Exhibit 10.3
________________________________________________________________________________
LIMITED LIABILITY COMPANY AGREEMENT
OF
CT XX XX LLC
a Delaware limited liability company
Effective as of: March 8, 2000
________________________________________________________________________________
ARTICLE I DEFINED TERMS.......................................1
1.1. Definitions..................................................1
1.2. General References...........................................6
ARTICLE II FORMATION AND DURATION..............................6
2.1. Formation....................................................6
2.2. Name.........................................................7
2.3. Agent and Office.............................................7
2.4. Principal Place of Business..................................7
2.5. Qualification in Other Jurisdictions.........................7
2.6. Term.........................................................7
2.7. Intent.......................................................7
2.8. Limited Liability............................................7
2.9. Transfer of Warrants.........................................7
ARTICLE III PURPOSE AND POWERS OF THE COMPANY...................8
3.1. Purposes and Powers..........................................8
3.2. Limitations on Company Powers................................8
ARTICLE IV CAPITAL CONTRIBUTIONS...............................8
4.1. Initial Contributions........................................8
4.2. Additional Capital Contributions.............................9
4.3. Failure to Contribute Additional Payments...................10
4.4. Loans by Members; Compensation..............................10
ARTICLE V MANAGEMENT OF THE COMPANY..........................11
5.1. Management of the Company...................................11
5.2. Management Committee and Related Matters....................11
5.3. Conduct of Management Committee Meetings; Minutes...........12
ARTICLE VI DISTRIBUTIONS AND ALLOCATION OF TAX ITEMS..........13
6.1. Distributions...............................................13
6.2. Allocation of Net Profit and Net Loss.......................13
6.3. Withholding.................................................13
6.4. Restoration of Funds........................................14
ARTICLE VII TAX ELECTIONS; TAX MATTERS MEMBER; TAX
CAPITAL ACCOUNTS...................................14
7.1. Federal Income Tax Elections; Tax Matters Member............14
7.2. Tax Matters.................................................14
ARTICLE VIII OTHER RIGHTS AND OBLIGATIONS OF MEMBERS............15
8.1. Resignation of a Member.....................................15
8.2. Admission of New Members....................................15
8.3. Indemnification by Company..................................15
8.4. Indemnification by Members..................................16
8.5. Exculpation.................................................16
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Page(s)
8.6. Reimbursement of Members....................................16
8.7. Particular Covenants of Members.............................16
ARTICLE IX TRANSFERS OF COMPANY MEMBERSHIP INTERESTS..........17
9.1. Condition to Transfer of Any Membership Interest............17
9.2. Transfers of Membership Interests...........................18
ARTICLE X DISSOLUTION AND LIQUIDATION........................18
10.1. Dissolution.................................................18
10.2. Winding up Affairs and Distribution of Assets...............19
10.3. No Liability................................................19
10.4. Limitations on Payments Made in Dissolution.................19
10.5. Certificate of Cancellation.................................19
ARTICLE XI DEFAULT AND REMEDIES...............................20
11.1. Default.....................................................20
11.2. Remedies Upon Event of Default..............................21
11.3. Dispute Resolution. .......................................21
11.4. Waiver of Partition and Certain Other Rights. .............21
ARTICLE XII REPRESENTATIONS AND WARRANTIES OF THE MEMBERS......22
12.1. Reciprocal Representations and Warranties...................22
ARTICLE XIII BOOKS, RECORDS AND REPORTS.........................23
13.1. Maintenance of Books........................................23
13.2. Records to be Maintained....................................23
13.3. Inspection by Members; Confidential Information.............23
13.4. Books and Tax Reports.......................................24
ARTICLE XIV MISCELLANEOUS......................................25
14.1. Notices.....................................................25
14.2. Certificate Requirements....................................25
14.3. Modification................................................26
14.4. Waivers and Consents........................................26
14.5. Severability................................................26
14.6. Further Assurances..........................................26
14.7. Governing Law...............................................26
14.8. Counterparts................................................26
14.9. Limitation on Rights of Others..............................26
14.10. Brokers and Finders.........................................26
14.11. Construction and Interpretation.............................26
14.12. Successors And Assigns......................................26
14.13. Survival....................................................27
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LIMITED LIABILITY COMPANY AGREEMENT
OF CT XX XX LLC
This LIMITED LIABILITY COMPANY AGREEMENT ("Agreement") of CT XX XX LLC
(the "Company") is entered into this 8th day of March 2000, between Travelers
General Real Estate Mezzanine Investments II, LLC a Delaware limited liability
company ("General XXXX XX"), and CT-F2-GP, LLC, a Delaware limited liability
company ("CT-F2"), as members of the Company.
WHEREAS, General XXXX XX and certain of its Affiliates and CT-F2 and
certain of its Affiliates are parties to that certain Venture Agreement dated
the date hereof (the "Venture Agreement") pursuant to which, among other things,
the parties or their Affiliates will co-sponsor, commit to invest capital in and
manage real estate mezzanine investment opportunity funds;
WHEREAS, General XXXX XX and CT-F2 wish to form the Company in which
General XXXX XX and CT-F2 shall be the only Members and the only investors;
WHEREAS, the Company will serve as the general partner of CT Mezzanine
II, LP, a Delaware limited partnership ("Fund II").
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the Members hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1. Definitions. Unless the context otherwise requires, the following
terms shall have the following meanings:
"Additional Capital Contributions" means the additional Capital
Contributions made by the Members pursuant to, and determined in accordance
with, Section 4.2(a) hereof.
"Additional Payment" has the meaning specified in Section 4.2(a)
hereof, as adjusted by Section 4.3(a) hereof.
"Affiliate" means, with respect to any Person, a Person which directly
or indirectly controls, or is controlled by or is under common control with that
Person, or is controlled by a principal executive officer of that Person. As
used in this definition, "control" means possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting interests, by contract or
otherwise.
"Agreement" means this Limited Liability Company Agreement of the
Company.
"Annual Operating Budget" means, collectively, with respect to each
Fiscal Year of the Company any annual operating budget, working capital budget,
marketing budget and expenditures relating to the operation of the Company as
and when approved by the Management Committee. The Annual Operating Budget shall
be prepared in accordance with GAAP by the Management Committee and shall show
the estimated receipts, expenditures (operating and capital) and reserves of the
Company for the subject Fiscal Year. "Annual Operating Budget" also includes all
subsequent amendments and revisions to the foregoing approved by the Management
Committee.
"Bankruptcy" of a Person means the institution of any proceedings under
any federal or state law for the relief of debtors, including the filing by or
against that Person of a voluntary or involuntary case under the United States
Bankruptcy Code, which proceedings, if involuntary, are not dismissed within
sixty (60) days after their filing; an assignment of the property of that Person
for the benefit of creditors; the appointment of a receiver, trustee or
conservator of any substantial portion of the assets of that Person, which
appointment, if obtained ex parte, is not dismissed within sixty (60) days
thereafter; the seizure by a sheriff, receiver, trustee or conservator of any
substantial portion of the assets of that Person; the failure by that Person
generally to pay its debts as they become due within the meaning of Section
303(h)(1) of the United States Bankruptcy Code, as determined by the Bankruptcy
Court; or that Person's admission in writing of its inability to pay its debts
as they become due.
"Business" shall have the meaning given to such term in the Venture
Agreement.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
applicable law to close.
"Calculation Date" means, for purposes of computing Net Cash Flow to be
distributed with respect to a particular fiscal quarter, the last day in that
quarter.
"Capital Account" of a Member with respect to the Company means the
capital account of that Member which, except as otherwise provided herein, shall
be determined from the inception of the Company in accordance with GAAP. The
Initial Capital Account of each Member is set forth on Exhibit "A".
"Capital Contributions" of a Member means, as of a particular date, the
aggregate amount of money and the Fair Market Value of any property (other than
money), net of encumbrances, theretofore contributed to the Company by that
Member pursuant to this Agreement, which shall consist of the Member's Initial
Capital Contribution, Additional Capital Contributions, Default Payments (in the
case of General XXXX XX after the Warrant Purchase Notes have been paid) that
are not treated as loans under Section 4.3(b)(ii) hereof, and Warrant
Contributions.
