Document:

PLM Exhibit 10.2

 

OPERATING AGREEMENT 

 

OF 

 

PLM CAL I LLC 

 

 

This Operating Agreement ("Agreement") is made as of June 4, 2004 among the parties signing below as Members (each individually referred to as a "Member" and collectively referred to as the "Members").

 

 

SECTION 1 

DEFINITIONS 

 

 

When used in the Agreement the following terms shall have the meanings set forth in this Section. 

 

1.1 Act. The Delaware Limited Liability Company Act, Delaware Statutes, §§ 18-101 to 18-1109, as amended from time to time. 

 

1.2 Additional Capital Contribution Date. As defined in Section 4.2 

 

1.3 Additional Capital Contributions. As defined in Section 4.2. 

 

1.4 Adjusted Capital Account. As defined in Section 4.4(b). 

 

1.5 Adjusted Capital Account Deficit. As defined in Section 4.4(c). 

 

1.6 Adjusted Invested Capital. The Invested Capital of a Member, less all Distributions. 

 

1.7 Affiliate. An affiliate of a erson is: 

 

       a) any person directly or indirectly controlling, controlled by, or under common control with the person; 

 

       b) a person owning or controlling 10% or more of the outstanding voting securities or beneficial interests of the person: 

 

       c) any officer, director, partner, general trustee, or person acting in a substantially similar capacity for the person; and 

 

       d) any person who is an officer, director, general partner, trustee, or holder of 10% or more of the voting securities or beneficial interests of any of the foregoing. 

 

1.8 Allocations. The allocations of the LLC

 

1.9 Assignee. A person who has acquired a beneficial interest in the LLC from a Member in compliance with the terms of the Agreement and who acquires the rights described in Section 9.2. 

 

1.10 Bankruptcy. Institution of any proceedings under federal or state laws for relief of debtors, including the filing of a voluntary or involuntary petition under the federal bankruptcy law; an adjudication as insolvent or bankrupt; an assignment of property for the benefit of creditors; the appointment of a receiver, trustee, or conservator of any substantial portion of assets; or the seizure by a sheriff, receiver, trustee, or conservator of any substantial portion of assets. The failure to obtain the dismissal of any of the foregoing proceedings, or the failure to obtain the removal of a conservator, receiver, or trustee, within 60 days after either event shall also be considered Bankruptcy. 

 

1.11 Capital Account. As defined in Section 4.4(a). 

 

1.12 Cash Call. As defined in Section 4.2. 

 

1.13 Certificate of Interest. The certificate described in Section 2.6. 

 

1.14 Code. The Internal Revenue Code of 1986, as amended, or corresponding provisions of subsequent revenue laws. 

 

1.15 Contributing Member. As defined in Section 4.2. 

 

1.16 Deficit Contribution Amount. As defined in Section 4.2. 

 

1.17 Distributions. Cash or property distributed to Members arising from their interests in the LLC, other than payments to Members for services or as repayment of loan. 

 

1.18 Event of Dissolution. As defined in Section 3.2. 

 

1.19 Invested Capital. The money contributed to the LLC by any Member as capital, including contributions pursuant to Section 4.1 when the LLC was first formed and any subsequent contributions. 

 

1.20 Limited Liability Company or LLC. PLM CAL I LLC 

 

1.21 Managing Member. Equis II Corporation, a Delaware corporation, and any permitted successors thereto. 

 

1.22 Member. Any person who is a Member in the LLC. 

 

1.23 Membership Interests. The interests of the Member(s) in the LLC as indicated on Exhibit A as it may be modified from time to time as permitted by this Agreement and the Act, as more particularly described in Section 2.6 below. 

 

1.24 Minimum Gain. The 

 

1.25 Net Income and Net Loss. For each taxable year or other period, the amount equal to the LLC's taxable income or loss for such year or period, determined in accordance with Internal Revenue Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Internal Revenue Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

 

       a) Any income that is exempt from federal income tax shall be added to the LLC

 

       b) Any expenditure of the LLC described in Internal Revenue Code Section 705(a)(2)(B) (or treated by Treasury Regulations as if described in that section) shall be treated as a deduction of the LLC; 

 

      c) Gain or loss from any disposition of LLC property shall be computed with reference to the LLC

 

      d) Such other adjustments that the Managing Member determines is necessary to comply with Treasury Regulation Section 1.704-1(b). 

 

1.26 Net Proceeds from Operations. Gross revenues generated by the LLC and miscellaneous sources other than Net Proceeds from Sales or Refinancings, less cash expenditures, debt service, operating expenses and amounts set aside for reserves. 

 

1.27 Net Proceeds from Sales or Refinancings. Net proceeds from (i) a sale or refinancing of the LLC assets after deducting expenses relating to the transaction and retaining a Reserve, (ii) condemnation awards, or (iii) insurance settlements not used to rebuild or replace the affected property. 

 

1.28 Percentage Interest. The total percentage Membership Interest of a Member in the LLC as indicated on Exhibit A, as it may be modified from time to time as permitted by this Agreement and the Act. 

 

1.29 Place of Business. As defined in Section 2.5. 

 

1.30 Reserves. A sum of money retained by the LLC for contingencies, as described in Section 4.5. 

 

1.31 Successor. A successor to or holder of a Member's interest following the death, incapacity, or bankruptcy of a Member as described in Section 14.1.

 

1.32 Tax Matters Members. Equis II Corporation, a Delaware corporation, and any permitted successors thereto. 

 

1.33 Value Date. As defined in Section 14.2. 

 

 

SECTION 2 

ORGANIZATION 

 

 

2.1 Form. The LLC shall hold, operate, purchase, sell and manage the company property and enter into contracts and do business as a limited liability company. 

 

2.2 Articles. The Certificate of Formation will or have been signed by a Member, or its legal representative, and filed in the Office of the Secretary of State of Delaware. 

 

2.3 Purpose. Except as otherwise stated herein, the purpose and activity of the LLC shall be to engage in any lawful act or activity for which a limited liability company may be organized under the Act. In particular, the LLC shall manage, and act as agent for a number of Aircraft directly and/or indirectly controlled by various customers but shall not be involved in any capacity with any investment activity arising therefrom except in a referring capacity to Affiliates of the Members. 

 

2.4 Name. The name of the LLC shall be 

 

2.5 Place of Business. The principal place of business for the Limited Liability Company shall be 200 Nyala Farms, Westport, CT, 06880, at such other place as the Managing Member may determine from time to time. 

 

2.6 Certificate of Interest. Upon request, the LLC shall issue to each Member a Certificate of Interest evidencing the Member's Percentage Interest of the LLC.  The Certificate of Interest shall serve as prima facie evidence of the Member's Percentage Interest.  Subject to any restrictions on assignment in the Agreement, the Certificate of Interest may provide that its transfer is evidence of the transfer of the Percentage Interest of the Member of Membership Interest in the LLC, and that the holder of the Certificate of Interest shall be treated by the LLC as an assignee or as a Member, according to the terms of the Agreement.  A Percentage Interest shall be treated as a security as such term is defined in the Uniform Commercial Code as enacted in Delaware.

 

2.7 Ownership/Acquisition of Certificates of Interest. Each Member who now owns or holds or who in the future may own or hold a Certificate of Interest or who otherwise owns or holds a Percentage Interest in the LLC warrants and covenants that he/she: (i) owns such Percentage Interest free and clear of any and all pledges, proxies, voting trusts or other adverse claims whatsoever; (ii) acquired or is acquiring such Percentage Interest for his/her own account and not with a view to, or for resale in connection with, any distribution within the meaning of the Securities Act of 1933, as amended, and/or any equivalent or similar Act passed by any relevant state legislature, including but not limited to the Delaware legislature; (iii) prior to acquiring the Percentage Interest, had received all information regarding the LLC and its businesses which he/she requested in order to enable him/her to evaluate the merits and risks of an investment in the Percentage Interest; (iv) by reason of his/her substantial experience in business and financial matters or that of his/her financial or other advisor(s) was fully capable of evaluating the merits and risks of an investment in the Percentage Interest; and (v) was able to bear the full economic risk of investment in the Percentage Interest, understood that there were substantial restrictions on transferability of the Percentage Interest, and could afford the complete loss of its investment in the Percentage Interest. 

 

SECTION 3 

TERM 

 

 

3.1 Commencement. The LLC terms shall begin on the date the Certificate of Formation is filed with the Secretary of State. 

 

3.2 Dissolution. 

 

       a) The LLC, and the agency relationship between the Members shall dissolve on the occurrence of an Event of Dissolution. 

 

       b) Each of the following shall be an 

 

          i) Election by a unanimous vote of the Members to dissolve; 

 

          ii) sale of all or substantially all of the assets of the LLC as determined by the Members in their sole and absolute discretion; or 

 

          iii) entry of a judicial decree of dissolution. 

 

       c) Following a dissolution, the LLC assets shall be liquidated and the proceeds distributed as provided in Section 5.4. 

 

3.3 Continuation. On the occurrence of an Event of Dissolution, a Member by unanimous vote may elect to continue the business of the LLC in a new limited liability company. 

 

 

SECTION 4 

CAPITAL

 

 

4.1 Capital Contributions. Each Member has made the initial capital contributions on Exhibit A in return for the Membership Interest. 

 

4.2 Additional Capital. 

 

       a) Additional Capital Contributions. To the extent that the Managing Member determines that Company requires funds in addition to the amounts provided in Section 4.1, the Members shall make such additional capital contributions ("Additional Capital Contributions") as the Managing Member shall determine are necessary or desirable upon written notice (the "Cash Call") to each Member setting forth in reasonable detail (i) the amount and purpose of the Additional Capital Contributions required of the Members, (ii) the date on which the funds are required (the "Additional Capital Contribution Date"), and (iii) the amount to be contributed by each Member, which amount shall be in proportion to each Member's Percentage Interest on the date of the Cash Call.  On or prior to the Additional Capital Contribution Date, each Member shall contribute to the Company as an Additional Capital Contribution the funds requested in the Cash Call.

 

       b) Consequences of Failure to Provide Additional Capital Contributions. In the event that Additional Capital Contributions are required to be made, if on or prior to the Additional Capital Contribution Date, one or more Members has made its share of the Additional Capital Contribution (each a "Contributing Member") and one or more Members has failed to make its share of the Additional Capital Contribution (each a "Non-Contributing Member"),  the Manager shall determine and give written notice to each Contributing Member of the amount of Addditional Capital Contributions remaining to be made (the :Deficit Contribution Amount"), whereupon any Contributing Member shall have the option during the following five day period to elect to advance to the Company as an Additional Capital Contribution its pro rata share of the Deficit Contribution Amount.  If there is more than one Contributing Member who elects to make such an additional advance, such Contributing Members shall make the additional advances pro rata in proportion to their respective Percentage Interests.

 

       c) Loans. In the event the Managing Member determines that Company requires funds in addition to the amounts provided in Section 4.1 and 4.2, and the Company has determined that a loan or loans are necessary or desirable, the Company may borrow funds from Persons upon such terms and conditions as are approved by the Managing Member. 

