Exhibit 10.2
BRE/CSL II L.L.C.
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
Dated as of June 30, 2003
BRE/CSL II L.L.C.
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of
June 30, 2003 by and among BRE/CSL HOLDINGS II L.L.C., a Delaware limited
liability corporation ("Blackstone Member") and CAPITAL SENIOR LIVING
PROPERTIES, INC., a Texas corporation ("CSL Member") (collectively, the
"Members").
Preliminary Statement
Blackstone Member formed BRE/CSL II L.L.C. (the "Company") pursuant to
the provisions of the Act (as defined below).
The Members are executing this Amended and Restated Limited Liability
Company Agreement (the "Agreement") for the purpose of continuing the Company
pursuant to the provisions of the Act (as defined below).
Agreement
Accordingly, in consideration of the mutual promises and agreements
herein made and intending to be legally bound hereby, the parties hereto agree
as follows:
ARTICLE I
Definitions
Section 1.1. Definitions. Unless the context otherwise requires, the
following terms shall have the following meanings for purposes of this
Agreement:
"Act" means the Delaware Limited Liability Company Act, 6 Del.
C.ss.ss.18-101, et seq., as it may be amended from time to time, and
any successor to such statute.
"Acquisition Fee" has the meaning set forth in Section 5.8(b).
"Additional Capital Contribution" shall mean all Capital
Contributions made by the Members after the Initial Capital
Contributions, including any Contributing Member Capital Contributions.
"Adjusted Capital Account Deficit" shall mean, with respect to
any Member, the deficit balance, if any in such Member's adjusted
Capital Account as of the end of the relevant Fiscal Year, after giving
effect to the following adjustments: (i) crediting to such Capital
Account any amounts that such Member is obligated to restore pursuant
to Regulations sections 1.704-2(g) and 1.704-2(i)(5) or pursuant to any
provision of this Agreement and (ii) debiting to such Capital Account
the items described in Regulations sections 1.704-1(b)(2)(ii)(d)(4),
(5), and (6).
"Affiliate" with respect to any person means (i) any other
person who controls, is controlled by or is under common control with
such person, (ii) any director, officer, partner or employee of such
person or any person specified in clause (i) above or (iii) any
immediate family member of any person specified in clause (i) or (ii)
above. As used in this definition, "control" (including its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"Agreement" means this Amended and Restated Limited Liability
Company Agreement, as it may be amended, supplemented, modified or
restated from time to time.
"Blackstone Member" means BRE/CSL Holdings II L.L.C. or any
Affiliate of the foregoing who replaces such member as a member
hereunder, or is admitted as an additional member hereunder.
"BREA" means Blackstone Real Estate Advisors III L.P., a
Delaware limited partnership.
"BREH" means Blackstone Real Estate Holdings III L.P., a
Delaware limited partnership.
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or
required by law to close.
"Call Deemed Liquidation" means, in connection with a CSL Call
Notice, a deemed sale by the Company of the Property and the other
Company Assets for the CSL Valuation Amount and the payment of all
Company liabilities (and liabilities secured by the Company Assets) on
the Call Closing Date and the distribution by the Company of the
resulting Capital Proceeds in accordance with this Agreement.
"Capital Account" has the meaning set forth in Section 6.3.
"Capital Contribution" means the amount of money and/or the
agreed upon fair market value of property contributed to the Company by
a Member or its predecessor in interest on the date of contribution and
shall include (i) the contributions of such Member made pursuant to
Sections 5.1 and 5.2, and (ii) a Member's payments made to third party
creditors of the Company with respect to Company obligations to the
extent such Member is required by this Agreement to make such
additional Capital Contributions, unless and until reimbursed by the
Company.
"Capital Proceeds" means (A) the cash or other consideration
received by the Company (including interest on installment sales when
received) as a result of (i) any sale, exchange, abandonment,
foreclosure, insurance award, condemnation, easement sale or other
similar transaction relating to any property of the Company, (ii) any
financing or refinancing relating to any property of the Company, (iii)
Capital Contributions to the Company upon admission of new members, in
each case less (B) any such cash which is applied to (i) the payment of
transaction costs and expenses, (ii) the repayment of debt of the
Company which is required under the terms of any indebtedness of the
Company or has been authorized by Blackstone Member, (iii) the repair,
restoration or other improvement of Company Assets which is required
under any contractual obligation of the Company or has been authorized
by Blackstone Member, and (iv) the establishment of reserves as
approved by Blackstone Member. "Capital Proceeds" shall also mean any
of the foregoing which are received by a partnership, limited liability
company or other vehicle in which the Company is a partner or investor
or in which the Company otherwise has an interest (including the
Property Entity), to the extent received by the Company as dividends or
distributions.
"Carrying Value" means, with respect to any Company Asset, the
asset's adjusted basis for federal income tax purposes, except that the
Carrying Values of all Company Assets shall be adjusted to equal their
respective fair market values, in accordance with the rules set forth
in Regulations Section 1.704-1(b)(2)(iv)(f), except as otherwise
provided herein, as of: (a) the date of the acquisition of any
additional Interest by any new or existing Member in exchange for more
than a de minimis Capital Contribution, other than pursuant to the
initial formation of the Company; (b) the date of the distribution of
more than a de minimis amount of Company Assets to a Member; or (c) the
date an Interest is relinquished to the Company; provided, however,
that adjustments pursuant to clauses (a), (b) and (c) above shall be
made only if such adjustments are deemed necessary or appropriate to
reflect the relative economic interests of the Members. The Carrying
Value of any Company Asset distributed to any Member shall be adjusted
immediately prior to such distribution to equal its fair market value
and depreciation shall be calculated by reference to Carrying Value.
The Carrying Value of any asset contributed (or deemed contributed
under Regulations Section 1.704-1(b)(1)(iv)) by a Member to the Company
will be the fair market value of the asset at the date of its
contribution thereto.
"Certificate" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute. Any reference herein to a
particular provision of the Code shall mean, where appropriate, the
corresponding provision in any successor statute.
"Company" means BRE/CSL II L.L.C., a Delaware limited
liability company.
"Company Assets" means all right, title and interest of the
Company in and to all or any portion of the assets of the Company and
any property (real or personal) or estate acquired in exchange therefor
or in connection therewith.
"Company Minimum Gain" shall have the meaning set forth for
"Partnership Minimum Gain" in Regulations section 1.704-2(d)(1) and
1.704-2(b)(2).
"Contributing Member" has the meaning set forth in Section
5.3.
"Contributing Member Additional Capital Contribution" has the
meaning set forth in Section 5.3.
"Contribution Agreement" means that certain Contribution
Agreement, dated June 30, 2003, pursuant to which CSL Member agreed to
contribute the Property to, or as directed by, the Company.
"CSL Member" means Capital Senior Living Properties, Inc., a
Texas corporation, or any Affiliate of the foregoing who replaces such
member, or is admitted as an additional member hereunder.
"Default Capital Contributions" has the meaning set forth in
Section 5.3.
"Dissolution Event" means any event which would cause a
dissolution of the Company pursuant to Section 18-801(a)(5) of the Act.
"Fiscal Period" means each calendar quarter.
"Fiscal Year" means the calendar year ending on December 31 of
each year.
"Initial Capital Contribution" means the contributions made by
Blackstone Member and by CSL Member pursuant to Section 5.1.
"Internal Rate of Return" means as of the date of a cash
distribution of proceeds by the Company, the rate of return (calculated
as provided below, taking into account the time value of money) which
(x) the total distributions received (excluding the Acquisition Fee)
and to be received by a Member represents on (y) the aggregate Capital
Contributions.
In determining the Internal Rate of Return, the
following shall apply:
(i) subject to the provisions of clause (ii) of this
definition, all present value calculations are to be made as
of the date such Capital Contributions were contributed or
deemed contributed to the Company;
(ii) all Capital Contributions shall be treated as
having been contributed to the Company on the first day of the
month during which a Member's funds or property were actually
delivered to the Company;
(iii) all distributions shall be treated as if
received on the last day of the month in which the
distribution was made;
(iv) all distribution amounts shall be based on the
amount of the distribution prior to the application of any
federal, state or local taxation to Members (including any
withholding or deduction requirements); and
(v) the rates of return shall be per annum rates and
all amounts shall be calculated on an annual basis on the
basis of a twelve month year.
"Interests" means a Member's share of the profits and losses
of the Company and a Member's right to receive distributions of Company
Assets.
"Liquidator" has the meaning set forth in Section 7.2.
"Management Agreement" means the Management Agreement between
the Company or the Property Entity and Manager substantially in the
form of the Management Agreement attached hereto as Exhibit A.
"Manager" means Capital Senior Living, Inc., a Texas
corporation.
