UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended
December 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ___________
Commission File Number 33-82040
MAIN PLACE FUNDING, LLC
(Exact name of registrant as specified in its charter)
Delaware 57-0236115
- --------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
100 North Tryon Street, Charlotte, NC 28255
-------------------------------------------
(Address of principal executive offices) (Zip Code)
(704) 388-7436
--------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes x No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]
On March 31, 1999, there were no shares of common stock outstanding. As of March
31, 1999, members' interests consisted of ownership percentages of 99 percent
and 1 percent for NationsBank, N.A. and Main Place Trust, respectively.
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(A) AND
(B) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
Documents incorporated by reference: NONE
<PAGE>
PART I
ITEM 1. BUSINESS
Main Place Funding, LLC (Main Place), a Delaware limited liability company,
is a subsidiary of NationsBank, N.A., which is a wholly owned indirect
subsidiary of BankAmerica Corporation (the Corporation). On September 25, 1998,
NationsBank Corporation (NationsBank) reincorporated in Delaware, and on
September 30, 1998, the former BankAmerica Corporation merged into NationsBank,
with the latter entity surviving. In connection with this merger, NationsBank
changed its name to "BankAmerica Corporation."
Main Place is the successor by merger of Main Place Real Estate Investment Trust
(MPREIT) with and into Main Place. MPREIT was established on October 29, 1996 as
a Maryland real estate investment trust to consolidate the acquisition, holding
and management of certain closed-end residential mortgage loans owned by certain
affiliates of the Corporation. MPREIT is the successor by merger of Main Place
Funding Corporation (MPFC) on November 1, 1996. On October 15, 1998, Main Place
Holdings Corporation, the former parent of MPREIT, merged with and into Main
Place, and on December 23, 1998, MPREIT merged with and into Main Place, its
parent company. These mergers were each accounted for in a manner similar to a
pooling of interests and, accordingly, the accompanying financial statements
include the results of operations and financial condition of the combined
entities since the beginning of the earliest period presented.
As of the December 23, 1998 merger, NationsBank, N.A. held a 99 percent
membership interest in Main Place. The other 1 percent interest is held by Main
Place Trust, a Delaware business trust. In connection with the merger of MPREIT
with and into Main Place, all outstanding MPREIT Class A Trust Shares were
cancelled. All outstanding MPREIT Class B Trust Shares were converted into
rights to receive cash. As the surviving entity, Main Place issues and sells
mortgage-backed bonds and acquires, owns, holds and pledges the related mortgage
notes and other assets serving as collateral in connection therewith. In
connection with the merger with MPREIT, Main Place assumed MPREIT's obligations
under the Series 1995-2 and Series 1997-1 mortgage-backed bonds.
ITEM 2. PROPERTIES
Main Place does not own or lease any physical property.
ITEM 3. LEGAL PROCEEDINGS
Main Place has no legal actions or proceedings pending.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Omitted in accordance with General Instruction I to Form 10-K.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
There is no common stock outstanding for Main Place. During 1998, Main Place
paid distributions of $10.0 billion. In addition, during 1998 all MPREIT Class B
Trust Shares were converted into rights to receive cash. All outstanding MPREIT
Class A Trust Shares were cancelled.
In 1997, Main Place paid aggregate cash dividends of $88 thousand on the MPREIT
Class B Trust Shares.
ITEM 6. SELECTED FINANCIAL DATA
Omitted in accordance with General Instruction I to Form 10-K.
2
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Net income was $1.8 billion and $0.8 billion for the years ended December 31,
1998 and 1997, respectively. The increase in net income was primarily due to
increases in interest income on securities and time deposits placed, gains on
sales of available for sale securities and a decrease in interest expense on
long-term and subordinated debt. The increase in net income was partially offset
by increases in interest expense on securities sold under agreements to
repurchase and other operating expenses.
During 1998, interest income on securities and time deposits placed increased
$872.5 million and $414.3 million, respectively. These increases were primarily
attributed to an increase in the average balance of securities to $19.4 billion
during 1998 from $6.8 billion during 1997 and an increase in the average balance
of time deposits placed to $14.3 billion during 1998 from $6.7 billion during
1997. The average yield on securities was relatively unchanged, while the
average yield on time deposits placed decreased to 5.47 percent from 5.57
percent during 1998 and 1997, respectively.
During 1998, Main Place recognized gains of $201.2 million from the sale of
available for sale securities, compared to gains of $22.8 million during 1997.
The increase in gains on sales of available for sale securities was due to an
increase in sales activity associated with higher loan securitization and sale
activity and a decline in the general level of interest rates during 1998.
Interest expense increased to $1.1 billion during 1998 from $599.5 million
during 1997. The increase was due to an $504.7 million increase in interest on
securities sold under agreements to repurchase, partially offset by a decrease
of $44.7 million of interest on long-term and subordinated debt. The increase in
interest on securities sold under agreements to repurchase was due to an
increase in average borrowings to $15.8 billion from $6.4 billion, partially
offset by a decrease in the average rate paid on such borrowings to 5.47 percent
from 5.56 percent in 1998 and 1997, respectively. The increased borrowings were
used to fund the higher securities balances.
The decrease in interest on long-term and subordinated debt was primarily due to
the repayment of mortgage-backed bonds during 1998 coupled with a decline in the
average rate paid on such borrowings to 5.96 percent from 6.01 percent during
1998 and 1997, respectively.
Other operating expenses increased $8.5 million during 1998 as compared to 1997.
The increase was due to an increase in foreclosed properties and higher mortgage
servicing costs associated with an increase in average loans outstanding during
1998.
Income tax expense increased to $562.6 million during 1998 from $453.0 million
during 1997. As discussed in Item 1. Business, Main Place Funding Corporation
(MPFC) merged with and into MPREIT on November 1, 1996. On October 15, 1998,
Main Place Holdings Corporation, the former parent of MPREIT, merged with and
into Main Place, and on December 23, 1998, MPREIT merged with and into Main
Place, its parent company. Main Place is the successor, by merger, of these
entities and is structured as a limited liability company (LLC) and is treated
as a division of NationsBank, N.A. for income tax purposes. Accordingly, Main
Place's income tax expense represents those income taxes incurred prior to the
conversion to a LLC status.
Main Place had $109.8 million of nonperforming loans on December 31, 1998
compared to $66.8 million on December 31, 1997. The increase was due primarily
to loan growth. Future economic conditions and levels of loans purchased and
contributed may result in higher levels of nonperforming loans.
For information related to the Corporation's Year 2000 efforts, refer to the
section entitled "Year 2000 Project" in the Corporation's Annual Report on Form
10-K for the year ended December 31, 1998.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and financial statement schedule required by this
Item are listed in the Index to Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with accountants on accounting and
financial disclosures.
3
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Omitted in accordance with General Instruction I to Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
Omitted in accordance with General Instruction I to Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Omitted in accordance with General Instruction I to Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Omitted in accordance with General Instruction I to Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<PAGE>
a. The financial statements and financial statement schedule listed in the Index
to Financial Statements and Supplementary Data are filed as part of this
report.
b. No reports on Form 8-K were filed during the quarter ended December 31, 1998.
c. The exhibits filed as part of this report are listed in the Index to
Exhibits.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Main Place Funding, LLC
----------------------------
/s/ John E. Mack
Date: March 31, 1999 ----------------------------
John E. Mack
President
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ John E. Mack President March 31, 1999
- --------------------------- (Principal Executive
John E. Mack Officer)
/s/ Neil A. Cotty Treasurer and Senior Vice March 31, 1999
- --------------------------- President / Principal Financial
Neil A. Cotty and Accounting Officer
(Principal Financial and
Accounting Officer)
NATIONSBANK, N.A.
By: /s/ John E. Mack Managing Member March 31, 1999
------------------------
John E. Mack
MAIN PLACE TRUST
By: /s/ John E. Mack Special Managing March 31, 1999
----------------------- Member
John E. Mack
Business Trustee
</TABLE>
5
<PAGE>
MAIN PLACE FUNDING, LLC
INDEX TO FINANCIAL STATEMENTS
<TABLE>
PAGE
----
<S> <C>
Report of Independent Accountants 7
Financial Statements:
Statement of Income for the Years Ended December 31, 1998, 1997 and 1996 8
Balance Sheet as of December 31, 1998 and 1997 9
Statement of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996 10
Statement of Changes in Members' and Shareholders' Equity for the Years
Ended December 31, 1998, 1997 and 1996 11
Notes to Financial Statements 12
Financial Schedules:
Report of Independent Accountants on Financial Statement Schedule as of
and for each of the three years ended December 31, 1998 21
IV - Mortgage Loans on Real Estate 22
</TABLE>
6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Members of Main Place Funding, LLC
In our opinion, the accompanying balance sheet and the related statements of
income, of changes in members' and shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Main Place
Funding, LLC (the "Company") at December 31, 1998 and 1997, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina
March 31, 1999
7
<PAGE>
MAIN PLACE FUNDING, LLC
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------
1998 1997 1996
<S> <C> <C> <C>
Income
Interest and fees on loans $1,110,868 $1,059,949 $ 484,191
Interest on securities 1,345,293 472,836 8,335
Interest on time deposits placed 785,030 370,722 --
Gains on sales of available for sale securities 201,236 22,752 --
------- ------ -------
Total income 3,442,427 1,926,259 492,526
--------- --------- -------
Expenses
Interest on securities sold under agreements to repurchase 862,302 357,610 --
Interest on long-term and subordinated debt 197,245 241,921 258,174
Provision for credit losses 400 -- --
Other operating expenses 41,054 32,576 17,643
------ ------ ------
Total expenses 1,101,001 632,107 275,817
--------- ------- -------
Income before income taxes 2,341,426 1,294,152 216,709
Income tax expense 562,622 452,953 73,551
------- ------- -------
Net income $ 1,778,804 $ 841,199 $ 143,158
============= =========== ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
MAIN PLACE FUNDING, LLC
BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31
--------------------------------
1998 1997
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 2,219,988 $ 1,709,810
Time deposits placed with affiliates 12,000,000 17,950,000
Securities:
Held for investment, at cost (market value $201,220 and $479,491) 201,190 478,371
Available for sale 8,794,598 22,022,424
--------------------------------
Total securities 8,995,788 22,500,795
--------------------------------
Amount due from Trustee 272,237 233,273
Loans, net of unearned income 13,092,178 16,612,818
Allowance for credit losses (37,599) (41,412)
--------------------------------
Loans, net of unearned income and allowance for credit losses 13,054,579 16,571,406
Interest receivable 127,536 233,202
Accounts receivable from affiliates 188,333 396,965
Other assets 92,445 77,188
--------------------------------
$ 36,950,906 $ 59,672,639
================================
LIABILITIES
Accrued expenses $ 933 $ 128,020
Accrued expenses due to affiliate 590,623 113,736
Securities sold under agreements to repurchase from affiliate 8,658,818 22,134,599
Long-term debt 2,499,879 3,999,745
--------------------------------
11,750,253 26,376,100
MEMBERS' AND SHAREHOLDERS' EQUITY
Class A Trust shares, $1 par value-authorized 200,000 shares in 1997;
issued: 100,000 shares in 1997 - 100
Class B Trust shares, $10,000 par value-authorized 200 shares in 1997;
issued: 110 shares in 1997 - 1,100
Additional paid-in capital - 32,321,896
Retained earnings - 806,236
Accumulated other comprehensive income 220,081 167,207
Contributed equity 24,980,572 -
Undistributed income - -
--------------------------------
Total members' and shareholders' equity 25,200,653 33,296,539
--------------------------------
$ 36,950,906 $ 59,672,639
================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
MAIN PLACE FUNDING, LLC
STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------------------------
1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,778,804 $ 841,199 $ 143,158
Reconciliation of net income to net cash provided by (used in)
operating activities
Provision for credit losses 400 - -
Gains on sales of securities (201,236) (22,752) -
Deferred income tax (benefit) expense (33,567) 28,369 5,198
Net (increase) decrease in amount due from Trustee (38,964) (131,948) 5,206
Net decrease (increase) in interest receivable 105,666 (141,366) (69,929)
Net decrease (increase) in accounts receivable from affiliates 208,632 (183,238) (213,727)
Net (decrease) increase in accrued expenses (165,207) 48,612 57,271
Net increase in accrued expenses due to affiliate 476,887 112,837 899
Other operating activities 175,923 (152,598) 42,951
---------------------------------------------------
Net cash provided by (used in) operating activities 2,307,338 399,115 (28,973)
----------------------------------------------------
INVESTING ACTIVITIES
Proceeds from maturities of securities held for investment 277,030 140,308 -
Proceeds from sales and maturities of securities available for sale 16,701,252 2,276,101 6,127
Purchases of securities available for sale (1,337,677) (3,063,523) -
Net decrease (increase) in time deposits placed with affiliates 5,950,000 (17,950,000) -
Purchases of loans (4,339,301) (4,822,224) -
Collections of loans outstanding 5,928,302 2,389,677 1,259,402
----------------------------------------------------
Net cash provided by (used in) investing activities 23,179,606 (21,029,661) 1,265,529
----------------------------------------------------
FINANCING ACTIVITIES
(Decrease) Increase in securities sold under agreements to repurchase (13,475,781) 22,134,599 -
Issuances of long-term debt - 1,000,000 516,593
Retirement of long-term and subordinated debt (1,499,797) (1,072,733) (764,043)
Proceeds from issuance of common stock - - 1,100
Redemption of Class B Trust Shares (1,100) - -
Capital contribution from NationsBank, N.A. - 25,000 -
Distribution (10,000,088) - (556,329)
Cash dividends paid - (88) (185,169)
----------------------------------------------------
Net cash (used in) provided by financing activities (24,976,766) 22,086,778 (987,848)
----------------------------------------------------
Net increase in cash and cash equivalents 510,178 1,456,232 248,708
Cash and cash equivalents at beginning of period 1,709,810 253,578 4,870
----------------------------------------------------
Cash and cash equivalents at end of period $ 2,219,988 $ 1,709,810 $ 253,578
====================================================
Supplemental cash flow disclosure
Cash paid for interest $ 1,132,793 $ 509,040 $ 272,321
Cash paid for income taxes 33,792 478,886 19,453
Securities held for investment contributed from affiliate $ - $ 619,144 $ -
Securities available for sale contributed from affiliate 75,182 19,585,750 79,280
Net loans contributed from affiliate - 16,019 12,222,202
Noncash dividends of loans to affiliates - - 52,030
Loans securitized and retained in the securities portfolio 1,903,041 537,924 755,213
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
<TABLE>
<CAPTION>
MAIN PLACE FUNDING, LLC
STATEMENT OF CHANGES IN MEMBERS' AND SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
Accumulated
Class A Class B Additional Retained Other
Trust Trust Paid-In Earnings Comprehensive
Shares Shares Capital(1) (Deficit) Income
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE ON DECEMBER 31, 1995..... $ - $ - $ 299,648 $ 7,136 $ -
Net income................................. 143,158
Other comprehensive income, net of tax.. 8,530
Comprehensive income.......................
Cash dividends paid........................ (185,154)
Cash dividends paid to
NationsBank, N.A....................... (15)
Net assets contributed by
NationsBank, N.A....................... 12,301,482
Distribution of capital to
NationsBank, N.A....................... (556,329)
Trust shares issued........................ 100 1,100
Other...................................... (2,065)
------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1996.................. 100 1,100 12,042,736 (34,875) 8,530
Net income................................. 841,199
Other comprehensive income, net of tax.. 158,677
Comprehensive income.......................
Cash dividends paid ....................... (87)
Cash dividends paid to
NationsBank, N.A....................... (1)
Net assets contributed by
NationsBank, N.A....................... 20,245,913
Other...................................... 33,247
------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1997.................. 100 1,100 32,321,896 806,236 167,207
Net income................................. 1,778,804
Other comprehensive income, net of tax.. 52,874
Comprehensive income.......................
Net assets contributed by
NationsBank, N.A....................... 75,182
Distribution .............................. (1,100) (7,415,048) (2,585,040)
Other...................................... (1,558)
----------------------------------------------------------------------
Balance prior to conversion
to limited liability company............ $ 100 $ - $ 24,980,472 $ - $ 220,081
Conversion to limited liability company ... (100) (24,980,472)
------------------------------------------------------------------------
BALANCE ON DECEMBER 31, 1998.................. $ - $ - $ - $ - $ 220,081
========================================================================
Total
Members' and Compre-
Contributed Undistributed Shareholders' hensive
Equity Income Equity Income
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE ON DECEMBER 31, 1995..... $ - $ - $ 306,784
Net income................................. 143,158 $ 143,158
Other comprehensive income, net of tax.. 8,530 8,530
-------------
Comprehensive income....................... $ 151,688
=============
Cash dividends paid........................ (185,154)
Cash dividends paid to
NationsBank, N.A....................... (15)
Net assets contributed by
NationsBank, N.A....................... 12,301,482
Distribution of capital to
NationsBank, N.A....................... (556,329)
Trust shares issued........................ 1,200
Other...................................... (2,065)
--------------------------------------------------------
BALANCE ON DECEMBER 31, 1996..... 12,017,591
Net income................................. 841,199 $ 841,199
Other comprehensive income, net of tax.. 158,677 158,677
-------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Comprehensive income....................... $ 999,876
=============
Cash dividends paid ....................... (87)
Cash dividends paid to
NationsBank, N.A....................... (1)
Net assets contributed by
NationsBank, N.A....................... 20,245,913
Other...................................... 33,247
--------------------------------------------------------
BALANCE ON DECEMBER 31, 1997..... 33,296,539
Net income................................. 1,778,804 $ 1,778,804
Other comprehensive income................. 52,874 52,874
-------------
Comprehensive income....................... $ 1,831,678
=============
Net assets contributed by
NationsBank, N.A....................... 75,182
Distribution............................... (10,001,188)
Other...................................... (1,558)
--------------------------------------------------------
Balance prior to conversion
to limited liability company............ $ - $ - $ 25,200,653
Conversion to limited liability company ... 24,980,572 -
--------------------------------------------------------
BALANCE ON DECEMBER 31, 1998..... $ 24,980,572 $ - $ 25,200,653
========================================================
(1) Changes in Accumulated Other Comprehensive Income includes net unrealized gains (losses) on securities available for sale.
</TABLE>
11
<PAGE>
MAIN PLACE FUNDING, LLC
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
BASIS OF PRESENTATION
Main Place Funding, LLC (Main Place), a Delaware limited liability company,
is a subsidiary of NationsBank, N.A., which is a wholly owned indirect
subsidiary of BankAmerica Corporation (the Corporation). On September 25, 1998,
NationsBank Corporation (NationsBank) reincorporated in Delaware, and on
September 30, 1998, the former BankAmerica Corporation merged into NationsBank,
with the latter entity surviving. In connection with this merger, NationsBank
changed its name to "BankAmerica Corporation."
Main Place is the successor by merger of Main Place Real Estate Investment Trust
(MPREIT) with and into Main Place. MPREIT was established on October 29, 1996 as
a Maryland real estate investment trust to consolidate the acquisition, holding
and management of certain closed-end residential mortgage loans owned by certain
affiliates of the Corporation. MPREIT is the successor by merger of Main Place
Funding Corporation (MPFC) on November 1, 1996. On October 15, 1998, Main Place
Holdings Corporation, the former parent of MPREIT, merged with and into Main
Place, and on December 23, 1998, MPREIT merged with and into Main Place, its
parent company. These mergers were each accounted for in a manner similar to a
pooling of interests and, accordingly, the accompanying financial statements
include the results of operations and financial condition of the combined
entities since the beginning of the earliest period presented.
As of the December 23, 1998 merger, NationsBank, N.A. held a 99 percent
membership interest in Main Place. The other 1 percent interest is held by Main
Place Trust, a Delaware business trust. In connection with the merger of MPREIT
with and into Main Place, all outstanding MPREIT Class A Trust Shares were
cancelled. All outstanding MPREIT Class B Trust Shares were converted into
rights to receive cash. As a result of the December 23, 1998 merger, Main
Place's ownership interests are presented in the accompanying financial
statements to reflect the equity structure of a limited liability company. As
the surviving entity, Main Place issues and sells mortgage-backed bonds and
acquires, owns, holds and pledges the related mortgage notes and other assets
serving as collateral in connection therewith. In connection with the merger
with MPREIT, Main Place assumed MPREIT's obligations under the Series 1995-2 and
Series 1997-1 mortgage-backed bonds.
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles. The preparation of the financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported amounts and
disclosures. Actual results could differ from these estimates. Significant
estimates made by management are discussed in these footnotes as applicable.
Certain prior period amounts have been reclassified to conform to current period
classifications.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash items in the process of collection and
amounts due from affiliated banks.
SECURITIES
Securities are classified based on management's intention on the date of
purchase. Securities which management has the intent and ability to hold to
maturity are classified as held for investment and reported at amortized cost.
All other securities are classified as available for sale and carried at fair
value with net unrealized gains and losses included in accumulated other
comprehensive income.
Interest and dividends on securities, including amortization of premiums and
accretion of discounts, are included in interest income. Realized gains and
losses from the sales of securities are determined using the specific
identification method.
12
<PAGE>
LOANS
Loans are reported at their outstanding principal balances net of any unearned
income, charge-offs, unamortized deferred fees and costs on originated loans and
premiums or discounts on purchased loans. Unearned income, discounts and
premiums are amortized to income using methods that approximate the interest
method.
NONPERFORMING LOANS
Residential mortgages and certain past due consumer loans are generally charged
off at 120 days past due or placed on nonperforming status upon repossession of
collateral or the inception of foreclosure proceedings. Interest accrued but not
collected is charged off along with principal.
Commercial mortgage loans that are past due 90 days or more as to principal or
interest, or where reasonable doubt exists as to timely collection, including
loans that are individually identified as being impaired, are classified as
nonperforming loans unless well secured and in the process of collection. Loans
which are past due 180 days or more as to principal or interest are classified
as nonperforming regardless of collateral or collection status. Interest accrued
but not collected is reversed when a loan is classified as nonperforming.
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses is available to absorb losses inherent in the
credit extension process. Credit exposures deemed to be uncollectible are
charged against the allowance for credit losses. Recoveries of previously
charged off amounts are credited to the allowance for credit losses.
Main Place's process for determining an appropriate allowance for credit losses
includes management's judgment and use of estimates. The adequacy of the
allowance for credit losses is reviewed regularly by management. Additions to
the allowance for credit losses are made by charges to the provision for credit
losses. On a quarterly basis, a comprehensive review of the adequacy of the
allowance for credit losses is performed. This assessment is made in the context
of historical losses, as well as existing economic conditions and performance
trends within specific portfolio segments and individual concentrations of
credit.
FORECLOSED PROPERTIES
Loans are reclassified to foreclosed properties when Main Place forecloses on a
property or when physical possession of the collateral is taken regardless of
whether foreclosure proceedings have taken place. Foreclosed properties are
carried at the lower of (1) the recorded amount of the loan for which the
foreclosed property previously served as collateral or (2) the fair value of the
property minus estimated costs to sell. Prior to foreclosure, the loan is
written down, if necessary, by charging the allowance for credit losses.
Subsequent to foreclosure, gains or losses on the sale of and losses on the
periodic revaluation of foreclosed properties are credited or charged to
expense. Net costs of maintaining and operating foreclosed properties are
expensed as incurred.
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase are treated as collateralized
financing transactions and are recorded at the amounts at which the securities
were sold plus accrued interest.
