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Exhibit 3.1
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
CAREY DIVERSIFIED LLC
(a Delaware limited liability company)
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (the
"Agreement") of CAREY DIVERSIFIED LLC, a Delaware limited liability company (the
"Company"), dated as of [ ], 1997, is entered into by and among those Persons
who have executed this Agreement or a counterpart hereof, or who become parties
hereto pursuant to the terms of this Agreement.
W I T N E S S E T H:
WHEREAS, Carey Management LLC (the "Managing Member") and Carey Property
Advisors LP (the "Initial Member") (together, the "Original Shareholders") have
formed the Company and contributed to the Company, in consideration for their
respective limited liability company interests in the Company, the consideration
specified herein.
WHEREAS, as part of a transaction (the "Consolidation") whereby the
Subsidiary Partnerships (as defined herein) will be merged with and into the CPA
Partnerships (as defined herein), resulting in certain of the limited partners
of such CPA Partnerships becoming Shareholders (as defined herein).
WHEREAS, this Agreement shall constitute the Limited Liability Company
Agreement of the Company, and shall be binding upon all Persons (as defined
herein) now or at any time hereafter who are Shareholders (as defined herein).
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Agreement, and of other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto, intending legally
to be bound, hereby agree as follows:
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ARTICLE 1
Definitions
Capitalized terms used in this Agreement shall have the meanings set forth
below or in the Section of this Agreement referred to below, except as otherwise
expressly indicated or limited by the context in which they appear in this
Agreement. All terms defined in this Article 1 or in the preamble to this
Agreement in the singular have the same meanings when used in the plural and
vice versa.
1.1. "Acquiring Person" shall have the meaning set forth in Section 13.1
of this Agreement.
1.2. "Act" means the Delaware Limited Liability Company Act, Del. Code
Ann. tit. 6, ss.ss.18-101 et seq., as amended from time to time.
1.3. "Adjusted Capital Account Deficit" means with respect to any
Shareholder, the negative balance, if any, in such Shareholder's Capital Account
as of the end of any relevant Fiscal Year, determined after giving effect to the
following adjustments:
(a) credit to such Capital Account any portion of such negative
balance which such Shareholder (i) is treated as obligated to restore to
the Company pursuant to the provisions of Section 1.704-1(b)(2)(ii)(c) of
the Treasury Regulations, or (ii) is deemed to be obligated to restore to
the Shareholder pursuant to the penultimate sentences of Section
1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury Regulations; and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.
1.4. "Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person; (ii) any Person owning or controlling 10% or more of the
outstanding voting securities of such Person; (iii) any officer, director or
partner of such Person or of any Person specified in (i) or (ii) above; and (iv)
any Person in which any officer, director or partner of any Person specified in
(iii) above is an officer, director or partner.
1.5. "Agreement" means this Amended and Restated Limited Liability Company
Agreement of the Company, as may be amended,
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restated, supplemented or otherwise modified from time to time as herein
provided.
1.6. "Announcement Date" shall have the meaning set forth in Section 12.3
of this Agreement.
1.7. "Associate" shall have the meanings set forth in Sections 12.1 and
13.1 of this Agreement.
1.8. "Beneficial Owner" shall have the meaning set forth in Section 12.1
of this Agreement.
1.9. "Board of Directors" or "Board of Managers" or "Board" means the
board on which all of the Company's Managers sit, in their capacities as
Managers.
1.10. "Book Gain" or "Book Loss" means the gain or loss recognized by the
Company for Section 704(b) book purposes in any Fiscal Year by reason of any
sale or disposition with respect to any of the assets of the Company. Such Book
Gain or Book Loss shall be computed by reference to the Book Value of such
property or assets as of the date of such sale or disposition (determined in
accordance with Section 1.12 of this Agreement), rather than by reference to the
tax basis of such property or assets as of such date, and each and every
reference herein to "gain" or "loss" shall be deemed to refer to Book Gain or
Book Loss, rather than to tax gain or tax loss, unless the context manifestly
otherwise requires.
1.11. "Book Value" means, with respect to any asset of the Company, such
asset's adjusted basis for federal income tax purposes, except as follows:
(a) the initial Book Value of any asset contributed by a Shareholder
to the Company shall be the gross fair market value of such asset, without
reduction for liabilities, as determined by the contributing Shareholder
and the Company on the date of contribution thereof;
(b) if the Managing Member reasonably determines that an adjustment
is necessary or appropriate to reflect the relative economic interests of
the Shareholders, the Book Values of all Company assets shall be adjusted
in accordance with Sections 1.704-1(b)(2)(iv)(f) and (g) of the Treasury
Regulations to equal their respective gross fair market values, without
reduction for liabilities, as reasonably determined by the Managing
Member, as of the following times:
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(1) a Capital Contribution (other than a de minimis Capital
Contribution) to the Company by a new or existing Shareholder as
consideration for a Share; or
(2) the distribution by the Company to a Shareholder of more
than a de minimis amount of Company assets as consideration for the
repurchase of a Share; or
(3) the liquidation of the Company within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations;
(c) the Book Value of Company assets distributed to any Shareholder
shall be the gross fair market values of such assets (taking Section
7701(g) of the Code into account) without reduction for liabilities, as
reasonably determined by the Managing Member as of the date of
distribution; and
(d) The Book Value of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent
that such adjustments are taken into account in determining Capital
Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury
Regulations (as set forth in Section 3.4); provided, however, that Book
Values shall not be adjusted pursuant to this paragraph (d) to the extent
the Managing Member reasonably determines that an adjustment pursuant to
paragraph (b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
paragraph (d).
At all times, Book Value shall be adjusted by any Depreciation taken into
account with respect to the Company's or a CPA Partnership's assets for purposes
of computing Profit and Loss.
1.12. "Business Combination" shall have the meaning set forth in Section
12.1 of this Agreement.
1.13. "Bylaws" means the bylaws of the Company, as amended from time to
time, governing various aspects of the operation of the Company and the rights
and obligations of its Shareholders, Board of Directors, officers and other
agents. The Bylaws shall be deemed an amendment and supplement to and part of
this Agreement after they are adopted by the Board of Directors in accordance
with Section 7.1(a). All provisions of the Bylaws not
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inconsistent with law or this Agreement shall be valid and binding.
1.14. "Capital Account" shall have the meaning ascribed thereto in Section
3.4 of this Agreement.
1.15. "Capital Contributions" means the total amount of cash and the fair
market value of other property contributed to the Company by the Shareholders.
1.16. "Capital Transactions" means (a) any sale, exchange, taking by
eminent domain, damage, destruction or other disposition of all or any part of
the assets of the Company, other than tangible personal property disposed of in
the ordinary course of business; or (b) any financing or refinancing of any
Company indebtedness; provided, that the receipt by the Company of Capital
Contributions shall not constitute Capital Transactions.
1.17. "Certificate" means the "Certificate of Formation" of the Company,
as originally filed with the office of the Secretary of State of the State of
Delaware, as amended, restated, supplemented or otherwise modified from time to
time as herein provided.
1.18. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any subsequent federal law of similar import, and, to the extent
applicable, any Treasury Regulations promulgated thereunder.
1.19. "Company" means the limited liability company heretofore formed and
continued hereby in accordance with this Agreement by the parties hereto, as
such limited liability company may from time to time be constituted.
1.20. "Company Interest" means a limited liability company interest in the
Company, and, if the context so allows, the percentage of a limited liability
company interest as compared to all of the aggregate Capital Accounts of all
Shareholders (as such percentage may be changed from time to time to reflect
adjustments as provided for in this Agreement); it being understood and agreed
that this term shall not be deemed to apply to any debt incurred by the Company
(directly or indirectly), including but not limited to through custodial, trust,
or similar or other arrangements.
1.21. "Consent" means either the consent given by vote at a duly called
and held meeting or the prior written consent, as the case may be, of a Person
to do the act or thing for which the
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consent is solicited, or the act of granting such consent, as the context may
require.
1.22. "Consolidation" shall have the meaning set forth in the recitals to
this Agreement.
1.23. "Consolidation Date" means the date on which the Consolidation is
consummated.
1.24. "Control Shares" shall have the meaning set forth in Section 13.1 of
this Agreement.
1.25. "CPA Partnership" means Corporate Property Associates, a California
limited partnership, Corporate Property Associates 2, a California limited
partnership, Corporate Property Associates 3, a California limited partnership,
Corporate Property Associates 4, a California limited partnership, Corporate
Property Associates 5, a California limited partnership, Corporate Property
Associates 6, a California limited partnership, Corporate Property Associates 7,
a California limited partnership, Corporate Property Associates 8, L.P., a
Delaware limited partnership, Corporate Property Associates 9, L.P., a Delaware
limited partnership or any of them.
1.26. "Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other period for federal income tax
purposes; provided, that if the Book Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of any such year or other
period, Depreciation shall be an amount that bears the same relationship to the
Book Value of such asset as the depreciation, amortization, or other cost
recovery deduction computed for federal income tax purposes with respect to such
asset for the applicable period bears to the adjusted tax basis of such asset at
the beginning of such period, or if such asset has a zero adjusted tax basis,
Depreciation shall be an amount determined under any reasonable method selected
by the Board of Directors.
1.27. "Determination Date" shall have the meaning set forth in Section
12.3 of this Agreement.
1.28. "Director" shall have the same meaning as Manager.
1.29. "Distribution Payment Date" means each such date as the Board of
Directors shall declare for a distribution to Shareholders.
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1.30. "Entity" means any general partnership, limited partnership,
corporation, joint venture, trust, limited liability company, limited liability
partnership, business trust, cooperative, or association. An Entity may or may
not be an Affiliate of the Company or of a Company Affiliate.
1.31. "Exchange Value" means the appraised value of a CPA Partnership or
any interest therein.
1.32. "Fiscal Year" means the fiscal year of the Company and shall be the
same as its taxable year, which shall be the calendar year unless otherwise
determined by the Board of Directors in accordance with the Code.
1.33. "Five Year Tolling Period" shall have the meaning set forth in
Section 12.2 of this Agreement.
1.34. "Future Shares" shall have the meaning set forth in Section 3.1 of
this Agreement.
1.35. "Independent Director" means a Director of the Company who, in the
opinion of the Board of Directors of the Company, is free from any relationship
that would interfere with the exercise of independent judgment. A Director of
the Company who is an Affiliate of the Company or an officer or employee of the
Company or its Subsidiaries or Affiliates would not qualify as an Independent
Director.
1.36. "Initial Capital Contribution" means any Capital Contribution made
in accordance with Section 3.2 hereof.
1.37. "Interested Shares" shall have the meaning set forth in Section 13.1
of this Agreement.
1.38. "Interested Party" shall have the meaning set forth in Section 12.1
of this Agreement.
1.39. "Limited Partner" means a limited partner of a CPA Partnership.
1.40. "Listed Shareholders" means the holders of Listed Shares.
1.41. "Listed Shares" shall have the meaning set forth in Section 3.1 of
this Agreement.
1.42. "Managers" means those individuals serving on the Board of Directors
of the Company, including successor or additional Managers duly elected in
accordance with the terms of
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this Agreement in their capacities as "Managers" of the Company within the
meaning of the Act.
1.43. "Market Value" shall have the meaning set forth in Section 12.1 of
this Agreement.
