FIRST AMENDMENT TO PARTNERSHIP AGREEMENT

Exhibit 3.19

 

FIRST AMENDMENT TO PARTNERSHIP AGREEMENT

 

FIRST AMENDMENT TO PARTNERSHIP AGREEMENT, dated as of November 10, 1988, by and between Star Theatres of Michigan, Inc., a Delaware corporation (“Star”), and Loeks Michigan Theatres, Inc., a Michigan corporation (“Loeks”).

 

W I T N E S S E T H :

 

WHEREAS, the parties have entered into a Partnership Agreement dated as of August 30, 1988; and

 

WHEREAS, the parties desire to amend the Agreement as hereinafter set forth;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants made herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. All capitalized terms used herein shall have the respective meanings set forth in the Agreement unless otherwise specifically defined herein. All references herein to Sections refer to Sections in the Agreement.

 

2. Section 18.2(b) is amended to substitute the word “Assets” for the word “Liabilities” set forth at the beginning of the second to last line of page 40.

 

3. Section 25.1 is amended by adding the following Paragraphs (f), (g) and (h):

 

(f) All Losses sustained or incurred by any Star Indemnified Party (it being understood that if the Partnership sustains or incurs any Loss, the Star Indemnified Parties collectively shall be deemed to have sustained or incurred one-half of any such Loss) arising out of the dispossession of the Partnership from the Theatre Property located at 1136 South Rochester Road, Rochester Hills, Michigan 48063 (the “Winchester Mall Theatre Property”) or increased rent required to be paid by the Partnership under a renegotiated lease of the Winchester Mall Theatre Property, in the event that Loeks fails to obtain Non-Disturbance Agreements (as hereinafter defined) with respect to that certain Lease, dated as of January 3, 1980, by and between Wind Mall Realty, Inc., predecessor in interest to Winchester Mall Associates Limited Partnership, and Winchester Mall Associates, predecessor in interest to Loeks Winchester Theatres, Inc., as amended by Amendments dated May 27, 1983, August 30, 1984, May 13, 1985, and October 28, 1988 (collectively, the “Winchester Mall Lease”). “Non-Disturbance Agreements” shall mean agreements from the holders of each of the instruments listed on

 

Schedule 25.1(f) attached hereto covering the Winchester Mall Theatre Property or any interest of the Landlord therein in substantially the form of the Subordination, Non-Disturbance and Attornment Agreement attached as Exhibit I to the Amendment to the Winchester Mall Lease dated October 28, 1988. Loeks shall not be required to obtain a Non-Disturbance Agreement from the holder of any such instrument that is now or hereafter discharged of record.

 

Notwithstanding the foregoing, the indemnity obligation of Loeks as to matters specified in this Paragraph (f) shall be limited to the following time periods and amounts:

 

(i) If the Partnership is dispossessed from the Winchester Mall Theatre Property following foreclosure by the mortgagee prior to the earlier of (x) the end of the Lease Term, (y) 5 years from the Closing Date or (z) the date upon which Loeks has obtained all Non-Disturbance Agreements, an amount equal to $4.5 million multiplied by a fraction, the numerator of which is the number of months remaining in the 9-year period after the Closing Date (calculated to the nearest month) and the denominator of which is 108. Such amount shall bear interest at the Prime Rate and shall be paid by Loeks as follows:

 

(A) Within 5 days after the date of each Partnership Distribution, Loeks shall pay to Star an installment equal to 20% of the Partnership Distribution received by Loeks; provided, however, that if a Partnership Distribution includes Net Capital Proceeds (as hereinafter defined), Loeks shall pay to Star an installment equal to 100% of the Net Capital Proceeds included in such Partnership Distribution, less any amount paid under a Deed of Direction pursuant to Section 7. 2, plus 20% of the balance of such Partnership Distribution. “Net Capital Proceeds” shall mean the gross cash receipts from sales, exchanges or other dispositions of all or part of the assets of the Partnership or from borrowings by the Partnership, less the amount paid in connection with such sales, exchanges, dispositions or borrowings, including, without limitation, brokerage commissions, other transaction costs and payment of mortgage or other indebtedness secured by the assets in question.

 

(B) Loeks shall pay to Star the balance of such amount, together with any unpaid interest, 3

 

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years after the Partnership is dispossessed from the Winchester Mall Theatre Property.