"Major Action" means any of the following:
(i) any amendment to the terms of this Agreement or
the terms of any governing documents of any Property Entity,
provided that if an amendment (i) is required by a lender and
(ii) does not have a material adverse effect on CSL Member,
such amendment shall not be a Major Action;
(ii) a Sale Event, provided that if a Sale Event is
effected in accordance with Section 3.3, such Sale Event shall
not be a Major Action;
(iii) the admission of new Members to the Company
other than in connection with the admission of a new Member
which is a replacement manager (or an Affiliate of such
manager) of the Property after a termination of the Management
Agreement;
(iv) the hiring by the Company of a Member or
Affiliate of Member, provided that if such hiring is on market
terms such hiring shall not be a Major Action; and
(v) the acquisition of any additional properties
other than the Property.
"Members" means Blackstone Member, CSL Member and any other
person admitted to the Company as an additional or substitute member of
the Company in accordance with the provisions of this Agreement, until
such time as such person ceases to be a member of the Company as
provided herein.
"Member Nonrecourse Debt" shall have the meaning ascribed to
the term "Partner Nonrecourse Debt" in Regulations section
1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" shall have the meaning
ascribed to such term in Regulations section 1.704-2(i)(2).
"Member Nonrecourse Deductions" means any item of Company
loss, deduction, or expenditure under section 705(a)(2)(B) of the Code
that is attributable to a Member Nonrecourse Debt, as determined
pursuant to Regulations section 1.704-2(i)(2).
"Net Income (Loss)" for any Fiscal Period means the taxable
income or loss of the Company for such period as determined in
accordance with the accounting method used by the Company for federal
income tax purposes with the following adjustments: (i) all items of
income, gain, loss or deduction allocated pursuant to Section 6.5
(other than the last sentence of Section 6.5(a)) shall not be taken
into account in computing such taxable income or loss; (ii) any income
of the Company that is exempt from federal income taxation and not
otherwise taken into account in computing Net Income (Loss) shall be
added to such taxable income or loss; (iii) if the Carrying Value of
any asset differs from its adjusted tax basis for federal income tax
purposes, any depreciation, amortization or gain resulting from a
disposition of such asset shall be calculated with reference to such
Carrying Value; (iv) upon an adjustment to the Carrying Value of any
asset, pursuant to the definition of Carrying Value, the amount of the
adjustment shall be included as gain or loss in computing such taxable
income or loss; (v) if the Carrying Value of any asset differs from its
adjusted tax basis for Federal income tax purposes, the amount of
depreciation, amortization or cost recovery deductions with respect to
such asset for purposes of Net Income (Loss) shall be an amount which
bears the same ratio to such Carrying Value as the Federal income tax
depreciation, amortization or other recovery deductions bears to such
adjusted tax basis (provided that if the Federal income tax
depreciation, amortization or other cost recovery deduction is zero,
the Managing Member may use any reasonable method of purposes of
determining depreciation, amortization or other cost recovery
deductions in calculating Net Income (Loss)); and (vi) except for items
in (i) above, any expenditures of the Company not deductible in
computing taxable income or loss, not properly capitalizable and not
otherwise taken into account in computing Net Income (Loss) pursuant to
this definition shall be treated as deductible items.
"Non-Capital Proceeds" means (x) any cash or other
consideration received by the Company other than Capital Proceeds less
(y) any such cash that is applied to the establishment of reserves and
to expenses and capital expenditures of the Company.
"Non-Contributing Member" has the meaning set forth in Section
5.3.
"Nonrecourse Deductions" shall have the meaning ascribed to
such term in Regulations section 1.704-2(b)(1).
"Organizational Expenses" means all reasonable third-party
costs and expenses pertaining to the organization of the Company and
the registration, qualification or exemption of the Company under any
applicable federal, state or foreign laws.
"Permitted Transferee" means any corporation, partnership,
real estate investment trust or other entity (a "Vehicle"), or any
operating partnership of any Vehicle or any subsidiary of any such
Vehicle or operating partnership, in each case to which a portfolio of
real estate assets controlled by BREA and/or its Affiliates or CSL
Member and or/its Affiliates are being contributed.
"Proceeds" means the collective reference to Capital Proceeds
and Non-Capital Proceeds.
"Property" means the combined assisted living and independent
living facility located in Cottonwood, Arizona and commonly known as
Cottonwood Village, and all tangible and intangible real and personal
property owned by CSL Member (and being assigned to the Company or the
Property Entity) and related thereto.
"Property Entity" means BRE/Cottonwood L.L.C, a Delaware
limited liability company.
"Property Loan" means the collective reference to one or more
loans made to the Property Entity and/or the Company secured by a
mortgage or deed of trust or other collateral on the Property and/or
the Company's equity interests in the Property Entity, or any portion
thereof, and any extension, amendment, increase, restatement and/or
refinancing thereof pursuant to the terms of this Agreement.
"Regulations" means the regulations promulgated under the
Code.
"ROFO Acceptance Notice" has the meaning set forth in
subsection 3.3(b).
"ROFO Closing" has the meaning set forth in subsection 3.3(b).
"ROFO Deposit" has the meaning set forth in subsection 3.3(b).
"ROFO Minimum Sale Price" has the meaning set forth in
subsection 3.3(b).
"ROFO Offer Period" has the meaning set forth in subsection
3.3(b).
"ROFO Offer to Purchase" has the meaning set forth in
subsection 3.3(b).
"ROFO Outside Closing Date" has the meaning set forth in
subsection 3.3(b).
"ROFO Purchase Price" has the meaning set forth in subsection
3.3(b).
"ROFO Rejection Notice" has the meaning set forth in
subsection 3.3(b).
"ROFO Response Period" has the meaning set forth in subsection
3.3(b).
"ROFO Sale Notice" has the meaning set forth in subsection
3.3(b).
"ROFO Sale Period" has the meaning set forth in subsection
3.3(b).
"ROFO Valuation Amount" has the meaning set forth in
subsection 3.3(b).
"Sale Event" means any of the following transactions, whether
in one transaction or through a series of transactions: (A) a direct or
indirect sale, transfer, contribution or other disposition of the
Property or the other Company Assets; (B) a direct or indirect sale,
transfer, contribution or other disposition of all or any of the direct
or indirect interests in the Property Entity by the Company; (C) a
merger, consolidation, recapitalization, reorganization,
reclassification or other similar transaction involving the Company or
the Property Entity; or (D) a direct or indirect sale, transfer,
contribution or other distribution of the capital stock or other equity
interests, including without limitation an initial public offering, of
the Company or the Property Entity.
"Sharing Percentage" means the percentage interest of a Member
as set forth on Schedule A hereto, as amended from time to time in
accordance herewith.
"Tax Matters Member" shall have the meaning ascribed to such
term in Section 6.2.
"Transfer" shall have the meaning ascribed to such term in
Section 8.1.
Section 1.2. Terms Generally. The definitions in Section 1.1
shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The term
"person" includes individuals, partnerships, joint ventures,
corporations, trusts, governments (or agencies or political
subdivisions thereof) and other associations and entities. Unless the
context requires otherwise, the words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". The term "hereunder" shall mean this entire Agreement as a
whole unless reference to a specific section of this Agreement is made.
ARTICLE II
General Provisions
Section 2.1. Continuation. The Company is hereby continued under the
provisions of the Act. Each Blackstone Member is hereby designated as an
authorized person, within the meaning of the Act, to execute, deliver and file
the certificate of formation of the Company and any amendments and/or
restatements thereof (collectively, the "Certificate") and any other
certificates necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business. The execution by
any Blackstone Member of any of the foregoing certificates and (and any
amendments and/or restatements thereof) shall be sufficient.
Section 2.2. Members. Schedule A hereto contains the name, address and
Sharing Percentage of each Member as of the date of this Agreement. Schedule A
shall be revised from time to time to reflect the admission or withdrawal of a
Member or the transfer or assignment of interests in the Company in accordance
with the terms of this Agreement and other modifications to or changes in the
information set forth therein.
Section 2.3. Name. The Company shall conduct its activities under the
name of BRE/CSL II L.L.C. Any Blackstone Member shall have the power at any time
to change the name of the Company; provided, that the name shall always contain
the words "Limited Liability Company" or the letters "L.L.C." Prompt notice of
any such change shall be given to each Member.
Section 2.4. Term. The term of the Company commenced on the date of
filing the certificate of formation of the Company in accordance with the Act
and shall continue until December 31, 2053, unless sooner dissolved, wound up
and terminated in accordance with Article VII.