"Certificate of Formation" means the Certificate of Formation of the
Company filed on behalf of the Company with the office of the Secretary of State
of the State of Delaware pursuant to the Delaware Act (as defined below).
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means CT XX XX LLC, the limited liability company formed and
existing under and pursuant to the Delaware Act, the Certificate of Formation
and this Agreement.
"Contribution Date" means the date which is specified in a call for
Additional Capital.
"CT-F2" has the meaning given to such term in the Preamble of this
Agreement.
"CT Stock" means the class A common stock, $.01 par value per share, of
Capital Trust, Inc., a Maryland corporation.
"Default" has the meaning specified in Section 11.1(b) hereof.
"Default Payment" has the meaning specified in Section 4.3(a) hereof.
"Defaulting Member" has the meaning specified in Section 11.1(b)
hereof.
"Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.
X.xx. 18-101, et seq.
"Distribution" means the transfer of money or property by the Company
to one or more Members, in their capacity as Members, without separate
consideration.
"Effective Date" means March 8, 2000.
"Event of Default" has the meaning specified in Sections 11.1(c)
hereof.
"Fair Market Value" of an asset means the price at which that asset
would be sold between a willing buyer and a willing seller, each having
knowledge of all relevant facts concerning the asset and neither being under any
compulsion to buy or sell the asset, as agreed upon by the Members or if the
Members cannot agree within thirty (30) days, the price shall be determined by
Section 4.1(b) of the Venture Agreement.
"Fiscal Year" means the calendar year.
"Fund II Investment Management Agreement" means that certain investment
management agreement by and between CTIMCO and the Company, dated the date
hereof.
"Fund II" shall have the meaning set forth in the Whereas clauses.
"Fund II Initial Closing" shall have the meaning given to such term in
the Venture Agreement.
"Fund II Management Agreement" means the management agreement between
the Company and Fund II.
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"Fund II Partnership Agreement" shall mean the agreement of limited
partnership of Fund II.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States, applied on a consistent basis throughout the
term of this Agreement.
"Indemnitee" has the meaning specified in Section 8.3.
"Initial Capital Contribution" of a Member means the capital
contributions made by that Member pursuant to Section 4.1 hereof.
"Investments" shall have the meaning specified in the Fund II
Partnership Agreement.
"Investment Management Fee" means the fee that the Investment Manager
is entitled to receive pursuant to the Fund II Investment Management Agreement.
"Investment Manager" shall mean CT Investment Management Co., LLC, a
Delaware limited liability company.
"Investment Period" means the period, commencing on the date of the
Fund II Initial Closing, during which Fund II may make new Investments pursuant
to the Fund II Partnership Agreement.
"Key Individuals" shall have the meaning given to such term in the
Venture Agreement.
"Key Individuals Requirement" shall mean the Investment Manager's
covenants under Section 1.4 of the Fund II Investment Management Agreement.
"Management Committee" means the committee described in Section 5.2.
"Management Fee" shall have the meaning given such term in the Fund II
Management Agreement.
"Member" means each of General XXXX XX and CT-F2 and includes any
Person admitted as a Substitute Member pursuant to the provisions of this
Agreement, in such Person's capacity as a member of the Company; "Members" means
two (2) or more of such Persons when acting in their capacities as members of
the Company. For purposes of the Delaware Act, the Members shall constitute one
(1) class or group of members.
"Membership Interest" means a Member's total interest as a Member of
the Company, including that Member's rights to allocations of Net Profits, Net
Losses, special allocations, Net Cash Flow and other Distributions, its right to
inspect the books and records of the Company and its right, to the extent
specifically provided in this Agreement or in the Delaware Act and not otherwise
restricted herein, to participate in the business, affairs and management of the
Company and to vote or grant consent with respect to matters coming before the
Company.
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"Net Cash Flow" has the meaning specified in Section 6.1(a) hereof.
"Net Profits" and "Net Losses" means, for each fiscal period, the net
income and net loss, respectively, of the Company determined in accordance with
GAAP.
"Nonrecourse Exception Indemnitee" has the meaning specified in Section
8.4 hereof.
"Notice of Default" has the meaning specified in Section 11.1(b)
hereof.
"Notices" has the meaning specified in Section 14.1(a) hereof.
"Percentage Interest" of a Member means in the case of each of General
XXXX XX and CT-F2, 50%, as may be subsequently adjusted as provided in Section
4.3(b)(i).
"Person" means any entity, corporation, company, association, joint
venture, joint stock company, partnership, trust, limited liability company,
limited liability partnership, real estate investment trust, organization,
individual, nation, state, government (including agencies, departments, bureaus,
boards, divisions and instrumentalities thereof), trustee, receiver or
liquidator.
"Purchase Warrants" means the warrants to purchase such number of
shares of CT Stock to be sold by the Company to General XXXX XX, as determined
with respect to Fund II, pursuant to the Venture Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Service Warrants" means the warrants to purchase such number of shares
of CT Stock to be transferred by the Company to Limited XXXX XX, as determined
with respect to Fund II, pursuant to the Venture Agreement as consideration for
services rendered by Limited XXXX XX, as provided in the Venture Agreement.
"Substitute Member" means a Person who is admitted to the Company as a
Member pursuant to Article IX.
"Tax Matters Member" means the "tax matters partner" referred to in
Section 6231(a)(7) of the Code.
"Transfer" of all or any portion of a Membership Interest means any
direct or indirect sale, assignment, gift, hypothecation, pledge or other
disposition, whether voluntary, involuntary or by operation of law, of all or
any portion of a Membership Interest, including, without limitation, the right
to receive Distributions from the Company. Notwithstanding that a Transfer of
all or any portion of a Membership Interest by way of hypothecation or pledge
has occurred, any subsequent transfer, sale or other disposition of such
Membership Interest or portion thereof at foreclosure shall also constitute a
separate Transfer hereunder and shall also be subject to all of the provisions
of this Agreement.
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"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code.
"Venture Agreement" shall have the meaning set forth in the Whereas
clauses.
"Warrants" means Service Warrants and/or Purchase Warrants, as the
context may require. The parties agree that the Warrants have a Fair Market
Value of $0.32 per share.
"Warrant Contribution" has the meaning specified in Section 4.2(c)
hereof.
"Warrant Purchase Agreement" means the forward purchase agreement
pursuant to which General XXXX XX will purchase Purchase Warrants from the
Company, which is in the form of Exhibit S to the Venture Agreement.
"Warrant Purchase Note" means the Fund II Purchase Warrant Promissory
Note as defined in the Venture Agreement.
1.2. General References. References in this Agreement to "Articles,"
"Sections," "Exhibits" and "Schedules" shall be to the Articles, Sections,
Exhibits and Schedules of this Agreement, unless otherwise specifically
provided; the term "including" means "including without limitation;" any of the
terms defined in this Agreement may, unless the context otherwise requires, be
used in the singular or the plural and in any gender depending on the reference;
the words "herein", "hereof" and "hereunder" and words of similar import, when
used in this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; and except as otherwise specified in
this Agreement, all references in this Agreement (a) to any Person shall be
deemed to include such Person's permitted heirs, personal representatives,
successors and assigns; and (b) to any agreement, any document, certificate or
any other written instrument shall be a reference to such agreement, document,
certificate or instrument together with all exhibits, schedules, attachments and
appendices thereto, and in each case as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof; and
(c) to any law, statute or regulation shall be deemed references to such law,
statute or regulation as the same may be supplemented, amended, consolidated,
superseded or modified from time to time with an effective date rendering such
change applicable to the event or transaction in question.
ARTICLE II
FORMATION AND DURATION
2.1. Formation.
(a) Formation. Unless expressly provided otherwise in this Agreement,
the rights, duties and liabilities of the Members of the Company shall be as
provided in the Delaware Act. The Company has been organized as a Delaware
limited liability company under the Delaware Act by the filing of the
Certificate of Formation on February 28, 2000 with the Secretary of State of the
State of Delaware.
(b) Information as to Members. As of the Effective Date, the name of
each Member shall be as listed in Exhibit "A". The Members shall be required to
update Exhibit "A"
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from time to time as necessary to reflect any change in Members. Any amendment
or revision to Exhibit "A" made in accordance with this Agreement shall not be
deemed an amendment to this Agreement.
