UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 2, 2006
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BRT REALTY TRUST
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(Exact name of Registrant as specified in charter)
Massachusetts 001-07172 13-2755856
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(State or other (Commission file No.) (IRS Employer
jurisdiction of I.D. No.)
incorporation)
60 Cutter Mill Road, Suite 303, Great Neck, New York 11021
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 516-466-3100
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
-- Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
-- Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
-- Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
-- Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement
Please see the information contained in Item 8.01 of this report, which is
incorporated herein by reference.
Item 8.01 Other Events
On November 2, 2006, entities wholly-owned by CIT Capital USA, Inc.,
(wholly-owned by CIT Group, Inc., (DEL)) and BRT Realty Trust (registrant or
BRT) entered into a joint venture agreement. The joint venture, known as BRT
Funding LLC, will engage in the business of investing in short-term commercial
real estate loans, commonly referred to as "bridge loans." The joint venture
provides for an initial capitalization of up to $100 million, to be advanced as
commercial real estate loans are funded by the joint venture, 75% of which will
be provided by the CIT member of the joint venture and 25% by the BRT member of
the joint venture. The joint venture contemplates obtaining a line of credit of
up to $50 million, but there are no agreements or commitments in place with
respect to such line of credit and there is no assurance that an acceptable line
can be obtained.
The joint venture, which will be managed on a fee basis by the BRT member, will
distribute net available cash to its members on a pro rata basis until each
party receives annually a 9% return on outstanding advances, and, thereafter,
any available net cash in excess of 9% will be distributed 37 1/2% to the CIT
member and 62 1/2% to the BRT member. In addition, up to 2% of the origination
fees paid by borrowers on loans originated by the joint venture will be
distributed 37 1/2% to the CIT member and 62 1/2 % to the BRT member. Any
origination fees received in any loan transaction exceeding 2%, but not
exceeding 3%, will be paid to REIT Management Corp., BRT's adviser, and
origination fees in excess of 3% will be paid 37 1/2% to the CIT member and 62%
to the BRT member. BRT has agreed to present loan proposals to the joint venture
for its consideration on a first refusal basis under procedures set forth in a
joint venture agreement, with the first $50 million in principal amount of loans
accepted by the joint venture to be originated solely by, and for the benefit
of, the joint venture. Loans in excess of $50 million accepted by the joint
venture will be shared 50/50 by the joint venture and BRT until the joint
venture has a loan portfolio of $100 million of outstanding loans (up to $150
million if the maximum line of credit is obtained). If the joint venture
sustains any loss of principal with respect to a loan which is foreclosed upon
(principal amount of loan exceeds the amount received upon a foreclosure, net of
all foreclosure expenses) the BRT member will reimburse the CIT Member up to 75%
of the actual loss, but only to the extent that amounts received by the BRT
member from cash distributions exceeds the BRT member's 9% return, with such
reimbursement to be capped at two thirds of 1% of the highest aggregate
principal amount of the venture's loans outstanding.
BRT will continue to originate loans for its own account, including, among
others, loans which are made after the joint venture's loan portfolio exceeds
$100 million (or, if the maximum line of credit is obtained, up to $150
million).
Registrant will pay a fee of 4% of the funds advanced by the CIT member, as and
when such funds are advanced, to a merchant banking firm for services rendered
in the transaction. The merchant banking firm involved in the transaction is
unrelated to the registrant. However, an independent director of One Liberty
Properties, Inc., which may be deemed an affiliate of registrant, is a managing
director of the merchant bank.
A complete copy of the joint venture agreement (Limited Liability Company
Agreement dated November 2, 2006) is attached as an exhibit to this report and
should be referred to for all provisions of the joint venture agreement, as the
above description is a summary of only the more important provisions of the
agreement.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired. Not applicable.
(b) Pro Forma Financial Information. Not required.
(c) Shell Company transactions - Not applicable.
(d) Exhibit 1.
Limited Liability Company Agreement dated as of November 2, 2006.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BRT REALTY TRUST
Date: November 8, 2006 By: /s/ Simeon Brinberg
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Simeon Brinberg
Senior Vice President and Secretary
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LIMITED LIABILITY COMPANY AGREEMENT
OF
BRT FUNDING LLC
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Dated as of: November 2, 2006
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TABLE OF CONTENTS
ARTICLE I DEFINED TERMS ANDE RULES OF CONSTRUCTION..............................................1
Section 1.01 Defined Terms..............................................................1
Section 1.02 Other Defined Terms........................................................17
Section 1.03 Governing Law..............................................................17
Section 1.04 Rules of Construction......................................................17
ARTICLE II ORGANIZATION.........................................................................18
Section 2.01 Formation and Continuation.................................................18
Section 2.02 Name and Principal Place of Business.......................................18
Section 2.03 Term.......................................................................19
Section 2.04 Registered Agent, Registered Office and Foreign Qualification..............19
Section 2.05 Purpose 19
Section 2.06 Internal Business Activities and Maintenance of Separateness...............19
Section 2.07 Limitations on Activities of the Company .................................20
Section 2.08 Qualified Loans. .........................................................20
Section 2.09 Limitations on Company Loans...............................................21
Section 2.10 Shared Loans ..............................................................22
Section 2.11 Further Limitations on Company Loans.......................................22
ARTICLE III MEMBERS AND INTERESTS...............................................................23
Section 3.01 Admission of Members.......................................................23
Section 3.02 Limitation on Liability....................................................23
Section 3.03 Third-Party Debt Liability.................................................23
Section 3.04 Compensation of Members....................................................24
Section 3.05 Percentage Interests.......................................................24
Section 3.06 Return of Capital..........................................................24
Section 3.07 Ownership..................................................................24
Section 3.08 Waiver of partition; nature of interests in the Company............................24
ARTICLE IV MANAGEMENT...........................................................................24
Section 4.01 Management.................................................................24
Section 4.02 Major Decisions............................................................25
Section 4.03 Loan Approval Process......................................................27
Section 4.04 Conditions to Closing of Company Loans.....................................28
Section 4.05 Limitation on Other Members' Rights to Manage the Company..................29
Section 4.06 Accounting and Fiscal Year.................................................30
Section 4.07 Books and Records..........................................................30
Section 4.08 Access to Books and Records................................................30
Section 4.09 Provision of Financial Statements and Reports..............................30
Section 4.10 Reports....................................................................31
Section 4.11 The Company Accountant.....................................................31
Section 4.12 Reserves...................................................................31
Section 4.13 Tax Matters................................................................31
Section 4.14 Reimbursement for Certain Expenses.........................................32
Section 4.15 Obligation of the Managing Member to Bear Expenses.........................32
Section 4.16 Holding of REIT Qualifying Assets..........................................33
Section 4.17 Loans Deemed Disapproved...................................................33
ARTICLE V CAPITAL...............................................................................33
Section 5.01 Initial Capital Contributions..............................................33
Section 5.02 Capital Calls..............................................................33
Section 5.03 No Further Capital Contributions...........................................34
Section 5.04 Method of Payment..........................................................35
Section 5.05 Defaults in Making Capital Contributions and Remedies......................35
ARTICLE VI ALLOCATIONS..........................................................................36
Section 6.01 Profits....................................................................36
Section 6.02 Losses.....................................................................37
Section 6.03 Special Allocations........................................................37
Section 6.04 Curative Allocations.......................................................38
Section 6.05 Other Allocation Rules.....................................................38
Section 6.06 Tax Allocations; Code Section 704(c).......................................38
ARTICLE VII DISTRIBUTIONS.......................................................................39
Section 7.01 Amounts Distributed........................................................39
Section 7.02 Amounts Withheld...........................................................42
Section 7.03 Limitations on Distributions...............................................42
Section 7.04 Treatment of Certain Payments on Company Loans.............................42
Section 7.05 Distributions and Payments to Members......................................43
Section 7.06 Payments Due with respect to Lost Principal................................43
Section 7.07 Payments to REIT...........................................................43
ARTICLE VIII ADMISSION OF MEMBERS AND RESTRICTIONS ON TRANSFER..................................44
Section 8.01 No New or Additional Members...............................................44
Section 8.02 No Transfer................................................................44
Section 8.03 Permitted Transfers........................................................44
Section 8.04 Limitation on Resignations.................................................44
Section 8.05 Conditions on Transfer.....................................................44
Section 8.06 Distributions and Allocations in Respect of Transferred
Interests..................................................................45
ARTICLE IX DISSOLUTION AND TERMINATION.........................................................45
Section 9.01 Dissolution and Liquidation................................................45
Section 9.02 Reconstitution.............................................................46
Section 9.03 Transfer Not Effecting Termination.........................................46
Section 9.04 Winding Up.................................................................46
Section 9.05 Compliance with Certain Requirements of Regulations; Deficit Capital
Accounts 47
Section 9.06 Deemed Distribution and Recontribution.....................................47
Section 9.07 Distributions in Kind......................................................48
Section 9.08 Rights of Members..........................................................48
Section 9.09 Allocations and Distributions during Period of Liquidation.................48
Section 9.10 Character of Liquidating Distributions.....................................48
Section 9.11 Effect of Wind-Up Notice...................................................48
Section 9.12 Compensation...............................................................48
ARTICLE X REPRESENTATIONS AND WARRANTIES.......................................................48
Section 10.01 In General..............................................................48
Section 10.02 Representations and Warranties..........................................48
ARTICLE XI RESTRICTIONS........................................................................51
Section 11.01 Restrictive Covenants...................................................51
ARTICLE XII MISCELLANEOUS.......................................................................53
Section 12.01 Further Assurances......................................................54
Section 12.02 Expenses................................................................54
Section 12.03 Indemnification.........................................................54
Section 12.04 Notices.................................................................55
Section 12.05 Entire Agreement........................................................57
Section 12.06 Amendment and Waiver....................................................57
Section 12.07 Assignment; No Third Party Beneficiaries................................57
Section 12.08 Severability ...........................................................57
Section 12.09 Waiver of Jury Trial; Consent to Jurisdiction...........................58
Ssection 12.10 Counterparts...........................................................58
EXHIBITS
EXHIBIT A - List of BRT Mortgage Brokers
EXHIBIT B - Form of Standard Recourse Carve-Out Provisions
LIMITED LIABILITY COMPANY AGREEMENT
OF
BRT FUNDING LLC
This LIMITED LIABILITY COMPANY AGREEMENT of BRT FUNDING LLC (the "Company") is
made and entered into as of November 2, 2006 (the "Effective Date"), by and
among the Company, CIT Capital USA, Inc. ("CIT Sub," and together with its
successors and assigns, as a member in the Company, the "CIT Member"), a
corporation formed under and pursuant to the laws of the State of Delaware, and
BRT Joint Venture No. 1 LLC ("BRT Sub," together with its successors and
assigns, as a member in the Company, the "BRT Member"), a limited liability
company formed under and pursuant to the laws of the State of Delaware. The CIT
Member and the BRT Member are hereinafter sometimes referred to collectively as
the "Members" and individually as a "Member," and the Company, the CIT Member
and the BRT Member are hereinafter sometimes referred to collectively as the
"Parties" and individually as a "Party;" provided, however, that for the
purposes of Article XII, (a) the term "Parties" shall mean, collectively, the
Company, the CIT Member, the BRT Member, CIT (as defined below) and BRT (as
defined below) and (b) the term "Party" shall means each or any (as the case may
be) of such entities.
R E C I T A L S:
WHEREAS, the CIT Member is a wholly owned subsidiary of CIT Capital USA Inc.
("CIT"), a corporation formed under and pursuant to the laws of the State of
Delaware; WHEREAS, the BRT Member is a wholly owned subsidiary of BRT Realty
Trust ("BRT"), a business trust formed under and pursuant to the laws of the
Commonwealth of Massachusetts; WHEREAS, the CIT Member and the BRT Member have
formed the Company in order to engage in the business of investing in real
estate mortgage loans to be secured by certain types of real property, subject
to the terms and conditions set forth herein; WHEREAS, the Company was formed on
November 2, 2006 pursuant to the Delaware Act, and there has been filed a
Certificate of Formation of the Company with the office of the Secretary of
State of the State of Delaware; WHEREAS, the Parties desire to provide for the
respective rights, obligations and interests of the Parties to each other and to
the Company; and WHEREAS, this Agreement shall apply to and govern the
management and operation of the Company from the date hereof and shall bind each
and every present and future Member. NOW, THEREFORE, in consideration of the
foregoing premises and the covenants and other agreements set forth herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties, intending to be bound hereby, agree as
follows:
DEFINED TERMS AND RULES OF CONSTRUCTION
Defined Terms. As used in this Agreement, the following terms have the
respective meanings set forth below:
"100% Affiliate" means, with respect to any specified Person, (a) any other
Person that, directly or indirectly through one or more intermediaries, owns all
of the capital stock or other equity interests in such specified Person, (b) any
other Person of which all of the capital stock or other equity interests are
owned, directly or indirectly through one or more intermediaries, by such
specified Person and (c) any other Person of which all of the capital stock or
other equity interests are owned, directly or indirectly through one or more
intermediaries, by any Person referred to in the foregoing clause (a).
"Accounting Fees" has the meaning set forth in Section 4.11.
"Additional Capital Contribution" means, with respect to any Member, the cash
contribution to the capital of the Company made by such Member pursuant to
Section 5.02. "Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(i) credit to such Capital Account any amounts that such Member is
deemed obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
(ii) debit to such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2) (ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"Affiliate" means, with respect to any specified Person, (a) any other Person
directly or indirectly controlling, controlled by, or under common control with
such specified Person, (b) any individual who is an Executive Officer of such
specified Person or of any other Person described in clause (a) of this
definition or (c) any other Person directly or indirectly controlling,
controlled by, or under common control with any individual or groups of
individuals described in clause (b) of this definition; provided, however, that
the Company shall not be deemed to be an Affiliate of any Member (but each
Member and its Affiliates will be deemed Affiliates of the Company).
"Agreement" means this Limited Liability Company Agreement, including any
exhibits or schedules attached hereto, as the same may be further amended or
restated from time to time pursuant to the terms hereof. "Allocation Year" means
(i) the period commencing on the Effective Date and ending on December 31, 2006,
(ii) any subsequent period commencing on January 1st and ending on the following
December 31st or (iii) any portion of the period described in the foregoing
clause (ii) for which the Company is required to allocate Profits, Losses and
other items of income, gain, loss or deduction pursuant to Article VI. "Base
Amount" means, with respect to any Company Loan Origination Fee that is paid to
the Company on or with respect to any Company Loan that is a High-Spread Company
Loan, the amount of such Company Loan Origination Fees up to two percent (2%) of
the principal amount of such Company Loan (which principal amount shall include
any amount the Company is committed to loan or advance, whether or not the
Company actually loans or advances such amount).
"Borrower" means, with respect to any loan (whether or not a Qualified Loan),
the Person to whom such loan has been made or advanced and who is contractually
obligated to repay such loan. "Borrower Group" means, with respect to any
Borrower, collectively such Borrower and its Affiliates. "BRT" has the meaning
set forth in the RECITALS.
"BRT Investment Commitment Notice" has the meaning set forth in Section
11.01(h).
"BRT's Investment Percentage Commitment" has the meaning set forth in
Section 11.01(h).
"BRT Joint Venture Commitment Notice" has the meaning set forth in
Section 11.01(g).
"BRT's Joint Venture Percentage Commitment" has the meaning set forth in Section
11.01(g). "BRT Loan Fee Portion" means, with respect to any Company Loan
Origination Fee, the following:
if such Company Loan Origination Fee has been paid to the Company
on or with respect to a Company Loan that is not a
High-Spread Company Loan, an amount equal to sixty-two and
one-half percent (62 1/2%) of such Company Loan Origination
Fee; or
if such Company Loan Origination Fee has been paid to the
Company on or with respect to a Company Loan that is a
High-Spread Company Loan, an amount equal to (i) sixty-two
and one-half percent (62 1/2%) of such Company Loan
Origination Fee (up to the Base Amount of such Company Loan
Origination Fee) plus (ii) one hundred percent of the Medium
Amount of such Company Loan Origination Fee plus (iii)
sixty-two and one-half percent (62 1/2%) of the Excess
Amount of such Company Loan Origination Fee.
"BRT Member" has the meaning set forth in the first paragraph of this Agreement.
"BRT Mortgage Broker" means any mortgage broker that is specified in Part I or
Part II of Exhibit A attached hereto. "BRT Sub" has the meaning set forth in the
first paragraph of this Agreement. "Business Day" means any day that is not a
Saturday or Sunday or a day on which banks are required or permitted to be
closed in the State of New York.
"Capital Account" means, with respect to any Member, the Capital Account
maintained for such Member in accordance with the following provisions:
(i) To each Member's Capital Account there shall be credited (A)
such Member's Capital Contributions and (B) such Member's
distributive share of Profits and any items in the nature of
income or gain that are specially allocated pursuant to
Section 6.03 or 6.04;
(ii) To each Member's Capital Account there shall be debited (A)
the amount of money and the Gross Asset Value of any Property
distributed to such Member pursuant to any provision of this
Agreement and (B) such Member's distributive share of Losses
and any items in the nature of expenses or losses that are
specially allocated pursuant to Section 6.03 or 6.04; and
(iii) In the event an Interest is Transferred in accordance with the
terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to
the Transferred Interest.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b) and shall be interpreted and applied in a manner consistent
with such Regulations. In the event the Managing Member shall (in good faith)
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto are computed in order to comply with such
Regulations, the Managing Member may make such modification. The Managing Member
also shall (i) make any adjustments that are necessary or appropriate to
maintain equality between the aggregate Capital Accounts of the Members and the
amount of capital reflected on the Company's balance sheet, as computed for book
purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (ii)
make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulations Section
1.704-1(b).
"Capital Call Notice" has the meaning set forth in Section 5.02(a).
"Capital Contribution" means, with respect to any Member, the Initial Capital
Contribution and all Additional Capital Contributions made by such Member to the
Company pursuant to this Agreement. "Carry-over BRT Loan Fee Distribution" means
any distribution (or the relevant portion thereof) that should have been
distributed to the BRT Member with respect to any prior Fiscal Quarter pursuant
to clause (iv) of Section 7.01(b) but that has not been distributed to the BRT
Member. "Carry-over CIT Loan Fee Distribution" means any distribution (or the
relevant portion thereof) that should have been distributed to the CIT Member
with respect to any prior Fiscal Quarter pursuant to clause (iv) of Section
7.01(b) but that has not been distributed to the CIT Member. "Carry-over
Management Distribution" means any distribution (or the relevant portion
thereof) that should have been distributed to the BRT Member with respect to any
prior Fiscal Quarter pursuant to clause (ii) of Section 7.01(b) but that has not
been distributed to the BRT Member. "Carry-over Priority Member Advance
Distribution" means any distribution (or the relevant portion thereof) that
should have been distributed to a Member with respect to any prior Fiscal
Quarter pursuant to clause (iii) of Section 7.01(b) but that has not been
distributed to such Member. "Certificate of Formation" has the meaning set forth
in Section 2.01(b).
"CIT Loan Fee Portion" means, with respect to any Company Loan Origination
Fee, the following:
if such Company Loan Origination Fee has been paid to the Company on
or with respect to a Company Loan that is not a High-Spread
Company Loan, an amount equal to thirty-seven and one half
percent (37 1/2%) of such Company Loan Origination Fee; or
if such Company Loan Origination Fee has been paid to the Company
on or with respect to a Company Loan that is a High-Spread
Company Loan, an amount equal to (i) thirty-seven and one half
percent (37 1/2%) of such Company Loan Origination Fee (up to
the Base Amount of such Company Loan Origination Fee) plus
(ii) thirty-seven and one-half percent (37 1/2%) of the Excess
Amount of such Company Loan Origination Fee.
"CIT" has the meaning set forth in the RECITALS.
"CIT Loan Principal Shortfall" means, at any time, the amount (if any) by which
(a) seventy-five percent (75%) of the aggregate of all Lost Principal Amounts
that are attributable to all Foreclosed Company Loans that have been suffered by
the Company subsequent to the Effective Date and prior to such time exceeds (b)
the aggregate amount of the payments that, prior to such time, have been made by
the BRT Member to the CIT Member pursuant to Section 7.06.
"CIT Member" has the meaning set forth in the first paragraph of this Agreement.
"CIT Sub" has the meaning set forth in the first paragraph of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended. Any reference herein
to any specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of future laws.
"Commercial Real Estate Loan" means any loan that is (A) secured solely
or principally by a First Mortgage on real property (inclusive of all buildings
and other improvements) that is for office, industrial, retail and/or other
commercial use and that is situated in the continental United State of America
and (B) otherwise is the same as, or substantially the same as, the Company
Loans that hereunder have been, or are contemplated to be, made by the Company.
"Committee Report" means, with respect to any proposed or prospective
Company Loan (including any Shared Loan), the report provided to the Loan
Committee, which report shall detail all aspects and circumstances of such
proposed or prospective Company Loan that would cause such proposed loan not to
be a Qualified Loan or that would require any approval or consent by any Member
under Section 2.09.
"Company" means BRT Funding LLC as the limited liability company formed pursuant
to the Certificate of Formation and operated pursuant to the terms of this
Agreement. "Company Accountant" means such accounting firm as may be approved in
writing by all of the Members. "Company Loan" means any loan that is made or
advanced by the Company as contemplated hereunder and shall include the
Company's Share of any Shared Loan.