1.44. "Members" means the Original Shareholders, together with all Persons
who become Members as herein provided and who are listed as members of the
Company in the books and records of the Company, in such Persons' capacity as
"Members" of the Company within the meaning of the Act.
1.45. "Merger Agreement" means any of those certain agreements dated as of
[ ], 1997, by which a Subsidiary Partnership is merged with and into a CPA
Partnership.
1.46. "Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations.
1.47. "Nonrecourse Liabilities" has the meaning set forth in Section
1.704-2(b)(3) of the Treasury Regulations.
1.48. "Original Member" or "Original Shareholder" has the meaning therefor
set forth in the recitals to this Agreement.
1.49. "Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Treasury Regulations Section 1.704-2(i)(3).
1.50. "Partner Nonrecourse Debt" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(4).
1.51. "Partner Nonrecourse Deductions" has the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Company
taxable year shall be determined in accordance with the rules of Treasury
Regulations Section 1.704-2(i)(2).
1.52. "Partnership Assets" means collectively the properties and other
assets originally held by a CPA Partnership.
1.53. "Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of a CPA Partnership.
1.54. "Partnership Interest" means a partnership interest in a CPA
Partnership.
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1.55. "Partnership Minimum Gain" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in a Partnership Minimum Gain, for a
Company taxable year shall be determined in accordance with the rules of
Treasury Regulations.
1.56. "Permitted Selling Expenses" means the out-of-pocket expenses
actually incurred directly by a CPA Partnership in the course of selling a
particular Property, or by securing such Property; or, if no such actual sale
has occurred in the case in question, the out-of-pocket expenses which would
have been incurred directly by such CPA Partnership (based on local conditions
and practices existing at the time) had such CPA Partnership sold a particular
Property.
1.57. "Person" means any individual or Entity, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such Person
where the context so admits.
1.58. "Profit" and "Loss" means, for each Fiscal Year or other period for
which allocations to Shareholders are made, an amount equal to the Company's
taxable income or loss for such year or period, determined in accordance with
Section 703(a) of the Code (provided, that for this purpose, all items of
income, gain, loss, or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(a) Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profit or Loss pursuant
to this provision shall be added to such taxable income or loss;
(b) Any expenditure of the Company described in Section 705(a)(2)(B)
of the Code or treated as Code Section 705(a)(2)(B)expenditures pursuant
to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not
otherwise taken into account in computing Profit or Loss pursuant to this
provision, shall be subtracted from such taxable income or loss;
(c) Book Gain or Book Loss from a Capital Transaction shall be taken
into account in lieu of any tax gain or tax loss recognized by the Company
by reason of such Capital Transaction; and
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(d) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, there shall be taken into account Depreciation for such Fiscal Year
or other period, computed as provided in this Agreement.
If the Company's taxable income or loss for such Fiscal Year or other
period, as adjusted in the manner provided above, is a positive amount, such
amount shall be the Company's Profit for such Fiscal Year or other period; and
if a negative amount, such amount shall be the Company's Loss for such Fiscal
Year or other period.
1.59. "Property" means the land and the buildings thereon which the
Company or a CPA Partnership owns at a particular time.
1.60. "Relative" means, with respect to any Person, any parent,
spouse, brother, sister, or natural or adopted lineal descendant or spouse of
such descendant of such Person.
1.61. "Sale" means the sale or other disposition of a Partnership Property
to a third party which is unaffiliated with the current CPA Partnership (or
respective general partner) owning such Property; provided, however, that this
term shall not include the pledge, mortgage or encumbrance of a Property, or of
any interest therein, in connection with the financing, refinancing or other
leveraging of such Property or otherwise or any assignment of any leases or
rents related to such Property.
1.62. "Shareholders" means all Persons who hold Shares, and shall have the
same meaning as the word "Members".
1.63. "Shares" means Company Interests and includes Listed Shares and
Future Shares.
1.64. "Subsidiary" shall have the meaning set forth in Section 12.1 of
this Agreement.
1.65. "Subsidiary Partnership" means any of the limited partnerships which
are Subsidiaries of the Company which will merge into the CPA Partnerships in
connection with the Consolidation.
1.66. "Tax Matters Partner" shall have the meaning ascribed thereto in
Section 3.6 of this Agreement.
1.67. "Transfer" (or "Transferred") means to give, sell, assign, devise,
bequeath, or otherwise dispose of, transfer, or permit to be transferred, during
life or at death. The word
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"Transfer," when used as a noun, shall mean any Transfer transaction.
1.68. "Transferee" means any Person to whom Shares are Transferred by a
Shareholder for any reason or by any means.
1.69. "Treasury Regulations" means the federal income tax regulations,
including any temporary or proposed regulations, promulgated under the Code, as
such Treasury Regulations may be amended from time to time (it being understood
that all references herein to specific sections of the Treasury Regulations
shall be deemed also to refer to any corresponding provisions of succeeding
Treasury Regulations).
1.70. "Valuation Date" shall have the meaning set forth in Section 12.3 of
this Agreement.
1.71. "Working Capital Reserves" means funds held in reserves which are
maintained as working capital for the Company and available for any
contingencies relating to the ownership of the Property and the operation of the
Company. Amounts held in the Working Capital Reserves may at any time, in the
discretion of the Board of Directors, be added to the liquidation proceeds
allocable to the respective Shares (depending upon the characterization of such
amounts when received by the Company), but may not be otherwise removed from the
respective Working Capital Reserves.
ARTICLE 2
Continuation, Purpose and Term
2.1. Continuation. The parties hereto hereby agree to continue the limited
liability company known as Carey Diversified LLC, as a limited liability company
under the provisions of the Act.
2.2. Company Name. The name of the Company is "Carey Diversified LLC". The
business of the Company shall be conducted under such name or such other names
as the Board of Directors or the Shareholders may from time to time determine on
and pursuant to the terms of this Agreement.
2.3. The Certificate. The Managing Member, and any other Person designated
as such by the Board of Directors, shall be an "Authorized Person" within the
meaning of the Act and is hereby authorized to execute, file and record all such
certificates and documents, including amendments to the Certificate, and to do
such other acts as may be appropriate to comply with all
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requirements for the formation, continuation, and operation of a limited
liability company, the ownership of property, and the conduct of business under
the laws of the State of Delaware and any other jurisdiction in which the
Company may own property or conduct business.
2.4. Principal Place of Business. The principal place of business shall be
located at 50 Rockefeller Plaza, New York, New York 10020, or at such location
as may hereafter be determined by the Board of Directors. The principal business
office, as well as the registered office and the registered agent, of the
Company may be changed by the Board of Directors from time to time in accordance
with the then applicable provisions of the Act and any other applicable laws, as
well as the terms and conditions of this Agreement.
2.5. Term of Company. The term of the Company commenced on the date of the
filing of the Certificate and shall continue until the Company is dissolved
pursuant to the provisions of Article 10 hereof.
2.6. Purposes. The purposes of the Company are (a) to own and invest in or
engage in activities related to investment in net leased properties (including,
without limitation, industrial, commercial, retail and warehouse distribution
properties); provided, however, that the investment criteria shall be
established by the Board of Directors from time to time in its sole discretion
subject to the requirement that such criteria be consistent with the purposes of
the Company; (b) to acquire, own and dispose of general and limited partner
interests, and stock, warrants, options or other equity interests in Entities,
and to exercise all rights and powers granted to the owner of any such
interests; (c) to invest in any type of investment and to engage in any other
lawful act or activity for which limited liability companies may be formed under
the Act, and by such statement all lawful acts and activities shall be within
the purposes of the Company, except for express limitations, if any; (d) to
engage in any other activities relating to, and compatible with, the purposes
set forth above; and (e) to take such other actions, or do such other things, as
are necessary or appropriate (in the sole discretion of the Board of Directors)
to carry out the provisions of this Agreement.
2.7. Powers. In furtherance of its purposes, but subject to all of the
provisions of this Agreement, the Company shall have the power and is hereby
authorized to (a) invest (at any time during the term of the Company) in real
property for the purpose of engaging in net lease transactions with respect
thereto and in other assets which are designed to accomplish the foregoing
purpose or in any manner consistent with the Company's then-existing investment
criteria and objectives, and to reinvest the proceeds (to the extent permitted
by this Agreement) of any Sales by the Company of Company assets; (b) act as
general or limited partner, member, joint venturer, manager or shareholder
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of any Entity, and to exercise all of the powers, duties, rights and
responsibilities associated therewith; (c) take any and all actions necessary,
convenient or appropriate as the holder of any such interests or positions; (d)
make mortgage loans; (e) operate, purchase, maintain, finance, improve, own,
sell, convey, assign, mortgage, lease, construct, demolish or otherwise dispose
of any real property or personal property that may be necessary, convenient or
incidental to the accomplishment of the purposes of the Company; (f) borrow
money and issue evidences of indebtedness in furtherance of any or all of the
purposes of the Company, and secure the same by mortgage, pledge or other lien
or encumbrance on any assets of the Company; (g) invest any funds of the Company
pending distribution or payment of the same pursuant to the provisions of this
Agreement; (h) prepay in whole or in part, refinance, recast, increase, modify
or extend any indebtedness of the Company and, in connection therewith, execute
any extensions, renewals or modifications of any mortgage or security agreement
securing such indebtedness; (i) enter into, perform and carry out contracts of
any kind, including, without limitation, contracts with any Person affiliated
with any of the Shareholders, necessary to, in connection with or incidental to
the accomplishment of the purposes of the Company; (j) establish reserves for
capital expenditures, working capital, debt service taxes, assessments,
insurance premiums, repairs, improvements, depreciation, depletion, obsolescence
and general maintenance of buildings or other property out of the rents, profits
or other income received; (k) employ or otherwise engage employees, managers,
contractors, advisors and consultants, and pay reasonable compensation for such
services, and enter into employee benefit plans of any type; (l) purchase or
repurchase Shares from any Person for such consideration as the Board of
Directors may determine in its reasonable discretion (whether more or less than
the original issuance price of such Share or the then trading price of such
Share); (m) enter into rights plans or other plans relating to Shares, options
or bonuses, and to issue Shares, options or warrants thereunder (or other
derivatives relating thereto) for any consideration (even if such consideration
is less than the market value of such Shares); and (n) do such other things and
engage in such other activities as may be necessary, convenient or advisable
with respect to the conduct of the business of the Company, and have and
exercise all of the powers and rights conferred upon limited liability companies
formed pursuant to the Act.
2.8. Effectiveness of this Agreement. This Agreement shall govern the
operations of the Company and the rights and restrictions applicable to the
Shareholders, to the extent permitted by law. Pursuant to Section 18-101(7)(a)
of the Act, all Persons who become holders of Shares in the Company shall be
bound by the provisions of this Agreement and shall be admitted as Members. The
acceptance by a Person of a certificate issued to such Person evidencing the
Shares acquired in connection with the Consolidation and the acceptance by a
Person of a certificate issued to such Person evidencing the acquisition of
Shares from
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the Company or another Shareholder shall be deemed to constitute a direction to
the Managing Member to execute this Agreement on such Person's behalf and a
request that the records of the Company reflect such admission; and shall be
deemed to be a sufficient act to comply with the requirements of Section
18-101(7)(a) of the Act and to so cause that Person to become a Shareholder and
to bind that Person to the terms and conditions of this Agreement (and to
entitle that Person to the rights of a Shareholder hereunder).