2.2. Name. The name of the Company is CT XX XX LLC. However, the business
of the Company may be conducted under any other name designated by the Members
from time to time.
2.3. Agent and Office. The Company's registered agent and office in
Delaware shall be United Corporate Services, 00 Xxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxx
xx Xxxx, Xxxxxxxx 00000. At any time, the Members may designate another
registered agent and/or registered office.
2.4. Principal Place of Business. The principal place of business of the
Company shall be at the CT offices currently located at 000 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, or at such other place as the Members may
determine from time to time.
2.5. Qualification in Other Jurisdictions. The Members shall cause the
Company to be qualified or registered (a) as a foreign limited liability company
under the provisions of the New York Act, and shall cause such status to be
maintained for so long as the Company owns any real property, or otherwise
transacts business, in the State of New York, and (b) under the assumed or
fictitious name statutes or similar laws in the State of New York and in any
other jurisdiction in which the Company transacts business. The Company shall
execute, deliver and file any certificates (and any amendments and/or
restatements thereof) necessary for the Company to qualify to do business in the
State of New York or in any other jurisdiction in which the Company may wish to
conduct business.
2.6. Term. The term of the Company commenced on the date the Certificate of
Formation was filed in the office of the Delaware Secretary of State and shall
continue until the cancellation of the Certificate of Formation in the manner
required by the Delaware Act.
2.7. Intent. It is the intent of the Members that the Company be operated
in a manner consistent with its treatment as a "partnership" for Federal and
state income tax purposes. It also is the intent of the Members that the Company
not be operated or treated as a "partnership" for purposes of Xxxxxxx 000 xx xxx
Xxxxxx Xxxxxx Bankruptcy Code. No Member or member of the Management Committee
shall take any action inconsistent with that express intent.
2.8. Limited Liability. Except as otherwise provided in the Delaware Act,
the debts, obligations and liabilities of the Company (whether arising in
contract, tort or otherwise) shall be solely the debts, obligations and
liabilities of the Company, and no Member (including the Tax Matters Member
acting in such capacity and any Person who formerly held such status) shall be
liable or shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of that status. No individual trustee,
officer, director, shareholder, member, manager, constituent partner, employee,
agent or attorney of any entity Member, in his, her or its individual capacity
as such, shall have any personal liability for the performance of any obligation
of that Member under this Agreement.
2.9. Transfer of Warrants. At the times and in the amounts required in the
Venture Agreement, the Company shall sell the Purchase Warrants to General XXXX
XX pursuant to the
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Warrant Purchase Agreement in exchange for Warrant Purchase Notes. At the times
and in the amounts required in the Venture Agreement, the Company shall assign
the Service Warrants to Limited XXXX XX as consideration for services provided
by it as set forth in the Venture Agreement.
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY
3.1. Purposes and Powers.
(a) The sole business and purposes of the Company shall be to:
(i) form Fund II as contemplated by the Venture Agreement;
(ii) enter into the Fund II Partnership Agreement, acquire an
interest as general partner of Fund II and serve as the general partner of Fund
II;
(iii) hold, sell, dispose of, exchange, transfer, vote or
otherwise exercise all rights, powers, privileges and other incidents of
ownership or possession with respect to the interests of the Company in Fund II;
and
(iv) to enter into, perform and carry out contracts of any kind,
including, without limitation, contracts with any Member and/or Affiliate
thereof (approved by the other Member) or any agent of the Company necessary,
convenient, desirable or incidental to the accomplishment of the purpose of the
Company; including assigning Service Warrants to Limited XXXX XX as compensation
for services rendered by it.
(b) In order to carry out the business and purposes set forth in
Section 3.1(a) hereof, the Company shall have the power to do everything
necessary, suitable or proper for the accomplishment of or in furtherance of any
of the purposes set forth herein, and to do every other act or acts, thing or
things, incidental or appurtenant to or arising from or connected with any of
such purposes. Without limiting the generality of the foregoing, the Company
shall have the power to sell Company assets to Members in exchange for cash or a
promissory note in payment of such assets, including to sell the Purchase
Warrants to General XXXX XX pursuant to the Purchase Agreement in exchange for
Warrant Purchase Notes.
3.2. Limitations on Company Powers. Notwithstanding Section 3.1, the
Company shall not do business in any jurisdiction the laws of which do not give
full faith and credit to the limitations on liability afforded to the Members
under the Delaware Act or this Agreement.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1. Initial Contributions. As at the Effective Date, each of General XXXX
XX and CT-F2 are contributing $50 to the capital of the Company.
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4.2. Additional Capital Contributions.
(a) Additional Payments. No Member shall be required to make any
further payments in cash to the Company during the term of this Agreement unless
and until the Management Committee has approved such further payments; provided,
however, that each Member shall cause its representatives on the Management
Committee to approve such further payments as are necessary to permit the
Company to pay any further capital that it is required to contribute to Fund II
in cash pursuant to the Fund II Partnership Agreement or to permit the Company
to pay Xxxxxxx Xxxxx Barney, Inc.'s placement agent fees and expenses pursuant
to the Placement Agent Agreement and any organizational costs with respect to
the formation and marketing of Fund II required by the Fund II Partnership
Agreement ("Additional Payments"). Any Additional Payment and any Default
Payment that is not treated as a loan under Section 4.3(b)(ii) hereof by General
XXXX XX shall first be applied to repay the Warrant Purchase Notes. Once the
Warrant Purchase Notes are repaid, any Additional Payment by General XXXX XX
shall constitute an Additional Capital Contribution. Any Additional Payment by
CT-F2 shall constitute an Additional Capital Contribution.
(b) Call Procedures; Payment of Call. Whenever the Management Committee
has determined that the Members will be required to make Additional Payments to
the Company as provided in this Section 4.2, each Member shall be obligated to
contribute its share of the requested Additional Payment in cash in an amount
equal to (a) that Member's Percentage Interest multiplied by (b) the aggregate
dollar amount of the requested Additional Payment. To satisfy any call for an
Additional Payment, a Member shall cause to be paid to the Company, on the date
specified by the Management Committee which date shall be the "Contribution
Date," in immediately available funds in the full amount of such Member's share
of the requested Additional Payment.
(c) Contribution of Warrants. CT-F2 shall contribute to the capital of
the Company the Service Warrants and the Purchase Warrants in such amounts and
at such times as required by the Venture Agreement (a "Warrant Contribution").
The parties agree that the Fair Market Value of each Warrant contributed is, and
the amount of the capital contribution shall be considered to be, $0.32 per
share.
(d) Credit to Capital Accounts. Upon any Additional Capital
Contribution or Warrant Contribution, the aggregate amount contributed shall be
credited to the Capital Accounts of the Members in proportion to their
Percentage Interests at such time. Notwithstanding the foregoing, in the event
the Non-Defaulting Member makes the Default Payment, the Additional Capital
Contribution of the Non-Defaulting Member with respect to the call that resulted
in the Defaulting Member's default and the Default Payment that is not treated
as a loan under Section 4.3(b)(ii) hereof shall, if CT-F2 is the Non-Defaulting
Member, be credited solely to the Capital Account of CT-F2, and if General XXXX
XX is the Non-Defaulting Member, be applied first to repay the Warrant Purchase
Notes and thereafter be credited solely to the Capital Account of General XXXX
XX.
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4.3. Failure to Contribute Additional Payments.
(a) Default Payment. In the event that a call is issued pursuant to
Section 4.2 for an Additional Payment and any Member does not contribute its
required share of such Additional Payment, then the Non-Defaulting Member may,
in addition to any other right or remedy available under this Agreement, at law
or in equity, make an additional payment (a "Default Payment") to the Company in
cash equal to the amount of the Additional Payment which the Defaulting Member
has failed to make. The Non-Defaulting Member shall give Notice to the
Defaulting Member within thirty (30) days after making a Default Payment (or, if
sooner, by the date the next Distributions to the Members are scheduled to be
made by the Company) designating its election under Section 4.3(b). If the
Non-Defaulting Member does not make the Default Payment, the Additional Payment
made by the Non-Defaulting Member with respect to the call that resulted in the
Defaulting Member's default shall be treated as a demand loan from the
Non-Defaulting Member to the Company having the terms set forth in Section
4.3(b)(ii), and shall not constitute an Additional Payment.