 

4.3 Additional Member. Additional Members may be admitted to the LLC at any time as proposed by any Member and approved by a unanimous vote of the Members. Additional Members shall be admitted effective as of the first day of the first calendar month following the month in which the additional Member has contributed Invested Capital. All of the Members' Percentage Interests shall be recalculated to reflect the addition of any additional Members pursuant to this Section 4.3.

 

4.4 Capital Accounts. 

 

       a) Capital Account. Each Member shall have a Capital Account which shall be maintained in accordance with Treasury Regulation Section 1.704-1(b). The Capital Account for each Member shall include that Member

 

       b) Adjusted Capital Account. "Adjusted Capital Account" shall mean the balance in a Member's Capital Account as of the end of the taxable year after giving effect to the following adjustments:

 

          i) increasing the Capital Account by any amounts which the Member is obligated to restore or is deemed to be obligated to restore pursuant to Treasury Regulation Section 1.704-1(b)(4)(iv) (f) or Treasury Regulation Section 1.704-1(b)(4)(iv)(h)(5); and 

 

          ii) decreasing the Capital Account by the items described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6). 

 

       c) Adjusted Capital Account Deficit. "Adjusted Capital Account Deficit" shall mean the deficit balance, if any, in a Member's Adjustsed Capital Account as of the end of the taxable year.  This definition of Adjustsed Capital Account Deficit is intended to comply with, and it shall be interpreted so as to be, consistent with, the provisions of the Treasury Regulation, Section 1.704-1(b)(2)(ii)(d)(4), 

 

       d) Valuation of Limited Liability Company Assets. The book values of all LLC assets shall be adjusted to equal their respective fair market values (taking Internal Revenue Code Section 7701(g) into account), as reasonably determined by the Managing Member, upon the occurrence of any of the following events: 

 

          i) a contribution of money or property (other than a de minimis amount) to the LLC by a new or existing Member as consideration for an interest in the LLC; 

 

         ii) a distribution of money or property (other than a de minimis amount) by the LLC to a Member as consideration for an interest in the LLC; and 

 

         iii) the liquidation of the LLC within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g). 

 

Any such adjustments shall be reflected by corresponding adjustments to the Capital Accounts which reflect the manner in which the unrealized income, gain, loss or deduction inherent in such property (that has not been reflected in the Capital Accounts previously) would be allocated among the Members if there were a taxable disposition of such assets for such fair market values. 

 

4.5 Reserves. Reserves in an amount determined by the Managing Member may be retained out of Invested Capital, Net Proceeds From Sales or Refinancings or Net Proceeds From Operations. Any Reserves remaining on dissolution of the LLC shall be held until the final liquidation and then distributed to the Members in accordance with the provisions of Section 5.5. 

 

 

SECTION 5 

DISTRIBUTIONS AND ALLOCATIONS 

 

 

5.1 Distributions. Except as otherwise provided in Section 5.4, Net Proceeds from Operations, Net Proceeds from Sales and Refinancings and Net Income shall be distributed as follows: subject to the provisions of Section 6.2 below, and after all ordinary and reasonable expenses of the LLC have been paid, including but not limited to debt service, fees for services rendered to the LLC, commissions, etc., any cash or other assets of the LLC remaining will be distributed by the LLC between and amongst all Members pro-rata in accordance with their Percentage Interests. 

 

5.2 Net Losses. Except as otherwise provided in Section 5.3, Net Losses for any year shall be allocated between and amongst all Members pro-rata. Notwithstanding the foregoing, the Members expressly agree that no Member shall be allocated Net Losses in excess of that Member

 

5.3 Special Allocations. Notwithstanding Sections 5.1 and 5.2, LLC income, gain, losses and deductions shall be allocated in accordance with the following provisions: 

 

        a) If LLC property is reflected in the Capital Accounts and on the books of the LLC at a book value that differs from the adjusted tax basis of such property, then depreciation, depletion, amortization, and gain or loss, as computed for tax purposes, with respect to such property, shall be determined so as to take account of the variation between the adjusted tax basis and the book value of such property in the same manner as under Section 704(c) of the Internal Revenue Code. 

 

        b) To the extent a Member unexpectedly receives an adjustment allocation or distribution of any item described in Treasury Regulations Section 1.704-1(b) (2)(ii)(4), (5) or (6), and such adjustment, allocation or distribution creates an Adjusted Capital Account Deficit in such Member's Capital Account, item of income and gain shall be allocated to such in an amount and manner sufficient to eliminate such Adjussted Capital Account Deficit as quickly as possible.  This Section 5.4(b) is intended to comply with the "qualified income offset" provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and these provisions shall be interpreted, and allocations hereunder shall be made, in conformity with such regulations.

 

        c) If there is a net decrease in LLC Minimum Gain for any LLC taxable year and if there exists an Adjusted Capital Account Deficit in a Member's Capital Accout, items of income and gain shall be allocated to such Member in accordance with Treausry Regulation Section 1.704-IT(b)(4)(iv)(e),  This Section 5.4(c) is intended to comply with  the "minimum gain charge back" requirements of Treasury Regulations Section 1.704-IT(b)(4)(iv) and shall be interpreted consistently therewith.

 

        d) Any item of LLC loss, deduction, or Section 705(a)(2)(B) expenditure that is attributable to nonrecourse debt with respect to which a Member bears the economic risk of loss (a "partner nonrecourse debt") must be allocated to such Member in accordance with Treasury Regulations Section 1.704-IT(b)(4)(iv)(h).  If there is a net decrease during a LLC taxable year shall be allocated items of LLC income and gain for such year (and, if necessary, for subsequent years) in proportion to, and to the extent of, an amount equal to the greater of (i) the portion of such Member's share of the net decrease of such LLC Minimum Gain that is allocable to the disposition of the Property that is subject to such onrecourse debt, or (ii) the Adjusted Capital Account Deficit in such Member's Capital Account as determined pursuant to Treasury Regulations Section 1.704-1(T)(b)(4)(iv)(h)(4).

 

        e) Any special allocations of items of Income or gain pursuant to Sections 5.4(b) and (c) shall be taken into account in computing subsequent allocations pursuant to Sections 5.2 and 5.3, so that the net amount of any items so allocated to each Member shall, to the extent possible, be equal to the net amount that would have been allocated to each Member pursuant to this Section 5 if the qualified income offset or minimum gain charge back had not occurred. 

 

5.4 Dissolution. On dissolution of the LLC without continuation, the business of the LLC shall be wound up by the Managing Member, the assets liquidated, and the proceeds applied to: 

 

        a) payment of LLC debts, including expenses of the liquidation, except that on liquidation the debts owed to secured creditors shall be assumed or otherwise transferred; and 

 

        b) creation in a trust account of a reasonable reserve, as determined by the Managing Member, for payment of contingent liabilities and expenses. 

 

The remaining proceeds shall be distributed to the Members in accordance with Section 5.1 of this Agreement, as determined after taking into account all Capital Account adjustments for the LLC taxable year during which such liquidation occurs. Such Distributions shall be made by the end of the taxable year in which the liquidation occurs, or, if later, within 90 days after the date of such liquidation. After passage of a reasonable time and payment of any contingencies arising in that time, the balance of the reserve shall be distributed to the Members in the same manner. 

 

5.5 Apportionment Among Members. Except as otherwise provided herein, the Net Income, Net Loss, and Distributions allocated to the Members shall be apportioned among them in the same ratio as each Capital Account bears to the total of the Capital Accounts of all Members. 

 

5.6 Return of Distributions. Any Distribution made to the Members shall be deemed to comply with all applicable law, provided the Distribution is made from available LLC assets. 

 

5.7 Allocation on Transfer of Limited Liability Company Percentage Interests. On the transfer of a Percentage Interest of a particular class of Membership Interest in the LLC, the distributive share of all items of income, gain, loss, deduction, or credit associated with that interest for the taxable year in which the transfer occurs shall be allocated between the transferor and the transferee as determined by the Member using any permissible method under Internal Revenue Code Section 706 and Treasury Regulations thereunder. 

 

5.8 Allocation Regulation. It is the intent of the LLC that the Agreement complies with the terms and requirements of Treasury Regulation Section 1.704-1(b)(2)(ii)(d), including its provisions as to the safe harbor test and the qualified income offset. Treasury Regulation Section 1.704-1(b)(2)(ii)(d) is incorporated by reference in this Agreement. If the LLC determines that the Allocation provisions of the Agreement are unlikely to be respected for federal income tax purposes, the Members shall have the authority to amend the allocation provisions of this Agreement to the minimum extent necessary to effect the allocations and distributions plan of the Agreement. 

 

SECTION 6 

MANAGING MEMBER COMPENSATION 

 

 

The Managing Member shall receive compensation only as specified in the Agreement, as set forth on Exhibit B. The Members hereby expressly agree that compensation to the Managing Member shall be paid prior to any profit distribution to the Members. The compensation to the Managing Member as contemplated by this Section 6 shall be in addition to, and not in lieu of, any other Distributions that the LLC may make to its Members. 

 

 

SECTION 7 

LIMITED LIABILITY COMPANY EXPENSES 

 

 

7.1 Reimbursable Expenses. 

 

       a) The LLC shall reimburse the Managing Member, Members or its Affiliates for the actual cost of goods and materials used for or by the LLC. 

 

      b) The LLC shall pay all expenses of the LLC for services engaged by the LLC. Such services shall be upon terms and conditions that the Managing Member deems to be fair and reasonable, provided that no amounts payable to Affiliates or Members for such services shall exceed an amount which is competitive in price and terms with compensation charged by a non-Affiliate or non-Member rendering comparable services. Such services may include, without limitation: 

 

          i) any expenses incurred in borrowing money and the costs of repaying loans; 

 

         ii) all taxes and assessments on property and all other taxes applicable to the LLC; 

 

        iii) all costs of professional services rendered to the LLC for LLC related business, including, without limitation, administrative services, asset management services, management agents, personnel, insurance brokers, real estate brokers, loan brokers, consultants, accountants, attorneys, auditors, and other professional advisors; 

 

         iv) expenses and taxes incurred in distributing, transferring, and recording documents that evidence ownership of an interest in the LLC or LLC related business; 

 

        v) expenses incurred in repairing, certifying, leasing, refinancing, removal, improvements to and operating the LLC property; 

 

       vi) commissions arising from the sale or disposition of the LLC property; and 

 

       vii) the costs to employ the services to assist the Managing Member in its managerial duties. 

 

7.2 Members Indemnification. Each Member will indemnify each other Member for any amounts such other Member pays on any guarantee of the LLC's debts in excess of such indemnified Member's pro rata share of such debt.