 

(ii) If the Winchester Mall Lease is renegotiated by the Partnership in order to continue in possession following a foreclosure or a threat of foreclosure by the mortgagee prior to the earlier of (x) the end of the Lease Term, (y) 5 years from the Closing Date or (z) the date upon which Loeks has obtained all Non-Disturbance Agreements, an amount, payable on an annual basis, equal to one-half of the “Excess Costs” as defined herein. The “Excess Costs” shall be determined on or before February 28 of each year for the immediately preceding lease year ending January 31 (the “Lease Year”) as follows:

 

(A) The total amount of rent, common area charges and all other charges payable to the Landlord under the Winchester Mall Lease for the Lease Year shall be computed as though the Winchester Mall Lease had never been renegotiated. This amount shall be referred to herein as the “Alternative Rent Calculation.”

 

(B) The total amount of rent, common area charges and all other charges payable to the Landlord under the Winchester Mall Lease as renegotiated for the Lease Year shall be calculated. This amount shall be referred to herein as the “Actual Paid Rent.”

 

(C) The Alternative Rent Calculation shall be subtracted from the Actual Rent Paid, resulting in the “Excess Costs” for such Lease Year.

 

Loeks shall pay to Star one-half of the Excess Costs for the Lease Year together with a statement showing the calculations as set forth herein, on or before February 28 of each year during the unexpired initial term of the Winchester Mall Lease (without giving effect to any options to extend or renew) . Notwithstanding the foregoing, the aggregate amount payable by Loeks under this subparagraph (ii) shall not exceed the amount that would have been payable under subparagraph (i) above had the Partnership been dispossessed from the Winchester Mall Theatre Property in lieu of renegotiating the Winchester Mall Lease.

 

If the Partnership receives any damages, expenses or other amounts (“Recovery”) from the Landlord under the Winchester Mall Lease or any other third party in connection with the dispossession of the Partnership from the

 

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Winchester Mall Theatre Property, the Recovery shall be (i) paid to Loeks to the extent necessary to reimburse Loeks for any payments made under this Paragraph (f) or (ii) paid to Star to reduce any amount payable by Loeks under this Paragraph (f) . Any Recovery in excess of the amounts paid to Loeks or Star under (i) or (ii) shall be for the account of the Partnership.

 

(g) All Losses sustained or incurred by any Star Indemnified Party (it being understood that if the Partnership sustains or incurs any Loss, the Star Indemnified Parties collectively shall be deemed to have sustained or incurred one-half of any such Loss) arising out of the dispossession, in whole or in part, of the Partnership from the Theatre Property located at Sears Lincoln Park Shopping Center, 1748 Dix, Lincoln Park, Michigan 48063 (the “Lincoln Park Theatre Property”), due to any violation of that certain Building Line Agreement, dated July 1, 1957, between Cecil P. Bronston, as successor co-trustee of The Supplemental Savings and Retirement Plan of Sears, Roebuck and Co. Employees, and Lincoln Park Shopping Center, recorded August 29, 1957, in Liber 13490, page 261, Wayne County Records (the “Building Line Agreement”).

 

Notwithstanding the foregoing, the indemnity obligation of Loeks as to matters specified in this Paragraph (g) shall be limited to the following time period and amount: if the Partnership is dispossessed from the Lincoln Park Theatre Property prior to the earlier of (x) the end of the Lease Term or (y) 5 years from the Closing Date, (A) $4.5 million multiplied by a fraction, the numerator of which is the number of months remaining in the 9-year period after the Closing Date (calculated to the nearest month) and the denominator of which is 108, multiplied by (B) a fraction, the numerator of which shall be the number of seats required to be eliminated from the Lincoln Park Theatre Property to cure the violation of the Building Line Agreement and the denominator of which shall be the total number of seats in the Lincoln Park Theatre Property immediately before seats were required to be eliminated from the Lincoln Park Theatre Property to cure the violation of the Building Line Agreement, plus (C) one-half of any construction or related costs incurred by the Partnership to cure the violation of the Building Line Agreement. Such amount shall bear interest at the Prime Rate, and shall be paid by Loeks as follows:

 

(i) Within 5 days after the date of each Partnership Distribution, Loeks shall pay to Star an installment equal to 20% of the Partnership Distribution received by Loeks; provided, however, that if a Partnership Distribution includes Net Capital