INCOME TAXES
Prior to the merger of Main Place Holdings Corporation into Main Place on
October 15, 1998, the operating results of Main Place Holdings Corporation were
included in the consolidated federal income tax return of the Corporation. The
method of
13
<PAGE>
allocating federal income tax expense was determined under a tax allocation
agreement with the Corporation. This agreement specified that income tax expense
be computed for all subsidiaries on a separate company method, taking into
account tax planning strategies and the tax position of the consolidated group.
There are two components of income tax expense: current and deferred. Current
income tax expense approximates taxes to be paid or refunded for the applicable
period. Balance sheet amounts of deferred taxes are recognized on the temporary
differences between the bases of assets and liabilities as measured by tax laws
and their bases as reported in the financial statements. Deferred tax expense or
benefit is then recognized for the change in deferred tax liabilities or assets
between periods.
Recognition of deferred tax assets is based on management's belief that it is
more likely than not that the tax benefit associated with certain temporary
differences will be recognized. A valuation allowance is recorded for those
deferred tax items for which it is more likely than not that realization will
not occur.
After October 14, 1998, Main Place is treated as a division of NationsBank, N.A.
for income tax purposes. Accordingly, no current or deferred tax expense was
provided after October 14, 1998.
On December 23, 1998, MPREIT, which was taxed as a partnership from May 20,
1998, was merged with and into Main Place. MPREIT was taxed as a real estate
investment trust from November 1, 1996 until May 19, 1998.
NOTE 2 - SECURITIES
The amortized cost and market values of securities held for investment on
December 31 were (dollars in thousands):
1998
-------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------------- ---------- ----------- --------------
Mortgage-backed
securities $ 201,190 $ 227 $ (197) $ 201,220
============== ========== =========== ==============
1997
-------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------------- ---------- ----------- --------------
Mortgage-backed
securities $ 478,371 $ 1,975 $ (855) $ 479,491
============== ========== =========== ==============
14
<PAGE>
The amortized cost and market values of securities available for sale on
December 31 were (dollars in thousands):
1998
-------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------------- ---------- ----------- --------------
Mortgage-backed
securities $ 8,574,517 $224,796 $(4,715) $ 8,794,598
============== ========== =========== ==============
1997
-------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
-------------- ---------- ----------- --------------
Mortgage-backed
securities $ 21,765,182 $275,870 $(18,628) $ 22,022,424
============== ========== =========== ==============
Gross gains of approximately $201.3 million and $22.9 million were realized on
sales of available for sale securities during 1998 and 1997, respectively.
The expected maturities of securities held for investment and securities
available for sale on December 31, 1998 are summarized in the following tables
(dollars in thousands). Actual maturities may differ from contractual maturities
or maturities shown below since borrowers may have the right to prepay
obligations with or without prepayment penalties.
<TABLE>
<CAPTION>
SECURITIES HELD FOR INVESTMENT
NET
AMORTIZED MARKET UNREALIZED
COST VALUE GAINS (LOSSES)
---------------- ---------------- ---------------
<S> <C> <C> <C>
Due in one year or less $ 22,273 $ 22,327 $ 54
Due after one year through five years 77,582 77,521 (61)
Due after five years through ten years 40,137 40,201 64
Due after ten years 61,198 61,171 (27)
---------------- ---------------- ---------------
$ 201,190 $ 201,220 $ 30
================ ================ ===============
SECURITIES AVAILABLE FOR SALE
NET
AMORTIZED MARKET UNREALIZED
COST VALUE GAINS (LOSSES)
---------------- ---------------- ---------------
Due in one year or less $ 3,013 $ 3,062 $ 49
Due after one year through five years 287,307 296,124 8,817
Due after five years through ten years 117,721 118,678 957
Due after ten years 8,166,476 8,376,734 210,258
---------------- ---------------- ---------------
$ 8,574,517 $ 8,794,598 $ 220,081
================ ================ ===============
</TABLE>
On December 31, 1998, the valuation allowance for securities available for sale
increased accumulated other comprehensive income by $52.9 million.
15
<PAGE>
NOTE 3 - LOANS
The following table presents the composition of loans on December 31 (dollars in
thousands):
<TABLE>
<CAPTION>
1998 1997
----------------------------------------------------------------------------------------------
<S> <C> <C>
Residential mortgage $ 13,052,858 $ 16,551,952
Other consumer loans 21,997 39,281
Commercial real estate 17,323 21,585
-------------------- --------------------
Total loans, net of unearned income $ 13,092,178 $ 16,612,818
==================== ====================
</TABLE>
Mortgage loans collateralizing mortgage-backed bonds were comprised of the
following on December 31 (dollars in thousands):
<TABLE>
<CAPTION>
1998 1997
----------------------------------------------------------------------------------------------
<S> <C> <C>
Adjustable-rate $ 2,419,756 $ 4,604,436
Fixed-rate 1,265,581 1,331,860
-------------------- --------------------
Total mortgage loans $ 3,685,337 $ 5,936,296
==================== ====================
</TABLE>
Transactions in the allowance for credit losses on December 31 were (dollars in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance on January 1 $41,412 $ 42,396 $17,805
Net loans charged off (4,213) (986) (15)
Provision for credit losses 400 - -
Other - 2 24,606
-----------------------------------------
Balance on December 31 $37,599 $ 41,412 $42,396
=========================================
</TABLE>
Main Place had $109.8 million of nonperforming loans on December 31, 1998 and
$66.8 million on December 31, 1997. Foreclosed properties on December 31, 1998
were $9.1 million compared to $1.2 million on December 31, 1997.
During 1998, Main Place securitized residential mortgage loans with a book value
of $1.9 billion and retained the securities in its available for sale securities
portfolio.
NOTE 4 - AFFILIATE TRANSACTIONS
Main Place maintains its cash and cash equivalent accounts with NationsBank,
N.A. Main Place had $12.0 billion and $18.0 billion of time deposits placed with
NationsBank, N.A for the years ended December 31, 1998 and 1997, respectively.
Interest income on time deposits for the years ended December 31, 1998 and 1997
was $785.0 million and $370.7 million, respectively.
On December 31, 1998 and 1997, Main Place had $188.3 million and $397.0 million,
respectively, of accounts receivable from affiliates of the Corporation. These
receivables are related to mortgage payments and securities principal and
interest payments in process, which generally clear within 30 days.
On December 31, 1998 and 1997, Main Place had $8.7 billion and $22.1 billion,
respectively, in outstanding securities sold under agreements to repurchase from
NationsBank, N.A. and NationsBanc Montgomery Securities LLC, wholly owned
indirect subsidiaries of the Corporation. Interest expense on these securities
for the years
16
<PAGE>
ended December 31, 1998 and 1997 was $862.3 million and $357.6 million,
respectively. Main Place has entered into agreements with NationsBanc Mortgage
Corporation (NationsBanc Mortgage), a wholly owned indirect subsidiary of the
Corporation, and with NationsBank, N.A. for the servicing and administration of
its mortgage portfolio. Servicing fees paid to NationsBanc Mortgage approximated
$34.9 million and $31.3 million for the years ended December 31, 1998 and 1997,
respectively, and are included in "Other operating expenses" on the accompanying
statement of income.
From time to time, Main Place purchases certain mortgage loans originated by
NationsBanc Mortgage. Main Place purchased $3.1 billion and $4.8 billion of
loans from NationsBanc Mortgage for the years ended December 31, 1998 and 1997,
respectively. In addition, during 1998, Main Place purchased $790 million of
loans from NationsBank, N.A. and $425 million of loans in the secondary market
through NationsBanc Mortgage.
During the first quarter of 1998, NationsBank, N.A. contributed $75.2 million in
available for sale securities to Main Place. During 1997, NationsBank, N.A.
contributed approximately $20.2 billion in mortgage-backed securities and
collateralized mortgage obligations, approximately $16.0 million of mortgage
loans and $25.0 million in cash to Main Place. The contributions received by
Main Place were recorded at the book value of the assets contributed by
NationsBank, N.A.
In 1998, Main Place made a $10.0 billion distribution.
At December 31, 1998, Main Place had a revolving line of credit agreement with
NationsBank, N.A. for the benefit of the trustee under the Series 1995-2
Mortgage-Backed Bonds. The maximum borrowing allowed under this agreement is
$82.5 million (expires in 2000). The borrowings bear interest at prime and are
subject to a .25 percent per annum commitment fee on the unused portion of the
facility. There have been no borrowings under this agreement.
Additionally, a subsidiary of NationsBank, N.A., Bank of America Technology &
Operations, Inc., provides data processing and other support services to Main
Place and certain other subsidiaries of the Corporation. These services included
the completion of substantially all of Main Place's Year 2000 software
conversion projects as of December 31, 1998. The related costs, which are
expensed when billed, are included in "Other operating expenses." Bank of
America Technology & Operations, Inc. is reimbursed through affiliate
allocations to the other subsidiaries. For further information related to the
Corporation's Year 2000 efforts, refer to the section entitled "Year 2000
Project" in the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1998.
NOTE 5 - LONG-TERM DEBT
In September 1994, the Securities and Exchange Commission declared effective
MPFC's shelf registration statement (Registration Statement) to issue up to $4
billion of Mortgage-Backed Bonds (Bonds). The obligations of MPFC under the
Bonds were assumed by Main Place pursuant to the merger of MPREIT with and into
Main Place Funding, LLC on December 23, 1998. The Bonds, which were issued in
series pursuant to separate indentures, are generally subject to the following
terms. The Bonds, collateralized primarily by mortgage loans on 1-to-4 family
dwellings, are obligations solely of Main Place. The Bonds are not prepayable at
the option of Main Place, but are subject to redemption in whole or in part
under certain circumstances. Under the terms of an indenture relating to each
series of Bonds, Main Place must maintain a minimum amount of eligible
collateral, which is determined on a discounted basis and may consist of
mortgage loans, certain U.S. agency mortgage pass-through certificates, U.S.
government securities and cash held by a trustee (the Trustee). The types,
characteristics and permitted amounts of eligible collateral are subject to
change from time to time without the consent of the bondholders if such changes
would not adversely affect the ratings assigned to the Bonds. In the event such
collateral requirements are not met with respect to any series, Main Place must
provide additional or substitute mortgage loans or other acceptable collateral
with respect to such series to meet the required amounts of eligible collateral
and/or repurchase Bonds in an amount sufficient to meet collateral requirements.
If sufficient eligible collateral is not supplied and/or sufficient Bonds are
not repurchased, Main Place must redeem a portion of the outstanding Bonds of
such series such that the existing amount of the eligible collateral meets the
collateral requirements of the indenture relating to the Bonds of such series
that remain outstanding after the redemption. Although there is no remaining
capacity under Main Place's existing shelf registration statement, Main Place
may file, from time to time, additional registration statements for the issuance
of additional securities.
17
<PAGE>
The following table displays the primary terms of Main Place's 1995-2 and 1997-1
Mortgage-Backed Bonds as of December 31, 1998 (dollars in thousands):
SERIES SERIES
1995-2 1997-1
(ISSUED (ISSUED
OCTOBER 1995) MARCH 1997)
----------------------------------
Amount issued $1,500,000 $1,000,000
Reference rate 3-mo. LIBOR 3-mo. LIBOR
+17 bps +5 bps
Period-end interest rate 5.374% 5.300%
Maturity 2000 2000
Mortgage loans collateralizing mortgage-backed bonds:
Collateral - book value $2,240,356 $1,444,981
Collateral - discounted value 1,861,220 1,265,277
Collateral - approximate amount exceeding
minimum indenture requirements 279,000 210,000
On July 17, 1998, Main Place repaid its obligations on the Series 1995-1
Mortgage-Backed Bonds of $1.5 billion.
Interest expense on the Series 1995-1, 1995-2 and 1997-1 Bonds for the year
ended December 31, 1998 was $197.2 million compared to $227.9 million for the
year ended December 31, 1997.
18
<PAGE>
NOTE 6 - INCOME TAXES
Due to Main Place's tax status as discussed in Note 1, no current or deferred
tax expense has been provided after October 14, 1998. The components of income
tax expense for the years ended December 31 were (dollars in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------- ------------
<S> <C> <C> <C>
CURRENT PORTION - EXPENSE
Federal $ 574,968 $ 424,584 $ 67,742
State 21,221 - 611
------------ ------------- ------------
596,189 424,584 68,353
------------ ------------- ------------
DEFERRED PORTION - (BENEFIT) EXPENSE
Federal (32,475) 27,277 5,198
State (1,092) 1,092 -
------------ ------------- ------------
(33,567) 28,369 5,198
------------ ------------- ------------
Total income tax expense $ 562,622 $ 452,953 $ 73,551
============ ============= ============
</TABLE>
A reconciliation of the expected federal income tax expense, based on the
federal statutory rate of 35 percent for 1998, 1997 and 1996, to the actual
income tax expense for the years ended December 31 is as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------- ------------
<S> <C> <C> <C>
Expected federal tax expense $ 819,499 $ 452,953 $ 75,848
Increase (decrease) in taxes resulting from
Reorganization of subsidiary (263,481) - -
State tax expense, net of federal benefit 12,702 1,092 397
Other (6,098) (1,092) (2,694)
------------ ------------- ------------
Total income tax expense $ 562,622 $ 452,953 $ 73,551
============ ============= ============
</TABLE>
Significant components of Main Place's deferred tax (liabilities) and assets on
December 31 are as follows (dollars in thousands):
<TABLE>
<CAPTION>
1997 1996
------------- ------------
<S> <C> <C>
DEFERRED TAX LIABILITIES
Allowance for credit losses $ (350) $ (5)
Securities available for sale (90,035) (3,177)
Deferred income (47,448) (5,576)
Other, net (1,092) -
------------- ------------
Gross deferred tax liabilities (138,925) (8,758)
------------- ------------
DEFERRED TAX ASSETS
Discount accretion 3,414 -
Deferred mortgage origination fee and interest
income recognition 6,982 -
Other, net 4,927 383
------------- ------------
Gross deferred tax assets 15,323 383
------------- ------------
Net deferred tax liabilities $ (123,602) $ (8,375)
============= ============
</TABLE>
There were no deferred tax assets or liabilities at December 31, 1998 due to
Main Place's tax status (see Note 1). Current income taxes payable to the
Corporation of $572 million and $14 million are included in the accompanying
balance sheet as of December 31, 1998 and 1997, respectively.
19
<PAGE>
NOTE 7 - FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments," requires the disclosure of the estimated fair
values of financial instruments. The fair value of an instrument is the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. Quoted market
prices, if available, are utilized as estimates of the fair values of financial
instruments. Fair values of items for which no quoted market price is available
have been derived based on management's assumptions with respect to future
economic conditions, the amount and timing of future cash flows and estimated
discount rates. The estimation methods for individual classifications of
financial instruments are more fully described below. Different assumptions
could significantly affect these estimates. Accordingly, the net realizable
values could be materially different from the estimates presented below. In
addition, the estimates are only indicative of individual instruments' values
and should not be considered an indication of the fair value of Main Place.
SHORT-TERM FINANCIAL INSTRUMENTS
The carrying value of short-term financial instruments, including cash and cash
equivalents, repurchase agreements, accounts receivable from affiliates,
interest receivable and amounts due from the Trustee, approximates the fair
value. These financial instruments generally expose Main Place to limited credit
risk and have no stated maturities or maturities of less than 30 days.
LOANS
Fair values were estimated for the loans based on credit quality and maturity.
The fair value of loans was estimated by discounting estimated cash flows using
the December 31 origination rate of the Corporation and its affiliates for
similar loans. Contractual cash flows were adjusted for prepayments using
published industry data. Where credit deterioration has occurred, cash flows for
fixed- and variable-rate loans have been reduced to incorporate estimated
losses. Where quoted market prices were available, such market prices were
utilized as estimates of fair value.
LONG-TERM DEBT
The Series 1995-2 and Series 1997-1 Mortgage-Backed Bonds are variable rate
instruments and the fair value approximated book value at December 31, 1998
and 1997.
SECURITIES HELD FOR INVESTMENT AND SECURITIES AVAILABLE FOR SALE
The carrying value of securities held for investment and securities available
for sale approximates the fair value.
The book and fair values of financial instruments for which book and fair value
differed on December 31 were (dollars in thousands):
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------------------------------
BOOK FAIR BOOK FAIR
VALUE VALUE VALUE VALUE
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Loans, net of unearned income $13,092,178 $ 13,510,477 $ 16,612,818 $ 16,734,535
</TABLE>
For all other financial instruments, book value approximates fair value.
20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Members of Main Place Funding, LLC
Our audits of the financial statements referred to in our report dated March 31,
1999 also included an audit of the Financial Statement Schedule listed in Item
14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related financial statements.
/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina
March 31, 1999
21
<PAGE>
<TABLE>
<CAPTION>
MAIN PLACE FUNDING, LLC
SCHEDULE IV. MORTGAGE LOANS ON REAL ESTATE
December 31, 1998 (DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
Principal Amount
Final Carrying of Loans Subject
Interest Maturity Periodic Amount of to Delinquent
Description Rate Date Payment Terms Mortgage Loans Principal/Interest
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Conventional loans balance
$0 to $50...........................6.00% to 10.00% Varies Interest and $ 665,440 $ 11,527
principal monthly
$50 to $100.........................6.00% to 10.00% Varies Interest and 1,176,151 24,626
principal monthly
$100 to $150........................6.00% to 10.00% Varies Interest and 757,951 12,682
principal monthly
$150 to $200........................6.00% to 10.00% Varies Interest and 528,501 6,573
principal monthly
Greater than $200.................. 6.00% to 10.00% Varies Interest and 788,074 10,012
principal monthly
Government loans balance
$0 to $50...........................6.00% to 10.00% Varies Interest and 16,024 889
principal monthly
$50 to $100.........................6.00% to 10.00% Varies Interest and 148,348 5,575
principal monthly
$100 to $150........................6.00% to 10.00% Varies Interest and 72,238 5,693
principal monthly
$150 to $200........................6.00% to 10.00% Varies Interest and 12,900 679
principal monthly
Greater than $200.................. 7.01% to 9.50% Varies Interest and 1,101 -
principal monthly
Jumbo loans balance
Greater than $200.................. 6.00% to 10.00% Varies Interest and 8,137,241 40,060
principal monthly
Loans serviced by others......... 6.46% to 10.18% Varies Interest and 788,209 14,728
principal monthly
- ---------------------------------------------------------------------------------------------------------------------------------
Total mortgage loans on
real estate...................................................................................$ 13,092,178 133,044
=================================================================================================================================
</TABLE>
The loans in the table above are secured primarily by single-family dwellings
with initial maturities ranging from 15 to 30 years. A summary of activity of
loans, net of unearned income, for the years ended December 31, 1998, 1997 and
1996 is on the following page:
22
<PAGE>
<TABLE>
<CAPTION>
1998 1997 1996
-------------------------- --------------------------- ------------------------
<S> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $ 16,612,818 $ 14,704,375 $ 4,523,744
ADDITIONS DURING THE PERIOD
Purchases of mortgage loans 4,339,301 4,822,224 -
Loans contributed from affiliate - 16,019 12,222,202
Other - - 25,074
-------------------------- --------------------------- ------------------------
4,339,301 4,838,243 12,247,276
Collections of principal 5,928,302 2,389,677 1,259,402
Loans distributed to parent - - 52,030
Loans securitized 1,903,041 537,924 755,213
Other 28,598 2,199 -
-------------------------- --------------------------- ------------------------
7,859,941 2,929,800 2,066,645
-------------------------- --------------------------- ------------------------
BALANCE AT CLOSE OF PERIOD $ 13,092,178 $ 16,612,818 $ 14,704,375
========================== =========================== ========================
</TABLE>
23
<PAGE>
MAIN PLACE FUNDING, LLC
FORM 10-K
INDEX TO EXHIBITS*
<TABLE>
<CAPTION>
<S> <C>
Exhibit No. Description
- ----------- -----------
2 (a) Agreement of Merger merging Main Place Holdings Corporation into Main Place Holdings,
LLC, dated as of October 15, 1998.
2 (b) Agreement and Plan of Merger between Main Place Real Estate Investment Trust and Main
Place Funding, LLC, dated as of December 22, 1998.
3 (a) Limited Liability Company Agreement of Main Place Holdings, LLC, dated as of October
15, 1998.
3 (b) Amended and Restated Limited Liability Company Agreement of Main Place Funding, LLC,
dated as of December 14, 1998.
4 (a) Indenture dated as of October 31, 1995, between MPFC and First Trust National
Association, pursuant to which MPFC issued Mortgage-Backed Bonds, Series 1995-2,
bearing interest at the three-month LIBOR rate plus 17 basis points, due 2000,
incorporated by reference to Exhibit 4.1 of MPFC's Current Report on Form 8-K dated
October 31, 1995.
4 (b) First Supplemental Indenture dated as of November 1, 1996 to Indenture dated as of
October 31, 1995 between MPFC and First Trust National Association, as Trustee,
incorporated by reference to Exhibit 4 (b) of the registrant's Quarterly Report on
Form 10-Q dated November 14, 1996.
4 (c) Indenture of Trust dated as of March 18, 1997, between the registrant and First Trust
National Association, as Trustee, incorporated by reference to Exhibit 4 (a) of the
registrant's Quarterly Report on Form 10-Q dated May 13, 1997.
4 (d) Second Supplemental Indenture, dated as of December 23, 1998, between Main Place
Funding, LLC and U.S. Bank Trust National Association, as Trustee, in connection with
the Indenture dated as of October 31, 1995.
4 (e) First Supplemental Indenture, dated as of December 23, 1998, between Main Place
Funding, LLC and U.S. Bank Trust National Association, as Trustee, in connection with
the Indenture dated as of March 18, 1997.
4 (f) Assignment and Assumption Agreement between NationsBank, N.A. and Main Place Trust,
dated as of December 14, 1998.
4 (g) Trust Agreement of Main Place Trust, dated as of December 14, 1998.
10 (a) Servicing Agreement dated as of July 18, 1995, between MPFC and NationsBanc Mortgage
Corporation, incorporated by reference to Exhibit 10.1 of MPFC's Current Report on
Form 8-K dated July 18, 1995.
10 (b) Servicing Agreement dated as of October 31, 1995, between MPFC and NationsBanc
Mortgage Corporation, incorporated by reference to Exhibit 10.1 of MPFC's Current
Report on Form 8-K dated October 31, 1995.
10 (c) Servicing Agreement dated November 1, 1996, between MPREIT and NationsBanc Mortgage
Corporation, incorporated by reference to Exhibit 10 (l) of the registrant's
Quarterly Report on Form 10-Q dated November 14,1996.
24
<PAGE>
10 (d) Servicing Agreement dated as of November 1, 1996, between MPREIT and NationsBank,
N.A., incorporated by reference to Exhibit 10 (m) of the registrant's Quarterly
Report on Form 10-Q dated November 14,1996.
10 (e) Servicing Agreement dated as of March 18, 1997, between the registrant and
NationsBanc Mortgage Corporation, incorporated by reference to Exhibit 10 (a) of the
registrant's Quarterly Report on Form 10-Q dated May 13, 1997.
10 (f) Contribution Agreement dated as of August 18, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (p) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (g) Contribution Agreement dated as of September 10, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (q) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (h) Contribution Agreement dated as of September 29, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (r) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (i) Contribution Agreement dated as of October 21, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (s) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (j) Contribution Agreement dated as of October 23, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (t) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (k) Contribution Agreement dated as of October 29, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (u) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (l) Contribution Agreement dated as of October 30, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (v) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (m) Contribution Agreement dated as of October 31, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (w) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (n) Contribution Agreement dated as of November 24, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (x) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (o) Contribution Agreement dated as of November 25, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (y) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (p) Contribution Agreement dated as of November 28, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (z) of the registrant's
Annual Report on Form 10-K dated March 31, 1998.