 

 

SECTION 8 

BOOKS AND RECORDS 

 

 

8.1 Records. The Managing Member shall keep at its offices located at the Place of Business, the following LLC documents: 

 

        a) a current list of the full name and last known business or residence address of each Member, together with the contribution and share in profits and losses of each Member; 

 

        b) a copy of the Certificate of Formation of LLC and all Certificates of Amendment, and executed copies of any powers of attorney pursuant to which any Certificate has been executed; 

 

        c) copies of the LLC's federal, state, and local income tax or information returns and reports, if any, for the six most recent tax years;

 

        d) copies of this Agreement and all Amendments to the Agreement; 

 

       e) financial statements of the LLC for the six most recent tax years; and 

 

        f) the LLC's books and records as they relate to the internal affairs of the LLC for the current and most recent three fiscal years.

 

8.2 Delivery to Member and Inspection. 

 

        a) Upon written request of a Member, the Managing Member shall promptly deliver to the requesting Member, at the expense of the LLC, a copy of the information required to be maintained by Sections 8.1(a), 8.1(b), or 8.1(d). 

 

        b) Each Member has the right, upon reasonable request in writing, to: 

 

           i) Inspect and copy during normal business hours any of the LLC records required to be maintained by Section 8.1; and 

 

           ii) Obtain from the Managing Member, promptly after they are available a copy of the LLC's fedeeral state and local income tax or information returns for each year.

 

        c) Notwithstanding anything to the contrary in Section 8 of the Agreement, Members shall not be entitled to inspect or receive copies of the following: 

 

           i) internal memoranda of the Members or Managing Member relating to matters other than LLC matters; 

 

           ii) correspondence and memoranda of advice from attorneys for the Managing Member; 

 

           iii) trade secrets and customer lists of the Managing Member or Members, tor information, financial statements of investors or Members, supplier lists, and similar and related materials, documents and correspondence. 

 

8.3 Tax Returns. 

 

        a) The LLC's tax or fiscal year shall terminate on December 31 of each calendar year.  The LLC's accountants shall be insstructed to prepare and file all required income tax returns for the LLC.  The Managing Member shall make any tax election necessary for completion of the LLC tax return.

 

        b) The Managing Member shall send to each Member, within 120 days after the end of each tax year, the information necessary for each Member to complete its federal and state income tax or information returns. 

 

8.4 Tax Matters Member. The Managing Member shall be the Tax Matters Member for purposes of Section 6231(a)(7) of the Code, and shall have all the authority granted by the Code to the Tax Matters Member, including the authority, without the consent of any other Member, to do any of the following: 

 

        a) enter into a settlement agreement with the Internal Revenue Service, which purports to bind the Members; 

 

        b) file a petition as contemplated in Sections 6226(a) or 6228 of the Code; 

 

       c) intervene in any action as contemplated in Section 6226(b)5 of the Code; 

 

       d) file any request contemplated in Section 6227(b) of the Code; and enter into an agreement extending the period of limitations as contemplated in Section 6229(b)(1)(B) of the Code. 

 

 

SECTION 9 

ASSIGNMENT 

 

 

9.1 Member Assignment Prohibited. Members shall not assign, transfer or sell any Percentage Interest or any Interest in LLC assets unless unanimous approval is given by the Members, and the procedures of this section, Section 13, and Section 14 are followed. A person purchasing or obtaining a Member interest at a foreclosure sale (or at its substituted sale) or by other operation of law without the consent of all of the Members, shall be an Assignee. Any assignment made in violation of this Agreement shall be void. 

 

9.2 Assignee Rights. An Assignee shall not be entitled to any Member rights except the right to receive Distributions and Allocations of Net Income and Net Loss. The Assignee shall have a Capital Account and shall have Adjusted Invested Capital in the same amount as when its Percentage Interest was held by the assigning Member. The Assignee may become a Member pursuant to the procedures set forth in Section 9.3 below. 

 

9.3 Substitute Member. An Assignee may become a Member upon the completion of all of the following: 

 

       a) The execution, acknowledgment, and delivery to the LLC of a written assignment in a form approved by the Members specifying the interest (including class) being assigned and setting forth the intention of the assigning Member that the Assignee succeed to the LLC interest as a Member. 

 

       b) The execution, acknowledgment, and delivery to the LLC of any other documents required by the Members from the assigning Member and the Assignee, including the Assignee's acceptance of the Agreement (including Section 2.7 hereof).

 

       c) Obtaining the unanimous written consent of the Members. 

 

The Members may elect to treat an Assignee who has not become a substituted Member as a substituted Member in the place of his Assignor should the Members deem, in their sole and absolute discretion, that such treatment is in the best interest of the LLC. 

 

9.4 Involuntary Transfer. 

 

       a) Subject to the terms and conditions of Section 15 below, persons may become an Assignee by: 

 

          i) transfer caused by the death or legal incapacity of a Member; 

 

          ii) foreclosure (or transfer in lieu of foreclosure) against a Member's interest that was pledged or assigned as security for an obligation;

 

          iii) court order; 

 

         iv) transfer from the transferee's spouse pursuant to a dissolution decree or a property settlement agreement; or

 

         v) transfer from a trustee, guardian, conservator, or other fiduciary on termination of the trust, guardian, conservator, or other fiduciary on termination of the trust, guardianship, conservatorship, or other fiduciary relationship. 

 

On the occurrence of any of these events, the transferee shall become an Assignee on the first day of the calendar month following the later to occur of the date of transfer or notice to the Members of the date of transfer. 

 

9.5 Conditions of Member Transfer. No assignment, transfer or sale of any Membership Interest that would otherwise be permitted hereunder shall be effective or recognized in any manner unless the person who acquires such interest accepts and assumes the terms and conditions of this Agreement in writing in form and substance acceptable to the Managing Member in its sole and absolute discretion. Any person who acquires in any manner whatsoever any Membership Interest (or any part thereof) in the LLC, whether or not such person has accepted and assumed in writing the terms and provisions of this Agreement or been admitted into the LLC as a Member, shall be deemed, by acceptance of the acquisition thereof, to have agreed to be subject to and bound by all of the obligations of this Agreement with respect to such Membership Interest and shall be subject to the provisions of this Agreement with respect to any subsequent assignment, transfer or sale of any Membership Interest. 

 

9.6 Tax Election. The Managing Member may, at its sole discretion, make an election under Section 754 of the Internal Revenue Code to adjust the basis of the LLC's assets to reflect the purchase price paid by an Assignee.

 

SECTION 10 

MANAGEMENT 

 

 

10.1 Control in Managing Member. Except as otherwise expressly stated in the Agreement, the Managing Member shall have exclusive control over the day to day business of the LLC, including without limitation the power to make ordinary and regular business decisions on a day-to-day basis regarding the operation of the venture. 

 

10.2 Authority of Managing Member. The Managing Member shall have all rights, power and authority generally conferred by law or necessary, advisable, or consistent with accomplishing the purpose of the LLC. Without limiting the Managing Member's powers, and subject to the applicable voting rights of the Membmers, the Managing Member shall have the right and authority to;

 

        a) manage the LLC operations and property; 

 

        b) acquire, hold, refinance, alienate or dispose of property, any interest in property, or any assets of the LLC; 

 

       c) employ or hire services for the LLC at the expense of the LLC as contemplated in Section 7 of this Agreement; 

 

       d) pay all organization expenses incurred in creating the LLC, and all operation expenses incurred in operating the LLC; 

 

       e) determine the amount and timing of Distributions; 

 

       f) open and maintain LLC bank accounts; 

 

       g) assume the overall duties imposed on the Managing Member by the Act; 

 

       h) borrow money on behalf of the LLC, encumber LLC assets, or place title to the LLC in the name of a nominee to obtain financing; 

 

         i) prepay in whole or in part, refinance, increase, modify, or extend any obligation; 

 

10.3 Limitation on Managing Member. Without the unanimous consent of the Members, the Managing Member shall not have authority to: 

 

       a) perform any act in contravention of the Agreement; 

 

       b) perform any act that would make it impossible to carry on the ordinary business of the LLC; 

 

       c) amend the Agreement; 

 

      d) perform any act which, pursuant to the Agreement, requires approval by a vote of the Members, without first receiving the required approval; or 

 

      e) cause the LLC to enter into partnerships as a general or limited partner and exercise the authority and perform the duties required of the LLC as a partner in any partnership. 

 

10.4 Devotion of Time. The Managing Member is not obligated to devote its full time and attention to the affairs of the LLC, and may become involved in other businesses, occupations and partnerships, whether or not related to the business and affairs of the LLC, including but not limited to that certain capital investment venture as more particularly described in Section 10.5 below. The Managing Member shall devote to the LLC the amount of time reasonably necessary to manage the LLC business and perform the Managing Member duties.

 

10.5 Indemnification of Managing Member. 

 

       a) The LLC, its receiver, or its trustee shall indemnify the Managing Member, any partners of the Managing Member, any officers, directors, shareholders, employees, agents, attorneys, subsidiaries, or assignees of the Managing Member or its partners and any Affiliates of the Managing Member or its partners against all liabilities and expenses (including penalties, fines, attorneys, subsidiaries, or assignees of the Managing Member or its partners and any Affiliates of the Managing Membmer or its partners against all liabilities and expenses (including penalties, fines, attorneys' fees, and amounts paid in compromise of a claim or to satisfy a judgment) reasonably incurred by any of them in defending or disposing of any threatened or actual civil, criminal, or administrative suit or proceeding arising out of or in any way relating to the LLC, the business of the LLC, or to acting or having acted as a Managing Member or an Affiliate of the Managing Member, including any payments made to satisfy guarantees of the debts of the LLC, except as limited in Section 7.2 of this Agreement.  Notwithstanding anything to the contrary in Section 10.4(a), no person shall be indemnified as to any matter caused by that person's gross negligence, fraud, or criminal act or as to any matter in which the person is adjudicated to have acted in bad faith or with willful miscondect.

 

  b) Recoveries based on the indemnification provisions of Section 10.4(a) shall be paid only out of LLC assets. No Member shall be personally liable for any recovery based on the indemnification provisions of Section 10.4(a). 

 

10.6 Investment Opportunities. Neither the Managing Member, Members, nor any of its Affiliates shall be obligated to present any particular investment opportunity to the LLC, even if the opportunity is of a character which, if presented to the LLC, could be taken by the LLC. The Managing Member, Members, and their Affiliates shall have the right to take for their own account, or to recommend to others, any investment opportunity. 

 

10.7 Miscellaneous Management Matters. 

 

      a) In executing the powers granted and performing the duties imposed by the Agreement, the Managing Member may rely on any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, or other document they believe to be genuine and to have been signed or presented by the proper party. 

 

     b) Members and Affiliates may participate in any permitted agreement and this participation shall not constitute a breach of any duty that the participant owes under the Agreement or by operation of law to the LLC, the Members, or the Assignees. 

