This excerpt taken from the REG 10-Q filed Aug 8, 2005.
Section 3.1 Capital Contributions.
(a) MCW LLCs Capital Contribution. MCW LLC is hereby admitted as a Member of the Company on the date hereof. On March 25, 2005, MCW LLC contributed $712,400,000 as a Cash Contribution to the Company so that the Company could pay its deposit pursuant to the Purchase and Sale Agreement. If necessary, contemporaneously with the execution and delivery of this Agreement, MCW LLC shall contribute cash as an additional Capital Contribution in an amount such that the total Capital Contributions made by MCW LLC shall be equal to its Percentage Interest of the total Capital Contributions made to the Company on or prior to the date hereof. Otherwise, the Company shall make a special cash distribution to MCW LLC in an amount such that after giving effect to such distribution, the Capital Contributions made by MCW LLC (less such distribution) shall be equal to its Percentage
Interest of the total Capital Contributions made to the Company (less such distribution) on or prior to the date hereof. MCW LLCs Capital Contribution(s) to the Company (less such distribution, if applicable) shall be set forth on Exhibit A. The Company shall use a portion of such Capital Contribution(s) to purchase the First Washington Portfolio.
(b) Regency Capital Contribution. Contemporaneously with the execution and delivery of this Agreement, Regency shall contribute cash as its Capital Contribution to the Company in the amount set forth on Exhibit A. The Company shall use a portion of such Capital Contribution to purchase the First Washington Portfolio.
(c) U.S. Manager Capital Contribution. U.S. Manager is hereby admitted as a Member of the Company on the date hereof. Contemporaneously with the execution and delivery of this Agreement, U.S. Manager shall contribute cash as its Capital Contribution to the Company in the amount set forth on Exhibit A using a portion of the due diligence fee payable to U.S. Manager pursuant to Section 6.5(f) hereof in connection with the acquisition of the First Washington Portfolio. The Company shall use a portion of such Capital Contribution to purchase the First Washington Portfolio.
(d) Percentage Interests. It is intended that the Percentage Interests of the Members shall be 64.95% for MCW LLC, 34.95% for Regency and 0.1% for U.S. Manager.
Section 3.2 Additional Capital Contributions.
(a) By Agreement. Regency may contribute New Projects and cash to the Company, and MCW LLC may contribute additional cash to the Company, in each case with the written approval of all the Members. Upon such contributions by the Non-Managing Members, Exhibit A to this Agreement shall be amended to reflect such contributions, and the Percentage Interests of each of the Members (including the U.S. Manager) shall be recalculated as of the date of such contribution (based solely on the amount of the New Projects and additional cash contributed to the Company by such Non-Managing Members) and set forth on such amended Exhibit A.
(b) Capital Calls. If at any time all the Members agree that additional funds are needed for any purpose, then U.S. Manager may make a written call on MCW LLC and Regency (the Non-Managing Members) to make Additional Capital Contributions (Call) in accordance with their respective Percentage Interests. Each Call shall specify:
(i) the aggregate amount of Additional Capital Contributions requested to be made by the Non-Managing Members;
(ii) a general description of the intended application of the Additional Capital Contributions being called;
(iii) the date on which Additional Capital Contributions are due (which date shall be not less than ten (10) Business Days after receipt by each of the Non-Managing Members of the Call from U.S. Manager); and
(iv) the Capital Contribution requested to be made by each of the Non-Managing Members, which shall equal the aggregate amount required by the Company multiplied by a fraction the (A) the numerator of which shall be such Non-Managing Members Percentage Interest at such time and (B) the denominator of which shall be the sum of the Non-Managing Members Percentage Interests at such time.
Each Additional Capital Contribution shall be paid to the Company on or before the due date in immediately available funds wired to an account of the Company at a financial institution selected by U.S. Manager. Upon such Additional Capital Contributions by the Non-Managing Members, Exhibit A to this Agreement shall be amended to reflect such Additional Capital Contributions, and the Percentage Interests of each of the Members (including the U.S. Manager) shall be recalculated as of the date of such Additional Capital Contribution (based solely on the amount of the additional cash contributed to the Company by such Non-Managing Members) and set forth on such amended Exhibit A.