(b) Effect of a Default Payment. At the election of the Non-Defaulting
Member, its Default Payment shall have one of the following effects:
(i) As to each contribution of Default Payment, the Percentage
Interest of each Member shall be redetermined to be a fraction (expressed as a
percentage), the numerator of which is the sum of (1) the Initial Capital
Contribution of that Member, plus the Additional Payments by that Member, plus
(2) 1.5 times the Default Payments by that Member that are not treated as loans
pursuant to Section 4.3(b)(ii) hereof, if any, and the denominator of which is
the sum of (3) the Initial Capital Contributions of all the Members, plus the
Additional Payments of all the Members, plus (4) 1.5 times the Default Payment
of all Members that are not treated as loans pursuant to Section 4.3(b)(ii)
hereof. All amounts shall be determined through the date of the adjustment.
Notwithstanding that Percentage Interests are generally determined to be in
proportion to Initial Capital Contributions and Additional Payments, it is
intended that the Non-Defaulting Member's Default Payment is to receive 1.5
times credit for purposes of redetermining the Percentage Interests of the
Members; or
(ii) The amount of such Default Payment shall be treated as a
demand loan from the Non-Defaulting Member to the Company. Such loan shall bear
interest, compounded daily, at a rate per annum (based on a year of 360 days)
equal to the lower of eighteen percent (18%) or the highest rate permitted by
the usury laws of the State of New York until such loan shall have been paid in
full.
4.4. Loans by Members; Compensation. No Member shall be required to lend
any funds to the Company, and no Member shall have any personal liability for
the repayment of any Capital Contribution of any other Member. No Member shall
receive any interest, salary or drawing with respect to its Additional Payments,
Default Payments, Capital Contributions or its Capital Account or for services
rendered on behalf of the Company or otherwise in its capacity as a Member,
except as otherwise provided in this Agreement.
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ARTICLE V
MANAGEMENT OF THE COMPANY
5.1. Management of the Company. The business and affairs of the Company
shall be managed by the Management Committee, except to the extent management is
delegated to the Investment Manager pursuant to the Fund II Investment
Management Agreement.
5.2. Management Committee and Related Matters.
(a) Management Committee. Except to the extent expressly delegated to
the Investment Manager pursuant to Section 5.1 hereof and the Fund II Investment
Management Agreement or as otherwise provided in this Section 5.2, the Members,
acting through a management committee (the "Management Committee") established
by the Members pursuant to this Section 5.2, shall have all of the rights and
powers granted to the Members pursuant to the Delaware Act and this Agreement,
and shall have all authority, rights and powers in the management of the Company
to do any and all acts and things necessary, proper, appropriate, advisable,
incidental or convenient to effectuate the purposes of this Agreement. Where
reference is made in this Agreement to the consent, approval or agreement of the
Members, such consent, approval or agreement may be granted or withheld by the
Members in their sole and absolute discretion acting through their respective
representatives on the Management Committee. No Member shall have the authority
to bind the Company except with the written approval of all Members or by the
action of the Management Committee.
(b) Members of Management Committee. The Management Committee shall
consist of four (4) members. General XXXX XX, and any Person succeeding to the
entire Membership Interest of General XXXX XX hereunder, shall designate two (2)
representatives to serve on the Management Committee, and CT-F2, and any Person
succeeding to the entire Membership Interest of CT-F2 hereunder, shall designate
two (2) representatives to serve on the Management Committee. For purposes of
Article V, any reference to General XXXX XX shall include any Person succeeding
to its entire Membership Interest, and CT-F2 shall include any Person succeeding
to its entire Membership Interest. The initial representatives of General XXXX
XX on the Management Committee shall be Xx. Xxxxx X. Xxxxx and Mr. Xxxxxxx
Xxxxxx. The initial representatives of CT-F2 on the Management Committee shall
be Xx. Xxxx X. Xxxxx and Xx. Xxxxx X. Xxxxxxx. CT-F2 and General XXXX XX may by
ten (10) days prior written Notice to the other Member designate a new
representative to replace an existing representative designated by it, but the
failure of any Member to appoint a representative shall not limit the right of
the Management Committee to carry on the business of the Company.
(c) Actions By Management Committee.
(i) The Management Committee shall act only by the agreement of a
majority of its members, including at least one representative designated by
each of General XXXX XX and CT-F2. Notwithstanding the foregoing, the
enforcement of any rights that the Company may have against any Member (or
Affiliate of a Member) shall be determined solely by the members of the
Management Committee designated by the other Member. In the event of a deadlock
on the Management Committee between General REMI II's representatives and
CT-F2's representatives, all such representatives shall attempt to resolve the
deadlock in good faith.
11
In the event of any such deadlock, any disputes, other than with respect to the
determination of Fair Market Value of an asset shall be resolved pursuant to the
provisions of Section 11.3 hereof.
(ii) As soon as practicable after the Effective Date, the
Management Committee will prepare an Annual Operating Budget for the first
Fiscal Year of the Company.
(d) Meetings of the Management Committee. The Management Committee
shall meet from time to time at meetings called by any member of the Management
Committee for the purpose of discussing or voting on any action as to which the
Management Committee is authorized to act, but shall in any case meet at least
monthly. Such meetings may be held at the principal office of the Company or at
such other place or places as the Management Committee may designate from time
to time. Notices of such meeting shall be given not less than five (5) days in
advance of the meeting to all members of the Management Committee; provided,
however, that in the case of an emergency, such meeting may be called on two (2)
Business Days' notice. Any member of the Management Committee may grant any
other member a proxy to act in his or her place at any meeting of the Management
Committee. Subject to Section 5.2(c)(i), the presence, either in person or by
proxy, of at least a majority of the members of the Management Committee
including at least one representative of each of General XXXX XX and CT-F2 shall
constitute a quorum. Meetings of the Management Committee may be held in person
or by telephone conference call. In addition, any action which may be taken at a
meeting of the Management Committee may be taken without a meeting if a consent
in writing, setting forth the action so taken, is signed by members of the
Management Committee sufficient to cause such action to be taken at a meeting of
the Management Committee at which all members of the Management Committee are
present. Such written consents shall be retained in the Company's minute book.
(e) Delegation of Powers by Members. The compensation and benefits of
officers, agents and employees appointed by the Management Committee to act on
behalf of the Company shall be fixed by the Management Committee. The Management
Committee may from time to time also appoint one or more officers of the
Company, such as a President, one or more Vice-Presidents, a Secretary and a
Treasurer, who shall have such powers and duties, and shall serve for such term
and compensation, as the Management Committee may determine. Such officers may
but need not be officers or employees of a Member.
5.3. Conduct of Management Committee Meetings; Minutes. A majority of the
members of the Management Committee shall nominate a Chair of each meeting, who
shall conduct the business of that meeting, and a Secretary of the meeting, who
shall keep the minutes and faithfully record all actions taken at that meeting.
The position of Chair of the first meeting shall be held by a Management
Committee representative appointed by General XXXX XX, and shall rotate
thereafter at each successive meeting from a representative appointed by General
XXXX XX to a representative appointed by CT-F2 and vice versa. All such minutes
shall be signed by such Chair and Secretary and shall be retained in the minute
book of the Company.
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ARTICLE VI
DISTRIBUTIONS AND ALLOCATION OF TAX ITEMS
6.1. Distributions.
(a) Net Cash Flow. Not later than ten (10) days after the applicable
Calculation Date, the Members shall, unless they otherwise agree, determine the
amount of cash which in their judgment is in excess of amounts necessary or
appropriate for operating expenses (including, without limitation, payments of
the Investment Management Fee to the Investment Manager pursuant to the Fund II
Investment Management Agreement), contingency reserves and other needs of the
Company. Such excess (the "Net Cash Flow") shall, as soon as possible following
the applicable Calculation Date, but in no event later than three (3) Business
Days following the determination of Net Cash Flow, be distributed to the Members
in accordance with this Section 6.1(a). The Net Cash Flow of the Company shall
not be reduced by depreciation, amortization, cost recovery deductions,
depletion, similar allowances or other noncash items, but shall be increased by
any release or reduction of reserves previously established (other than for the
payment of expenses reserved against). The Net Cash Flow of the Company shall be
calculated effective as of the applicable Calculation Date with respect to which
the Net Cash Flow is being distributed, regardless of the actual date of
distribution. Distributions of Net Cash Flow shall be made in accordance with a
Member's respective Percentage Interest. Notwithstanding anything herein to the
contrary, no Distributions (other than Distributions pursuant to Section 10.2)
may be made by the Company after a Notice of Default has been given pursuant to
Section 11.1 hereof until the Default to which the Notice of Default relates has
been cured as set forth in Section 11.1(c) hereof or the period to cure expires,
or as otherwise agreed by the Management Committee.