"Company Loan Origination Fee" means, with respect to any Company Loan that is
made or advanced by the Company, the aggregate fee (whether denominated as
"points," "origination fee" or otherwise) that is paid by the Borrower of such
Company Loan to the Company upon, and as consideration for, the initial making
or advancement of such Company Loan (exclusive, however, of any portion of such
fee that is paid or payable as (a) as a Loan Origination Deposit or otherwise
for reimbursement or other payment of Loan Origination Expenses related to such
Company Loan or (b) a prepayment of any Loan Interest). "Company Loan
Non-Principal Repayments" means all cash payments received by the Company on or
with respect to any Priority Advance Loan or other Company Loan (including any
Shared Loan), inclusive of any Company Loan Origination Fees but, exclusive,
however, of (a) any Principal Repayments, (b) any Loan Origination Deposits
(except to the extent of the amount (if any) thereof that has been forfeited, or
have otherwise reverted, to the Company after all Loan Origination Expenses
provided or contemplated to be paid or funded therefrom have been paid in full),
and (c) any portion of such payments that are applied or required to be applied
by the Company (i) to make payment on or with respect to the Third Party
Financing or (ii) for other Operating Expenses. For avoidance of doubt, "Company
Loan Non-Principal Repayments" include the Priority Advance Loan Exclusion
Portion (but only such portion) of any payments received by the Company on or
with respect to the principal amount of any Priority Advance Loan (as well as on
or with respect to Loan Interest payable with respect to any Priority Advance
Loan). "Company's Share" means, with respect to any Shared Loan, fifty percent
(50%) or such other amount as may be agreed to in writing by all of the Members
with respect to such Shared Loan. "Contributing Member" has the meaning set
forth in Section 5.05(a).
"Contribution Percentage" means, with respect to any new Company Loan to be made
or advanced by the Company as contemplated by Section 5.02, the following:
if the Third Party Financing has not yet been obtained by the Company,
(i) with respect to the CIT Member, seventy-five percent (75%),
and (ii) with respect to the BRT Member, twenty-five percent
(25%), or, with respect to the CIT Member and the BRT Member,
such other respective percentages as may be agreed to in
writing by both the CIT Member and the BRT Member; and
if the Third Party Financing has been obtained by the Company, (i)
with respect to the CIT Member, fifty percent (50%), and (ii)
with respect to the BRT Member, sixteen and two-thirds
percent (16?%), or, with respect to the CIT Member and the
BRT Member, such other respective percentages as may be
agreed to in writing by both the CIT Member and the BRT Member.
"Control," when used with respect to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
"CRE Unit" means the Commercial Real Estate Business Unit of CIT that is managed
and supervised by Timothy M. Zietara and Dennis R. Irvin (or by their respective
successors in their respective current positions with CIT).
"Customary Practices" means, with respect to any evaluation, determination or
other process, practices, procedures and policies that are the same in all
material respects as the practices, procedures and policies that prior to the
Effective Date have customarily been used or applied (as applicable) by the Loan
Committee of BRT in making any such evaluation, determination or other process
in the same or any analogous situation.
"Damages" means, without duplication, claims, demands, damages, costs and
expenses (including reasonable fees and disbursements of counsel), Liabilities,
liens, losses, fines, penalties, charges and administrative, judicial and
arbitration awards, judgments, settlement payments and deficiencies or other
charges.
"Debt" means, with respect to any Person, (i) any indebtedness for borrowed
money or the deferred purchase price of property as evidenced by a note, bond or
other instrument, (ii) obligations as lessee under capital leases, (iii)
obligations secured by any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind existing on any asset owned or held by such Person,
whether or not such Person has assumed or become liable for the obligations
secured thereby, (iv) any obligation under any interest rate swap agreement, (v)
accounts payable and (vi) obligations under direct or indirect guarantees of
(including obligations (contingent or otherwise) to assure a creditor against
loss in respect of) indebtedness or obligations of the kinds referred to in the
foregoing clauses (i), (ii), (iii), (iv) and (v), provided that Debt shall not
include obligations in respect of any accounts payable that are incurred in the
ordinary course of such Person's business and are not delinquent or are being
contested in good faith by appropriate proceedings.
"Default Contribution Amount" means, with respect to any Non-Contributing
Member, the amount that such Non-Contributing Member was required to contribute
to the capital of the Company pursuant to Section 5.01 or 5.02 but failed to
timely so contribute.
"Delaware Act" means the Delaware Limited Liability Company Act, as amended from
time to time. "Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year for federal income tax purposes, except
that if the Gross Asset Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such Fiscal Year, Depreciation
shall be an amount that bears the same ratio to such beginning Gross Asset Value
as the federal income tax depreciation, amortization or other cost recovery
deduction for such Fiscal Year bears to such beginning adjusted tax basis;
provided, however, that, if the adjusted basis for federal income tax purposes
of an asset at the beginning of such Fiscal Year is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Managing Member with the consent of the
Members. "Designees" has the meaning set forth in Section 4.03(a).
"Director" of any specified Person that is an entity means any director (or
Person serving in a similar capacity) of or with such specified Person.
"Disapproved Loan" means any proposed or prospective Company Loan that is
disapproved by the CIT Member as contemplated by Section 4.03(c) or any proposed
or prospective Company Loan that is disapproved by the CIT Member on account of
any conditions for the making or advancement of such proposed or prospective
Company Loan that are set forth in clause (a) or (f) of Section 4.04 not being
able to be met.
"Dissolution Date" means the date as of which the Company is dissolved and its
assets are distributed as contemplated in Article IX. "Effective Date" has the
meaning set forth in the first paragraph of this Agreement. "Embargoed Person"
has the meaning set forth in Section 10.02(h).
"Excess Amount" means, with respect to any Company Loan Origination Fee that is
paid to the Company on or with respect to any Company Loan that is a High-Spread
Company Loan, the amount of such Company Loan Origination Fee that is in excess
of three percent (3%) of the principal amount of such Company Loan (which
principal amount shall include any amount the Company is committed to loan or
advance, whether or not the Company actually loans or advances such amount).
"Executive Officer" of any specified Person that is an entity means any
executive or other senior officer, general partner, manager or managing member
(or Person serving in a similar capacity) of or with such specified Person.
"First Mortgage" means, with respect to any real property (inclusive of all
buildings and other improvements), a mortgage or deed of trust that (a) is
granted by the Borrower that is the title or fee owner of such real property,
(b) is granted in favor of the Company or a trustee acting for the benefit of
the Company, (c) secures all of the obligations of such Borrower to the Company
(whether with respect to any Company Loan made or advanced by the Company to
such Borrower or under such mortgage or deed of trust), (d) constitutes a first
priority mortgage on, and pledge of, such real property (subject only to
Permitted Liens) and (e) contains such terms and conditions (not inconsistent
with this Agreement) as have been approved by the Managing Member in good faith
and in accordance with Customary Practices. "Fiscal Quarter" means a three-month
period commencing on January 1st, April 1st, July 1st or October 1st (each of
the foregoing, a "Quarter Commencement Date"), as the case may be; provided,
however, that (a) the first "Fiscal Quarter" shall be the period commencing on
the Effective Date and ending on December 31, 2006 (or, if earlier, the
Dissolution Date) and (b) the last "Fiscal Quarter" shall be the period ending
on the Dissolution Date and commencing on the next preceding Quarter
Commencement Date (or, if later, the Effective Date). For purposes of
clarification, the first Fiscal Quarter of any Fiscal Year shall be the Fiscal
Quarter that first ends during such Fiscal Year, the second Fiscal Quarter of
any Fiscal Year shall be the Fiscal Quarter that next follows the first Fiscal
Year of such Fiscal Year, the third Fiscal Quarter of any Fiscal Year shall be
the Fiscal Quarter that next follows the second Fiscal Year of such Fiscal Year
and the fourth Fiscal Quarter of any Fiscal Year shall be the Fiscal Quarter
that next follows the third Fiscal Year of such Fiscal Year; provided, however,
that, with respect to any Fiscal Year comprised of less than four (4) Fiscal
Quarters, the last Fiscal Quarter of such Fiscal Year shall be deemed to be the
fourth Fiscal Quarter of such Fiscal Year. "Fiscal Year" means a twelve-month
period commencing on January 1st and ending on the following December 31st;
provided, however, that (a) the first "Fiscal Year" shall be the period
commencing on the Effective Date and ending on December 31, 2006 (or, if
earlier, the Dissolution Date) and (b) the last "Fiscal Year" shall be the
period ending on the Dissolution Date and commencing on the immediately prior
January 1st (or, if later, the Effective Date).
"Foreclosed Company Loan" means any Company Loan with respect to which the
Company (either alone or, with respect to any Company Loan that is part of a
Shared Loan, in conjunction with BRT) has commenced or joined in any action or
other proceeding pursuant to which the Company (either alone or, with respect to
any Company Loan that is part of a Shared Loan, in conjunction with BRT) has
sought to enforce and collect on such Company Loan (whether by foreclosure or
otherwise) and with respect to which the Company has received a recovery (net of
all related Foreclosure Expenses) in an amount less than the outstanding
principal amount of such Company Loan. In the event the Company has, pursuant to
or in connection with a foreclosure action or other proceeding or otherwise in
connection with the enforcement of any Company Loan or the Loan Documentation
related thereto, acquired any real property that secured such Company Loan
(whether pursuant to a deed in lieu of foreclosure, by bidding the outstanding
amount the relevant Company Loan at a foreclosure sale of such real property or
otherwise), then, upon such acquisition, the Company shall be deemed to have
received a recovery on such Company Loan in an amount equal to the then fair
market value of such real property (determined in accordance with GAAP and
otherwise by the Managing Member in good faith in accordance with Customary
Practices), net of all related Foreclosure Expenses. In the event the Company
subsequently sells or otherwise disposes of such real property, any
consideration received by the Company for or with respect to such real property
(net of all related expenses of such sale) shall treated as payments received by
the Company with respect to the payment of such Company Loan, with the amount of
such payments (net of all related expenses of such sale) up to the outstanding
principal amount of such Company Loan determined as of the date of such
acquisition to be treated (for the purposes of the definition of "Principal
Repayment") as a repayment of principal received by the Company with respect to
such Company Loan.
"Foreclosure Capital Contribution" of any Member means any capital contribution
made by such Member to the Company as contemplated under Section 5.02(b).
"Foreclosure Expenses" has the meaning set forth in Section 4.15(a); provided
that, with respect to any costs and expenses that would constitute "Foreclosure
Expenses" (as such term is defined in Section 4.15(a)) and that are incurred or
paid in connection with the foreclosure on, or other enforcement of, any Shared
Loan or otherwise relate to any Shared Loan, only the Company's Share of such
costs and expenses shall constitute "Foreclosure Expenses." "GAAP" has the
meaning set forth in Section 4.06. "Gross Asset Value" means, with respect to
any asset, such asset's adjusted basis for federal income tax purposes, except
as follows:
the initial Gross Asset Value of any asset contributed by a Member
to the Company shall be the gross fair market value of such
asset;
the Gross Asset Values of all items of Property shall be adjusted
to equal their respective gross fair market values (taking
Code Section 7701(g) into account) as of the following times:
(A) the acquisition of an additional interest in the Company
by any new or existing Member in exchange for more than a de
minimis Capital Contribution; (B) the distribution by the
Company to a Member of more than a de minimis amount of
Property as consideration for an interest in the Company; (C)
the liquidation of the Company within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g); and (D) in
connection with the grant of an interest in the Company (other
than a de minimis interest) as consideration for the provision
of services to or for the benefit of the Company by an
existing Member acting in a member capacity, or by a new
Member acting in a partner capacity in anticipation of being a
Member; provided that an adjustment described in subclauses
(A), (B) and (D) of this clause (ii) shall be made only if the
Managing Member reasonably determines that such adjustment is
necessary to reflect the relative economic interests of the
Members in the Company;
the Gross Asset Value of any item of Property distributed to any Member
shall be adjusted to equal the gross fair market value (taking
Code Section 7701(g) into account) of such item on the date
of distribution; and
the Gross Asset Values of each item of Property shall be increased
(or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or
743(b), but only to the extent that such adjustments are taken
into account in determining Capital Accounts pursuant to (A)
Regulations Section 1.704-1(b)(2)(iv)(m) and (B) subparagraph
(vi) of the definition of "Profits" and "Losses" or Section
6.03(d) hereof; provided, however, that Gross Asset Values
shall not be adjusted pursuant to this clause (d) to the
extent that an adjustment pursuant to clause (b) above is
required in connection with a transaction that would otherwise
result in an adjustment pursuant to this clause (d).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
the foregoing clause (a), (b) or (d), such Gross Asset Value shall thereafter be
adjusted by the Depreciation taken into account with respect to such asset, for
purposes of computing Profits and Losses.
"Gross Available Cash Flow" means, as of any date, the amount of Company Loan
Non-Principal Repayments that are held by the Company as of the close of
business on such date and are not required to be distributed by the Company, on
or prior to such date, pursuant to Section 7.01, net, however, of such reserves
(if any) as have been established as contemplated by clause (vi) of Section
4.02(a). "High-Spread Company Loan" means any Company Loan for which the annual
per annum interest payable by the Borrower thereunder exceeds the Index Rate
(determined as of the date such Company Loan is initially made or advanced) plus
300 basis points; provided, however, that, if any portion of the funding of a
Company Loan is provided from the Third Party Financing, then such Company Loan
shall not constitute a "High-Spread Company Loan" unless the annual per annum
interest payable by the Borrower thereunder exceeds the greater of (a) the Index
Rate (determined as of the date such Company Loan is initially made or advanced)
plus 300 basis points or (b) the Third Party Financing Interest Rate (determined
as of the date such Company Loan is initially made or advanced) plus 300 basis
points. "Included Distribution Amount" means, for any period, the following:
with respect to the CIT Member, the amount (if any) that is
required, pursuant to clause (iv) of Section 7.01(b), to be
distributed to the CIT Member for such period; and
with respect to the BRT Member, the amount (if any) that is
required, pursuant to clause (iv) of Section 7.01(b), to be
distributed to the BRT Member for such period (exclusive,
however, of (i) eighty percent (80%) of such amount (if any)
as is determined pursuant to clause (a) of the definition of
"BRT Loan Fee Portion," (ii) eighty percent (80%) of such
amount (if any) as determined pursuant to subclause (i) of
clause (b) of the definition of "BRT Loan Fee Portion," (iii)
one hundred percent (100%) of such amount (if any) as is that
determined pursuant to subclause (ii) of clause (b) of the
definition of "BRT Loan Fee Portion," and (iv) eighty percent
(80%) of such amount (if any) as is determined pursuant to
subclause (iii) of clause (b) of the definition of "BRT Loan
Fee Portion").
"Indemnified Party" has the meaning set forth in Section 12.03(a). "Indemnifying
Party" has the meaning set forth in Section 12.03(a).
"Independent Third Party" means any Person that is not a Member, the Managing
Member, the Tax Matters Member or the Liquidating Member nor an Affiliate of any
of the foregoing or of the Company. "Index Rate" means, as of any time, the
"prime rate", and "prime rate" shall mean the rate publicly quoted from time to
time by The Wall Street Journal as the "prime rate" (or, if The Wall Street
Journal ceases quoting a prime rate, the highest per annum rate of interest
published by the Federal Reserve Board in Federal Reserve statistical release
H.15 (519) entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent.
"Initial Capital Contributions" means, with respect to each Member, the cash
contribution to the capital of the Company made by such Member pursuant to
Section 5.01. "Interest" means, with respect to any Member at any time, the
interest of such Member in the Company at such time, including the right of such
Member to any and all of the benefits to which such Member may be entitled as
provided in this Agreement, together with the obligations of such Member to
comply with all of the terms and provisions of this Agreement.
"Investment" has the meaning set forth in Section 11.01(h). "Issuance Items" has
the meaning set forth in Section 6.03(e). "Joint Venture Action" has the meaning
set forth in Section 11.01(g).
"Lien" means, with respect to any Qualified Real Estate, any security interest,
pledge, hypothecation or other encumbrance of any nature whatsoever on or with
respect to all or any portion of such Qualified Real Estate (or any interest
therein), any option or other right to purchase all or any portion of such
Qualified Real Estate (or any interest therein) and any restriction on the right
to sell, transfer or otherwise dispose of all or any portion of such Qualified
Real Estate (or any interest therein). "Liquidating Event" has the meaning set
forth in Section 9.01.
"Liquidating Member" means the BRT Member, but only in its capacity as the
Liquidating Member as contemplated hereunder. "Loan Commitment" means any formal
commitment that is entered into by the Company and that the Company is
contractually obligated to perform.
"Loan Committee" means the Loan Committee (or any similar committee or group)
used by the BRT Member to evaluate and approve any proposed or prospective
Company Loan (including any Shared Loan), which may be the Loan Committee (or
any similar committee or group) of BRT.
"Loan Documentation" means, with respect to any loan, collectively, the loan or
lending agreement, the promissory note, the First Mortgage and the other
documentation providing for or otherwise relating to such loan.
"Loan Interest" means any amount that, pursuant to the terms of any Company
Loan, is required to be paid on a monthly or other periodic basis (whether or
not designated as "interest") by the Borrower that is obligated with respect to
such Company Loan, inclusive of any fee payable with respect to the extension of
the maturity date of such Company Loan but exclusive of any such payment that
constitutes (i) payment of a Company Loan Origination Fee on or with respect to
such Company Loan or (ii) a Principal Repayment made on or with respect to such
Company Loan.
"Loan Origination Deposits" means, collectively, those deposits and other
payments that have been made to the Company by Borrowers and prospective
Borrowers and that are earmarked for payment or reimbursement of Loan
Origination Expenses.
"Loan Origination Expenses" means (a) those costs and expenses that are incurred
by the Company in connection with the investigation of a prospective Borrower or
any other due diligence relating to any prospective Company Loan or the
preparation or negotiation of documentation for any prospective Company Loan and
that are payable to any Independent Third Party and (b) the reimbursement by the
Company to personnel of the Company or any Member the reasonable costs of hotel,
food and travel incurred in connection with any such investigation or other due
diligence undertaken on behalf of or for the benefit of the Company; provided
that with respect to any such costs, expenses and reimbursement that are
incurred or paid after the aggregate outstanding principal amount of Company
Loans that are not Shared Loans equals or exceeds fifty million dollars
($50,000,000), only fifty percent (50%) of such costs, expenses and
reimbursement that relate to any such prospective Company Loan shall constitute
Loan Origination Expenses or, if such prospective Company Loan is in fact made
and advanced by the Company, only such portion of such costs, expenses and
reimbursement that relate to any such prospective Company Loan that are equal to
the Company's Share of such prospective Company Loan shall constitute Loan
Origination Expenses. For purposes of clarification, Loan Origination Expenses
shall not include any personnel or other overhead costs of the Managing Member
or any of its Affiliates. "Loan Percentage" means, with respect to any new
Company Loan to be made or advanced by the Company as contemplated by Section
2.08(g), the following:
if the Third Party Financing has not yet been obtained by the
Company, (i) with respect to the CIT Member, seventy-five
percent (75%), and, with respect to the BRT Member,
twenty-five percent (25%); or (ii) with respect to the CIT
Member and the BRT Member, such other respective percentages
as may be agreed to in writing by both the CIT Member and
the BRT Member; or (iii) if the Company Loan has been
effected by means of a Priority Member Advance, the actual
ratio in which the applicable Company Loan has been funded
by the Members; and
if the Third Party Financing has been obtained by the Company,
(i) with respect to the CIT Member, fifty percent (50%),
with respect to the BRT Member, sixteen and two-thirds
percent (16?%), and with respect to the Third Party Lender,
thirty-three and one-third percent (33?%); or, (ii) with
respect to the CIT Member, the BRT Member and the Third
Party Lender, such other respective percentages as may be
agreed to in writing by both the CIT Member and the BRT
Member; or (iii) if the Company Loan has been effected by
means of a Priority Member Advance, the actual ratio in
which the applicable Company Loan has been funded by each of
the Members and funds provided by the Third Party Lender.
"Loan Portfolio" means, collectively, all of the Company Loans from time to time
made or advanced by the Company. "Lost Principal Amount" means, with respect to
any Foreclosed Company Loan, the amount (if any) by which the outstanding
principal amount of such Foreclosed Company Loan exceeded the amount (if any)
that the Company received upon a foreclosure on such Company Loan, net of all
related Foreclosure Expenses. "Major Decision" has the meaning set forth in
Section 4.02.
"Management Distribution" means any distribution that is provided to be made to
the BRT Member pursuant to clause (ii) of Section 7.01(b). "Management
Distribution Shortfall" means, with respect to any Company Loan, any Management
Distribution that would have been provided to be made to the BRT Member pursuant
to clause (ii) of Section 7.01(b) if such Company Loan had not been a
Non-Performing Company Loan.
"Managing Member" means such Person that is designated in or pursuant to Section
4.01(c) as the Managing Member of the Company, but only in its capacity as the
Managing Member of the Company as contemplated hereunder.
"Maximum BRT Loan Loss Amount" means, at any time, an amount equal to
sixty-seven hundredth percent (0.67%) of the highest aggregate principal amount
of all Company Loans outstanding at any time subsequent to the Effective Date
and prior to such time.