Section 2.5. Purpose; Powers. (a) The purpose of the Company shall be
(i) to consummate the transactions contemplated by the Contribution Agreement,
(ii) to form, acquire, encumber, dispose of or otherwise deal with the Property
Entity and to engage in any other business pertaining to the Property Entity,
(iii) to manage the Property Entity and, through the Property Entity, acquire,
manage, develop, operate, improve, rent, lease, encumber, dispose of or
otherwise deal with the Property and to engage in any other business pertaining
to the Property, (iv) incur indebtedness to finance or refinance the Company's
acquisition of the Property and (v) to do all things necessary or incidental to
any of the foregoing.
(b) In furtherance of its purposes, the Company shall have all powers
necessary, suitable or convenient for the accomplishment of its purposes, alone
or with others, including the following:
(i) to invest and reinvest the cash assets of the Company in
money-market or other short-term investments;
(ii) to have and maintain one or more offices within or
without the State of Delaware, and, in connection therewith, to rent or
acquire office space, engage personnel and compensate them and do such
other acts and things as may be advisable or necessary in connection
with the maintenance of such office or offices;
(iii) to open, maintain and close bank accounts and draw
checks and other orders for the payment of moneys;
(iv) to engage employees (with such titles and delegated
responsibilities as may be determined), accountants, consultants,
auditors, custodians, investment advisers, attorneys and any and all
other agents and assistants, both professional and nonprofessional, and
to compensate them as may be necessary or advisable;
(v) to form or cause to be formed and to own the Property
Entity;
(vi) to enter into, make and perform all contracts, agreements
and other undertakings as may be necessary or advisable or incident to
carrying out its purposes;
(vii) to xxx, prosecute, settle or compromise all claims
against third parties, to compromise, settle or accept judgment of
claims against the Company, and to execute all documents and make all
representations, admissions and waivers in connection therewith;
(viii) to distribute, subject to the terms of this Agreement,
at any time and from time to time to Members cash or investments or
other property of the Company, or any combination thereof;
(ix) to borrow money, and to cause the Property Entity to
borrow money whether secured or unsecured, and to make, issue, accept,
endorse and execute promissory notes, drafts, guarantees, bills of
exchange and other instruments and evidences of indebtedness, all
without limit as to amount, and to secure the payment thereof by
mortgage, pledge, or assignment of, or security interest in, the assets
then owned or thereafter acquired by the Company or any Property
Entity;
(x) to hold, receive, mortgage, pledge, lease, transfer,
exchange or otherwise dispose of, grant options with respect to, and
otherwise deal in and exercise all rights, powers, privileges and other
incidents of ownership or possession with respect to, all property held
or owned by the Company; and
(xi) to take such other actions necessary or incidental
thereto as may be permitted under applicable law.
Section 2.6. Place of Business. The Company shall maintain a registered
office at The Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000, or such other office within the State of Delaware
as directed by Blackstone Member. The Company shall maintain an office and
principal place of business at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 or at
such other place as may from time to time be determined by any Blackstone Member
as the Company's principal place of business. The name and address of the
Company's registered agent as of the date of this Agreement is The Corporation
Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx
00000.
ARTICLE III
Management and Operation of the Company
Section 3.1. Management. (a) The management, control and operation of
the Company and the formulation and execution of business and investment policy
shall be vested exclusively in Blackstone Member, and Blackstone Member shall
exercise all powers necessary and convenient for the purposes of the Company,
including those enumerated in Section 2.5, on behalf and in the name of the
Company and the Property Entity, in accordance with this Agreement. The
day-to-day management of the Property has been delegated to Manager pursuant to
the terms of the Management Agreement. The management fee for the Property is
set forth in the Management Agreement. Notwithstanding the foregoing, the
Company shall require the consent of CSL Member to take any Major Action.
(b) Upon the request of Blackstone Member, CSL Member shall confirm in
writing the authorization of Blackstone Member to take any action, other than a
Major Action, on behalf of and in the name of the Company and the Property
Entity.
(c) Without limiting the power and authority of Blackstone Member
stated above, Blackstone Member shall have the sole and absolute authority, on
behalf of the Company and the Property Entity, to take all actions and enforce
all remedies (including the right to terminate) under the Management Agreement.
(d) Any Member may call a special meeting of all Members, upon
reasonable notice to the other Member, provided that such special meeting occurs
not more than once per quarter. During such special meetings Members may raise
and jointly discuss any issues relating to the Company in accordance with this
Agreement. The foregoing restriction on the frequency of special meetings shall
not limit the Company's or Blackstone Member's right to obtain all information
relating to the operation and results of the Property from CSL Member or the
Manager.
Section 3.2. Certain Duties and Obligations of the Members (a) Subject
to the terms of this Agreement, the Members shall take all actions which may be
reasonably necessary or appropriate (i) for the formation and continuation of
the Company as a limited liability company under the laws of the State of
Delaware and (ii) for the development, maintenance, preservation and operation
of the business of the Company in accordance with the provisions of this
Agreement and applicable laws and regulations. The Members shall take all action
which is necessary to form or qualify the Company to conduct the business in
which the Company is engaged under the laws of any jurisdiction in which the
Company is doing business and to continue in effect such formation or
qualification. No Member shall take any action so as to cause the Company to be
classified for Federal income tax purposes as an association taxable as a
corporation and not as a partnership.
(b) No Member shall take, or cause to be taken, any action that would
result in any Members or any Affiliate of a Member having any personal liability
for the obligations of the Company. In connection with the Property Loan
obtained from time to time by the Company or the Property Entity, if required by
a lender thereunder, Capital Senior Living Properties, Inc. (the "CSL
Guarantor") and BRE/CSL Holdings II L.L.C. (the "Blackstone Guarantor"; either
the CSL Guarantor and the Blackstone Guarantor, individually a "Guarantor" and
collectively the "Guarantors") will enter into a customary non-recourse carve
out guaranty (the "Carve-out Guaranty"). Except as provided below, the CSL
Guarantor and the Blackstone Guarantor shall be fully protected and indemnified
and held harmless by the Company against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or nature whatsoever (including, without limitation,
reasonable attorneys' fees, costs of investigation, fines, judgments and amounts
paid in settlement, actually incurred by any such Guarantor in connection with
such action, suit or proceeding) (collectively, "Losses") relating to the
Carve-out Guaranty; provided, however, that any such Guarantor shall not be so
indemnified for liability under the Carve-out Guaranty to the extent that such
liability resulted from the acts or omissions of the party seeking
indemnification or its Affiliates. The indemnification provided by the Company
under this paragraph shall be recoverable only out of the assets of the Company,
and no Member shall have any personal liability on account thereof.
Notwithstanding anything to the contrary stated above, (i) if the Blackstone
Guarantor incurs any liability under the Carve-out Guaranty and such liability
is caused by (a) acts or omissions which would constitute a default or breach
under the Management Agreement or (b) any other acts or omissions of the CSL
Member or its Affiliates, the CSL Members shall indemnify and hold the
Blackstone Guarantor harmless from and against all if such liability and (ii) if
the CSL Guarantor incurs any liability under the Carve-out Guaranty and such
liability is caused by the acts or omissions of the Blackstone Member or its
Affiliates, the Blackstone Members shall indemnify and hold the CSL Guarantor
harmless from and against all if such liability.
(c) No Member shall be liable, responsible or accountable in damages or
otherwise to the Company or to any other Member for (a) any act performed within
the scope of the authority conferred on the Members by this Agreement except for
the gross negligence or willful misconduct of such Member in carrying out the
obligations of such Member hereunder, (b) such Member's failure or refusal to
perform any act, except those expressly required by or pursuant to the terms of
this Agreement, (c) such Member's performance of, or failure to perform, any act
on the reasonable reliance on advice of legal counsel to the Company or (d) the
negligence, dishonesty or bad faith of any agent, consultant or broker of the
Company selected, engaged or retained in good faith. In any threatened, pending
or completed action, suit or proceeding, each Member shall be fully protected
and indemnified and held harmless by the Company against all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, proceedings,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, reasonable attorneys' fees, costs of investigation, fines,
judgments and amounts paid in settlement, actually incurred by any such Member
in connection with such action, suit or proceeding) by virtue of its status as
Members or with respect to any action or omission taken or suffered in good
faith, other than liabilities and losses resulting from the gross negligence or
willful misconduct of the such Member; provided, however, that any such Member
shall not be so indemnified for any acts determined to be in contravention of
this Agreement or in breach of its fiduciary duties. The indemnification
provided by this paragraph shall be recoverable only out of the assets of the
Company, and no Member shall have any personal liability on account thereof.