(b) Withdrawal of Capital; Limitation on Distributions. No Member shall
be entitled to withdraw any part of its Capital Contributions to, or to receive
any Distributions from, the Company except as provided in Sections 6.1(a) and
10.2. No Member shall be entitled to demand or receive interest on its Capital
Contributions or, except as set forth in Article X hereof, any property from the
Company other than cash.
6.2. Allocation of Net Profit and Net Loss. Net Profits and Net Losses
shall be allocated in accordance with each Member's Percentage Interest.
6.3. Withholding. Should the Company be required, pursuant to the Code, the
laws of any state or any other provision of law, to withhold any amount from
amounts otherwise distributable to any Member or on the basis of income
allocable to any Member, the Company shall withhold those amounts, and any
amounts so withheld shall be deemed to have been distributed to that Member
under this Agreement. If any sums are withheld pursuant to this provision, the
Company shall remit the sums so withheld to, and file the required forms with,
the Internal Revenue Service, the appropriate authority of any such state or
other applicable government agency. In the event of any claimed
over-withholding, a Member shall be limited to an action against the Internal
Revenue Service, the appropriate authority of any such state or other applicable
government agency for refund, and each Member hereby waives any claim or right
of action against the Company on account of such withholding. Furthermore, if
the amounts required to be withheld exceed the amounts which would otherwise
have been
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distributed to a Member, the Member shall contribute any deficiency to the
Company within ten (10) Business Days after notice from the Investment Manager.
If the deficiency is not contributed within that time, such failure shall be
considered a demand loan from the Company to that Member, with interest at a
rate equal to the lesser of fifteen percent (15%) or the highest rate permitted
by law, which interest shall be treated as an item of Company income and accrue
until discharged by the Member by repayment. Such demand loan shall be repaid in
full within ten (10) Business Days after demand (and for this purpose any Member
other than the Member on whose account such loan was made may unilaterally make
such demand for and on behalf of the Company), and otherwise shall be repaid,
without prejudice to any other remedies at law or in equity that the Company may
have, out of Distributions to which the debtor Member would otherwise
subsequently be entitled under this Agreement.
6.4. Restoration of Funds. Except as otherwise provided by law, no Member
shall be required to restore to the Company any funds properly distributed to it
pursuant to Section 6.1. or 10.2 If any Member receives Distributions from the
Company contrary to the provisions of this Agreement, that Member shall promptly
return the same to the Company.
ARTICLE VII
TAX ELECTIONS; TAX MATTERS MEMBER; TAX CAPITAL ACCOUNTS
7.1. Federal Income Tax Elections; Tax Matters Member.
(a) Tax Elections. The Members shall determine all elections to be made
by the Company for tax purposes.
(b) Tax Matters Member. General XXXX XX is hereby designated the Tax
Matters Member. The Tax Matters Member will take no action (other than
ministerial action without the prior approval of the Members. The Tax Matters
Member will not be required to take any action or incur any expenses for the
prosecution of any administrative or judicial remedies in its capacity as Tax
Matters Member unless the Members agree on a method of sharing expenses incurred
in connection with the prosecution of such remedies.
7.2. Tax Matters.
(a) The Company shall maintain a capital account for each Member in
accordance with the rules set forth in Treasury Regulation Section
1.704-1(b)(2)(iv). In the event an asset of the Company other than cash is
distributed in kind to a Member, such capital accounts shall be adjusted for the
hypothetical "book" gain or loss that would have been realized by the Company if
the distributed asset had been sold for its Fair Market Value in a cash sale (in
order to reflect unrealized gain or loss).
(b) For tax capital account maintenance purposes, except as otherwise
required by Section 704(c) of the Code,
(i) If the Company is dissolved pursuant to Section 10.1 during a
Fiscal Year, gross income and/or deductions of the Company for such Fiscal Year
and each Fiscal Year thereafter shall be first allocated to the Members in the
amount necessary to cause the tax capital account of each Member to be equal to
its Capital Account.
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(ii) If the Company is required to recognize any interest income
pursuant to Section 483 or Sections 1271 through 1288 of the Code in connection
with any transaction with a Member or any loss with respect to the transfer of
the Purchase Warrants to a Member, such interest income or loss shall be
specially allocated to such Member for tax purposes.
(iii) Any deduction allowed to the Company with respect to the
Service Warrants shall be specifically allocated to CT-F2.
(iv) Net income or loss as determined for purposes of Section
704(b) of the Code, as adjusted by the amount, if any, specially allocated
pursuant to clause (i), (ii) or (iii) above, shall be allocated in accordance
with Section 6.2.
(c) For income tax purposes, income, gain, loss and deduction shall be
allocated in accordance with the corresponding item under Section 7.2(b), except
as otherwise required by Section 704(c) of the Code.
ARTICLE VIII
OTHER RIGHTS AND OBLIGATIONS OF MEMBERS
8.1. Resignation of a Member. No Member may withdraw or resign from the
Company without the written consent of the Members, which consent may be given
or withheld in their absolute discretion. In the event of any withdrawal or
resignation in violation of this Section 8.1, such withdrawal or resignation
shall be void ab initio, and the withdrawing or resigning Member shall be
subject to any and all remedies available to the Company or the Members under
this Agreement, at law or in equity in respect of such default, and the Company
shall have the right to offset the damages against any amounts otherwise
distributable to the withdrawing or resigning Member.
8.2. Admission of New Members. Other than Members that may be admitted to
the Company pursuant to Section 9.2(b), no new or additional Members may be
admitted to the Company without the written consent of the Members.
8.3. Indemnification by Company. To the maximum extent permitted by law,
the Company shall defend, indemnify and hold harmless each Members and its
respective partners, shareholders and members, and their respective directors,
officers, employees and shareholders (each such Person being an "Indemnitee")
from and against any and all liabilities, losses, claims, judgments, fines,
settlements and damages incurred by the Indemnitee or by the Company, arising
out of any claim based upon any acts performed or omitted to be performed by the
Indemnitee in connection with the organization, management, business or property
of the Company (including in any Member's capacity as Tax Matters Member),
including costs, expenses and attorneys' fees (which may be paid as incurred)
expended in the settlement or defense of any such claims, except to the extent
that the claim giving rise to such indemnification rights: (a) arises out of any
gross negligence (which for purposes of this Agreement shall mean an act or
failure to act with reckless disregard of the consequences thereof), willful
misconduct, breach of fiduciary duty or a material breach of this Agreement by
the Indemnitee; or (b) is governed by Section 8.4. Except as required by Section
8.4, all judgments against the Company
15
and/or an Indemnitee wherein an Indemnitee is entitled to indemnification or
other amount payable to an Indemnitee pursuant to this Section 8.3 shall be
satisfied only from the assets of the Company.
8.4. Indemnification by Members. To the maximum extent permitted by law,
each Member shall defend, indemnify and hold harmless the Company and the other
Members and each of their respective directors, officers, employees, partners
and shareholders (each such Person being a "Nonrecourse Exception Indemnitee")
from and against any and all liabilities, losses, claims, judgments, fines,
settlements and damages, and any costs and expenses (including attorneys' fees
and disbursements) incurred in connection therewith, suffered or incurred by any
Nonrecourse Exception Indemnitee or arising out of any claim that the Company or
any Nonrecourse Exception Indemnitee is liable under any exceptions or
"carve-outs" to any nonrecourse provisions in any loan documents entered into by
the Company to the extent (a) such liability is attributable to any gross
negligence, willful misconduct, breach of fiduciary duty or material breach of
this Agreement by the indemnifying Member or any of its Affiliates,
shareholders, members, partners, officers, directors, employees or agents,
whether on behalf of the Company or otherwise, in violation of the requirements
of any such loan documents (unless the Management Committee agrees to violate
such loan document requirement) and (b) such liability exceeds any economic
benefit received by the Nonrecourse Exception Indemnitee as a direct result of
the breach, act or omission giving rise to the claim.