(c) Default by a Member. In the event a Non-Managing Member defaults in making its portion of any Additional Capital Contribution by the last day specified in the Call (the Default Date), the unpaid amount being herein called the Contribution Deficiency, then such Non-Managing Member shall be deemed a Non-Contributing Member. U.S. Manager shall notify the non-defaulting Non-Managing Member within five (5) days after the Default Date and the non-defaulting Non-Managing Member (the Contributing Member) shall have the right, but not the obligation, to make a loan to the Non-Contributing Member up to the amount of the Contribution Deficiency bearing interest at a rate equal to the lesser of (i) the prime or base rate of interest of commercial lending announced from time to time by Bank of America, plus 5% per annum or (ii) the maximum rate permitted by applicable law. The Contributing Member may pay the amount of such loan directly to the Company, and from and after the date of such loan all distributions by the Company to the Non-Contributing Member shall be paid by the Company to the Contributing Member and applied first to accrued but unpaid interest and then principal on such loan. The loan (together with reasonable attorneys fees and expenses incurred by the Contributing Member in enforcing the loan) shall be secured by the entire Membership Interest of the Non-Contributing Member under the Uniform Commercial Code of the State of Delaware, and the Contributing Member shall have all the rights and remedies of a secured party thereunder. The Non-Contributing Member (i) hereby appoints the Contributing Member as its attorney-in-fact for the purpose of signing and filing any financing statements to perfect the Contributing Members security interest and (ii) agrees to take such other actions as may reasonably be required to perfect or enforce such security interest.
Section 3.3 Capital of the Company; Capital Accounts.
(a) Capital Account. Each Member shall have a Capital Account. Each Members Capital Account on the date of this Agreement is set forth on Exhibit A.
(b) Adjustments to Capital Account. Without limiting the generality of the foregoing, the Capital Account of each Member shall be increased by (i) the amount of any Additional Capital Contributions by the Member to the Company, and (ii) allocations to the Member of Profit (or items thereof pursuant to Article IV hereof), including all items of Company income and gain (including income and gain exempt from tax) specially allocated to
the Member pursuant to Section 4.2 and Section 4.3 of this Agreement, and (iii) the amount of any Company indebtedness assumed by such Member or which is secured by liens on any property distributed to such Member, and the Capital Account of each Member shall be reduced by (x) the Gross Asset Value of all property and the amount of all cash distributed to such Member pursuant to this Agreement, (y) allocations to the Members of Loss (or items thereof pursuant to Article IV hereof), including all items of Company deduction and loss specially allocated to such Member pursuant to Section 4.2 and Section 4.3 of this Agreement, and (z) the amount of any indebtedness of such Member assumed by the Company or which is secured by any property contributed by such Member to the Company.
(c) Compliance With Treasury Regulations. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulations. In the event U.S. Manager shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitations, debits or credits relating to liabilities that are secured by liens on contributed or distributed property or that are assumed by the Company or a Member), are computed in order to comply with such Treasury Regulations, U.S. Manager, with the approval of the Members, may make such modification, provided that it is not likely to have an adverse effect on the amounts distributed to any Member pursuant to Article VII hereof upon the dissolution of the Company. U.S. Manager, with the approval of the Members also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Companys balance sheet, as computed for book purposes, in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g), and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Treasury Regulations Section 1.704-1(b).
(d) Members Rights and Obligations Regarding Capital Contributions. No interest shall be paid by the Company on any Capital Contribution except as specifically provided herein. A Member shall not be entitled to demand the return of, or to withdraw, any part of its Capital Contributions or its Capital Account, or to receive any distribution, except as provided in this Agreement. No Member shall be liable for the return of the Capital Contributions of any other Member or the payment of interest thereon. No Member shall be obligated or permitted to make any contributions to the capital of the Company other than the Capital Contributions provided for in this Article III.