Section 3.3. Sale Event; ROFO; CSL Call Right. (a) During the period
(the "Lockout Period") commencing on the date hereof and ending on the earlier
of (i) June 30, 2006 and (ii) a Sale Event relating to the "Amberleigh Property"
(as such term is defined in that certain Limited Liability Company Agreement of
BRE/CSL L.L.C. dated as of December 28, 2001) and all four "Properties" (as such
term is defined in that certain Amended and Restated Limited Liability Company
Agreement of BRE/CSL Portfolio L.L.C. dated as of June 13, 2002), the Company
shall be authorized to enter into or complete a Sale Event solely with the prior
written consent of all of the Members.
(b) After the expiration of the Lock-out Period, Blackstone Member (the
"Triggering Party") may give written notice (the "ROFO Sale Notice") to CSL
Member (the "Responding Party") stating that the Triggering Party desires to
enter into a Sale Event with respect to the Property and a statement of intent
to rely upon this Section 3.3(b). At the time of the ROFO Sale Notice, no
definitive Sale Event need be proposed.
(i) At any time within the 30-day period (the "ROFO Offer
Period") after receipt of the ROFO Sale Notice, the Responding Party
may give the Triggering Party a written notice (a "ROFO Offer To
Purchase") which shall set forth a valuation stating (A) the aggregate
dollar amount (with no reduction for the Property Loan) which the
Responding Party as a third party would be willing to pay for the
Property (the "ROFO Purchase Price") including an allocation of all
transaction expenses which would be paid for by the Responding Party,
including, prepayment premiums and expenses if applicable ("Transaction
Expenses") and (B) whether the Responding Party seeks to assume the
Property Loan secured by the Property.
(ii) At any time within the 30-day period (the "ROFO Response
Period") after receipt of the ROFO Offer To Purchase, the Triggering
Party, in its discretion shall either
(A) give the Responding Party written notice (the
"ROFO Acceptance Notice") advising the Responding Party that
the Triggering Party desires the Company to consummate (or to
cause the applicable Property Entity to consummate) a sale of
the Property to the Responding Party, without representation
or warranty of any kind other than as to the ownership of such
interests, free and clear of any liens and security interests;
or
(B) give the Responding Party written notice (the
"ROFO Rejection Notice") advising the Responding Party that
the Triggering Party has rejected the ROFO Offer To Purchase.
If the Triggering Party fails to give a ROFO Acceptance Notice or a
ROFO Rejection Notice prior to the expiration of the ROFO Response
Period, then the Triggering Party shall be deemed to have given a ROFO
Rejection Notice as of the date of expiration of the ROFO Response
Period.
(iii) If the ROFO Acceptance Notice is delivered to the
Responding Party, the Responding Party shall, within 30 days thereafter
deliver to the Triggering Party a non-refundable deposit (the "ROFO
Deposit") toward the purchase price to be paid by the Responding Party
in respect thereof in an amount equal to 5% of the ROFO Purchase Price,
which ROFO Deposit shall be delivered in the form of certified check or
wire transfer of immediate funds.
(iv) Upon delivery of the ROFO Deposit to the Triggering
Party, the Triggering Party and the Responding Party shall diligently
proceed to complete a sale (the "ROFO Closing") of the Property within
60 days of such required delivery, unless a longer period is required
for licensure requirements, which period shall not exceed 120 days from
the delivery of the ROFO Deposit (the "ROFO Outside Closing Date") at
an amount equal to the ROFO Purchase Price. The ROFO Deposit shall be
credited toward the ROFO Purchase Price. The ROFO Closing shall take
place at a location in New York City as designated by Blackstone
Member. At the ROFO Closing, the Company, the appropriate Property
Entity, and/or the Triggering Party, as applicable, shall execute and
deliver to Responding Party the assignments of interest, instruments of
conveyance, and other instruments as the Responding Party may
reasonably require, to give it title to the Property or the respective
Property Entity. The Responding Party may elect to retain any Property
Loan secured by the Property provided that (i) the Triggering Party is
released, if necessary, from any liability in connection with such
assumed Property Loan; (ii) the Responding Party stated its intention
to retain such Property Loan in the ROFO Offer to Purchase; and (iii)
the terms of such Property Loan permit, or the holder of such Property
Loan permits, such assumption.
(v) If the ROFO Rejection Notice is delivered or deemed
delivered to the Responding Party, the Triggering Party shall have the
right, on behalf of the Company and the Members, for a period ("ROFO
Sale Period") of 120 days after the date on which the ROFO Rejection
Notice was received by the Responding Party, to (A) cause a Sale Event
with respect to the Property to be consummated for a purchase price
which provides to the Company Capital Proceeds equal to more than the
Capital Proceeds that would have resulted from a sale to the Responding
Party pursuant to the ROFO Offer to Purchase (the "ROFO Minimum Sale
Price") and on such other non-economic terms as the Triggering Party
may determine; (B) cause a Sale Event with respect to the Property to
be consummated with the Responding Party, if still agreeable to the
Responding Party at that time, for the ROFO Purchase Price (with
Transaction Expenses being allocated as stated in the ROFO Offer to
Purchase), or (C) withdraw the ROFO Sale Notice. If the Triggering
Party desires at any time during the ROFO Sale Period to cause a Sale
Event with respect to the Property to be consummated for a purchase
price which is less than the ROFO Minimum Sale Price, or desires to
cause a Sale Event with respect to the Property to be consummated at
any time after the end of the ROFO Sale Period, the provisions of this
Section 3.3(b) shall be repeated.
(vi) If (A) the Responding Party fails to send a ROFO Offer To
Purchase within the ROFO Offer Period or (B) if the Responding Party
fails to deliver the ROFO Deposit to the Triggering Party within the
specified period or fails to close upon the purchase (the circumstances
described in (A) and (B) above, each being a "ROFO Default"), then the
Responding Party shall be deemed to have waived its right of first
offer with respect to the ROFO Sale Notice and shall, within five
Business Days of request by the Triggering Party, deliver a certificate
confirming such waiver (provided, however, that failure by the
Responding Party to deliver such certificate shall not negate such
waiver).
(vii) If a ROFO Default shall occur, CSL Member shall not have
any further rights under this Section 3.3(b) and Blackstone Member may
cause a Sale Event without the approval or other rights of CSL Members
and such Sale Event shall not constitute a Major Action.
(c) (i) At any time after the expiration of the Lock-Out Period, CSL
Member may give written notice (the "CSL Call Notice") to Blackstone Member
stating that CSL Member desires to purchase the interests of Blackstone Member
and stating its intention to rely upon the provisions of this Section 3.3(c).
The CSL Call Notice shall state (A) an aggregate dollar amount CSL Member would
be willing to pay for all the assets of the Company (the "CSL Valuation Amount")
including an allocation of all Transaction Expenses which would be paid for by
CSL Member, and (B) whether CSL Member seeks to assume the Property Loan. The
CSL Valuation Amount (and taking into account the allocation of Transaction
Expenses) shall not be less than that required to provide Blackstone Member with
a 21% Internal Rate of Return.
(ii) At any time within the 30-day period (the "CSL Call Offer
Period") after receipt of the CSL Call Notice, Blackstone Member, in
its sole discretion shall either:
(A) give CSL Member written notice (the "CSL
Acceptance Notice") advising CSL Member that Blackstone Member
desires to consummate a sale of Blackstone Member's interest
in the Company to CSL Member for the amount Blackstone Member
would have been entitled to receive if a Call Deemed
Liquidation occurred (the "CSL Purchase Price"); or
(B) give CSL Member written notice (the "CSL
Rejection Notice") advising CSL Member that Blackstone Member
desires to acquire CSL Member's interest in the Company for a
purchase price equal to the amount that CSL Member would have
been entitled to receive if a Call Deemed Liquidation occurred
(the "CSL Sale Price").
(iii) If the CSL Acceptance Notice is delivered to CSL Member,
CSL Member shall, within 30 days thereafter deliver to Blackstone
Member a non-refundable deposit toward the purchase price to be paid by
CSL Member in respect thereof in an amount equal to 10% of the CSL
Purchase Price (the "CSL Purchase Deposit"), which CSL Purchase Deposit
shall be delivered in the form of certified check or wire transfer of
immediate funds. Upon delivery of the CSL Purchase Deposit, Blackstone
Member and CSL Member shall diligently proceed to complete a sale (the
"CSL Closing") of Blackstone Member's interest in the Company within 60
days of such required delivery at the CSL Purchase Price. The sale of
Blackstone Member's interest in the Company shall be without any
representations or warranties, except as to the ownership of such
interests, free and clear of any liens and security interests. The CSL
Purchase Deposit shall be credited toward the CSL Purchase Price. The
CSL Closing shall take place at a location in New York City as
designated by Blackstone Member. At the CSL Closing, the Company and
Blackstone Member, shall execute and deliver to CSL Member the
assignments of interest, instruments of conveyance, and other
instruments as CSL Member may reasonably require, to give it title to
all of Blackstone Member's right, title and interest in and to the
Company and of the Company's right, title and interest in and to the
Property Entity. CSL Member may elect to retain any Property Loan
provided that (A) Blackstone Member is released or indemnified by CSL
Member (provided that the creditworthiness of CSL Member is reasonably
acceptable to Blackstone Member), if necessary, from any liability in
connection with such assumed Property Loan, (B) CSL Member stated its
intention to retain such Property Loan in the CSL Call Notice, and (C)
the terms of such Property Loan permit or the holder of such loan
permits such an assumption.