10 (q) Contribution Agreement dated as of December 1, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (aa) of the
registrant's Annual Report on Form 10-K dated March 31, 1998.
10 (r) Contribution Agreement dated as of December 24, 1997 between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 (bb) of the
registrant's Annual Report on Form 10-K dated March 31, 1998.
10 (s) Contribution Agreement dated as of January 1, 1998, between MPREIT and Main Place
Holdings Corporation, incorporated by reference to Exhibit 10 of the registrant's
Quarterly Report on Form 10-Q dated May 15, 1998.
12 Ratio of Earnings to Fixed Charges.
23 Consent of PricewaterhouseCoopers LLP.
25
<PAGE>
27 Financial Data Schedule.
</TABLE>
* The registrant agrees to furnish supplementally a copy of
any omitted schedule or exhibit to the Commission upon
request.
26
AGREEMENT OF MERGER
MERGING
MAIN PLACE HOLDINGS CORPORATION
INTO
MAIN PLACE HOLDINGS, LLC
Pursuant to this Agreement of Merger, Main Place Holdings Corporation, a
corporation organized and existing under the laws of Delaware, shall be merged
with and into Main Place Holdings, LLC, a limited liability company organized
and existing under the laws of Delaware (the "Merger").
The Merger shall be in accordance with the following terms and conditions:
FIRST: Upon the Merger becoming effective, Main Place Holdings Corporation shall
be merged into Main Place Holdings, LLC, which shall continue to exist as a
Delaware limited liability company.
SECOND: The Certificate of Formation of Main Place Holdings, LLC in effect at
the time of the Merger shall continue in full force and effect as the
Certificate of Formation of the surviving entity.
THIRD: Additional terms and conditions of the Merger are as follows:
(a) The Limited Liability Company Agreement of Main Place Holdings, LLC
in effect at the time of the Merger shall be and remain the Limited
Liability Company Agreement of the surviving entity until the same shall
be altered, amended or repealed as therein provided.
(b) The officers of Main Place Holdings, LLC shall continue in office
upon and after the time of the Merger.
(c) The Merger shall become effective on such date and time as the
officers of the surviving entity shall deem appropriate.
FOURTH: The manner of converting the outstanding shares of the capital stock of
the constituent corporation is as follows:
Each share of capital stock of the Main Place Holdings Corporation
issued and outstanding at the effective time of the Merger shall be
canceled and no consideration shall be issued or paid with respect
thereto.
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FIFTH: This Agreement of Merger may be terminated and abandoned by action of the
Member of Main Place Holdings, LLC at any time prior to the effective date of
the Agreement of Merger. To the extent permitted by applicable law, this
Agreement of Merger may be amended by action of the Board of Directors of the
merging corporation and the Member of the limited liability company at any time
prior to the effective date of the certificate of merger issued by the State
Corporation Commission of Delaware.
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<PAGE>
Dated as of the 15th day of October, 1998
MAIN PLACE HOLDINGS CORPORATION
By: /s/ John E. Mack
-----------------------------------------
John E. Mack
President
MAIN PLACE HOLDINGS, LLC
By: /s/ John E. Mack
-----------------------------------------
John E. Mack
President
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 22, 1998
(this "Agreement"), is between Main Place Real Estate Investment Trust, a
Maryland real estate investment trust (the "Trust"), and Main Place Funding,
LLC, a Delaware limited liability company (the "Company").
W I T N E S S E T H:
WHEREAS, the Company desires to acquire the properties and other
assets, and to assume all of the liabilities and obligations, of the Trust by
means of a merger of the Trust with and into the Company;
WHEREAS, Section 18-209 of the Delaware Limited Liability Company
Act, 6 Del. C. ss.ss. 18-101 et seq. (the "Delaware Act"), and Section 8-501.1
of the Corporations and Associations Article of the Annotated Code of the Public
General Laws of Maryland (the "Maryland Act"), authorize the merger of a
Maryland real estate investment trust with and into a Delaware limited liability
company;
WHEREAS, the Trust and the Company now desire to merge the Trust
with and into the Company (the "Merger"), following which the Company shall be
the surviving entity;
WHEREAS, the Board of Trustees of the Trust has approved this
Agreement and the Merger, and the sole shareholder of the Trust entitled to vote
on the Merger has approved of the Merger; and
WHEREAS, the member of the Company holding 99% of the Company's
membership interests has approved this Agreement and the Merger.
NOW THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER.
(a) After satisfaction or, to the extent permitted hereunder,
waiver of all conditions to the Merger, as the Trust and the Company shall
determine, the Company, which shall be the surviving entity, shall file a
certificate of merger (the "Certificate of Merger")
<PAGE>
with the Secretary of State of the State of Delaware and make all other filings
or recordings required by the Delaware Act and the Maryland Act in connection
with the Merger. The Merger shall become effective in accordance with applicable
law (the "Effective Time").
(b) At the Effective Time, the Trust shall be merged with and
into the Company, whereupon the separate existence of the Trust shall cease, and
the Company shall be the surviving entity of the Merger (the "Survivor") in
accordance with Section 18-209 of the Delaware Act and Section 8-501.1 of the
Maryland Act.
SECTION 1.02 CANCELLATION OF STOCK; CONVERSION OF INTERESTS. At
the Effective Time:
(a) Each issued and outstanding Class A Trust Share of the Trust
owned by the Company shall be canceled and cease to exist;
(b) Each issued and outstanding Class B Trust Share of the Trust
will be converted into the right to receive $10,800 in cash; and
(c) Each limited liability company interest in the Company
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the Company or the holder thereof,
remain unchanged and continue to remain outstanding as a limited liability
company interest in the Survivor.
ARTICLE II
THE SURVIVING LIMITED LIABILITY COMPANY
SECTION 2.01. CERTIFICATE OF FORMATION AND LIMITED LIABILITY
COMPANY AGREEMENT. The certificate of formation and limited liability company
agreement of the Company in effect immediately prior to the Effective Time shall
be the certificate of formation and limited liability company agreement of the
Survivor unless and until amended in accordance with their terms and applicable
law. The name of the Survivor shall remain unchanged as Main Place Funding, LLC.
ARTICLE III
TRANSFER AND CONVEYANCE OF
ASSETS AND ASSUMPTION OF LIABILITIES
SECTION 3.01. TRANSFER, CONVEYANCE AND ASSUMPTION. At the
Effective Time the Company shall continue in existence as the Survivor, and
shall, without further transfer or other action, succeed to and possess all of
the rights, privileges and powers of the Trust, and all of the assets and
property of whatever kind and character of the Trust shall vest in the Survivor
without further act or deed; thereafter, the Survivor shall be liable for all of
the liabilities and obligations of the Trust, and any claim or judgment against
the Trust may be
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<PAGE>
enforced against the Survivor in accordance with Section 18-209 of the Delaware
Act and Section 8-501.1 of the Maryland Act.
ARTICLE IV
CONDITIONS TO THE MERGER
SECTION 4.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of the Company and the Trust to consummate the Merger are subject to
the satisfaction of the following conditions as of the Effective Time:
(i) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of
the Merger; and
(ii) all actions by or in respect of or filings with any
governmental body, agency, official or authority required to permit the
consummation of the Merger shall have been obtained; and
(iii) this Agreement shall have been adopted by the appropriate
action of, or on behalf of, each of the parties in accordance with
applicable law.
ARTICLE V
TERMINATION
SECTION 5.01. TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by the
aforementioned member of the Company or the Board of Trustees of the Trust.
SECTION 5.02 EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to Section 5.01, then this Agreement shall become void and
of no effect with no liability on the part of any party hereto.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may, subject to applicable
law, be amended or waived prior to the Effective Time if, and only if, such
amendment or waiver is in writing and signed by the Company and by the Trust.
(b) No failure or delay by any party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power
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<PAGE>
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
SECTION 6.02. INTEGRATION. All prior or contemporaneous
agreements, contracts, promises, representations, and statements, if any, among
the Trust and the Company, or their representatives, are merged into this
Agreement, and this Agreement shall constitute the entire understanding between
the Trust and the Company with respect to the subject matter hereof.
SECTION 6.03. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns; provided, however, that
no party may assign, delegate or otherwise transfer any of its rights or
obligations under this Agreement without the consent of the other parties
hereto.
SECTION 6.04. GOVERNING LAW. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Delaware,
without regard to principles of conflict of laws.
SECTION 6.05 COUNTERPARTS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, but all of which,
taken together, shall constitute one and the same instrument, with the same
effect as if the signatures thereto were upon the same instrument.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS)
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized representatives as of the day
and year first above written.
MAIN PLACE REAL ESTATE INVESTMENT TRUST
By: /s/ John E. Mack
------------------------------------
Name:
Title:
MAIN PLACE FUNDING, LLC
By: NATIONSBANK, N.A.
Managing Member
By: /s/ James W. Kiser
------------------------------------
Name:
Title:
LIMITED LIABILITY COMPANY AGREEMENT
OF
MAIN PLACE HOLDINGS, LLC
The undersigned (the "Initial Member") does hereby enter into this Limited
Liability Company Agreement of Main Place Holdings, LLC, a Delaware limited
liability company (the "Company"), effective this 15th day of October, 1998.
ARTICLE I
OFFICE
The principal place of business of the Company is 100 North Tryon Street,
Charlotte, North Carolina 28255. The Company may have such offices as the
members may designate or as the business of the Company may require. The
registered office of the Company is located at 1209 Orange Street, City of
Wilmington, County of New Castle, Delaware 19801.
ARTICLE II
PURPOSE
The purposes of the Company shall be to conduct any lawful business purpose or
activity with the exception of the business of granting policies of insurance,
or assuming insurance risks or banking as defined in Section 126 of Title 8 of
the Delaware Code Annotated. The Company shall have the power to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of such purposes, and for the
protection and benefit of its business.
ARTICLE III
DURATION OF THE COMPANY
The Company shall commence upon the filing of its Certificate of Formation with
the Secretary of State of Delaware and shall continue for a term of twenty (20)
years unless (a) extended by the Manager, (b) sooner dissolved by the Manager or
(c) dissolved by a statutory event of dissolution. The right to continue after
the stated term or after statutory event of dissolution is reserved and may be
exercised by the remaining members(s).
ARTICLE IV
MANAGEMENT
The management, control and operation of the Company shall be vested exclusively
in its Manager. The Initial Member is hereby designated as the Manager. The
Manager shall have the exclusive power on behalf and in the name of the Company,
including without limitation
<PAGE>
to appoint officers of the Company, to carry out any and all of the purposes of
the Company and to perform all of the acts and enter into and perform all of the
contracts and other undertakings that it may deem necessary or advisable or
incidental thereto. The initial officers of the Company are as follows:
John E. Mack President and Treasurer
Gary S. Williams Senior Vice President/Tax Officer
Johnny E. Graves Vice President/Assistant Treasurer
Mary-Ann Lucas Secretary
ARTICLE V
CAPITAL CONTRIBUTIONS
The Initial Member hereby agrees to make an initial contribution of capital to
the Company in the amount of one thousand dollars ($1,000). Additional capital
contributions may be received at such times and in such amounts as may be
determined and permitted by the Manager.
ARTICLE VI
ADMISSION OF NEW MEMBERS
Any other person who acquires an interest in the Company, whether directly from
the Company or by assignment, shall thereafter be admitted to membership by the
Manager. As a condition to membership, a new owner shall execute a document in
which such owner affirms and accepts all the terms, conditions and provisions of
this Operating Agreement and agrees to be bound to the same. A "person" shall
include any individual, corporation, partnership, association, trust,
institution or other entity or organization.
ARTICLE VII
DISTRIBUTIONS AND ALLOCATIONS
The members shall share in all post-formation profits and surplus of the Company
according to their respective interests as represented by the shares (or as
herein otherwise provided). The members agree for themselves and their
successors, assigns and heirs, that their participation is considered a
long-term investment, and that any return of capital prior to the termination
and winding up of the Company is in the dole discretion of the Manager. Prior to
dissolution, and at least annually, as income has been received by the Company,
the Manager shall determine funds available for distribution.
ARTICLE VIII
RESTRICTIONS
No member, without the written authorization of the Manager, shall (i) endorse
any note or act as an accommodation party, or otherwise become surety for any
person in any transaction involving the Company; (ii) on behalf of the Company
borrow or lend money, or make,
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<PAGE>
deliver or accept any commercial paper, or execute any mortgage, security
agreement, bond, or lease, or purchase or contract to purchase, or sell or
contract to sell any property for or of the Company, or do any act detrimental
to the best interests of the Company, or which would make it impossible to carry
on the ordinary purpose of the Company. Each member shall be reimbursed by the
Company for all expenses incurred on behalf of the Company.
ARTICLE IX
BANKING
All funds of the Company shall be deposited in its name in such bank account or
accounts as shall be designated by the Manager. All withdrawals therefrom are to
be made upon the authority of such person or persons as may be authorized by the
Manager from time to time.
ARTICLE X
BOOKS
The Company books shall be maintained at the offices of Main Place Holdings, LLC
and each member shall have access thereto. The fiscal year of the Company shall
be the calendar year, and the books shall be closed and balanced at the end of
each fiscal year. The Company will furnish annual financial statements to the
members, and prepare tax returns as required in a timely manner.
ARTICLE XI
EXECUTION OF INSTRUMENTS
All agreements, indentures, mortgages, deeds, conveyances, transfers, contracts,
checks, notes, drafts, loan documents, letters of credit, master agreements,
swap agreements, guarantees, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, proxies and other instruments or documents may
be signed, executed, acknowledged, verified, attested, delivered or accepted on
behalf of the Company by the President, any Senior Vice President, any Vice
President, or any individual who is appointed by the Manager to a position equal
to any of the aforementioned officer positions, or such other officers,
employees or agents as the members of any of such designated officers or
individuals may direct. The provisions of this Article are supplementary to any
other provision of this Agreement and shall not be construed to authorize
execution of instruments otherwise dictated by law.
ARTICLE XII
VOLUNTARY TERMINATION
The Company may be dissolved at any time by resolution passed by the Manager, in
which event the members shall proceed with reasonable promptness to liquidate
the Company. The assets of the Company shall be distributed in the following
order:
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<PAGE>
1. To pay or provide for the payment of all Company liabilities other
than members, and liquidating expenses and obligations;
2. To pay debts owing to members other than for capital and profits;
3. To pay the remaining funds to the members in proportion to their
share ownership.
ARTICLE XIII
CONTINUATION
Upon the occurrence of a statutory event of termination, the remaining owners of
the Company have the right to continue the Company by a majority in interest
voted unless a higher vote is required by the state statute or by the IRS
classification regulations allowing avoidance of the corporate characteristic of
continuity of interest.
ARTICLE XIV
AMENDMENT
This Agreement is a written contract of the members of the Company. Amendments
must be written and executed by all members.
ARTICLE XV
VIOLATION OF THIS AGREEMENT
Any member who shall violate any of the terms, conditions, and provisions of
this agreement shall keep and save harmless the Company property and shall also
indemnify the other then members from any and all claims, demands and actions of
every kind and nature whatsoever which may arise out of or by reason of such
violation of any of the terms and conditions of this agreement.
IN WITNESS WHEREOF, the undersigned has hereunto set its hand effective as of
the day first above written.
NATIONSBANK, N.A.
Member
By: /s/ John E. Mack
--------------------
John E. Mack
Senior Vice President
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<PAGE>
AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT
OF
MAIN PLACE FUNDING, LLC
A Delaware Limited Liability Company
(formerly Main Place Holdings, LLC)
Dated as December 14, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I....................................................................................6
DEFINITIONS...............................................................................6
Section 1.1 DEFINITIONS................................................................6
ARTICLE II...................................................................................8
ORGANIZATION..............................................................................8
Section 2.1 FORMATION..................................................................8
Section 2.2 CERTIFICATE OF FORMATION; FOREIGN QUALIFICATION............................8
Section 2.3 NO STATE LAW PARTNERSHIP; LIABILITY TO THIRD PARTIES.......................9
ARTICLE III..................................................................................9
PURPOSES AND POWERS, PRINCIPAL OFFICE, REGISTERED.........................................9
Section 3.1 PURPOSES AND POWERS........................................................9
Section 3.2 PRINCIPAL OFFICE..........................................................10
Section 3.3 REGISTERED AGENT AND OFFICE...............................................10
Section 3.4 PERIOD OF DURATION........................................................10
ARTICLE IV..................................................................................10
MEMBERSHIP AND DISPOSITIONS OF INTERESTS.................................................10
Section 4.1 MEMBERS...................................................................10
Section 4.2 ELIMINATION OF PREEMPTIVE RIGHTS..........................................10
Section 4.3 RESIGNATION...............................................................10
Section 4.4 RESTRICTION ON THE DISPOSITION OF THEMEMBERSHIP INTEREST..................10
Section 4.5 BANKRUPT MEMBER; CONTINUATION............................................11
Section 4.6 TWO MEMBERS REQUIRED......................................................12
Section 4.7 OTHER ACTIVITIES OF THE MEMBERS AND THEIR AFFILIATES......................12
ARTICLE V...................................................................................12
CAPITAL CONTRIBUTIONS....................................................................12
Section 5.1 INITIAL CAPITAL...........................................................12
Section 5.2 ADDITIONAL CAPITAL........................................................12
Section 5.3 RETURN OF CONTRIBUTIONS...................................................12
ARTICLE VI..................................................................................13
PROFITS, LOSSES, ACCOUNTING, TAXES AND DISTRIBUTION......................................13
Section 6.1 ALLOCATION OF PROFITS AND LOSSES..........................................13
Section 6.2 BOOKS; FISCAL YEAR; ACCOUNTING TERMS......................................13
Section 6.3 CAPITAL ACCOUNTS..........................................................13
Section 6.4 DISTRIBUTIONS.............................................................13
Section 6.5 TAX RETURNS...............................................................13
Section 6.6 TAX MATTERS PARTNER.......................................................13
Section 6.7 WITHDRAWALS...............................................................14
</TABLE>
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<TABLE>
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Section 6.8 BANKING..................................................................14
Section 6.9. TAX CLASSIFICATION.......................................................14
ARTICLE VII.................................................................................14
MANAGEMENT, LIABILITY OF MEMBERS,........................................................14
Section 7.1 MANAGING MEMBER...........................................................14
Section 7.2 POWERS OF THE MANAGING MEMBER.............................................14
Section 7.3 ACTIONS REQUIRING CONSENT.................................................15
Section 7.4 OFFICERS..................................................................17
Section 7.5 INDEMNIFICATION...........................................................18
Section 7.6 EXCULPATION; DUTIES.......................................................18
Section 7.7 VIOLATION OF THIS AGREEMENT...............................................19
Section 7.8 EXECUTION OF INSTRUMENTS..................................................19
Section 7.9 SCHEDULED DUTIES AND COMPENSATION.........................................19
ARTICLE VIII................................................................................20
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY..................................20
Section 8.1 DISSOLUTION...............................................................20
Section 8.2 LIQUIDATION AND TERMINATION...............................................20
Section 8.3 PAYMENT OF DEBTS.........................................................20
Section 8.4 REMAINING DISTRIBUTION....................................................20
Section 8.5 RESERVE...................................................................20
Section 8.6 FINAL ACCOUNTING..........................................................21
ARTICLE IX..................................................................................21
AMENDMENTS...............................................................................21
Section 9.1 AUTHORITY TO AMEND........................................................21
ARTICLE X...................................................................................21
POWER OF ATTORNEY........................................................................21
Section 10.1 POWER....................................................................21
Section 10.2 SURVIVAL OF POWER........................................................22
ARTICLE XI..................................................................................22
SEPARATE LEGAL ENTITY....................................................................22
Section 11.1 SEPARATE LEGAL ENTITY....................................................22
ARTICLE XII.................................................................................23
MISCELLANEOUS............................................................................23
Section 12.1 METHOD OF GIVING CONSENT.................................................23
Section 12.2 GOVERNING LAW............................................................23
Section 12.3 AGREEMENT FOR FURTHER EXECUTION..........................................24
Section 12.4 ENTIRE AGREEMENT.........................................................24
Section 12.5 SEVERABILITY.............................................................24
Section 12.6 NOTICES..................................................................24
Section 12.7 COUNTERPARTS.............................................................24
</TABLE>
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<TABLE>
<S> <C>
Section 12.8 WAIVER OF PARTITION......................................................24
Section 12.9 PRONOUNS.................................................................24
Section 12.10 TITLES AND CAPTIONS.....................................................24
</TABLE>
4
<PAGE>
AMENDED AND RESTATED LIMITED
LIABILITY COMPANY AGREEMENT
OF
MAIN PLACE FUNDING, LLC
A Delaware Limited Liability Company
(formerly Main Place Holdings, LLC)
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this "Agreement") is executed as of the 14th day of December, 1998 by the
undersigned, the sole members, to continue a limited liability company under the
laws of the State of Delaware for the purposes and upon the terms and conditions
hereinafter set forth.
RECITALS
1. WHEREAS, NationsBank, N.A. ("NationsBank" or the "Managing Member")
has heretofore been the sole member of the Company pursuant to the original
Limited Liability Agreement of the Company (the "Original Agreement");
2. WHEREAS, Main Place Trust (the "Trust" or the "Special Managing
Member") has on the date hereof acquired a Membership Interest and been admitted
as a Member of the Company pursuant to an Assignment and Assumption Agreement
between NationsBank and the Trust;
3. WHEREAS, NationsBank and the Trust, as the sole members of the
Company, desire to amend and restate the Original Agreement in order to reflect
the admission of the Trust as a Member of the Company, to reflect the new name
of the Company as "Main Place Funding, LLC," and to make certain other changes
in connection with the merger of Main Place Real Estate Investment Trust with
and into the Company; and
4. WHEREAS, each of NationsBank and the Trust desire that this
Agreement be, and it hereby is, the sole governing document of the Company,
superseding all prior agreements.
5
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. Whenever used in this Agreement the
following terms shall have the meanings respectively assigned to them in this
Article I unless otherwise expressly provided herein or unless the context
otherwise requires:
ACT: "Act" shall mean the Delaware Limited Liability Company Act,
6 Del.C. ss.ss. 18-101 et seq., as amended from time to time.
AFFILIATE: "Affiliate" of another Person shall mean any Person
directly or indirectly controlling, controlled by, or under common control with,
such other person.
AGREEMENT: "Agreement" shall mean this Amended and Restated
Limited Liability Company Agreement of the Company as the same may be amended or
restated from time to time in accordance with its terms.
ASSIGNEE: "Assignee" shall mean a Person who has acquired a share
of the Company's profits and losses and such rights to receive distributions
from the Company as are assigned to that Person, but who is not a Substitute
Member.
BANKRUPT MEMBER: "Bankrupt Member" shall mean any Member (a) that
(i) makes an assignment for the benefit of creditors; (ii) files a voluntary
petition in bankruptcy; (iii) is adjudged a bankrupt or insolvent, or has
entered against such Member an order for relief, in any bankruptcy or insolvency
proceedings; (iv) files a petition or answer seeking for such Member any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation; (v) files an answer or
other pleading admitting or failing to contest the material allegations of a
petition filed against such Member in any proceeding of the type described in
subclauses (i) through (iv) of this clause (a); or (vi) seeks, consents to, or
acquiesces in the appointment of a trustee, receiver or liquidator of such
Member or of all or any substantial part of such Member's properties; or (b)
against which, a proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any statute, law
or regulation has been commenced and one hundred twenty (120) days have expired
without dismissal thereof or with respect to which, without such Member's
consent or acquiescence, a trustee, receiver or liquidator of such Member or of
all or any substantial part of such Member's properties has been appointed and
ninety (90) days have expired without the appointment having been vacated or
stayed, or ninety (90) days have expired after the date of expiration of a stay,
if the appointment has not previously been vacated. The foregoing is intended to
and shall supersede and replace the events of bankruptcy described in Sections
18-304(a) and (b) of the Act.