 

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Proceeds (as hereinafter defined), Loeks shall pay to Star an installment equal to 100% of the Net Capital Proceeds included in such Partnership Distribution, less any amount paid under a Deed of Direction pursuant to Section 7.2, plus 20% of the balance of such Partnership Distribution. “Net Capital Proceeds” shall mean the gross cash receipts from sales, exchanges or other dispositions of all or part of the assets of the Partnership or from borrowings by the Partnership, less the amount paid in connection with such sales, exchanges, dispositions or borrowings, including, without limitation, brokerage commissions, other transaction costs and payment of mortgage or other indebtedness secured by the assets in question.

 

(ii) Loeks shall pay to Star the balance of such amount, together with any unpaid interest, 3 years after the Partnership is dispossessed from the Lincoln Park Theatre Property.

 

If the Partnership receives any Recovery from the Landlord under the Lincoln Park Lease or any other third party in connection with the dispossession of the Partnership from the Lincoln Park Theatre Property, the Recovery shall be (i) paid to Loeks to the extent necessary to reimburse Loeks for any payments made under this Paragraph (g) or (ii) paid to Star to reduce any amount payable by Loeks under this Paragraph (g). Any Recovery in excess of the amounts paid to Loeks or Star under (i) or (ii) shall be for the account of the Partnership.

 

(h) All Losses sustained or incurred by any Star Indemnified Party and the Partnership arising out of or relating to the following tax liens: (i) federal tax lien in the amount of $72,062.55 against Winchester Mall Cinemas, Inc., dated April 13, 1983, recorded in Oakland County on April 21, 1983, in Liber 8360, page 316; (ii) state tax lien in the amount of $1,239.16, against Winchester Mall Cinemas, Inc., dated January 28, 1983, recorded in Oakland County on March 7, 1983, in Liber 8332, page 395; and (iii) state tax lien in the amount of $875.93 against Winchester Mall Cinemas, Inc., dated September 26, 1984, recorded in Oakland County on October 30, 1984, in Liber 8822, page 12.

 

4. Section 25.1(a)(iii) is amended by inserting the following language in the fifth line, following the word “Closing,” and before the word “except”:

 

including, without limitation, all liabilities and obligations of Loeks to Sign Craft, Inc., incurred or entered into on or before the Closing Date with respect to the construction of interior or exterior signage at

 

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the Lincoln Park Theatre Property (as hereinafter defined).

 

5. Section 25.4 is amended by inserting the following sentence after the first sentence of the paragraph:

 

Notwithstanding the foregoing, (i) claims under Section 25.1, Paragraphs (f) and (g) may be asserted within 5 years after the Closing, (ii) claims under Section 25.1, Paragraph (a)(iii) relating to signage at the Lincoln Park Theatre Property may be asserted within 5 years after the Closing, and (iii) claims under Section 25.1(h) may be asserted until the expiration of the Winchester Mall Lease.

 

6. Except as specifically provided herein, nothing contained in this First Amendment to Partnership Agreement shall be deemed to modify in any respect the terms, provisions, covenants, or conditions of the Agreement, and such terms, provisions, covenants, and conditions shall remain in full force and effect, as so modified.

 

7. This First Amendment to Partnership Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, legal representatives, permitted successors, and assigns.

 

8. This First Amendment to Partnership Agreement contains the sole and entire understanding and agreement of the parties with respect to its entire subject matter and all prior negotiations, discussions, representations, agreements, and understandings heretofore had between them with respect thereto are merged herein.

 

9. This First Amendment to Partnership Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this First Amendment to Partnership Agreement as of the day and year first above written.

 

 

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SCHEDULE 25.1(f)

 

1. A Mortgage and Security Agreement in the amount of $7,750,000 executed by Winchester Mall Associates Limited Partnership, a New Jersey limited partnership, to Balcor Pension Investors-VI, an Illinois limited partnership, dated December 30, 1985, recorded January 24, 1986, in Liber 9256, page 161.

 

2. A Second Mortgage, Security Agreement, Assignment of Rents and Leases, and Financing Statement in the amount of $1,800,000 executed by MIG Winchester Mall Associates Limited Partnership, a Michigan limited partnership, to San Jacinto Savings Association, dated November 28, 1984, recorded December 14, 1984, in Liber 8861, page 346.