(iv) If the CSL Rejection Notice is delivered to CSL Member,
Blackstone Member shall deliver to CSL Member a deposit equal to 10% of
the CSL Sale Price (the "Blackstone Deposit") which Blackstone Deposit
shall be delivered in the form of certified check or wire transfer of
immediate funds. Upon delivery of the Blackstone Deposit, Blackstone
Member and CSL Member shall diligently proceed to complete a sale (the
"CSL Closing") of CSL Member's interest in the Company within 60 days
thereof at the CSL Sale Price. The Blackstone Deposit shall be credited
toward the CSL Sale Price. The sale of CSL Member's interest in the
Company shall be without any representations or warranties except as to
the ownership of such interests, free and clear of any liens and
security interests. The CSL Closing shall take place at a location in
New York City as designated by Blackstone Member. At the CSL Closing,
the Company and CSL Member, shall execute and deliver to CSL Member the
assignments of interest, instruments of conveyance, and other
instruments as Blackstone Member may reasonably require, to give them
title to all of CSL Member's right, title and interest in and to the
Company, and of the Company's right, title and interest in and to the
Property Entity. Blackstone Member may elect to retain any Property
Loan provided that (A) CSL Member is released or indemnified by
Blackstone member, if necessary, from any liability in connection with
such assumed Property Loan and (B) and the terms of such Property Loan
permit, or the holder of such loan permits such an assumption.
(d) Blackstone Member and CSL Member, shall pay their own legal fees in
connection with any sale of Interests or interests in the Property Entity to the
other Member(s) pursuant to this Section 3.3. All transfer, stamp and recording
taxes in connection with any such sale shall be paid as specified in the CSL
Call Notice.
(e) Remedies available for breach of obligations under Section 3.3
shall be, except as specified in Section 3.3(g), limited to the retention of the
Blackstone Deposit or the CSL Deposit, as the case may be, as liquidated
damages.
(f) Time is of the essence with respect to each and every time period
set forth in the Section 3.3.
(g) If after delivering a CSL Call Notice, CSL Member defaults in any
of its obligations set forth above, CSL Member shall thereafter have no further
right to deliver a CSL Call Notice or to otherwise invoke the provisions of
Section 3.3(c).
ARTICLE IV
Other Activities Permitted
Except as expressly provided hereunder, this Agreement shall not be
construed in any manner to preclude any Member or any of its Affiliates from
engaging in any activity whatsoever permitted by applicable law (whether or not
such activity might compete, or constitute a conflict of interest, with the
Company), including, without limitation, the provision of financial or
investment advisory services to any person, managing investments or receiving
compensation or profit from any of the foregoing.
ARTICLE V
Capital Contributions; Distributions
Section 5.1. Initial Capital Contributions. In accordance with the
Contribution Agreement, CSL Member contributed the Property to the Company and
Blackstone Member contributed cash to the Company in the amount set forth as the
Cash Contribution in the Contribution Agreement (the "Initial Capital
Contributions").
Section 5.2. Subsequent Fundings. (a) In addition to the Initial
Capital Contributions set forth in Section 5.1, in the event it is determined by
Blackstone Member that funds in excess of the Initial Capital Contributions, are
required (i) in connection with any of the purposes set forth in Section 2.5,
(ii) to pay for fees, costs or expenses payable by the Company pursuant to this
Agreement or (iii) otherwise to meet the Company's then existing obligations
and, in each case, funds are not otherwise available from Company revenues,
within 10 Business Days after notice from Blackstone Member, each of the Members
shall make further Capital Contributions pro rata in accordance with their
respective Sharing Percentages, which amounts shall be set forth in the books
and records of the Company.
(b) No Member shall be required to make a Capital Contribution except
as provided in this Article V. No Member shall have any obligation to restore
any negative balance in the Member's Capital Account upon liquidation of the
Company or the liquidation of a Member's interest in the Company. No Member
shall be entitled to withdraw all or any part of its Capital Contributions
except as expressly provided in this Agreement. No interest shall be payable by
the Company on the Capital Contributions of any Member except as otherwise
provided herein. In no event shall any Member be entitled to demand any property
from the Company other than cash.
Section 5.3. Member Loans for Failure to Fund Capital Contribution. If
any Member shall fail to timely make a Capital Contribution required pursuant to
paragraph (a) of Section 5.2 (such Member is hereinafter referred to as a
"Non-Contributing Member") and such default is not cured within 10 Business Days
of the written due date for such Capital Contribution, then any other Member (a
"Contributing Member") may fund all or part of such Capital Contribution and,
unless the Contributing Member otherwise elected the remedy of the dilution of
such Non-Contributing Member's Interest in the Company, as set forth in Section
5.4 below, any amounts funded by a Contributing Member on behalf of a
Non-Contributing Member shall be made directly to the Company but shall be
treated as (i) a non-recourse demand loan (except to the extent of the
Non-Contributing Member's interest in the Company) made by the Contributing
Member to the Non-Contributing Member (bearing interest at a rate of 18% per
annum, but in no event in excess of the maximum rate permitted by applicable
law), in each case with interest compounding annually, followed by (ii) a
Capital Contribution (a "Default Capital Contribution") by such Non-Contributing
Member to the Company. Any such non-recourse loan shall be repaid directly by
the Company on behalf of the Non-Contributing Member to the Contributing Member
only from Non-Capital Proceeds and Capital Proceeds otherwise distributable to
the Non-Contributing Member. Amounts paid directly by the Company to the
Contributing Member on account of the loan shall be deemed distributions to the
Non-Contributing Member. Any Non-Capital Proceeds and Capital Proceeds used to
repay such loan shall be applied first to interest on and then to principal of
such loan.
Section 5.4. Dilution for Failure to Fund Capital. (a) If a
Non-Contributing Member fails to contribute any amounts required to be
contributed pursuant to paragraph (a) of Section 5.2 above as and when required
to be contributed and such funds are contributed to the Company by a
Contributing Member, the Non-Contributing Member's Sharing Percentage shall be,
if the Contributing Member elects to apply the provisions of this Section in
lieu of the loan mechanism provided in Section 5.3, adjusted pursuant to Section
5.4(b) below as of the day on which the Contributing Member contributes such
funds. In such an event the contribution of such funds shall be treated as a
Capital Contribution to the Company by the Contributing Member.
(b) The Sharing Percentage of a Non-Contributing Member may be reduced
(but not below zero and subject to any restrictions in a Property Loan), upon
the election described in paragraph (a) above, by an amount equal to the product
of (i) 1.5 times (ii) a fraction expressed as a percentage, (A) the numerator of
which is the amount of the Capital Contribution which such Non-Contributing
Member fails to contribute and (B) the denominator of which is the aggregate of
the Capital Contributions made or to be made by the Members up to and including
such time, including the Capital Contribution which such Non-Contributing Member
fails to make. The Sharing Percentage of the Contributing Member shall be
increased by the amount of the reduction in the Sharing Percentage of the
Non-Contributing Member. In the event of an adjustment of the Sharing
Percentages as a result of this Section 5.4(b), the Capital Accounts of the
Members shall be readjusted such that the total capital of the Company is
allocated amongst the Members in accordance with their Sharing Percentages, as
so adjusted under this Section 5.4(b).
Section 5.5. Distributions Generally. (a) Except as otherwise
specifically required by this Section 5.5 and except as otherwise provided in
Sections 5.6(c) and 5.6(d), distributions shall be made in such amounts and at
such times as determined by Blackstone Member from time to time. Capital
Proceeds (other than distributions of Capital Proceeds in connection with the
sale of all of the assets of the Company) shall be distributed as soon as
practicable but in any event within 45 days after the date that such Proceeds
are received by the Company. Non-Capital Proceeds shall be distributed at such
times and intervals as determined by Blackstone Member, but in no event later
than 30 days after the end of each calendar quarter. The Company shall make such
distributions in cash among the Members in accordance with this Article V.