BONDS: "Bonds" shall have the meaning specified in Section
3.1(a)(vii).
6
<PAGE>
BOND DOCUMENTS: "Bond Documents" shall mean any outstanding
Bonds, the indentures pursuant to which such Bonds were issued and the related
agreements contemplated thereby.
CAPITAL ACCOUNT: "Capital Account" shall mean, as to the Member,
the account established and maintained for such Member pursuant to Article VI
hereof.
CAPITAL CONTRIBUTION: "Capital Contribution" shall mean the
amount in cash or property contributed by each Member (or its predecessors in
interest) to the capital of the Company for such Member's Membership Interest.
CODE: "Code" shall mean the Internal Revenue Code of 1986, as
amended.
COMPANY: "Company" shall mean Main Place Funding, LLC, the
Delaware limited liability company (formerly known as Main Place Holdings, LLC)
continued pursuant to the Act and this Agreement.
DISPOSE, DISPOSING or DISPOSITION: "Dispose," "Disposing" or
"Disposition" shall mean a sale, assignment, transfer, exchange, mortgage,
pledge, grant of a security interest, or other disposition or encumbrance
(including, without limitation, by operation of law), or any act thereof.
INDEPENDENT REPRESENTATIVE: "Independent Representative" shall
mean a trustee of the Trust who is not at the time of appointment and has not
been at any time during the preceding five (5) years: (i) a direct or indirect
legal or beneficial owner (beyond a nominal amount) in the Trust or any of its
affiliates; (ii) a creditor, supplier, employee, officer, director, family
member, manager, or contractor of the Trust or any of its affiliates; or a
person who controls (whether directly, indirectly, or otherwise) the Trust or
its affiliates or any creditor, supplier, employee, officer, director, manager,
or contractor of the Trust or its affiliates. As used herein, the following
terms shall have the following meanings: "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
management, policies or activities of a person or entity, whether through
ownership of voting securities, by contract or otherwise; "person" means a
natural person, corporation or other entity, government, or political
subdivision, agency, or instrumentality of a government; and an "affiliate" of a
person is a person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the person specified. Notwithstanding the foregoing, an Independent
Representative may serve in similar capacities for other "special purpose"
corporations formed by NationsBank or any affiliate thereof.
IRS: "IRS" shall mean the Internal Revenue Service.
MANAGING MEMBER: "Managing Member" shall mean NationsBank and any
successor Managing Member appointed pursuant to this Agreement, each in its
capacity as the managing member of the Company.
7
<PAGE>
MEMBER: "Member" shall mean each of NationsBank and the Trust,
and any Person hereafter admitted to the Company as a member as provided in this
Agreement, each in its capacity as a member of the Company.
MEMBERSHIP INTEREST: "Membership Interest" shall mean the limited
liability company interest of each Member in the Company, including, without
limitation, rights in the capital of the Company, rights to receive
distributions (liquidating or otherwise) and allocations of profits and losses.
For purposes of this Agreement, NationsBank's Membership Interest is ninety-nine
percent (99%) and the Trust's Membership Interest is one percent (1%).
PERSON: "Person" shall have the meaning given that term in
Section 18-102(12) of the Act.
SUBSTITUTE MEMBER: "Substitute Member" shall mean any Person to
whom a Membership Interest in the Company has been transferred and who was not a
Member immediately prior to such transfer and who has been admitted to the
Company as a Member pursuant to and in accordance with the provisions of Article
IV of this Agreement.
ARTICLE II
ORGANIZATION
Section 2.1 FORMATION. Each of NationsBank and the Trust hereby
execute this Agreement for the purpose of setting forth the rights and
obligations of the Members.
Section 2.2 CERTIFICATE OF FORMATION; FOREIGN QUALIFICATION. The
Certificate of Formation of the Company was filed for record in the office of
the Secretary of State of the State of Delaware on October 15, 1998, in
accordance with the Act. A Certificate of Amendment to the Certificate of
Formation of the Company was filed for record in the office of the Secretary of
State of the State of Delaware on December 10, 1998, in accordance with the Act,
for the purpose of renaming the Company. Prior to the Company's conducting
business in any jurisdiction other than the State of Delaware, the Managing
Member of the Company shall cause the Company to comply, to the extent
procedures are available and those matters are reasonably within the control of
the Managing Member, with all requirements necessary to qualify the Company as a
foreign limited liability company in that jurisdiction. At the request of the
Managing Member of the Company, each Member shall execute, acknowledge, swear
to, and deliver all certificates and other instruments conforming with this
Agreement that are necessary or appropriate to qualify, continue and terminate
the qualifications of the Company as a foreign limited liability company in all
such jurisdictions in which the Company may conduct business. The Managing
Member is hereby designated as an authorized person, with the meaning of the
Act, to execute, deliver and file, to cause the execution, delivery and filing
of, all certificates (and any amendments and/or restatements thereof) required
or permitted by the Act to be filed in the office of the Secretary of State of
the State of Delaware.
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Section 2.3 NO STATE LAW PARTNERSHIP; LIABILITY TO THIRD PARTIES.
The Members intend that the Company not be a partnership (including, without
limitation, a limited partnership) or joint venture, and that no Member be a
partner or joint venturer of any other Member, for state law purposes, and that
this Agreement not be construed to suggest otherwise. This provision does not
reflect the federal or state tax classification of the Company. Except as
otherwise specifically provided in the Act, no Member shall be liable for the
debts, obligations or liabilities of the Company or any other Member, including
under a judgment, decree or order of a court.
ARTICLE III
PURPOSES AND POWERS, PRINCIPAL OFFICE, REGISTERED
AGENT, PERIOD OF DURATION AND MEMBER LIST
Section 3.1 PURPOSES AND POWERS. The Company has been formed for
the following purposes: (a) to purchase or otherwise acquire, own, hold, sell,
transfer, assign, pledge, finance, refinance and otherwise deal with (i)
mortgage loans, certificates or other securities guaranteed by the Government
National Mortgage Association, (ii) mortgage loans, certificates or other
securities issued or guaranteed by the Federal National Mortgage Association,
(iii) mortgage loans, certificates or other securities issued or guaranteed by
the Federal Home Loan Mortgage Corporation, (iv) deeds of trust, mortgage loans,
mortgage pass-through certificates or collateralized mortgage obligations issued
by any person or entity or other types of mortgage-related securities including
residual interest, (v) direct obligations of, and obligations fully guaranteed
by, the United States of America or any agency or instrumentality of the United
States the obligations of which are backed by the full faith and credit of the
United States of America, (vi) certificates representing interests in the
principal and/or interest payable on any of the foregoing and (vii) such other
securities and investments as may be permitted by or acceptable to the
applicable nationally-recognized statistical rating agency or agencies in
connection with issuance, offer and sale by the Company of one or more series of
Mortgage-Backed Bonds (the "Bonds") collateralized by any of the foregoing,
related property and/or collections and proceeds in respect thereof; (b) to
issue debt subordinated to the Bonds in connection with the acquisition of
collateral for the Bonds; provided, however, that the acts and activities and
exercise of any powers permitted in subsections (a) and (b) of this Section 3.1
require the prior written affirmation of the nationally-recognized statistical
rating agency or agencies which rate any outstanding series of Bonds that any
such activities will not result in a downgrade, qualification or withdrawal of
rating or ratings assigned to such Bonds; and (c) to engage in any activity and
to exercise any powers permitted to limited liability companies under the laws
of the State of Delaware that are incident to foregoing and necessary or
convenient to accomplish the foregoing. The Company shall not engage in any
activities other than as permitted by this Section 3.1.
Notwithstanding any other provision of this Agreement to the
contrary, the Company and the Managing Member, on behalf of the Company, shall
have the power to
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merge the Company with and into Main Place Real Estate Investment Trust with the
Company as the surviving entity.
Section 3.2 PRINCIPAL OFFICE. The initial principal office of the
Company is located at 100 North Tryon Street, Charlotte, North Carolina 28255.
The principal office of the Company may be relocated from time to time by
determination of the Managing Member.
Section 3.3 REGISTERED AGENT AND OFFICE. The registered agent for
service of process on the Company in the State of Delaware shall be the
Corporation Trust Company, and the address of such agent and the registered
office of the Company, 1209 Orange Street in the City of Wilmington, County of
New Castle, State of Delaware 19801.
Section 3.4 PERIOD OF DURATION. The term of the Company shall
continue in perpetuity, unless the Company is earlier dissolved pursuant to law
or the provisions of this Agreement.
ARTICLE IV
MEMBERSHIP AND DISPOSITIONS OF INTERESTS
Section 4.1 MEMBERS. NationsBank and the Trust are the sole
members of the Company as of the date hereof. NationsBank was admitted to the
Company effective as of the formation of the Company, and the Trust has been
admitted to the Company effective as of the date hereof pursuant to an
Assignment and Assumption Agreement between NationsBank and the Trust.
Section 4.2 ELIMINATION OF PREEMPTIVE RIGHTS. No Member shall be
entitled as such, as a matter of right, to subscribe for or purchase interests
in the Company of any class, now or hereafter authorized.
Section 4.3 RESIGNATION. Except as otherwise provided in this
Agreement, a Member does not have the right or power to resign from the Company
as a Member.
Section 4.4 RESTRICTION ON THE DISPOSITION OF THE MEMBERSHIP
INTEREST. (a) Subject to compliance with all applicable provisions of this
Section 4.4, any Member may Dispose of all or any part of its Membership
Interest. The Person to whom such Disposition is made shall be an Assignee of
such interest but shall not be a Substitute Member unless admitted as a
Substitute Member in accordance with Section 4.4(b).
(b) The Person to whom a Disposition is made as described in
Section 4.4(a) shall have the right to become a Substitute Member only if (i)
the Member making such Disposition grants the transferee the right to be a
Substitute Member (which grant (subject to the following clause (ii)) is hereby
permitted) and (ii) such admission as a Substitute Member is consented to by all
of the Members.
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(c) The Company shall not recognize for any purpose any purported
Disposition of all or part of the Member's Membership Interest or any right or
interest appertaining thereto unless and until the Company has received a
document (i) executed by both the Member effecting the Disposition and the
Person acquiring such Membership Interest or part thereof, (ii) including the
notice address of any Person to be admitted to the Company as a Substitute
Member and such Person's agreement to be bound by this Agreement in respect of
the Membership Interest or part thereof being obtained, (iii) setting forth the
Membership Interest of the parties to the Disposition after the Disposition, and
(iv) containing a warranty and representation that the Disposition was made in
accordance with this Agreement and all applicable laws and regulations. Each
Disposition and, if applicable, admission complying with the provisions of this
Section 4.4 is effective as of the date of the document described in this
Section 4.4(c), but only if the other requirements of this Section 4.4 have been
met.
(d) Notwithstanding any other provision of this Agreement, the
Disposition of the Membership Interest, or any right, title or interest therein
or thereto, will not be permitted if the Membership Interest sought to be
Disposed of, when added to the total of all other Membership Interests Disposed
of within the period of twelve (12) consecutive months ending with the proposed
date of the Disposition, results in a termination of the Company under Section
708 of the Code.
(e) Notwithstanding any other provision of this Agreement, no
Disposition shall be effected while any Bonds are outstanding without the prior
written affirmation of the nationally-recognized statistical rating agency or
agencies rating such Bonds that such Disposition will not result in a downgrade,
qualification or withdrawal of the ratings then assigned to such Bonds, if as a
result of such Disposition an entity that beneficially or constructively owned
less than 49% of the Membership Interests in the Company would as a result of
the contemplated Disposition beneficially or constructively own greater than 49%
of the Membership Interests in the Company.
Section 4.5 BANKRUPT MEMBER; CONTINUATION. Notwithstanding any
other provision of this Agreement, a Member shall not cease to be a Member as a
result of such Member becoming a Bankrupt Member and, upon the occurrence of
such event, the Company shall continue without dissolution. Notwithstanding any
other provision of this Agreement, a Member waives any right that it might have
under Section 18-801(b) of the Act to agree in writing to dissolve the Company
upon such Member becoming a Bankrupt Member or the occurrence of any event that
causes such Member to cease to be a Member of the Company. Upon the occurrence
of any other statutory event of termination, the remaining owners of the Company
have the right to continue the Company by a majority in interest voted unless a
higher vote is required by the state statute or by the IRS classification
regulations allowing avoidance of the corporate characteristic of continuity of
interest.
Section 4.6 TWO MEMBERS REQUIRED. For so long as any Bonds are
outstanding, the Company shall have not less than two Members, one of which
shall be either the Trust or another special purpose entity as to which the vote
of an Independent Representative is required for such entity to take certain
actions as a Member hereunder.
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Section 4.7 OTHER ACTIVITIES OF THE MEMBERS AND THEIR AFFILIATES.
Except as expressly provided in this Agreement, the Members and their Affiliates
may engage in other business ventures of every nature, independently or with
others, whether or not competitive with the business of the Company, and neither
the Company nor any of the other Members shall have any right in such
independent ventures or to the income and profits derived therefrom.
ARTICLE V
CAPITAL CONTRIBUTIONS
Section 5.1 INITIAL CAPITAL. Each of the Managing Member and the
Special Managing Member has contributed cash totaling $990 and $10,
respectively. Each Member may contribute in the future any additional capital
deemed necessary by the Managing Member, in its sole discretion, for the
operation of the Company.
Section 5.2 ADDITIONAL CAPITAL. Except as specifically set forth
elsewhere in this Agreement, no Member shall be required to contribute capital
to the Company in excess of such Member's initial Capital Contribution, and the
Membership Interests of the Members shall remain fixed at the percentages
indicated in the definition of "Membership Interest". The value of any property
contributed to the Company shall be determined by any reasonable method as the
Managing Member, in its discretion, shall decide.
Section 5.3 RETURN OF CONTRIBUTIONS. A Member is not entitled to
demand the return of any part of its Capital Contribution or to payment of
interest in respect of either its Capital Account or its Capital Contribution.
Except as otherwise expressly set forth in this Agreement, neither the Company
nor any Member has any obligation to return the Capital Contribution of a
Member.
ARTICLE VI
PROFITS, LOSSES, ACCOUNTING, TAXES AND DISTRIBUTION
Section 6.1 ALLOCATION OF PROFITS AND LOSSES. Except as otherwise
provided herein, net profits from the operation of the business of the Company
(including gain from the sale, exchange or other disposition of all or any
significant portion of the assets of the Company) and net losses incurred by the
Company shall be allocated among and borne by the Members in accordance with
their Membership Interests.
Section 6.2 BOOKS; FISCAL YEAR; ACCOUNTING TERMS. The Company
books shall be maintained at the offices of Main Place Funding, LLC, and each
member shall have access thereto. The fiscal year of the Company shall be the
calendar year, and the books shall be closed and balanced at the end of each
fiscal year. The Company will furnish annual financial statements to the members
upon request, and prepare tax returns as required in a timely manner.
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Section 6.3 CAPITAL ACCOUNTS. The Company shall maintain a
capital account for each of the Members in such manner as the Managing Member
shall determine in its sole discretion.
Section 6.4 DISTRIBUTIONS. The Members shall share in all
post-formation profits and surplus of the Company according to their Membership
Interest. The Members agree for themselves and their successors, assigns and
heirs, that their participation is considered a long-term investment, and that
any return of capital prior to the termination and winding up of the Company is
in the sole discretion of the Managing Member, subject to Section 18-607 of the
Act.
Section 6.5 TAX RETURNS. The Managing Member shall cause to be
prepared and filed all necessary federal, state and local income tax returns and
all other tax returns required of the Company.
Section 6.6 TAX MATTERS PARTNER. To the extent that such a "tax
matters partner" is required for the Company, the Managing Member shall be the
"tax matters partner" of the Company pursuant to Section 6231(a)(7) of the Code.
The "tax matters partner" shall inform each Member of all significant matters
that may come to its attention in its capacity as "tax matters partner" by
giving notice thereof on or before the tenth business day after becoming aware
thereof and, within that time, shall forward to each Member copies of all
significant written communications it may receive in that capacity. The "tax
matters partner" may not take any action contemplated by Sections 6222 through
6232 of the Code without the consent of every Member affected by such action.
Section 6.7 WITHDRAWALS. No Member shall be entitled to make
withdrawals from its Capital Account.
Section 6.8 BANKING. All funds of the Company shall be deposited
in its name in such bank account or accounts as shall be designated by the
Managing Member. All withdrawals therefrom are to be made upon the authority of
such person or persons as may be authorized by the Managing Member from time to
time.
Section 6.9. TAX CLASSIFICATION. The Members intend that the
Company be disregarded as an entity separate from its owner for federal income
tax purposes.
ARTICLE VII
MANAGEMENT, LIABILITY OF MEMBERS,
RIGHTS TO OBTAIN INFORMATION
Section 7.1 MANAGING MEMBER. Except as otherwise specifically
provided in this Agreement, the Managing Member shall have the authority to, and
shall, conduct the affairs of the Company.
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Section 7.2 POWERS OF THE MANAGING MEMBER.
(a) Without limiting the generality of the foregoing Section 7.1,
the Managing Member shall have the power and authority to:
(1) establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to allocations and distributions;
(2) bring and defend on behalf of the Company actions and
proceedings at law or in equity before any court or governmental, administrative
or other regulatory agency, body or commission or arbiter or otherwise; and
(3) execute all documents or instruments, perform all duties and
powers and do all things for and on behalf of the Company in all matters
necessary, desirable, convenient or incidental to the purpose of the Company,
including, without limitation, all documents, agreements and instruments related
to the making of investments of Company funds, the borrowing of money by the
Company, the taking of actions in the name of or on behalf of the Company and
the execution of Member consents with respect thereto.
In managing the business and affairs of the Company, the Managing
Member may act as Managing Member or agent or attorney-in-fact, as the case may
require, and any action taken by the Managing Member in such capacity and in
accordance with this Agreement shall be binding upon the Company. The expression
of any power or authority of the Managing Member in this Agreement shall not in
any way limit or exclude any other power or authority of the Managing Member
which is not specifically or expressly set forth in this Agreement.
(a) No Management by Other Persons or Entities. Except for the
Special Managing Member to the extent provided in this Agreement, no person or
entity other than the Managing Member (including without limitation the other
Members) shall be an agent or attorney of the Company or have any right, power
or authority to transact any business in the name of the Company or to act for
or on behalf of or to bind the Company, except as (and only to the extent)
expressly delegated by the Managing Member.
(b) Reliance by Third Parties. Any person or entity dealing with
the Company, the Managing Member or the Special Managing Member may rely upon a
certificate signed by the Managing Member as to:
(1) the identity of the Managing Member, the Special Managing
Member or other Members (if any);
(2) the existence or non-existence of any fact or facts which
constitute a condition precedent to acts by the Managing Member, the Special
Managing Member or the Company or are in any other manner germane to the affairs
of the Company;
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(3) the persons who or entities which are authorized to execute
and deliver any instrument or document of or on behalf of the Company; or
(4) any act or failure to act by the Company or as to any other
matter whatsoever involving the Company, the Managing Member or the Special
Managing Member.
(c) Interests of Creditors. When making decisions on behalf of the
Company, the Managing Member shall consider the interests of creditors of the
Company as well as the interests of the Members, to the extent permitted by law.
Section 7.3 ACTIONS REQUIRING CONSENT.
(a) For so long as any Bonds are outstanding and until all of the
obligations of the Company under the indentures or the Bonds have been
indefeasibly and fully satisfied, notwithstanding any other provision of law
that otherwise so empowers the Company, the Company shall not, without the
unanimous consent of all of the Members (which consent on behalf of the Trust
shall have been approved and authorized by the Independent Representative);
(i) commence any case, proceeding or other action on behalf of
the Company under any existing or future law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of debtors;
(ii) institute proceedings, including filing a voluntary
petition, to have the Company adjudicated as bankrupt or insolvent;
(iii) consent to the institution of bankruptcy or insolvency
proceedings against the Company;
(iv) file a petition or consent to a petition seeking
reorganization, arrangement, adjustment, winding-up, dissolution, composition,
liquidation or other relief on behalf of the Company of its debts on behalf of
its debts under any federal or state law relating to bankruptcy;
(v) seek or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator, custodian or any similar official for the
Company or a substantial portion of its properties or a substantial portion of
its properties;
(vi) make any assignment for the benefit of the Company's
creditors; or
(vii) take any action or cause any other Person to take any
action in furtherance of any of the foregoing.
(b) For so long as any Bonds are outstanding and until all of the
obligations of the Company under the indentures or the Bonds have been
indefeasibly and fully satisfied, without the prior written affirmation of each
nationally-recognized statistical rating agency or
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agencies rating such Bonds that the taking, by the Company, of the desired
action or actions provided below in subparagraphs (i) through (v) of this
paragraph (b) will not result in a downgrade, qualification or withdrawal of
rating or ratings assigned to such Bonds, the Company shall not:
(i) to the fullest extent permitted by law, dissolve or
liquidate, in whole or in part;
(ii) merge or consolidate with any other entity other than with
an entity wholly owned, directly or indirectly, by an entity owning 100% of the
membership interests of the Company and having a certificate of incorporation or
other organizational document containing provisions substantially identical to
the provisions of Sections 3.1, 3.3, 4.4(e), 4.5, 4.6, 8.1, Article IX, Article
XI and this Section 7.3;
(iii) sell all or substantially all of its assets;
(iv) amend this Agreement to alter in any manner or delete
Sections 3.1, 3.3, 4.4(e), 4.5, 4.6, 8.1, Article IX, Article XI or this Section
7.3; or
(v) engage in any business activity other than that provided for
in Section 3.1.
(c) To the fullest extent permitted by applicable law, no Member shall
be guilty of breaching any fiduciary duty to any other Member by refusing to
consent to any of the above listed actions.
Section 7.4 OFFICERS.
(a) The Company shall have an officer designated as the Company's
President who shall be appointed from time to time by the Managing Member. The
President shall be the chief operating officer of the Company. The President of
the Company is hereby delegated the power, authority and responsibility of the
day-to-day management, administrative, financial and implementive acts of the
Company's business. The President of the Company shall have the right and power
to bind the Company and to make the final determination on questions relative to
the usual and customary daily business decisions, affairs and acts of the
Company. Other primary management functions of the Company shall be assigned by
the Managing Member.
(b) The Company shall also have officers designated as vice presidents
who shall be appointed from time to time by the Managing Member. The vice
presidents shall have such powers and duties as may from time to time be
assigned to them by the Managing Member or the president. At the request of the
president, or in the case of his absence or disability, the vice president
designated by the president (or in the absence of such designation, the vice
president designated by the Managing Member) shall perform all the duties of the
president and when so acting, shall have all the powers of the president.
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(c) The Managing Member may appoint such other officers as it may deem
advisable from time to time. Each officer of the Company shall hold office at
the pleasure of the Managing Member, and the Managing Member may remove any
officer at any time, with or without cause. If appointed by the Managing Member,
the officers shall have the duties assigned to them by the Managing Member.
(d) The present officers of the Company are as follows:
<TABLE>
<S> <C>
John E. Mack President/Principle Executive Officer
Neil A. Cotty Treasurer and Senior Vice President/Principle Financial and
Accounting Officer
Gary S. Williams Senior Vice President/Tax Officer
Charles S. Brummitt Executive Vice President
Daniel F. Hellams Executive Vice President
Elise D. Boucher Vice President
Janet G. Locke Vice President/Tax Officer
Mary-Ann Lucas Secretary
</TABLE>
Section 7.5 INDEMNIFICATION.