 

3. A Purchase Money Junior Mortgage in the amount of $1,000,000 executed by Winchester Mall Associates Limited Partnership, a New Jersey limited partnership, to MIG Winchester Mall Associates Limited Partnership, a Michigan limited partnership, dated December 27, 1985, recorded January 24, 1986, in Liber 9256, page 209.

 

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SECOND AMENDMENT TO PARTNERSHIP AGREEMENT

 

SECOND AMENDMENT TO PARTNERSHIP AGREEMENT, dated as of November 16, 1992, to the Partnership Agreement, dated as of August 30, 1988 and amended as of November 10, 1988, by and between Star Theatres of Michigan, Inc., a Delaware corporation (“Star”) and Loeks Michigan Theatres, Inc., a Michigan corporation (“Loeks”).

 

W I T N E S S E T H :

 

WHEREAS, the parties entered into a Partnership Agreement dated as of August 30, 1988, which was amended by the First Amendment to Partnership Agreement dated as of November 10, 1988 (the “Partnership Agreement”); and

 

WHEREAS, James Loeks (“J. Loeks”) and Barrie Loeks (“B. Loeks”), the sole shareholders of Loeks, are, simultaneously with entering into this Second Amendment to Partnership Agreement, entering into an employment agreement (the “Employment Agreement”), dated as of November 16, 1992, with Sony Pictures Entertainment Inc. (“SPE”), an affiliate of Star; and

 

WHEREAS, Loews Theatre Management Corp. (“Loews”) is the Booking Agent (as defined in the Partnership Agreement) for the Partnership (as defined in the Partnership Agreement); and

 

WHEREAS, pursuant to the Employment Agreement, J. Loeks and B. Loeks will, as Chairmen of Loews, an affiliate of both Star and SPE, be in the position to make certain business decisions affecting the Partnership, which could create a conflict of interest due to J. Loeks and/or B. Loeks’ interests in Loeks;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants made herein and in the Employment Agreement and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. All capitalized terms used herein shall have the respective meanings set forth in the Partnership Agreement unless otherwise specifically defined herein. All references herein to Sections refer to Sections in the Partnership Agreement.

 

2. J. Loeks and B. Loeks each acknowledge that while their primary obligation shall be to Loews, they shall also continue to devote such time as they deem reasonably necessary to continue to fulfill their individual obligations and the obligations of Loeks

 

under the Partnership Agreement. Star acknowledges that J. Loeks and B. Loeks’ entering into the Employment Agreement and the performance of their obligations to Loews thereunder shall not be considered a violation of any of their obligations pursuant to the Partnership Agreement.

 

3. J. Loeks and B. Loeks each agree to use their best efforts to avoid any preferential treatment of the Partnership and/or Loeks, on the one hand, or Loews, on the other hand, to the detriment of the other, in their capacities as Chairmen of Loews and in Loews’ capacity as Booking Agent for the Partnership.

 

4. As of the date of this Agreement, Section 16.6 shall be amended to provide that the Operating Agent shall no longer be entitled to the annual fee of $100,000.

 

5. As of the date of this Agreement, Section 17.6 shall be amended to provide that the Booking Agent shall no longer be entitled to the annual fee of $100,000.

 

6. Article 26 shall be amended to provide that the addresses for notices to Star shall be as follows:

 

“Star Theatres of Michigan, Inc.

c/o Sony Pictures Entertainment Inc.

711 Fifth Avenue

New York, Hew York 10022

Attention: President

Telecopier: 212-702-7877

 

with a copy to:

 

Sony Pictures Entertainment Inc.

Thalberg Building

10202 W. Washington Blvd.

Culver City, California 90232

Attention: General Counsel

Telecopier: 310-280-1797”

 

and the following telecopier numbers shall be added to the following addresses for notice to Loeks:

 

for Loeks Michigan Theatres, Inc.:

 

“Telecopier: 616-940-0046”

 

for Charles E. McCallum, Esq.:

 

“Telecopier: 616-459-2611”

 

7. Except as specifically provided herein, nothing contained in this Second Amendment to Partnership Agreement shall be deemed to modify in any respect the terms, provisions, covenants, or

 

conditions of the Agreement, and such terms, provisions, covenants and conditions shall remain in full force and effect, as so modified.

 

8. This Second Amendment to Partnership Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, legal representative, permitted successors, and assigns.