 

10.8 Agreements with Managing Member, Members or Affiliate. The Managing Member, Members and any of its Affiliates may deal directly or indirectly with the LLC in carrying out LLC business. The Managing Member may act as an independent contractor or as an agent for other persons, and may receive profits, compensation and commissions. Any such agreements the Managing Member intends to have with the LLC shall be made on an arm's length basis and disclused in advance of such agreement to all of the Members.  In particular, and without limiting in any way the Managing Member's right to participate in any other related or unrelated business venture, the Members, jointly and severally: (i) acknowledge that the Managing Member may be associated with an invnestment company, (ii) irrevocably consent to the referral by the LLC and/or the Managing Member to the Investment Company of investment opportunities which may aarise or be related in any way to the management or administration of the LLC, (iii) expressly and irrevocably waive the right to claim an interest in any profits derived by the Managing Member and/or the Investment Company from any such investment activity, whether or not such profit was derived from a referral of the Managing Member and/or breach of fiduciary duty on the part of the Managing Member with respect to the foregoing.  Notwithstanding the foregoing, the LLC shall be reimbursed by the Investment Company for all out of pocket expenses incurred in relation to any investment activity arising from or related to the LLC business, including but not limited legal fees, aircraft inspections, and travel, upon the written disclosure by the LLC to the INvestment Company of all such out of pocket expenses.

 

SECTION 11 

VOTING RIGHTS AND MEETINGS OF MEMBERS 

 

 

11.1 Management and Control. Except as otherwise provided in this Agreement, Members shall take no part in the control, conduct, or operation of the LLC and shall have no right or authority to act for or bind the LLC, including during the winding up period following dissolution of the LLC. 

 

11.2 Voting Rights. Members shall have voting rights in proportion to their Percentage Interest. 

 

11.3 Limitations. No Member shall have the right or power to: 

 

       a) withdraw or reduce its Invested Capital except on the dissolution of the LLC or as otherwise provided by law; 

 

       b) bring an action for partition against the LLC. 

 

       c) cause the termination and dissolution of the LLC, except as set forth in the Agreement; or 

 

      d) receive property other than cash in return for its Invested Capital. 

 

Except as provided in Section 5 above, no Member shall have priority over any other Member to receive a return of invested Capital, Allocations of Net Income and Net Loss, or Distributions. Other than on dissolution of the LLC as provided by the Agreement, the Members have not agreed on when the contribution of each Member may be returned. 

 

11.4 Limited Liability Company Meetings. 

 

       a) LLC meetings shall be held at any place stated in a meeting notice. 

 

       b) LLC meetings shall be held when called by any of the Members. 

 

       c) LLC meeting notices and procedures shall conform to the Act. 

 

11.5 Voting Procedures. A Member shall be entitled to vote at a LLC meeting in person, by written proxy, or by a signed writing that is delivered to the Managing Member before the meeting and directs the manner in which the vote is to be cast. A Member shall be entitled to vote without a meeting by a signed writing that is delivered to the Managing Member in which the vote is to be cast. Only votes of Members of record on the notice date shall be counted at a LLC meeting or on the counting of a noticed vote. The laws of the State of Delaware applicable to the use of Limited Liability Company or corporate proxies shall govern the use of proxies by the Members. 

 

 

11.6 Action Without a Meeting. Any action that may be taken at a LLC meeting may be taken without a LLC meeting if Members owning Percentage Interest of Membership Interest sufficient to authorize the action at a LLC meeting consent in a signed writing to the action and all Members are given notice of the action as provided in Section 11.4. 

 

 

SECTION 12 

REMOVAL OR WITHDRAWAL OF THE MANAGING MEMBER

 

 

12.1 Removal. Any Member may be removed at any time, with cause, by the unanimous vote of the Members at a meeting called expressly for that purpose, or by the unanimous written consent of the Members. Any removal shall not affect the Members' rights as a Member or constitute a withdrawal of a Member. For purposes of this section, "cause" shall mean fraud, gross negligence, willful misconduct, breach of fiduciary duty not otherwise waived herein or elsewhere in writing, embezzlement or a breach of the Managing Member's obligations under this Agreement. Notice of removal shall be served on the Member and shall set forth the date on which the removal becomes effective.

 

12.2 Withdrawal. Any Member may withdraw only upon the unanimous approval of all Members, and then on 90 days' written notice to all of the Members, and shall cease to be a Managing Member and Member on the effective date of its withdrawal.

 

SECTION 13 

RIGHT OF FIRST REFUSAL 

 

13.1 Offer. Subject to Sections 9.2 and 15, any Member who wants to assign, transfer, sell, pledge or hypothecate its LLC interest ("Selling Member") other than to another Member or an Affiliate of a Member shall first offer to sell its interest to the LLC and to the other Members ("Offerees"). The Selling Member shall make the offer to sell by giving notice to the Offerees ("Proposal"). The Proposal shall state the exact terms and price of the proposed sale.

 

13.2 Concurrence or Acceptance. The Offerees, shall respond by giving notice within 10 days of receiving the Proposal ("Offer Period"). The Offeree's response shall either accept the offer on the same terms and for the same price as in the Proposal or reject the offer. If more than one Offeree elects to purchase, the purchasers shall take the Selling Member's interest pro rata according to their respective Percentage Interests in the class of Membership Interest being sold by the Selling Member. If the Offerees do not respond within the Offer Period, the Selling Member may sell its interest to any other party on the same terms and for the same price as in the Proposal for a period of 90 days after the end of the Offer Period. If the Selling Member does not complete the sale of its interest within that 90-day period, the provisions of Section 14 shall apply to any later sale or Proposal.

 

13.3 Rights of Buyer. A purchaser of the Selling Member's interest, if not already a Member, shall be an assignee and shall not become a substitute Member unless it satisfies the requirements of Section 9.3 above.

 

13.4 Purchase By Member. Any Member in the LLC or any Affiliate of a Member (the "Purchasing Member") may, at any time, purchase any or all of the Membership Interest in the LLC of another Member, subject to the requirements of Sections 9 and 14.

 

SECTION 14 

DEATH OR INCAPACITY OF A MEMBER 

 

 

14.1 Withdrawing Member. A Member who is a natural person who becomes incapacitated, as defined in Section 15.1(b), or has died, shall be referred to as the Withdrawing Member. 

 

       a) Death of a Member. A Member's death shall not cause the LLC to dissolve.  The estate of the deceased Member and the person entitled to succeed to the LLC interest of a deceased Member under the decedent's will or the laws of interstate succession shall be referred to as the "Successor".  On the death ofa Member, the Successor shall become a Member, with all the rights and obligations of the deceased Member except that its interest shall be subject to the options described in Section 15.1(c).

 

       b) Incapacity of a Member. A Member shall be deemed incapacitated as of the date it undergoes bankruptcy, is judicially declared incompetent or insane, or has appointed a legal guardian or conservator. The trustee in bankruptcy, legal guardian, or conservator shall be referred to as the Successor. On the incapacity of a Member, its Successor shall become a Member except that its interest shall be subject to the options described in Section 15.1(c). 

 

      c) Successor. The LLC shall have the option to purchase the Successor.  The LLC shall have the option to purchase the Successor's interest.  The LLC's decision to exercise its option to purchase shall be within the sole discretion of the Managing Member.  This option shall be available for 90 calendar days after the date of death or incapacity and shall be exercised by giving notice to the LLC and the Successor within that time period.

 

14.2 Valuation of Successor. If an option described in Section 14.1(c) is exercised, the LLC shall determine the value of the Withdrawing Member's interest. The value shall be calculated as of the last dau of the calendar month in which the Withdrawing Member dies or becomes incapacitated ("ValueDate"). The value shall be the amount that the Withdrawing Member would receive upon the liquidation and sale of all of the LLC assets, taking into consideration the costs of the sale and assuming the assets would be sold at their fair market value. If the Successor does not approve the value determined by the LLC, or if the determination of value is not made within 90 calendar days of the Value Date, the value shall be determined by arbitration according to the rules of the American Arbitration Association.

 

14.3 Payment Upon Withdrawal. If the LLC purchases the Successor's interst, the LLC shall pay the Successor the stated amount in one, single cash payment. 

 

SECTION 15 

MISCELLANEOUS 

 

 

15.1 Arbitration. Any controversy or claim arising out of or relating to this Agreement or a breach thereof shall, upon the request of any party involved, be settled by arbitration in accordance with the rules of the American Arbitration Association, and judgment upon the award rendered may be entered in the highest court of any forum, state or Federal, having jurisdiction. 

 

15.2 Survival of Representations and Obligations. Each and every warranty, representation, covenant and agreement set forth herein shall be true as of the date of execution hereof and as of the closing date of the subject transaction, shall survive the closing contemplated herein and the delivery of the assets and transfer of the title thereon, and shall be binding upon and inure to the benefit of the parties hereto and their representatives, heirs, successors and assigns. 

 

15.3 Governing Law/Venue. It is the intent of the parties hereto that all questions with respect to the construction of this Agreement and the rights and liabilities of the parties hereto, shall be determined solely in accordance with the provisions of the laws of the State of Delaware. 

 

15.4 Paragraph Headings. The subject headings of the paragraphs of this Agreement are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions. 

 

15.5 Capitalized Terms. Except as otherwise expressly provided herein, all capitalized terms herein which are defined in this Agreement shall have the meaning ascribed to them in the Agreement. 

 

15.6 Severability. In the event that any of the terms of this Agreement are held to be partially or wholly invalid or unenforceable for any reason whatsoever, such holding shall not affect, alter, modify or impair in any manner whatsoever, any of the other terms, or the remaining portion of any term, held to be partially invalid or unenforceable. 

 

15.7 Amendments. The parties hereto may at any time amend this Agreement in any particular, by written consent of all of the Members. 

 

15.8 Gender. Whenever required by the context, the singular number shall include the plural number, the plural number shall include the singular number, the masculine gender shall include the neuter and feminine genders and vice versa. 

 

15.9 Notices. All notices and other communications under this Agreement shall be in writing and shall be considered given when delivered personally or mailed by registered mail (return receipt requested) or by well known international courier (i.e., Federal Express or D.H.L.) to the parties at the addresses set forth in the signature block (or at such other address as a party may specify by notice pursuant to this provision). 1 

 

5.10 Merger of Prior Agreement and Understandings. This Agreement and the other documents incorporated herein by reference contain the entire understanding between the parties relating to the transaction contemplated hereby and all prior contemporaneous agreements, understandings, representations and statements, oral or written, are merged herein and shall be of no further force or effect. 

 

15.11 Covenant to Sign Documents. Each Member shall execute, with acknowledgment or affidavit if required, all documents reasonably necessary or expedient to create the LLC and achieve its purpose. 

 

15.12 Multiple Ownership of Limited Liability Company Issues. A Membership Interest may be held jointly by husband and wife as community property, or by husband and wife or by unrelated persons as joint tenants or tenants in common, as shown on the signature page of the Agreement or in the LLC's books and records. A Membership Interest owned by more than one person shall be deemed to be held by the owners as one Member. The LLC and the Members shall be entitled to consider any notice, vote, check, or similar document signed by any one of the owners to bind all the owners.

 

15.13 No Waiver of Remedies. The failure of a Member to insist on the strict performance of any covenant or duty required by the Agreement, or to pursue any remedy under the Agreement, shall not constitute a waiver of the breach or the remedy. 