(a) The Members shall not have any liability for the obligations
or liabilities of the Company, except to the extent, if any, expressly provided
in the Act. The Company shall, to the fullest extent permitted by applicable
law, indemnify and hold harmless each Member (an "Indemnified Person") against
any obligations or liabilities of the Company which may be imposed upon (or
which any person may seek to impose upon) such Member (including the costs of
defending against such a claim) in contravention of this Section 7.5.
(b) The Company shall, to the fullest extent permitted by
applicable law, indemnify and hold harmless each Indemnified Person against any
losses, claims, damages or liabilities (including without limitation reasonable
attorney's fees) to which such Indemnified Person may become subject in
connection with any matter arising from, related to, or in connection with, this
Agreement or the Company's business or affairs, except for such losses, claims,
damages or liabilities as are determined by final judgment of a court of
competent jurisdiction to have resulted from such Indemnified Person's gross
negligence or willful misconduct.
(c) Notwithstanding anything else contained in this Agreement,
the indemnity obligations of the Company under paragraph (b) above shall:
(i) be in addition to any liability that the Company may
otherwise have;
(ii) extend upon the same terms and conditions to the
directors, committee members, officers, stockholders, partners, members,
control persons, employees, agents and representatives of each
Indemnified Person;
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(iii) be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of each
Indemnified Person and any such persons;
(iv) be limited to the assets of the Company; and
(v) be subordinate to the Company's obligations in respect
of Bonds as set forth in Section 11.1(b)(xii) of this Agreement.
Section 7.6 EXCULPATION; DUTIES.
(a) No Member or officer of the Company shall be liable to the
Company or any other Person who has an interest in the Company for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Member or officer in good faith on behalf of the Company and in a manner
reasonably believed to be within the scope of the authority conferred on such
Member or officer by this Agreement, except that a Member or officer shall be
liable for any such loss, damage or claim incurred by reason of such Member's or
officer's willful misconduct or gross negligence.
(b) To the extent that at law or in equity, the Managing Member
or an officer, employee or agent of the Company has duties (including fiduciary
duties) and liabilities relating thereto to the Company or to any Member, any
such Member, officer, employee or agent acting under this Agreement shall not be
liable to the Company or to any Member for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the extent
that they restrict the duties and liabilities of an Indemnified Person otherwise
existing at law or in equity, are agreed by the Members to replace such other
duties and liabilities of such Member, officer, employee or agent.
(c) Whenever in this Agreement the Managing Member is permitted
or required to make a decision (i) in its "sole discretion", or "discretion" or
under a grant of similar authority or latitude, the Managing Member shall be
entitled to consider only such interest and factors as it desires, including its
own interests, and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Company or any other Member, or (ii) in
its "good faith" or under another expressed standard, the Managing Member shall
act under such express standard and shall not be subject to any other or
different standards imposed by this Agreement or any other agreement
contemplated herein or by relevant provisions of law or in equity or otherwise.
Section 7.7 VIOLATION OF THIS AGREEMENT. Any member who shall
violate any of the terms, conditions, and provisions of this agreement shall
keep and save harmless the Company property and shall also indemnify the other
then members from any and all claims, demands and actions of every kind and
nature whatsoever which may arise out of or by reason of such violation of any
of the terms and conditions of this agreement.
Section 7.8 EXECUTION OF INSTRUMENTS. All agreements, indentures,
mortgages, deeds, conveyances transfers, contracts, checks, notes, drafts, loan
documents,
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letters of credit, master agreements, swap agreements, guarantees, certificates,
declarations, receipts, discharges, releases, satisfactions, settlements,
petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and
other instruments or documents may be signed, executed, acknowledged, verified,
attested, delivered or accepted on behalf of the Company by the President, any
Senior Vice President, any Vice President, or any individual who is appointed by
the Managing Member to a position equal to any of the aforementioned officer
positions, or such other officers, employees or agents as the members or any of
such designated officers or individuals may direct. The provisions of this
Article are supplementary to any other provision of this Agreement and shall not
be construed to authorize execution of instruments otherwise dictated by law.
Section 7.9 SCHEDULED DUTIES AND COMPENSATION. Without limiting
the generality of Section 7.2, the Managing Member shall perform the duties
listed in Exhibit A hereto, and shall be entitled to receive the compensation
and reimbursement for certain expenses with respect to the performance of such
duties as set forth on Exhibit A. The Managing Member may also employ
subcontractors with respect to such duties in accordance with Exhibit A.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY
Section 8.1 DISSOLUTION. The Company shall be dissolved and its
affairs wound up only upon (i) the written consent of all the Members (including
the Independent Representative) and (ii) the entry of a decree of judicial
dissolution under Section 18-802 of the Act. The Company shall not be dissolved
as a result of there no longer being any Members of the Company if the Company
is continued in accordance with Section 18-801(a)(4) of the Act. Notwithstanding
anything in this Agreement to the contrary, to the fullest extent permitted by
applicable law, the Company shall not be dissolved as long as any Bonds are
outstanding.
Section 8.2 LIQUIDATION AND TERMINATION. On dissolution of the
Company, the Managing Member shall appoint one or more Persons, which appointee
or appointees may include itself, to act as a liquidator. The liquidator shall
proceed diligently to wind up the affairs of the Company and make final
distributions as provided herein and in the Act. The costs of liquidation shall
be borne as a Company expense. Until final distribution, the liquidator shall
continue to operate the Company properties with all of the power and authority
of the Managing Member. A reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the discharge of liabilities to
creditors so as to enable the liquidator to minimize any losses resulting from
liquidation.
Section 8.3 PAYMENT OF DEBTS. The assets shall first be applied
to the satisfaction of all liabilities of the Company other than to its Members
and the expenses of liquidation and to second to any loans or advances that may
have been made by Members to the Company.
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Section 8.4 REMAINING DISTRIBUTION. The remaining assets shall
then be distributed to the Members according to their Membership Interests.
Section 8.5 RESERVE. Notwithstanding anything to the contrary in
Section 8.4, the liquidator may retain such amount as it deems necessary as a
reserve for any contingent, conditional or unmatured liabilities or obligations
of the Company, which reserve, after the passage of a reasonable period of time
as determined by the liquidator, shall be distributed in accordance with this
Article VIII.
Section 8.6 FINAL ACCOUNTING. Each of the Members shall be
furnished with a statement that sets forth the assets and liabilities of the
Company as of the date of the complete liquidation. Upon compliance by the
liquidator with the foregoing distribution plan, the liquidator shall execute
and cause to be filed a Certificate of Cancellation and any and all other
documents necessary with respect to termination and cancellation of the Company
under the Act. The existence of the Company as a separate legal entity shall
continue until the cancellation of its Certificate of Formation.
ARTICLE IX
AMENDMENTS
Section 9.1 AUTHORITY TO AMEND. This Agreement may only be
amended with approval of all the Members. Notwithstanding anything in this
Agreement to the contrary, the following provisions of this Agreement may not be
amended as long as any Bonds are outstanding without the prior written
affirmation of each nationally-recognized statistical rating agency or agencies
rating such Bonds that such amendment or amendments will not result in a
downgrade, qualification or withdrawal of the rating or ratings assigned to such
Bonds: Sections 3.1, 4.4(e), 4.5, 4.6, 7.1, 7.2, 7.3 and 8.1 and this Article IX
and Article XI.
ARTICLE X
POWER OF ATTORNEY
Section 10.1 POWER. Each member irrevocably constitutes and
appoints the Managing Member as his true and lawful attorney in his name, place
and stead to make, execute, swear to, acknowledge, deliver and file:
(a) Any certificates or other instruments which may be required
to be filed by the Company under the laws of the State of Delaware or of any
other state or jurisdiction in which the Managing Member shall deem it
advisable;
(b) Any documents, certificates or other instruments, including
but not limited to, any and all amendments and modifications of this Agreement
or of the instruments described in Subsection 10.1(a) which may be required or
deemed desirable by the Managing Member to effectuate the provisions of any part
of this Agreement, and, by way of extension
20
<PAGE>
and not in limitation, to do all such other things as shall be necessary to
continue and to carry on the business of the Company; and (c) All documents,
certificates or other instruments which may be required to effectuate the
dissolution and termination of the Company, to the extent such dissolution and
termination is authorized hereby. The power of attorney granted hereby shall not
constitute a waiver of, or be used to avoid, the rights of the Members to
approve certain amendments to this Agreement pursuant to Subsection 9.1 or be
used in any other manner inconsistent with the statutes of the Company as a
limited liability company or inconsistent with the provisions of this Agreement.
Section 10.2 SURVIVAL OF POWER. It is expressly intended by each
Member that the foregoing power of attorney is coupled with an interest, is
irrevocable and shall survive the death, retirement or adjudication of
incompetency of such Member. The foregoing power of attorney shall survive the
delivery of an assignment by the Member of its entire interest in the Company,
except that where an assignee of such entire interest has become a Substitute
Member, then the foregoing power of attorney of the assignor Member shall
survive the delivery of such assignment for the sole purpose of enabling the
Managing Member to execute, acknowledge and file any and all instruments
necessary to effectuate such substitution.
ARTICLE XI
SEPARATE LEGAL ENTITY
Section 11.1 SEPARATE LEGAL ENTITY.
(a) The Company shall respect and appropriately document the separate and
independent nature of its activities, as compared with those of any other
Person, take all reasonable steps to continue its identity as a separate legal
entity, and make it apparent to third Persons that the Company is an entity with
assets and liabilities distinct from those of any other Person. Without limiting
the foregoing, the Company shall:
(i) maintain books and records separate from any other
Person or entity;
(ii) maintain its accounts separate from those of any
other Person or entity;
(iii) conduct its own business in its own name;
(iv) maintain separate financial statements;
(v) pay its own liabilities out of its own funds;
(vi) observe all limited liability company formalities
and other formalities required by the organic documents;
21
<PAGE>
(vii) maintain an arm's-length relationship with its
Affiliates;
(viii) pay the salaries of its own employees and maintain
a sufficient number of employees in light of its contemplated business
operations;
(ix) allocate fairly and reasonably any overhead for
shared office space;
(x) use separate stationery, invoices, and checks;
(xi) hold itself out as a separate entity;
(xii) correct any known misunderstanding regarding its
separate identity; and
(xiii) maintain adequate capital in light of its
contemplated business operations.
Failure to comply with any of the foregoing covenants shall not
affect the status of the Company as a separate legal entity.
(b) The Company shall not:
(i) commingle assets with those of any other entity;
(ii) guarantee or become obligated for the debts of any
other entity or hold out its credit as being available to satisfy the
obligations of others;
(iii) acquire obligations or securities of its members
(other than in the ordinary course of its business); and
(iv) pledge its assets for the benefit of any other
entity or make any loans or advances to any entity (other than in the
ordinary course of its business).
Failure to comply with any of the foregoing covenants shall not
affect the status of the Company as a separate legal entity.
ARTICLE XII
MISCELLANEOUS
Section 12.1 METHOD OF GIVING CONSENT. Any consent of the Member
required by this Agreement may be given by a written consent, given by the
consenting Member and received by the Person soliciting such consent.
22
<PAGE>
Section 12.2 GOVERNING LAW. This Agreement and the rights and
duties of the Members shall be governed by and construed in accordance with the
laws of the State of Delaware, without regard to principles of conflict of laws.
Section 12.3 AGREEMENT FOR FURTHER EXECUTION. At any time or
times upon the request of the Managing Member, each Member agrees to sign and
swear to any certificate, any amendment to or cancellation of such certificate,
acknowledge similar certificates or affidavits or certificates of fictitious
firm name or the like (and any amendments or cancellations thereof) required by
the laws of the State of Delaware, or any other jurisdiction in which the
Company does, or proposes to do, business. This Section 12.3 shall not prejudice
or affect the rights of the Members to approve amendments to this Agreement
pursuant to Section 9.1.
Section 12.4 ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the parties and supersedes any prior understandings or
agreements between them respecting the within subject matter. There are no
representations, agreements, arrangements or understandings, oral or written,
between the parties hereto relating to the subject matter of this Agreement
which are not fully expressed.
Section 12.5 SEVERABILITY. This Agreement is intended to be
performed in accordance with, and only to the extent permitted by, all
applicable laws, ordinances, rules and regulations of the jurisdictions in which
the Company does business. If any provision of this Agreement or the application
thereof to any Person or circumstance shall, for any reason and to any extent,
be invalid or unenforceable, the remainder of this Agreement and the application
of such provision to other Persons or circumstances shall not be affected
thereby, but rather shall be enforced to the greatest extent permitted by law.
Section 12.6 NOTICES. Notices to Members or to the company shall
be deemed to have been given when personally delivered or mailed, by prepaid
registered or certified mail, addressed as set forth in this Agreement, unless a
notice of change of address has previously been given in writing by the
addressee to the addressor, in which case such notice shall be addressed to the
address set forth in such notice of change of address.
Section 12.7 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each one of which shall constitute an original executed
copy of this Agreement.
Section 12.8 WAIVER OF PARTITION. Each Member hereby waives any
right to partition of the Company property.
Section 12.9 PRONOUNS. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the person or persons may require.
Section 12.10 TITLES AND CAPTIONS. All titles and captions are
for convenience only, do not form a substantive part of this Agreement, and
shall not restrict or enlarge any substantive provisions of this Agreement.
23
<PAGE>
IN WITNESS WHEREOF, the parties have hereunto set their hands as
of the day and year first above written.
NATIONSBANK, N.A.
By:/s/ John E. Mack
----------------------------
Name: John E. Mack
Title: Senior Vice President
MAIN PLACE TRUST
By:/s/ John E. Mack
-----------------------------
Name: John E. Mack
Title: Trustee
24
<PAGE>
EXHIBIT A
Scheduled Duties and Compensation of
Managing Member
Without limiting the generality of Section 7.1, but subject to
Section 7.3, the Managing Member shall:
(a) administer the day-to-day operations and affairs of the
Company, including without limitation, the performance or supervision of
the functions described in this Exhibit A;
(b) monitor the credit quality of the mortgage loans and other
real estate mortgage assets held by the Company;
(c) manage the affairs of the Company with respect to the
acquisition, management, financing and disposition of the Company's
mortgage loans and other real estate mortgage assets;
(d) represent the Company in its day-to-day dealings with Persons
with whom the Company interacts, including without limitation,
securityholders of the Company, transfer agents, consultants,
accountants, attorneys, servicers of the Company's mortgage loans,
custodians, insurers and banks;
(e) establish and provide necessary services for the Company,
including executive, administrative, accounting, shareholder relations,
secretarial, recordkeeping, copying, telephone, mailing and distribution
facilities;
(f) provide the Company with office space, conference room
facilities, office equipment and personnel necessary for the services to
be performed by the Managing Member hereunder at a reasonable market
price;
(g) maintain communications and relations with the members of the
Company, including but not limited to, responding to inquiries, proxy
and consent solicitations, providing reports to securityholders and
arranging and coordinating all meetings of members;
(h) arrange for the investment and management of any short-term
investments of the Company;
(i) arrange for the services of third parties, including but not
limited to mortgage loan servicers who may be the Managing Member or
affiliates of the Managing Member, to collect and distribute funds of
the Company;
<PAGE>
(j) monitor and supervise the performance of all parties who have
contracts to perform services for the Company, provided that the
Managing Member shall have no duty to assume the obligations or
guarantee the performance of such parties under such contracts;
(k) establish and maintain such bank accounts in the name of the
Company as may be required by the Company and ensure that all funds
collected by the Managing Member in the name or on behalf of the Company
shall be held in trust and shall not be commingled with the Managing
Member's own funds or accounts;
(l) arrange for the execution and delivery of such documents and
instruments by the officers of the Company as may be required in order
to perform the functions herein described and to take any other required
action;
(m) arrange for insurance for the Company to be paid for by the
Company, including liability insurance, errors and omissions policies
and officers and directors policies which shall cover and insure the
Company, and the members (in such amounts as the Managing Member may
deem advisable) and officers of the Company;
(n) maintain proper books and records of the Company's affairs;
(o) consult and work with legal counsel for the Company to
implement Company decisions and undertake measures consistent with all
pertinent Federal, state and local laws and rules or regulations of
governmental or quasi-governmental agencies, including, but not limited
to, Federal and state securities laws, the Code, and the regulations
promulgated under each of the foregoing;
(p) consult with work with accountants for the Company in
connection with the preparation of financial statements, annual reports
and tax returns;
(q) arrange for an annual audit of the books and records of the
Company by an accounting firm;
(r) prepare and distribute in consultation with the accountants
for the Company, annual reports to members, the trustee under any
indenture of the Company to which the Company is a party or the
Securities and Exchange Commission, which will contain audited financial
statements,
(s) furnish reports to the members and provide research,
economical and statistical data in connection with the Company's
investments;
(t) as reasonably requested by the members, make reports to the
Company of its performance of the foregoing services and furnish advice
and recommendations with respect to other aspects of the business of the
Company; and
<PAGE>
(u) maintain appropriate books of account and records relating to
services performed hereunder, and such books of account and records
shall be accessible for inspection by any member at all times.
Compensation. The Company shall pay to the Managing Member, for
services rendered by the Managing Member hereunder, a management fee payable
annually in an amount equal to $500,000 per year, subject to adjustment upon 90
days' notice by the Managing Member to the Company of the proposed change and to
the Company's consent thereto.
Expenses. (a) Without regard to the compensation received
pursuant to Section 3, the Managing Member will bear the following expenses:
(i) employment expenses of the personnel employed by the
Managing Member, including without limitation, salaries, wages, payroll
taxes and the cost of employee benefit plans; and
(ii) rent, telephone equipment, utilities, office
furniture and equipment and machinery and other office expenses of the
Managing Member incurred in connection with the maintenance of any
office facility of the Managing Member.
(b) The Company shall reimburse the Managing Member within 30
days of a written request by the Managing Member for any expenses referenced in
(a) above. All other expenses shall be paid by the party receiving the benefit
of the services rendered.
Subcontracting. The Managing Member may at any time subcontract
all or a portion of its obligations under this Agreement to any Affiliate of the
Managing Member. The Managing Member shall not subcontract, and shall not permit
any of its Affiliates to subcontract, any of its obligations under this
Agreement to Persons who are not Affiliates of the Managing Member.
Notwithstanding the foregoing, the Managing Member will not, in connection with
subcontracting any of its obligations under this Agreement, be relieved or
discharged in any respect from its obligations under this Agreement.
SECOND SUPPLEMENTAL INDENTURE
(dated as of December 23, 1998)
to the
INDENTURE OF TRUST
(dated as of October 31, 1995)
between
MAIN PLACE REAL ESTATE INVESTMENT TRUST
(as successor in interest to
MAIN PLACE FUNDING CORPORATION)
and
FIRST TRUST NATIONAL ASSOCIATION
------------------------------
$1,500,000,000
Mortgage-Backed Bonds, Series 1995-2 Due 2000
------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE, dated as of December 23, 1998,
between Main Place Funding, LLC, a Delaware limited liability company formerly
known as Main Place Holdings, LLC (the "Company"), as successor in interest to
Main Place Real Estate Investment Trust, a Maryland real estate investment trust
(the "Issuer"), and U.S. Bank Trust National Association (the "Trustee"),
formerly known as First Trust National Association ("First Trust") and the
trustee under that certain Indenture of Trust, dated as of October 31, 1995,
between the Issuer and First Trust (the "Indenture").
WHEREAS, Main Place Funding Corporation, a Delaware Corporation
(the "Predecessor Issuer") and First Trust previously entered into the
Indenture, pursuant to which the Predecessor Issuer issued $1,500,000,000
aggregate principal amount of Mortgage-Backed Bonds, Series 1995-2 Due 2000; and
WHEREAS, pursuant to that certain Agreement of Merger dated
October 31, 1996, by and among the Issuer, the Predecessor Issuer and Main Place
Holdings Corporation, a Delaware corporation (the "Parent"), the Predecessor
Issuer was merged by the Parent with and into the Issuer, with the Issuer as the
surviving entity of the merger; and
WHEREAS, pursuant to the First Supplemental Indenture, dated as
of November 1, 1996, between the Issuer and First Trust (the "First Supplemental
Indenture"), the Issuer, as successor in interest to the Predecessor Issuer,
evidenced, pursuant to Sections 7.01(1), (2) and 8.01(1) of the Indenture, the
succession of the Issuer to the Predecessor Issuer and the assumption by the
Issuer of the covenants of the Predecessor Issuer under the Indenture and the
Securities (as defined in the Indenture) issued pursuant to the Indenture; and
WHEREAS, pursuant to that certain Agreement of Merger, dated as
of October 15, 1998, the Parent merged with and into the Company, with the
Company as the surviving entity of the merger; and
WHEREAS, pursuant to that certain Agreement and Plan of Merger
dated as of December 22, 1998, by and among the Company and the Issuer, the
Issuer merged with and into the Company, with the Company as the surviving
entity of the merger; and
WHEREAS, the Company, as successor in interest to the Issuer,
wishes to enter into this Second Supplemental Indenture pursuant to Sections
7.01(1), (2) and 8.01(1) of the Indenture to evidence the succession of the
Company to the Issuer and the assumption by the Company of the covenants of the
Issuer under the Indenture and the Securities (as defined in the Indenture)
issued pursuant to the Indenture; and
<PAGE>
WHEREAS, all acts necessary to cause this Second Supplemental
Indenture to constitute a valid, binding and legal obligation of the Company
have been done and performed.
NOW, THEREFORE, witnesseth that, in consideration of the premises
and of the covenants contained herein, it is hereby agreed as follows:
1. All references to the Issuer in the Indenture shall hereinafter
refer to the Company, as successor in interest to the Issuer.
2. The Company hereby expressly assumes all rights and obligations of
the Issuer under the Indenture in respect of the Securities and the Collateral
(as defined in the Indenture) and expressly assumes every covenant of the
Indenture on the part of the Issuer to be performed or observed.
3. The Company hereby expressly confirms that the Collateral shall
secure its obligations under the Securities and the Indenture.
4. Except as expressly set forth herein, the Indenture shall remain
unchanged and in full force and effect.
5. This Second Supplemental Indenture shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without giving effect to principles of conflicts of law.
6. This Second Supplemental Indenture may be executed in any number of
counterparts, each of which may be an original, but all of which, taken
together, shall constitute one and the same instrument.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS)
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, all as of the date first written
above.
MAIN PLACE FUNDING, LLC
By: /s/ John E. Mack
--------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
By: /s/ S. Christopherson
---------------------------
Authorized Signatory
Name: S. Christopherson
Title: Vice President
FIRST SUPPLEMENTAL INDENTURE
(dated as of December 23, 1998)
to the
INDENTURE OF TRUST
(dated as of March 18, 1997)
between
MAIN PLACE REAL ESTATE INVESTMENT TRUST
and
FIRST TRUST NATIONAL ASSOCIATION
------------------------------
$1,000,000,000
Mortgage-Backed Bonds, Series 1997-1 Due 2000
------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of December 23, 1998,
between Main Place Funding, LLC, a Delaware limited liability company formerly
known as Main Place Holdings, LLC (the "Company"), as successor in interest to
Main Place Real Estate Investment Trust, a Maryland real estate investment trust
(the "Issuer"), and U.S. Bank Trust National Association (the "Trustee"),
formerly known as First Trust National Association ("First Trust") and the
trustee under that certain Indenture of Trust dated as of March 18, 1997,
between the Issuer and First Trust (the "Indenture").