ARTICLE 3
Classes of Shares; Admissions of Shareholders; Capitalization
3.1. Classes of Shares.
(a) The Company shall have the authority to issue the following
classes and Series of Shares:
(i) Shares which are designated "Listed Shares";
(ii) one or more other classes or series of Shares, as to
which the Board of Directors shall have the exclusive authority, by
resolution or resolutions providing for the issuance of Shares or of
a particular class or series thereof, to fix and determine the
voting powers, full or limited or no voting power, and such
designations, preferences, and relative, participating, optional or
other special rights, and qualifications, limitations, or
restrictions thereof, as may be desired by the Board of Directors
from time to time, to the fullest extent now or hereafter permitted
by the laws of the State of Delaware (collectively, all such other
classes and series to be referred to as the "Future Shares").
(b) Each Share shall have the rights and be governed by the
provisions set forth in this Agreement or in the resolutions of the Board
of Directors authorizing the issuance by the Company of such Shares; and
none of such Shares shall have any preemptive rights, or give the holders
thereof any rights to convert into any other securities of the Company, or
give the holders thereof any cumulative voting rights, except as
specifically set forth herein or in such resolutions. Except as otherwise
provided herein or in a resolution of the Board of Directors, each
Shareholder shall be entitled to one vote for each Share held by such
Shareholder.
(c) The Board of Directors may cause the Company to issue such
numbers of Listed Shares and Future Shares from time to time as the Board
of Directors may determine in its
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sole discretion, and the number of such Shares is not limited.
(d) If the Board of Directors determines that it is necessary or
desirable to amend this Agreement or to make any filings under the Act or
otherwise in order to reference the existence or creation of a class or
series of Future Shares, the Board of Directors may cause such amendments
and filings to be made, which filings might take the form of amendments to
the Certificate; provided, however, that, unless specifically required by
the Act or this Agreement, no approval or consent of any Shareholders
shall be required in connection with the making of any such filing or
amendment.
(e) The Board of Directors, without any Consent of any Shareholder
required, may effect a split or reverse split of Shares of any Series or
class, by adopting a resolution therefor. If the Board of Directors
determines that it is necessary or desirable to make any filings under the
Act or otherwise in order to reference the existence of such a split or
reverse split, the Board of Directors may cause such filings to be made,
which filings might take the form of amendments to the Certificate;
provided, however, that, unless specifically required by the Act or this
Agreement, no approval or consent of any Shareholders shall be required in
connection with the making of any such filing.
(f) Notwithstanding any other provisions of this Agreement, the
Board of Directors may, without the consent of any Shareholder, amend this
Agreement to the extent required to allow the Board of Directors to
exercise the powers granted to it by this Section 3.1
3.2. Original Shareholders and their Affiliates; Initial and Subsequent
Capital Contributions.
(a) Prior to the Consolidation Date, the only Shareholders shall be
the Original Shareholders.
(b) Each of the Original Shareholders has contributed or caused to
have been contributed to the Company, prior to the Consolidation Date, its
Initial Capital Contribution, which amounts are as follows:
Managing Member: $250
Initial Member: $250
In exchange for such contributions, each Original Shareholder has
been issued one Listed Share.
(c) Admission of Holders of Partnership Interests and Other Persons
as Shareholders of the Company. On the
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Consolidation Date, and except as set forth in the next succeeding
sentence and as provided under and in accordance with the terms of the
Merger Agreements, each and every Person who is a Limited Partner of a CPA
Partnership participating in the Consolidation shall automatically become
a Shareholder. Such Person shall automatically receive Listed Shares in
exchange for all of his, her or its interests in a CPA Partnership, unless
such Person duly elected otherwise in the Consolidation voting and
approval process conducted by the Company prior to the consummation of the
Consolidation (whether or not such Person voted in favor of the
Consolidation), in which case such Person shall not receive Shares but
shall continue to hold a limited partner interest in surviving CPA
Partnership of which such Person was a Limited Partner. The class and
number of Shares or units of limited partner interests to be received or
to be continued to be held by each such Person shall be as provided for in
the Merger Agreements. Each such Person receiving Listed Shares shall be
deemed to have contributed capital to the Company, in the form of such
Person's Partnership Interest being converted to a Company Interest, as
provided in Section 3.4 of this Agreement and each such Person shall have
no other obligations to make contributions to the capital of the Company.
3.3. Additional Provisions Relating to Additional Shareholders. In the
event that the Board of Directors determines that additional funds are required
by the Company for any Company purpose, or that the Company should for any
reason seek to raise additional capital or acquire Property, the Board may cause
the Company to sell Future Shares for a price equal to what the Board of
Directors determines to be the fair value of such Shares, in exchange for cash,
other property, services or any other lawful consideration to be received by the
Company in consideration of such Shares (to be valued by the Board of Directors
in its discretion), or may cause the Company to obtain funds as a loan from any
third party upon such terms and conditions as the Board of Directors deems
appropriate, or any combination thereof from time to time. The Capital
Contribution of any such additional Shareholders shall be specified by the Board
of Directors at the time of admission of such additional Shareholders.
3.4. Capital Accounts. A separate capital account (a "Capital Account")
shall be established and maintained for each Shareholder, including any
substitute or additional Shareholder who shall hereafter acquire a Company
Interest, in accordance with the following provisions:
(a) To each Shareholder's Capital Account there shall be credited
the amount of cash and fair market value of the property actually or
deemed to be contributed to the Company by such Shareholder pursuant to
Sections 3.2 and 3.3 hereof (which, in the case of the holders of
Partnership Interests,
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shall initially be an amount equal to the Exchange Value for each
Partnership Interest), such Shareholder's allocable share of Profit, and
the amount of any Company liabilities that are assumed by such Shareholder
or that are secured by any Company property distributed to such
Shareholder.
(b) To each Shareholder's Capital Account there shall be debited the
amount of cash and the fair market value of any Company property
distributed or deemed distributed to such Shareholder pursuant to any
provision of this Agreement, such Shareholder's allocable share of Loss,
and the amount of any liabilities of such Shareholder that are assumed by
the Company or that are secured by any property contributed by such
Shareholder to the Company.
(c) If any asset of the Company is distributed in kind, the Company
shall be deemed to have realized Profit or Loss thereon in the same manner
as if the Company had sold such asset for an amount equal to the greater
of (i) the fair market value of such asset, or (ii) the fair market value
of any nonrecourse debts to which such asset is then subject, in each case
as determined by the Board of Directors. If at any time after the date of
this Agreement, the Book Value of any Company asset is adjusted pursuant
to the last sentence of the definition of Book Value set forth in Article
1 hereof, the Capital Accounts of all Shareholders shall be adjusted
simultaneously to reflect the aggregate net adjustments, as if the Company
recognized Profit or Loss equal to the respective amounts of such
aggregate net adjustments.
(d) The provisions of this Agreement relating to the maintenance of
Capital Accounts are intended to comply with Section 1.704-1(b)(2)(iv) and
1.704-2 of the Treasury Regulations, and shall be interpreted and applied
in a manner consistent with such Treasury Regulations.
(e) A Shareholder shall not be entitled to withdraw any part of its
Capital Account or to receive any distributions from the Company, except
as provided in Article 5 hereof, nor shall a Shareholder be entitled to
make any loan or Capital Contribution to the Company other than as
expressly provided herein. No loan made to the Company by any Shareholder
shall constitute a capital contribution to the Company.
(f) No Shareholder shall have any liability for the return of the
Capital Contribution of any other Shareholder. A Shareholder who has more
than one class of interest in the Company may have a separate Capital
Account for each different class of interest owned.
3.5. Transfer of Capital Accounts. The original Capital Account
established for each Transferee shall be in the same
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amount as the Capital Account or portion thereof of the Shareholder which such
Transferee succeeds, at the time such Transferee is admitted to the Company. The
Capital Account of any Shareholder whose Company Interest shall be increased by
means of the Transfer to it of all or part of the Shares of another Shareholder
shall be appropriately adjusted to reflect such Transfer. Any reference in this
Agreement to a Capital Contribution of, or distribution to, a then-Shareholder
shall include a Capital Contribution or distribution previously made by or to
any prior Shareholder on account of the Shares of such then-Shareholder.
3.6. Tax Matters Partner. The Managing Member shall be the Company's "Tax
Matters Partner" (as such term is defined in Section 6231(a)(7) of the Code),
with all of the powers that accompany such status (except as otherwise provided
in this Agreement). Promptly following the written request of the Tax Matters
Partner, the Company shall, to the fullest extent permitted by law, reimburse
and indemnify the Tax Matters Partner for all reasonable expenses, including
reasonable legal and accounting fees, claims, liabilities, losses and damages
incurred by the Tax Matters Partner in connection with any administrative or
judicial proceeding with respect to the tax liability of the Shareholders. The
provisions of this Section 3.6 shall survive the termination of the Company and
shall remain binding on the Shareholders for as long a period of time as is
necessary to resolve with the Internal Revenue Service any and all matters
regarding the federal income taxation of the Company or the Shareholders.
ARTICLE 4
Allocations
4.1. General Rules Concerning Allocations. Within 45 days after the end of
each calendar month, the Company shall conduct an interim closing of books as of
the end of the last day of that calendar month. On the basis of the closing of
the books for each calendar month, Profit and Loss for such month shall be
determined in accordance with the accounting methods followed by the Company for
federal income tax purposes.
4.2. Allocations of Profits and Losses. All allocations to the
Shareholders of items included within the Company's Profits and Losses
attributable to each calendar month shall be allocated solely among the
Shareholders recognized as Shareholders as of the last day of that calendar
month, as follows:
(a) The Profits and Losses shall be allocated to the holders of
Shares.
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(b) The Tax Matters Partner is authorized to make reasonable
determinations regarding the allocation of Profit and Loss under this
Section 4.2, including determinations relating to the calculation of
Profit or Loss, and such other items of the Company's income, gain, loss,
deduction and credit as may be appropriate to carry out the intent of this
Section 4.2.
4.3. Special Allocations.
(a) Notwithstanding any other provision of this Agreement, to the
extent an allocation of Profit or Loss or any item thereof to any
Shareholder pursuant to Sections 4.1 or 4.2 of this Agreement would be in
violation of the requirements of the Treasury Regulations under Section
704(b) of the Code, the Tax Matters Partner shall comply with the
requirements of such Treasury Regulations and adjust such allocations to
comply with such requirements in a manner that will, in the reasonable
judgment of the Tax Matters Partner, have the least effect on the amounts
to be allocated and distributed under this Agreement. The Shareholders
agree that if this Section 4.3 becomes applicable, the Tax Matters Partner
is authorized to review and adjust the allocations made pursuant to
Sections 4.1 or 4.2 of this Agreement.
(b) Qualified Income Offset. In the event a Shareholder unexpectedly
receives any adjustment, allocation or distribution described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) that causes or
increases an Adjusted Capital Account Deficit, items of Profit shall be
specially allocated to such Shareholder so as to eliminate such negative
balance as quickly as possible. This subparagraph is intended to
constitute a "qualified income offset" under Section 1.704-1(b)(2)(ii)(d)
of the Regulations and shall be interpreted consistently therewith.
