EXHIBIT 10.92
[Amberleigh and Additional Properties]
BRE/CSL L.L.C.
LIMITED LIABILITY COMPANY AGREEMENT, dated as of December 28,
2001 by and among BRE/CSL HOLDINGS L.L.C., a Delaware limited liability
corporation ("Blackstone Member"), CAPITAL SENIOR LIVING PROPERTIES, INC., a
Texas corporation ("CSL Member") (collectively, the "Members").
Preliminary Statement
The Members are executing this Limited Liability Company
Agreement (the "Agreement") for the purpose of forming BRE/CSL L.L.C. (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:
"ACQUISITION FEE" has the meaning set forth in Section 5.8(b).
"ACT" means the Delaware Limited Liability Company Act, 6 Del.
C. Sections 18-101, et seq., as it may be amended from time to time,
and any successor to such statute.
"ADDITIONAL CAPITAL CONTRIBUTION" shall mean all Capital
Contributions made by the Members after the Initial Capital
Contributions, including any Contributing Member Capital Contributions.
"ADDITIONAL PROPERTIES" shall mean additional Facilities to be
acquired by the Company or the Property Entities after the date of this
Agreement.
"ADDITIONAL PROPERTY SHARING PERCENTAGE" has the meaning set
forth in Section 3.4(e).
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"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 Limited Liability Company Agreement, as
it may be amended, supplemented, modified or restated from time to
time.
"AMBERLEIGH PROPERTY" means the Independent Living Facility
commonly known as "The Amberleigh" and located at 2330 Maple Road,
Williamsville, New York and being acquired by BRE/Amberleigh Inc. on
the date hereof, and all tangible and intangible real and personal
property owned by CSL Member and related thereto.
"ASSET PURCHASE AGREEMENT" means that certain Asset Purchase
Agreement dated as of the date hereof between BRE/Amberleigh Inc., NHP
Retirement Housing Partners I Limited Partnership, and Amherst Limited
Partnership.
"ASSISTED LIVING FACILITY" means a residential facility which
provides seniors with assistance with activities of daily living.
"BLACKSTONE MEMBER" means BRE/CSL Holdings 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.
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"CALL DEEMED LIQUIDATION" means, in connection with a CSL Call
Notice, a deemed sale by the Company of the Properties 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, (ii) the contributions of such Member for the
legal fees incurred by the Company for the financing of the Amberleigh
Property and (iii) 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 Entities), 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
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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 L.L.C., a Delaware limited liability
company.
"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).
"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.
"CONTRIBUTING MEMBER" has the meaning set forth in Section
5.2.
"CONTRIBUTING MEMBER ADDITIONAL CAPITAL CONTRIBUTION" has the
meaning set forth in Section 5.3.
"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.
"FACILITIES" shall mean Independent Living Facilities in the
United States, those Assisted Living Facilities located on the same
campus as an Independent Living Facility owned directly or indirectly
by the Company, and the Crown Villa senior housing facility located in
Omaha, Nebraska.
"FISCAL PERIOD" means each calendar quarter.
"FISCAL YEAR" means the calendar year ending on December 31 of
each year.
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"INDEPENDENT LIVING FACILITY" means a residential facility
for seniors, which does not provide assistance or support for
activities of daily living.
"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 plus (without duplication) all legal fees paid by a
Member in connection with the formation of this Company and the
negotiation of this Agreement, and the Management Agreements made by
such Member as of such date.
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 Entities and Manager substantially in the
form of the Management Agreement attached hereto as Exhibit A.
"MANAGER" means Capital Senior Living, Inc., a Texas
corporation.
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"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
Properties 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.
"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,
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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
5.2.
"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.
"PROPERTIES" means the collective reference to the Amberleigh
Property and the Additional Properties.
"PROPERTY ENTITIES" means the special purpose limited
liability company or other entities which directly own the Properties.
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"PROPERTY LOAN" means the collective reference to one or more
loans made to the Property Entities and/or the Company secured by a
mortgage or deed of trust or other collateral on the Properties and/or
the Company's equity interests in the Property Entities, 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 all or
any of the Properties 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 Entities by the
Company; (C) a merger, consolidation, recapitalization, reorganization,
reclassification or other similar transaction involving the Company or
the Property Entities; 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 Entities.