 

15.14 Other States. If the business of the LLC is carried on or conducted in states other than Delaware, each Member shall execute documents as may be required or requested so that the Members may legally qualify the LLC in such other states. The Managing Member shall have the authority to designate a LLC office or principal place of business in any other state. 

 

15.15 Remedies Cumulative. The remedies of the Members under the Agreement are cumulative and shall not exclude any other remedies to which the Member may be lawfully entitled. 

 

15.16 Confidentiality. The Members hereby jointly and severally resolve that the commercial terms of this Agreement, and all negotiations between the Members, shall remain strictly confidential. The Members will hold same as "confidential information: in confidene, using whatever security measures, devices and procedures are necessary and required to secure the information confidential.  In the event that disclosure is required to any other third party or any other person who is not a party to this Agreement, they shall be made to execute a confidentiality and non-compete agreement in advance binding them to the terms of this Agreement.  This covenant shall be construed as an agreement independent of any other provision of this Agreement and shall survive the termination of this Agreement.  In the event of a breach or threatened breach of the obligations under this Section 15.16, the Members acknowledge that thee Company will not have any adequte rememdy at law and shall be entitled to such equitable and injuctive relief as may be available to restrain the defaulting party from the violation of the provisions of this Section 15.16.  This remedy shall not be exclusive. 

 

 

[Signature page follows.] 

 

	 	 	 
	 	 	 

 

 

	 

 

        IN WITNESS WHEREOF, the following Members have signed this Operating Agreement effective as of the date first set forth above. 

 

 

                                                                                              Equis II Corporation, a Delaware corporation 

 

 

                                                                                              ______________________________________ 

 

 

                                                                                             By: __________________________________ 

 

 

                                                                                             Title:____________________________ 

 

 

                                                                                             PLM Equipment Growth Fund V, a 

 

 

                                                                                             California limited partnership 

 

 

                                                                                             _____________________________________ 

    

 

                                                                                            By:___________________________________ 

 

 

                                                                                            Title: __________________________________ 

 

 

                                                                                            PLM Equipment Growth Fund VI, a 

 

 

                                                                                           California limited partnership 

 

 

                                                                                           _____________________________________ 

 

 

                                                                                       By:___________________________________ 

 

 

                                                                                       Title: __________________________________ 

 

 

                                                                                       PLM Equipment Growth Fund VII, a 

 

 

                                                                                       California limited partnership 

 

 

                                                                                      _______________________________________ 

   

 

                                                                                      By:____________________________________ 

 

 

                                                                                      Title:___________________________________ 

 

	 	 	 
	 	 	 

 

 

	 

 

EXHIBIT A 

 

 

MEMBERS 

INITIAL CAPITAL CONTRIBUTIONS AND 

PERCENTAGE INTERESTS 

 

	
 

Name and Address

 
	
 

Initial Capital

Contribution

 
	
 

Percentage

Interest 

 

	
 

Equis II Corporation1050 Waltham StreetLexington, MA 02421 

 
	
 

$500,000

in cash

 
	
 

0.990% 

 

	
 

PLM Equipment Growth Fund V200 Nyala FarmsWestport, CT 06880 

 
	
 

$20,000,000

in cash

 
	
 

39.604% 

 

	
 

PLM Equipment Growth Fund VI200 Nyala FarmsWestport, CT 06880 

 
	
 

$17,000,000

in cash 

 
	
 

33.6634% 

 

	
 

PLM Equipment Growth Fund VII200 Nyala FarmsWestport, CT 06880 

 
	
 

$13,000,000

in cash 

 
	
 

25.7426% 

 

 

EXHIBIT B

 MANAGING MEMBER COMPENSATION 

 

 

(1) Acquisition Fee. As compensation for supervising asset acquisition and arranging deliveries of assets, Managing Member shall receive a fee equal to 4.5% of the original purchase price of the assets. 

 

(2) Lease Negotiation Fee. As compensation for negotiating arrangements for the initial use of the assets, Managing Member shall receive a fee equal to 1% of the original purchase price of the assets. 

 

(3) Debt Placement Fee. As compensation for arranging new indebtedness to finance the acquisition of assets by the LLC, Managing Member shall receive a fee equal to 1% of such indebtedness; provided, however, that such fee shall be reduced to the extent the LLC incurs such fees to unaffiliated third parties with respect to such indebtedness 

 

(4) Asset Management Fee. As compensation for managing the assets, the Managing Member shall receive from the LLC, on a monthly basis, as soon as reasonably practical following the close of each calendar month, Asset Management Fees equal to the lessor of (i) the fees which would be charged by an independent third party for similar services for similar equipment or (ii) 2% of the gross lease revenues attributable to assets which are subject to full payout net leases.Unassociated Document

EXHIBIT 10.36

 

CONTRACT OF PURCHASE AND SALE

 

 

THIS CONTRACT OF PURCHASE AND SALE (this "Contract") is made and entered into by and between BF ENTERPRISES, INC., a Delaware corporation ("Seller"), and ANSLEY INVESTMENTS, LLC, a Georgia limited liability company, or its permitted assigns ("Purchaser").

 

W I T N E S S E T H:

 

WHEREAS, Seller desires to sell, and Purchaser desires to purchase, the real property described herein on the terms and conditions set forth in this Contract.

 

NOW THEREFORE, for and in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

 

1.  Property: Subject to the conditions set forth in this Contract, Seller agrees to sell and Purchaser agrees to purchase the unimproved real property, consisting of approximately 21.16 acres on Hobson Drive, Davidson County, Tennessee, generally described as Tax Parcels 19-183.00-0-046.00, 19-183.00-0-.98.00 and 19-183.00-0-099.00, and being part of Planned Unit Development 188-84-6-12, on record with the Metro Nashville Planning Commission (the "P.U.D."), together with all appurtenances, easements and privileges pertaining thereto and being more particularly described on Exhibit A attached hereto (the "Property"). 

 

2.  Purchase Price; Terms of the Note. 

 

(a)  Purchase Price. The total purchase price ("Purchase Price") shall be $1,250,000.00, to be paid at Closing as follows:

 

(i)  Application of the Earnest Money, as described in Section 3 below;

 

(ii)  $225,000.00 via wire transfer of immediately available funds; and 

 

(iii)  the execution and delivery by Purchaser to Seller of (i) a promissory note in the principal amount of $1,000,000.00 (the "Note"), (ii) a first priority Deed of Trust (the "Deed of Trust"), encumbering the Property and securing Purchaser's obligations set forth in the Note, and (iii) such other documents and instruments requested by Seller which are ordinarily and customarily executed with respect to purchase money lending transactions of the type contemplated hereby (collectively, the "Loan Documents").

 

(b)  Terms of the Loan Documents. 

 

(i)  The Note shall initially bear interest at a rate equal to the five (5) year Treasury Note rate as of the Closing Date. On each six (6) month anniversary of the Closing (herein, an "Adjustment Date"), the interest rate shall be re-adjusted to the then five (5) year Treasury Note rate as of the applicable Adjustment Date. Interest only shall be due and payable in arrears on each Adjustment Date, with all unpaid principal and accrued interest due and payable in full on the tenth (10th) Adjustment Date.

	 
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(ii)  Purchaser shall remit fifty percent (50%) of the net sale proceeds derived from the sale of any portion of the Property to Seller, which shall be applied to the outstanding principal balance of the Note, until the Note is paid in full, principal and interest. When the Note has been paid in full, principal and interest, Seller shall mark the Note "paid in full" and shall cancel the Deed of Trust and all other security documents. For the purposes of this paragraph, "net sale proceeds" shall mean the gross proceeds of the sale of any portion of the Property, less any amounts attributable to the proration of taxes, premiums for title insurance, escrow charges, transfer taxes, real estate commissions, and similar fees and charges paid by Purchaser at the closing of such sale pursuant to the related sale agreement. Upon receipt of its share of the net sale proceeds from such sale, Seller shall release the subject property from the lien of the Deed of Trust, all as to be more specifically set forth in the Deed of Trust. 

 

(iii)  In consideration of the cash down payment paid to Seller at the Closing, Seller shall release from the lien of the Deed of Trust all Excluded Areas, which are herein defined as the road right-of-way for the construction and installation of Hobson Drive through the Property, all acceleration and deceleration lanes and traffic signalization, all utility and drainage easements and storm water detention areas.

 

(iv)  Prior to Seller’s being required to release the Excluded Areas from the lien of the Deed of Trust, Purchaser must furnish Seller with the Plans and Specifications (as herein defined) for the Infrastructure (as herein defined). The Plans and Specifications may not be in existence or complete by the Closing. If the Plans and Specifications are not complete by the Closing, Purchaser and Seller shall nevertheless close the sale and conveyance of the Property as otherwise provided in this Contract; provided, however, the Excluded Areas shall not be conveyed free and clear of the Deed of Trust, but shall be part of the real property encumbered by the Deed of Trust. When the Plans and Specifications have been completed and approved by Seller, the Excluded Areas shall be released from the Deed of Trust by Seller.

 

3.  Earnest Money. 

 

(a)  Within five (5) business days of the Effective Date (defined in Paragraph 25 of this Contract), Purchaser shall deliver $25,000.00 (the "Earnest Money") to Chicago Title Insurance Corporation ("Title Company") at its Nashville, Tennessee office. The Earnest Money shall be deposited in an interest-bearing account, with interest to follow the principal. 

 

4.  Closing:

 

(a)  The closing of this transaction (the "Closing") shall be held at the offices of Seller's attorneys, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., in Nashville, Tennessee, no later than thirty (30) days following the expiration of the Inspection Period (the "Closing Date"). The parties agree that the parties do not have the physically attend the Closing and that it may occur by delivery of the various closing documents by overnight courier to Seller’s attorney or the Title Company to be held in escrow pending the occurrence of the Closing

	 
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(b)  At Closing, Seller shall deliver to Purchaser or the Title Company, as applicable, the following:

 

(i)   Special Warranty Deed (the "Deed"), conveying the Property to Purchaser subject only to the Permitted Exceptions (as defined herein); the Deed shall have the legal description attached hereto as Exhibit A and if the legal description of the Property shown on the Survey is different from Exhibit A, Seller shall also execute and deliver to Purchaser at the Closing a quitclaim deed with a legal description prepared from the Survey;

 

(ii)   A non-foreign status certification as required by Section 1445 of the Internal Revenue Code of 1986; and 

 

(iii)  Such other closing documents as are customary in similar transactions and as may be reasonably requested by Purchaser or the Title Company. 