"Maximum Contribution Amount" means, with respect to the CIT Member,
seventy-five million dollars ($75,000,000) and, with respect to the BRT Member,
twenty-five million dollars ($25,000,000). "Maximum Reimbursement Amount" for
any Fiscal Year means two hundred and fifty thousand dollars ($250,000);
provided, however, that, if the weighted average of the aggregate outstanding
principal amounts of all Company Loans during such Fiscal Year is greater than
one hundred and fifty million dollars ($150,000,000), the "Maximum Reimbursement
Amount" for such Fiscal Year means two hundred and fifty thousand dollars
($250,000) times a fraction, the numerator of which is the weighted average of
the aggregate outstanding principal amounts of all Company Loans during such
Fiscal Year and the denominator of which is one hundred and fifty million
dollars ($150,000,000); and provided, however, that, with respect to any Fiscal
Year comprised of less than twelve full months, the amount of the "Maximum
Reimbursement Amount" for such Fiscal Year shall be pro rated based upon the
number of months comprising such Fiscal Year.
"Medium Amount" means, with respect to any Company Loan Origination Fee that is
paid to the Company on or with respect to any Company Loan that is a High-Spread
Company Loan, the amount of such Company Loan Origination Fee that is at least
two percent (2%), and up to three percent (3%), of the principal amount of such
Company Loan (which principal amount shall include any amount the Company is
committed to loan or advance, whether or not the Company actually loans or
advances such amount). "Member" or "Members" have the respective meanings set
forth in the first paragraph of this Agreement. "Model Loan" means any loan that
would meet each of the criteria set forth in clauses (a) through (f) of Section
2.08.
"Net Available Cash Flow" means, as of any date, the amount of the Gross
Available Cash Flow as of such date net of the amount thereof that is provided,
pursuant to Section 7.01(b), to be distributed to the Members.
"Non-Contributing Member" has the meaning set forth in Section 5.05(a).
"Non-Performing Company Loan" means any Company Loan if (a) any payment of
principal due thereunder is in default by more than fifteen (15) days, (b) any
payment of interest or other amount (other than principal) due thereunder is in
default by more than thirty (30) days or (c) the Borrower with respect to such
Company Loan is in default with respect to any financial or other covenants
under the Loan Documentation for such Company Loan for a period of more than
sixty (60) days. "Notice" has the meaning set forth in Section 12.04.
"Notice to Indemnify" has the meaning set forth in Section 12.03(b). "Operating
Expenses" has the meaning set forth in Section 4.15.
"Outstanding Advance" means, with respect to any Member as of any date, the
aggregate amounts that such Member has contributed to the Company pursuant to
Section 5.01 or 5.02(a) as of the close of business on such date less the
aggregate amounts that have been distributed by the Company to such Member as of
the close of business on such date pursuant to Section 7.01(a).
"Participation Agreement" means a participation agreement contemplated by
Section 2.10. "Party" or "Parties" have the respective meanings set forth in the
first paragraph of this Agreement. "Percentage Interest" means, with respect to
each Member, the percentage set forth below opposite its name below:
Member Percentage Interest
------ -------------------
BRT Member 25.0%
CIT Member 75.0%
"Person" means any individual, partnership, corporation, limited liability
company, trust or other entity. "Permitted Lien" means any of the following: (i)
any Lien in favor of the Company; (ii) any Lien for taxes or other assessments
not yet due and payable; (iii) deposits, pursuant to any lease or otherwise;
(iv) any lease, license or similar arrangement, provided that such lease,
license or similar arrangement has been entered into by the relevant Qualified
Borrower in the ordinary and normal course of its business consistent with past
practice and does not impair the value of the relevant Qualified Real Estate (or
any portion thereof) as collateral security for the obligations being secured;
and (viii) easements and encumbrances (other than for any indebtedness)
reflected in a title policy on the relevant Qualified Real Estate that is
provided to, and is for the benefit of, the Company. "Portfolio Management
Report" for any Fiscal Quarter means a report prepared by the Managing Member
that (a) sets forth (i) all Company Loans made or advanced by the Company during
such Fiscal Quarter, (ii) all Company Loans previously made or advanced by the
Company that were repaid during such Fiscal Quarter, (iii) the status of all
other outstanding Company Loans as of the end of such Fiscal Quarter, (iv) any
defaults or non-performance occurring during such Fiscal Quarter under or with
respect to any Company Loan, (e) the status of any outstanding Company Loan that
is a construction loan, (v) such other information as is contemplated by such
form and (vi) such other information as any Member may reasonably request. The
Portfolio Management Report shall be in such form as may from time to time be
agreed to by all of the Members.
"Principal Repayment" means (subject to Section 7.04) any repayment of principal
received by the Company with respect to any Company Loan (including any Shared
Loan and any Priority Advance Loan), whether pursuant to a scheduled payment
(whether of principal only or of principal and interest), any prepayment, upon
maturity (including on account of an acceleration) or otherwise; provided,
however, that, if any percentage of such Company Loan has been funded by a
Priority Member Advance, then an equal percentage of any such repayment of
principal shall not be deemed to be or treated as a Principal Repayment.
"Priority Advance Loan" means any Company Loan that has been funded by a
Priority Member Advance (whether solely from such Priority Member Advance or
also with funds provided from any Third Party Financing).
"Priority Advance Loan Exclusion Portion" means that portion (if any) of any
repayment of principal received by the Company with respect to any Priority
Advance Loan that (pursuant to the proviso in the definition of "Principal
Repayment") is not to be deemed to be or treated as a Principal Repayment.
"Priority Member Advance" means, with respect to any Contributing Member, any
advance made by such Contributing Member and designated by the Contributing
Member as a "Priority Member Advance" pursuant to Section 5.05(a)(i), provided,
that in no event may the aggregate Priority Member Advances outstanding at any
time exceed seven million five hundred thousand dollars ($7,500,000).
"Profits" and "Losses" mean, for each Allocation Year, an amount equal to the
Company's taxable income or loss for such Allocation Year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments (without duplication):
any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or
Losses pursuant to this definition of "Profits" and
"Losses" shall be added to such taxable income or loss;
any expenditures of the Company described in Code Section 705(a)(2)(B)
or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profits or Losses pursuant to
this definition of "Profits" and "Losses,"shall be subtracted
from such taxable income or loss;
in the event the Gross Asset Value of any item of Property is
adjusted pursuant to clause (ii) or (iii) of the definition of
Gross Asset Value, the amount of such adjustment shall be
treated as an item of gain (if the adjustment increases the
Gross Asset Value of such item of Property) or an item of loss
(if the adjustment decreases the Gross Asset Value of such
item of Property) from the disposition of such item of
Property and shall be taken into account for purposes of
computing Profits or Losses;
gain or loss resulting from any disposition of Property with respect
to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross
Asset Value of the Property disposed of, notwithstanding
that the adjusted tax basis of such Property differs from its
Gross Asset Value;
in lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable
income or loss, there shall be taken into account
Depreciation for such Allocation Year, computed in accordance
with the definition of "Depreciation;" and
to the extent an adjustment to the adjusted tax basis of any item
of Property pursuant to Code Section 734(b) is required,
pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be
taken into account in determining Capital Accounts as a result
of a distribution other than in liquidation of an Interest,
the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the item of
Property) or loss (if the adjustment decreases such basis)
from the disposition of such item of Property and shall be
taken into account for purposes of computing Profits or
Losses.
Notwithstanding any other provision of this definition, any items that are
specially allocated pursuant to Section 6.03 or 6.04 hereof shall not be taken
into account in computing Profits or Losses. The amounts of the items of Company
income, gain, loss or deduction available to be specially allocated pursuant to
Sections 6.03 and 6.04 hereof shall be determined by applying rules analogous to
those set forth in the foregoing clauses (a) through (f).
"Property" means all real and personal property acquired by the Company,
including cash and loans and shall include both tangible and intangible
property. "Qualified Borrower" means, with respect to any Company Loan, the
title or fee owner of the real property (inclusive of all buildings and other
improvements) securing such Company Loan. "Qualified Loan" has the meaning set
forth in Section 2.08.
"Qualified Real Estate" means real property (inclusive of all buildings and
other improvements) that is for residential, office, industrial or retail use or
a combination of the foregoing and that is situated in the continental United
State of America.
"Real Estate Type" means, with respect to any Qualified Loan, the type of real
property (inclusive of all buildings and other improvements) (whether
residential, office, industrial or retail use) that secures such Qualified Loan
pursuant to a First Mortgage. For purposes of clarification, in the event such
real property (inclusive of all buildings and other improvements) is comprised
of more than one such type of real property, such real property shall be deemed
to be the predominant type of real property comprising such real property,
determined on the basis of square footage of such real property that is of each
relevant type of real property.
"Reconstitution Period" has the meaning set forth in Section 9.02.
"Regulations" means, with respect to any referenced provision, such provision of
the regulations of the United States Department of the Treasury or any successor
provision. "Regulatory Allocations" has the meaning set forth in Section 6.04.
"Reimbursable Loan Origination Expenses" has the meaning set forth in Section
4.14. "REIT" means REIT Management, Inc., an Affiliate of BRT and the BRT
Member. "REIT Qualifying Obligation" means an obligation that is secured by
mortgages on real property or on interest in real property within the meaning of
Section 856(c)(3)(B) of the Code. "Restricted Period" means the period
commencing on the Effective Date and terminating eighteen (18) months after the
first occurrence of any Liquidating Event that is not followed (as contemplated
by Section 9.02) by a reconstitution.
"Retained Loan Balance" means, with respect to any Company Loan at any time, the
amount of the principal amount of such Company Loan that, as of such time, has
been repaid to the Company but that has not been distributed to the Members or
applied in repayment of the Third Party Financing. "Securities Act" means the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.
"Securities Laws" has the meaning set forth in Section 10.02(e).
"Shared Loan" means any loan contemplated by Section 2.10, with the Company
making or advancing the Company's Share of such loan and BRT simultaneously
making or advancing (or causing an Affiliate of BRT to make or advance) the
balance of such loan.
"Shortened Restricted Period" means the period commencing on the Effective Date
and terminating nine (9) months after the first occurrence of any Liquidating
Event that is not followed (as contemplated by Section 9.02) by a
reconstitution.
"Standard Recourse Carve-outs" means provisions that are the same as, or
substantially similar to, the provisions set forth in Exhibit B attached hereto
or that are for the same purpose and effect as such provisions.
"Status Report" means a written status report setting forth, in reasonable
detail, (a) the status of each Company Loan that, as of the relevant time, is in
default, (b) the actions that are being taken with respect to such Company Loan
and (c) such other information as any Member may reasonably request.
"Tax Matters Member" means the Person so designated to act pursuant to Section
4.13(a), but only in its capacity as the Tax Matters Member as contemplated
hereunder. "Taxes" means any and all taxes (including net income, gross income,
franchise, ad valorem, gross receipts, sales, use, property and stamp taxes),
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever, general or special, ordinary or extraordinary, now existing or
hereafter created or adopted, together with any and all penalties, fines,
additions to tax and interest thereon.
"Third-Party Claim" has the meaning set forth in Section 12.03(a).
"Third Party Financing" means such financing, in an aggregate principal amount
of up to fifty million dollars ($50,000,000) (or such greater amount as may be
agreed to in writing by all of the Members), as may be obtained (a) from time to
time by the Company from one or more Independent Third Parties and (b) for the
purpose of providing the Company with additional financial resources for the
making or advancing of Company Loans.
"Third Party Financing Interest Rate" means, for purposes of calculating a High
Spread Company Loan of any date, the per annum interest rate being charged to
the Company as of such date with respect to the Third Party Financing, provided
that, if different per annum interests rates shall then be applicable to various
principal amounts of the Third Party Financing, the per annum interest rate
being charged to the Company as of such date with respect to the Third Party
Financing shall be the weighted average of such different per annum interests
rates. By way of example only, if (as of the applicable date) the Company is
being charged 10% per annum with respect to $20 million principal amount of the
Third Party Financing, 8% per annum with respect to $10 million principal amount
of the Third Party Financing and 5% per annum with respect to $5 million
principal amount of the Third Party Financing, the Third Party Financing
Interest Rate would be ($20 million X 10%) + ($10 million X 8%) + ($5 million X
5%) / $35 million = 8.71%.
"Third Party Lender" means any bank, financial institution or other lender that
provides the Third Party Financing to the Company. "Transfer" means, with
respect to any Interest, the following: (i) as a noun, any voluntary or
involuntary transfer, sale or other disposition of such Interest (or any right
or interest therein) or the granting of any security interest, lien or other
encumbrance on or with respect to such Interest; and (ii) as a verb, voluntarily
or involuntarily to transfer, sell or otherwise dispose of such Interest (or any
right or interest therein) or to grant any security interest, lien or other
encumbrance on or with respect to such Interest.
"U.S. Government Blacklists" shall mean, (i) the two (2) lists maintained by the
United States Department of Commerce (Denied Persons and Entities; the Denied
Persons), (ii) the list maintained by the United States Department of Treasury
(Specially Designated Nationals and Blocked Persons), and (iii) the list by the
United States Department of State (Terrorist Organizations and Debarred
Parties). "Wind-Up Notice" has the meaning set forth in Section 9.01(b).
Other Defined Terms. As used in this Agreement, unless otherwise specified, each
accounting term used herein is used herein with the respective meaning ascribed
to such accounting term in accordance with the United States GAAP. All defined
terms used in this Agreement that are not defined in this Article I shall have
the respective meanings set forth elsewhere in this Agreement.
Governing Law. This Agreement shall be governed by, interpreted under and
construed in accordance with the internal substantive laws of the State of
Delaware applicable to contracts executed and to be performed wholly within that
State without giving effect to the choice or conflict of laws principles or
provisions thereof that would apply the law of any other jurisdiction.
Rules of Construction. Unless otherwise specified herein, all references herein
to Articles, Sections or Exhibits are to Articles, Sections or Exhibits of this
Agreement. Titles, captions and headings of the sections, articles and other
subdivisions of this Agreement are for convenience of reference only and shall
not affect the construction or interpretation of any provision of this
Agreement. Words such as "herein," "hereinafter," "hereof," "hereto," "hereby"
and "hereunder," and words of like import, unless the context requires
otherwise, refer to this Agreement taken as a whole and not to any particular
Section, Article or other provision hereof. As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if
the context requires, and if the context requires, the use of the singular shall
include the plural and vice versa. The terms "include" and "including" shall be
construed as if followed by the phrase "without limitation." This Agreement is
the product of mutual negotiations among the Parties and their respective
counsels, and no Party shall be deemed the draftsperson hereof or of any portion
or provision hereof. Accordingly, in the event of any ambiguity or inconsistency
in any provision of this Agreement, the same shall not be interpreted against
any Party as the party responsible for drafting or providing such provision.
ORGANIZATION
Formation and Continuation.
From and after the Effective Date, the Members hereby agree to continue
the Company as a limited liability company under and pursuant to the Delaware
Act, upon and subject to the terms and conditions set forth in this Agreement.
The Percentage Interest of each Member shall be personal property for all
purposes. The Managing Member is hereby authorized to file and record any
amendments to the Certificate of Formation and such other documents as may be
approved or permitted by this Agreement or required or appropriate under the
Delaware Act or the laws of any other jurisdiction in which the Company may
conduct business or own property.
Simeon Brinberg, who is hereby confirmed to have been as an "authorized
person" within the meaning of the Delaware Act, has executed, delivered and
filed the certificate of formation of the Company (the "Certificate of
Formation") with the Secretary of State of the State of Delaware. Upon the
filing of the Certificate of Formation with the Secretary of State of the State
of Delaware, his powers as an "authorized person" ceased, and the Managing
Member thereupon became the designated "authorized person" of the Company and
shall continue as the designated "authorized person" of the Company within the
meaning of the Delaware Act. The Managing Member shall execute, deliver and file
any other certificates (and any amendments and/or restatements thereof)
necessary for the Company to qualify to do business in the State of New York and
in any other jurisdiction(s) in which the Company may wish to conduct business.
Name and Principal Place of Business.
The name of the Company shall be BRT Funding LLC. All business of
the Company shall be conducted under such name, and title to
all assets of the Company shall be held in such name.
The principal place of business and office of the Company shall be
initially located at the offices of the Managing Member at 60
Cutter Mill Road, Suite 303, Great Neck, New York 11021. The
Managing Member may (with the written consent of the CIT
Member) at any time (i) change such principal office and place
of business or (ii) change or establish such additional
offices or places of business of the Company as it may deem
necessary or appropriate for the operation of the Company's
business.
Term. The term of the Company commenced on the date of the filing of the
Certificate of Formation pursuant to the Delaware Act and shall continue in full
force and effect until the dissolution and termination of the Company pursuant
to Article IX.
Registered Agent, Registered Office and Foreign Qualification. Unless otherwise
determined by the Managing Member, the name of the Company's registered agent
for service of process shall be United Corporate Services, and the address of
the Company's registered agent and the address of the Company's registered
office in the State of Delaware shall be 874 Walker Road, Suite C, Dover,
Delaware 19904. Such agent and such office may be changed from time to time by
the Managing Member. Either Member, or any other Person authorized by the
Managing Member, is hereby authorized, for the purpose of authorizing or
qualifying the Company to do business in any state, territory or dependency of
the United States in which it is necessary or expedient for the Company to
transact business, to do any and all acts and things necessary to obtain from
such state, territory or dependency any such authorization or qualification.
Purpose. The purpose of the Company shall be:
to advance and make Qualified Loans to Qualified Borrowers;
to borrow additional funds from a third party for the purpose of
obtaining additional funds that may be used by the Company to
advance and make such Qualified Loans (provided, however, that
the aggregate outstanding principal amount of all borrowings
contemplated by this clause (b) shall not, without the prior
written consent of all Members, at any time exceed fifty
million dollars ($50,000,000)):
to administer and manage such Qualified Loans (including, as necessary,
enforce such Qualified Loans, including foreclosing and
otherwise realizing on any real property or other
collateral securing such Qualified Loans);
to conduct all activities reasonably necessary or desirable to
accomplish the foregoing purposes and to do anything
necessary or incidental to any of the foregoing, which in
each case, is not a breach of this Agreement; and
to engage in any other business or activity approved in writing
by the Members (and the Members acknowledge and agree that
each of the foregoing matters in clauses (a) - (d) is part of
the ordinary business of the Company).
Internal Business Activities and Maintenance of Separateness. In order to carry
on its business purpose, and in support thereof, the Company (except as
otherwise provided herein or otherwise agreed to in writing by the Members) is
authorized to, and shall, at all times:
maintain books and records separate from any other Person, and, without
limiting the generality of the foregoing, maintain itsown bank
accounts in its own name and use separate invoices, bank
accounts and checks;
hold itself out to the public and all other Persons as a legal entity
separate and apart from any Member and other Person and
promptly correct any known misunderstanding regarding
its separate identity and status;
observe all formalities required by the Delaware Act and its
organizational documents and operating agreement and
otherwise comply with all organizational formalities to
maintain its separate existence;
file its own tax returns as may be required under applicable law to the
extent (1) not part of a consolidated group filing a
consolidated return or (2) not treated as a division for
tax purposes of another taxpayer, and pay any taxes so
required to be paid under applicable law;
not commingle assets with those of any other Person, including any
Member;
pay its own liabilities out of its own funds and not hold out the
credit or assets of any other Person (including any Member)
as being able to satisfy any obligations of the Company;
maintain and periodically prepare separate financial statements and not
consolidate its financial statements with any other Person for
any purpose (provided, however, that the Company's assets may
be included in a consolidated financial statement with each of
The CIT Group, Inc. and BRT, provided that (in each case)
appropriate notation shall be made in such consolidated
financial statements to indicate the separateness of the
Company and to indicate that the Company's assets and credit
are not available to satisfy the debts and other obligations
of The CIT Group, Inc. or BRT, as applicable);
maintain an "arms-length relationship" with its Members and other
Affiliates of the Company or of any Member;
not hold out its credit or assets as being available to satisfy the
obligations of any other Person (including any Member);
not incur any indebtedness, secured or unsecured, direct or indirect,
absolute or contingent, with any Members or other Affiliate
of the Company or of any Member, and not pledge any of its
assets for the benefit of any Members or other Affiliate of
the Company or of any Member; and
not make any loans or advances to any Member or other Affiliate of the
Company or of any Member or acquire the securities of (or
otherwise make any investment in) any Member or other
Affiliate of the Company or of any Member.
Limitations on Activities of the Company. The Company shall not engage in any
other business or activity except as set forth in Section 2.05 without the prior
written approval of all Members.