8.5. Exculpation. Except to the extent required by law, neither the Members
nor any of their respective directors, officers, employees or shareholders shall
be liable or responsible to the Company or the other Members for any act or
failure to act, or any loss, liability, damage, settlement cost or other expense
incurred by reason of any act or failure to act, of any such Person, provided
such Person acted in good faith and in a manner reasonably believed to be in, or
not opposed to, the interests of the Company, except to the extent such loss,
liability, damage, settlement cost or other expense resulted from the gross
negligence, willful misconduct, breach of fiduciary duty or material breach of
this Agreement by such Person. The termination of any action, suit or proceeding
by judgment, order or settlement shall not, of itself, create a presumption that
a Person did not act in good faith and in a manner reasonably believed to be in,
or not opposed to, the best interests of the Company. Furthermore, no Affiliate
of a Member shall be entitled to exculpation hereunder in respect of any act or
omission committed or omitted in its capacity as an independent contractor to
the Company, but, rather, the terms of the contract between such Affiliate and
the Company shall control with respect to exculpation.
8.6. Reimbursement of Members. Each of the Members, including the Tax
Matters Member acting in such capacity, shall be entitled to reimbursement from
the Company for out-of-pocket expenses reasonably, properly and directly
incurred by such Member on behalf of the Company and provided for in an approved
Annual Operating Budget; provided, however, that no Member shall seek
reimbursement from the Company for any "overhead" or general and administrative
expenses incurred by that Member.
8.7. Particular Covenants of Members.
(a) Defend Against Creditors. Each Member shall defend at its sole cost
and expense any claim made against its Membership Interest (including its right
to Distributions
16
from the Company) resulting from the personal indebtedness of that Member or
the claims of its individual creditors.
(b) Notice of Claims. Each Member shall promptly notify the other
Members as to any claims asserted or threatened against its Membership Interest
(including its right to Distributions from the Company).
ARTICLE IX
TRANSFERS OF COMPANY MEMBERSHIP INTERESTS
9.1. Condition to Transfer of Any Membership Interest. Without limiting
any other provisions of this ARTICLE IX, no Transfer of a Membership Interest
may be made unless all of the following requirements are satisfied, and any
purported Transfer of a Membership Interest failing to meet the following
requirements shall be void ab initio:
(a) Required Documents. The transferee executes and delivers to the
Company an instrument pursuant to which it agrees to be bound by the terms of
this Agreement, and such additional instruments and documents as shall be
reasonably required by the Members (including opinions of counsel to any
transferor satisfactory to the Members with respect to the matters set forth in
Section 9.1(b)).
(b) Restrictions. Such Transfer would not:
(i) Securities Laws. Result in the violation of the Securities
Act, or any regulation issued pursuant thereto, or any state securities law or
regulation or any other applicable federal or state laws or order of any court
having jurisdiction over the Company;
(ii) Events of Default. Be a violation of or an event of default
under, or give rise to a right to accelerate any indebtedness described in, any
note, mortgage, loan agreement or similar instrument or document to which the
Company is a party, unless the violation or event of default is waived by the
parties thereto;
(iii) Regulatory Requirements. Cause the Company or any Member to
be subject to any additional regulatory requirements;
(iv) Tax Status. Cause a substantial risk, in the opinion of
counsel to the Company, that the classification of the Company as a
"partnership" for Federal and state income tax purposes could be adversely
affected;
(v) Prohibited Transaction. Result in or create a "prohibited
transaction" or cause the Company or a Member or an Affiliate of a Member to be
or become a "party in interest", as defined in Section 3(14) of ERISA, or a
"disqualified person", as defined in Section 4975 of the Code with respect to
any plan, as defined in Section 3(3) of ERISA and/or Section 4975 of the Code,
or result in or cause the Company or any Member or any Affiliate of a Member to
be liable for tax under Chapter 42 of the Code or otherwise cause any such
Person to incur tax liabilities;
17
(vi) Not Legally Competent. Be a Transfer to an individual who is
not legally competent or who has not achieved his or her majority under
applicable law (excluding trusts for the benefit of minors); or
(vii) Transfer to a Foreign Person. Be a Transfer to a Person who
constitutes a "foreign person" under Section 1445 of the Code.
(c) Costs. The transferor or transferee pays to the Company any and all
costs incurred and to be incurred by the Company in connection with the
Transfer, to the extent such costs would not have been incurred by the Company
if the Transfer had not been proposed or made.
9.2. Transfers of Membership Interests.
(a) Transfers Restricted. No Member may Transfer all or any portion of
its Membership Interest, except as set forth in Section 9.2(b), and any
purported Transfer of its Membership Interest failing to meet the requirements
of Sections 9.1 and 9.2(b) shall be void ab initio.
(b) Transfers of Membership Interest to Affiliates. Subject only to the
provisions of Section 9.1, a Member, with Notice to (but without consent of) the
other Member, may Transfer all (but not less than all) of its Membership
Interest at any time as follows:
(i) CT-F2 may Transfer its Membership Interest to any wholly owned
entity of CT; and
(ii) Limited REMI I may Transfer its Membership Interest to
Citigroup Inc. or to any of its direct or indirect wholly owned entities, or to
Travelers Property Casualty Corp. or any of its direct or indirect wholly owned
entities.
In accepting any such assignment, any such assignee shall automatically become a
Substitute Member with all of the rights and powers granted to the assigning
Member herein but no such Transfer shall release the transferring Member of any
of its obligations hereunder, unless such release is approved in writing by the
other Member.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.1. Dissolution. The Company shall be dissolved upon the first to occur
of the following:
(a) Bankruptcy of the Company. The Bankruptcy of the Company;
(b) Agreement to Dissolve. The decision of the Members to dissolve the
Company pursuant to Section 11.2 or for any reason;
(c) Election of Non-Defaulting Member. The election of the
Non-Defaulting Member pursuant to Section 11.2(f); or
18
(d) Judicial Dissolution. The entry of a decree of judicial dissolution
under Section 18-802 of the Delaware Act with respect to the Company or Fund II.
10.2. Winding up Affairs and Distribution of Assets.
(a) Liquidation. Upon the dissolution of the Company, the Members shall
choose a liquidating Member ("Liquidating Member"), and the Liquidating Member
shall proceed to wind up the affairs of the Company, liquidate the remaining
property and assets of the Company and wind up and terminate the business of the
Company. Any such Liquidating Member shall cause a full accounting of the assets
and liabilities of the Company to be taken and shall cause the assets to be
liquidated and the business to be wound up as promptly as possible.
(b) Payments of Proceeds Upon Liquidation. The proceeds of liquidation
of the Company shall be applied in the following order of priority: (i) first,
to the expenses of such liquidation; (ii) second, to the debts and liabilities
of the Company owing to third parties (including payments owed to the Investment
Manager pursuant to the Fund II Investment Management Agreement), in the order
of priority provided by law; (iii) third, a reasonable reserve shall be set up
to provide for any contingent or unforeseen liabilities or obligations of the
Company owing to third parties and at the expiration of such period as the
Members may deem advisable, the balance remaining in such reserve shall be
distributed as provided herein; (iv) fourth, to the debts and liabilities of the
Company owing to the Members or their Affiliates, including any reimbursements
payable under this Agreement; (v) fifth, the Warrant Purchase Note shall be
distributed to General XXXX XX; and (vi) sixth, to the Members in accordance
with their respective Capital Accounts (after taking into account all
allocations and prior distributions). Assets distributed in kind shall be taken
into account at their Fair Market Value.
10.3. No Liability. Notwithstanding anything to the contrary in this
Agreement, no Member shall have any obligation to make any contribution to the
capital of the Company on account of any negative balance on its Capital Account
or tax capital account, whether at liquidation or otherwise, and the negative
balance of that Member's Capital Account or tax capital account shall not be
considered a debt owned by that Member to the Company or to any other person for
any purpose whatsoever.