 

(c)  At Closing, Purchaser shall deliver to Seller or the Title Company, as applicable, the following:

 

(i)  The Note; 

 

(ii)  The Deed of Trust; 

 

(iii)  Any other Loan Documents agreed upon by Seller and Purchaser pursuant to Section 11(b) below;

 

(iv)  Evidence reasonably acceptable to Seller of either (A) a firm, irrevocable commitment to provide financing or (B) immediately available funds earmarked to assure the completion of the Infrastructure described in Section 9(b)(iii) below, together with copies of the executed contracts for the construction of the Infrastructure and the payment and performance bonds related thereto; if the items in clause (A) or (B) are not available at the Closing, the Closing shall nevertheless occur as provided in this Contract, but Seller shall not be required to release any portions of the Property, and Purchaser shall not commence development of the Property, until this item has been satisfied or the Note has been paid in full;

 

(v)  Certificates of insurance evidence of the existence of Commercial General Liability Insurance with respect to the Property with limits of not less than One Million Dollars ($1,000,000.00) per occurrence, and Two Million Dollars ($2,000,000.00) in the aggregate; and

 

(vi)  Such other closing documents as are customary in similar transactions and as may be reasonably requested by Seller or the Title Company.

 

	 
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5.  Closing Costs:

 

(a)  Seller shall pay for: the cost of an owner's title insurance policy, one-half (1/2) of the costs of recording the Declaration (as hereinafter defined), and one half (1⁄2) the cost of Title Company escrow charges. Purchaser shall pay for: its due diligence expenses, the recording fees and conveyance taxes associated with the recording of the Deed, the recording fees and indebtedness taxes associated with the recording of the Deed of Trust, one-half (1/2) of the costs of recording the Declaration, and one half (1⁄2) of the cost of Title Company escrow charges. Purchaser and Seller shall each be responsible for their own attorneys’ fees and other expenses. 

 

(b)  All real property ad valorem taxes and assessments against the Property shall be prorated between Seller and Purchaser as of the Closing Date on a calendar year basis. Seller will be responsible for any taxes (including roll-back taxes) in respect to prior years, including penalties and interest for the year 2003 and all prior years. 

 

6.  Possession: Possession of the Property shall be delivered to Purchaser on the Closing Date. 

 

7.  Representations and Warranties of Seller: Seller represents and warrants to Purchaser that:

 

(a)  Seller is a Delaware corporation and has authority to execute this Contract.

 

(b)  To the best of Seller's actual knowledge, there are no eminent domain or similar condemnation proceedings now affecting all or any part of the Property, and none are threatened.

 

(c)  The execution and delivery of this Contract and the consummation of the transactions herein contemplated have been duly and validly authorized by all necessary action on the part of Seller, and this Contract constitutes a valid and legally binding obligation of Seller, enforceable in accordance with its terms. 

 

(d)  Seller has no actual knowledge of any hazardous wastes or substances on the Property and, to Seller's actual knowledge, no such wastes or substances have been deposited or released on the Property by others.

 

(e)  To the best of Seller's actual knowledge, the Property is not subject to any pending litigation and none is threatened.

 

Seller shall immediately inform Purchaser if it obtains actual knowledge that any of the foregoing representations or warranties are untrue; provided that in no event shall Seller be liable to Purchaser in the event any of the foregoing representations or warranties to Purchaser are or prove to be untrue. The foregoing representations and warranties shall expressly NOT survive the Closing.

 

	 
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Except as otherwise expressly provided in this Paragraph 7, Seller does not make any representations, guaranties, promises, statements, assurances or warranties of any kind or nature whatsoever, express or implied, as to the condition, business, operations, assets, liabilities or prospects of the Property or any of its operations, of any kind or nature whatsoever.

 

Without limiting the generality of the foregoing, Purchaser hereby acknowledges and agrees that it is purchasing the Property in the present "AS IS/WHERE IS" condition and with all defects and, unless otherwise expressly provided in this Contract, neither Seller nor any employee or agent of Seller has made or will make, either expressly or impliedly, any representations, guaranties, promises, statements, assurances or warranties of any kind concerning any of the following matters (collectively referred to herein as the "Property Conditions"): (i) the suitability or condition of the Property for any purpose or its fitness for any particular use, (ii) the profitability, legality and/or feasibility of owning, developing, operating and/or improving the Property, either now or at any time hereafter, (iii) the physical condition of the Property, including, without limitation, the current or former presence or absence of environmental hazards or hazardous materials, asbestos, radon gas, underground storage tanks, electromagnetic fields, or other substances or conditions which may affect the Property or its current or future uses, habitability, value or desirability, (iv) the rentals, income, costs or expenses thereof, (v) the net or gross acreage, useable or unusable, contained therein, (vi) the zoning of the Property, (vii) the condition of title (other than as contained in the Deed), (viii) the compliance by the Property with applicable zoning or building laws, codes or ordinances, or other laws, rules and regulations, including, without limitation, environmental and similar laws governing or relating to environmental hazards or hazardous materials, asbestos, radon gas, underground storage tanks, electromagnetic fields, or other substances or conditions which may affect the Property or its current or future uses, habitability, value or desirability, (ix) water or utility availability or use restrictions, (x) geologic/seismic conditions, soil and terrain stability, or drainage, (xi) sewer, septic, and well systems and components, (xii) other neighborhood or Property conditions, including schools, proximity and adequacy of law enforcement and fire protection, crime statistics, noise or odor from any sources, fills, proposed future developments, or other conditions or influences which may be significant to certain cultures or religions, or (xiii) any other past, present or future matter relating to the Property which may affect the Property or its current or future use, habitability, value or desirability.

 

Purchaser is strongly encouraged to conduct its own inspection and investigation of the Property Conditions referred to above and is further encouraged to obtain, at its expense, expert advice as to such matters from professional inspectors and others. Purchaser acknowledges that as of Closing it has been given the full opportunity to inspect and investigate such Property Conditions to its own satisfaction or cause such an inspection and investigation by experts engaged by Purchaser. Purchaser represents to Seller that it is relying solely upon such inspections and investigations in connection with the purchase of the Property, and not upon any express or implied representations, guaranties, promises, statements, assurances or warranties of Seller or any of Seller's employees or agents as to such Property Conditions. Purchaser also understands and agrees that it is purchasing the Property without any obligation on the part of Seller to make any repairs, changes or alterations with respect to the Property or any of the Property Conditions.

 

Within ten (10) days following the Effective Date, Seller shall deliver to Purchaser all information in its possession or control regarding the Property, including without limitation, zoning materials, site plans, title insurance policies, title exceptions, surveys, environmental reports, geotechnical reports, engineering plans, utility reports and studies, governmental permits, wetlands studies, endangered species studies, traffic studies, and market reports.

	 
	 	5	 
	

	 

 

To the extent that Seller is providing Purchaser with information and documents with respect to the Property, Purchaser hereby acknowledges and agrees that this information and the materials and documents relating thereto, will be provided for their background value only, that they will not be relied upon by Purchaser or its professionals for any purpose, and that Seller has not made and will not make any representations or warranties as to the completeness, accuracy or validity of such information, materials and/or documents.

 

Notwithstanding the foregoing, Seller hereby represents to Purchaser that: (a) Due and appropriate action has been taken by Seller in order to authorize this transaction and to authorize the execution of this Contract, and (b) Seller is not subject to any pending action under the United States Bankruptcy Code.

 

8.  Representations and Warranties of Purchaser: Purchaser represents and warrants to Seller that:

 

(a)  Purchaser is a Georgia limited liability company and has authority to execute this Contract.

 

(b)  This Contract constitutes a valid and legally binding obligation of Purchaser, enforceable in accordance with its terms.

 

9.  Inspection Period; Required Items. 

 

(a)  Inspection Period. Purchaser shall have until 5:00 p.m., CST on 150th day following the Effective Date (the "Inspection Period") to satisfy itself as to the suitability and feasibility of the Property for Purchaser's intended uses. Purchaser may terminate this Contract upon written notice to Seller, delivered on or before the expiration of the Inspection Period, if, in its sole discretion, if it finds the Property unsuitable for any reason. Upon such termination Purchaser shall obtain a prompt refund of the Earnest Money. Failure of Purchaser to terminate this Contract by written notice to Seller before expiration of the Inspection Period shall constitute waiver of its right to terminate this Contract, except in the case of Seller's default or failure of a condition precedent to Closing. 

 

(b)  Required Items. Notwithstanding that Purchaser shall have the benefit of the Inspection Period to evaluate the Property, Purchaser must have ordered and received or completed the following items, or terminated this Contract in accordance with Section 9(a) above, within the time frames set forth below, in order to demonstrate that Purchaser is proceeding in good faith during the Inspection Period toward the purchase of the Property so as to justify Seller continuing to hold the Property off the open market:

 

(i)  Within fifteen (15) days following the Effective Date, Purchaser must have ordered a subsurface analysis of the Property. Purchaser shall diligently work to have such subsurface analysis substantially completed within ninety (90) days following the Effective Date; and 

 

	 
	 	6	 
	

	 

(ii)  Within fifteen (15) days following the Effective Date, Purchaser must have ordered a zoning letter relating to the Property from the appropriate zoning authority of the Metropolitan Government of Nashville and Davidson County. Purchaser shall diligently work to obtain the zoning letter within ninety (90) days following the Effective Date; and

 

(iii)  Within fifteen (15) days following the Effective Date, Purchaser must have ordered a study of off-site costs relating to the Property, which is to include but not be limited to, utilities, sewerage, signage, outfall lines, and right-of-way dedication. Purchaser shall diligently work to have such study substantially completed within ninety (90) days following the Effective Date; and

 

(iv)  Within sixty (60) days following the Effective Date, Purchaser must have ordered a Phase I environmental site assessment to evaluate the environmental status of the Property. This Phase I assessment must be completed within ninety (90) days following the Effective Date; and

 

(v)  Within thirty (45) days following the Effective Date, Purchaser shall deliver evidence to Seller that the equity ownership of Century South, LLC held by Carl Cofer and Robert Beauchamp has been conveyed to Bonneau Ansley or an affiliate thereof ("Affiliate"), or that an Affiliate has contracted to purchase the Century South, LLC property; provided however, should such negotiations regarding the equity ownership of Century South, LLC or the Century South, LLC property be terminated by either party thereto, Purchaser shall promptly (within five (5) business days) notify Seller thereof; and

 

(vi)  Within seventy-five (75) days following the Effective Date, Purchaser must have ordered an ALTA/ACSM survey and topographical survey of the Property (collectively the "Survey") certified to Seller, Purchaser and Title Company. The Survey must be completed within one hundred twenty (120) days following the Effective Date; and

 

(vii)  Within seventy-five (75) days following the Effective Date, Purchaser must have ordered a topographical and grading analysis of the Property. Purchaser shall diligently work to have such analysis substantially completed within one hundred twenty (120) days following the Effective Date; and 

 

(viii)  Within seventy-five (75) days following the Effective Date, Purchaser must have ordered an analysis of Federal and State issues relating to "wetlands," any creeks, or other waterways running through or adjacent to the Property, lake drainage issues, and water quality issues. Purchaser shall diligently work to have such analysis substantially completed within one hundred twenty (120) days following the Effective Date.

 

	 
	 	7	 
	

	 

For the foregoing items, where appropriate, Purchaser shall hire Barge, Waggoner, or another engineering firm acceptable to Purchaser, and shall share the results of these items with Seller promptly following completion of each.