Qualified Loans. The Managing Member may from time to time, without the consent
of the other Members (but subject to compliance with Section 4.03), cause the
Company to make and advance any loan that meets all of the following criteria
(any loan that meets all such criteria and has received the approval(s) (if any)
required under Section 2.09 or that has otherwise been approved in writing by
all Members is herein referred to as a "Qualified Loan"):
a loan having a maturity date (inclusive of any extension
thereof that is at the option of the Borrower, whether or not
upon the payment of any extension or other fee) of two (2)
years or less from the date it is made or advanced by the
Company;
a loan providing for per annum interest of not less than 200 basis
points in excess of the Index Rate;
a loan that is subject to standard and customary terms and
conditions, including Standard Recourse Carve-outs, not
inconsistent with the provisions hereof;
if the relevant loan is being made or advanced to a Borrower for the
purpose of its purchasing any Qualified Real Estate, (i)
the principal amount of such loan is not greater than
eighty-five percent (85%) of the purchase price paid or
being paid by such Borrower for such Qualified Real Estate
and (ii) such loan shall be secured by a First Mortgage
on such Qualified Real Estate;
if the relevant loan is otherwise being advanced or made to a
Borrower, (i) the principal amount of such loan is not greater
than eighty-five percent (85%) of the fair market value of the
Qualified Real Estate being pledged by such Borrower to secure
such loan (where the fair market value is determined by the
Managing Member in good faith and in accordance with Customary
Practices) and (ii) such loan shall be secured by a First
Mortgage on such Qualified Real Estate;
a loan that is made to a Borrower that is a Person with which
the Managing Member (or any of its Affiliates) has previously
had a successful lending relationship or that is an Affiliate
of such a Person;
a loan that is funded from the CIT Member, the BRT Member and (as
applicable) the Third Party Lender in proportions to the
respective Loan Percentages from each (with it being
agreed and understood that any amount funded from any Capital
Contribution made to the Company from any Member or from
such Member's portion of any Retained Loan Balance
shall be deemed to have been funded from such Member); and
a loan that is being made or advanced to a Borrower that neither
has been in default with respect to any payment obligation
or, to the knowledge of the Managing Member, any
other obligation under any Company Loan nor is an Affiliate
of any Borrower that has been in default with respect to any
payment obligation or, to the knowledge of the
Managing Member, any other obligation under any Company Loan.
Limitations on Company Loans. Notwithstanding anything contained herein to the
contrary, the Company shall not make or participate in, and the Managing Member
shall not cause or permit the Company to make or to participate in, any loan
referred to below unless such loan has been approved in writing by all Members
or, pursuant to Section 4.03(c), is deemed to have been approved by all Members:
any loan that is in a principal amount, or that (when aggregated
with the outstanding principal amount of all other loans that
have been made or advanced by the Company or participated in
by the Company and that are secured by the same Qualified Real
Estate that secures such loan) would be, in excess of ten
million dollars ($10,000,000);
any loan that is secured by any Real Estate Type if the principal
amount of such loan, when aggregated with the outstanding
principal amount of all other loans that are secured by the
same Real Estate Type, exceeds fifty percent (50%) of the
aggregate outstanding amount of all loans made or advanced by
the Company (with it being agreed and understood that, for the
purpose of determining whether the foregoing fifty percent
(50%) limitation would be exceeded, during the period from the
Effective Date through the second anniversary of the Effective
Date, the aggregate outstanding amount of all loans made or
advanced by the Company shall be deemed to be not less than
one hundred million dollars ($100,000,000));
any loan that is made or advanced to any Borrower if the principal
amount of such loan, when aggregated with the outstanding
principal amount of all other loans made or advanced to the
Borrower Group of such Borrower or any members of such
Borrower Group, would exceed twenty-five percent (25%) of the
aggregate outstanding amount of all loans made or advanced by
the Company (with it being agreed and understood that, for the
purpose of determining whether the foregoing twenty-five
percent (25%) limitation would be exceeded, during the period
from the Effective Date through the second anniversary of the
Effective Date, the aggregate outstanding amount of all loans
made or advanced by the Company shall be deemed to be not less
than one hundred million dollars ($100,000,000)); or
any loan that is made or advanced to any Borrower if such Borrower
(or any Affiliate of such Borrower) has been in default with
respect to any indebtedness owed to any Member or any
Affiliate thereof.
The Managing Member shall not be liable hereunder for causing or permitting the
Company to make or to participate in any loan that would be prohibited hereunder
on account of such loan being of the nature of a loan referred to under the
foregoing clause (d) if the Managing Member undertook reasonable efforts to
determine whether such loan was of such nature and such efforts failed to
disclose that such loan was of such nature.
Shared Loans. Notwithstanding anything contained herein to the contrary, from
and after time that the aggregate outstanding principal amount of Company Loans
that are not Shared Loans equals or exceeds fifty million dollars ($50,000,000),
the Company may make and advance a new loan that is a Shared Loan if both of the
following conditions are met:
such new loan complies with Sections 2.08 and (to the extent
applicable) 2.09 or such loan is otherwise approved in writing by all
of the Members; and
if, but only if,
in lieu of making or advancing all of such loan, the
Company makes or advances the Company's Share of such
loan and BRT simultaneously makes and advances the
balance of such loan, and
simultaneously with the making or advancing of such
loan, the Company and BRT enter into a participation
agreement, which shall be properly completed with
respect to such loan and shall be in such form, with
such amendments thereto, as may be agreed to in
writing by all of the Members.
Further Limitations on Company Loans. Notwithstanding anything contained
hereinto the contrary, the Company shall not make any loan without the consent
of all of the Members unless the interest or any other fees received or to be
received by the Company on the account on the origination of such loan is in
respect of REIT Qualifying Obligations.
MEMBERS And Interests
Admission of Members. The CIT Member and the BRT Member are the initial members
of the Company. Except with the prior written approval of all Members, no other
Person shall be admitted as a member of the Company and no additional Interests
shall be issued.
Limitation on Liability.
Except as otherwise expressly provided in the Delaware Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Member shall be obligated personally for any such debt,
obligation or liability of the Company, solely by reason of being a member of
the Company. Except as otherwise expressly provided in the Delaware Act, but
subject to the provisions of subparagraph (b) of this Section 3.02, the
liability of each Member shall be limited to the amount of Capital Contributions
required to be made by such Member in accordance with the provisions of this
Agreement, but only when and to the extent the same shall become due and payable
pursuant to the provisions of this Agreement. Further, no general or limited
partner in, or shareholder, member or other holder of any equity interest of,
any Member or any Executive Officer, Director or employee of any of the
foregoing or any of their Affiliates shall be obligated personally for any debt,
obligation or other liability of the Company solely by reason of his, her or its
being any such general or limited partner, shareholder, member or other holder
of any equity interest or such Executive Officer, Director or employee. Further,
failure of the Company to observe any formalities or requirements relating to
the exercise of its powers or the management of its business or affairs under
this Agreement or the Delaware Act shall not be grounds for any Member, or any
general or limited partner in, or shareholder, member or other holder of any
equity interest of, any Member or any Executive Officer, Director or employee of
any of the foregoing or any of their Affiliates to be held liable or obligated
for any debt, obligation or other liability of the Company.
Notwithstanding any other provision of this Agreement to the contrary,
(i) each Member's liability under this Agreement is explicitly limited to the
assets of such Member and (ii) neither the Company nor any Member shall have any
recourse against any assets of an Affiliate of another Member or any past,
present or future officers, agents, shareholders, incorporators, directors,
principals (direct or indirect), affiliates, partners, members or
representatives of another Member or any of the assets or property of any of the
foregoing, for the payment or collection of any amount, judgment, judicial
process, arbitration award, fees or costs or for any other obligation or claim
arising out of or based upon this Agreement.
The provisions of this Section 3.02 shall survive the
termination or expiration of this Agreement.
Third-Party Debt Liability. Except as may be expressly agreed to in writing by
any Member with respect to the Third Party Financing, the Parties intend that no
Member, or any of its Affiliates, shall have any liability under or in
connection with any third-party debt, including liability with regard to any
environmental matters, recourse carve-outs, fraud, intentional misconduct, theft
or other commonly called "bad acts" or with regard to any other matter, unless
otherwise approved by the Members or pursuant to an agreement entered into by
such Member; provided, however, that the foregoing shall not be deemed to
release any Party from its obligations hereunder to the other Parties or from
any damages resulting from any breach of such obligations.
Compensation of Members. Except for the distributions to be made to the Members
as provided under Articles VII and IX, no Member (including, as relevant, in its
capacity as the Managing Member, the Tax Matters Member or the Liquidating
Member or otherwise) shall be entitled to any compensation or other payment from
the Company.
Percentage Interests. With regard to each Member separately, the initial
Percentage Interest of each Member will be as set forth in Section 1.01 (in each
case, subject to adjustment as provided in this Agreement). The Percentage
Interests of the Members may be adjusted only as set forth in this Agreement.
Return of Capital. No Member shall be liable for the return of the Capital
Contributions (or any portion thereof) of any other Member, it being expressly
understood and agreed that any such return shall be made solely from the assets
of the Company. No Member shall be entitled to withdraw or receive a return of
any part of its Capital Contributions or Capital Account, to receive interest on
its Capital Contributions or Capital Account or to receive any distributions
from the Company, except as expressly provided for in this Agreement or under
applicable law (and for purposes of this Section 3.06, Capital Account shall be
deemed to also include the capital account of any Member for financial or book
purposes or as set forth in the Delaware Act or under common law).
Ownership. All assets of the Company shall be owned by the Company, subject to
the terms and provisions of this Agreement.
Waiver of Partition; Nature of Interests in the Company. Except as otherwise
expressly provided for in this Agreement, each of the Members hereby irrevocably
waives any right or power that such Member might have:
to cause the Company or the assets of the Company to be partitioned;
to cause the appointment of a receiver for all or any portion of the
assets of the Company;
to compel any sale of all or any portion of the assets of the
Company; or
to file a complaint, or to institute any proceeding at law or
in equity, to cause the termination, dissolution or liquidation
of the Company.
No Member shall have any interest in any specific assets of the Company
(including the Loan Portfolio or any Company Loans).
MANAGEMENT
Management.
Except as otherwise provided in this Agreement, the business and
affairs of the Company shall be controlled and managed by the Managing Member.
The Managing Member shall, in all cases, act in all material respects in
accordance with customary industry standards and Customary Practices and in
accordance with this Agreement. The Managing Member shall assure that it is
provided with, and has, the services of appropriately skilled personnel
(including, to the extent relevant and to the extent each is employed or
otherwise retained by the Managing Member or any of its Affiliates, Jeffrey
Gould, Mitchell Gould, David Kalish and George Zweier), who shall dedicate
sufficient time and effort to the performance of the services and
responsibilities contemplated hereunder to be provided by the Managing Member in
order to facilitate its ability to perform effectively such services and
responsibilities. The Managing Member shall consult regularly with the Members
in exercising its authority under this Agreement.
Without limiting the generality of the foregoing Section 4.01(a), and
except as otherwise provided in this Agreement, the Managing Member, at the
Company's cost: (i) shall, acting for and on behalf of the Company, (A)
establish the policies and operating procedures of the Company; (B) implement
all Major Decisions that have been approved in the manner provided for herein;
(C) make decisions (other than (I) Major Decisions and (II) such other decisions
as are reserved to one or more of the Members hereunder) as to all matters that
the Company has authority to undertake, subject, however, to the terms and
conditions of this Agreement; (ii) may perform, or cause to be performed, all of
the Company's obligations under any agreement to which the Company is a party;
and (iii) may enter into contracts on behalf of the Company and make such
expenditures as are required to operate and manage the Company. All decisions
made, and actions taken, by the Managing Member in accordance with the foregoing
Section 4.01(a) and this Section 4.01(b) shall be binding on the Company.
The Members hereby designate the BRT Member to act as the Managing
Member of the Company. The Managing Member may only be removed or changed: (i)
by unanimous consent of the Members; or (ii) upon the Managing Member's
resignation at its election. In the event the Managing Member resigns, the
Members shall appoint a successor Managing Member. Any provision to the contrary
herein notwithstanding, to the extent any Major Decision has been approved by
the Members, the Managing Member shall be authorized, without any further
consent or approval, to act in accordance therewith.
Major Decisions.
Notwithstanding any provision to the contrary in this Article IV, no
action shall be taken, sum expended, decision made or obligation incurred by or
on behalf of the Company with regard to the following matters (each a "Major
Decision") unless the same are approved in writing by all of the Members:
any hiring, employment or other engagement of any officer or
other employee other than the retention of the Company Accountants, any
retention, engagement or other contracting for the services of any
advisor or consultant to the Company if such retention, engagement or
other contracting for services would result in the incurrence by the
Company of any Operating Expenses;
any delegation of any of powers, duties, responsibilities and
management functions of the Managing Member, the Tax Matters Member or
the Liquidating Member;
any financing or refinancing of the Company or any assets of
the Company (which include the Third Party Financing);
any sale or other transfer of any Company Loan;
selecting or varying depreciation and accounting methods and
making other decisions with respect to treatment of various
transactions for state or federal income tax purposes or other
financial purposes not otherwise specifically provided for herein,
provided that such methods and decisions shall be consistent with the
other provisions of this Agreement;
determining any reserves to be established prior to the
distributions to the Members as provided herein;
the approval of any contract or other arrangement with any
Affiliate of any Member, the Managing Member, the Tax Matters Member or
the Liquidating Member;
the institution of legal action or proceeding (exclusive of a
foreclosure action with respect to any Company Loan or real property
securing any Company Loan), or the settlement or compromise of any
legal action or proceeding (exclusive of any such foreclosure action),
involving more than $100,000 or the settlement or compromise of any
uninsured claim or legal action or proceeding against the Company
involving more than $100,000;
any election to admit any other Person as a member to the
Company or the issuance of any Interest to any Person other than a
Member;
any election (A) to dissolve the Company other than in
accordance with the terms of this Agreement, (B) to merge the Company
with or into any other entity or (C) to file a bankruptcy or similar
insolvency petition on behalf of the Company;
any election pursuant to Code Section 301.7701-3 to have the
Company treated as a corporation for federal income tax purposes; or
the extension of the maturity date of any Company Loan or any
other extension or renewal of any Company Loan.
Major Decisions may be introduced for consideration of the Members by
the Managing Member or any Member. Any provision to the contrary herein
notwithstanding, the Managing Member shall have no power or authority to
authorize or approve any Major Decision, or to take any material action or make
any material decision with regard thereto, unless the same has been approved in
writing by all Members.
Notwithstanding anything contained herein to the contrary, the CIT
Member shall have sole power and authority to enforce and to cause the Company
to enforce any Participation Agreement. Without limiting the scope or generality
of the foregoing, the CIT Member, acting alone, shall have the power and
authority, in the name and on behalf of the Company, to retain such counsel and
other advisors as the CIT Member may deem appropriate to investigate any breach
or violation of any Participation Agreement by BRT or any Affiliate of BRT and
to institute and prosecute, and to settle or compromise, any action or
proceeding with respect to any breach or violation of any Participation
Agreement by BRT or any Affiliate of BRT. All costs and expenses incurred in
connection with the exercise of the power and authority contemplated by this
Section 4.02(c) shall be for the account of, and shall be borne by, the Company,
subject to reimbursement to the Company as provided in the relevant
Participation Agreement.
Loan Approval Process.
The CIT Member shall, from time to time, give written notice to the
Managing Member designating up to three individuals as CIT's designee(s) to
receive notice of, and the right to attend and participate in, any meeting of
the Loan Committee contemplated under Section 4.03(b). One designee of the CIT
Member shall be permitted (at such designee's election, either in person or by
conference telephone) to attend and participate in the discussion of each matter
under consideration at such meeting and (subject to the terms and conditions of
this Agreement) to approve or disapprove, on behalf of CIT, any loan proposed to
be made by the Company. CIT may, at any time and from time to time, change the
individuals so designated and may designate alternative individuals as to serve
as its designee(s) for such purpose in the event another individual so
designated is unavailable or otherwise unable to act as such designee. The
individuals who have been so designated by CIT are herein referred to as such
CIT's "Designees."
The BRT Member shall assure that (a) simultaneously with members of the
Loan Committee being given notice of any meeting at which any proposed or
prospective Company Loan (including any Shared Loan) is to be considered for
approval, the Designees of the CIT Member are given notice of such meeting and
(b) simultaneously with any Committee Report being given to any member of the
Loan Committee with respect to any proposed or prospective Company Loan
(including any Shared Loan), the Designees of the CIT Member are given a copy of
such Committee Report with respect to such proposed or prospective Company Loan.
Unless, within two (2) Business Days following (i) the completion of
any meeting of the Loan Committee called for the purposes of approving or
disapproving any proposed or prospective Company Loan or (ii) (if later) the
receipt by the CIT Member's Designees of the Committee Report with respect to
such proposed or prospective Company Loan, a Member indicates its disapproval of
such proposed or prospective Company Loan, such Member shall (subject to Section
4.03(d)) be deemed to have approved such proposed or prospective Company Loan;
provided, however, that no Member shall (absent its express written approval) be
deemed to have approved any proposed or prospective Company Loan (A) that would
not comply with Section 2.08(g) or that is referred to in Section 2.09(d) or (B)
with respect to which such Member has (as contemplated by Section 4.03(d))
requested additional information and such additional information has not been
provided.
Notwithstanding anything contained herein to the contrary, in the event
any Member shall request any additional information with respect to any proposed
or prospective Company Loan (including any third party market study), then, as
soon as reasonably practical after such request is made, such additional
information shall be obtained (at the Company's expense) and provided to such
Member. If any information so requested is obtained prior to the date the
relevant proposed or prospective Company Loan is to be made or advanced by the
Company, then (notwithstanding anything contained in Section 4.03(c) to the
contrary) the Member requesting such information shall have two (2) Business
Days following its receipt of such information to determine whether to approve
or disapprove such proposed or prospective Company Loan; provided, however,
that, if such information is not received by the Company or the Managing Member
until less than two (2) Business Days prior to when such proposed or prospective
Company Loan is required to close and be funded and such information is
forthwith delivered to the Member requesting such information, then such Member
shall have only until a reasonable period of time prior to the date such
proposed or prospective Company Loan is required to close and be funded to
determine whether to approve or disapprove such proposed or prospective Company
Loan.
No Member shall (without the consent of the other Members) disapprove
any proposed or prospective Company Loan that has been recommended by the
Managing Member unless (i) such proposed or prospective Company Loan fails to
meet or comply with one or more of the criteria set forth in Section 2.08, (ii)
such proposed or prospective Company Loan would, if made, constitute a loan
referred to under Section 2.09, (iii) such Member has (as contemplated by
Section 4.03(d)) requested additional information with respect to such proposed
or prospective Company Loan and such additional information has not been
provided or (iv) in the case of the CIT Member, the CIT Designees did not
receive advance notice of the Loan Committee meeting at which such proposed or
prospective Company Loan was considered for approval or disapproval so as to
allow them to attend and participate in such Loan Committee meeting.
Conditions to Closing of Company Loans. The Managing Member shall not cause or
permit the Company to close or fund any loan contemplated hereunder to be made
or advanced by the Company unless each and all of the following conditions
(except to the extent the same have been waived in writing by the Members) have
been met or satisfied:
at least three (3) Business Days in advance of such closing and
funding, a "Phase 1" environmental report or environmental
audit (the costs of which shall have been paid for or borne by
the relevant Borrower) with respect to the real property that
is intended to secure such loan shall have been approved by
the Managing Member acting in good faith and in accordance
with Customary Practices and delivered to each Member;
if such loan is to be secured by any building or other
improvements that are not yet constructed, at least three (3)
Business Days in advance of such closing and funding, a
construction budget for such building or other improvements
shall have been approved by the Managing Member acting in good
faith and in accordance with Customary Practices and a copy
thereof (as so approved) shall have been delivered to each
Member;
the Company shall have been provided with title insurance, in
customary form and substance (as approved by the Managing
Member acting in good faith and in accordance with Customary
Practices), with respect to the real property that is intended
to secure such loan;
a physical inspection (as approved by the Managing Member acting
in good faith and in accordance with Customary Practices) of
the real property that is intended to secure such loan shall
have been completed;
a First Mortgage with respect to the real property that is
intended to secure such loan shall have been approved by the
Managing Member acting in good faith and in accordance with
Customary Practices and executed by the relevant Borrower,
delivered to the Company for filing or recording, as
applicable;
the Company shall have received written confirmation (in form
and substance satisfactory to the Managing Member acting in
good faith and in accordance with Customary Practices) as to
the proper zoning and permitted use of the real property
that is intended to secure such loan;
the Company shall have received copies of all applicable
certificates of occupancy (in form and substance satisfactory
to the Managing Member acting in good faith and in accordance
with Customary Practices) with respect to the real property
that is intended to secure such loan;
all Loan Documentation for such loan shall be in form and
substance satisfactory to the Managing Member acting in good
faith and in accordance with Customary Practices;
the Company shall have received copies of appropriate authorizing
resolutions, confirmation of signing authority and legal
opinions (all in form and substance satisfactory to the
Managing Member acting in good faith and in accordance with
Customary Practices) with respect to all applicable Loan
Documentation for such loan;
the Company shall have received written confirmation (in form and
substance satisfactory to the Managing Member acting in good
faith and in accordance with Customary Practices) that the
relevant Borrower has obtained (as provided for in the Loan
Documentation for such loan) appropriate fire, liability,
comprehensive and replacement insurance with respect to the
real property that is intended to secure such loan, with the
Company listed as an additional loss payee and mortgagee with
respect to each insurance policy in an amount equal to the
replacement cost of the buildings and other improvements
included in such real property;
all Taxes with respect to the real property that is intended to
secure such loan shall have been paid in full and discharged
or escrowed with the Company, the Managing Member or
the title company;
the financial condition of the relevant borrower and (as applicable)
major tenants of the real property that is intended to
secure such loan shall have been provided to, and
approved by, the Managing Member acting in good faith and
in accordance with Customary Practices;
at least three (3) Business Days in advance of such closing and
funding, each Member shall have been provided with a copy
of the Managing Member's "in-house" condition report with
respect to such loan and the real property that is intended
to secure such loan; and
such other conditions as any Member may, from time to time reasonably
request, shall have been met or satisfied.