WHEREAS, the Issuer and First Trust previously entered into the
Indenture, pursuant to which the Issuer issued $1,000,000,000 aggregate
principal amount of Mortgage-Backed Bonds, Series 1997-1 Due 2000; and
WHEREAS, pursuant to that certain Agreement of Merger dated as of
October 15, 1998, Main Place Holdings Corporation, a Delaware corporation,
merged with and into the Company, with the Company as the surviving entity of
the merger; and
WHEREAS, pursuant to that certain Agreement and Plan of Merger
dated as of December 22, 1998, by and among the Company and the Issuer, the
Issuer merged with and into the Company, with the Company as the surviving
entity of the merger; and
WHEREAS, the Company, as successor in interest to the Issuer,
wishes to enter into this First Supplemental Indenture pursuant to Sections
7.01(1), (2) and 8.01(1) of the Indenture to evidence the succession of the
Company to the Issuer and the assumption by the Company of the covenants of the
Issuer under the Indenture and the Securities (as defined in the Indenture)
issued pursuant to the Indenture; and
WHEREAS, all acts necessary to cause this First Supplemental
Indenture to constitute a valid, binding and legal obligation of the Company
have been done and performed.
NOW, THEREFORE, witnesseth that, in consideration of the premises
and of the covenants contained herein, it is hereby agreed as follows:
1. All references to the Issuer in the Indenture shall hereinafter
refer to the Company, as successor in interest to the Issuer.
2. The Company hereby expressly assumes all rights and obligations of
the Issuer under the Indenture in respect of the Securities and the Collateral
(as defined in the Indenture) and expressly assumes every covenant of the
Indenture on the part of the Issuer to be performed or observed.
3. The Company hereby expressly confirms that the Collateral shall
secure its obligations under the Securities and the Indenture.
<PAGE>
4. Except as expressly set forth herein, the Indenture shall remain
unchanged and in full force and effect.
5. The First Supplemental Indenture shall be governed by and construed
and enforced in accordance with, the laws of the State of New York, without
giving effect to principles of conflicts of law.
6. This First Supplemental Indenture may be executed in any number of
counterparts, each of which may be an original, but all of which, taken
together, shall constitute one and the same instrument.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS)
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the date first written
above.
MAIN PLACE FUNDING, LLC
By: /s/ John E. Mack
------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
By: /s/ S. Christopherson
------------------------
Authorized Signatory
Name: S. Christopherson
Title: Vice President
TRUST AGREEMENT
OF
MAIN PLACE TRUST
by and among
NATIONSBANK, N.A.
a national banking association
(as the "Owner")
and
WILMINGTON TRUST COMPANY
a Delaware corporation
(as the "Delaware Trustee" and as the "Independent Trustee")
and
JAMES H. LUTHER
an individual
(as the "Special Trustee")
and
JOHN E. MACK
an individual
(as the "Business Trustee")
Dated as of December 14, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
PAGE
ARTICLE 1
DEFINITIONS AND TERMS
<S> <C>
Section 1.1 Certain Definitions............................................1
Section 1.2. Usage of Terms.................................................4
Section 1.3. Section References.............................................4
ARTICLE 2
FORMATION OF TRUST; AUTHORITY TO EXECUTE
DOCUMENTS; DECLARATION OF TRUST
Section 2.1. Name...........................................................4
Section 2.2. Office.........................................................4
Section 2.3. Purposes.......................................................4
Section 2.4. Declaration of Trust...........................................5
Section 2.5. Restrictions on Trust Action...................................6
Section 2.6. Subchapter K Election..........................................8
Section 2.7. Authority to Execute and Perform Various Documents.............8
Section 2.8. Title to the Trust Estate......................................8
ARTICLE 3
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST ESTATE
Section 3.1. Distribution of Payments.......................................9
Section 3.2. Method of Payments.............................................9
ARTICLE 4
DUTIES OF THE TRUSTEE
Section 4.1. Notices; Furnishing of Documents...............................9
Section 4.2. Action Upon Instructions......................................10
Section 4.3. Right to Indemnity Before Acting..............................10
Section 4.4. No Duties Except as Specified.................................11
Section 4.5. No Action Except Under Specified Documents or Instructions....11
ARTICLE 5
THE TRUSTEE
Section 5.1. Acceptance of Trusts and Duties...............................12
Section 5.2. Absence of Certain Duties.....................................12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 5.4. Segregation of Funds..........................................13
Section 5.5. Reliance Upon Certificates and Counsel........................13
Section 5.6. Not Acting in Individual Capacity.............................13
Section 5.7. Compensation and Expenses.....................................13
Section 5.8. Tax Returns...................................................14
Section 5.9. Trustee Status................................................14
Section 5.10. Doing Business in Other Jurisdictions.........................14
ARTICLE 6
INDEMNIFICATION OF AND REPRESENTATIONS TO
THE TRUSTEE BY THE OWNER
Section 6.1. Indemnification of the Trustee................................15
Section 6.2. Representations...............................................16
ARTICLE 7
TRANSFER OF THE OWNER'S INTEREST
Section 7.1. Transfer of Interest of the Owner.............................16
ARTICLE 8
SUCCESSOR TRUSTEE; CO-TRUSTEE
Section 8.1. Resignation or Removal of a Trustee: Appointment of Successor.17
Section 8.2. Independent Trustee...........................................18
ARTICLE 9
SUPPLEMENTS AND AMENDMENTS TO TRUST
AGREEMENT AND OTHER DOCUMENTS
Section 9.1. Supplements and Amendments....................................19
Section 9.2. Discretion as to Execution of Documents.......................19
Section 9.3. Absence of Requirements as to Form............................20
Section 9.4. Distribution of Documents.....................................20
Section 9.5. Condition to Successor Trustee................................20
ARTICLE 10
MISCELLANEOUS
Section 10.1. Termination...................................................21
Section 10.2. The Owner Has No Legal Title..................................21
Section 10.3. Assignment, Sale, etc. of Trust Estate........................22
Section 10.4. Trust Agreement for Benefit of Parties Only...................22
Section 10.5. Notices.......................................................22
Section 10.6. Severability..................................................23
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 10.7. Waivers.......................................................24
Section 10.8. Counterparts..................................................24
Section 10.9. Binding Effect................................................24
Section 10.10. Headings......................................................24
Section 10.11. Governing Law.................................................24
Section 10.12. Amendment.....................................................24
Section 10.13. Assignment....................................................24
</TABLE>
EXHIBIT
EXHIBIT A = Form of Assignment and Assumption Agreement.
<PAGE>
TRUST AGREEMENT
OF
MAIN PLACE TRUST
TRUST AGREEMENT OF MAIN PLACE TRUST dated as of December 14, 1998
(the "Agreement"), by and among NATIONSBANK, N.A., a national banking
association (together with its successors and permitted assigns, the "Owner"),
WILMINGTON TRUST COMPANY, a Delaware corporation (in its individual capacity
only as expressly stated herein, the "Delaware Trustee" and the "Independent
Trustee"), JAMES H. LUTHER, an individual (in his individual capacity only as
expressly stated herein, the "Special Trustee"), and JOHN E. MACK, an individual
(in his individual capacity only as expressly stated herein, the "Business
Trustee").
W I T N E S S E T H:
WHEREAS, the Owner and the Trustees have agreed to create a
"business trust" in accordance with Chapter 38 of Title 12 of the Delaware Code,
12 Del.C. ss. 3801, et. seq., which shall be named the "Main Place Trust" (the
"Trust").
WHEREAS, the parties desire for the Trust to acquire from the
Owner and hold a one percent (1%) interest ("LLC Interest"), in Main Place
Funding, LLC, a Delaware limited liability company ("MP-LLC"), and to serve as a
co-managing member of MP-LLC solely to act on matters relating to the bankruptcy
or insolvency of MP-LLC.
WHEREAS, the Owner and the Trustees intend that this Agreement
constitute the "governing instrument" of the Trust.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Owner and the
Trustees hereby agree as follows:
ARTICLE 1
DEFINITIONS AND TERMS
SECTION 1.1 CERTAIN DEFINITIONS.
(a)....For all purposes of this Agreement, the capitalized terms
set forth below shall have the following meanings:
"Affiliate" of any specified Person (as hereinafter defined)
means any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person. For the
purposes of this definition, "control" when used with respect to a specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through ownership of voting securities or other
beneficial
<PAGE>
interests, by contract or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
"Assignment Agreement" means that certain Assignment and
Assumption Agreement entered into by the Trust and the Owner on or about the
date hereof, pursuant to which the Owner transfers the LLC Interest to the
Trust.
"Bankruptcy Event" means, with respect to the Trust or MP-LLC,
(i) the institution of proceedings to be adjudicated bankrupt or insolvent, or
consent to the institution of bankruptcy or insolvency proceedings against it,
or (ii) the filing of, or consent to, a petition seeking reorganization or
relief under any applicable federal or state law relating to bankruptcy or
insolvency, or (iii) the seeking of, or consent to, the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of such entity or any substantial part of its property, or (iv) the
making of, or consent to, an assignment for the benefit of creditors, or (v) the
admission, in writing, of its inability to pay its debts generally as they
became due, or (vi) the taking of any action that will cause such entity to
become insolvent, or the taking of corporate action in furtherance of any such
action.
"Bonds" means the certain mortgage-backed bonds issued pursuant
to the Indentures.
"Business Trustee" has the meaning given to it in the preamble to
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended and as
the same may be further amended from time to time.
"Delaware Trustee" has the meaning given to it in the preamble to
this Agreement.
"Indentures" means, collectively, (i) that certain Indenture of
Trust dated as of October 31, 1995, between Main Place Real Estate Investment
Trust (as successor in interest to Main Place Funding Corporation), and U.S.
Bank Trust National Association (formerly known as First Trust National
Association), as amended, and (ii) that certain Indenture of Trust dated as of
March 18, 1997, between Main Place Real Estate Investment Trust and U.S. Bank
Trust National Association (formerly known as First Trust National Association),
as amended.
"Independent Trustee" means Wilmington Trust Company, a Delaware
corporation, or any other Person appointed as such pursuant to this Agreement
who is not at the time of appointment and has not been at any time during the
preceding five (5) years: (i) a direct or indirect legal or beneficial owner
(beyond a nominal amount) in the Trust or any of its Affiliates; (ii) a
creditor, supplier, employee, officer, director, family member, manager, or
contractor of the Trust or any of its Affiliates; or a Person who controls
(whether directly, indirectly, or otherwise) the Trust or its Affiliates or any
creditor, supplier, employee, officer, director, manager, or contractor of the
Trust or its Affiliates. Notwithstanding the foregoing, an Independent Trustee
may serve in similar capacities for other "special purpose" entities formed by
the Owner or any Affiliate thereof. (For purposes of this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the
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management, policies or activities of a Person, whether through ownership of
voting securities, by contract or otherwise.)
"Lien" means any mortgage, deed of trust, pledge, security
interest, encumbrance, lien, easement, restriction, servitude or charge of any
kind, including, without limitation, any irrevocable license, conditional sale
or other title retention agreement, any lease in the nature thereof or the
filing of, or agreement to execute as "debtor", any financing or continuation
statement under the Uniform Commercial Code of any jurisdiction or any federal,
state or local lien imposed pursuant to any applicable law.
"LLC Interest" has the meaning given to it in the recitals to
this Agreement.
"MP-LLC" has the meaning given to it in the recitals to this
Agreement.
"Operative Documents" means the Assignment Agreement, the Amended
and Restated Limited Liability Company Agreement of MP-LLC dated as of December
_____, 1998, and any other documents executed from time to time by the Trust in
connection with the acquisition or ownership of the LLC Interest.
"Owner" means NationsBank, N.A., and each of its successors in
interest as beneficiaries of the Trust hereunder.
"Owner Creditor" has the meaning ascribed thereto in Section
9.5(b).
"Person" means a natural person, corporation, limited
partnership, limited liability company, general partnership, joint stock
company, joint venture, association, company, trust, bank trust company, land
trust, business trust, national association or other organization, whether or
not a legal entity, and a government or agency, instrumentality, or political
subdivision thereof.
"Rating Agency" means each nationally-recognized statistical
rating agency rating any of the Bonds.
"Rating Agency Confirmation" means, with respect to any action or
event, the written confirmation of each Rating Agency that such action or event
will not result in the qualification, downgrade or withdrawal of the ratings
then assigned to any of the Bonds.
"Relevant State" has the meaning ascribed thereto in Section 9.5.
"Responsible Officer" means the president, the chief financial
officer or the treasurer.
"Special Trustee" has the meaning given to it in the preamble of
this Agreement.
"Trust" means the trust formed by this Agreement, as described in
the recitals to this Agreement.
<PAGE>
"Trustees" means one or more of any of the Delaware Trustee, the
Independent Trustee, the Special Trustee, or the Business Trustee, together with
their respective successors and permitted assigns, where the distinction between
each such trustee is not relevant.
"Trust Estate" means all right, title and interest of the Trust
in and to any property contributed to the Trust by the Owner or otherwise
acquired by the Trust, including the LLC Interest and all distributions,
payments or proceeds therefrom.
(b) Capitalized terms used herein but not otherwise defined
herein shall have the meaning assigned to them in the Operative Documents.
SECTION 1.2. USAGE OF TERMS. With respect to all terms in this
Agreement, the singular includes the plural and the plural includes the
singular, words importing any gender include the other gender; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a visible form; references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Person include their successors and permitted assigns,
and the term "including" means including without limitation.
SECTION 1.3. SECTION REFERENCES. All section references, unless
otherwise indicated, shall be to sections of this Agreement.
ARTICLE 2
FORMATION OF TRUST;
AUTHORITY TO EXECUTE DOCUMENTS;
DECLARATION OF TRUST
SECTION 2.1. NAME. The Trust created hereby shall be known as
"Main Place Trust".
SECTION 2.2. OFFICE. The office of the Trust shall be in care of
the Business Trustee, at the address set forth in Section 10.5 or at such other
address as the Business Trustee may designate by notice to the Owner and the
other Trustees. The business address of the Delaware Trustee shall be the
address set forth in Section 10.5 or at such other address as the Delaware
Trustee may designate by notice to the Owner and the other Trustees.
SECTION 2.3. PURPOSES. The Trust is a special purpose entity that
has been organized as a business trust and, subject to Section 2.5 of this
Agreement, will be operated for the following sole and exclusive purposes at the
direction of the Owner:
(a) To acquire, own, and hold the LLC Interest;
(b) To exercise exclusive control, by exercising veto
power as a co-manager of MP-LLC, over the ability of MP-LLC to file,
consent to the filing of, or join
<PAGE>
in any filing of, a bankruptcy or insolvency petition, or otherwise
institute insolvency proceedings;
(c) To otherwise dispose of the Trust Estate in accordance
with the terms and conditions of this Agreement;
(d) To take any and all actions necessary to maintain the
existence of the Trust as a business trust in good standing under the
laws of the State of Delaware and, if necessary, to qualify the Trust to
do business as a business trust in any other state in which such
qualification, in the opinion of the Business Trustee or the Owner, is
required; and
(e) To elect to be organized as a Delaware business trust
pursuant to 12 Del.C. ss. 3801 et seq.
The Trust shall hold the Trust Estate for investment purposes only and not for
the active conduct of a trade or business. The Trust shall conduct no business
nor, except as provided herein, acquire any property other than as specifically
set forth in this Section 2.3.
SECTION 2.4. DECLARATION OF TRUST. As of the date of the
Assignment Agreement, the Owner has granted to the Trust and its successors and
assigns, forever, all right, title and interest of the Owner in and to the LLC
Interest, constituting the initial Trust Estate, and the Trustees acknowledge,
by their execution and delivery of the Assignment Agreement, their receipt of
the LLC Interest on behalf of the Trust, to have and to hold, together with any
other part of the Trust Estate, until this Agreement terminates pursuant to the
terms hereof. The Trust shall hold the Trust Estate upon the terms and subject
to the conditions set forth herein for the use and benefit of the Owner, and in
accordance with the obligations of the Trust under the Operative Documents. It
is the intention of the parties hereto that the Trust constitute a "business
trust" under Chapter 38 of Title 12 of the Delaware Code. The Trustees shall
have caused the filing of a Certificate of Trust (the "Certificate of Trust")
with the Secretary of the State of Delaware (the "Secretary of State") pursuant
to Section 3810 of Title 12 of the Delaware Code. It is the intention of the
parties hereto that the Trust shall be a grantor trust for Federal income tax
purposes. The Owner agrees to report its interest in the Trust in a manner
consistent with the foregoing and the Owner and the Trustees agree otherwise not
to take any action that would be inconsistent with the foregoing and the
provisions of this Agreement shall be construed to further the foregoing.
SECTION 2.5. RESTRICTIONS ON TRUST ACTION. Notwithstanding any
other provision of this Agreement, the Operative Documents or any provision of
law that would so empower the Trust, the Trust shall:
(a) Not engage in any business or activity other than
those set forth in Section 2.3 above;
(b) Not take any action, in its role as co-manager of
MP-LLC, with respect to exercising its veto power over the ability of
MP-LLC to file, consent to the filing of, or join in any filing of, a
bankruptcy or insolvency petition, or otherwise institute insolvency
proceedings or any other Bankruptcy Event, without the prior written
<PAGE>
consent of both the Independent Trustee and the Special Trustee, for as
long as any Bonds are outstanding and until all of the obligations of
MP-LLC under the Indentures or the Bonds have been indefeasibly and
fully satisfied;
(c) Not acquire or own any assets other than the LLC
Interest and any proceeds therefrom and any contribution by the Owner
and any earnings on any of the foregoing;
(d) Do all things necessary to preserve its existence and
not (x) engage in, seek or consent to any dissolution, winding up,
liquidation, consolidation or merger, (y) engage in, seek or consent to
any sale or transfer of the LLC Interest or of any other part of the
Trust Estate, or (z) amend, modify or change the Certificate of Trust
for this Trust or this Agreement or permit a constituent party to cause
the amendment or modification thereof without, in each case, under
clause (x), (y) or (z), the prior written consent of both the
Independent Trustee and the Special Trustee;
(e) Have at least one Independent Trustee;
(f) Not take any action requiring the consent of both the
Independent Trustee and the Special Trustee unless both the Independent
Trustee and the Special Trustee shall have consented thereto;
(g) Not fail to correct any known misunderstanding
regarding the Trust's separate identity;
(h) Not, without the prior written consent of both the
Independent Trustee and the Special Trustee, either for itself or for
MP-LLC or as a managing member of MP-LLC, take any action whatsoever to
initiate, consent to, or join in causing, a Bankruptcy Event; provided,
however, that if the Trust shall not have an Independent Trustee, then
no such action shall be taken unless and until such an Independent
Trustee shall have been duly elected and shall consent in writing
thereto;
(i) Maintain its books, records, resolutions and
agreements as official records;
(j) Not commingle its funds or assets with those of any
other Person;
(k) Hold its assets in its own name and maintain its
assets in such a manner that it will not be costly or difficult to
segregate, ascertain or identify its individual assets from those of any
Affiliate of any other Person;
(l) Conduct its business in its own name;
(m) Maintain its books, records, financial statements,
accounting records, bank accounts and other entity documents separate
from those of any other Person and file its own tax returns when
necessary;
(n) Pay its own liabilities out of its own funds and
assets;
<PAGE>
(o) Observe all trust formalities;
(p) Maintain an arms-length relationship with its
Affiliates;
(q) Not incur any indebtedness, secured or unsecured,
direct or indirect, absolute or contingent (including guaranteeing any
obligation), other than (i) indebtedness permitted under the Operative
Documents, and (ii) unsecured trade payables incurred in the ordinary
course of business relating to the ownership of the LLC Interest and
payable within thirty (30) days after the date incurred;
(r) Not assume or guaranty or become obligated for the
debts of any other Person or hold itself out to be responsible for the
debts or obligations of any other Person;
(s) Not (i) except for the LLC Interest, acquire any
obligations or securities of the Owner, any Trustee, or any Affiliates
of the foregoing, and (ii) hold out as being available, or make
available, its credit for use to satisfy the obligations of any of the
foregoing;
(t) Allocate fairly and reasonably shared expenses,
including, without limitation, shared office space, and use separate
stationary, invoices and checks;
(u) Except as permitted by the Operative Documents, not
pledge its assets for the benefit of any other Person;
(v) Hold and identify itself out as a separate and
distinct entity under its own name and not as a division or part of any
other Person;
(w) Not make or permit to remain outstanding any loans or
advances to any Person, except as may be expressly permitted by the
Operative Documents;
(x) Not identify the Owner, the Independent Trustee or any
other Trustee, or any Affiliates of any of them, as a division or part
of it;
(y) Except for the Advisory Services Agreement dated on or
about the date hereof between the Trust and NationsBank, N.A., not enter
into or be a party to, any transaction, contract or agreement with the
Owner, the Independent Trustee or any other Trustee, or their respective
Affiliates, except in the ordinary course of business and on terms which
are intrinsically fair and no less favorable to it than would be
obtained in a comparable arms-length transaction with an unrelated third
party;
(z) Pay the salaries of its own employees, if any, from
its own funds;
(aa)Maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its character and in light of
its contemplated business operations;
<PAGE>
(bb) Not dissolve as a result of the dissolution or
insolvency of the Owner, the Independent Trustee, or any other Trustee;
and
(cc) Not be organized as other than a Delaware business
trust pursuant to 12 Del.C. ss. 3801 et seq.
SECTION 2.6. SUBCHAPTER K ELECTION. The Owner intends to be
excluded from Subchapter K of the Code and shall have the right to direct the
Business Trustee to specifically elect out of Subchapter K of the Code.
SECTION 2.7. AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS.
The Owner hereby authorizes and directs the Business Trustee to execute and
deliver on behalf of the Trust each Operative Document to which the Trust is or
is to be a party, and such other documents, agreements, instruments and
certificates relating to the Operative Documents, in each case in the respective
forms in which the same may be delivered by or on behalf of the Owner to the
Business Trustee from time to time for execution and delivery. In addition, the
Owner hereby empowers and authorizes the Business Trustee to execute and deliver
any and all documents, agreements and instruments necessary for the operation of
the Trust Estate, to the full extent allowed by law. Notwithstanding any of the
foregoing, the Owner hereby authorizes and empowers only the Independent Trustee
and the Special Trustee, acting in unison, with sole authority to execute and
deliver any and all documents relating to the Trust's acting to fulfill its
purpose set forth in Section 2.3(b) in its role as a co-managing member of
MP-LLC.
SECTION 2.8. TITLE TO THE TRUST ESTATE. Title to all of the Trust
Estate shall be vested in the Trust as a separate legal entity; provided,
however, that if the laws of any jurisdiction in which any of the Trust Estate
is located require that title to any part of the Trust Estate be vested in a
Trustee of the Trust, then title to that part of the Trust Estate shall be
deemed to be vested in the Business Trustee.
ARTICLE 3
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
SECTION 3.1. DISTRIBUTION OF PAYMENTS.
(a) Payments. If any funds shall be received by the Trust,
then the Business Trustee shall disburse, or not disburse, such amounts as it
deems reasonable in the ordinary course of business or, if requested by the
Owner, in accordance with the written instructions of the Owner.
(b) Liability for Payments. The Business Trustee shall not be
liable for any amounts payable under this Agreement or any document executed by
the Trust except to the extent that the Business Trustee has actually received
the funds required to make such payment.