(c) Minimum Gain Chargeback (Nonrecourse Liabilities). Except as
otherwise provided in Section 1.704-2(f) of the Regulations, if there is a
net decrease in Partnership Minimum Gain for any Fiscal Year, each
Shareholder shall be specially allocated items of Company income and gain
for such year (and, if necessary, subsequent years) in an amount equal to
such Shareholder's share of the net decrease in Partnership Minimum Gain
to the extent required by Treasury Regulations Section 1.704-2(f). The
items to be so allocated shall be determined in accordance with Sections
1.704-2(f) and (j)(2) of the Treasury Regulations. This subparagraph is
intended to comply with the minimum gain chargeback requirement in said
section of the Treasury Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this subparagraph shall be made in
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proportion to the respective amounts required to be allocated to each
Shareholder pursuant hereto.
(d) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net
decrease in Partner Minimum Gain attributable to a Partner Nonrecourse
Debt during any Fiscal Year, each Shareholder who has a share of the
Partner Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations, shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount
equal to that Shareholder's share of the net decrease in the Partner
Minimum Gain attributable to such Partner Nonrecourse Debt to the extent
and in the manner required by Section 1.704-2(i) of the Treasury
Regulations. The items to be so allocated shall be determined in
accordance with Sections 1.704-2(i)(4) and (j)(2) of the Treasury
Regulations. This subparagraph is intended to comply with the minimum gain
chargeback requirement with respect to Partner Nonrecourse Debt contained
in said section of the Treasury Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this subparagraph shall be
made in proportion to the respective amounts to be allocated to each
Shareholder pursuant hereto.
(e) Nonrecourse Deductions. Partner Nonrecourse Deductions for any
Fiscal Year or other applicable period with respect to a Partner
Nonrecourse Debt shall be specially allocated to the Shareholders that
bear the economic risk of loss for such Partner Nonrecourse Debt (as
determined under Sections 1.704-2(b)(4) and 1.704-2(i)(1) of the Treasury
Regulations).
4.4. Additional Allocations.
(a) The Tax Matters Partner, in order to preserve uniformity of
Shares within a class, in its sole discretion, may make a special
allocation of items of Company income, gain, loss or deduction but only if
such allocations would not have a material adverse effect on the
Shareholders and if they are consistent with the principles of Section 704
of the Code.
(b) If, and to the extent that any Shareholder is deemed to
recognize income as a result of any transaction between such Shareholder
and the Company resulting from a compensatory transfer of Shares by the
Company to such Shareholder or pursuant to Sections 482, 483, 1272-1274
and 7872 of the Code, or any similar provision now or hereafter in effect,
any corresponding loss or deduction (or if unavailable, the next available
loss or deduction) of the
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Company shall be allocated to the Shareholder who was charged with such
income.
(c) Adjustments to the Capital Accounts of Shareholders with respect
to an adjustment to the Tax Basis of any asset of the Company pursuant to
Section 734(b) or Section 743(b) of the Code shall be made in accordance
with the provisions of Treasury Regulation Section 1.704-1(b)(2)(iv)(m).
4.5. Tax Allocations.
(a) For federal income tax purposes, except as otherwise provided in
this Section 4.5, each item of Profit, gain, Loss and deduction of the
Company shall be allocated among the Shareholders in the same proportion
as the corresponding items are allocated pursuant to Sections 4.2, 4.3 and
Section 4.4 hereof.
(b) In the event that the Book Value of any asset contributed to and
held by the Company differs from its basis for federal income tax purposes
("Tax Basis"), allocations of income, gain, loss or deduction with respect
to such asset shall, solely for tax purposes, be allocated among the
Shareholders so as to take account of any variation between Book Value and
Tax Basis in accordance with the provisions of Section 704(c) of the Code
and Treasury Regulations thereunder. The Tax Matters Partner may elect any
reasonable method or methods for making such allocations.
(c) If the Book Value of any asset of the Company is adjusted
pursuant to Section 1.12 hereof, subsequent allocations of Profit, gain,
Loss and deductions with respect to such asset shall take into account any
variation between Book Value and Tax Basis in accordance with the
provisions of Section 704(c) of the Code and Treasury Regulations
thereunder.
The Tax Matters Partner shall have the sole discretion to make special
allocations of items of income, gain, loss and deductions that are consistent
with the principles of Section 704(c) of the Code and to amend the provisions of
this Agreement (without Shareholder action, notwithstanding Section 14.D of this
Agreement), as appropriate, to reflect the proposal or promulgation of Treasury
Regulations under Subchapter K of the Code. The Tax Matters Partner may adopt
and employ such methods for (A) the maintenance of capital accounts for book and
tax purposes, (B) the determination and allocation of adjustments under Sections
704(c), 734 and 743 of the Code, (C) the determination and allocation of taxable
income, tax loss and items thereof under this Agreement and pursuant to the
Code, (D) the determination of the identities and tax classification of
Shareholders, (E) the provision of tax information and reports to
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the Shareholders, (F) the adoption of reasonable conventions and methods for the
valuation of assets and the determination of tax basis, (G) the allocation of
asset values and Tax Basis, (H) conventions for the determination of
depreciation, cost recovery and amortization deductions and the adoption and
maintenance of accounting methods, (I) the recognition of the transfer of
Shares, (J) tax compliance and other tax-related requirements, including without
limitation, the use of computer software, and to use filing and reporting
procedures similar to those employed by publicly-traded partnerships and limited
liability companies, as it determines in its sole discretion are necessary and
appropriate to execute the provisions of this Agreement and to comply with
federal, state and local tax law, and to achieve uniformity of Shares within a
class. The Tax Matters Partner shall be indemnified and held harmless by the
Company for any expenses, penalties or other liabilities arising as a result of
decision made in good faith on any of the matters referred to in the preceding
sentence. If the Tax Matters Partner determines, based on advice of counsel,
that no reasonable allowable convention or other method is available to preserve
the uniformity of Shares within a class, or the Tax Matters Partner in its
discretion so elects, Shares may be separately identified as distinct classes to
reflect differences in tax consequences.
ARTICLE 5
Distributions, Redemptions and Certain Permitted Conversions
5.1 Special Distributions; Distributions of Cash Flow from Operations or
Financings. This Section 5.1 (except for Section 5.1(b)) applies only to
distributions other than distributions upon the liquidation of the Company (such
subject being governed by Section 5.2 of this Agreement).
(a) If the Board of Directors declares a distribution payable on a
Distribution Date, then the holders of Shares shall be entitled to receive
all such distributions which the Board has declared, with each holder of
Listed Shares entitled to receive a pro-rata portion (with reference to
the number of Listed Shares then-held by such holder of Listed Shares and
the total number of Listed Shares then-held by all Persons) of such
available distributions.
(b) Notwithstanding any other provision of this Agreement, neither
the Company, nor the Board of Directors on behalf of the Company, shall
make a distribution to any Shareholder on account of its Shares if such
distribution would violate the Act or other applicable law.
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5.2 Distributions Relating to Liquidation Events.
Upon the dissolution, liquidation or winding-up of the Company, after
satisfaction of all of the Company's liabilities (whether by payment or the
making of reasonable provision for payment therefor), each Shareholder shall be
entitled to receive out of the assets of the Company, an amount in cash or in
kind equal to the sum of (A) its pro-rata portion of all accrued and unpaid
distributions on the Shares; plus (B) its pro-rata portion of any remaining
assets of the Company.
No distribution shall be made to any holder of Listed Shares that would
result in such holder having a deficit balance in its Capital Account until such
time as the balance of each such holder's Capital Account is zero.
A consolidation or merger of the Company with or into any other Entity, or
a sale, lease or exchange of any or all assets of the Company in consideration
for the issuance of equity securities of another Entity, shall not be deemed to
be a dissolution, liquidation or winding up of the Company, provided that the
consolidation, merger, sale, lease or exchange has been approved by the majority
vote of the Shareholders voting together as one class.
5.3 Priority. Notwithstanding any other provision of this Agreement, it is
specifically acknowledged and agreed by each Shareholder that the Company's
failure to pay any amounts to such Shareholder, whether as a distribution,
redemption payment or otherwise, even if such payment is specifically required
hereunder, shall not give such Shareholder creditor status with regard to such
unpaid amount; but rather, such Shareholder shall be treated only as a
Shareholder of whatever class such Person is a Shareholder, and not as a
creditor, of the Company. This Section 5.3 is, as permitted by Section 18-606 of
the Act, intended to override the provisions of Section 18-606 of the Act
relating to a member's status and remedies as a creditor, to the extent that
such provisions would be applicable in the absence of this Section 5.3.
5.4. Payments to Shareholders for Services. Any payments by the Company to
a Shareholder for services rendered to or on behalf to the Company shall be
treated as guaranteed payments for services under Section 707(c) of the Code.
5.5. Withholding. (a) With respect to any withholding tax or other similar
tax liability or obligation to which the Company may be subject as a result of
any act or status of any Shareholder or to which the Company becomes subject
with respect to any Share, the Company shall have the right to withhold amounts
distributable to such Shareholder or with respect to such Shares, to the extent
of the amount of such withholding tax or other similar tax liability or
obligation, pursuant to the provision contained in Section 5.5(b).
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(b) Each Shareholder hereby authorizes the Company to withhold from,
or pay on behalf of or with respect to such Shareholder any amount of
federal, state, local or foreign taxes that the Managing Member determines
that the Company is required to withhold or pay with respect to any amount
distributable or allocable to such Shareholder pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid
by the Company pursuant to Sections 1441, 1442, 1445 or 1446 of the Code.
Any amount paid on behalf of or with respect to a Shareholder shall
constitute a loan by the Company to such Shareholder, which loan shall be
repaid by such Shareholder within fifteen (15) days after notice from the
Managing Member that such payment must be made unless (i) the Company
withholds such payment from a distribution which would otherwise be made
to the Shareholder; or (ii) the Managing Member determines, in its sole
and absolute discretion, that such payment may be satisfied out of the
available funds of the Company which would, but for such payment, be
distributed to the Shareholder. Any amounts withheld pursuant to the
foregoing clauses (i) or (ii) shall be treated as having been distributed
to such Shareholder. In the event that a Shareholder fails to pay when due
any amounts owed to the Company pursuant to this Section 5.5(b),the
Managing Member, in its sole and absolute discretion, may elect to make
the payment to the Company on behalf of such defaulting Shareholder, and
in such event shall be deemed to have loaned such amount to such
defaulting Shareholder and shall succeed to all rights and remedies of the
Company as against such defaulting Shareholder.
ARTICLE 6
Shareholders
6.1. Limited Liability Except as otherwise provided by the 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 the Shareholders shall not be obligated personally for any such
debt, obligation or liability of the Company solely by reason of being a
Shareholder of the Company. The Shareholders shall not be required to lend any
funds to the Company. Each of the Shareholders shall be liable to make payment
of his, her or its respective contributions as and when due hereunder and other
payments as expressly provided in this Agreement. If and to the extent a
Shareholder's contribution shall be fully paid, such Shareholder shall not,
except as required by the express provisions of the Act regarding repayment of
sums wrongfully distributed to Shareholders, be required to make any further
contributions.
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6.2. Voting Rights of Shareholders; Authority of Board of Directors.
(a) The Board of Directors, in its sole discretion, has full,
complete and exclusive right, power and authority in the management and
control of the Company business to do any and all things necessary to
effectuate the purpose of the Company; except, however, as expressly set
forth herein. The members of the Board of Directors shall devote such time
as is necessary to the affairs of the Company, and shall receive such
compensation from the Company and such reimbursement for expenses as is
permitted by the Bylaws. No Person dealing with the Board of Directors
shall be required to determine its authority to make any undertaking on
behalf of the Company or to determine any facts or circumstances bearing
upon the existence of such authority.