Section 5.6. Distribution of Proceeds. (a) Distribution of Non-Capital
Proceeds shall be made to the Members in accordance with their Sharing
Percentages. Distributions of Capital Proceeds (other than in connection with
the liquidation of the Company which shall be governed by Section 7.3) shall be
made to the Members as follows:
(i) to the Members in accordance with their Sharing
Percentages until the Members shall have received a 20% Internal Rate
of Return;
(ii) thereafter, 80% to the Members in accordance with their
Sharing Percentages and 20% to CSL Member, until Blackstone Member
shall have received a 25% Internal Rate of Return;
(iii) thereafter, 75% to the Members in accordance with their
Sharing Percentages and 25% to CSL Member.
(b) Intentionally Deleted.
(c) Capital Proceeds Support. After a Sale Event, if the aggregate
Capital Proceeds received by the Company attributable to such Sale Event is less
than the amount necessary for the Blackstone Member to achieve a 15% Internal
Rate of Return (the "Minimum Capital Proceeds Amount"), notwithstanding anything
to the contrary set forth in this Agreement, Capital Proceeds attributable to
such Sale Event and otherwise distributable to CSL Member shall be paid to
Blackstone Member until Blackstone Member has received Capital Proceeds that
would result in an 15% Internal Rate of Return to Blackstone Member. If a Sale
Event is consummated for less than all of the remaining Property owned directly
or indirectly by the Company, Blackstone Member shall have the right to cause
the Capital Proceeds otherwise distributable to CSL Member from such Sale Event
(less the portion of such Capital Proceeds necessary to pay income taxes payable
by CSL Member on such Sale Event) to be deposited into an account controlled by
Blackstone Member (the "Support Escrow"). The Support Escrow, together with the
Capital Proceeds allocable to CSL Member from a Sale Event relating to the
remaining Property, shall be first used to pay the Minimum Capital Proceeds
Amount to Blackstone Member, with any excess being paid to CSL Member.
Section 5.7. Restricted Payments. Notwithstanding any provisions to the
contrary in this Agreement, the Company shall not make a distribution if such
distribution would violate the Act.
Section 5.8. Reimbursement of Expenses; Acquisition Fee. (a) Promptly
after the date of this Agreement, the Company, to the extent it does not pay
such costs and expenses directly, will reimburse Blackstone Member for all
third-party out-of-pocket costs and expenses incurred prior to the execution of
this Agreement in connection with the pursuit of the acquisition of the
Property.
(b) The Company shall pay to the Members (or a designee of a Member) in
connection with the acquisition of the Property a fee in an aggregate amount
equal to 1% of the Agreed Value (as defined in the Contribution Agreement) of
the Property (the "Acquisition Fee"), which Acquisition Fee shall be shared by
the Members in accordance with the Sharing Percentages of the Members.
(c) Each of the Members shall be responsible for its own formation and
organizational expenses with respect to the entities constituting each of the
Members.
ARTICLE VI
Books and Reports; Tax Matters; Capital Accounts; Allocations
Section 6.1. General Accounting Matters. (a) Allocations of Net Income
(Loss) pursuant to Section 6.4 shall be made by or under the direction of
Blackstone Member at the end of each Fiscal Period.
(b) Each Member shall be supplied with the Company information
necessary to enable such Member to prepare in a timely manner its Federal, state
and local income tax returns and such other financial or other statements and
reports.
(c) Blackstone Member shall keep or cause to be kept books and records
pertaining to the Company's business showing all of its assets and liabilities,
receipts and disbursements, realized profits and losses, Members' Capital
Accounts and all transactions entered into by the Company. Such books and
records of the Company shall be kept at the office of the Company and the
Members and their representatives shall at all reasonable times have free access
thereto for the purpose of inspecting or copying the same. The Company's books
of account shall be kept on an accrual basis and otherwise in accordance with
generally accepted accounting principles, except that for income tax purposes
such books shall be kept in accordance with applicable tax accounting
principles.
(d) All determinations, valuations and other matters of judgment
required to be made for accounting and tax purposes under this Agreement shall
be made by or under the direction of the Blackstone and shall be conclusive and
binding on all Members, former Members, their successors or legal
representatives and any other person except for computational errors or fraud,
and to the fullest extent permitted by law no such person shall have the right
to an accounting or an appraisal of the assets of the Company or any successor
thereto except for computational errors or fraud. The foregoing shall not limit
the right of CSL Member to dispute in good faith the amount of the distributions
due to CSL Member calculated by Blackstone Member.
(e) If approved by Blackstone Member or CSL Member, the books of the
Company shall be examined, certified and audited as of the end of a Fiscal Year,
by a recognized firm of independent certified public accountants. For each
Fiscal Year of the Company that Blackstone Member or CSL Members have so
approved an audit, such accountants shall determine and prepare full financial
statements, including, without limitation, a balance sheet, an income statement,
a statement of changes in financial position and a statement of the Non-Capital
Proceeds and Capital Proceeds of the Company. The Tax Matters Member shall
promptly upon receipt of any such financial statements transmit copies thereof
to each Member, together with the report and management letter of such
accountants covering the results of such audit. The cost of all audits and
reports provided to the Members pursuant to this Section shall be an expense of
the Company.
Section 6.2. Certain Tax Matters. The taxable year of the Company shall
be the same as its Fiscal Year. The Tax Matters Member shall cause to be
prepared all Federal, state and local tax returns of the Company for each year
for which such returns are required to be filed and shall cause such returns to
be timely filed. The Tax Matters Member shall determine the appropriate
treatment of each item of income, gain, loss, deduction and credit of the
Company and the accounting methods and conventions under the tax laws of the
United States, the several states and other relevant jurisdictions as to the
treatment of any such item or any other method or procedure related to the
preparation of such tax returns. The Tax Matters Member shall make the election
provided for in Section 754 of the Code, if, and only if the Member who or which
has acquired an interest in the Company or a distribution of Company property
with respect to which the election is made will have provided to the Tax Matters
Member concurrently, or within 30 days after the Transfer of such interest, its
undertaking to the effect that it, and its successors in interest hereunder,
will reimburse the Company annually for its additional administrative costs
incurred by reason of such election as determined by the auditor of the Company.
The Tax Matters Member shall also make the election to amortize Organizational
Expenses pursuant to Code Section 709 and the regulation promulgated thereunder.
In addition, Blackstone Member may cause the Company to make or refrain from
making any and all other elections permitted by the tax laws of the United
States, the several states and other relevant jurisdictions. The "tax matters
partner" for purposes of Section 6231(a)(7) of the Code (the "Tax Matters
Member") shall be BREH. The Tax Matters Member shall have all of the rights,
duties, powers and obligations provided for in Sections 6221 through 6232 of the
Code with respect to the Company.
Section 6.3. Capital Accounts. There shall be established for each
Member on the books of the Company as of the date hereof, or such later date on
which such Member is admitted to the Company, a capital account (each being a
"Capital Account"). Each Capital Contribution shall be credited to the Capital
Account of such Member on the date such contribution of capital is paid to the
Company. In addition, each Member's Capital Account shall be (a) credited with
(i) such Member's allocable share of any Net Income of the Company, (ii) any
items in the nature of income or gain that are specially allocated to such
Member under Section 6.5 and (iii) the amount of any Company liabilities that
are assumed by the Member or secured by any Company property distributed to the
Member, (b) debited with (i) distributions to such Member of cash or the fair
market value of other property, (ii) such Member's allocable share of Net Loss
of the Company and expenditures of the Company described or treated under
Section 704(b) as described in Section 705(a)(2)(B) of the Code, (iii) any items
in the nature of deduction or loss that are specially allocated to the Member
under Section 6.5 and (c) otherwise maintained in accordance with the provisions
of the Code. Any other item which is required to be reflected in a Member's
Capital Account under Section 704(b) of the Code or otherwise under this
Agreement shall be so reflected. Capital Accounts shall be appropriately
adjusted to reflect transfers of part (but not all) of a Member's interest in
the Company. Interest shall not be payable on Capital Account balances.
Notwithstanding anything to the contrary contained in this Agreement, the
Company shall maintain the Capital Accounts of the Members in accordance with
the principles and requirements set forth in section 704(b) of the Code and
Regulations section 1.704-1(b)(2)(iv).