SECTION 3.2. METHOD OF PAYMENTS. The Business Trustee shall make
distributions or cause distributions to be made to the Owner pursuant to this
Article 3 by
<PAGE>
transferring by wire transfer of immediately available funds (or by such other
manner as is acceptable to, or requested by, the Owner) the amount to be
distributed to such account or accounts as the Owner may designate from time to
time by written notice to the Business Trustee (and the Business Trustee shall
use reasonable and diligent efforts to cause such funds to be transferred by
wire transfer (or by such other manner as is acceptable to, or requested by, the
Owner) by such date as the Owner reasonably requests).
ARTICLE 4
DUTIES OF THE TRUSTEE
SECTION 4.1. NOTICES; FURNISHING OF DOCUMENTS.
(a) If any Trustee shall have actual knowledge of any event or
notice relating to the LLC Interest, other than a Bankruptcy Event or a notice
related thereto, then such Trustee shall give to the Owner and the Business
Trustee prompt telecopier notice thereof, followed by prompt confirmation
thereof by U.S. mail, postage prepaid. Subject to Section 4.3, the Business
Trustee shall take such action, or shall refrain from taking such action, with
respect to the LLC Interest as the Business Trustee shall be directed in writing
by the Owner. If the Business Trustee shall not have received instructions as
above provided within twenty (20) days after the delivery of notice of such
event or notice to the Owner, then the Business Trustee may, subject to
instructions received pursuant to the preceding sentence, take such action, or
refrain from taking such action, but shall be under no duty and shall have no
liability for its failure or refusal to take or refrain from taking any action,
with respect to such event or notice not inconsistent with the provisions of the
Operative Documents, as the Business Trustee shall deem in its sole and absolute
discretion to be in the best interests of the Owner.
(b) If any Trustee shall have actual knowledge of any
Bankruptcy Event or a notice related thereto, then such Trustee shall give to
the Owner, the Independent Trustee, and the Special Trustee prompt telecopier
notice thereof, followed by prompt confirmation thereof by U.S. mail, postage
prepaid. The Independent Trustee and the Special Trustee shall unanimously take
such action, or shall unanimously refrain from taking such action, with respect
to such Bankruptcy Event or related matter as is keeping in compliance with the
terms and intent of this Agreement, such that the ability of MP-LLC and of the
Trust to proceed with such Bankruptcy Event is eliminated or reduced to the
greatest extent possible.
(c) The Business Trustee will furnish to the Owner, promptly
upon receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instrument furnished
to the Business Trustee hereunder or with respect to the LLC Interest.
SECTION 4.2. ACTION UPON INSTRUCTIONS. Subject to the provisions
of Section 4.3 and the last two sentences of this Section 4.2, upon the written
instructions at any time and form time to time of the Owner, the Business
Trustee shall take such of the following actions as may be specified in such
instructions: (i) give such notice or direction or exercise such right, remedy
or power hereunder or under any Operative Document to which the Trust is a
party, or in respect of all or any part of the Trust Estate, as shall be
specified in such instructions; (ii) take such
<PAGE>
action to preserve or protect the Trust Estate (including the discharge of any
liens) as shall be specified in such instructions; (iii) approve as satisfactory
to the Business Trustee all matters required by the terms of any Operative
Document to be satisfactory to the Business Trustee or the Trust, it being
understood that, without written instructions of the Owner, the Business Trustee
shall not approve any such matter as satisfactory to the Business Trustee or the
Trust; (iv) provided that there are no Bonds outstanding, convey and deliver the
LLC Interest to the Owner in accordance with such instructions; and (v) any
other action required to be taken by the Business Trustee pursuant to the
Operative Documents. In the event that any Trustee is unsure as to the
application of any provision of this Agreement or of any other agreement
relating to the transactions contemplated hereby, such Trustee may request and
rely upon written instructions of the Owner. The Owner shall not instruct such
Trustee to take any action which is inconsistent with this Agreement or which
the Owner has actual knowledge is inconsistent with the provisions of the
Operative Documents or other legal requirements or laws. Without limiting the
foregoing, under no circumstance shall the Owner give instructions which would
require or instruct such Trustee to violate any of the provisions of Sections
2.3, 2.5, 4.2, 8.2, 9.1(c) or 10.1, and such Trustee shall not obey, without
incurring any liability, any such instructions if given.
SECTION 4.3. RIGHT TO INDEMNITY BEFORE ACTING. A Trustee shall
not be required to take or refrain from taking action under this Agreement or
any Operative Document (other than to give the notices required of the Trustees
therein) unless such Trustee shall have been indemnified by the Owner, in manner
and form reasonably satisfactory to such Trustee, against any liability, cost or
expense (including reasonable counsel fees and disbursements) which may be
incurred in connection therewith; and if the Owner shall have directed such
Trustee to take or refrain from taking any such action, then the Owner agrees to
furnish such indemnity as shall be required and, in addition, to pay the
reasonable fees and charges of such Trustee for the services performed or to be
performed by them pursuant to such direction. Such Trustee shall not be required
to take any action under this Agreement or any Operative Document if such
Trustee shall reasonably determine, or shall have been advised by counsel, that
such action is contrary to the terms of any Operative Document to which the
Trust is a party or is contrary to law.
SECTION 4.4. NO DUTIES EXCEPT AS SPECIFIED.
(a) The Trustees shall not have any duty or obligation to
manage, control, use, sell, dispose of or otherwise deal with any of the LLC
Interest or any other part of the Trust Estate, to perform any obligation of the
Trust under any of the Operative Documents or otherwise to take or refrain from
taking any action under, or in connection with, any Operative Document to which
the Trust is a party, except as expressly required by the terms hereof or in
written instructions received pursuant to Section 4.1 or 4.2 from the Owner; and
no implied duties or obligations shall be read into this Agreement or any other
Operative Document to which the Trust is a party against any of the Trustees.
(b) Notwithstanding the provisions of Section 4.4(a), each
Trustee agrees that it will, at its own cost and expense (without any right of
indemnity in respect of any such cost or expense under Section 6.1), promptly
take such action as may be necessary duly to discharge and satisfy in full: (i)
all Liens against the Trust Estate attributable to such Trustee in its
individual capacity; (ii) any Liens created as a result of a breach by such
Trustee of its individual obligations under this Agreement (subject to the
limitations on liability set forth in Section 5.9)
<PAGE>
on any part of the Trust Estate, or on any properties of the Trust assigned,
pledged or mortgaged as part of the Trust Estate, which arise from acts of such
Trustee in its individual capacity, and (iii) any other Liens attributable to
such Trustee in its individual capacity on any part of the Trust Estate which
result from claims against such Trustee in its individual capacity unrelated to
the ownership of the LLC Interest, the administration of the Trust Estate or the
transactions contemplated by the Operative Documents.
SECTION 4.5. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Trust shall have no power or authority to, and each Trustee
agrees that it will not, manage, control, use, sell, dispose of or otherwise
deal with the LLC Interest or any other part of the Trust Estate except (i) as
expressly required by the terms of any Operative Document to which the Trust is
a party, (ii) as expressly required by the terms hereof, or (iii) as expressly
provided in written instructions from the Owner pursuant to Section 4.1 or 4.2,
but subject always to the provisions of this Agreement.
ARTICLE 5
THE TRUSTEES
SECTION 5.1. ACCEPTANCE OF TRUSTS AND DUTIES. Each Trustee hereby
accepts the trusts hereby created and agrees to perform the same but only upon
the terms of this Agreement. The Business Trustee also agrees to receive and
disburse all monies paid to it constituting part of the Trust Estate upon the
terms hereof. Each Trustee shall not incur any liability under any
circumstances, except for liability incurred as a result of (i) its own willful
misconduct or gross negligence; (ii) its failure to comply with the provisions
of Section 4.4(b); (iii) its failure to use ordinary care in receiving or
disbursing funds; (iv) the inaccuracy of any of its representations or
warranties made in its individual capacity (or from its failure to perform any
covenant made in its individual capacity) in Section 5.3 or in any other
Operative Document to which the Trust is now or hereafter a party; and (v) all
taxes, fees or other charges on, based on or measured by any fees, commissions
or other compensation received by the Trustee on account of its services as
Trustee; provided, however, that the Trustee's failure to act or perform in the
absence of instructions, after the Trustee shall have requested instructions
from the Owner pursuant to the last sentence of Section 4.2, shall not
constitute willful misconduct or gross negligence for purposes of clause (i) of
this sentence. The Delaware Trustee further agrees to perform all of its
administrative functions and duties as a Trustee hereunder within the State of
Delaware. The Independent Trustee and the Special Trustee each recognize that
the bankruptcy remoteness of the Trust is an integral requirement of the Trust,
and that, so long as the Trust remains solvent, the Independent Trustee's and
the Special Trustee's intention is not to file or cause the filing of a
bankruptcy petition on behalf of the Trust, consent to the filing of an
involuntary bankruptcy petition against the Trust, or seek, or consent to, the
consolidation of the Trust and any Affiliate in a bankruptcy proceeding
involving the Trust or any Affiliate thereof. In no event shall the Independent
Trustee or the Special Trustee be liable to the Owner, the Trust or any other
Person for any act or omission taken or made in good faith in accordance with
the immediately preceding sentence.
SECTION 5.2. ABSENCE OF CERTAIN DUTIES. Except in accordance with
written instructions furnished pursuant to Section 4.1 or 4.2, and except as
provided in, and without
<PAGE>
limiting the generality of, Section 4.4, no Trustee shall have any duty (i) to
see to any recording or filing of this Agreement or any other documents or to
see to the maintenance of any such recordation or filing or to any necessary
rerecording or refiling thereof; (ii) to see to the payment or discharge of any
tax, assessment or other governmental charge on, or any Lien of any kind owing
with respect to, or assessed or levied against, any part of the Trust Estate; or
(iii) to inspect MP-LLC or its books and records with respect thereto.
SECTION 5.3. NO REPRESENTATION OR WARRANTIES AS TO CERTAIN
MATTERS. Each Trustee hereby represents and warrants that this Agreement has
been, and (assuming the due authorization, execution and delivery of this
Agreement by the Owner) the other Operative Documents to which the Trust is a
party have been, or at the time of execution and delivery thereof by the Trust
pursuant hereto will be, as the case may be, duly authorized and delivered by a
Responsible Officer of such Trustee (with respect to such Trustee), who is or
will be, as the case may be, duly authorized to execute and deliver the same on
behalf of such Trustee and that this Agreement has been duly authorized,
executed and delivered by such Trustee and constitutes the legal, valid and
binding obligation of such Trustee enforceable against such Trustee in
accordance with its terms, except as such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights or creditors generally and by general principles of equity. Except for
Liens attributable to such Trustee in its individual capacity, such Trustee
shall not be individually liable for any indebtedness of the Trust. In addition,
such Trustee shall not be liable or responsible for or in respect of the
validity or sufficiency of this Agreement or for the due execution hereof by the
Owner.
SECTION 5.4. SEGREGATION OF FUNDS. Monies received by any Trustee
hereunder for on or behalf of the Trust shall be segregated and not commingled
with the funds of any other Person.
SECTION 5.5. RELIANCE UPON CERTIFICATES AND COUNSEL. No Trustee
shall incur any liability to any Person by reason of acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Owner mentioned herein or
in any other Operative Document to which the Trust is now or hereafter a party
shall be sufficiently evidenced by a written instrument signed by a person
purporting to be an officer of the Owner. As to any fact or matter the manner of
ascertainment of which is not specifically provided herein, any Trustee may for
all purposes hereof rely on a certificate signed by an officer of the Owner as
to such fact or matter, and such certificate shall constitute full protection to
such Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon. In the administration of the Trust Estate as provided herein
and in the Operative Documents, each Trustee may execute any of the powers
hereof and perform its powers and duties hereunder and under the Operative
Documents directly or through agents or counsel and may consult with counsel,
accountants and other persons selected and employed by it, and such Trustee
shall not be liable for anything done, suffered or omitted in good faith by them
in accordance with the advice of any such counsel or accountants appointed by it
with due care.
<PAGE>
SECTION 5.6. NOT ACTING IN INDIVIDUAL CAPACITY. Each Trustee is
acting hereunder solely as a Trustee and not in its individual capacity except
as otherwise expressly provided herein; and, except as may be otherwise
expressly provided in this Agreement, all Persons, other than the Owner, having
any claim against the Trust by reason of the transactions contemplated hereby
shall look only to the Trust Estate for payment or satisfaction thereof.
SECTION 5.7. COMPENSATION AND EXPENSES. Each Trustee shall be
entitled to receive as compensation for its services hereunder such ordinary
fees as are fair, reasonable and customary for the performance of such services
and as any heretofore and from time to time hereafter be agreed upon between the
Owner and such Trustee and/or pursuant to a written agreement between the Owner
and such Trustee. Such Trustee shall be entitled to be reimbursed for its
reasonable expenses incurred in the performance of its duties as a Trustee,
including but not limited to the reasonable fees and expenses of any counsel or
accountants hired by such Trustee pursuant to Section 5.5 of this Agreement.
SECTION 5.8. TAX RETURNS. The Business Trustee shall be
responsible for the keeping of all appropriate books and records relating to the
receipt and disbursement by it of all monies under this Agreement and each other
agreement (including the Operative Documents to which the Trust is now or
hereafter a party) contemplated hereby. The Owner shall be responsible for
causing to be prepared and filed, at its expense, all income tax returns
required to be filed by the Owner and for causing to be prepared all income tax
returns (if any) required to be filed with respect to the trust created hereby.
The Business Trustee, upon request and upon adequate assurance of reimbursement
by the Owner for the costs and expenses associated therewith, shall furnish to
the Owner all such information as may be reasonably required from such Trustee
in connection with the preparation of such income tax returns. Upon request of
the Owner, the Business Trustee shall sign and file the trust's tax returns
prepared by the Owner. The Owner hereby instructs and directs Business the
Trustee to apply for and obtain a Federal Tax Identification Number for the
Trust.
SECTION 5.9. TRUSTEE STATUS . It is expressly understood and
agreed that (a) any Operative Document entered into or to be entered into by the
Trust is executed and delivered by a Trustee, not individually or personally but
solely as a Trustee of the Trust, in the exercise of the powers and authority
conferred and vested in it under this Agreement, (b) each of the
representations, undertakings and agreements made in any Operative Document on
the part of the Trust is made and intended not as personal representations,
undertakings, and agreements by the Trustee but is made and intended for the
purpose of binding only the Trust, and (c) under no circumstances shall any
Trustee be personally liable for the payment of any indebtedness or other
obligations of the Trust or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the Trust
under any such Operative Document.
SECTION 5.10. DOING BUSINESS IN OTHER JURISDICTIONS.
Notwithstanding anything contained herein to the contrary, the Delaware Trustee
(and, if the same Person is acting as both the Delaware Trustee and the
Independent Trustee, then also the Independent Trustee) shall not be required to
take any action in any jurisdiction other than in the State of Delaware if the
taking of such action will (i) require the consent or approval or authorization
or order of or the giving of notice to, or the registration with or the taking
of any other action in respect of, any state or other governmental authority or
agency of any jurisdiction other than the
<PAGE>
State of Delaware; (ii) result in any fee, tax or other governmental charge
under the laws of any jurisdiction or any political subdivisions thereof in
existence on the date hereof other than the State of Delaware becoming payable
by the Delaware Trustee (or, if the same Person is acting as both the Delaware
Trustee and the Independent Trustee, then also the Independent Trustee); or
(iii) subject the Delaware Trustee (or, if the same Person is acting as both the
Delaware Trustee and the Independent Trustee, then also the Independent Trustee)
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by the Delaware Trustee (or, if the same Person is acting as both
the Delaware Trustee and the Independent Trustee, then also the Independent
Trustee) contemplated hereby. The Delaware Trustee (and, if the same Person is
acting as both the Delaware Trustee and the Independent Trustee, then also the
Independent Trustee) shall be entitled to obtain advice of counsel (which advice
shall be an expense of the Owner) to determine whether any action required to be
taken results in the consequences described in clauses (i), (ii) and (iii) of
the preceding sentence. If said counsel advises the Delaware Trustee (or, if the
same Person is acting as both the Delaware Trustee and the Independent Trustee,
then also the Independent Trustee) that such action will result in such
consequences, then the Delaware Trustee will direct the Business Trustee to
proceed with such action in its place and the Independent Trustee will direct
the Special Trustee to proceed with such action in its place.
ARTICLE 6
INDEMNIFICATION OF AND REPRESENTATIONS TO
THE TRUSTEES BY THE OWNER
SECTION 6.1. INDEMNIFICATION OF THE TRUSTEES. To the fullest
extent permitted by law, the Owner hereby agrees, whether or not any of the
transactions contemplated hereby shall be consummated, to assume liability for,
and does hereby indemnify, protect, save and keep harmless the Trustees and
their respective successors, permitted assigns, agents and servants from and
against, any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by the Trustees on or measured by any fees or other
compensation received by the Trustees for their services hereunder), claims,
action, suits, costs, expenses or disbursements (including, without limitation,
reasonable legal fees and expenses) of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against any of the Trustees in any way
relating to or arising out of this Agreement or any other Operative Document or
the enforcement of the terms of any thereof, or in any way relating to or
arising out of the acquisition, ownership, possession, use, sale or other
disposition of any of the Trust Estate, or in any way relating to or arising out
of the administration of the Trust Estate or the action or inaction of any of
the Trustees hereunder, except: (i) in the case of willful misconduct or gross
negligence on the part of any of the Trustees or in any Trustee's individual
capacity in the performance or nonperformance of its obligations and duties
hereunder; (ii) those resulting from the inaccuracy of any representation or
warranty of any Trustee in its individual capacity (or from the failure of any
Trustee to perform any covenant in its individual capacity) in this Agreement;
(iii) those arising or resulting from any of the matters described in clauses
(i) through (v) of Section 5.1; or (iv) those resulting from any Trustee's
failure to perform the terms of Section 4.4(b) or from the failure to use
ordinary care in the receipt or disbursement of funds. The indemnities contained
in this Section 6.1 extend to the Trustees only and shall not be
<PAGE>
construed as indemnities of the Trust Estate. The indemnities contained in this
Section 6.1 shall survive the termination of this Agreement. Any claim by any
Trustee shall be against the interest of the Owner in the Trust Estate as
security for any amounts owning to it hereunder.
SECTION 6.2. REPRESENTATIONS. The Owner represents, warrants and
agrees as follows:
(a) The Owner has observed and will observe all applicable
corporate procedures including, where applicable, the holding of regular
periodic and special meetings, the recording and maintenance of minutes of such
meetings, and the recording of resolutions, if any, adopted at such meetings.
(b) The Owner has paid and will pay its liabilities (including
liability in respect of guaranties) and losses from its own separate funds.
(c) The Owner has and will have at all times sufficient
officers and employees to run its business and operations. The Owner will manage
its own assets and liabilities.
(d) The Owner has not taken and will not take any action that
would give any creditor of the Owner cause to believe that indebtedness
previously incurred by the Owner is now or will be an obligation of the Trust or
any Trustee or that the Owner is not or will not remain an entity separate and
distinct from the Trust and each Trustee.
(e) The Owner has not taken and will not take any action that
is inconsistent with any of the representations, warranties and agreements set
forth in this Agreement or that would give (i) any future creditor of the Owner
cause to believe mistakenly that any such future obligation incurred by the
Owner would be not only the obligation of the Owner, but also of the Trust or
any Trustee, or (ii) any future creditor of the Owner cause to believe
mistakenly that the Owner was not or would not continue to remain an entity
separate and distinct from the Trust and each Trustee.
(f) No transaction relating to this Agreement is being or will
be entered into by the Owner (i) in bad faith or with the intent to delay,
hinder or defraud any of its creditors, or (ii) with the intent of removing
assets from the Owner to the detriment of the Owner's creditors.
(g) So long as the Bonds are outstanding, the Owner will not
consensually merge or consolidate with the Trust, the Independent Trustee, or
the Delaware Trustee.
ARTICLE 7
TRANSFER OF THE OWNER'S INTEREST
SECTION 7.1. TRANSFER OF INTEREST OF THE OWNER.
(a) The Owner may assign, convey or otherwise transfer all or
any of its right, title and interest in and to this Agreement and the Trust
Estate by giving written notice to the Business Trustee specifying (i) the name
and address of the proposed transferee, (ii) the effective date of the proposed
transfer, and (iii) the percentage of the interest of the Owner to be
<PAGE>
transferred. Upon any assignment, conveyance or transfer of all of the interest
of the Owner, the transferor Owner shall, upon such assignment, conveyance or
transfer, be released and discharged without further act or formality whatsoever
from the indemnification obligations imposed under Section 6.1 arising after
such transfer date, except to the extent that any such transferee shall not have
assumed the obligations of the Owner hereunder with respect to such interest so
transferred. No such assignment, conveyance or transfer shall violate any legal
requirement or laws or create a relationship which would be in violation
thereof. The Business Trustee shall not be on notice of or otherwise be bound by
any such assignment, conveyance or transfer until the Business Trustee shall
have received an executed counterpart of the instrument of such assignment,
conveyance or transfer.
(b) No assignment, conveyance or other transfer pursuant to
Section 7.1(a) shall be effective unless (i) the transferee shall have executed
and delivered to the Business Trustee an instrument containing the transferee's
agreement to be bound by the terms of this Agreement, and (ii) if such
assignment, conveyance or other transfer shall result in the Owner owning less
than 51% of the aggregate beneficial interests in the Trust, then the Trust
shall have received Rating Agency Confirmation.
ARTICLE 8
SUCCESSOR TRUSTEE; CO-TRUSTEE
SECTION 8.1. RESIGNATION OR REMOVAL OF A TRUSTEE: APPOINTMENT
OF SUCCESSOR.
(a) Resignation or Removal. Subject to Section 2.5(d) hereof,
any Trustee or any successor trustee may resign at any time without cause by
giving at least sixty (60) days' prior written notice to the Owner and, during
the period while any Bonds are outstanding and until all of the obligations of
MP-LLC under the Indentures or the Bonds have been indefeasibly and fully
satisfied, to MP-LLC, such resignation to be effective upon the acceptance of
appointment by the successor trustee under Section 8.1(b). In addition, subject
to Section 2.5(d) hereof, the Owner may at any time remove the Business Trustee
without cause by a notice in writing delivered to the Business Trustee and,
during the period while any Bonds are outstanding and until all of the
obligations of MP-LLC under the Indentures or the Bonds have been indefeasibly
and fully satisfied, to MP-LLC, such removal to be effective upon the acceptance
of appointment by the successor trustee under Section 8.1(b), but in no event
shall such removal cause a termination of the Trust. In the case of the
resignation or removal of the Business Trustee or the Delaware Trustee, the
Owner may appoint a successor trustee by an instrument in writing signed by the
Owner. If a successor trustee shall not have been appointed within thirty (30)
days after notice of resignation or removal of such Trustee, then such Trustee
or, during the period while any Bonds are outstanding and until all of the
obligations of MP-LLC under the Indentures or the Bonds have been indefeasibly
and fully satisfied, MP-LLC may apply to any court of competent jurisdiction to
appoint a successor trustee to act until such time, if any, as a successor
trustee shall have been appointed by the Owner as above provided. Any successor
trustee so appointed by such court shall immediately, and without further act,
be superseded by any successor trustee appointed by the Owner as above provided.