(b) Notwithstanding Section 6.2(a) above, but subject to Section
10.1(a), Article 12 and Article 13 hereof, any sale or other disposition
of all or substantially all of the assets of the Company at any one time,
any merger or consolidation of the Company (where the Company is not the
surviving Entity) or vote to dissolve the Company must, (i) receive the
approval of the Board of Directors, and (ii) receive the vote, at a duly
held meeting, of more than 50% in interest of the total then issued and
outstanding Shares (or, in the case of a written Consent without a
meeting, more than 50% in interest of the total of such then-issued and
outstanding Shares) (or such greater percentage as is then required under
the Act.
(c) Subject to Sections 7.2(a) and 7.2(b) and Articles 12 and 13
hereof, the vote, at a duly held meeting, of more than 50% interest of the
total then issued and outstanding Shares (or, in the case of a written
Consent without a meeting, more than 50% in interest of the total of such
then-issued and outstanding Shares) shall be able to remove any Director
and elect a replacement therefor. If such Shareholders intend to vote to
remove a Director pursuant to this Section 6.2(c), they shall provide the
removed Director with notice thereof, which notice shall set forth the
date upon which such removal is to become effective.
(d) The annual meeting of the holders of Shares of the Company for
the election of Directors and for the transaction of such other business
as properly may come before such meeting shall be held in accordance with
the Bylaws. Subject to the provisions of Article 13 relating to meetings
of Shareholders and related subjects, the Bylaws shall govern matters
relating to, among other things, annual and special meetings, notice,
waiver of notice, adjournment, proxies, written consents, procedures, and
telephonic meetings, to the extent not inconsistent with this Agreement.
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(e) Notwithstanding any other provision of this Agreement,
Shareholders have voting rights with respect to a particular matter (to
the extent provided herein with regard to categories of Shareholders
permitted to vote on particular matters, and otherwise) only after such
matter has first been approved by the Board of Directors, except with
regard to (i) the removal of a Director (and the election of a replacement
therefor) as provided in this Agreement, (ii) the amendment of this
Agreement, (iii) any matter as to which any Share plan or Share incentive
plan adopted by the Company provides otherwise, and (iv) any matter
presented at a special meeting of Shareholders called upon the written
request of holders of at least 10% of the outstanding Shares.
(f) For purposes of this Agreement, in order for a meeting of
Shareholders to be considered duly held with regard to a particular
question, a quorum of more than 50% in interest of the Shares which are
entitled to vote at such meeting on the particular question must be
present (in person or by proxy).
ARTICLE 7
Directors and Officers
7.1. General Powers of Directors.
(a) Except as may otherwise be provided by the Act or by this
Agreement, the property, affairs and business of the Company shall be
managed by or under the direction of the Board of Directors, the Board of
Directors may exercise all the powers of the Company (including but not
limited to deciding whether to make various tax elections), and the
Shareholders shall have no right to act on behalf of or bind the Company.
The Board of Directors shall have the power and authority, on behalf of
the Company, to (i) hire employees and such other agents, who may be
designated as officers, consultants and Persons necessary or appropriate
to effectuate the purpose of the Company, and (ii) delegate to one or more
Persons (or to committees of the Board of Directors) its rights and powers
to manage and control the affairs of the Company. Such delegation may be
in the Bylaws or by a management agreement or other agreement with such
Persons and such delegation shall not cause the Directors to cease to be
"managers" (within the meaning of the Act) of the Company. The management
agreement or other agreement may designate a Person or Persons to be
"managers" (within the meaning of the Act) of the Company. The officers
shall not be "managers" (within the meaning of the Act) of the Company. At
its initial meeting at which a
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quorum is present, the Board of Directors, on behalf of the Company, by a
majority of the Directors present, shall (i) designate a person as the
chief executive officer of the Company and (ii) adopt the Bylaws. The
Directors shall act only as a Board, and the individual Directors shall
have no power as such. Subject to the provisions of this Agreement and the
Bylaws with regard to Board of Directors, the approval of a matter by a
majority of the Directors present at a meeting at which a quorum is
present shall constitute approval by the Board of Directors (or, in the
case of a written Consent without a meeting, the approval of a matter by
all of the Directors shall constitute approval by the Board of Directors.)
(b) No contract or transaction among the Company and one or more of
its Affiliates, Directors or officers, or among the Company and any other
Entity in which one or more of the Company's Affiliates, Directors or
officers are directors or officers, or have a financial interest, shall be
void or voidable solely for this reason, or solely because the Director or
officer is present at or participates in the meeting of the Board of
Directors or of a committee thereof which authorizes the contract or
transaction, or solely because his or their votes are counted for such
purpose, if:
(i) The material facts as to such Affiliate's, Director's or
officer's relationship or interest as to the contract or transaction
are disclosed or are known to the Board of Directors or the
committee, and the Board of Directors or committee in good faith
authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested Directors, even though the
disinterested Directors be less than a quorum; or
(ii) The contract or transaction is fair as to the Company.
Interested Directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
Notwithstanding, and instead of, the foregoing provisions of this
Section 7.1(b), the Company shall enter into or renew no agreement pursuant to
which any Affiliate of any Director would provide management services for any
Property, unless such agreement is approved by a majority of the Independent
Directors; and, if such approval is obtained in the case of a particular
contract, such approval shall be deemed to satisfy the requirements of this
Section 7.1(b).
Furthermore, notwithstanding the foregoing, the Company may acquire
property as tenants-in-common, in joint ventures, or
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in other joint ownership arrangements with Affiliates of the Company without
approval of the Board other than that which would be required for transactions
with non-Affiliates.
7.2. Number and Term of Office of Directors.
(a) The number of seats constituting the entire Board of Directors
shall be at least two, and, following the listing of the Listed Shares on
the New York Stock Exchange, at least five and no more than 15, with the
exact number of seats on the Board of Directors to be determined from time
to time by resolution of the Board of Directors. At least two of the
Directors in office at any point in time after the listing of the Listed
Shares on the New York Stock Exchange must be Independent Directors. Each
Director (whenever elected) shall hold office until his or her successor
has been duly elected and qualified, or until his or her earlier death,
resignation, or removal. A Director shall not be required to be a
Shareholder or a resident of the State of Delaware.
(b) At all times the Board of Directors shall be divided into three
classes, as nearly equal in numbers as the then total number of Directors
constituting the entire Board of Directors permits, with the term of
office of one class expiring each year (with the first such class
expiration to occur at the first annual meeting of Shareholders); and the
Board of Directors shall have sole power to make such determinations. At
the first annual meeting of the Shareholders, only the Directors of the
first class shall be elected by the Shareholders (in accordance with
Section 6.2 hereof), and such Persons shall hold office thereafter for a
term expiring at the third succeeding annual meeting. At the second annual
meeting of Shareholders, only the Directors of the second class shall be
elected by the Shareholders (in accordance with Section 6.2 hereof), and
such Persons shall hold office thereafter for a term expiring at the third
succeeding annual meeting. At the third annual meeting of Shareholders,
only the Directors of the third class shall be elected by the Shareholders
(in accordance with Section 6.2 hereof), and such Persons shall hold
office thereafter for a term expiring at the third succeeding annual
meeting. At each subsequent annual meeting of Shareholders thereafter, the
successors to any class of Directors whose term shall then expire shall be
elected by the Shareholders (in accordance with Section 6.2 hereof) to
hold office for a term expiring at the third succeeding annual meeting.
(c) Notwithstanding any other provision of this Agreement, the
original Shareholders, by written consent, shall appoint the initial Board
of Directors. Each initial Director shall serve until the first meeting of
the Shareholders, or until his successor is duly elected.
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7.3. Officers. Pursuant to the Bylaws, the Company will have officers, who
need not be employees of the Company, who will have the rights and be subject to
the restrictions provided therein.
ARTICLE 8
Limitations on Liability of, and Indemnification of, Directors and
Officers.
(a) No Directors or officers of the Company shall be liable,
responsible or accountable in damages or otherwise to the Company or any
of the Shareholders for any act or omission performed or omitted by him or
her, or for any decision, except in the case of fraudulent or illegal
conduct of such Person. For purposes of this Article 8, the fact that an
action, omission to act or decision is taken on the advice of counsel for
the Company shall be evidence of good faith and lack of fraudulent
conduct.
(b) To the fullest extent permitted by law, all Directors and
officers of the Company shall be entitled to indemnification from the
Company for any loss, damage or claim (including any reasonable attorney's
fees incurred by such person in connection therewith) due to any act or
omission made by him or her, except in the case of fraudulent or illegal
conduct of such Person; provided, that any indemnity shall be paid out of
the assets of the Company only (or any insurance proceeds available
therefor), and no Shareholder shall have any personal liability on account
thereof.
(c) The termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Person
acted fraudulently or illegally.
(d) The indemnification provided by this Article 8 shall not be
deemed exclusive of any other rights to which those indemnified maybe
entitled under any agreement, vote of Shareholders or Directors, or
otherwise, and shall inure to the benefit of the heirs, executors and
administrators of such a Person.
(e) Any repeal or modification of this Article 8 shall not adversely
affect any right or protection of a Director or officer of the Company
existing at the time of such repeal of modifications.
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The Company may, if the Board of Directors of the Company deems it
appropriate in its sole discretion, obtain insurance for the benefit of
the Company's Directors and officers, or enter into indemnification
agreements with such Directors and officers, relating to the liability of
such Persons.
ARTICLE 9
Transfers of Interests; Admission of New Shareholders
9.1. Transfers. The Listed Shares shall be freely transferable. Subject to
the foregoing and in accordance with Section 2.8, any Person who is a Transferee
of Shares shall, upon acceptance of a certificate evidencing the Shares, (a)
automatically become a Shareholder of the Company with no further action being
required on such Person's part, and (b) automatically be bound to the terms and
conditions of this Agreement (and be entitled to the rights of a Shareholder
hereunder).
9.2. New Shareholders. The Company may issue Future Shares pursuant to
Sections 3.1; and, in accordance with Section 2.8, any Person acquiring Future
Shares from the Company shall, upon acceptance of a certificate evidencing the
Shares, (a) automatically become a Shareholder of the Company with no future
action being required on such Person's part, and (b) automatically be bound to
the terms and conditions of the Agreement (and be entitled to the rights of a
Shareholder hereunder).
9.3 Lender Ownership Limit.
(a) No Lender, as defined in Section 9.3(c), may own Shares nor
shall Shares be accepted, purchased, or in any manner acquired by any
Lender if such issuance or transfer would result in a Lender owning
Shares.
(b) If any Shares are accepted, purchased, or in any manner acquired
by any Lender resulting in a violation of Section 9.3(a) hereof, any such
purchase or acquisition shall be null and void with respect to such Shares
("Excess Shares"). If the last clause of the foregoing sentence is
determined to be invalid by virtue of any legal decision, statute, rule or
regulation, such Lender shall be conclusively deemed to have acted as an
agent on behalf of the Company in acquiring the Excess Shares and to hold
such Excess Shares on behalf of the ultimate owner of such Excess Shares.