Section 6.4. Allocations. Net Income of the Company shall be allocated
to the Members having Adjusted Capital Account Deficits. Any remaining Net
Income and all Net Loss shall be allocated among the Members so as to produce
Capital Accounts for each Member equal to (i) the distributions that would be
made to such Member in accordance with distributions of Capital Proceeds under
Section 5.6 (without regard to the parenthetical in Section 5.6(a)) if the
Company was dissolved, its affairs wound up and its assets sold for cash equal
to their Carrying Value, all Company liabilities (including liabilities
allocated to the Company from an entity treated as a partnership for U.S.
federal income tax purposes in which the Company was a Member) were satisfied
(limited with respect to each nonrecourse liability to the Carrying Value of the
assets securing such liability) and the net assets of the Company were
distributed in accordance with distributions of Capital Proceeds under Section
5.6 (without regard to the parenthetical in Section 5.6(a))to the Members
immediately after making such allocation, minus (ii) such Member's share of
Company Minimum Gain and Member Nonrecourse Debt Minimum Gain, computed
immediately prior to the hypothetical sale of assets. Notwithstanding the
foregoing, if an allocation of Net Loss to the Members is in excess of amounts
of Net Income previously allocated to the Members in a ratio other than their
Sharing Percentages, then such allocation of Net Loss shall instead be made to
the Members in accordance with their respective Sharing Percentages. This
provision is intended to comply with the "fractions rule" and "substantial
economic effect" rules described in section 514(c)(9)(E) of the Code and
notwithstanding anything to the contrary in this Agreement, Net Income (Loss)
and any items described in Section 6.5 shall be allocated among the Members only
to the extent such allocation would not violate such rules.
Section 6.5. Special Allocations. (a) Notwithstanding the provisions of
Section 6.4, net income, net gain, and net loss of the Company (or items of
income, gain, loss, deduction, or credit, as the case may be) shall be allocated
in accordance with the following provisions of this Section 6.5 to the extent
such provisions shall be applicable. If any Member unexpectedly receives any
adjustments, allocations or distributions described in paragraphs
(b)(2)(ii)(d)(4), (5) or (6) of Section 1.704-1 of the regulations under the
Code, there shall be specially allocated to such Member such items of Company
income and gain, at such times and in such amounts as will eliminate as quickly
as possible that portion of any deficit in its Capital Account caused or
increased by such adjustments, allocations or distributions. To the extent
permitted by the Code and the regulations thereunder, any special allocations of
items of income or gain pursuant to this Section 6.5(a) shall be taken into
account in computing subsequent allocations of Net Income (Loss) pursuant to
this Section 6.5(a) so that the net amount of any items so allocated and the
subsequent allocations of Net Income (Loss) to the Members pursuant to this
Section 6.5(a) shall, to the extent possible, be equal to the net amounts that
would have been allocated to each such Member pursuant to the provisions of this
Section 6.5(a) if such unexpected adjustments, allocations or distributions had
not occurred.
(b) Nonrecourse Deductions of the Company for any Fiscal Year shall be
specially allocated to the Members in the same proportion as Net Income or Net
Loss is allocated for such Fiscal Year. Member Nonrecourse Deductions of the
Company for any Fiscal Year shall be specially allocated to the Member who bears
the economic risk of loss for the liability in question. The provisions of this
Section 6.5(b) are intended to satisfy the requirements of Regulations sections
1.704-2(e)(2) and 1.704-2(i)(1) and shall be interpreted in accordance therewith
for all purposes under this Agreement.
(c) If there is a net decrease in the Minimum Gain of the Company
during any Company Fiscal Year, each Member shall be specially allocated items
of Company income and gain for such year equal to that Member's share of the net
decrease in Minimum Gain, within the meaning of Regulations section
1.704-2(g)(2). The provisions of this Section 6.5(c) are intended to comply with
the Minimum Gain chargeback requirements of Regulations section 1.704-2(f) and
shall be interpreted in accordance therewith for all purposes under this
Agreement.
(d) If there is a net decrease in Member Nonrecourse Debt Minimum Gain
during any Fiscal Year, each Member that has a share of such partner Nonrecourse
Debt Minimum Gain, determined in accordance with Regulations section
1.704-2(i)(5), as of the beginning of such year shall be specially allocated
items of Company income and gain for such year (and, if necessary, for
succeeding years) equal to such Member's share of the net decrease in Member
Nonrecourse Debt Minimum Gain. The provisions of this Section 6.5(d) are
intended to comply with the Member Nonrecourse Debt Minimum Gain chargeback
requirement of Regulations section 1.704-2(i)(4) and shall be interpreted in
accordance therewith for all purposes under this Agreement.
(e) All items of income, gain, loss, deduction and credit of the
Company shall be allocated among the Members for Federal, state and local income
tax purposes consistent with the manner that the corresponding constituent items
of Net Income (Loss) shall be allocated among the Members pursuant to this
Agreement, except as may otherwise be provided herein or by the Code. To the
extent Treasury Regulations promulgated pursuant to Subchapter K of the Code
(including under Sections 704(b) and (c) of the Code) require allocations for
tax purposes that differ from the foregoing allocations, the Tax Matters Member
shall determine the manner in which such tax allocations shall be made so as to
comply more fully with such Treasury Regulations or other applicable law and, at
the same time to the extent reasonably possible, preserve the economic
relationships among the Members as set forth in this Agreement.
ARTICLE VII
Dissolution
Section 7.1. Dissolution. The Company shall be dissolved and
subsequently terminated upon the occurrence of the first of the following
events:
(a) December 31, 2053;
(b) the occurrence of a Dissolution Event;
(c) if all of the Company Assets are sold or otherwise disposed of; or
(d) if all Members agree to dissolve the Company.
If an event described in Section 18-801(b) of the Act shall occur, the
unanimous vote of all of the Members shall be required to dissolve the Company.
Section 7.2. Winding-up. When the Company is dissolved, the business
and property of the Company shall be wound up and liquidated or, in the event of
a Dissolution Event, by such liquidating trustee as may be approved by
Blackstone Member (the remaining Members or such liquidating trustee, as the
case may be, being hereinafter referred to as the "Liquidator"). The Liquidator
shall use its best efforts to reduce to cash and cash equivalent items such
assets of the Company as the Liquidator shall deem it advisable to sell, subject
to obtaining fair value for such assets and any tax or other legal
considerations.
Section 7.3. Final Distribution. Within 90 calendar days after the
effective date of dissolution of the Company, the assets of the Company shall be
distributed in the following manner and order:
(b) to the payment of the expenses of the winding-up, liquidation and
dissolution of the Company;
(c) to pay all creditors of the Company, other than Members, either by
the payment thereof or the making of reasonable provision therefor;
(d) to establish reserves to meet other liabilities of the Company; and
(e) to pay, in accordance with the provisions of this Agreement
applicable to any loans from a Member to a Company or in accordance with the
terms agreed among them and otherwise on a pro rata basis, all creditors of the
Company that are Members, either by the payment thereof or the making of
reasonable provision therefor.
The remaining assets of the Company shall be applied and distributed in
accordance with the positive balances of the Members' Capital Accounts, as
determined after taking into account all adjustments to Capital Accounts for the
Company taxable year during which the liquidation occurs.
ARTICLE VIII
Transfer of Member's Interests; Rights of First Refusal
Section 8.1. Restrictions on Transfer of Company Interests. (a) Subject
to Section 3.3 hereof, no Member may, directly or indirectly, assign, sell,
exchange, transfer, pledge, hypothecate or otherwise dispose of all or any part
of its interest in the Company (any assignment, sale, exchange, transfer,
pledge, hypothecation or other disposition of an interest in the Company being
herein collectively called a "Transfer") to any person, other than in accordance
with paragraph (b) below.
(b) Blackstone Member may Transfer all or part of their respective
interest in the Company (i) (A) to any Person provided that after giving effect
to such Transfer, BREA continues to control the Company, (B) to an Affiliate of
BREA, or (C) to a Permitted Transferee, in each case without obtaining the prior
consent of CSL Member or (ii) to any other person to the extent such Transfer
does not comply with clause (i) upon obtaining the prior consent of CSL Member.
CSL Member may Transfer all or part of its interest in the Company (i) to a CSL
Member Affiliate, (ii) to a Permitted Transferee, in the case of either (i) or
(ii) without obtaining the prior consent of Blackstone Member or (iii) to any
other person upon obtaining the prior consent of Blackstone Member. Upon any
Transfer of a Member's interest in accordance with this subsection, the person
(the "Transferee") to whom the Member's interest was Transferred shall be
admitted as a Member upon the Transferee's written acceptance and adoption of
all of the terms and provisions of this Agreement.
Section 8.2. Other Transfer Provisions. (a) Any purported Transfer by a
Member of all or any part of its interest in the Company in violation of this
Article VIII shall be null and void and of no force or effect.
(b) Except as provided in this Article VIII, no Member shall have the
right to withdraw from the Company prior to its termination and no additional
Member may be admitted to the Company unless approved by Blackstone Member and
CSL Member. In no event shall this cause a dilution of the interest of CSL
Member. Notwithstanding any provision of this Agreement to the contrary, a
Member may not Transfer all or any part of its interest in the Company if such
Transfer would jeopardize the status of the Company as a partnership for federal
income tax purposes, or would violate, or would cause the Company to violate,
any applicable law or regulation, including any applicable federal or state
securities laws or financing covenant.