 

9. This Second Amendment to Partnership Agreement contains the sole and entire understanding and agreement of the parties with respect to its entire subject matter and all prior negotiations, discussions, representations, agreements, and understandings heretofore had between them with respect thereto are merged herein.

 

10. This Second Amendment to Partnership Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Second Amendment to Partnership Agreement as of the day and year first above written.

 

 

 

Agreed to as of the date first above-written:

/s/ James loeks

JAMES LOEKS

/s/ Barrie Lawson Loeks

BARRIE LAWSON LOEKS

 

SONY PICTURES ENTERTAINMENT INC.
By:		/s/ Ronald N. Jacobi
		Ronald N. Jacobi
		Senior Vice President and
		General Counsel

 

 

THIRD AMENDMENT TO PARTNERSHIP AGREEMENT

 

THIRD AMENDMENT TO PARTNERSHIP AGREEMENT, dated as of March 9, 2000, by and between STAR THEATRES OF MICHIGAN, INC., a Delaware corporation (“Star”), and LOEKS & LOEKS ENTERTAINMENT, INC., a Michigan corporation (f/k/a Loeks Michigan Theatres, Inc.) (“Loeks”).

 

W I T N E S S E T H:

 

WHEREAS, the parties entered into a Partnership Agreement of Loeks-Star Partners (“Partnership”) dated as of August 30, 1988, which was amended by the First Amendment to Partnership Agreement dated as of November 10, 1988, and the Second Amendment to Partnership Agreement dated as of November 16, 1992 (the “Partnership Agreement”).

 

WHEREAS, the Partnership is a member of Star Southfield Center, LLC, a Michigan limited liability company (“Star Southfield”), which was a member of Southfield Restaurant Company, LLC, a Delaware limited liability company (“Restaurant Company”);

 

WHEREAS, Ark Southfield Corp., a Delaware corporation, was formerly a member of Restaurant Company, but withdrew as a member on March 9, 2000;

 

WHEREAS, Star Southfield has distributed a portion of its membership interest in Restaurant Company to the Partnership, and Partnership has sold such interest to Loeks; and

 

WHEREAS, the Partners desire to amend the Partnership Agreement to clarify the management authority of Loeks with respect to all matters related to Restaurant Company and to provide for special allocations of Partnership income and cash flow to Loeks with respect to the Minimum Rent paid under the terms of the Lease dated September 28, 1999, between Star Southfield and Restaurant Company, as amended (the “Lease”), and the value attributable to such Minimum Rent in the event of any sale of Star Southfield;

 

NOW, THEREFORE, in consideration of the mutual promises and covenants made herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. All capitalized terms used herein shall have the respective meanings set forth in the Partnership Agreement and the Lease unless otherwise specifically defined herein. All references herein to Sections refer to Sections in the Partnership Agreement.

 

2. Notwithstanding anything to the contrary contained in the Partnership Agreement, the Loeks Partner shall receive the following special allocations of Partnership income and cash flow:

 

(a) an amount equal to the Minimum Rent paid by Restaurant Company to Star Southfield under the Lease multiplied by Partnership’s percentage membership interest in Star Southfield, which special allocation of cash flow shall be distributed to the Loeks Partner by the Partnership no less often than quarterly, prior to any other Partnership Distributions made under Section 14.1; and

 

(b) in the event of any sale of Partnership’s membership interest in Star Southfield or any sale of all or substantially all of the assets of Star Southfield, an amount equal to the portion of the sale proceeds received by Partnership that is attributable to the value of the Minimum Rent payable by Restaurant Company under the Lease, which special allocation of cash flow shall be distributed to the Loeks Partner within thirty (30) days after such sale proceeds are received by the Partnership

 

The parties agree and acknowledge that the Minimum Rent payable by Restaurant Company under the Lease does not include the GR Rent payable under Article VIA of the Lease. Consequently, the GR Rent shall be paid by Restaurant Company to Star Southfield, and there shall be no special allocation to either Partner with respect to the GR Rent.