10.4. Limitations on Payments Made in Dissolution. Except as otherwise
specifically provided in this Agreement, each Member shall be entitled to look
only to the assets of the Company for the return of that Member's positive
Capital Account balance and shall have no recourse for its Capital Contributions
and/or share of Net Profits (upon dissolution or otherwise) against any other
Member.
10.5. Certificate of Cancellation. Upon completion of the winding up of the
Company's affairs, the Liquidating Member shall file a Certificate of
Cancellation with the Delaware Secretary of State.
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ARTICLE XI
DEFAULT AND REMEDIES
11.1. Default.
(a) Default. The occurrence of any of the following shall constitute a
default ("Default") hereunder by the affected Member:
(i) A Member assigns or otherwise Transfers its Membership
Interest other than as set forth in Article IX;
(ii) The voluntary dissolution of the Member;
(iii) The Bankruptcy of the Member;
(iv) A Member materially breaches any of its obligations
hereunder;
(v) A Member commits an act of fraud involving the Company (which
materially damages the Company) or intentionally misappropriates significant
funds of the Company;
(vi) The Investment Manager commits an act of fraud involving Fund
II (which materially damages Fund II) or intentionally misappropriates
significant funds of Fund II;
(vii) A Member's Affiliate that is a limited partner in Fund II
materially breaches any of its obligations under the Fund II Partnership
Agreement, including any failure by such Affiliate to comply with the CIG
Parties Commitment or the CT Parties Commitment (as such terms are defined in
the Venture Agreement), as the case may be, pursuant to the Venture Agreement;
or
(viii) A Member or the members of the Management Committee
designated by such Member causes the Company to default in an obligation
required to be performed by the Company pursuant to the Venture Agreement or the
Fund II Investment Management Agreement.
(b) Notice of Default. If a Default occurs with respect to a Member,
the other Member (the "Non-Defaulting Member") shall have the right to give that
Member (the "Defaulting Member") Notice of that Default (a "Notice of Default").
The Notice of Default shall set forth the nature of the Default with reasonable
specificity.
(c) Period to Cure. A Member who shall have received a Notice of
Default with respect to a Default under any of clauses (i), (iv), (vii) or
(viii) of Section 11.1(a) shall have a period of thirty (30) days after receipt
of such Notice of Default to cure such Default and the Notice of Default with
respect thereto shall not be effective unless such Default is not cured within
such thirty (30) day period. In such case, the Defaulting Member shall lose no
rights hereunder with respect to a Default that has been so cured. However, if
such Default was not cured within thirty (30) days of receipt of the Notice of
Default, then the Default shall constitute
20
an "Event of Default", and Limited REMI I or CT-F2, as the case may be, shall
have the rights set forth in Section 11.2.
11.2. Remedies Upon Event of Default. Subject to Section 11.1(c), upon the
occurrence of an Event of Default by a Defaulting Member, then in addition to
the remedies set forth in Section 4.3(b) hereof, the Non-Defaulting Member may
elect to do any one or more of the following by Notice to the Defaulting Member.
(a) Terminate the Defaulting Member's right to designate
representatives to serve on the Management Committee, participate in any
decision with respect to the Company's Business and to consent to or approve any
matter which, but for the Event of Default, would require the Defaulting
Member's consent or approval;
(b) Cause the Company to withhold any Distributions payable on account
of the Defaulting Member's Membership Interest and apply such Distributions,
instead, to the damages suffered by the Non-Defaulting Member as a result of the
Event of Default;
(c) Cause Fund II to withhold any distributions payable on account of
the Defaulting Member's Affiliate's limited partnership interest in Fund II and
apply such distributions, instead, to the damages suffered by the Non-Defaulting
Member as a result of the Event of Default;
(d) Cause the Company to pay the Non-Defaulting Member all Management
Fees not yet accrued and owing, subject to year end adjustment for any
overpayment or underpayments;
(e) If CT-F2 is the Defaulting Member, or if its Affiliate that is the
limited partner in Fund II is in default as set forth in Section 11.1(a)(v)
hereof, then General XXXX XX shall have the right to terminate the Fund II
Investment Management Agreement;
(f) Cause the Company to dissolve pursuant to Section 10.1 hereof; and
(g) Pursue, and/or cause the Company to pursue, any other remedy
provided in this Agreement, at law or in equity.
11.3. Dispute Resolution. Should any dispute arise under this Agreement,
other than with respect to Fair Market Value, then the parties shall resolve
such dispute pursuant to Section 4.2 of the Venture Agreement.
11.4. Waiver of Partition and Certain Other Rights. Each of the Members
irrevocably waives any right or power that it might have: (a) to cause the
Company or any of its assets to be partitioned; (b) to compel any sale of all or
any portion of the assets of the Company under any applicable law; (c) to cause
the appointment of a receiver for all or any portion of the assets of the
Company; or (d) to file a complaint, or to institute proceedings at law or in
equity, to cause the dissolution or liquidation of the Company, other than in
accordance with this Agreement. Each of the Members has been induced to enter
into this Agreement in reliance upon the waivers of this Section 11.4, and
without those waivers no Member would have entered into this Agreement.
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ARTICLE XII
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
12.1. Reciprocal Representations and Warranties. Each Member hereby
represents and warrants to the Company and each other Member that:
(a) Organization; Authority; Due Authorization.
(i) Organization and Good Standing. It is a limited liability
company duly organized, validly existing and in good standing under the
applicable laws of its jurisdiction of formation; has all requisite power to
own, lease and operate its assets, properties and business and to carry on its
business as now conducted; and is duly qualified or licensed to do business as a
foreign limited liability company and is in good standing in every jurisdiction
in which the nature of its business or the location of its properties requires
such qualification or licensing, except for such jurisdictions where the failure
to so qualify or be licensed would not have a material adverse effect upon its
ability to perform fully its obligations under this Agreement or any other
related agreement.
(ii) Authority to Execute and Perform Agreements. It has all
requisite limited liability company power and authority to enter into, execute
and deliver this Agreement, and all other related agreements to be executed by
it and to perform fully its obligations hereunder and thereunder.
(iii) Due Authorization; Enforceability. It has taken all limited
liability company actions necessary to authorize it to enter into and perform
fully its obligations under this Agreement and all other related agreements to
be executed by it and to consummate the transactions contemplated herein and
therein. This Agreement has been duly and validly executed by each Member and
constitutes the legal, valid and binding obligation of each Member, enforceable
in accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar applicable laws
affecting creditors' rights generally or by general equitable principles
affecting the enforcement of contracts.
(iv) United States Person. It is a "United States" person
(as defined in Section 7701 of the Code).
(v) Ownership. General XXXX XX is a wholly owned indirect entity
of Citigroup Inc. and Travelers Property Casualty Corp., and CT-F2 is a wholly
owned direct entity of CT.
(b) No Violation. Neither its execution or delivery of this Agreement
nor the consummation of the transactions contemplated herein will (i) violate
any provision of its organizational documents limited liability company
agreement; or (ii) violate in any material respect any applicable law or order.
(c) Regulatory and Other Approvals. No consent, approval,
authorization, notice, filing, exemption or other requirement must be obtained
by it from any authority or Person or must otherwise be satisfied by it in order
that the consummation of the transactions
22
contemplated in this Agreement or any related documents will not violate in any
material respect any applicable law or order or any material contract to which
it is a party.
(d) Securities Matters. It (i) is acquiring its Membership Interest for
itself for investment purposes only, and not with a view to any resale or
distribution of such Membership Interest, (ii) has been advised and understands
that such Membership Interest has not been and will not be registered under the
Securities Act, or any applicable state securities laws and, therefore, cannot
be resold unless such Membership Interest is registered under the Securities Act
and all applicable state securities laws, or unless exemptions from registration
are available, and (iii) has, either alone or with its "purchaser
representatives," as that term is defined in Rule 501(h) under the Securities
Act, such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the Company. It
further acknowledges that the Company has made available to such Member, at a
reasonable time prior to its acquisition of its Membership Interest, the
opportunity to ask questions and receive answers concerning the terms and
conditions of such acquisition and to obtain any additional information which
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to verify the accuracy of the information furnished by the Company
in connection with such acquisition.