Limitation on Other Members' Rights to Manage the Company. Except as expressly
provided in this Agreement, no Member, other than the Managing Member, shall
have any right or power to participate in or have any control over the Company's
business, affairs or operations or to act for or to bind the Company in any
matter whatsoever; provided, however, that the foregoing shall not be deemed to
limit or impair, or to adversely affect, the right of any Member to withhold its
consent to any Major Decision or the effect of any Member's failure to grant any
such consent.
Accounting and Fiscal Year. The books of the Company shall be kept on the
accrual basis in accordance with generally accepted accounting practices and
principles consistently applied ("GAAP"), and the Company shall report its
operations for tax purposes on the accrual method. The taxable year of the
Company shall end on December 31 of each year unless a different taxable year
shall be required by the Code.
Books and Records. The Managing Member shall maintain, or cause to be
maintained, in a manner customary and consistent with good accounting
principles, practices and procedures, a comprehensive system of office records,
books and accounts (which records, books and accounts shall be and remain the
property of the Company) in which shall be entered fully and accurately each and
every financial transaction with respect to the operations of the Company.
Bills, receipts and vouchers shall be maintained on file by the Managing Member.
The Managing Member shall maintain said books and accounts in a safe manner and
separate from any records not having to do directly with the Company. The
Managing Member shall cause audits to be performed and audited statements and
income tax returns to be prepared as required by Section 4.10. Such books and
records of account shall be prepared and maintained by the Managing Member at
the principal place of business of the Company or such other place or places as
may from time to time be determined by the Managing Member.
Access to Books and Records. The Company shall provide each Member and its
accountants or other representatives, and the Managing Member shall cause the
Company to provide each Member and its accountants or other representatives,
with free and unlimited access during normal business hours to, and the ability
to make copies of, all books and records relating to the Company and its
operations, including the Loan Portfolio.
Provision of Financial Statements and Reports. The Company shall provide each
Member, and the Managing Member shall cause the Company to provide each Member,
with the following:
within three (3) days following the end of each calendar month, a
Status Report with respect to the status of each of the
Company Loans as of the end of such calendar month;
within three (3) days following the end of each Fiscal Quarter, a
Portfolio Management Report for such Fiscal Quarter;
within five (5) Business Days following the end of each Fiscal
Quarter (other than the last Fiscal Quarter) of each Fiscal
Year, unaudited financial statements of the Company for such
Fiscal Quarter and for such Fiscal Year through the end of
such Fiscal Quarter, which financial statements shall include
a statement of profit and loss and of cash flows of the
Company for each of the periods covered thereby and a balance
sheet of the Company as of the end of such Fiscal Quarter, in
each case been prepared in accordance with GAAP applied on a
consistent basis;
within thirty (30) days following the end of each Fiscal Year, audited
financial statements of the Company for such Fiscal Year,
which financial statements shall include a statement of
profit and loss and of cash flows of the Company for such
Fiscal Year and a balance sheet of the Company as of the end
of such Fiscal Year, in each case been prepared in
accordance with GAAP applied on a consistent basis;
within twenty-one (21) days following the end of each Fiscal Year,
the Form K-1 and other documentation required by each Member
for the purposes of determining such Member's income (or
loss) for such Fiscal Year attributable to such Member's
interest in the Company; and
promptly after any request therefor, such other information and reports
as any Member may from time to time reasonably request with
respect to the Company, its business and operations and/or
the Loan Portfolio and the performance thereof.
Reports. The Managing Member shall prepare the financial reports and other
information that the Members may determine are appropriate, including those
provided for in Section 4.09. In addition, promptly after the end of each Fiscal
Year, the Managing Member will cause the Company Accountant to prepare and
deliver to each Member a report setting forth in sufficient detail all such
information and data with respect to business transactions effected by or
involving the Company during such Fiscal Year as will enable the Company and
each Member to timely prepare its federal, state and local income tax returns in
accordance with the laws, rules and regulations then prevailing. The Managing
Member will also cause the Company Accountant to prepare federal, state and
local tax returns required of the Company, submit those returns to the Members
for their approval as early as practicable but in no event later than twenty-one
(21) calendar days following the end of the preceding Fiscal Year and will file
the tax returns after they have been approved by the Members. In the event any
Member shall not in good faith be able to approve any such tax return prior to
the date required for the filing thereof, the Managing Member will timely obtain
an extension of such date if such extension is available under applicable law.
The Managing Member shall prepare and distribute the reports and statements
described in this Section 4.10. All decisions as to accounting principles shall
be made by the Managing Member, subject to the provisions of this Agreement.
The Company Accountant. The Company shall retain the Company Accountant as its
regular accountant and auditor. The fees and expenses of the Company Accountant
(such fees and expenses, collectively, the "Accounting Fees"), inclusive of any
such fees related to the preparation of any tax returns, shall be a Company
operating expense.
Reserves. Subject to Section 4.02(a), the Managing Member may establish reserves
to the extent it determines in good faith and in accordance with Customary
Practices that said reserves are reasonably required (i) to satisfy requirements
of applicable law, (ii) to make payments on or with respect to the Third Party
Financing or (iii) for other Operating Expenses.
Tax Matters.
Tax Matters Member. The Managing Member is specifically authorized to
act as the Company's "Tax Matters Member" and shall act as the Company's "tax
matters partner" within the meaning of Section 6231(a)(7) of the Code and in any
similar capacity under state or local law. The Tax Matters Member shall have the
authority without any further consent of the Members being required (except as
specifically required herein) to make any and all elections for federal, state,
local and foreign tax purposes, including any election, if permitted by
applicable law: (i) to make the election provided for in Code Section
6231(a)(1)(B)(ii), (ii) to adjust the basis of any Company assets pursuant to
Code Sections 754, 734(b) and 743(b), or comparable provisions of state, local
or foreign law, in connection with Transfers of Interests and Company
distributions; (iii) to extend the statute of limitations for assessment of tax
deficiencies against the Members with respect to adjustments to the Company's
federal, state, local or foreign tax returns; and (iv) to the extent provided in
Code Sections 6221 through 6231 and similar provisions of federal, state, local
or foreign law, to represent the Company and the Members before taxing
authorities or courts of competent jurisdiction in tax matters affecting the
Company or the Members in their capacities as Members and to file any tax
returns and execute any agreements or other documents relating to or affecting
such tax matters, including agreements or other documents that bind the Members
with respect to such tax matters or otherwise affect the rights of the Company
and the Members.
Tax Information. Necessary tax information shall be delivered to each
Member as soon as practicable fter the end of each Fiscal Year but not later
than twenty-one (21) days after the end of each Fiscal Year.
Treatment as a Partnership. The Members intend for the Company to be
treated as a partnership under the Code. The Members shall take reporting
positions on their respective federal, state and local income tax returns
consistent with the positions determined for the Company by the Tax Matters
Member. The Tax Matters Member shall cause all federal, state and local income
and other tax returns to be timely filed by the Company.
Reimbursement for Certain Expenses. The Company shall reimburse the Managing
Member for Loan Origination Expenses that are in excess of the corresponding
Loan Origination Deposits, provided that the amount of such reimbursement for
any Fiscal Year or other period shall not (except as agreed to in writing by all
of the Members) exceed the Maximum Reimbursement Amount. The Loan Origination
Expenses that the Company is obligated under this Section 4.14 to reimburse to
the Managing Member are herein referred to as the "Reimbursable Loan Origination
Expenses."
Obligation of the Managing Member to Bear Expenses.
--------------------------------------------------
The Managing Member shall bear (and shall pay so as not to subject the
Company to any obligation to pay) (a) all costs and expenses related to the
performance of the duties and obligations of the Managing Member, the Tax
Matters Member and the Liquidating Member hereunder and (b) all personnel and
other overhead and related costs and expenses (including rent, utilities and
expenses for telecommunications, printing, mailing and courier service and any
travel or entertainment expenses) and other operating costs with respect to the
operation of the Company's business. The Company shall bear and pay the
following, but (except with the prior written consent of all of the Members)
only the following, expenses: (i) all Taxes payable by the Company, (ii) all
Accounting Fees incurred by the Company, (iii) all legal and other expenses
incurred by the Company and payable to an Independent Third Party in connection
with (A) the enforcement of any Company Loan (including the foreclosure under
any related First Mortgage or other realization upon any real property or other
collateral securing such Company Loan and any costs or expenses related to the
repair, preservation or improvement of any real property securing any Company
Loan, including (if applicable) after the Company has acquired such real
property in connection with a foreclosure sale or otherwise) (all such legal and
other expenses, collectively, "Foreclosure Expenses") or (B) the enforcement of
any Participation Agreement or other contract to which the Company is a party,
(iv) all payments of interest, principal and any other amounts (including any
points and other fees payable by the Company to any Third Party Lender in
connection with any Third Party Financing) that are payable by the Company to
any Third Party Lender in connection with any Third Party Financing, (v) all
legal and other similar expenses incurred by the Company and payable to an
Independent Third Party in connection with the preparation and negotiation of
any loan agreement or other documentation relating to any Third Party Financing,
(vi) all legal and other expenses incurred by the Company and payable to an
Independent Third Party in connection with the dissolution and liquidation of
the Company as contemplated under Article IX and (vii) any Reimbursable Loan
Origination Expenses (all of the costs and expenses referred to in the foregoing
clauses (i) through (vii) are herein referred to collectively as the "Operating
Expenses"). Notwithstanding anything contained in this Section 4.15 to the
contrary, the Managing Member shall be authorized to apply any Loan Origination
Deposits in payment of any corresponding Loan Origination Expenses.
The Managing Member shall assure that the Company shall not incur or
bear more than one half (1/2) of all costs and expenses that are incurred
(whether by or on behalf of the Company, BRT or any Affiliate of BRT) in
connection with (i) the investigation of a prospective Borrower that may enter
into a Company Loan if such Company Loan might be part of a Shared Loan, (ii)
any other due diligence relating to any prospective Company Loan if such Company
Loan might be part of a Shared Loan or (iii) the preparation or negotiation of
documentation for any prospective Company Loan if such Company Loan might be
part of a Shared Loan. The Managing Member shall also assure that, with respect
to all costs and expenses that, if paid or incurred by the Company, would
constitute Foreclosure Expenses related to any Company Loan, the Company shall
not incur or bear more than the Company's Share of such costs and expenses.
Nothing contained in this Section 4.15(b) shall be deemed to release or relieve
the Managing Member of any of its obligations under Section 4.15(a) or any other
provisions of this Agreement.
Holding of REIT Qualifying Assets. If any Member or a direct or indirect parent
of any Member is a real estate investment trust and such Member is not a taxable
REIT subsidiary, at the request of such Member, the Managing Members shall
promptly dispose of any asset of the Company that generates gross income of a
character that is not described in Section 856(c)(3) of the Code, causes or
threatens to cause such Member to fail to satisfy the requirements of Section
856(c)(4) of the Code or produces income from a prohibited transaction within
the meaning of Section 857(b)(6) of the Code.
Loans Deemed Disapproved. Any loan that is not approved or deemed approved
within specified time frames by the CIT Member shall be deemed disapproved.
CAPITAL
Initial Capital Contributions. Within ten (10) Business Days following the
Effective Date, the CIT Member shall contribute one hundred and fifty thousand
dollars ($150,000) to the capital of the Company and the BRT Member shall
contribute fifty thousand dollars ($50,000) to the capital of the Company.
Capital Calls.
In anticipation of, but not less than two(2) full Business Days prior
to the closing of, the making or advance of a new Company Loan by the Company
(including any new Company Loan that constitutes the Company's Share of any
Shared Loan), the Managing Member may, by written notice given to each Member,
make a call upon such Member to make a contribution to the capital of the
Company in an amount equal to such Member's Contribution Percentage of the
principal amount of such Company Loan anticipated to be made or advanced by the
Company at the closing of such new Company Loan (any such written notice is
herein referred to as a "Capital Call Notice" and shall specify the principal
amount of such Company Loan anticipated to be made or advanced by the Company at
the closing of such new Company Loan). Promptly, and in any event within two (2)
full Business Days, following its receipt of any such Capital Call Notice, each
Member shall contribute to the capital of the Company, in immediately available
funds, its Contribution Percentage of the principal amount of such Company Loan
anticipated to be made or advanced by the Company at the closing of such new
Company Loan as set forth in such Capital Call Notice; provided, however, that
no Member shall be obligated to make any such additional contribution to the
capital of the Company to the extent that the amount of such additional
contribution, when aggregated with all capital contributions that have
theretofore been made by such Member to the capital of the Company (including
pursuant to Section 5.01) and that have not been repaid or returned to such
Member as contemplated under Section 7.01(a) would exceed such Member's Maximum
Contribution Amount.
In the event the Managing Member, acting in good faith and in
accordance with Customary Practices, determines that the Company needs to incur
and expend Foreclosure Expenses that cannot be funded from Company Loan
Non-Principal Repayments that have been retained or are anticipated to be
received by the Company, the Managing Member may make a capital call on the
Members to provide capital contributions to the Company to fund such Foreclosure
Expenses. Such capital call shall be made by written notice to the Members
setting forth the amount of such capital call and, in reasonable detail, the
anticipated application of the amount being requested. Within ten (10) days
following its receipt of such notice, the CIT Member shall contribute to the
capital of the Company an amount equal to seventy-five percent (75%) of the
amount of such capital call and the BRT Member shall contribute to the capital
of the Company an amount equal to twenty-five percent (25%) of the amount of
such capital call. Notwithstanding anything contained herein to the contrary,
the CIT Member shall not be required to make any contribution to the capital of
the Company pursuant to this Section 5.02(b) to the extent that the amount of
such contribution, when aggregated with the amount of all contributions that
have previously been made by the CIT Member pursuant to this Section 5.02(b) and
have not been repaid to the CIT Member pursuant to step one of Section 7.01(b),
would exceed seven hundred and fifty thousand dollars ($750,000) and the BRT
Member shall not be required to make any contribution to the capital of the
Company pursuant to this Section 5.02(b) to the extent that the amount of such
contribution, when aggregated with the amount of all contributions that have
previously been made by the BRT Member pursuant to this Section 5.02(b) and have
not been repaid to the BRT Member pursuant to step one of Section 7.01(b), would
exceed two hundred and fifty thousand dollars ($250,000).
No Further Capital Contributions. Except as expressly provided in this Agreement
or with the prior written consent of all the Members, no Member shall be
required or entitled to contribute any other or further capital to the Company
(subject, however, to the proviso in clause (i) of Section 5.05(a) and the last
sentence of Section 7.05), nor shall any Member be required or entitled to loan
any funds to the Company. No Member will have any obligation to restore any
negative or deficit balance in its Capital Account upon liquidation or
dissolution of the Company (and for purposes of this Section 5.03, Capital
Account shall be deemed to also include the capital account of any Member for
financial or book purposes or as set forth in the Delaware Act or under common
law). Notwithstanding any other provision of this Agreement to the contrary,
nothing contained herein will, or is intended or will be deemed to benefit any
creditor of the Company or any creditor of any Member, and no such creditor
shall have any rights, interests or claims hereunder, be entitled to any
benefits or be entitled to require the Company or any Member to demand, solicit
or accept any loan, advance or Additional Capital Contribution for or to the
Company or to enforce any rights that the Company or any Member may have against
any other Member or that any Member may have against the Company, pursuant to
this Agreement or otherwise.
Method of Payment. All Capital Contributions or advances required by or provided
for in this Article V shall be made by wire transfer of funds to the Company
account designated by the Managing Member, and any distributions to any Member
(pursuant to Article VII or IX) required by or provided in this Agreement shall
be made by wire transfer of funds to such account as designated by such Member
or other means mutually acceptable or then commonly used for the receipt and
distribution of proceeds in major commercial transactions.
Defaults in Making Capital Contributions and Remedies.
If either Member (the "Non-Contributing Member") fails to timely make
any Capital Contribution (or any portion thereof) required pursuant to Section
5.01 or 5.02 and the other Member (the "Contributing Member") has fully made its
Capital Contribution as required pursuant to Section 5.01 or 5.02 (as
applicable), then the Contributing Member may cause either (but not both) of the
following actions to be taken by delivery of notice to such effect to the
Company and the Non-Contributing Member (which notice shall be so delivered
within ten (10) Business Days following the date the Non-Contributing Member was
required, but failed, to make such Capital Contribution):
The Contributing Member may (A) advance (in addition to such amount as
the Contributing Member is required to contribute to the capital of the
Company pursuant to Section 5.01 or 5.02 (as applicable)) to the
Company an amount up to the Non-Contributing Member's Default
Contribution Amount (subject to the limitation that the aggregate
Priority Member Advances made by the Contributing Member and then
outstanding does not exceed seven million five hundred thousand dollars
($7,500,000)) and (B) designate such advance as a "Priority Member
Advance" (provided, however, such Priority Member Advance will be
considered and treated as a Capital Contribution for federal income tax
purposes); OR
The Contributing Member may withdraw its share of such required Capital
Contribution.
Notwithstanding any other provision of this Agreement to the contrary,
in the event any Member fails to timely make any Capital Contribution (or any
portion thereof) required pursuant to Section 5.01 or 5.02 and the resulting
exercise of any remedy in this Agreement results in the immediate or future
imposition of a transfer tax on the Company (or any Member thereof), the Member
that failed to make such Capital Contribution under Section 5.01 or 5.02 shall
be liable for and shall be obligated to directly pay any such transfer tax (and
such payment shall not be deemed to be a Capital Contribution and shall have no
effect upon the allocation provisions or any other equity provisions of this
Agreement).
Each Member acknowledges and agrees that the other Member would not be
entering into this Agreement were it not for (i) the Members agreeing to make
the Capital Contributions provided for in Sections 5.01 and 5.02 and (ii) the
remedy provisions provided for herein. Each Member acknowledges and agrees that
in the event any Member fails to make its Capital Contributions pursuant to this
Agreement, the other Member will suffer substantial damages and the remedy
provisions set forth above under step three of Section 7.01(b) are fair, just
and equitable in all respects and administratively superior to any other method
for determining such damages.
ALLOCATIONS
Profits. After giving effect to the special allocations set forth in Sections
6.03 and 6.04, Profits for any Allocation Year (determined without regard to any
Losses associated with Lost Principal Amounts) shall be allocated to the Members
as follows:
First, to the Members in an amount equal to the excess, if any, of
(i) the cumulative Losses allocated to the Members pursuant to Section
6.02(b) for all prior Allocation years over (ii) the cumulative Profits
allocated to the Members pursuant to this Section 6.01(a) for all prior
Allocation Years;
Second, to the Members until the Members have been allocated an amount
equal to the excess, if any, of (i) the sum of (1) the cumulative amounts
distributed to each such Members pursuant to Section 7.01(b)(i)(B) representing
the 9% return on such Members Priority Member Advances, plus (2) the cumulative
amounts distributed to each such Members pursuant to Section 7.01(b)(i)(A)
representing repayment of such Member's Foreclosure Capital Contributions, but
only to the extent such repayment is allocable to cumulative aggregate Lost
Principal Amounts for which Losses were previously allocated to such Member
pursuant to Section 6.02(a), over (ii) the cumulative Profits allocated to such
Member pursuant to this Section 6.01(b) for all prior Allocation Years;
Third, the BRT Member in an amount equal to the excess, if any, of (i)
the cumulative amounts distributed pursuant to Section 7.01(b)(ii)(B) over
(ii) the cumulative Profits allocated to BRT Member pursuant to this Section
6.01(c) for all prior Allocation Years;
Fourth, to the Members until the Members have been allocated an amount
equal to the excess, if any, of (i) the cumulative amounts distributed to
each such Member pursuant to Section 7.01(b)(iii) representing the 12% return
on such Member's Foreclosure Capital Contribution over (ii) the cumulative
Profits allocated to such Member pursuant to this Section 6.01(d) for all prior
Allocation Years;
Fifth, to the Members until the Members have been allocated an amount
equal to the excess, if any, of (i) the cumulative amounts distributed to
the Members pursuant to Section 7.01(b)(iv) over (ii) the cumulative Profits
allocated to the Members pursuant to this Section 6.01(e) for all prior
Allocation Years;
Sixth, to the Members until the Members have been allocated an amount
equal to the excess, if any, of (i) the cumulative amounts distributed to
the Members pursuant to Sections 7.01(d)(i) and 7.01(e)(i) over (ii) the
cumulative Profits allocated to the Members pursuant to this Section 6.01(f)
for all prior Allocation Years;
Seventh, to the Members until the Members have been allocated an amount
equal to the excess, if any, of (i) the cumulative amounts distributed to
the Members pursuant to Sections 7.01(d)(ii) and 7.01(e)(ii) over (ii) the
cumulative Profits allocated to the Member pursuant to this Section 6.01(g)
for all prior Allocation Years; and
Eighth, the balance, if any, thirty-seven and one-half percent(37 1/2%)
to the CIT Member and sixty-two and one-half percent (62 1/2%) to the BRT
Member.
Notwithstanding Section 6.01, any Profits relating to the recovery on and
with respect to any Lost Principal Amount shall be allocated the Members in the
same manner as which the Losses associated with such Lost Principal Amount were
allocated.