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"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 Formation. The Company is hereby formed under the
provisions of the Act. 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 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 shall commence on
the date of filing the certificate of formation of the Company in accordance
with the Act and shall continue
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until December 31, 2051, 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 form, acquire, encumber, dispose of or otherwise deal with the
Property Entities and to engage in any other business pertaining to the Property
Entities, (ii) to manage the Property Entities and, through the Property
Entities, acquire, manage, develop, operate, improve, rent, lease, encumber,
dispose of or otherwise deal with the Properties and to engage in any other
business pertaining to the Properties, (iii) incur indebtedness to finance or
refinance the Company's acquisition of the Properties and (iv) 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 one or more
Property Entities, whether foreign or domestic;
(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 sue, 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;
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(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 Property Entities 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, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801, 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 345 Park Avenue, New York, New
York, 10154 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, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801.
ARTICLE III
Management and Operation of the Company
Section 3.1 Management. (a) (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 Entities, in accordance with
this Agreement. The day-to-day management of the Amberleigh Property has been,
and of the Additional Properties will be, delegated to Manager pursuant to the
terms of the Management Agreement. The management fee for the Amberleigh
Property is set forth in the Management Agreement for the Amberleigh Property.
The management fee for the Additional Properties shall be on substantially
similar terms, except for the Additional Properties identified by CSL Member and
Blackstone Member as lease-up properties at the time of acquisition (the
"Lease-Up
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Properties"). The management fee for the Lease-Up Properties shall be no less
than the management fee that would be earned by Manager under the terms of the
Management Agreement, if the Lease-Up Properties were 85% occupied.
(b) Notwithstanding the foregoing, the Company shall require
the consent of CSL Member to take any Major Action.
(c) 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 Entities.
(d) 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 Entities, to take all
actions and enforce all remedies (including the right to terminate) under each
Management Agreement.
(e) 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 Properties 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 Loans obtained from time to time by the Company or the Property
Entities, if required by a lender thereunder, Capital Senior Living Properties,
Inc. (the "CSL Guarantor") and BRE/CSL Holdings 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
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(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.
14
(d) CSL Member agrees that neither CSL Member nor any
Affiliate of CSL Member shall make any claim against Blackstone Member or the
Venture or the Property Entity acquiring the Amberleigh Property in any way
relating to the Existing Mortgage, as defined in the Asset Purchase Agreement,
the notes secured by such Existing Mortgage and any other documents related
thereto (the Existing Mortgage, the notes secured by the Existing Mortgage and
all other related documents are referred to herein as the "Existing Financing
Documents"). In the event that Blackstone Member, the Company or the Property
Entity which is acquiring the Amberleigh Property incurs any liability, loss,
damage, judgment, costs or expenses (including attorneys' fees and expenses)
relating in any manner to any claim or suit brought by holders of the Existing
Financing Documents (the "Financing Damages"), CSL Member and its Affiliates
shall turn over to the Blackstone Member any amounts in respect of such claim or
suit received by the CSL Member or its Affiliates, up to the amount of the
Financing Damages.
Section 3.3 Sale Event; ROFO; CSL Call Right. (a) During the
period commencing on the date hereof and ending on December 31, 2004 (the
"Lockout Period") 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 one or more Properties designated in
such ROFO Sale Notice (the "Relevant Properties") 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 Loans) which the Responding Party
as a third party would be willing to pay for the Relevant
Properties (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 Loans secured by
the Relevant Properties.
(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
15
the applicable Property Entity to consummate) a sale of
the Relevant Properties 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 Relevant Properties 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 Entities, 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 Relevant
Properties or the respective Property Entities. The Responding
Party may elect to retain any Property Loan secured by the
Relevant Properties 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
16
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 Relevant Properties 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 Relevant
Properties 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 Relevant Properties 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 Relevant
Properties 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) At any time after 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 Loans. 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.
17
(i) 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") (1) 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").
(ii) 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 Entities. 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.