 

3. Star acknowledges and agrees that the Loeks Partner and James Loeks and Barrie Loeks, through their ownership of the Loeks Partner, shall be involved in the operation and management of Restaurant Company, and that this involvement may result in actual or potential conflicts of interest. Star expressly agrees that the existence of such actual or potential conflicts of interest shall not be a basis for any claims by Star against the Loeks Partner, James Loeks or Barrie Loeks; provided, however, that Restaurant Company shall operate the restaurants in accordance with the terms of the Lease, which shall not be assigned, amended or terminated without Star’s prior written consent, which shall not be unreasonably withheld or delayed. If Star receives a written request for consent and fails to respond in writing within fourteen (14) days, Star shall be deemed to have granted its consent provided such request contains the following admonition: “If you fail to respond to this request within fourteen (14) days after receipt of this request, you shall be deemed to have granted your consent.”

 

4. Except as specifically provided herein, nothing contained in this Third Amendment to Partnership Agreement shall be deemed to modify in any respect the terms, provisions, covenants, or conditions of the Partnership Agreement, and such terms, provisions, covenants, and conditions shall remain in full force and effect, as so modified.

 

5. Article 26 of the Partnership Agreement shall be amended to provide that the addresses for notices to Star shall be as follows:

 

Star Theatres of Michigan, Inc.

c/o Loews Cineplex Entertainment Corporation

711 Fifth Avenue

New York, New York 10022

Attn: President

Telecopier: (212) 833-6375

 

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with a copy to:

 

its General Counsel at the same address

Telecopier: (212) 833-6222

 

6. This Third Amendment to Partnership Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, legal representatives, permitted successors, and assigns.

 

7. This Third Amendment to Partnership Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one in the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Third Amendment to Partnership Agreement as of the day and year first above written.

 

 

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FOURTH AMENDMENT TO PARTNERSHIP AGREEMENT

 

FOURTH AMENDMENT TO PARTNERSHIP AGREEMENT (“Fourth Amendment”), dated as of April 2, 2002, by and between STAR THEATRES OF MICHIGAN, INC., a Delaware corporation (“Star”), LOEKS & LOEKS ENTERTAINMENT, INC., a Michigan corporation (f/k/a Loeks Michigan Theatres, Inc.) (“Loeks”), and LOEKS ACQUISITION CORP. (“Acquisition Corp.”)

 

W I T N E S S E T H :

 

WHEREAS, Star and Loeks (or their predecessors) entered into a Partnership Agreement of Loeks-Star Partners, a Michigan general partnership (“Partnership”), dated as of August 30, 1988, which was amended by the First Amendment to Partnership Agreement dated as of November 10,1988, the Second Amendment to Partnership Agreement dated as of November 16, 1992, and the Third Amendment to Partnership Agreement dated as of March 9, 2000 (the “Third Amendment”) (collectively, the “Partnership Agreement”).

 

WHEREAS, pursuant to a Purchase Agreement among Acquisition Corp., Loeks, Barrie Lawson Loeks and James J. Loeks (the “Purchase Agreement”), on the date of this Amendment Loeks has sold and transferred all of its partnership interest in the Partnership to Acquisition Corp., except the rights retained by Loeks described in this Fourth Amendment;

 

WHEREAS, the rights retained by Loeks include a 1% capital interest in the Partnership and certain management and economic rights with respect to the Partnership’s interest in Star Southfield (as defined in the Third Amendment), among other things; and

 

WHEREAS, the parties desire to amend the Partnership Agreement to delineate the interest and rights of Loeks in the Partnership.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants made herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Definitions. For purposes of this Fourth Amendment, the following terms shall have the meanings specified or referred to in this Section 1. All other capitalized terms used herein shall have the respective meanings set forth in the Partnership Agreement or in the text of this Fourth Amendment.

 

“Adverse Consequences” has the meaning set forth in the Purchase Agreement.

 

“Affiliate” has the meaning set forth in the Purchase Agreement.

 

“Assumed Liabilities” has the meaning set forth in the Purchase Agreement.

 

“Closing Statement” has the meaning set forth in the Purchase Agreement.

 

“Effective Date” has the meaning set forth in the Purchase Agreement.

 

“Employees” has the meaning set forth in the Purchase Agreement.

 

“Estimated Payment” has the meaning set forth in the Purchase Agreement.

 

“Loeks Management Rights” means the management and approval rights of Loeks as set forth in Section 5 of this Fourth Amendment.

 

“Management Employees” has the meaning set forth in the Purchase Agreement.