Losses. After giving effect to the special allocations set forth in Sections
6.03 and 6.04, Losses for any Allocation Year shall be allocated to the Members
as follows:
First, to the Members, in proportion to their relative Outstanding
Advances (increased by any outstanding Priority Member Advances) an amount equal
to the excess, if any, of (i) the cumulative aggregate Lost Principal Amounts
for all Foreclosed Company Loans over (ii) the cumulative Losses allocated to
such Member pursuant to this Section 6.02(a) for all prior Allocation Years; and
Second, the balance, if any, thirty-seven and one-half percent(37 1/2%)
to the CIT Member and sixty-two and one-half percent (62 1/2%) to the BRT
Member.
Special Allocations. The following special allocations shall be made in the
following order:
Allocations on account of Payments with Respect to Lost Principal. If
the BRT Member shall make a payment pursuant to Section 7.06 to the CIT
Member on account of a CIT Loan Principal Shortfall, the Loss that gave
rise to such CIT Loan Principal Shortfall shall be allocated to the BRT
Member.
Qualified Income Offset. In the event that any Member unexpectedly
receives any adjustments, allocations or distributions described in
Regulations Section 1.704-1(b)(2)(ii)(d)(4), Section
1.704-1(b)(2)(ii)(d)(5) or Section 1.704-1(b)(2)(ii)(d)(6), items of
Company income and gain shall be allocated to such Member in an amount
and manner sufficient to eliminate, to the extent required by the
Regulations, the Adjusted Capital Account Deficit of such Member as
quickly as possible; provided that an allocation pursuant to this
Section 6.03(b) shall be made only if and to the extent that such
Member would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Article VI have been tentatively made
as if this Section 6.03(b) were not in this Agreement.
Gross Income Allocation. In the event that any Member has an Adjusted
Capital Account Deficit at the end of any Allocation Year, such Member
shall be allocated items of Company income and gain in the amount of
such deficit as quickly as possible; provided that an allocation
pursuant to this Section 6.03(b) shall be made only if and to the
extent that such Member would have an Adjusted Capital Account Deficit
in excess of such sum after all other allocations provided for in this
Article VI have been tentatively made as if Section 6.03(b) and this
Section 6.03(c) were not in this Agreement.
Section 754 Adjustments. To the extent an adjustment to the adjusted
tax basis of any Company asset, pursuant to Code Section 734(b) or
Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4), to be taken
into account in determining Capital Accounts as the result of a
distribution to a Member in complete liquidation of such Member's
Interest in the Company, the amount of such adjustment to Capital
Accounts shall be treated as an item of gain (if the adjustment
increases the basis of such Company asset) or loss (if the adjustment
decreases such basis) and such gain or loss shall be specially
allocated to the Members in accordance with their Interests in the
event Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the
Member to whom such distribution was made in the event Regulations
Section 1.704-1(b)(2)(iv)(m)(4) applies.
Allocations Relating to Taxable Issuance of Interests. Any income,
gain, loss or deduction realized as a direct or indirect result of the
issuance of an Interest by the Company to a Member (the "Issuance
Items") shall be allocated among the Members so that, to the extent
possible, the net amount of such Issuance Items, together with all
other allocations under this Agreement to each Member, shall be equal
to the net amount that would have been allocated to each such Member if
the Issuance Items had not been realized.
Curative Allocations. The allocations set forth in Sections 6.03(b), 6.03(c) and
6.03(d) (the "Regulatory Allocations") are intended to comply with certain
requirements of the Regulations. It is the intent of the Members that, to the
extent possible, the Regulatory Allocations shall be offset either with special
allocations of other items of Company income, gain, loss or deduction pursuant
to this Section 6.04. Therefore, notwithstanding any other provision of this
Article VI (other than the Regulatory Allocations), the Managing Member shall
make such offsetting special allocations of Company income, gain, loss or
deduction in whatever manner it (acting in good faith) determines appropriate so
that, after such offsetting allocations are made, each Member's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of this
Agreement and all Company items were allocated pursuant to Sections 6.01, 6.02
and 6.03(e).
Other Allocation Rules.
Profits, Losses and any other items of income, gain, loss or deduction
shall be allocated to the Members pursuant to this Article VI as of the last
day of each Fiscal Year, provided that Profits, Losses and such other items
shall also be allocated at such times as the Gross Asset Values of Property
are adjusted pursuant to clause (ii) of the definition of "Gross Asset Value"
in Section 1.01.
For purposes of determining the Profits, Losses or any other items
allocable to any period, Profits, Losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by the Managing
Member (except to the extent otherwise provided in Section 8.06) using any
permissible method under Code Section 706 and the Regulations thereunder.
The Members are aware of the income tax consequences of the allocations
made by this Article VI and hereby agree to be bound by the provisions of this
Article VI in reporting their shares of Company income and loss for income
tax purposes, except as otherwise required by law.
Tax Allocations; Code Section 704(c).
Except as otherwise provided in this Section 6.06, each item of income,
gain, loss and deduction of the Company for federal income tax purposes shall be
allocated among the Members in the same manner as such items are allocated for
book purposes under this Article IV. In accordance with Code Section 704(c) and
the Regulations thereunder, income, gain, loss and deduction with respect to any
Property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such Property to the Company for federal income
tax purposes and its initial Gross Asset Value (computed in accordance with the
definition of "Gross Asset Value" in Section 1.01).
In the event the Gross Asset Value of any Company asset is adjusted
pursuant to clause (ii) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss and deduction with respect to such asset
shall take account of any variation between the adjusted basis of such assetfor
federal income tax purposes and its Gross Asset Value in the
same manner as under Code Section 704(c) and the Regulations thereunder.
Any elections or other decisions relating to such allocations shall be
made by the Managing Member in any manner that reasonably reflects the purpose
and intention of this Agreement, provided that the Company shall elect to apply
the traditional method described by Regulation Section 1.704-3(b), and provided,
further, that any items of loss or deduction attributable to property
contributed by a Member shall, to the extent of an amount equal to the excess of
(A) the federal income tax basis of such property at the time of its
contribution over (B) the Gross Asset Value of such property at such time, be
allocated in its entirety to the such contributing Member and the tax basis of
such property for purposes of computing the amounts of all items allocated to
any other Member (including a transferee of the contributing Member) shall be
equal to its Gross Asset Value upon its contribution to the Company. Allocations
pursuant to this Section 6.06 are solely for purposes of federal, state and
local taxes and shall not affect, or in any way be taken into account in
computing, any Member's Capital Account or share of Profits, Losses, other items
or distributions pursuant to any provision of this Agreement.
DISTRIBUTIONS
Amounts Distributed.
Principal Repayments. Promptly, and in any event within five (5)
Business Days following its receipt of any Principal Repayment made to the
Company on account of or with respect to any Company Loan (including any Shared
Loan, but other than any Prior Advance Loan), the Company shall distribute, and
the Managing Member shall cause the Company to distribute, to each Member a
portion of such Principal Repayment where such portion is equal to such Member's
Loan Percentage of such Company Loan.
Quarterly Distributions. Except as otherwise provided in Article IX
and subject to Sections 7.01(c) and 7.07, promptly (and in any event, within
five (5) Business Days) following the end of each Fiscal Quarter (commencing
with the Fiscal Quarter ending December 31, 2006) the Company shall distribute,
and the Managing Member shall cause the Company to distribute, to the Members
from (and to the extent of) the Gross Available Cash Flow (determined as of the
close of business on the last day of such Fiscal Quarter) the following amounts
in accordance with the following steps and in the following priorities:
first step (Recovery of Foreclosure Capital Contributions) -
to each Member the amount (if any) equal to (A) the aggregate
outstanding amount of such Member's Foreclosure Capital Contribution(s)
that have not been repaid to such Member as contemplated by this clause
(i) or otherwise repaid to such Member plus (B) an amount sufficient to
pay such Member a nine percent (9%) per annum (calculated on the actual
number of days outstanding) return on the aggregate outstanding amount
of the Foreclosure Capital Contribution(s) of such Member during such
Fiscal Quarter;
second step (Management Allocation) - to the BRT Member an
amount equal to (A) one-quarter percent (1/4%) of the weighted average
of the aggregate outstanding principal amounts of the Company Loans
(exclusive of any Non-Performing Company Loans) during such Fiscal
Quarter (provided that, for any Fiscal Quarter that is less than three
full calendar months, the foregoing amount shall be pro rated based
upon the length of such Fiscal Quarter compared to the corresponding
three full calendar months) plus (B) if, during such Fiscal Quarter,
the Company has recovered on and with respect to any Non-Performing
Company Loan an amount (net of all legal fees and other related costs
of recovery) equal to or in excess of the outstanding principal amount
of such Non-Performing Company Loan, an amount equal to the Management
Distribution Shortfall for such Non-Performing Company Loan or, if
less, the amount of such excess, plus the amount (if any) of the
Carry-over Management Distribution (determined as of the close of
business on the last day of such Fiscal Quarter), if any;
third step (Priority Member Advances) - to each Member the
amount (if any) equal to (A) the aggregate outstanding amount of such
Member's Priority Member Advance(s) that have not been repaid to such
Member as contemplated by this clause (iii) or otherwise repaid to such
Member plus (B) an amount sufficient to pay such Member a twelve
percent (12%) per annum (calculated on the actual number of days
outstanding) return on the aggregate outstanding amount of the Priority
Member Advance(s) of such Member during such Fiscal Quarter.
fourth step (Company Loan Origination Fees) - with respect to
each Company Loan that was initially made or advanced by the Company
during such Fiscal Quarter, (A) to the CIT Member an amount equal to
(I) the CIT Loan Fee Portion of the Company Loan Origination Fee that
was received by the Company during such Fiscal Quarter plus (II) the
amount (if any) of the Carry-over CIT Loan Fee Distribution (determined
as of the close of business on the last day of such Fiscal Quarter), if
any and (B) to the BRT Member an amount equal to (I) the BRT Loan Fee
Portion of the Company Loan Origination Fee that was received by the
Company during such Fiscal Quarter plus (II) the amount (if any) of the
Carry-over BRT Loan Fee Distribution (determined as of the close of
business on the last day of such Fiscal Quarter), if any.
Application of Principles for Allocations. Notwithstanding anything
contained in Section 7.01(b) to the contrary, the distributions provided for
under Section 7.01(b) shall be made in accordance with the following principals:
the aggregate amount of the distributions to be made pursuant
to Section 7.01(b) for or with respect to any Fiscal Quarter shall not
exceed the amount of the Gross Available Cash Flow (determined as of
the close of business on the last day of such Fiscal Quarter);
the aggregate amount of the distributions to be made pursuant
to any step set forth under Section 7.01(b) for or with respect to any
Fiscal Quarter shall not exceed the balance of (A) the amount of the
Gross Available Cash Flow (determined as of the close of business on
the last day of such Fiscal Quarter) less (B) the aggregate amount of
all distributions provided to be made pursuant to any and all prior
step(s) set forth under Section 7.01(b) for or with respect to such
Fiscal Quarter; and
in the event the balance (as contemplated under the foregoing
clause (ii)) available to be distributed to the Members pursuant to any
step under Section 7.01(b) is not sufficient to pay to the Members the
full amount provided to be distributed to the Members pursuant to such
step (exclusive of any limitation thereof contemplated by the foregoing
provisions of this Section 7.01(c)), such balance shall be allocated
and distributed to and among the Members in proportion to the
respective amounts that would have been distributed to the Members if
such balance had equaled or exceeded the full amount provided to be
distributed to the Members pursuant to such step (exclusive of any
limitation thereof contemplated by the foregoing provisions of this
Section 7.01(c)).
Quarterly Distributions of Net Available Cash Flow. Except as
otherwise provided in Article IX, promptly (and in any event, within five (5)
Business Days) following the end of each Fiscal Quarter (commencing with the
Fiscal Quarter ending December 31, 2006, 2007), other than the last Fiscal
Quarter of any Fiscal Year, the Company shall distribute, and the Managing
Member shall cause the Company to distribute, to the Members from (and to the
extent of) the Net Available Cash Flow (determined as of the close of business
on the last day of such Fiscal Quarter) the following amounts in accordance with
the following steps:
first step, to each Member, an amount sufficient (when
aggregated with the Included Distribution Amount for the such Member
for such Fiscal Quarter) to pay such Member a nine percent (9%) per
annum (calculated on the actual number of days outstanding) return on
the Outstanding Advances of such Member during such Fiscal Quarter,
provided that, if the amount of such Net Available Cash Flow is not
sufficient to make the distribution provided for pursuant to this
clause (i), an amount equal to such Net Available Cash Flow shall be
allocated and distributed to and among the Members so that, for such
Fiscal Quarter, each Member will have received, pursuant to this clause
(i) (when aggregated with its respective Included Distribution Amounts
for such Fiscal Quarter), a per annum (calculated on the actual number
of days outstanding) return on its respective Outstanding Advances
during such Fiscal Quarter equal to the per annum (calculated on the
actual number of days outstanding) return that each other Member
receives, pursuant to this clause (i), on its respective Outstanding
Advances during such Fiscal Quarter; and
second step, an amount equal to the balance of such Net
Available Cash Flow (after deducting therefrom the amount provided to
be distributed pursuant to the foregoing first step, shall be allocated
and distributed (A) thirty-seven and one-half percent (37 1/2%) to the
CIT Member and (B) sixty-two and one-half percent (62 1/2%) to the BRT
Member.
Annual Distributions of Net Available Cash Flow. Except as otherwise
provided in Article IX, promptly (and in any event, within five (5) Business
Days) following the end of each Fiscal Year (commencing with the Fiscal Year
ending December 31, 2006), the Company shall distribute, and the Managing Member
shall cause the Company to distribute, to the Members from (and to the extent
of) the Net Available Cash Flow (determined as of the close of business on the
last day of such Fiscal Year) the following amounts in accordance with the
following steps:
first step, to each Member, an amount sufficient (when
aggregated with (A) the Included Distribution Amount(s) for such Member
for all of the Fiscal Quarters ending during such Fiscal Year and (B)
all distributions theretofore made to such Member pursuant to Section
7.01(d) for all of the Fiscal Quarters ending during such Fiscal Year)
to pay such Member a nine percent (9%) per annum (calculated on the
actual number of days outstanding) return on the Outstanding Advances
of such Member during such Fiscal Year, provided that, if the amount of
such Net Available Cash Flow is not sufficient to make the
distributions provided for pursuant to this clause (i), an amount equal
to such Net Available Cash Flow shall be allocated and distributed to
and among the Members so that, for such Fiscal Year, each Member will
have received, pursuant to this clause (i) (when aggregated with (A)
the its respective Included Distribution Amounts for all of the Fiscal
Quarters ending during such Fiscal Year and (B) all distributions
theretofore made to such Member pursuant to Section 7.01(d) for all of
the Fiscal Quarters ending during such Fiscal Year), a per annum
(calculated on the actual number of days outstanding) return on its
respective Outstanding Advances during such Fiscal Year equal to the
per annum (calculated on the actual number of days outstanding) return
that each other Member receives, pursuant to this clause (i), on its
respective Outstanding Advances during such Fiscal Quarter; and
second step, an amount equal to the balance of such Net
Available Cash Flow (after deducting therefrom the amount provided to
be distributed pursuant to the foregoing first step, shall be allocated
and distributed (A) thirty-seven and one-half percent (37 1/2%) to the
CIT Member and (B) sixty-two and one-half percent (62 1/2%) to the BRT
Member.
Amounts Withheld. All amounts withheld pursuant to the Code or any provision of
any state, local, or foreign tax law with respect to any payment, distribution
or allocation to the Company or the Members shall be treated as amounts paid or
distributed, as the case may be, to the Members with respect to which such
amount was withheld pursuant to this Section 7.02 for all purposes under this
Agreement. The Company is authorized to withhold from payments and
distributions, or with respect to allocations, to the Members, and to pay over
to any federal, state and local government or any foreign government, any
amounts required to be so withheld pursuant to the Code or any provisions of any
other federal, state, or local law or any foreign law and shall allocate any
such amounts to the Members with respect to which such amount was withheld.
Limitations on Distributions. The Company shall make no distributions to any of
the Members except (i) as provided in this Article VII or in Article IX or (ii)
as agreed to by all of the Members.
Treatment of Certain Payments on Company Loans. Notwithstanding any provision of
the relevant Loan Documentation that would provide that any Foreclosure Expenses
(or any similar costs or expenses) incurred or expended by the Company (or, with
respect to any Shared Loan, BRT) are to be added to, or otherwise constitute,
the principal amount of any Company Loan, any repayment made to the Company with
respect to such Foreclosure Expenses (or any similar costs or expenses) shall be
deemed to be and treated as a Company Loan Non-Principal Repayment. Further,
notwithstanding anything to the contrary contained in any Loan Documentation
with respect to any Company Loan that is a Non-Performing Company Loan, for so
long as such Company Loan is a Non-Performing Company Loan, all payments
received by the Company shall (for the purposes of determining whether such
payment constitutes a Principal Repayment or a Company Loan Non-Principal
Repayment) be deemed applied first to the outstanding principal amount of such
Company Loan (exclusive of any portion such principal amount that, under the
terms of the Loan Documentation, would be attributable to any Foreclosure
Expenses (or any similar costs or expenses) incurred or expended by the Company
(or, with respect to any Shared Loan, BRT).
Distributions and Payments to Members. It is the intent of the Members and the
Managing Member that no distribution or payment to any Member (including
distributions under Sections 7.01 and 9.04) shall be deemed a return of money or
other property in violation of the Delaware Act. The payment or distribution of
any such money or property to a Member shall be deemed to be a compromise within
the meaning of Section 18-502(b) of the Delaware Act, and the Member receiving
any such money or property shall not be required to return any such money or
property to the Company, any creditor of the Company or any other Person.
However, if any court of competent jurisdiction holds that, notwithstanding the
provisions of this Agreement, any Member is obligated to return such money or
property, such obligation shall be the obligation of such Member and not of the
Company, any other Member or the Managing Member. Any amounts required to be
paid under such obligation shall be treated as a permitted additional Capital
Contribution.
Payments Due with respect to Lost Principal. If, as of the end of any Fiscal
Year, there is a CIT Loan Principal Shortfall, then, within ten (10) days
following the end of such Fiscal Year, the BRT Member shall pay to the CIT
Member an amount equal to the least of the following:
an amount equal to such CIT Loan Principal Shortfall;
an amount equal to seventy-five percent (75%) of the aggregate
of (i) the amount (if any) distributed or required to be
distributed to the BRT Member for or with respect to such
Fiscal Year pursuant to clause (ii) of Section 7.01(e) plus
(ii) the amount(s) (if any) distributed to the BRT Member
for or with respect to the Fiscal Quarters ending during
such Fiscal Year (other than the last Fiscal Quarter of such
Fiscal Year) pursuant to clause (ii) of Section 7.01(d); or
seventy-five percent (75%) of the Maximum BRT Loan Loss Amount.
Payments to REIT. The BRT Member hereby authorizes and instructs the Company
that, with respect to each quarterly distribution contemplated to be made under
the fourth step of Section 7.01(b), the Company shall deduct from, and shall pay
to REIT (at such address as may be set forth in written instructions given by
the BRT Member to the Company) from, such distribution an amount equal to the
portion of such distribution that is payable on account of the Medium Amount (if
any) of any Company Loan Origination Fee that was paid to the Company during the
Fiscal Quarter with respect to which such distribution is to be made, and the
Parties agree that (notwithstanding anything contained herein to the contrary,
but subject to the immediately following sentence), unless and until such
authorization and instructions are revoked in writing given by the BRT Member to
the Company and the other Members, the Company shall make such payment to REIT.
Any such payment to REIT shall, for purposes of this Agreement, be deemed
distributed to the BRT Member.
ADMISSION OF MEMBERS AND RESTRICTIONS ON TRANSFER
No New or Additional Members. Except as contemplated in the following provisions
of this Article VIII with respect to a permitted Transfer of an Interest, no
Person may be admitted as a Member without the written consent of all Members.
No Transfer. Except as expressly permitted under Section 8.03 and, as
applicable, Section 8.05, no Member may Transfer, directly or indirectly, all or
any portion of its Interest without the prior written consent of the other
Members (which may be withheld or granted in the sole discretion of such other
Members). Any attempt to Transfer any Interest in violation of this Agreement
shall be null and void and of no force or effect.
Permitted Transfers. Any Member may, upon at least ten (10) days' prior written
notice to the Company and the other Member(s), transfer and assign all of its
Interests to a 100% Affiliate of such Member, provided that (a) the transferee
of such Interests shall, prior to or simultaneously with such transfer, execute
and deliver to the Company and the other Members a joinder or other agreement
(in form and substance acceptable to the Company and the other Members) pursuant
to which such transferee agrees to be bound by all of the terms, conditions and
provisions this Agreement as a Member in the place and stead of the transferor
Member and (b) the transferor Member shall not be released or relieved of any of
its obligations and liabilities hereunder to the extent such transferee fails to
perform or fulfill such obligations and liabilities. The provisions of this
Section 8.03 will not apply to or be deemed to authorize or permit any
collateral transfer of, or grant of a security interest in, a Member's Interest
or in any Property.
Limitation on Resignations. No Member may, without the prior written consent of
the other Member(s), resign from the Company, except as a result of such
Member's involuntary dissolution or final adjudication as bankrupt or in
connection with a permitted Transfer.
Conditions on Transfer.