 

In the event that Purchaser fails to comply with the above listed requirements within the time periods listed above, then Seller may, at Seller’s option, terminate this Contract by written notice to Purchaser, and the parties shall have no further obligations or liabilities hereunder, except those obligations and liabilities which survive the Closing or earlier termination of this Contract as specified herein. The foregoing time frames pertain only to the ordering and completion of the foregoing items. Purchaser shall have the benefit of the entire Inspection Period to evaluate the items described in 9(b)(i)-(vii) above, and may terminate in this Contract within the time period set forth in Section 9(a) if any of the foregoing are unsatisfactory to it for any reason. If Purchaser terminates this Contract in accordance with Paragraph 9(a) above, Purchaser shall return the Property to its condition as of the Effective Date; shall deliver to Seller any and all information provided by Seller to Purchaser as well as all surveys, soil test, engineering reports, site plans, feasibility studies, governmental applications and approvals and like items pertaining to the Property which Purchaser has produced or has had produced by the third parties during the pendency of this Contract (the "Studies"); and thereafter the parties shall have no further obligations or liabilities hereunder except those obligations and liabilities which specifically survive the termination of this Contract. 

 

(c)  Prior to Purchaser’s commencement of actual development of the Property, Purchaser must have caused a full, complete and final set of plans and specifications (the "Plans and Specifications") for the construction and installation of Hobson Road (as shown on the PUD Plan), all mass grading to be performed on the Property, and all other infrastructure improvements necessary for development of the Property ("Infrastructure"), to be prepared by Barge, Waggoner, or another engineering firm acceptable to Purchaser. Included in the Infrastructure and clearly labeled on the Plans and Specifications shall be the road right-of-way required for the construction and installation of Hobson Drive through the Property, all acceleration and deceleration lanes and traffic signalization, utility and drainage easements, storm water detention areas and any other areas to be released from the lien of Seller’s Deed of Trust (the "Excluded Areas") in consideration of Purchaser’s cash down-payment at the Closing.

 

10.  Title: Seller shall provide a commitment (with copies of all exceptions) (the "Title Commitment") from the Title Company for an owner’s title insurance policy in the amount of the Purchase Price within thirty (30) days of the Effective Date. Any title or Survey exceptions that appear on the Title Commitment or the Survey and not removed prior to the expiration of the Inspection Period shall be "Permitted Exceptions." Provided, however, Seller covenants and agrees with Purchaser that Seller will, at or before the Closing, pay, satisfy and remove all deeds of trust, mortgage instruments, liens, judgments, and other monetary encumbrances affecting the Property.

 

11.  Contingencies: 

 

(a)  Declaration. The parties acknowledge that the Property is part of an overall larger development as described in the P.U.D. Purchaser's ability to use the Property for its intended use may be contingent upon all owners of all property subject to the P.U.D. (herein, the "P.U.D. Owners"; all property subject to the P.U.D. is hereinafter referred to as the "P.U.D. Property") entering into a Declaration of Restrictive Covenants, Conditions, and Restrictions (the "Declaration"), which shall set forth, among other things, (i) uses for which the Property and P.U.D. Property may be utilized, (ii) the maintenance and repair obligations of the P.U.D. Owners, (iii) the kinds and amounts of insurance to be carried by the P.U.D. Owners, and (iv) such other matters as the parties shall deem appropriate. Purchaser, Seller, and the P.U.D. Owners shall have until the end of the Inspection Period to agree upon the scope and form of the Declaration. Upon agreement as to the scope and form of the Declaration, the same shall be attached and incorporated into this Contract via a written amendment executed by the parties. If the parties and P.U.D. Owners are unable to agree upon the form of the Declaration prior to the end of the Inspection Period, then Purchaser may, at its option, either (1) terminate this Contract by giving written notice thereof to Seller on or before the close of business on the expiration date of the Inspection Period, whereupon this Contract shall terminate, Purchaser shall be entitled to the return of the Earnest Money, and neither party shall have any further obligation hereunder, (2) proceed to Closing without the benefit of the Declaration, in which case Purchaser shall remit the entirety of the Purchase Price, adjusted as provided in this Contract and inclusive of Purchaser's closing costs, via wire transfer of immediately available funds to Seller at Closing, or (3) proceed to Closing without the benefit of the Declaration, with the Closing to occur as otherwise provided in this Contract (i.e., with a cash down payment and the Note for the remainder of the Purchase Price). In the event Purchaser elects to proceed pursuant to subpart (2) of the preceding sentence, the parties shall have no obligation to the other with respect to the Declaration, and all references thereto shall be deemed stricken from this Contract. Purchaser and Seller shall negotiate the form of the Declaration in good faith.

	 
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(b)  Loan Documents. Seller and Purchaser shall negotiate the form and scope of the Loan Documents in good faith, and must agree upon the same prior to the expiration of the Inspection Period. Without limiting the foregoing, the Loan Documents shall be drafted by Seller's counsel, and shall be in a form and substance similar to those utilized by third party lenders in comparable purchase money lending transactions. Seller shall submit an initial draft of the Loan Documents to Purchaser within thirty (30) days following the Effective Date. Purchaser shall review and respond to the initial draft of the Loan Documents within fifteen (15) days following receipt thereof. Seller and Purchaser shall use their good faith efforts to agree on the form of the Loan Documents within sixty (60) days following the Effective Date. Upon the parties' agreement as to the form and scope of the Loan Documents, the same shall be attached and incorporated into this Contract via a written amendment executed by the parties. It is specifically understood and agreed that the Deed of Trust shall not encumber the Excluded Areas, which shall be shown on the Plans and Specs, except as provided herein. In the event the parties are unable to agree as to the scope and form of the Loan Documents prior to the end of the Inspection Period, then Purchaser may, at its option, either (1) terminate this Contract by giving written notice thereof to Seller on or before the close of business on the expiration date of the Inspection Period, whereupon this Contract shall terminate, Purchaser shall be entitled to the return of the Earnest Money, and neither party shall have any further obligation hereunder, or (2) proceed to Closing without the benefit of the purchase money loan evidenced by the Loan Documents, in which case Purchaser shall be required to remit the entirety of the Purchase Price, adjusted as provided in this Contract and inclusive of Purchaser's closing costs, via wire transfer of immediately available funds to Seller at Closing. In the event Purchaser elects to proceed pursuant to subpart (2) of the preceding sentence, the parties shall have no obligation to the other with respect to the Loan Documents, and all references thereto shall be deemed stricken from this Contract. 

 

	 
	 	9	 
	

	 

(c)  Conditions to Closing. Purchaser’s obligation to close under this Contract shall be conditioned upon the following: (1) that Seller has performed all the obligations herein imposed on Seller, (2) that all representations and warranties made by Seller herein are true and correct as of the Closing Date, (3) that the Property is in the same condition as it was on the Effective Date (without limiting the generality of the foregoing, Seller agrees that Seller will not remove any timber, pulpwood, buildings or improvements from the Property), and (4) that Purchaser has received from its title insurance company a "marked" Commitment for Title Insurance showing that "good and marketable fee simple title" to the Property is vested in Purchaser at Closing, free and clear of all exceptions and matters other than the Permitted Exceptions and the Deed of Trust (unless Purchaser elects to pay the Purchase Price all cash at the Closing).

 

In the event one or more of the foregoing conditions to Closing have not for any reason been satisfied prior to or on the Closing Date, Purchaser shall have the right, at its option, to (1) terminate this Contract, without prejudice to any other rights or remedies available to Purchaser under this Contract, at law or in equity, or (2) extend the Closing Date until fifteen (15) days following satisfaction of such condition(s), but no longer than a total of ninety (90) days, by delivery of one or more written notices to Seller; if at the end of the 90-day period, one or more of the foregoing conditions to Closing have still not been satisfied, Purchaser shall have the right to proceed under clause (1) hereof.

It is acknowledged that the conditions precedent contained in this Contract are for the sole benefit of Purchaser and Purchaser may, in its sole discretion exercised by notice in writing to Seller at or before Closing, waive fulfillment of any one or more of such conditions and close hereunder without regard to the failure of such condition(s).

12.  Entry Upon Premises: During the term of this Contract and prior to the Closing Date, Purchaser shall have the right to enter (upon reasonable prior notice and without unreasonably disturbing Seller) upon the Property, personally or through agents, employees and contractors, for the purpose of performing the Survey, conducting soil and/or environmental tests, taking photographs and in general performing such other acts with respect to the Property and its environs as are deemed necessary or appropriate by Purchaser in its reasonable discretion. Subject to the terms of this Contract, Purchaser shall bear the costs of such acts and shall indemnify and hold Seller harmless against any and all losses, claims or expenses (including reasonable attorneys’ fees) resulting from damages caused by Purchaser, its agents, employees or contractors, for injuries or liabilities to third parties. Purchaser shall repair any damage caused by Purchaser or its agents, employees or contractors resulting from the entry permitted by this Paragraph 12 and restore the Property, to the extent reasonably possible, to the condition existing prior to such damage. The obligations assumed by Purchaser in this Paragraph 12 shall survive termination of this Contract.

 

Prior to entry upon the Property, Purchaser shall procure and continue in force from and after the date Purchaser first enters the Property, and continuing throughout the term of this Contract, Commercial General Liability Insurance with a limit of not less than One Million Dollars ($1,000,000.00) per occurrence, and Two Million Dollars ($2,000,000.00) in the aggregate. Seller shall be included as an additional insured under such Commercial General Liability Coverage. Proof of such insurance coverage shall be provided to Seller prior to Purchaser’s entry upon the Property. The provisions of this paragraph shall survive the Closing or any termination of this Contract.

	 
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13.  Risk of Loss: All risk of loss (except for the indemnity obligations of Purchaser pursuant to Paragraph 12 herein) with respect to the Property shall remain with the Seller until the Closing Date, after which all risk of loss shall be with Purchaser.

 

14.  Casualty or Condemnation: If at any time, subsequent to the Effective Date and prior to the Closing Date, all or any part of the Property is taken or appropriated by virtue of eminent domain or similar proceedings or is condemned for any public or quasi-public use or is destroyed by casualty, then Purchaser may terminate this Contract and receive a return of the Earnest Money. If this Contract is terminated, then Seller shall be entitled to receive all insurance proceeds or condemnation proceeds paid for that portion of the Property taken or destroyed. If Purchaser elects to maintain this Contract in full force and effect, then Purchaser shall be entitled to receive all insurance proceeds or condemnation proceeds paid for that portion of the Property taken or destroyed, and all such proceeds shall be held in escrow until Closing. 