 

“Office Sublease” means the Sublease dated September 1, 2001, between Restaurant Company, as sublandlord, and Loeks, as subtenant, for office space located within the premises described in the Restaurant Lease, the subtenant’s interest in which has been assigned to and assumed by the Partnership under the Purchase Agreement.

 

“Post Closing Income Statement” has the meaning set forth in the Purchase Agreement

 

“Restaurant Company” means Star Southfield Restaurant Company, LLC, a Delaware limited liability company.

 

“Restaurant Lease” means the Lease dated as of September 28, 1999, between Star Southfield, as landlord, and Restaurant Company, as tenant, as amended by a First Amendment to Lease dated as of March 9, 2000, and a Second Amendment to Lease dated December 3, 2001, for certain premises located in Southfield, Michigan.

 

“Retained 1% Interest” means a 1% interest in the capital of the Partnership, without (a) any other interest in income, gains, profits or losses, (b) any right to receive distributions, other than a distribution upon liquidation that is limited to a 1% interest in the capital of the Partnership, (c) any right to vote, consent or participate in the management of the Partnership, and (d) any other rights under the Michigan Uniform Partnership Act.

 

“Second Closing” has the meaning set forth in the Purchase Agreement.

 

“Security Employees” has the meaning set forth in the Purchase Agreement.

 

“Shareholders” has the meaning set forth in the Purchase Agreement.

 

“Star Southfield” means Star Southfield Center, L.L.C., a Michigan limited liability company.

 

“Star Southfield Interest” means the interest in the Partnership consisting of Loeks’ right to receive the special allocations to Loeks set forth in Section 3 of this Fourth Amendment.

 

“Star Southfield Receivable” means the principal balance of, and accrued interest on, all amounts owed to the Partnership by Star Southfield as of the Effective Date, as reflected in the Company’s balance sheet as of the Effective Date, plus additional interest accrued on such principal balance from the Effective Date through the date of Star Southfield’s payment of such principal balance to the Partnership.

 

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2. Interests Retained by Loeks. Subject to the terms of the Purchase Agreement, on the date of this Fourth Amendment Acquisition Corp. shall succeed to all of Loeks’ rights, interests, liabilities, and obligations as a Partner under the Partnership Agreement, except for (a) the Retained 1% Interest, (b) the Star Southfield Interest, (c) the Loeks Management Rights, (d) Loeks’ other rights and obligations set forth in this Fourth Amendment and (e) the indemnification rights provided for under the Partnership Agreement for the actions or omissions of Loeks as Operating Agent.

 

3. Special Allocations with Respect to Star Southfield Interest. Notwithstanding anything to the contrary contained in the Partnership Agreement, Loeks and Star shall each receive, as a special allocation, 50% of all rights, interests, liabilities and obligations related to the Partnership’s interest in Star Southfield, including, without limitation, (a) 50% of all income, gains, profits, and losses allocated to the Partnership by Star Southfield, (b) 50% of the net proceeds received by the Partnership in connection with any sale or other disposition of the Partnership’s interest in Star Southfield, (c) 50% of all distributions made to the Partnership by Star Southfield, including, without limitation distributions made in connection with any sale or other disposition of the assets of Star Southfield or the liquidation of Star Southfield, and (d) 50% of all Partnership “excess nonrecourse liabilities,” as that term is defined by Treas. Reg. Section 1.752-3(a)(3), but solely to the extent such excess nonrecourse liabilities relate to Star Southfield liabilities and only for the purpose of determining Loeks’ share of Partnership liabilities for federal income tax purposes under Section 752 of the Code. Notwithstanding anything to the contrary contained in the Partnership Agreement, Loeks shall also receive the special allocations with respect to Star Southfield, Restaurant Company, and the Lease provided for in Section 2 of the Third Amendment, which special allocations shall be in addition to the 50% allocation described in the previous sentence. Loeks and Star acknowledge that any special allocation to which they are entitled upon any sale or other disposition of the Partnership’s interest in Star Southfield or any sale of all or substantially all the assets of Star Southfield shall only be made after any required satisfaction of indebtedness associated with such assets or interests.

 

4. Operating Agent. Subject to the terms of the Purchase Agreement, Loeks shall continue to be the Operating Agent of the Partnership, with all of the rights, powers, duties and obligations set forth in Article 16 of the Partnership Agreement, through June 30, 2002. Effective on July 1, 2002, Star shall become the Operating Agent and shall succeed to, assume and perform all of such rights, powers, duties and obligations, except as otherwise described in this Fourth Amendment.