Any Lender who receives dividends, interest or any other distribution paid
on account of Excess Shares shall hold and retain these dividends,
interest or any other distribution an agent for the ultimate owner of such
Excess Shares.
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While the Excess Shares are so held on behalf of the ultimate owner
of such Excess Shares, such Excess Shares shall not have any voting rights
and shall not be considered for purposes of any Shareholder vote and/or
for determining a quorum for such a vote. The Excess Shares shall be
treated as outstanding Shares.
In the event that a Shareholder knowingly holds Excess Shares and
the other Shareholders' basis for federal income tax purposes is reduced,
such Shareholder shall be required to indemnify the Company for the full
amount of any damages and expenses (including the Company's estimate of
the costs (including tax costs) to the other Shareholders, reasonable
attorneys' fees and administrative costs) resulting from the shift of
basis for federal income tax purposes.
Upon discovering the ownership of any Excess Shares, the Managing
Member may (i) cause the Company to immediately redeem such Excess Shares
at the Redemption Price (as defined below) or (ii) grant the Shareholder
30 days to transfer such Excess Shares to any Person whose ownership of
such Excess Shares would not result in a violation of Section 9.3(a)
hereof. Upon such permitted transfer, the Company shall pay or distribute
to the transferee any dividends on the Excess Shares not previously paid
or distributed. If such Excess Shares are not transferred within such 30
day period, the Company will redeem such Shares at the Redemption Price
(as defined below). For purposes of this Section 9.3, the "Redemption
Price" shall mean the lesser of the price paid for such Excess Shares by
the Shareholder in whose possession the redeemed Shares were Excess Shares
or the fair market value of the Excess Shares.
(c) For purposes of this Section 9.3, the term "Lender" shall mean
(i) any Person who is currently owed money by the Company or any one or
more of the CPA Partnerships in an amount exceeding $1,000,000 and (ii)
any Person related to a Person described in (i) under the rules of Treas.
Reg ss. 1.752-4(b).
(d) The Managing Member may exempt a Lender from the provisions of
this Section 9.3 upon receipt of an opinion of counsel that other
Shareholders will not suffer any material negative affects as a
consequence of such Lender owning Shares.
(e) If any provision of this Section 9.3 or any application thereof
is determined to be invalid by any federal or state court having
jurisdiction over the issue, the validity of the remaining provisions
shall not be affected and other applications of such provision shall be
affected only to the extent necessary to comply with the determination of
such court.
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ARTICLE 10
Dissolution and Termination
10.1. Events of Dissolution.
(a) In accordance with Section 18-801 of the Act, and the provisions
therein permitting this Agreement to specify the events of the Company's
dissolution, the Company has perpetual existence but shall be dissolved
and the affairs of the Company wound up upon the occurrence of any of the
following events:
(i) expulsion, bankruptcy (as defined in Section 18-304 of the
Act) or insolvency or dissolution of the Managing Member, absent a
vote of Shareholders holding interests in more than 50% of the
profits and capital of the Company to continue the Company within 90
days following such event;
(ii) the vote of the Shareholders pursuant to Sections 6.2(b)
and (e) hereof; or
(iii) the entry of a decree of judicial dissolution under
Section 18-802 of the Act.
The death, retirement, resignation, expulsion, bankruptcy (as
defined in Section 18-304 of the Act) or dissolution of a Shareholder or
the occurrence of any other event that terminates the continued membership
of a Shareholder in the Company, shall not cause the dissolution of the
Company except to the extent specified above in this Section 10.1(a).
(b) Dissolution of the Company shall be effective on the day on
which the event occurs which gives rise to the dissolution, but the
Company shall not terminate until the assets of the Company shall have
been distributed as provided herein and a certificate of cancellation of
the Certificate has been filed with the Secretary of State of the State of
Delaware.
10.2. Application of Assets. In the event of dissolution, the Company
shall conduct only such activities as are necessary to wind up its affairs
(including the sale of the assets of the Company in an orderly manner), and the
assets of the Company shall be applied, first, as required by Section
18-804(a)(1) of the Act, and then in the manner, and in the order of priority,
set forth in Article 5. Notwithstanding anything herein to the contrary, in the
event the Company is liquidated within the meaning of Treasury Regulation
ss.1.704-1(b)(2)(ii)(g), liquidation
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distributions shall be made by the end of the taxable year in which the Company
liquidates or, if later, within 90 days of the date of such liquidation.
Distributions may be made to a trust for the purposes of an orderly liquidation
of the Company by the trust in accordance with the Act.
10.3. Gain or Losses in Process of Liquidation. Any gain or loss on the
disposition of Company property in the process of liquidation shall be credited
or charged to the Capital Accounts of Shareholders in accordance with the
provisions of Article 3. Any property distributed in kind in the liquidation
shall be valued and treated as though the property were sold at its fair market
value and the cash proceeds were distributed. The difference between the fair
market value of property distributed in kind and its Book Value shall be treated
as a gain or loss on the sale of such property and shall be credited or charged
to the Capital Account of Shareholders in accordance with Article 3; provided,
that no Shareholder shall have the right to request or require the distribution
of the assets of the Company in kind.
10.4. Procedural and Other Matters.
(a) Upon dissolution of the Company and until the filing of a
certificate of cancellation as provided in Section 10.4(b), the Persons
winding up the affairs of the Company may, in the name of, and for and on
behalf of, the Company, prosecute and defend suits, whether civil,
criminal or administrative, settle and close the business of the Company,
dispose of and convey the property of the Company, discharge or make
reasonable provision for the liabilities of the Company, and distribute to
the Shareholders any remaining assets of the Company, in accordance with
this Article 10 and all without affecting the liability of Shareholders
and Directors and without imposing liability on a liquidating trustee.
(b) The Certificate may be canceled upon the dissolution and the
completion of winding up of the Company, by any Person authorized to cause
such cancellation in connection with such dissolution and winding up.
ARTICLE 11
Appointment of Attorney-in-Fact
11.1 Appointment and Powers.
(a) Each Shareholder hereby irrevocably constitutes and appoints the
Managing Member, with full power of substitution, as his, her or its true
and lawful attorney-in-fact, with full power and authority in his, her or
its name, place and stead to execute, acknowledge, deliver,
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swear to, file and record at the appropriate public offices such
documents, instruments and conveyances as may be necessary or appropriate
to carry out the provisions or purposes of this Agreement, including,
without limitation, the following: (i) the Certificate; (ii) all other
certificates and instruments and amendments thereto that the Board of
Directors deems appropriate to qualify or continue the Company as a
limited liability company in the jurisdiction in which the Company may
conduct business; (iii) all instruments that the Board of Directors deems
appropriate to reflect a change or modification of this Agreement in
accordance with the terms of this Agreement; (iv) all conveyances and
other instruments that the Board of Directors deems appropriate to reflect
the dissolution and termination of the Company; (v) all fictitious or
assumed name certificates required or permitted to be filed on behalf of
the Company; (vi) any and all documents necessary to admit Shareholders to
the Company, or to reflect any change or transfer of a Shareholder's
Shares, or relating to the admission or increased Capital Contribution of
a Shareholder; (vii) any amendment or other document to be filed as
referenced in Section 3.1(d) or 3.1(f) of this Agreement; and (viii) all
other instruments that may be required or permitted by law to be filed on
behalf of or relating to the Company and that are not inconsistent with
this Agreement.
The authority granted by this Section 11.1(i) is a special power of
attorney coupled with an interest, is irrevocable, and shall not be
affected by the subsequent incapacity or disability of the Shareholder;
(ii) may be exercised by a signature for each Shareholder or by a single
signature of any such Person acting as attorney-in-fact for all of them;
and (iii) shall survive the Transfer by a Shareholder of the whole or any
portion of his, her or its Shares.
11.2 Presumption of Authority. Any Person dealing with the Company may
conclusively presume and rely upon the fact that any instrument referred to
above, executed by such Person acting as attorney-in-fact, is authorized,
regular and binding, without further inquiry.
ARTICLE 12
Certain Provisions Relating to
Changes in Control and Business Combinations
12.1. Definitions. For purposes of this Article 12, the following
definitions shall apply:
"Associate" when used to indicate a relationship with any Person,
means:
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(a) Any Entity (other than the Company or a Subsidiary of the
Company) of which such Person is an officer, manager, member, director or
partner or is, directly or indirectly, the beneficial owner of 10 percent
or more of any class of equity securities of such Entity;
(b) Any trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee or in a
similar fiduciary capacity; and
(c) Any Relative of such Person, or any Relative of a spouse of such
Person, who has the same home as such Person or who is a Director or
officer of the Company or a manager, member, director or officer of any of
its Affiliates.
"Beneficial Owner" When used with respect to Shares, means a Person:
(a) That, individually or with any of its Affiliates or Associates,
beneficially owns Shares directly or indirectly; or
(b) That, individually or with any of its Affiliates or Associates,
has (i) the right to acquire Shares(whether such right is exercisable
immediately or only after the passage of time), pursuant to any agreement,
arrangement, or understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise; or (ii) the right to
vote Shares pursuant to any agreement, arrangement or understanding; or
(c) That has any agreement, arrangement, or understanding for the
purpose of acquiring, holding, voting, or disposing of Shares with any
other Person that beneficially owns, or whose Affiliates or Associates
beneficially own, directly or indirectly, such Shares.
"Business Combination" means:
(a) Unless the merger, consolidation or exchange of Shares does not
alter the contract rights of the Shares as expressly set forth in this
Agreement or change or convert in whole or in part the outstanding Shares,
any merger, consolidation or exchange of Shares or any interests in a
Subsidiary with (i) any Interested Party or (ii) any other Entity (whether
or not itself an Interested Party) which is, or after the merger,
consolidation or exchange of interests would be, an Affiliate of an
Interested Party that was an Interested Party prior to the transaction;
(b) Any sale, lease, transfer or other disposition, other than in
the ordinary course of business or pursuant to a distribution or any other
method affording substantially
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proportionate treatment to the Shareholders, in one transaction or a
series of transactions in any 12-month period, to any Interested Party or
any Affiliate of any Interested Party (other than the Company or any of
its Subsidiaries) of any assets of the Company or any Subsidiary having,
measured at the time the transaction or transactions are approved by the
Board of Directors of the Company, an aggregate Book Value as of the end
of the Company's most recently ended fiscal quarter of 10 percent or more
of (i) the total Market Value of the outstanding Shares or (ii) the
Company's net worth as of the end of its most recently ended fiscal
quarter;
(c) The issuance or transfer by the Company or any Subsidiary, in
one transaction or a series of transactions, of any Shares or any equity
securities of a Subsidiary which have an aggregate Market Value of five
percent or more of the total Market Value of the outstanding Shares to any
Interested Party or any Affiliate of any Interested Party (other than the
Company or any of its Subsidiaries) except pursuant to the exercise of
warrants or rights to purchase securities pro-rata to all Shareholders or
any other method affording substantially proportionate treatment to those
Shareholders;
(d) The adoption of any plan or proposal for the liquidation or
dissolution of the Company in which anything other than cash will be
received by an Interested Party or any Affiliate of any Interested Party;
(e) Any reclassification of securities or recapitalization of the
Company, or any merger, consolidation or exchange of Shares with any of
its Subsidiaries which has the effect, directly or indirectly, in one
transaction or series of transactions, of increasing by five percent or
more of the total number of outstanding Shares, the proportionate amount
of the outstanding Shares or the outstanding number of any class of equity
securities of any Subsidiary which is directly or indirectly owned by any
Interested Party or any Affiliate of any Interested Party; or
(f) The receipt by any Interested Party or any Affiliate of any
Interested Party (other than the Company or any of its Subsidiaries) of
the benefit, directly or indirectly (except proportionately as a holder of
Shares of any loan, advance, guarantee, pledge or other financial
assistance or any tax credit or other tax advantage provided by the
Company or any of its Subsidiaries.