 

15.  Default. If this transaction fails to close by reason of Seller's failure to perform its obligations hereunder, Purchaser shall have the right to: (i) a refund of the Earnest Money, or (ii) specific performance. If this transaction fails to close by reason of Purchaser's failure to perform its obligations hereunder, Seller shall have the right, as its sole and exclusive remedy, to retain the Earnest Money as full liquidated damages. The non-defaulting party shall also be entitled to recover its reasonable attorneys' fees and costs incurred as a result of the other party's breach or failure to perform. The parties acknowledge and agree that Seller's right hereunder to retain the Earnest Money as liquidated damages upon a default by Purchaser reflects the parties' mutual agreement that such amount represents a fair and reasonable measure of the damages that would be suffered by Seller for Purchaser's breach of this Contract, it being further agreed that the exact amount of such damages are incapable of ascertainment with mathematical precision and that the parties hereto are attempting and intending by such provision to establish a measure of damages that is fair and reasonable under the circumstances. Seller hereby waives the right to assert lack of mutuality in any proceeding for specific performance instituted by Purchaser hereunder.

 

16.  Notice: Any notice or consent authorized or required by this Contract shall be in writing and: (i) delivered personally; or (ii) sent postage prepaid by certified mail, return receipt requested; or (iii) sent by a nationally recognized overnight carrier that guarantees next day delivery, directed to the other party at the address set forth in this Paragraph 16 or such other parties or addresses as may be designated by either Purchaser or Seller by notice given from time to time in accordance with this Paragraph 16.

 

To Seller:    BF Enterprises, Inc.

         Attn: Brian P. Burns, Jr.

100 Bush Street, Suite 1250

San Francisco, California 94104

Fax: (415) 296-7125

E-mail: brianjr@bfeninc.com

	 
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With a copy to:    Laurence M. Papel

Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C.

211 Commerce Street

Suite 1000

Nashville, Tennessee 37201

Fax: (615) 744-5656

E-mail: lpapel@bakerdonelson.com

To Purchaser:      Ansley Investments, LLC

1307 Wesley Place, N.W.

Atlanta, GA 30327

Attn: Bonneau Ansley, Jr.

Fax: (404) 355-3817

E-mail: wbajr@aol.com

With a copy to:    Randolph A. Marks, Esq.

Marks & Williams, LLC

Two Midtown Plaza, Suite 1150

1349 West Peachtree Street

Atlanta, GA 30309

Fax: (404) 892-2824

Email: randymarks@mindspring.com

 

And a copy to:        Batson-Cook Development Company

700 Galleria Parkway, Suite 500

Atlanta, GA 30339

Attn: E.R. Michaels, Jr.

Fax: (770) 955-2742

Email: rmichaels@batsoncookdev.com    

Notice delivered pursuant to subsection (i) of this paragraph shall be deemed received upon completion of personal delivery. Notice given pursuant to subsections (ii) and (iii) of this paragraph shall be deemed delivered when placed in the hands of the appropriate carrier for delivery to recipient.

 

17.  Real Estate Commission. Neither party has contacted any real estate broker, finder or similar person in connection with the transaction contemplated hereby, except Phoenix Realty LLC of Murfreesboro TN (the "Broker"). Seller shall pay any commission or brokerage fee due to the Broker in accordance with a separate agreement entered into between Seller and the Broker. By execution hereof, the Broker agrees that any commission or brokerage fee shall be due only if, as, and when the Closing occurs, and that the commission or brokerage fee shall not be due or payable if the Closing fails to occur for any reason whatsoever, including a default by Seller, and further agrees that the Broker listed above shall look solely to the Seller for the payment of its respective commission or brokerage fee as described above. Purchaser and Seller each warrant and represent that no broker, finder, or agent is entitled to a commission or fee resulting from this transaction other than the Broker, and each party agrees to indemnify and hold the other harmless from and against the claim of any other broker, finder, or agent claiming through or under it.

	 
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18.  Benefit and Binding Effect. This Contract shall be binding upon and shall inure to the benefit of the parties hereto, their respective heirs, legal representatives, successors and assigns.

 

19.  Time of the Essence: Time is of the essence of this Contract.

 

20.  Governing Law: This Contract shall be governed by and construed in accordance with the laws of the State of Tennessee.

 

21.  Entire Contract: This Contract contains the entire contract between the parties hereto with respect to the matters to which it pertains and may be amended only by written agreement signed by both Purchaser and Seller.

 

22.  Headings/Drafting: The paragraph headings used herein are for convenience purposes only and do not constitute matters to be construed in interpreting this Contract. This Contract was drafted by Seller for convenience purposes only and shall not be construed for or against Seller on such basis.

 

23.  Assignment: Purchaser may assign this Contract, in whole or part, to an Affiliate of Purchaser without the prior written consent of Seller. For the purposes of this Section, "Affiliate" shall mean any entity which, directly or indirectly, controls or is controlled by or is under common control with Purchaser. For the purposes of this definition, "control" (including the correlative meanings of the terms "controlled by" and "under common control with"), shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of another entity, through the ownership of voting securities, partnership interests or other equity interests. Any other assignment of this Contract by Purchaser shall be subject to the prior written consent of Seller, which shall not be unreasonably withheld, provided Purchaser shall continue to remain fully liable for all the obligations of "Purchaser" hereunder. Seller may transfer ownership of the Property to an Affiliate of Seller prior to Closing, in which case Seller shall also assign, and such Affiliate shall assume, the obligations of Seller hereunder.

 

24.  Savings Clause: If any covenant or clause or portion thereof be deemed unenforceable by statute or by court decision, then only that portion which is so declared unenforceable shall be unenforceable and the remainder of this Contract shall survive in full force and effect.

 

25.  Execution: The "Effective Date" shall be the latest date that this Contract is executed by either party. This Contract may be executed in any number of counterparts, each of which shall be considered an original document. Fax signatures are acceptable.

 

(Signatures on following page)

 

	 
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IN WITNESS WHEREOF, the parties have executed this Contract on the dates set forth below.

 

Seller:  

BF Enterprises, Inc.

By: /s/ Brian P. Burns, Jr.        

Its: Senior Vice President            

Date: April 30, 2004        

Purchaser:

Ansley Investments, LLC

By: /s/ Bonneau Ansley, Jr.        

Its: Manager            

Date: April 30, 2004        

The Broker executes this Contract for the sole purpose of acknowledging and agreeing to the terms contained in Paragraph 17 above.

 

Phoenix Realty LLC of Murfreesboro TN

 

By:/s/ Laws Bouldin        

 

Its: Agent            

 

	

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EXHIBIT A

 

LEGAL DESCRIPTION

BEING a parcel of land in the Second Civil District, Nashville, Davidson County, Tennessee, located in the southwest quadrant of the intersection of Interstate 24 and Old Hickory Boulevard, and being more particularly described according to a survey of Barge, Waggoner, Sumner & Cannon, dated December 12, 1985 (File No. 8668#@*#225;15), as follows:

BEGINNING at a point in the westerly margin of Old Hickory Boulevard, said point being southerly 1,140 feet, more or less, from the centerline of I#@*#225;24, said point also being the northeast corner of the Gilroy Church of Christ as of record in Book 5210, Page 80, Register’s Office for Davidson County, Tennessee; thence leaving said westerly margin with a portion of the northerly line of the Gilroy Church of Christ, N 82° 28’ W, 168.33 feet to a point; thence, continuing with said northerly line and a portion of the northerly line of the property conveyed to Howard L. Paul by deed of record in Book 5231, Page 463, Register’s Office for Davidson County, Tennessee, N 82° 49’ W, 433.70 feet to a point; thence, with said northerly line of Paul property, N 82° 31’ W, 399.38 feet to an iron pin; thence with a portion of the northerly line of the property conveyed to James D. Gillespie, et al, by deed of record in Book 5047, Page 661, Register’s Office for Davidson County, Tennessee, N 81° 54’ W, 400.00 feet to an iron pin; thence leaving said northerly line with the easterly line of the property conveyed to Century South Associates by deed of record in Book 5734, page 543, Register’s Office for Davidson County, Tennessee, N 08° 09’ E, 789.92 feet to an iron pin; thence with the southerly line of the Century South Associates property, S 76° 22’ E, 829.79 feet to a point in the southerly margin of Hobson Drive; thence, with said southerly margin of Hobson Drive with a curve to the left 356.30 feet to a point, said curve having a central angle of 62° 30’ 00, a radius 326.63 feet, a tangent of 198.20 feet and a chord S 13° 29’ 32" E, 338.89 feet; thence continuing with said southerly margin, S 44° 44’ E, 37.45 feet to a point; thence crossing said Hobson Drive, N 21° 33’ E, 65.53 feet to a point in the northerly margin; thence, leaving said northerly margin with the easterly line of the property conveyed to Century South Associates by deed of record in Book 5734, page 543, Register’s Office for Davidson County, Tennessee, the following calls: N 27° 46’ E, 336.60 feet to a point; N 73° 08’ E, 224.94 feet to an iron pin in the southwesterly margin of I#@*#225;24; thence, with said southwesterly margin, S 16° 52’ E, 192.70 feet to an iron pin in the westerly margin of Old Hickory Boulevard; thence, with said westerly margin of Old Hickory Boulevard the following calls; S 03° 19’ E, 219.00 feet to an iron pin; S 78° 45’ E, 15.00 feet to an iron pin; S 11° 15’ W, 87.00 feet to a concrete monument; S 13° 55’ W, 199.41 feet to a concrete monument; S 74° 17’ E, 19.74 feet to an iron pin; S 16° 03’ W, 154.72 feet to the point of beginning, and containing 992,453 square feet or 22.78 acres, more or less according to said survey.

INCLUDED IN THE ABOVE DESCRIBED PARCEL, BUT EXPRESSLY EXCLUDED THEREFROM is a portion of Hobson Drive more particularly described according to said survey, as follows:

BEGINNING at a point in the westerly margin of Old Hickory, said point being 880 feet, more or less, southerly from the centerline of I#@*#225;24, said point also being at the intersection of the northerly margin of Hobson Drive and the westerly margin of Old Hickory Boulevard as shown on the plan of Hobson Park, as of record in Book 4460, Page 34, Register’s Office for Davidson County, Tennessee; thence, with said westerly margin of Old Hickory Boulevard S 13° 55’ W, 80.01 feet to a point at the intersection with the southerly margin of Hobson Drive; thence, with said southerly margin the following calls: N 75° 05’ W, 27.20 feet to a point; with a curve to the right, 392.65 feet to a point, said curve having a central angle of 30° 20’ 00", a radius of 741.66 feet, a tangent of 201.04 feet and a chord of N 59° 54’ 32" W, 388.08 feet; N 44° 44’ W, 47.45 feet to a point; thence, crossing said Hobson Drive, N 21° 33’ E, 65.53 feet to a point in the northerly margin of said Hobson Pike; thence, with said northerly margin the following calls: with a curve to the left, 427.65 feet to a point, said curve having a central angle of 30° 20’ 00", a radius of 807.77 feet, a tangent of 218.96 feet and a chord of S 59° 54’ 32" E, 422.67 feet; S 75° 04’ 32" E, 25.81 feet to the point of beginning, and containing 33,597 square feet or 0.77 acres, more or less, according to said survey.

 

Being the same property conveyed to BF Enterprises, Inc. by Quitclaim Deed from Boothe Financial Corporation, of record in Book 7452, page 897, Register's Office for Davidson County. 

 

 

 

	
 

		15

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