(c) Concurrently with the admission of any substitute or additional
Member, the Members shall forthwith cause any necessary papers to be filed and
recorded and notice to be given wherever and to the extent required showing the
substitution of a transferee as a substitute Member in place of the Member
transferring its interest, or the admission of an additional Member, all at the
expense, including payment of any professional and filing fees incurred, of such
substituted or additional Member. The admission of any person as a substitute or
additional Member shall be conditioned upon such person's written acceptance and
adoption of all the terms and provisions of this Agreement.
(d) If any interest in the Company is Transferred during any accounting
period in compliance with the provisions of this Article VIII, each item of
income, gain, loss, expense, deduction and credit and all other items
attributable to such interest for such period shall be divided and allocated
between the transferor and the transferee by taking into account their varying
interests during such period in accordance with Section 706(d) of the Code,
using any conventions permitted by law and selected by the Tax Matters Member.
All distributions on or before the date of such Transfer shall be made to the
transferor, and all distributions thereafter shall be made to the transferee.
Solely for purposes of making such allocations and distributions, the Company
shall recognize a Transfer on the date that the Tax Matters Member receives
notice of the Transfer which complies with this Article VIII from the Member
transferring its interest.
ARTICLE IX
Miscellaneous
Section 9.1. Equitable Relief. The Members hereby confirm that damages
at law may be an inadequate remedy for a breach or threatened breach of this
Agreement and agree that, in the event of a breach or threatened breach of any
provision hereof, the respective rights and obligations hereunder shall be
enforceable by specific performance, injunction or other equitable remedy, but,
nothing herein contained is intended to, nor shall it, limit or affect any right
or rights at law or by statute or otherwise of a Member aggrieved as against the
other for a breach or threatened breach of any provision hereof, it being the
intention by this Section 9.1 to make clear the agreement of the Members that
the respective rights and obligations of the Members hereunder shall be
enforceable in equity as well as at law or otherwise and that the mention herein
of any particular remedy shall not preclude a Member from any other remedy it or
he might have, either in law or in equity.
Section 9.2. Ownership and Use of Names. Rights to the name
"Blackstone" shall belong solely to Blackstone Member and rights to the name
"Capital Senior Living" shall belong solely to CSL Member. The ownership of, and
the right to use, sell or otherwise dispose of, the name, "BRE/CSL II L.L.C." or
any abbreviation or modification thereof, shall belong to the Company. The
Members each agree to take all actions and to approve, execute and file any
document or instrument to protect the rights of the Company to the name "BRE/CSL
II L.L.C."
Section 9.3. Officers. The Company may employ and retain persons as may
be necessary or appropriate for the conduct of the Company's business, including
employees and agents who may be designated as officers with titles, including,
but not limited to, "chairman," "chief executive officer," "president," "vice
president," "treasurer," "secretary," "director" and "chief financial officer,"
as and to the extent authorized by the Members and with such powers as
authorized by the Members.
Section 9.4. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware. In particular,
the Company is formed pursuant to the Act, and the rights and liabilities of the
Members shall be as provided therein, except as herein otherwise expressly
provided.
Section 9.5. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, their respective
successors and assigns.
Section 9.6. Access; Confidentiality. By executing this Agreement, each
Member expressly agrees, at all times during the term of the Company and
thereafter and whether or not at the time a Member of the Company (i) not to
issue any press release or advertisement or take any similar action concerning
the Company's business or affairs without first obtaining the approval of the
other Members which shall not be unreasonably withheld, (ii) not to publicize
detailed financial information concerning the Company and (iii) not to disclose
the Company's affairs generally without using reasonable efforts to consult with
the other Members prior to such disclosure; provided, however, the foregoing
shall not restrict any Member from disclosing information concerning such
Member's investment in the Company to its officers, directors, employees,
agents, legal counsel, accountants, other professional advisors, limited
partners, members and Affiliates, or to prospective or existing investors of
such Member or its Affiliates or to prospective or existing lenders to such
Member or its Affiliates with reasonable approval of the other Member or as
required by SEC regulations or as required by court action or otherwise, by law.
Notwithstanding the foregoing or anything else contained herein, Tax Matters
Member may disclose to any and all persons, without limitation of any kind, the
federal income tax treatment and federal income tax structure of the activities
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to them relating to such federal income
tax treatment and federal income tax structure; provided, however, that any such
information relating to such federal income tax treatment or federal income tax
structure is required to be kept confidential to the extent reasonably necessary
to comply with any applicable federal or state securities laws. The provisions
of this Section 9.6 shall survive the termination of the Company.
Section 9.7. Notices. Whenever notice is required or permitted by this
Agreement to be given, such notice shall be in writing unless otherwise required
herein or requested by the receiving Member. If in writing, such notice shall be
given to any Member at its address or facsimile number shown in the Company's
books and records (including Schedule A hereto). Each such notice shall be
effective (i) if given by facsimile, upon oral confirmation of receipt, (ii) if
given by mail, on the fourth day after deposit in the mails (certified or
registered return receipt requested) addressed as aforesaid, (iii) if given by a
nationally-recognized overnight courier, when delivered to the address of such
Member as aforesaid, and (iv) if given by any other means, when delivered to and
receipted for at the address of such Member specified as aforesaid.
Section 9.8. Counterparts. This Agreement may be executed in any number
of counterparts, all of which together shall constitute a single instrument.
Section 9.9. Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter hereof.
Section 9.10. Amendments. Any amendment to this Agreement shall be
effective only if such amendment is evidenced by a written instrument duly
executed; provided, however, no such amendment shall be effective or binding
against a Member unless executed by such Member if such amendment materially and
adversely affects such Member in a specific manner separate and distinct from
the amendment's treatment of other Members; and further, provided, however, if a
Member's Sharing Percentage has been reduced to 0%, then any amendment to this
Agreement shall not be required to be executed and delivered by such Member in
order to be effective.
Section 9.11. Section Titles. Section titles are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text hereof.
Section 9.12. Representations and Warranties. Each Member represents,
warrants and covenants to each other Member and to the Company that:
(a) such Member, if not a natural person, is duly formed and
validly existing under the laws of the jurisdiction of its organization
with full power and authority to conduct its business to the extent
contemplated in this Agreement;
(b) this Agreement has been duly authorized, executed and
delivered by such Member and constitutes the valid and legally binding
agreement of such Member enforceable in accordance with its terms
against such Member except as enforceability hereof may be limited by
bankruptcy, insolvency, moratorium and other similar laws relating to
creditors' rights generally and by general equitable principles;
(c) the execution and delivery of this Agreement by such
Member and the performance of its duties and obligations hereunder do
not result in a breach of any of the terms, conditions or provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, credit agreement, note or other evidence of indebtedness, or any
lease or other agreement, or any license, permit, franchise or
certificate, to which such Member is a party or by which it is bound or
to which its properties are subject, or require any authorization or
approval under or pursuant to any of the foregoing, or violate any
statute, regulation, law, order, writ, injunction, judgment or decree
to which such Member is subject;
(d) such Member is not in default (nor has any event occurred
which with notice, lapse of time, or both, would constitute a default)
in the performance of any obligation, agreement or condition contained
in any indenture, mortgage, deed of trust, credit agreement, note or
other evidence of indebtedness or any lease or other agreement, or any
license, permit, franchise or certificate, to which it is a party or by
which it is bound or to which the properties of it are subject, nor is
it in violation of any statute, regulation, law, order, writ,
injunction, judgment or decree to which it is subject, which default or
violation would materially adversely affect such Member's ability to
carry out its obligations under this Agreement;
(e) there is no litigation, investigation or other proceeding
pending or, to the knowledge of such Member, threatened against such
Member or any of its Affiliates which, if adversely determined, would
materially adversely affect such Member's ability to carry out its
obligations under this Agreement;
(f) no consent, approval or authorization of, or filing,
registration or qualification with, any court or governmental authority
on the part of such Member is required for the execution and delivery
of this Agreement by such Member and the performance of its obligations
and duties hereunder.
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Limited Liability Company Agreement as of the day and year first above written.
Blackstone Member:
BRE/CSL HOLDINGS II L.L.C.
By:_____________________
Name: Xxxxxxx Xxxxxxxx
Title: Managing Director
CSL Member:
CAPITAL SENIOR LIVING PROPERTIES, INC.
By:______________________
Name:
Title:
Schedule A Name, Address and Sharing Percentage of Members
BRE/CSL HOLDINGS II L.L.C. 90%
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
CAPITAL SENIOR LIVING PROPERTIES, INC. 10%
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Exhibit A
Form of Management Agreement