18
(iii) 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 of 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
Entities. 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) The Members agree that although the call right provided
for under Section 3.3(c) must be exercised as to all of the Properties, upon the
acquisition by the Company or Property Entities of Additional Properties, the
call provisions of Section 3.3(c) shall be appropriately modified so that the
call right will be separately exercisable by the CSL Member as to the Amberleigh
Property and as to each new portfolio of Additional Properties so acquired;
provided that the Lockout Period which will apply to each portfolio of
Additional Properties shall be three years from the date of the acquisition of
such Additional Properties.
(e) Blackstone Member and CSL Member, shall pay their own
legal fees in connection with any sale of Interests or interests in one of the
Property Entities 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.
(f) Remedies available for breach of obligations under
Section 3.3 shall be, except as specified in Section 3.3(h), limited to the
retention of the Blackstone Deposit or the CSL Deposit, as the case may be, as
liquidated damages.
(g) Time is of the essence with respect to each and every time
period set forth in the Section 3.3.
19
(h) 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).
Section 3.4 Acquisition of Additional Properties; Right of
First Opportunity.
(a) In addition to owning or acquiring the Amberleigh
Property, the Company shall also seek to acquire Additional Properties in
accordance with this Section 3.4.
(b) Except as set forth in this Section 3.4, for six months
from the date hereof (the "Exclusivity Period"), neither the Members nor any
Affiliates thereof, will enter into any acquisitions, financings, or joint
venture arrangements similar in nature to the Company, directly or indirectly,
for any Facilities; provided however that the following transactions (each, an
"Excluded Investment") will not be subject to the foregoing restrictions so long
as the Member pursuing such transaction offers the opportunity to the other
Member to invest in such proposing Member's share of such Excluded Investment in
accordance with its Sharing Percentage on a pari passu basis with the proposing
Member (provided that such opportunity need not be offered under the
circumstances described in clause (a)(i) and (ii) below unless CSL Member is
obtaining third party equity investments to pursue expansion or development
opportunities or the acquisition of one or more of the Triad Properties): (a)
CSL Member may (i) pursue development and/or expansion opportunities at
Facilities currently owned by CSL Member, (ii) acquire Facilities currently
owned by Triad Senior Living I, L.P., Triad Senior Living II, L.P., Triad Senior
Living III, L.P., Triad Senior Living IV, L.P. or Triad Senior Living V, L.P. as
of the date hereof (collectively, the "Triad Properties"), and (iii) enter into
third party management agreements for Facilities, provided that such management
agreements are not so-called "disguised purchases" with equity-type features and
do not contain any co-investment features, (b) Blackstone Member and their
Affiliates may (i) purchase debt secured by one or more Facilities and (ii)
purchase Facilities which are subject to management agreements with third party
operators, the termination of which, in the sole discretion of Blackstone Member
exercised in good faith, would be prohibitively expensive to the Company and
(iii) invest in Facilities where the investment opportunity was brought to
Blackstone Member by a third party and where management of the Facilities is not
available (e.g. such third party has previously selected a manager), (c) the
Offeror (as defined below) may acquire a Facility if the Company declines to
purchase such Facility in accordance with Section 3.4(d).
(c) (i) The Exclusivity Period will be automatically extended
for additional six month periods from the end of the prior six-month period, up
to an aggregate of two years from the date hereof, provided that if during any
such six-month period the Company (or subsidiaries of the Company) has not
acquired Additional Properties having an aggregate purchase price equal to or
greater than $40,000,000, either Member shall have the right in its sole
discretion to terminate the Exclusivity Period by written notice to the other
Member.
20
(ii) The Exclusivity Period shall be terminated upon a
default by the Manager under any Management Agreement, beyond
any applicable notice and cure periods.