"Interested Party" means any Person (other than (i) the Company, (ii) any
Subsidiary of the Company, (iii) the Original
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Shareholders, and (iv) any Affiliate or Associate of the Original Shareholders)
that:
(a) Is the beneficial owner, directly or indirectly, of 10 percent
or more of the outstanding Shares;
(b) Is an Affiliate or Associate of the Company and at any time
within the two-year period immediately prior to the date in question was
the beneficial owner, directly or indirectly, of 10 percent or more of the
then outstanding Shares; or
(c) Is an Affiliate or Associate of any Person described in clause
(a) or (b) above.
For purposes of determining whether a Person is an Interested Party, the
number of Shares deemed to be outstanding shall include Shares deemed
beneficially owned by the Person through the definitions of Beneficial Owner set
forth above but may not include any other Shares which may be issuable pursuant
to any agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
"Market Value" means:
(a) In the case of Shares, the highest closing sale price of Shares
during the 30-day period immediately preceding the date in question on the
composite tape of the New York Stock Exchange-listed stocks, and
(b) In the case of property other than cash or stock, the fair
market value of such property on the date in question as determined by the
Board of Directors in good faith.
"Subsidiary" means any Person (other than an individual) in which the
Company, directly or indirectly, holds a majority of the voting securities.
12.2 Business Combinations.
(a) Unless an exemption under Section 12.3 hereunder applies, the
Company may not engage in any Business Combination with an Interested
Party or any Affiliate of an Interested Party for a period of five years
following the most recent date on which such Interested Party became an
Interested Party (the "Five Year Tolling Period"), unless:
(1) In addition to any vote otherwise required by law or this
Agreement, the Board of Directors of the Company, prior to the most
recent date upon which the Interested Party became an Interested
Party, approved either the Business Combination or the transaction
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which resulted in the Interested Party becoming an Interested Party;
and
(2) On or subsequent to the date upon which the Interested
Party became an Interested Party, the Business Combination is (A)
approved by at least two-thirds of the Persons who are then members
of the Board of Directors and (B) authorized at an annual or special
meeting of the Shareholders (and not by written consent) by the
affirmative vote of at least two-thirds in interest of the Listed
Shareholders, excluding the Shares held by an Interested Party who
will be (or whose Affiliate will be) a party to the Business
Combination or by an Affiliate or Associate of that Interested
Party, voting together as a single class.
(b) Unless an exemption under Section 12.3 applies, in addition to
any vote otherwise required by law or this Agreement, a Business
Combination proposed by an Interested Party or an Affiliate of the
Interested Party after the Five Year Tolling Period shall be permitted
only if recommended by the Board of Directors who are present at a
duly-called meeting at which a quorum is present and approved by the
affirmative vote of at least:
(i) 80% in interest of all Listed Shareholders, voting
together as a single voting group; and
(ii) Two-thirds in interest of the Listed Shareholders,
excluding Shares held by an Interested Party who will (or whose
Affiliate will) be a party to the Business Combination or by an
Affiliate or Associate of the Interested Party.
12.3 Exemptions.
(a) For purposes of this Section 12.3:
"Announcement Date" means the first general public announcement of the
proposal or intentions to make a proposal of the Business Combination or its
first communication generally to the Shareholders, whichever is earlier;
"Determination Date" means the most recent date on which the Interested
Party became an Interested Party; and
"Valuation Date" means:
(i) For a Business Combination voted upon by the Shareholders,
the later of the day prior to the date of the vote or the day 20
days prior to the consummation of the Business Combination; and
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(ii) For a Business Combination not voted upon by the
Shareholders, the date of the consummation of the Business
Combination.
(b) The vote required by Section 12.2(b) does not apply to a Business
Combination if (1) the Business Combination or the transaction which resulted in
the Interested Party becoming an Interested Party shall have been approved by
the Board of Directors prior to the Determination Date or (2) each of the
conditions in items (i) through (iii) below is met:
(i) The aggregate amount of the cash and the Market Value as
of the Valuation Date of consideration other than cash to be
received for each Share in such Business Combination (whether or not
the Interested Party has previously acquired the particular class or
series of Shares in question) is at least equal to the highest of
the following:
(A) The highest per Share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Party for any Shares acquired by it within
the five-year period immediately prior to the Announcement
Date of the proposal of the Business Combination, plus an
amount equal to interest compounded annually from the earliest
date on which the highest per Share acquisition price was paid
through the Valuation Date at the rate for one-year United
States Treasury obligations from time to time in effect, less
the aggregate amount of any cash distributions paid and the
Market Value of any distributions paid in other than cash, per
Share from the earliest date through the Valuation Date, up to
the amount of the interest compounded annually for such
period; or
(B) The highest per Share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid
by the Interested Party for any Share acquired by it on, or
within the five-year period immediately before, the
Determination Date, plus an amount equal to interest
compounded annually from the earliest date on which the
highest per Share acquisition price was paid to the same class
or series through the Valuation Date at the rate for one-year
United States Treasury obligations from time to time in
effect, less the aggregate amount of any cash distributions
paid and the Market Value of any distributions paid in other
than cash, per Share from the earliest date through the
Valuation Date, up to the amount of the interest compounded
annually for such period; or
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(C) The highest preferential amount per Share to which
the holders of Shares are entitled in the event of any
voluntary or involuntary dissolution or winding up of the
Company; or
(D) The Market Value per Share on the Announcement Date,
plus an amount equal to interest compounded annually from that
date through the Valuation Date at the rate for one-year
United Sates Treasury obligations from time to time in effect,
less the aggregate amount of any cash distributions paid and
the Market Value of any distributions paid in other than cash,
per Share from that date through the Valuation Date, up to the
amount of the interest compounded annually for such period; or
(E) The Market Value per Share on the Determination
Date, plus an amount equal to interest compounded annually
from that date through the Valuation Date at the rate for
one-year United States Treasury obligations from time to time
in effect, less the aggregate amount of any cash distributions
paid and the Market Value of any distributions paid and the
Market Value of any distributions paid in other than cash, per
Share from that date through the Valuation Date, up to the
amount of the interest; or
(F) The price per Share equal to the Market Value per
Share on the Announcement Date or on the Determination Date,
whichever is higher, multiplied by the fraction of:
(1) The highest per Share price (including any
brokerage commissions, transfer taxes and solicitation
dealers' fees) paid by the Interested Party for any
Shares acquired by it within the five-year period
immediately prior to the Announcement Date, over
(2) The Market Value per Share on the first day in
such five-year period on which the Interested Party
acquired the Shares.
(ii) The consideration to be received in such Business
Combination by the holders of any Shares is to be in cash or in the
same form as the Interested Party has previously paid for such
Shares, except to the extent that the Shareholders otherwise elect
in connection with their approval of the proposed transaction under
Section 12.2 of this Agreement. If
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the Interested Party has paid for Shares with varying forms of
consideration, the form of consideration for such Shares shall be
either cash or the form used to acquire the largest number of Shares
previously acquired by it, except to the extent that the
Shareholders otherwise elect.
(iii) After the Determination Date and prior to the
consummation of such Business Combination:
(A) There shall have been no failure to declare and pay
at the regular date therefor (if applicable) any full periodic
distributions (whether or not cumulative) on any outstanding
Shares;
(B) There shall have been:
(1) No reduction in the annual rate of
distributions made with respect to the Shares; and
(2) An increase in such annual rate of
distributions as necessary to reflect any
reclassification, recapitalization, reorganization or
any similar transaction which has the effect of reducing
the number of outstanding Shares; and
(C) The Interested Party did not become the Beneficial
Owner of any additional Shares except as part of the
transaction which resulted in such Interested Party becoming
an Interested Party or by virtue of proportionate Share splits
or distributions.
The provisions of items (A) and (B) of this subsection
(b)(iii) do not apply if (I) no Interested Party or Affiliate
or Associate of the Interested Party voted as a member of the
Board of Directors of the Company in a manner inconsistent
with such items (A) and (B) and (II) the Interested Party,
within 10 days after any act or failure to act inconsistent
with such items, notifies the Board of Directors of the
Company in writing that the Interested Party disapproves
thereof and requests in good faith that the Board of Directors
rectify such act or failure to act.
(c) The provisions of Section 12.2 do not apply to any Business
Combination of the Company with an Interested Party that became an
Interested Party inadvertently, if the Interested Party:
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(i) As soon as practicable (but not more than 10 days after
the Interested Party knew or should have known it had become an
Interested Party) divests itself of a sufficient amount of Shares to
avoid being an Interested Party; and
(ii) Would not at any time within the five-year period
preceding the Announcement Date with respect to the Business
Combinations have been an Interested Party except by inadvertence.
12.4. Amendment. Notwithstanding any other provisions of this Agreement,
this Article 12 may be amended or repealed only by a vote of 80% in interest of
all Shareholders, excluding Shares held by any Interested Party or any Affiliate
of an Interested Party.
12.5. Certain Determinations with Respect to this Article 12. The Board of
Directors shall have the power to determine for the purposes of this Article 12,
on the basis of information known to the Directors: (i) the number of Shares of
which any Person is the Beneficial Owner, (ii) whether a Person is an Affiliate
or Associate of another, (iii) whether a Person has an agreement, arrangement or
understanding with another as to the matters referred to in the definition of
"Beneficial Owner" as hereinabove defined, (iv) whether two or more transactions
constitute a "series of transactions," and (v) such other matters with respect
to which a determination is required under this Article 12.
ARTICLE 13
Voting Rights of Certain Control Shares
13.1 Definitions. For purposes of this Article 13, the following
definitions shall apply:
"Acquiring Person" means a Person who makes or proposes to make a Control
Shares Acquisition, or such Person's Affiliate or Associate.
"Associate" when used to indicate a relationship with any Person means:
(a) An "Associate" as defined in Section 12.1; or
(b) A Person that:
(i) Directly or indirectly controls, or is controlled by, or
is under common control with, the Person specified; or
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(ii) Is acting or intends to act jointly or in concert with
the Person specified.
"Control Shares" means Shares that, except for this Article 13,
would, if aggregated with all other Shares (including Shares the acquisition of
which is excluded from the definition "Control Shares Acquisition" below) owned
by a Person or in respect of which that Person is entitled to exercise or direct
the exercise of voting power, except solely by virtue of a revocable proxy,
entitle that Person, directly or indirectly, to exercise or direct the exercise
of the voting power of Shares within any of the following ranges of voting
power:
(a) One-fifth or more, but less than one-third of all voting power;
(b) One-third or more, but less than a majority of all voting power;
or
(c) A majority or more of all voting power.
but such definition includes Shares only to the extent that the Acquiring
Person, following the acquisition of the Shares, is entitled, directly or
indirectly, to exercise or direct the exercise of voting power within any level
of voting power set forth in this section for which approval has not been
obtained previously under Section 13.2.