<PAGE>
(b) Execution and Delivery of Certain Documents. Any successor
trustee, however appointed, shall execute and deliver to the predecessor Trustee
an instrument accepting such appointment, and thereupon such successor trustee,
without further act, shall become vested with all the estates, properties,
rights, powers and duties of the predecessor Trustee in the Trust with like
effect as if originally named a Trustee herein and shall for the purpose of this
Agreement, thereafter be referred to as a Trustee; but nevertheless, upon the
written request of such successor trustee, such predecessor Trustee shall
execute and deliver an instrument transferring to such successor trustee, the
Trust herein expressed, all the estates, properties, rights, powers and duties
of such predecessor Trustee in and to the Trust, and such predecessor Trustee
shall duly assign, transfer, deliver and pay over to such successor trustee all
monies or other property then held by such predecessor Trustee in and to the
Trust, and such predecessor Trustee shall duly assign, transfer, deliver and pay
over to such successor trustee all monies or other property then held by such
predecessor Trustee in and to the Trust with respect to the Trust.
(c) Qualification. Any successor Delaware Trustee, however
appointed, shall be either a natural person who is a resident of the State of
Delaware, or any entity which has its principal place of business in the State
of Delaware.
(d) Merger, Etc. Any corporation which any Trustee may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which any Trustee
shall be a party, or any corporation to which substantially all the corporate
trust business of any Trustee may be transferred, shall, subject to Section
8.1(c), be such Trustee hereunder without further act.
SECTION 8.2. INDEPENDENT TRUSTEE. During the period while any
Bonds are outstanding and until all of the obligations of MP-LLC under the
Indentures or the Bonds are indefeasibly and fully satisfied, the Trust shall at
all times have at least one (1) Independent Trustee. A single Person may serve
as both the Delaware Trustee and the Independent Trustee.
ARTICLE 9
SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT
AND OTHER DOCUMENTS
SECTION 9.1. SUPPLEMENTS AND AMENDMENTS.
(a) Execution. Subject to the other provisions of this
Agreement, including, without limitation, Section 2.5, 8.2 and 9.1(c), at any
time and from time to time upon the written request of the Owner: (i) the
Trustees, together with the Owner, shall execute a supplement to this Agreement
for the purpose of adding provisions to, or changing or eliminating provisions
of, this Agreement (except Section 10.11) as specified in such request; and (ii)
each Trustee shall, subject to the consent of MP-LLC during the period while any
Bonds are outstanding and until all of the obligations of MP-LLC under the
Indentures or the Bonds have been indefeasible and fully satisfied, enter into
such written amendment of or supplement to any other Operative Document to which
such Trustee is a party as may be specified in such request, or execute and
deliver such written waiver or modification of or consent under the terms of any
such Operative Document as may be specified in such request.
<PAGE>
(b) Delivery of Amendments and Supplements to Certain Parties.
Until the Bonds shall have been repaid in full, a signed copy of each amendment
or supplement shall be delivered by each Trustee to MP-LLC and shall not in any
way affect the Bonds and shall not impose any duty on MP-LLC with respect to
such amendment or supplement.
(c) Amendments. Notwithstanding any other provision of this
Agreement or any provision of law, during the period while any Bonds are
outstanding and until all of the obligations of MP-LLC under the Indentures or
the Bonds have been indefeasibly and fully satisfied, no amendment of or
supplement, waiver or modification to this Agreement shall, without the prior
written consent of MP-LLC and the receipt by the Trust of Rating Agency
Confirmation, (i) modify the terms of Section 2.3, 2.5, 4.2, Article 5, Sections
7.1, 8.2, 9.1, 10.1, and the definitions of Independent Trustee and Bankruptcy
Event contained in this Agreement, or (ii) result in the Trust being terminated
until after all of the obligations of MP-LLC under the Indentures or the Bonds
have been indefeasibly and fully satisfied.
SECTION 9.2. DISCRETION AS TO EXECUTION OF DOCUMENTS. If in the
reasonable opinion of any Trustee any document required to be executed by it
pursuant to the terms of Section 9.1 materially and adversely affects any right,
duty, immunity or indemnity in favor of such Trustee hereunder or under any
other Operative Document to which such Trustee is a party, then such Trustee may
in its discretion decline to execute such document. If, in the reasonable
opinion of any Trustee any instrument required to be so executed adversely
affects any right, duty or liability of, or immunity or indemnity in favor of
such Trustee under this Agreement or any of the other Operative Documents to
which the Trust is now or hereafter a party, or would cause or result in any
conflict with or breach of any terms, conditions or provisions of, or default
under, such Trustee's charter documents or by-laws or any document contemplated
hereby to which such Trustee is a party, then such Trustee may decline to
execute such instrument, unless such Trustee shall have been provided by the
Owner an indemnity satisfactory to such Trustee.
SECTION 9.3. ABSENCE OF REQUIREMENTS AS TO FORM. It shall not be
necessary for any written request furnished pursuant to Section 9.1 to specify
the particular form of the proposed document to be executed pursuant to such
request, but it shall be sufficient if such request shall indicate the substance
thereof.
SECTION 9.4. DISTRIBUTION OF DOCUMENTS. Promptly after the
execution by any Trustee of any document entered into pursuant to Section 9.1,
such Trustee shall deliver, in accordance with the notice provisions of this
Agreement, a conformed copy thereof to the Owner.
SECTION 9.5. CONDITION TO SUCCESSOR TRUSTEE. No person shall
become a successor Trustee hereunder unless such successor Trustee shall deliver
an opinion of counsel, with respect to the laws of the jurisdiction of such
proposed successor Trustee (the "Relevant State"), to the following effect:
(a) Neither a Relevant State court nor a Federal court
applying Relevant State law, if properly presented with the issue and after
having properly considered each issue, would permit the Owner to terminate this
Agreement, except as otherwise provided herein or, during the period while any
Bonds are then outstanding, if any, and until all of the obligations of MP-
<PAGE>
LLC under the Indentures or the Bonds have been indefeasible and fully
satisfied, with the consent of MP-LLC, as the case may be, until payment in full
of the Bonds has occurred; and
(b) Under the laws of the Relevant State, as long as this
Agreement has not been terminated in accordance with its terms or, during the
period while any Bonds are then outstanding and until all of the obligations of
MP-LLC under the Indentures or the Bonds have been indefeasible and fully
satisfied, with the express prior written consent of MP-LLC, creditors of any
Person that is an Owner, holders of a lien against the assets of such Person,
and representatives of creditors of any such Person, such as trustees, receivers
or liquidators (whether or not any insolvency proceeding had been commenced)
(collectively, the "Owner Creditors"), may acquire legal, valid and enforceable
claims and liens, as to the Trust Estate, only against the beneficial interest
of such person in the Trust Estate, and do not have, and may not through the
enforcement of such Owner Creditors' rights, acquire any greater rights than the
Owner with respect to the Trust Estate.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. TERMINATION. This Agreement and the trusts,
rights, privileges and options created hereby shall terminate and this Agreement
shall be of no further force or effect upon the earliest of (i) provided the
then outstanding Bonds, if any, and all obligations of MP-LLC under the Bonds
and the related Indentures have been indefeasibly and fully satisfied, the sale
or other final disposition by the Business Trustee of all property constituting
part of the Trust Estate and the final distribution by the Business Trustee of
all monies or other property or proceeds constituting part of the Trust Estate
in accordance with Article 4, or (ii) twenty-one (21) years less one (1) day
after the death of the last survivor of the descendants living on the date of
this Agreement of Joseph P. Kennedy, father of President John F. Kennedy, but if
any trusts, rights, privileges or options shall be or become valid under
applicable law for a period subsequent to the twenty-first anniversary of the
death of the last such survivor (or, without limiting the generality of the
foregoing, if legislation shall become effective providing for the validity or
permitting the effective grant of such trusts, rights, privileges and options
for a period in gross exceeding the period for which such trusts, rights,
privileges and options are hereinabove stated to extend and be valid), then such
trusts, rights, privileges and options shall not terminate as aforesaid but
shall extend to and continue in effect, but only if such non-termination and
extension shall then be valid under applicable law, until such time as the same
shall under applicable law cease to be valid, or (iii) the election of the Owner
by notice to the Business Trustee to revoke the trusts created hereby, if such
notice shall be accompanied by the written agreement of the Owner assuming all
the obligations of the Trust under or contemplated by the Operative Documents
and all other obligations of the Trust incurred by the Business Trustee as a
trustee hereunder. Notwithstanding the foregoing or any other provision hereof,
to the fullest extent permitted by law, no such election shall be effective and
this Agreement shall not be terminated (A) if such election or termination is
made in contravention of the Operative Documents, or (B) until payment in full
of all the obligations of MP-LLC under the Bonds and related Indentures;
otherwise this Agreement and the trusts created hereby shall continue in full
force and effect in accordance with the terms hereof. Upon such termination, all
monies or other property or proceeds constituting part of the Trust Estate shall
be distributed in accordance with
<PAGE>
the terms of Article 4. Upon the termination of the Trust pursuant to this
Article 10, the Business Trustee shall cause a Certificate of Cancellation to be
filed with the Secretary of State of the State of Delaware.
SECTION 10.2. THE OWNER HAS NO LEGAL TITLE. The Owner shall not
have legal title to any part of the Trust Estate. No transfer, by operation of
law or otherwise, of any right, title or interest of the Owner in and to the
Trust Estate shall operate to terminate this Agreement or the trusts created
hereunder or entitle any successors or transferees of the Owner to an accounting
or to the transfer of legal title to any part of the Trust Estate. The
bankruptcy, death or incapacity of the Owner (or any other beneficiary
hereunder, if any) will not terminate this Agreement, nor entitle such person's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Estate, nor
otherwise effect the rights, obligations and liabilities of the parties hereto.
No Owner Creditor shall obtain legal title to or exercise legal or equitable
remedies with respect the Trust Estate as a result of the Owner's holding of the
beneficial interest hereunder. No transfer, by operation of law or otherwise, of
any right, title and interest of the beneficial interest hereunder shall operate
to terminate this Agreement or the Trust created hereby.
SECTION 10.3. ASSIGNMENT, SALE, ETC. OF TRUST ESTATE. Any
assignment, sale, transfer or other conveyance of any portion of the Trust
Estate by the Business Trustee pursuant to the terms hereof shall bind the Owner
and shall be effective to transfer or convey all right, title and interest of
the Trust and the Owner in and to such property. No purchaser or other grantee
shall be required to inquire as to the authorization, necessity, expediency or
regularity of such assignment, sale, transfer or conveyance or as to the
application of any sale or other proceeds with respect thereto by the Business
Trustee.
SECTION 10.4. TRUST AGREEMENT FOR BENEFIT OF PARTIES ONLY.
Nothing herein, whether express or implied, shall be construed to give any other
Person other than the Trustee and the Owner any legal or equitable right, remedy
or claim under or in respect of this Agreement; but this Agreement shall be held
to be for the sole and exclusive benefit of the Trustee and the Owner.
SECTION 10.5. NOTICES. Unless otherwise expressly specified or
permitted by the terms hereof, any notice, request, demand, or other
communications to be delivered under or in connection with this Agreement shall
be given in writing and delivered by either (a) personal delivery, (b) facsimile
transmission (with a copy to follow in the manner set forth in the following
clause (c)), (c) certified or registered mail, with postage prepaid and return
receipt requested, or (d) an overnight delivery service of general commercial
use (such as UPS, Federal Express, DHL, U.S.P.S. Express Mail, or Airborne)
addressed as follows:
(i) if to the Delaware Trustee or the Independent Trustee,
addressed to it at its office at:
Wilmington Trust Company
One Rodney Square
1100 North Market Street
Wilmington, Delaware 19890
<PAGE>
Attention: Corporate Trust Administration
Telephone Number: (302) ________
Facsimile Number: (302) ________
(ii) if to the Special Trustee, addressed to it at:
James H. Luther
3739 Bon Rea Drive
Charlotte, North Carolina 28226
Telephone Number: (704) 341-0354
Facsimile Number: (704) ________
(iii) if to the Business Trustee, addressed to it at:
John E. Mack
c/o NationsBank, N.A.
100 North Tryon Street
Charlotte, North Carolina 28255-0065
Telephone Number: (704) 386-5833
Facsimile Number: (704) 386-0270
(iv) if to the Owner, addressed to it at:
NationsBank, N.A.,
100 North Tryon Street
Charlotte, North Carolina 28255-0065
Attention: _______________
Telephone Number: (704) _________
Facsimile Number: (704) _________
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038-4892
Attention: A. Curtis Greer II, Esq.
Telephone Number: (212) 504-6000
Facsimile Number: (212) 504-6666
or to such other address or facsimile number as such party may hereafter specify
for such purposes by notice to the other party. Each such notice, request,
demand, or other communication shall be deemed to have been duly given and be
effective (i) if given by personal delivery, then when actually delivered to the
party to whom it is addressed, (ii) if given by facsimile, then when such
facsimile is transmitted, without error, to the facsimile number specified in
this Section, or (iii) if given by any other means, then when actually delivered
to the address specified in accordance with this Section.
<PAGE>
SECTION 10.6. SEVERABILITY. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.7. WAIVERS. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article 10; and any waiver
of the terms hereof shall be effective only in the specified instance and for
the specific purpose given. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights and
remedies provided by law.
SECTION 10.8. COUNTERPARTS. This Agreement may be executed by the
parties hereto in any number of separate counterparts, each of which when so
executed and delivered shall be an original, but all of such counterparts
together shall constitute but one and the same instrument.
SECTION 10.9. BINDING EFFECT. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Trustees, and their respective successors and permitted assigns, and the Owner,
and its successors and its permitted assigns. Any request, notice, direction,
consent, waiver or other instrument or action by the Owner shall bind its
successors and permitted assigns.
SECTION 10.10. HEADINGS. The headings of the various Articles,
Sections and paragraphs herein are for convenience of reference only and shall
not alter, modify, define or limit, or be used in construing or interpreting,
any of the terms or provisions hereof.
SECTION 10.11. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereunder shall in all respects be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
including all matters of construction, validity and performance, with giving
effect to such state's principles of conflicts of law.
SECTION 10.12. AMENDMENT. Except as otherwise set forth herein,
this Agreement may not be amended, changed or modified except pursuant to a
writing duly executed by both parties.
SECTION 10.13. ASSIGNMENT. Except as otherwise set forth herein,
this Agreement and its rights and obligations may not be assigned by any party
hereto without the prior written consent of the other parties hereto.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective duly authorized officers as of the day
and year first written above.
OWNER:
NATIONSBANK, N.A.
By: /s/ James W. Kiser
------------------------
Name:
Title:
DELAWARE TRUSTEE & INDEPENDENT TRUSTEE:
WILMINGTON TRUST COMPANY
By: /s/ Debra
-----------------------
Eberly
Name: Debra Eberly
Title: Administrative Account Manager
SPECIAL TRUSTEE:
/s/ James H. Luther
--------------------------
JAMES H. LUTHER
BUSINESS TRUSTEE:
/s/ John E. Mack
--------------------------
JOHN E. MACK
<PAGE>
EXHIBIT A
TO THE
TRUST AGREEMENT
OF
MAIN PLACE TRUST
(DATED AS OF DECEMBER 14, 1998)
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") is
dated as of December __, 1998, by NATIONSBANK, N.A (the "Assignor") and MAIN
PLACE TRUST, a Delaware business trust (the "Assignee").
WHEREAS, Assignor is the sole member of Main Place Funding, LLC,
a Delaware limited liability company formerly known as Main Place Holdings, LLC
(the "LLC"), and, in accordance with the Limited Liability Company Agreement of
the LLC dated as of October 15, 1998 (the "LLC Agreement"), Assignor holds a
100% membership interest in the LLC (the "LLC Interest").
WHEREAS, Assignee is a newly-formed Delaware business trust and
has not conducted any business or operations, or acquired any assets.
WHEREAS, Assignor desires to transfer, as a capital contribution,
in exchange for all of the equity interests in Assignee one percent (1%) of its
LLC Interest (the "Transferred Interest") to Assignee, and Assignee desires to
accept the Transferred Interest on the terms set forth below.
NOW THEREFORE, in consideration of the premises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the parties hereto hereby
agrees as follows: 1. Assignor hereby transfers, assigns, sells, grants and
conveys unto Assignee, its successors and assigns, all of the rights, title and
interest of Assignor in, to and under the Transferred Interest. This transfer
and assignment is made without representation or warranty except as set forth in
this Agreement.
<PAGE>
2. Assignee hereby affirms and accepts all the terms, conditions
and provisions of the LLC Agreement and agrees to be bound by and to the same,
and Assignee's execution of this Agreement shall be deemed to constitute
Assignee's execution of a counterpart signature page to the LLC Agreement.
3. Assignor represents and warrants that (a) it is the sole
owner of the Transferred Interest, and owns the Transferred Interest free and
clear of any lien, encumbrance or security interest, and (b) it has not assigned
any or all of its rights, title or interest in the Transferred Interest to any
other person or entity.
4. The terms of this Agreement shall be binding upon and shall
inure to the benefit of the Assignor, the Assignee and their respective
successors and assigns. All representations and warranties made herein shall
survive the execution and delivery of this Agreement.
5. This Agreement constitutes the complete agreement of the
parties hereto with respect to the subject matter referred to herein and
supersedes all prior or contemporaneous negotiations, promises, covenants,
agreements or representations of every nature whatsoever with respect thereto,
all of which have become merged and finally integrated into this Agreement. This
Agreement may not be amended, modified or supplemented except by an instrument
in writing executed by both parties hereto.
6. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without giving
effect to the conflicts of law provisions thereof.
7. This Agreement may be executed in multiple counterparts, each
one of which shall constitute an original executed copy of this Agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS)
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed and
delivered this Agreement as of the date first above written.
NATIONSBANK, N.A.
By:
-------------------
Name:
Title:
MAIN PLACE TRUST
By:
-------------------
Name:
Title:
The undersigned, being the sole member and sole manager of Main
Place Funding, LLC (the "LLC"), hereby admits Main Place Trust as a member of
the LLC.
Dated: December __, 1998___________ NATIONSBANK, N.A.
By:
-------------------
Name:
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") is
dated as of December 14, 1998, by NATIONSBANK, N.A (the "Assignor") and MAIN
PLACE TRUST, a Delaware business trust (the "Assignee").
WHEREAS, Assignor is the sole member of Main Place Funding, LLC,
a Delaware limited liability company formerly known as Main Place Holdings, LLC
(the "LLC"), and, in accordance with the Limited Liability Company Agreement of
the LLC dated as of October 15, 1998 (the "LLC Agreement"), Assignor holds a
100% membership interest in the LLC (the "LLC Interest").
WHEREAS, Assignee is a newly-formed Delaware business trust and
has not conducted any business or operations, or acquired any assets.
WHEREAS, Assignor desires to transfer, as a capital contribution,
in exchange for all of the equity interests in Assignee one percent (1%) of its
LLC Interest (the "Transferred Interest") to Assignee, and Assignee desires to
accept the Transferred Interest on the terms set forth below.
NOW THEREFORE, in consideration of the premises and covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each of the parties hereto hereby
agrees as follows:
1. Assignor hereby transfers, assigns, sells, grants and conveys
unto Assignee, its successors and assigns, all of the rights, title and interest
of Assignor in, to and under the Transferred Interest. This transfer and
assignment is made without representation or warranty except as set forth in
this Agreement.
2. Assignee hereby affirms and accepts all the terms, conditions
and provisions of the LLC Agreement and agrees to be bound by and to the same,
and Assignee's execution of this Agreement shall be deemed to constitute
Assignee's execution of a counterpart signature page to the LLC Agreement.
3. Assignor represents and warrants that (a) it is the sole owner
of the Transferred Interest, and owns the Transferred Interest free and clear of
any lien, encumbrance or security interest, and (b) it has not assigned any or
all of its rights, title or interest in the Transferred Interest to any other
person or entity.
4. The terms of this Agreement shall be binding upon and shall
inure to the benefit of the Assignor, the Assignee and their respective
successors and assigns. All representations and warranties made herein shall
survive the execution and delivery of this Agreement.
<PAGE>
5. This Agreement constitutes the complete agreement of the
parties hereto with respect to the subject matter referred to herein and
supersedes all prior or contemporaneous negotiations, promises, covenants,
agreements or representations of every nature whatsoever with respect thereto,
all of which have become merged and finally integrated into this Agreement. This
Agreement may not be amended, modified or supplemented except by an instrument
in writing executed by both parties hereto.
6. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without giving
effect to the conflicts of law provisions thereof.
7. This Agreement may be executed in multiple counterparts, each
one of which shall constitute an original executed copy of this Agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK - SIGNATURE PAGE FOLLOWS)
-2-
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed and
delivered this Agreement as of the date first above written.
NATIONSBANK, N.A.
By: /s/ James W. Kiser
-------------------
Name:
Title:
MAIN PLACE TRUST
By: /s/ John E. Mack
--------------------
Name:
Title:
The undersigned, being the sole member and sole manager of Main
Place Funding, LLC (the "LLC"), hereby admits Main Place Trust as a member of
the LLC.
Dated: December 14, 1998 NATIONSBANK, N.A.
By: /s/ James W. Kiser
---------------------
Name:
Title:
<TABLE>
<CAPTION>
MAIN PLACE FUNDING, LLC Exhibit 12
RATIO OF EARNINGS TO FIXED CHARGES
- ----------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
1998 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before taxes $2,341,426 $1,294,152 $ 216,709
Fixed charges:
Interest expense 1,056,419 595,818 255,318
Amortization of debt discount and
appropriate issuance costs 3,128 3,713 2,856
--------------------------------------------------
Total fixed charges 1,059,547 599,531 258,174
Earnings before fixed charges $3,400,973 $1,893,683 $ 474,883
==================================================
Fixed charges $1,059,547 $ 599,531 $ 258,174
==================================================
Ratio of Earnings to Fixed Charges 3.21 3.16 1.84
==================================================
</TABLE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-82040) of
Main Place Real Estate Investment Trust, predecessor to Main Place Funding,
LLC, of our report dated March 31, 1999 appearing on Page 12 of this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Charlotte, North Carolina
March 31, 1999
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary information extracted from the December 31, 1998
Form 10-K for Main Place Funding, LLC and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,219,988
<INT-BEARING-DEPOSITS> 12,000,000
<FED-FUNDS-SOLD> 0<F1>
<TRADING-ASSETS> 0<F1>
<INVESTMENTS-HELD-FOR-SALE> 8,794,598
<INVESTMENTS-CARRYING> 201,190
<INVESTMENTS-MARKET> 201,220
<LOANS> 13,092,178
<ALLOWANCE> (37,599)
<TOTAL-ASSETS> 36,950,906
<DEPOSITS> 0<F1>
<SHORT-TERM> 8,658,818
<LIABILITIES-OTHER> 591,556
<LONG-TERM> 2,499,879
0<F1>
0<F1>
<COMMON> 0<F1>
<OTHER-SE> 25,200,653
<TOTAL-LIABILITIES-AND-EQUITY> 36,950,906
<INTEREST-LOAN> 1,110,868
<INTEREST-INVEST> 1,345,293
<INTEREST-OTHER> 785,030
<INTEREST-TOTAL> 3,241,191
<INTEREST-DEPOSIT> 0<F1>
<INTEREST-EXPENSE> 1,059,547
<INTEREST-INCOME-NET> 2,181,644
<LOAN-LOSSES> 400
<SECURITIES-GAINS> 201,236
<EXPENSE-OTHER> 41,054
<INCOME-PRETAX> 2,341,426
<INCOME-PRE-EXTRAORDINARY> 2,341,426
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,778,804
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<YIELD-ACTUAL> 0<F1>
<LOANS-NON> 109,783
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 41,412
<CHARGE-OFFS> (4,834)
<RECOVERIES> 621
<ALLOWANCE-CLOSE> 37,599
<ALLOWANCE-DOMESTIC> 37,599
<ALLOWANCE-FOREIGN> 0<F1>
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>N/A = Not applicable
</FN>
</TABLE>