 

5. Loeks Management Rights. Notwithstanding anything to the contrary contained in the Third Amendment, until the Second Closing Loeks shall have the sole discretion and exclusive authority to take any and all actions on behalf of the Partnership with respect to Restaurant Company, the Restaurant Lease and the premises covered by the Restaurant Lease, including, without limitation, the right to enter into agreements and amendments on behalf of the Partnership or Star Southfield with respect thereto, without any consent from Star or Acquisition Corp. Notwithstanding the foregoing, Loeks shall not amend Section 5.01 of the Principal Business Terms of the Restaurant Lease or Section 5.01 (b) of the Restaurant Lease or enter into any new lease or occupancy agreement with respect to the premises covered by the Restaurant Lease that does not contain provisions the same as Section 5.01 of the Principal Business Terms

 

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of the Restaurant Lease and Section 5.01(b) of the Restaurant Lease without the prior written consent of Star and Acquisition Corp., and Loeks shall not enter into any agreement or take any action on behalf of the Partnership with respect to Restaurant Company, the Restaurant Lease or the premises covered by the Restaurant Lease, without first obtaining any and all consents required under the mortgage loan to Star Southfield. Neither Star nor Acquisition Corp. shall enter into any agreement or take any action on behalf of the Partnership with respect to the sale or other disposition of the Partnership’s interest in Star Southfield, or the sale or other disposition of any substantial portion of the assets of Star Southfield, without the prior written consent of Loeks.

 

6. Conflicts. Star and Acquisition Corp acknowledge and agree that Loeks and James Loeks and Barrie Loeks, through their ownership of Loeks, are involved in the ownership, operation and management of Restaurant Company, and that this involvement may result in actual or potential conflicts of interest. Star and Acquisition Corp. expressly agree that the existence of such actual or potential conflicts of interest shall not be a basis for any claims by Star or Acquisition Corp. against Loeks, James Loeks or Barrie Loeks.

 

7. Auburn Hills Property Tax Appeal. The Partnership shall pay to Loeks 50% of any refunds, interest and other amounts recovered by the Partnership (to the extent such amounts are not reflected in any of (i) the balance sheet of the Company delivered in connection with the Estimated Payment, (ii) the Closing Statement, or (iii) the Post Closing Income Statement) as a result of property tax appeals for any tax year beginning prior to the date hereof with respect to the Partnership’s property in Auburn Hills, Michigan, net of any expenses (including legal fees) incurred by the Partnership to pursue such appeals or to otherwise obtain such refunds, interest and other amounts. This Section 7 shall apply to both appeals by the Partnership with respect to its own property and appeals by the owner of the surrounding property at Great Lakes Crossings Mall to the extent that the latter appeals result in a refund, interest or other recovery by the Partnership for any tax year beginning prior to the date hereof. Any refund, interest or other recovery attributable to the tax year that includes the date hereof shall be prorated on a calendar year basis, and Loeks shall be entitled to 50% of any refund, interest and other amounts recovered that are attributable to the portion of the tax year through the date hereof, net of expenses as provided above. The obligations of the Partnership to Loeks under this Section 7 shall survive any transfer or termination of the Retained 1% Interest, the Star Southfield Interest, or the Loeks Management Rights.

 

8. Star Southfield Receivable. The Partnership shall pay Loeks 50% of the amounts collected on account of the Star Southfield Receivable as amounts are received by the Partnership in payment of the Star Southfield Receivable. Within five business days after the Partnership’s collection of any portion of the Star Southfield Receivable, 50% of the amount collected shall be paid by the Partnership to Loeks. The obligations of the Partnership to Loeks under this Section 8 shall survive any transfer or termination of the Retained 1% Interest, the Star Southfield Interest, or the Loeks Management Rights.

 

9. Severance. The Partnership shall pay severance in accordance with Section 4.4(d) of the Purchase Agreement to those Transferred Employees whose employment with the Partnership is terminated by the Partnership.

 

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10. Assumed Liabilities. The Partnership shall assume and pay, perform and discharge, when due, the Assumed Liabilities. The obligations of the Partnership under this Section 10 shall survive any transfer or termination of the Retained 1% Interest, the Star Southfield Interest, or the Loeks Management Rights.