ARTICLE XIII
BOOKS, RECORDS AND REPORTS
13.1. Maintenance of Books. The Company shall keep complete and accurate
books and records of accounts maintained in accordance with GAAP. Tax records
shall be maintained in accordance with the accrual method of accounting. The
books of account for the Company shall be maintained at the principal office of
the Company.
13.2. Records to be Maintained. The Company shall maintain the following
records:
(a) A current list of the full name, set forth in alphabetical order,
and last known mailing address together with the Capital Contribution and the
share of profit and losses of each Member or information from which such share
can be readily derived;
(b) A copy of the Certificate of Formation and all amendments thereto
or restatements thereof, together with executed copies of any powers of attorney
pursuant to which such Certificate of Formation have been executed;
(c) A copy of this Agreement, any amendments hereto and any
restatements hereof; and
(d) A copy of the Company's Federal, state and local income tax returns
or informational returns and reports, if any, for the past ten (10) years.
13.3. Inspection by Members; Confidential Information. (a) Any Member shall
have the right to inspect and copy at such Member's expense, any documents,
including financial statements maintained by the Company and other information
regarding the affairs of the Company, as is reasonable.
23
(b) The Members acknowledge that from time to time, they may receive
information from or regarding the Company in the nature of trade secrets or that
otherwise is confidential, the release of which may be damaging to the Company
or Persons with which it does business. Each Member shall hold in strict
confidence any information it receives which is subject to a confidentiality
agreement binding on the Company or any of its employees, whether as a principal
or as an agent, and may not disclose such information to any Person other than
another Member except for disclosures (i) compelled by law (but such Member must
notify the other Member promptly of any request for that information, before
disclosing it if practicable), (ii) to advisers or representatives of the Member
or Persons to which that Member's Membership Interest may be assigned as
permitted by this Agreement, but only if the recipients have agreed to be bound
by the provisions of this Section 13.3(b), (iii) of information that Member also
has received from a source independent of the Company that the Member reasonably
believes obtained that information without breach of any obligation of
confidentiality, (iv) in accordance with the terms of such confidentiality
agreements or (v) upon the consent of each Member but only if such employee is
informed that such information is to be held in strict confidence. The Members
acknowledge that breach of the provisions of this Section 13.3(b) may cause
irreparable injury to the Company for which monetary damages are inadequate,
difficult to compute, or both. Accordingly, the Members agree that the
provisions of this Section 13.3(b) may be enforced by specific performance.
13.4. Books and Tax Reports. The books of account shall be closed promptly
after the end of each Fiscal Year. Within ninety (90) days after the conclusion
of each Fiscal Year, each Member shall be provided with a Form K-1 and/or other
information statement with respect to its distributive share of income, gains,
deductions, losses and credits for income tax reporting purposes for the
previous Fiscal Year, together with any other information concerning the Company
necessary for the preparation of a Member's income tax return(s), all under the
supervision and as determined by the Tax Matters Member in its reasonable
discretion. With the sole exception of mathematical errors in computation, these
tax statements and the information contained therein shall be deemed conclusive
and binding upon such Member. Each Member agrees that it shall not (i) treat, on
its income tax returns, any item of income, gain, loss, deduction or credit
relating to its interest in the Company in a manner inconsistent with the
treatment of such item by the Members as reflected on the Form K-1 or other
information statement furnished by the Company to such Member for use in
preparing its income tax returns or (ii) file any claim for refund relating to
any such item based on, or which would result in, such inconsistent treatment.
Notwithstanding anything herein to the contrary, General XXXX XX shall cause the
Company's income tax returns for each Fiscal Year through and including the
Fiscal Year in which the aggregate amounts committed by the CIG Parties (as
defined in the Venture Agreement) and the aggregate Private Banking Client
Commitments (within the meaning of, and pursuant to, the Venture Agreement)
equal or exceed $250,000,000. Such returns will be prepared and furnished to
CT-F2 for its review and comment at least fifteen (15) Business Days before the
due date of the tax return. If CT-F2 does not furnish comments to General XXXX
XX within fifteen (15) Business Days, General XXXX XX may cause the Company to
file such tax returns.
24
ARTICLE XIV
MISCELLANEOUS
14.1. Notices.
(a) Form and Addresses. All notices, consents, approvals, waivers,
elections and other communications (collectively, "Notices") required to be
given pursuant to this Agreement shall be given in writing and,
If to Limited REMI I: Travelers General Real Estate Mezzanine
--------------------
Investments II LLC
000 Xxxxxxxx Xxxx., 0XX
Xxxxxxxx, XX 00000-0000
Attn: Xxxxx Xxxxxx, Esq.
Real Estate Investment Number: 12833
With Copies to: Citigroup Investments Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Mr. Xxxxxxx Xxxxxx
Real Estate Investment Number: 12833
Loeb & Loeb LLP
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
If to CT: Capital Trust. Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxx
With a Copy to: Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
(b) Delivery. All notices and other communications required or
permitted by this Agreement shall be deemed to have been duly given if
personally delivered to the intended recipient at the proper address determined
pursuant to this Section 14.1 or sent to such recipient at such address by air
courier, by overnight courier, or by hand and will be deemed given, unless
earlier received: (a) if sent by courier when recorded on the records of the
courier as received by the receiving party; and (b) if delivered by hand, on the
date of receipt.
14.2. Certificate Requirements. From time to time the Members shall sign
and acknowledge all such writings as are required to amend the Certificate of
Formation, for the
25
carrying out of the terms of this Agreement, or, upon dissolution of the
Company, to cancel such certificate.
14.3. Modification. No change or modification of this Agreement shall be of
any force unless such change or modification is in writing and has been signed
by all of the Members.
14.4. Waivers and Consents. No waiver of any breach of any of the terms of
this Agreement shall be effective unless such waiver is in writing and signed by
the Member against whom such waiver is claimed. No waiver of any breach shall be
deemed to be a waiver of any other or subsequent breach. Any consent of a Member
required hereunder must be in writing and signed by such Member to be effective.
No consent given by a Member in any one instance shall be deemed to waive the
requirement for such Member's consent in any other or future instance.
14.5. Severability. If any provision of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
14.6. Further Assurances. Each Member shall execute such deeds,
assignments, endorsements, evidences of Transfer and other instruments and
documents and shall give such further assurances as shall be consistent with the
provisions of this Agreement and necessary to perform its obligations hereunder.
14.7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to its conflict
of laws principles.
14.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
14.9. Limitation on Rights of Others. No Person other than a Member shall
have any legal or equitable right, remedy or claim under or in respect of this
Agreement; no third party (i.e., Person other than a Member) shall be a
beneficiary of any provision of this Agreement.
14.10. Brokers and Finders. Except as set forth in the Placement Agent
Agreement and in the CT-F2-GP Capital Formation Agreements and the General XXXX
XX Capital Formation Agreement (each as defined in the Venture Agreement), there
are no brokers, finders or placement agents, and (ii) each Member shall
indemnify and hold all of the other Members and the Company harmless from and
against any commission, fee or other payment due any broker, finder or other
Person in connection with such Member's decision to invest in the Company.
14.11. Construction and Interpretation. This Agreement shall not be
construed more strictly against one party than against another by reason of the
fact that it may have been prepared by counsel for one of the parties.
14.12. Successors And Assigns. This Agreement shall be binding upon and
inure to the benefit of the Members and their respective successors and
permitted assigns. This Agreement
26
and the rights and obligations set forth herein are for the sole benefit of the
parties hereto and their respective Affiliates. Nothing contained herein is
intended to confer upon any other Person any rights or remedies hereunder.
14.13. Survival. Sections 8.3 through 8.7, and Articles X through XIV
hereof shall survive termination of this Agreement.
27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above stated.
MEMBERS:
TRAVELERS GENERAL REAL
ESTATE MEZZANINE INVESTMENTS
II, LLC
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
Vice President
CT-F2-GP, LLC
By: Capital Trust, Inc.,
its sole member
By: /s/ Xxxx X. Xxxxx
----------------------------------
Xxxx X. Xxxxx
Chief Executive Officer
28
EXHIBIT "A"
Names and Initial Capital Account
Member Name Initial Capital
Account
Travelers General Real Estate Mezzanine $50
Investments II, LLC
CT-F2-GP, LLC $50
29