"Control Shares Acquisition" means the acquisition, directly or
indirectly, by any Person (other than (i) the Company, (ii) any Subsidiary of
the Company, (iii) the Original Shareholders, and (iv) any Affiliate or
Associate of any Person described in clause (iii) above), of ownership of, or
the power to direct the exercise of voting power with respect to, issued and
outstanding Control Shares. Control Shares Acquisition does not include the
acquisition of Control Shares:
(a) Under the laws of descent and distribution;
(b) Under the satisfaction of a pledge or other security interest
created in good faith and not for the purpose of circumventing this
Article 13; or
(c) Under a merger, consolidation or exchange of interests if the
Company is a party to the merger, consolidation or exchange of interests.
Unless the acquisition entitles any Person, directly or indirectly, to
exercise or direct the exercise of voting power of Shares in excess of the range
of voting power previously authorized or attained under an acquisition that is
exempt under items (a), (b), or (c) of this definition, "Control Shares
Acquisition" does not include the acquisition of Shares in good
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faith and not for the purpose of circumventing this Article 13, by or from any
Person whose voting rights have previously been authorized by the Shareholders
in compliance with this Article 13 or any Person whose previous acquisition of
Shares would have constituted a Control Shares Acquisition but for the
exclusions in items (a) through (c) of this definition.
"Interested Shares" means Shares in respect of which an Acquiring Person
is entitled to exercise or direct the exercise of the voting power of Shares in
the election of Directors or otherwise.
B. Voting Rights.
1. Control Shares acquired in a Control Shares Acquisition have no
voting rights except to the extent approved by the Shareholders at a
meeting held under Section 13.4 by the affirmative vote of two-thirds in
interest of all Shareholders, excluding any votes cast with respect to
Interested Shares.
2. For purposes of this Section 13.2:
a. Shares acquired within 180 days of Shares acquired under a
plan to make a Control Shares Acquisition are considered to have
been acquired in the same acquisition; and
b. A Person may be deemed to be entitled to exercise or direct
the exercise of voting power with respect to Shares held for the
benefit of others if the Person:
(1) Is acting in the ordinary course of business, in
good faith and not for the purpose of circumventing the
provisions of this Section of the Agreement; and
(2) Is not entitled to exercise or to direct the
exercise of the voting power of the Shares unless the Person
first seeks to obtain the instruction of another Person.
C. Acquiring Person Statement.
Any Person who proposes to make or who has made a Control Shares
Acquisition may deliver an Acquiring Person statement to the Company at the
Company's principal office. The Acquiring Person statement shall set forth all
of the following:
1. The identity of the Acquiring Person and each other member of any
group of which the Person is a part for purposes of determining Control
Shares;
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2. A statement that the Acquiring Person statement is given under
this Article 13;
3. The number of Shares owned (directly or indirectly) by the
Acquiring Person and each other member of any group;
4. The applicable range of voting power as set forth in the
definition of "Control Shares"; and
5. If the Control Shares Acquisition has not occurred:
a. A description in reasonable detail of the terms of the
proposed Control Shares Acquisition; and
b. Representations of the Acquiring Person, together with a
statement in reasonable detail of the facts on which they are based,
that:
(1) The proposed Control Shares Acquisition, if
consummated, will not be contrary to law; and
(2) The Acquiring Person has the financial capacity,
through financing to be provided by the Acquiring Person, and
any additional specified sources of financing required under
Section 13.5, to make the proposed Control Shares Acquisition.
D. Special Meeting.
1. Except as provided in Section 13.5, if the Acquiring Person
requests, at the time of delivery of an Acquiring Person statement, and
gives a written undertaking to pay the Company's expenses of a special
meeting, except the expenses of opposing approval of the voting rights,
within ten days after the day on which the Company receives both the
request and undertaking, the Board of Directors of the Company shall call
a special meeting of the Shareholders, to be held within 50 days after
receipt of the Acquiring Person statement and undertaking, for the purpose
of considering the voting rights to be accorded the Shares acquired in the
Control Shares Acquisition.
2. The Board of Directors may require the Acquiring Person to give
bond, with sufficient surety, to reasonably assure the Company that this
undertaking will be satisfied.
3. Unless the Acquiring Person agrees in writing to another date,
the special meeting of Shareholders shall be held within 50 days after the
day on which the Company has received the Acquiring Person statement.
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4. If no request is made under subsection (a) of this Section 13.4,
the issue of the voting rights to be accorded the Shares acquired in the
Control Shares Acquisition may, at the option of the Company, be presented
for consideration at any meeting of the Shareholders. If no request is
made under subsection (a) of this Section 13.4 and the Company proposes to
present the issue of the voting rights to be accorded the Shares acquired
in a Control Shares Acquisition for consideration at any meeting of the
Shareholders, the Company shall provide the Acquiring Person with written
notice of the proposal not less than 20 days before the date on which
notice of the meeting is given.
E. Calls.
1. A call of a special meeting of the Shareholders is not required
to be made under Section 13.4 unless, at the time of delivery of an
Acquiring Person statement an Acquiring Person has:
a. Entered into a definitive financing agreement or agreements
with one or more responsible financial institutions or other
entities that have the necessary financial capacity, providing for
any amount of financing of the Control Shares Acquisition not
provided by the Acquiring Person; and
b. Delivered a copy of the agreements to the Company.
F. Notice of Meeting.
1. If a special meeting of the Shareholders is requested, notice of
the special meeting shall be given as promptly as reasonably practicable
by the Company to all Shareholders of record as of the record date set for
the meeting, whether or not such Shareholder is entitled to vote at the
meeting.
2. Notice of the special or annual meeting at which the voting
rights are to be considered shall include or be accompanied by the
following:
a. A copy of the Acquiring Person statement delivered to the
Company under Section 13.3; and
b. A statement by the Board of Directors setting forth its
position or recommendation, or stating that it is taking no position
or making no recommendation, with respect to the issue of voting
rights to be accorded the Control Shares.
G. Redemption Rights.
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1. If an Acquiring Person statement has been delivered on or before
the 10th day after the Control Shares Acquisition, the Company may, at its
option, redeem any or all Control Shares, except Control Shares for which
voting rights have been previously approved under Section 13.2, at any
time during a 60-day period commencing on the day of a meeting at which
voting rights are considered under Section 13.4 and are not approved.
2. In addition to the redemption rights authorized under subsection
(a) of this Section 13.7, if an Acquiring Person statement has not been
delivered on or before the 10th day after the Control Shares Acquisition,
the Company may, at its option, redeem any or all Control Shares for which
voting rights have been previously approved under Section 13.2, at any
time during a period commencing on the 11th day after the Control Shares
Acquisition and ending 60 days after the Acquiring Person statement has
been delivered.
3. Any redemption of Control Shares under this Section shall be at
the fair value of the Control Shares. For purposes of this section, "fair
value" shall be determined:
a. As of the date of the last acquisition of Control Shares by
the Acquiring Person in a Control Shares Acquisition or, if a
meeting is held under Section 13.4, as of the date of the meeting;
and
b. Without regard to the absence of voting rights for the
Control Shares.
H. Amendment. Notwithstanding any other provision of this Agreement, this
Article 13 may only be amended or repealed by a vote of 80% in interest of all
Shareholders, excluding any votes cast with respect to Interested Shares.
ARTICLE 14
Miscellaneous Provisions
A. Notices.
1. Except as otherwise provided in this Agreement or in the Bylaws,
any and all notices, consents, offers, elections and other communications
required or permitted under this Agreement shall be deemed adequately
given only if in writing and the same shall be delivered either in hand,
by telecopy, or by mail or Federal Express or similar expedited commercial
carrier, addressed to the recipient of the notice, postage prepaid and
registered or certified with
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return receipt requested (if by mail), or with all freight charges prepaid
(if by Federal Express or similar carrier).
2. All notices, demands, and requests to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date
of receipt or refusal.
3. All such notices, demands and requests shall be addressed as
follows: (i) if to the Company, to its principal place of business, as set
forth in Article 2 hereof and (ii) if to a Shareholder, to the address of
such Shareholder listed on the Company's Shareholder register.
4. By giving to the other parties written notice thereof, parties
hereto and their respective successors and assigns shall have the right
from time to time and at any time during the term of this Agreement to
change their respective addresses effective upon receipt by the other
parties of such notice and each shall have the right to specify as its
address any other address.
B. Word Meanings. The words such as "herein", "hereinafter", "hereof" and
"hereunder" refer to this Agreement as a whole and not merely to the subdivision
in which such words appear unless the context otherwise requires. The singular
shall include the plural and the masculine gender shall include the feminine and
neuter, and vice versa, unless the context otherwise requires.
C. Binding Provisions. The covenants and agreements contained herein shall
be binding upon, and insure to the benefit of, the heirs, legal representatives,
successors and assigns of the respective parties hereto.
D. Amendment and Modification. Unless otherwise specifically provided in
this Agreement, this Agreement may be amended, modified or supplemented only by
the vote, at a duly held meeting, of more than 50% in interest of the
then-outstanding Shares (or, in the case of a written Consent without a meeting,
more than 50% in interest of the aggregate then-outstanding Shares) voting or
acting as one class (and not as separate classes, notwithstanding the fact that
there may be Shareholders of more than one class voting); provided, however,
that Article 8 shall not be amended, modified or supplemented, unless such
amendment, modification or supplement receives the Consent of at least 80% in
interest of the holders of then-outstanding Shares. Notwithstanding anything to
the contrary contained herein, the Bylaws may be amended by the affirmative vote
of a majority of all members of the Board of Directors as provided in the Bylaws
without any further vote, consent or approval of any Shareholder or other
Person.
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E. Waiver. The waiver by any party hereto of a breach of any provisions
contained herein shall be in writing, signed by the waiving party, and shall in
no way be construed as a waiver of any succeeding breach of such provision or
the waiver of the provision itself.
F. Applicable Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without regard to such
state's laws concerning conflicts of laws. In the event of a conflict between
any provisions of this Agreement and any nonmandatory provisions of the Act, the
provision of this Agreement shall control and take precedence.
G. Severability of Provisions. Each provision of this Agreement shall be
deemed severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make the
provision, as so changed, legal, valid, binding and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
nonbinding or unenforceable in its entirety or partially or as to any party, for
any reason, and if such provision cannot be changed consistent with the intent
of the parties hereto to make it fully legal, valid, binding and enforceable,
then such provision shall be stricken from this Agreement, and the remaining
provisions of this Agreement shall not in any way be affected or impaired, but
shall remain in full force and effect.
H. Headings. The headings contained in this Agreement have been inserted
for the convenience of reference only, and neither such headings nor the
placement of any term hereof under any particular heading shall in any way
restrict or modify any of the terms or provisions hereof.
I. Further Assurances. The Shareholders shall execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purposes of this Agreement.
J. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
K. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and supersedes all prior understandings or agreements, oral or written, between
the parties.
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IN WITNESS WHEREOF, the parties hereto, being the sole current
Members of the Company, have executed and delivered this Amended and Restated
Limited Liability Company Agreement as of the day and year first-above written.
CAREY MANAGEMENT LLC
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
CAREY PROPERTY ADVISORS LP
By: Carey Fiduciary Advisors, Inc.,
its General Partner
By:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
All Persons becoming Shareholders in
accordance with Section 2.8:
By: Carey Management LLC
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
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