(d) During the Exclusivity Period, any Member ("Offeror")
which desires to pursue an investment (debt or equity) in a Facility ("Potential
Investment") shall provide written notification ("Potential Investment Notice")
to the other Member ("Offeree") of the Potential Investment and including such
details of the Potential Investment that a prudent investor would require to
make an informed investment decision. The Offeror and the Offeree should make
reasonable efforts to disclose all relevant information known or available to
the other party. The Offeror shall provide the Offeree with such additional
information in its possession or readily obtainable and reasonably requested by
the Offeree, subject to any pre-existing confidentiality requirement. Within 30
days after receipt of the Potential Investment Notice, the Offeree shall either
approve or disapprove the Company's making of the Potential Investment in its
sole and absolute discretion. If the Potential Investment is approved by the
Offeree, (i) the Members shall cause the Company to diligently pursue such
Potential Investment, provided that Blackstone Member shall have the authority
on behalf of the Company or any subsidiary of the Company or other venture
formed by the Members or their Affiliates to negotiate and execute any binding
letters of intent and definitive agreements relating to such Potential
Investment and to select the form of ownership of such Potential Investment and
(ii) the ownership of such Potential Investment shall be governed by a joint
venture agreement (or supplement to this Agreement) substantially on the terms
of this Agreement and that the Members shall be required to contribute the
required equity for the Potential Investment in accordance with the Additional
Property Sharing Percentages of the Members. If the Potential Investment is
disapproved by the Offeree or the Company fails to close on the acquisition of
the Facility and such failure is not caused by the Offeror, the Offeror or its
Affiliates shall have the right to acquire the Facility and the Company shall
have no rights in such Potential Investment.
(e) If the Company acquires an Additional Property, each
Member will be required to make a capital contribution equal to its Sharing
Percentage of the equity required to acquire such Additional Property. CSL
Member shall have a one-time right to elect to contribute 20% of the required
equity (and receive 20% of the distributions in respect thereof) for Additional
Properties (in which case Blackstone Member applicable percentage of
contributions and distributions will be 80%), which modification will be
effective only as to Additional Properties acquired after the date of such
election (the applicable percentage of required equity to be contributed by the
Members for Additional Properties is referred to herein as the "Additional
Property Sharing Percentage").
(f) The Company shall seek non-recourse financing for all
Additional Properties and shall seek fixed rate, first mortgage third party
financing with a loan to value ratio between 70-80%, an annual interest rate
spread no greater than 250 basis points over five year United States Treasury
obligations, and a term of no more than 10 years and an amortization schedule no
shorter than 25 years. The Company will also seek to minimize prepayment
penalties. Blackstone Member shall have sole authority on behalf of the Company
to enter into such financing so long as the terms of such financing are within
the parameters set forth above.
21
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. On the date of this
Agreement and simultaneously with the acquisition by the Property Entity which
will own the Amberleigh Property, the Members shall make Capital Contributions
in the amounts set forth on Schedule A hereto (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
22
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 . Except as otherwise
specifically required by this Section 5.5, distributions shall be made in such
amounts and at such times as determined
23
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. 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.
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 formation of the Company and the
pursuit of the acquisition of the Properties, and will reimburse CSL Member for
the $16,000 lender application fee and deposit made for the contemplated initial
financing of the Amberleigh Property, provided however that Blackstone Member
and CSL Member shall each be responsible for their own attorney's fees and
expenses.
(b) The Company shall pay to the Members (or a designee of a
Member) in connection with the acquisition of the Properties a fee in an
aggregate amount equal to 1% of the purchase price of each 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.
24
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.
25
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
26
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)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.
27
Section 6.5 Special Allocations.(a) (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
28
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, 2051;
(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:
(a) to the payment of the expenses of the winding-up,
liquidation and dissolution of the Company;
(b) to pay all creditors of the Company, other than Members,
either by the payment thereof or the making of reasonable provision therefor;
29
(c) to establish reserves to meet other liabilities of the
Company; and
(d) 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
30
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.
31
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 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
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
32
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. 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:
33
(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 Limited
Liability Company Agreement as of the day and year first above written.
Blackstone Member:
BRE/CSL HOLDINGS L.L.C.
By:
-------------------------------
Name:
Title:
CSL Member:
CAPITAL SENIOR LIVING PROPERTIES, INC.
By:
-------------------------------
Name:
Title:
BRE/CSL L.L.C.
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of December 28, 2001
Schedule A
Name, Address and Sharing Percentage of Members; Initial Capital Contributions
<Table>
<Caption>
Sharing Percentage
as of
Members Address December 28, 2001
------- ------- ------------------
BRE/CSL Holdings L.L.C. 345 Park Avenue, New York, New York 10154 90%
Capital Senior Living
Properties, Inc. 10%
</Table>
EXHIBIT A
Form of Management Agreement