Notwithstanding anything to the contrary contained in this Agreement,
no Transfer of all or any part of any Interest shall be made (a) except in
compliance with all applicable securities laws or (b) if such Transfer would
violate any loan commitment or other agreement to which the Company is a party
or by which it is otherwise bound. As promptly as practicable after the Transfer
of any Interest as permitted hereunder, the books and records of the Company
shall be changed to reflect such Transfer. All reasonable costs and expenses
incurred by the Company in connection with such Transfer shall be paid by the
transferee.
It is expressly understood and agreed that any Transfer otherwise
permitted pursuant to this Article VIII shall in all instances be prohibited
(and, if consummated, shall be void ab initio) if such Transfer does not comply
with all applicable laws, rules and regulations and other requirements of
governmental authorities, including, without limitation, Executive Order 13224
(September 23, 2001), the rules and regulations of the Office of Foreign Assets
Control, Department of Treasury, and any enabling legislation or other Executive
Orders in respect thereof. In addition, each transferee of any Interest shall be
required to make the representations and warranties set forth in Section 10.02
to the other Member(s) and the Company as of the date of the Transfer of such
Interest. Each Member shall be deemed to make the representations and warranties
set forth in Section 10.02(h) to the other Member(s) and the Company on behalf
of any Person that acquires a beneficial ownership interest in such Member, with
such representations and warranties to be effective as of the date of such
acquisition.
Distributions and Allocations in Respect of Transferred Interests. If any
Interest is Transferred during any Allocation Year in compliance with the
provisions of this Article VIII, Profits, Losses, each item thereof, and all
other items attributable to the Transferred Interest for such Allocation Year
shall be divided and allocated between the transferor and the transferee by
taking into account their varying Interests during the Fiscal Year in accordance
with Code Section 706(d), using any conventions permitted by law and agreed to
by the transferor and transferee. All distributions on or before the date of
such Transfer shall be made to the transferor, and all distributions thereafter
shall be made to the transferee. Solely for purposes of making such allocations
and distributions, the Company shall recognize such Transfer not later than the
end of the calendar month during which it is given notice of such Transfer,
provided that, if the Company is given notice of a Transfer at least ten (10)
Business Days prior to the Transfer, the Company shall recognize such Transfer
as of the date of such Transfer, and provided further that, if the Company does
not receive a notice stating the date such Interest was Transferred and such
other information as the Managing Member may reasonably require within thirty
(30) days after the end of the Allocation Year during which the Transfer occurs,
then all such items shall be allocated, and all distributions shall be made, to
the Person who, according to the books and records of the Company, was the owner
of the Interest on the last day of such Allocation Year.
DISSOLUTION AND TERMINATION
Dissolution and Liquidation. The Company shall dissolve and shall commence
winding up and liquidating upon the first to occur of any of the following
events (each a "Liquidating Event"):
the sale, condemnation or other disposition of all the assets of
the Company and the receipt of all consideration therefor;
the lapse of sixty (60) days following the date on which any
Member gives written notice to the Company, the Managing
Member and the other Member(s) that such Member desires that
the Company be dissolved and wound up (any such notice, a
"Wind-Up Notice");
the determination of all of Members to dissolve the Company;
the resignation, expulsion, bankruptcy or dissolution of any Member
or the occurrence of any other event that terminates the
continued membership of any Member in the Company,
unless, within ninety (90) days after such event, each
of the remaining Members elects in writing to continue
the business of the Company; or
the happening of any other event that makes it unlawful, impossible
or impractical to carry on the business of the Company.
The Members hereby agree that, notwithstanding any provision of the Delaware
Act, the Company shall not dissolve prior to the occurrence of a Liquidating
Event.
Reconstitution. If it is determined, by a court of competent jurisdiction, that
the Company has dissolved prior to the occurrence of a Liquidating Event, then
within a period (the "Reconstitution Period") of an additional ninety (90) days
after such determination, all of the Members may elect to reconstitute the
Company and continue its business on the same terms and conditions set forth in
this Agreement by forming a new limited liability company on terms identical to
those set forth in this Agreement. Unless such an election is made within the
Reconstitution Period, the Company shall dissolve and wind up its affairs in
accordance with this Article IX. If such an election is made within the
Reconstitution Period, then:
the reconstituted limited liability company shall continue until
the occurrence of a Liquidating Event as provided in Section
9.01; and
unless otherwise agreed to by all of the Members, the Certificate
of Formation and this Agreement shall, subject to any
requirement under the Delaware Act to file a new certificate
of formation, automatically constitute the certificate of
formation and operating agreement of such new company. All
of the assets and liabilities of the dissolved Company shall
be deemed to have been automatically assigned, assumed,
conveyed and transferred to the new company. No bond,
collateral, assumption or release of any Member's or the
Company's liabilities shall be required;
provided, however, that the right of the Members to select successor managers
and to reconstitute and continue the business of the Company shall not exist
and may not be exercised unless the Company has received an opinion of counsel
that the exercise of the right would not result in the loss of limited
liability of any Member and neither the Company nor the reconstituted limited
liability company would cease to be treated as a partnership for federal
income tax purposes upon the exercise of such right to continue.
Transfer Not Effecting Termination. Without limiting, but subject to, the other
provisions hereof, the Transfer of all or any part of a Member's Interest
permitted hereunder will not result in the dissolution of the Company. Except as
contemplated by Section 9.01 or otherwise specifically provided in this
Agreement, each Member agrees that, without the consent of the other Member(s),
no Member may withdraw from or cause a voluntary dissolution of the Company. In
the event any Member withdraws from or causes a voluntary dissolution of the
Company in contravention of this Agreement, such withdrawal or the causing of a
voluntary dissolution shall not affect such Member's liability for obligations
of the Company.
Winding Up. Upon the occurrence of (i) a Liquidating Event or (ii) the
determination by a court of competent jurisdiction that the Company has
dissolved prior to the occurrence of a Liquidating Event (unless the Company is
reconstituted pursuant to Section 9.02), the Company shall continue solely for
the purposes of winding up its affairs in an orderly manner, liquidating its
assets and satisfying the claims of its creditors and the Members, and no Member
shall take any action that is inconsistent with, or not necessary to or
appropriate for, the winding up of the Company's business and affairs, provided
that, to the extent not inconsistent with the foregoing, all covenants contained
in this Agreement and obligations provided for in this Agreement shall continue
to be fully binding upon the Members until such time as the assets of the
Company have been distributed pursuant to this Section 9.04 or to a trust as
contemplated by Section 9.05 and the Certificate of Formation has been canceled
pursuant to the Delaware Act. The Liquidating Member shall be responsible for,
as promptly as possible, but in an orderly and businesslike and commercially
reasonable manner, overseeing the winding up and dissolution of the Company,
which winding up and dissolution shall be completed within ninety (90) days (or
such longer period as may be agreed to in writing by all Members) of the
occurrence of the Liquidating Event and within ninety (90) days (or such longer
period as may be agreed to in writing by all Members) after the last day on
which the Company may be reconstituted pursuant to Section 9.02. The Liquidating
Member shall take full account of the Company's liabilities and assets and shall
cause the Company's assets or the proceeds from the sale thereof, to the extent
sufficient therefor, to be applied and distributed, to the maximum extent
permitted by law, in the following order:
first, to creditors in satisfaction of all of the Company's Debts and
other Liabilities (whether by payment or the making of
reasonable provision for payment thereof to the extent
required by Section 18-804 of the Act), other than liabilities
for distribution to Members under Section 18-601 or Section
18-604 of the Act;
second, to Members and former Members of the Company in satisfaction of
liabilities for distribution under Section 18-601 or Section
18-604 of the Act; and
the balance, if any, to the Members in accordance with the positive
balance in their Capital Accounts, after giving effect to
all contributions, distributions and allocations for
all periods.
Compliance with Certain Requirements of Regulations; Deficit Capital Accounts.
In the event the Company is "liquidated" within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this
Article IX to the Members who have positive Capital Accounts in compliance with
Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Member has a deficit balance
in its Capital Account (after giving effect to all contributions, distributions
and allocations for all Allocation Years, including the Allocation Year during
which such liquidation occurs), such Member shall have no obligation to make any
contribution to the capital of the Company with respect to such deficit, and
such deficit shall not be considered a debt owed to the Company or to any other
Person for any purpose whatsoever. In the discretion of the Liquidating Member,
a pro rata portion of the distributions that would otherwise be made to the
Members pursuant to this Article IX may be:
distributed to a trust established for the benefit of the Members for
the purposes of liquidating the Company's assets, collecting
amounts owed to the Company and paying any contingent or
unforeseen liabilities or obligations of the Company. The
assets of any such trust shall be distributed to the Members
from time to time, in the reasonable discretion of the
Liquidating Member, in the same proportions as the amount
distributed to such trust by the Company would otherwise have
been distributed to the Members pursuant to Section 9.04; or
withheld to provide a reasonable reserve for the Company's liabilities
(contingent or otherwise) and to reflect the unrealized
portion of any installment obligations owed to the Company,
provided that such withheld amounts shall be distributed to
the Members as soon as practicable.
Deemed Distribution and Recontribution. Notwithstanding any other provision of
this Article IX, in the event the Company is liquidated within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred,
the assets of the Company shall not be liquidated, the Company's debts and other
liabilities shall not be paid or discharged, and the Company's affairs shall not
be wound up. Instead, solely for federal income tax purposes, the Company shall
be deemed to have contributed all its assets and liabilities to a new limited
liability company in exchange for an interest in such new company and,
immediately thereafter, the Company will be deemed to liquidate by distributing
interests in the new limited liability company to the Members.
Distributions in Kind. For the purposes of making distributions required by
Section 9.04, the Liquidating Member may determine whether to distribute all or
any portion of the Company's assets in-kind or to sell all or any portion of the
Company's assets and distribute the proceeds therefrom, provided that the
Liquidating Member shall not distribute any of the Company's assets, other than
cash, to any Member without its prior written consent.
Rights of Members. Except as otherwise provided in this Agreement, each Member
shall look solely to the assets of the Company for the return of its Capital
Contributions and shall have no right or power to demand or receive assets other
than cash from the Company. If the assets of the Company remaining after payment
or discharge of the debts or liabilities of the Company are insufficient to
return such Capital Contributions, the Members shall have no recourse against
the Company, the Managing Member or any other Member.
Allocations and Distributions during Period of Liquidation. During the period
commencing on the first day of the Fiscal Year during which a Liquidating Event
occurs and ending on the date on which all of the assets of the Company have
been distributed pursuant to Section 9.02 or to a trust as contemplated by
Section 9.05, the Members shall continue to share Profits, Losses, gain, loss
and other items of Company income, gain, loss or deduction in the manner
provided in Article VI but no distributions shall be made pursuant to Article
VII.
Character of Liquidating Distributions. All payments made in liquidation of the
Interest of a Member shall be made in exchange for the Interest of such Member
in the Company's assets pursuant to Code Section 736(b)(1), including the
interest of such Member in Company goodwill.
Effect of Wind-Up Notice. Notwithstanding anything contained herein to the
contrary, from and after the date the Managing Member receives a Wind-up Notice,
the Managing Member shall not (pursuant to Section 5.02 or otherwise) make a
capital call or other request or demand on any Member to make any additional
capital contribution to the Company, and no Member shall be obligated to make
any additional capital contribution to the Company, except with respect to any
Loan Commitment that the Company has theretofore entered into or that the
Company enters into within sixty (60) days following the date the Managing
Member receives a Wind-up Notice.
Compensation. Neither the Liquidating Member, the Managing Member nor any other
Member shall receive, or be entitled to receive, any additional compensation for
any services performed pursuant to or in connection with this Article IX.
Representations And Warranties
In General. As of the Effective Date, each Member makes each of the
representations and warranties applicable to such Member as set forth in Section
10.2, and such warranties and representations shall survive the execution of
this Agreement.
Representations and Warranties. Each Member hereby represents and warrants to
the other Members that:
Due Incorporation or Formation; Authorization of Agreement. Such Member
is a corporation duly organized or a partnership or limited liability company
duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation and has the corporate,
partnership or company power and authority to own its property and carry on its
business as owned and carried on at the date hereof and as contemplated hereby.
Such Member is duly licensed or qualified to do business and in good standing in
each of the jurisdictions in which the failure to be so licensed or qualified
would have a materially adverse effect on its financial condition or its ability
to perform its obligations hereunder. Such Member has the corporate, partnership
or company power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement by such Member has been duly authorized by all necessary
corporate, partnership or company action on the part of such Member. This
Agreement constitutes the legal, valid, binding and enforceable obligation of
such Member, enforceable against such Member in accordance with the terms
hereof, subject to the application of principles of equity and laws governing
insolvency and creditors' rights generally.
No Conflict with Restrictions; No Default. Neither the execution,
delivery and performance of this Agreement by such Member nor the consummation
by such Member of the transactions contemplated hereby to be consummated by such
Member (i) will conflict with, violate or result in a breach of any of the
terms, conditions or provisions of any law, regulation, order, writ, injunction,
decree, determination or award of any court, any governmental department, board,
agency or instrumentality, domestic or foreign, or any arbitrator applicable to
such Member, (ii) will conflict with, violate, result in a breach of or
constitute a default under any of the terms, conditions or provisions of the
articles of incorporation, bylaws, partnership agreement or operating agreement
(or any other governing instrument) of such Member or of any material agreement
or instrument to which such Member is a party or by which such Member is or may
be otherwise bound or to which any of its material properties or assets is
subject, (iii) will conflict with, violate, result in a breach of, constitute a
default under (whether with notice or lapse of time or both), accelerate or
permit the acceleration of the performance required by, give to others any
material interests or rights, or require any consent, authorization or approval
under, any indenture, mortgage, lease agreement or instrument to which such
Member is a party or by which such Member is or may be otherwise bound, or (iv)
will result in the creation or imposition of any lien, claim or encumbrance upon
any of the material properties or assets of such Member.
Governmental Authorizations. Any registration, declaration or filing
with, or consent, approval, license, permit or other authorization or order by,
any governmental or regulatory authority, domestic or foreign, that is required
in connection with the valid execution, delivery, acceptance and performance by
such Member of this Agreement or the consummation by such Member of any
transaction contemplated hereby to be consummated by such Member has been
completed, made or obtained on or before the Effective Date.
Litigation. There are no actions, suits, proceedings or investigations
pending or, to the knowledge of such Member, threatened against or affecting
such Member or any of its properties, assets or businesses in any court or
before or by any governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator that, based on the good faith evaluation
of management of such Member, are deemed to have merit and could, if adversely
determined (or, in the case of an investigation could lead to any action, suit
or proceeding, that, based on the good faith evaluation of management of such
Member, would have merit and if adversely determined could) reasonably be
expected to materially impair such Member's ability to perform its obligations
under this Agreement; and such Member has not received any currently effective
notice of any default, and such Member is not in default, under any applicable
order, writ, injunction, decree, permit, determination or award of any court,
any governmental department, board, agency or instrumentality, domestic or
foreign, or any arbitrator that could reasonably be expected to materially
impair such Member's ability to perform its obligations under this Agreement.
Investment Intent and Restricted Securities. Such Member is acquiring
its Interest for investment, solely for its own account, with the intention of
holding such Interest for investment and not with a view to, or for resale in
connection with, any distribution or public offering or resale of any portion of
such Interest within the meaning of the Securities Act or any other applicable
federal or state security law, rule or regulation (all of the foregoing,
collectively, "Securities Laws"). Such Member is acquiring its Interest with,
and the source of its Capital Contributions is, its own funds or the funds of a
parent entity, and not the funds of any third-party or equity investor. Such
Member acknowledges that it is aware that its Interest has not been, and will
not be, registered under the Securities Act or under any other Security Laws in
reliance upon exemptions contained therein. Such Member understands and
acknowledges that its representations and warranties contained herein are being
relied upon by the Company, the other Member(s) and the constituent owners of
such other Member(s) as the basis for exemption of the issuance of an Interest
from registration requirements of the Securities Act and other Securities Laws.
Such Member acknowledges that the Company will not and has no obligation to
register any Interest in the Company under the Securities Act or other
Securities Laws. No advertisement or other general solicitation was made to such
Member with respect to any offer to sell, or a solicitation of an offer to buy,
any Interest.
Investment Company Act; Public Utility Holding Company Act. Neither
such Member nor any of its Affiliates is, nor will the Company as a result of
such Member holding an interest in the Company be, an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of 1940,
as amended. Neither such Member nor any of its Affiliates is, nor will the
Company as result of such Member holding an interest in the Company be, a
"holding company," "an affiliate of a holding company" or a "subsidiary of a
holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
Investigation. Such Member is acquiring its Interest based upon its own
investigation, and the exercise by such Member of its rights and the performance
of its obligations under this Agreement will be based upon its own
investigation, analysis and expertise. Such Member's acquisition of its Interest
is being made for its own account for investment, and not with a view to the
sale or distribution thereof. Such Member is a sophisticated investor possessing
an expertise in analyzing the benefits and risks associated with acquiring
investments that are similar to the acquisition of its Interest. Such Member
acknowledges that prior to its execution of this Agreement, it received a copy
of this Agreement and that it examined this document or caused this document to
be examined by its representative or attorney. Such Member does hereby further
acknowledge that it or its representative or attorney is familiar with this
Agreement and with the business and affairs of the Company and that, except as
otherwise specifically provided in this Agreement, it does not desire any
further information or data relating to the Company, or the other Member(s).
Such Member does hereby acknowledge that it understands that the acquisition of
its Interest is a speculative investment involving a high degree of risks and
does hereby represent that it has a net worth sufficient to bear the economic
risk of its investment in the Company and to justify its investing in a highly
speculative venture of this type.
Compliance with Regulatory Requirements. Such Member is in compliance
with Executive Order 13224 (September 23, 2001), the rules and regulations of
the Office of Foreign Assets Control, Department of Treasury, and any enabling
legislation or other Executive Orders in respect thereof. At all times,
including after giving effect to any Transfers permitted pursuant to this
Agreement, (a) none of the funds or other assets of such Member constitutes
property of, or are beneficially owned, directly or indirectly, by any Person
subject to trade restrictions under U.S. law (including the International
Emergency Economic Powers Act, 50 U.S.C. ss.ss. 1701 et seq., The Trading with
the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations
promulgated thereunder) (any such person, entity or government, an "Embargoed
Person") with the result that the investment in such Member (whether directly or
indirectly) is prohibited by any applicable law, rule, regulation, order or
decree; (b) no Embargoed Person has any interest of any nature whatsoever in
such Member with the result that the investment in such Member (whether directly
or indirectly) is prohibited by any applicable law, rule, regulation, order or
decree; and (c) none of the funds of such Member have been derived from any
unlawful activity with the result that the investment in such Member (whether
directly or indirectly) is prohibited by any applicable law, rule, regulation,
order or decree. If applicable to such Member, such Member has implemented a
corporate anti-money laundering plan that is reasonably designed to ensure
compliance with applicable foreign and U.S. anti-money laundering laws. Such
Member is familiar with the U.S. Government Blacklists maintained by applicable
U.S. Federal agencies, and none of its investors, officers or directors is on
the U.S. Government Blacklists.
RESTRICTIONS
Restrictive Covenants.
During the Restricted Period, unless otherwise agreed to by BRT or the
BRT Member, CIT will not cause, and will not allow or permit, the CRE Unit to
make (or to cause any of its Affiliates to make) any Commercial Real Estate Loan
to any Borrower that has been initially introduced to the Company by any BRT
Mortgage Broker, the BRT Member or any of its Affiliates. For avoidance of
doubt, neither the CIT Member nor the CRE Unit shall be precluded from (i)
making any loans to, or otherwise dealing with, (A) any Person (other than
Steven Green or his known Affiliates) with which CIT or any of its Affiliates
has, prior to the Effective Date, had any business relations, (B) any Person
that was introduced to CIT or any of its Affiliates other than by or through the
Company, any BRT Mortgage Broker, the BRT Member or any of its Affiliates or (C)
any Affiliate of any Person referred to in the foregoing clause (A) or (B) or
(ii) from making any loans (other than Commercial Real Estate Loans) to any
Borrower.
Unless otherwise agreed to by BRT or the BRT Member, CIT shall
undertake in good faith to cause the CRE Unit (i) not to solicit, during the
Restricted Period, any BRT Mortgage Broker specified in Part I of Exhibit A
attached hereto with respect to any Commercial Real Estate Loan and (ii) not to
solicit, during the Shortened Restricted Period, any BRT Mortgage Broker
specified in Part II of Exhibit A attached hereto with respect to any Commercial
Real Estate Loan.
During the term of this Agreement, unless otherwise agreed to by CIT or
the CIT Member, BRT will not, and will not allow or permit any of its Affiliates
to, make any Commercial Real Estate Loan (other than (i) by and through the
Company and (ii) the portion of any Shared Loan contemplated hereunder to be
funded by BRT directly, rather than through the Company); provided, however,
that (i) neither BRT nor any of its Affiliates shall be precluded from making
any Disapproved Loan and (ii) neither BRT nor any of its Affiliates shall be
precluded from making any Commercial Real Estate Loan if the Company would not
be able to make such Commercial Real Estate Loan because of the absence of
available funding (whether from contributions from the Members pursuant to a
capital call that has been or could be make under Section 5.02(a) or from funds
that have been or could be obtained from any Third Party Financing).
During the term of this Agreement, BRT will not, and will not allow or
permit any of its Affiliates to, enter into (i) any transaction or other
arrangement with any other Person pursuant to which BRT or any of its
Affiliates would agree or otherwise undertake to make, manage or service any
third party's mortgage loan portfolio or other real estate loans or (ii)
any joint venture, partnership or other jointly-owned arrangement or entity the
purpose of which is to make, manage or service any third party's mortgage loan
portfolio or other real estate loans.
During the term of this Agreement, CIT will undertake in good faith to
cause the CRE Unit to introduce or otherwise direct to the Company any
opportunity of which the CIT Member becomes aware involving a prospective
Borrower who is seeking to obtain a loan that would meet all of the criteria set
forth in Section 2.08 and that would not require any approval contemplated under
Section 2.09, provided that such obligation shall not apply if the Company would
not be able to make such loan because of the absence of available funding
(whether from contributions from the Members pursuant to a capital call that has
been or could be make under Section 5.02(a) or from funds that have been or
could be obtained from any Third Party Financing).
Notwithstanding anything contained herein to the contrary, neither
CIT nor the CRE Unit shall be deemed to be precluded or prohibited from
participating in any loan or any group of related loans with any other Person
or from investing in any pool or other group of loans that have been originated
or funded by any other Person.
Notwithstanding anything contained herein to the contrary, CIT shall
be entitled, whether during or after the Restricted Period, (directly or through
any Affiliate) to enter into a joint venture or other arrangement with another
Person for the purposes of making or investing in Commercial Real Estate Loans,
provided that, prior to making entering into any such joint venture or other
arrangement, that is entered into during the Restricted Period (any such action
by CIT, whether directly or through any Affiliate, is hereinafter referred to as
a "Joint Venture Action"), CIT shall first have complied with the following
provisions of this Section 11.01(g). At least thirty (30) days prior to entering
into any Joint Venture Action, CIT shall give BRT written notice of CIT's desire
or intention to do so, which notice shall set forth the nature and the principal
terms and conditions of such Joint Venture Action. In the event BRT desires to
participate in an amount of up to twenty-five percent (25%) of CIT's investment,
commitment and/or involvement in such Joint Venture Action, then, within twenty
(20) days following its receipt of the aforesaid notice, BRT shall give CIT
written notice of BRT's commitment to do so (which notice (a "BRT Joint Venture
Commitment Notice") shall specify the percentage participation of CIT's
investment, commitment and/or involvement in such Joint Venture Action that BRT
will assume (such percentage participation is hereinafter referred to as "BRT's
Joint Venture Percentage Commitment"). In the event BRT gives a timely BRT Joint
Venture Commitment Notice to CIT as contemplated by the immediately preceding
sentence, then CIT shall not close or otherwise proceed with such Joint Venture
Action unless BRT is provided with an opportunity, upon the closing or
consummation of such Joint Venture Action, to participate (in the amount of
BRT's Joint Venture Percentage Commitment) in CIT's investment, commitment
and/or involvement in such Joint Venture Action upon the same or substantially
the same terms and conditions as CIT (with it being agreed that any differences
in terms and conditions that are dependent upon or related to the different
proportionate interests of CIT and BRT in such Joint Venture Action shall not
cause such terms and conditions not to be substantially the same). In the event
BRT fails to give a timely BRT Commitment Notice CIT shall not proceed with such
Joint Venture Action during the Restricted Period without BRT's prior consent;
provided, however, that CIT shall be entitled to proceed with such Joint Venture
Action without any consent from BRT if any Member gives or has given a Wind-Up
Notice.
Notwithstanding anything contained herein to the contrary, CIT shall be
entitled, whether during or after the Restricted Period, (directly or through
any Affiliate) to lend funds to another Person that makes Commercial Real Estate
Loans, provided that, prior to making any such loan transaction during the
Restricted Period (any such loan transaction by CIT, whether directly or through
any Affiliate, is hereinafter referred to as an "Investment"), CIT shall first
have complied with the following provisions of this Section 11.01(h). At least
thirty (30) days prior to making any Investment, CIT shall give BRT written
notice of CIT's desire or intention to do so, which notice shall set forth the
nature and the principal terms and conditions of such Investment. In the event
BRT desires to participate in an amount of up to twenty-five percent (25%) of
CIT's investment and/or commitment in such Investment, then, within twenty (20)
days following its receipt of the aforesaid notice, BRT shall give CIT written
notice of BRT's commitment to do so (which notice (a "BRT Investment Commitment
Notice") shall specify the percentage participation of CIT's investment and/or
commitment in such Investment that BRT will assume (such percentage
participation is hereinafter referred to as "BRT's Investment Percentage
Commitment"). In the event BRT gives a timely BRT Investment Commitment Notice
to CIT as contemplated by the immediately preceding sentence, then CIT shall not
close or otherwise proceed with such Investment unless BRT is provided with an
opportunity, upon the closing or consummation of such Investment, to participate
(in the amount of BRT's Investment Percentage Commitment) in CIT's investment
and/or commitment in such Investment upon the same or substantially the same
terms and conditions as CIT (with it being agreed that any differences in terms
and conditions that are dependent upon or related to the different proportionate
interests of CIT and BRT in such Investment shall not cause such terms and
conditions not to be substantially the same). In the event BRT fails to give a
timely BRT Investment Commitment Notice or gives a timely BRT Investment
Commitment Notice but fails to proceed timely with BRT's Investment Percentage
Commitment in such Investment, then CIT shall be entitled, without any
participation by BRT, to proceed with such Investment.
BRT shall not, without the prior written consent of CIT, directly or
indirectly Transfer all or any portion of its interest in the BRT Member to any
Person that is not a 100% Affiliate of BRT. CIT shall not, without the prior
written consent of BRT, directly or indirectly Transfer all or any portion of
its interest in the CIT Member to any Person that is not a 100% Affiliate of
CIT.
MISCELLANEOUS
Further Assurances. Each Party, upon the reasonable request of any other Party,
shall do and perform all such further acts and execute, acknowledge and deliver
all such further instruments and documents as may be necessary or desirable to
carry out, evidence and reflect the transactions contemplated hereby or
otherwise carry out and perform the provisions of this Agreement.
Expenses. Each Member will bear all of its own expenses in connection with the
preparation and negotiation of this Agreement and the consummation and
performance of its obligations thereunder.
Indemnification.
Each of the Parties (an "Indemnifying Party") shall indemnify and hold
harmless each other Party and its respective directors, officers, employees,
agents and affiliates (each of the foregoing, an "Indemnified Party") from and
against, and shall reimburse each Indemnified Party for, any and all
liabilities, losses, damages, costs and expenses (including reasonable
attorneys' fees and other legal costs, including those related to any appeal,
and costs of any investigation) that have been suffered or incurred by such
Indemnified Party and that have resulted from, or been occasioned by, (a) any
breach or violation by the Indemnifying Party of any of its representations,
warranties, covenants and other agreements set forth herein or (b) any claim
asserted by any third party that, if true, would constitute a breach or
violation by the Indemnifying Party of any of its representations, warranties,
covenants and other agreements set forth herein (any such claim, a "Third-Party
Claim").
If any Indemnified Party shall receive notice of, or otherwise become
aware of the assertion of, a Third-Party Claim with respect to which such
Indemnified Party intends to seek indemnification under this Section 12.03, then
such Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, which notice shall include or be accompanied with a copy of
any summons, complaint or other written evidence of such Third-Party Claim to
the extent that such summons, complaint or other written evidence has been
received by such Indemnified Party or by any attorney or other agent thereof.
The failure of an Indemnified Party to give such notice or to give such notice
promptly shall not relieve the Indemnifying Party of its obligation to indemnify
such (or any other) Indemnified Party under this Section 12.03 except to the
extent that the failure to give such notice or the delay in giving such notice
has materially prejudiced the Indemnifying Party in its ability to defend
against such Third-Party Claim. The Indemnifying Party shall, with counsel
selected by it (which selection shall be subject to the approval of the
Indemnified Parties, such approval not to be unreasonably withheld or delayed),
be entitled to defend against and settle any Third-Party Claim; provided,
however, that its right to do so shall be conditioned upon its having confirmed
in writing to the Indemnified Parties its obligation to indemnify them with
respect to such Third-Party Claim (any such confirmation, a "Notice to
Indemnify") and, provided, further, however, that the Indemnifying Party shall
not be entitled to enter into any settlement of any such Third-Party Claim
without the prior written consent of the Indemnified Parties, which consent
shall not be unreasonably withheld or delayed. Notwithstanding anything
contained herein to the contrary, the Indemnifying Party's obligation to
indemnify the Indemnified Parties against any Third-Party Claim shall be
conditioned upon the Indemnified Parties providing full and timely cooperation
in the defense of such Third-Party Claim.
Notwithstanding anything contained herein to the contrary, except as
provided in the next following sentence, the Indemnifying Party shall not be
obligated to indemnify any Indemnified Party for, or otherwise pay, any
attorneys' fees or other legal or related costs (or any costs of any
investigation) suffered or incurred by any Indemnified Party in connection with
any Third-Party Claim after such Indemnified Party has received any Notice to
Indemnify with respect to such Third-Party Claim; provided, however, that, if,
after giving any Notice to Indemnify, the Indemnifying Party reverses its
position and claims that it is not required to indemnify any Indemnified Party
against the Third-Party Claim, then, in the event the Indemnifying Party is
obligated hereunder to indemnify such Indemnified Party with respect to such
Third-Party Claim, the Indemnifying Party shall bear and pay the reasonable
attorneys' fees and other legal costs, including those related to any appeal,
and costs of any investigation, incurred by such Indemnified Party after the
Indemnifying Party has reversed its position and claimed that it is not required
to indemnify such Indemnified Party against such Third-Party Claim.
Notwithstanding the foregoing, if there is a legitimate and good faith conflict
of interest between the Indemnifying Party and one or more of the Indemnified
Parties in connection with the defense of any Third-Party Claim so that one
counsel or law firm could not properly represent both the Indemnifying Party and
such Indemnified Parties in connection with such defense, the Indemnifying
Party, in the event it is obligated hereunder to indemnify such Indemnified
Parties with respect to such Third-Party Claim, shall bear and pay the
reasonable attorneys' fees and other legal costs, including those related to any
appeal, and costs of any investigation, incurred by such Indemnified Parties in
connection with such defense, regardless of whether the Indemnifying Party has
given a Notice to Indemnify. However, under no circumstances shall the
Indemnifying Party be obligated to pay for the attorneys' fees or related legal
fees of more than one attorney or law firm for or on behalf of one or more of
the Indemnified Parties.
Notices. All notices, demands, requests, consents, approvals or other
communications (each of the foregoing, a "Notice") required or permitted to be
given hereunder or pursuant hereto or that are given with respect to this
Agreement to any Party shall be in writing and shall be (a) personally
delivered, (b) sent by both registered or certified mail, postage prepaid and
return receipt requested, and regular first class mail, (c) sent both by
facsimile transmission with receipt of transmission confirmed electronically or
by telephone and by regular first class mail, or (d) sent by reputable overnight
courier service with charges prepaid and delivery confirmed, to the intended
recipient at its respective address as set forth below; provided, however, that,
if a Party sending any Notice has received written notice in accordance with
this Section 12.04 of a more recent address for any intended recipient referred
to below, any Notice to such intended recipient shall be delivered or sent to it
at the most recent address of which such Party has received such a notice:
if to the Company:
BRT Funding LLC
c/o BRT Realty Trust
60 Cutter Mill Road, Suite 303
Great Neck, New York 11021
Attn: Jeffrey A. Gould, President
Facsimile number: (516) 773-2770
and
CIT
505 Fifth Avenue, 14th Floor
New York, New York 10017
Attn: Timothy M. Zietara, Managing Director - Real Estate
Facsimile number: (212) 771-9554
if to the CIT Member:
CIT
505 Fifth Avenue, 14th Floor
New York, New York 10017
Attn: Timothy M. Zietara, Managing Director - Real Estate
Facsimile number: (212) 771-9554
with a copy (which shall not constitute notice) to be simultaneously
and sent by the same means to its counsel as follows:
Stephen D. Millas
Vice President and Chief Counsel
Commercial Real Estate
CIT Capital USA Inc.
505 5th Avenue
New York, New York 10017
Facsimile number: (212) 771-9520
and
Reed Smith LLP
599 Lexington Avenue, 29th Floor
New York, New York 10022
Attn: Herbert F. Kozlov, Esq.
Facsimile number: (212) 521-5400
if to the BRT Member:
BRT Realty Trust
60 Cutter Mill Road, Suite 303
Great Neck, New York 11021
Attn: Jeffrey A. Gould, President
Facsimile number: (516) 773-2770
with a copy (which shall not constitute notice) to be simultaneously
and sent by the same means to its counsel as follows:
Mark H. Lundy
Senior Vice President
BRT Realty Trust
60 Cutter Mill Road, Suite 303
Great Neck, New York 11021
Facsimile number: (516) 466-3132
Any Notice delivered or sent as provided above shall be deemed given when so
delivered or sent and shall be deemed received (a) when personally delivered,
(b) three (3) Business Days after being mailed as above provided, (c) when sent
by facsimile transmission as above provided, or (d) one (1) Business Day after
being sent by courier as above provided; provided, however, that any Notice
specifying a new address to which any Notice shall be sent shall be deemed
received only when actually received; and provided further that any Notice that
is personally delivered after 4 PM or is sent by facsimile after 4 PM shall be
deemed to have been delivered on the next Business Day.
Entire Agreement. This Agreement is intended by the Parties as a final
expression of their agreement and is intended to be a complete and exclusive
statement of the agreement and understanding of the Parties in respect of the
subject matter contained herein, constitutes the entire agreement of the Parties
with respect to the subject matter hereof and supersedes, and merges herein, all
prior and contemporaneous negotiations, discussions, representations,
understandings and agreements among the Parties, whether oral or written, with
respect such subject matter. No representation, warranty, restriction, promise,
undertaking or other agreement with respect to such subject matter has been made
or given by any Party other than those set forth in this Agreement.
Amendment and Waiver. This Agreement may be amended, modified or supplemented
only to the extent expressly set forth in writing that is signed by the Party to
be charged therewith and that sets forth therein that its purpose is to amend,
modify or supplement this Agreement or some term, condition or provision hereof.
No waiver of any term, condition or provision of this Agreement or of any breach
or violation of this Agreement or any provision hereof shall be effective except
to the extent expressly set forth in writing that is signed by the Party to be
charged therewith. Without limiting the generality of the foregoing, no failure
to object or otherwise act, and no conduct (including, without limitation, any
failure or delay in enforcing this Agreement or any provision hereof or any
acceptance or retention of payment) or course of conduct or dealing, by any
Party shall be deemed (a) to constitute a waiver by such Party of the breach or
violation of this Agreement or of any provision hereof by any other Party or (b)
to have caused or reflected any amendment or other modification of this
Agreement or of any term or provision hereof. Any waiver may be made in advance
or after the right waived has arisen or the breach or default waived has
occurred, and any waiver may be conditional. No waiver of any breach or
violation of any agreement or provision herein contained shall be deemed a
waiver of any preceding or succeeding breach or violation thereof nor of any
other agreement or provision herein contained. No waiver or extension of time
for performance of any obligation or act shall be deemed a waiver or extension
of the time for performance of any other obligation or act.
Assignment; No Third Party Beneficiaries. This Agreement and the rights, duties
and obligations hereunder may not be assigned or delegated by any Party hereto
without the prior written consent of each of the other Parties; provided that
any Member may, as expressly provided herein, assign its Interest. Except as
provided in the immediately preceding sentence, any purported assignment or
delegation of rights, duties or obligations hereunder made without the prior
written consent of each of the other Parties shall be null and void and of no
effect. This Agreement and the provisions hereof shall be binding upon and
enforceable against each of the Parties and its successors and assigns and shall
inure to the benefit of and be enforceable by each of the Parties and its
successors and permitted assigns. Except as expressly provided for in this
Agreement, this Agreement is not intended to confer any rights or benefits on
any Persons other than the Parties and their successors and permitted assigns.
Without limiting the scope or generality of the foregoing, nothing contained in
this Agreement is intended or shall be deemed to benefit any creditor of the
Company or any Member, and no creditor of the Company or any Member shall be
entitled to require the Company to solicit, or the Members to make, any Capital
Contribution to the Company or to enforce any right that the Company or any
Member may have against any Member under this Agreement or otherwise.
Severability. This Agreement and the terms and provisions hereof shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof. In the event any term or provision hereof
shall be determined to be invalid or unenforceable as applied to any situation
or circumstance or in any jurisdiction, such invalidity or unenforceability
shall not apply or extend to any other situation or circumstance or in any other
jurisdiction or affect the validity or enforceability of any other term or
provision. It is the Parties' intent that this Agreement and each term and
provision hereof be enforceable in accordance with its terms and to the fullest
extent permitted by law. Accordingly, to the extent any term or provision of
this Agreement shall be determined or deemed to be invalid or unenforceable,
such provision shall be deemed amended or modified to the minimum extent
necessary to make such provision, as so amended or modified, valid and
enforceable.
Waiver of Jury Trial; Consent to Jurisdiction. EACH OF THE PARTIES EXPRESSLY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY SUIT, LITIGATION OR OTHER
JUDICIAL PROCEEDING REGARDING THIS AGREEMENT OR ANY DISPUTE HEREUNDER OR
RELATING HERETO. Each of the Parties agrees that any dispute under or with
respect to this Agreement or otherwise arising between them shall be determined
before the state or federal courts situated in the City, County and State of New
York, which courts shall have exclusive jurisdiction and venue over and with
respect to any such dispute, and each of the Parties hereby irrevocably submits
to the exclusive jurisdiction and venue of such courts. Each Party agrees not to
raise any defense or objection, under the theory of forum non conveniens or
otherwise, with respect to the jurisdiction of any such court. In addition to
such other method as may available under applicable law, each Party agrees that
any summons, complaint or other papers or process in connection with any such
dispute may be served on it in the same manner in which a Notice may be given to
it pursuant to Section 12.04.
Counterparts. This Agreement may be executed in two or more counterparts and by
one or more of the Parties in separate counterparts, each of which when so
executed shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth in the introductory paragraph hereof. THE COMPANY:
BRT FUNDING LLC, a Delaware limited liability company
By:
--------------------------
Name:
------------------------
Title:
-----------------------
CIT MEMBER: BRT MEMBER:
---------- ----------
CIT CAPITAL USA INC., BRT JOINT VENTURE NO. 1 LLC, a
a Delaware limited liability company Delaware limited liability company
By: By:
------------------------------- -------------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
------------------------------- ----------------------------
ACCEPTED AND AGREED TO AS OF THE EFFECTIVE DATE FOR THE PURPOSES OF SECTION
11.01, ARTICLE XII AND (TO THE EXTENT RELEVANT TO THE FOREGOING) ARTICLE I OF
THE FOREGOING AGREEMENT.
CIT: BRT:
CIT CAPITAL USA INC., BRT REALTY TRUST, a Massachusetts
Delaware corporation business trust
By: By:
------------------------------- -------------------------------
Name: Name:
------------------------------ -----------------------------
Title: Title:
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EXHIBIT A
LIST OF BRT MORTGAGE BROKERS
The following mortgage brokers shall constitute "BRT Mortgage Brokers":
Part I (18-Month Restriction)
Broadway Associates (Leiblich)
Chambre & Company
Eastern Union
GCP Capital
John Pollis Associates
Michael Tuck Associates
Paradigm Funding
Rothman & Stein
Shochat Capital
The Finance Group (Rich Santoro, Rafael Fink)
Zev Pollack
Part II (9-Month Restriction)
Haves Pines Seligman
Pergolis Schwartz
Meridian Capital Group
Singer Bassuk
EXHIBIT B
FORM OF STANDARD RECOURSE CARVE-OUT PROVISIONS
STANDARD CARVEOUT FOR NON-RECOURSE LOANS OR "WALK AWAY GUARANTEES"
(i) To recover damages, if any, for fraud, material misrepresentation, knowing
or intentional breach of warranty made at the time of closing or waste.
(ii) To recover any condemnation proceeds or insurance proceeds or other similar
funds which have been misapplied by Borrower and/or Guarantor or which, under
the terms of the Loan Documents, should have been paid to Lender.
(iii) To recover any tenant security deposits, tenant letters of credit or other
deposits or fees paid to Borrower that are part of the collateral of the Loan or
prepaid rents for a period of more than 30 days which have not been delivered to
Lender.
(iv) To recover Rents and Profits B (as defined in the Mortgage) received by
Borrower after the first day of the month in which an Event of Default (as
defined in the Mortgage) occurs and prior to the date Lender acquires title to
the Property which have not been applied to the Loan or in accordance with the
Loan Documents to operating and maintenance expenses of the Property.
(v) To recover damages, costs and expenses, if any, arising from, or in
connection with, the provisions of the Mortgage pertaining to hazardous
materials or the provisions of the Environmental Indemnity Agreement.
(vi) To recover all expenses, costs, charges and reasonable legal fees incurred
by Lender (including, without limitation, the fees and expenses of experts and
consultants) in connection with Lender's attempts to enforce the Mortgage, the
Guaranty, the Indemnity Agreement or the carveouts to exculpation of Borrower or
Guarantor as set forth herein, and/or
(vii) To recover damages, if any, arising from Borrower's failure to comply with
the provisions of the Mortgage pertaining to ERISA.