Exhibit 10.1
Execution Copy
SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ARCAP INVESTORS, L.L.C.
This Second Amended and Restated Limited Liability Company Agreement
dated as of August 15, 2006 (this "Second Amendment"), of ARCap Investors,
L.L.C., a Delaware limited liability company (the "Company") is entered into by
and among CM ARCap Investors LLC, a Delaware limited liability company, as the
managing member of the Company (the "Managing Member") and as holder of Common
Interests (as hereinafter defined) (the "CI Member") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (together, the "SCI Members").
W I T N E S S E T H:
WHEREAS, the Company was formed pursuant to the Delaware Limited
Liability Company Act, 6 Del. C. Section 18-101, et seq., as amended from time
to time (the "Delaware Act"), by execution of a Limited Liability Company
Agreement dated as of March 17, 1999 (the "Original LLC Agreement") and filing
of the Certificate of Formation of the Company with the Secretary of State of
Delaware pursuant to the provisions of the Delaware Act;
WHEREAS, an Amended and Restated Limited Liability Company Agreement,
dated as of August 4, 2000 (the "First Amended and Restated Agreement" and, as
amended by the First, Second, Third, Fourth and Fifth Amendments, the "Existing
Agreement") was authorized and approved by the then Members, and the First
Amended and Restated Agreement amended and restated the Original LLC Agreement;
WHEREAS, the Company entered into that certain Securities Purchase
Agreement dated as of August 15, 2006, by and among the Sellers (as defined
therein), the Sellers' Representative (as defined therein), the Company,
CharterMac and Charter Mac Corporation (the "SPA"), pursuant to which the CI
Member agreed to acquire all of the membership interests of the Company (the
"Acquired Interests"), except for those membership interests owned by the SCI
Members;
WHEREAS, immediately prior to the execution hereof, the CI Member has,
pursuant to the SPA, purchased the Acquired Interests and been admitted as a
Member of the Company;
WHEREAS, the SCI Members and the CI Member have agreed, pursuant to the
SPA, to enter into this Second Amendment and have approved this Second Amendment
in accordance with the terms of the Existing Agreement;
WHEREAS, by execution of this Second Amendment by the SCI Members and
the CI Member, the Common Units (as defined in the Existing Agreement) of the
SCI Members will be re-designated "Special Common Interests" in the amounts set
forth in Schedule A-1 and the Acquired Interests of the CI Member will be
re-designated "Common Interests" in the amount set forth in Schedule A-2; and
WHEREAS, the Managing Member and the SCI Members desire to amend and
restate in its entirety the Existing Agreement, in order to admit the Managing
Member as a Member (as hereinafter defined) of the Company and to otherwise
define the rights of the parties as Members of the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, parties hereto agree as follows:
ARTICLE ONE
Organization
1.1. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, acting as an "authorized person" within the meaning of
the Delaware Act, formed the Company as a limited liability company pursuant to
the provisions of the Delaware Act. The rights and liabilities of the Members
shall be as provided in said Delaware Act, except as herein otherwise expressly
provided.
1.2. The name of the Company shall be ARCap Investors, L.L.C.
1.3. The Company shall maintain a registered office at Corporation Service
Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Company shall maintain its principal office at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The Managing Member shall have the right to
change such registered office or principal office at any time or from time to
time.
1.4. The Company was formed for the object and purpose of, and the nature of the
business to be conducted and promoted by the Company is, engaging in any lawful
act or activity for which limited liability companies may be formed under the
Delaware Act and engaging in any and all activities necessary, convenient,
desirable or incidental to the foregoing. The Company shall have the power and
authority to take any and all actions necessary, appropriate, proper, advisable,
convenient or incidental to or for the furtherance of the purpose set forth in
this Section 1.4.
1.5. The Managing Member is the designated "authorized person" and shall
continue as the designated "authorized person" within the meaning of the
Delaware Act. The Managing Member, as an authorized person, within the meaning
of the Delaware Act, shall execute, deliver and file, or cause the execution,
delivery and filing of, all certificates (and any amendments and/or restatements
thereof) required or permitted by the Delaware Act to be filed with the
Secretary of State of the State of Delaware. The Managing Member shall execute,
deliver and file, or cause the execution, delivery and filing of, any
certificates (and any amendments and/or restatements thereof) necessary for the
Company to qualify to do business in any other jurisdiction in which the Company
may wish to conduct business.
1.6. The Managing Member shall cause the Company to be qualified, formed or
registered under assumed or fictitious name statutes or similar laws in any
jurisdiction in which the Company transacts business in which such
qualification, formation or registration is required or desirable.
1.7. Capitalized terms used herein shall have the meaning given to them in the
introductory paragraph, the Recitals, Exhibit A or in Article Six, as
applicable.
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ARTICLE TWO
Members, Capital and Membership Interests
2.1. Managing Member; Contributions
(a) The Managing Member shall be admitted to the Company as a Member of the
Company upon its execution of a counterpart signature page to this Second
Amendment. The name and the address of the Managing Member is as follows:
Name Address
CM ARCap Investors LLC c/o CharterMac
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(b) The Members shall have no obligation to make any additional capital
contributions or loans to the Company beyond those which have been made prior to
the date of this Second Amendment.
2.2. Issuance of Additional Membership Interests; Admission of Additional
Investor Members
(a) The Managing Member is authorized to cause the Company to issue
additional Membership Interests (or options therefor) in the form of Interests
or other Membership Interests in one or more series or classes, or in one or
more series of any such class to any persons at any time or from time to time,
and on such terms and conditions, as the Managing Member shall establish, in
each case subject to Delaware law, including, without limitation, but subject to
Section 4.9(b)(ii), (i) the allocations of items of Company income, gain, loss,
deduction and credit to each class or series of Membership Interests, (ii) the
right of each class or series of Membership Interests to share in Company
distributions, and (iii) the rights of each class or series of Membership
Interests upon dissolution and winding up of the Company.
(b) Subject to Section 4.9(b)(ii), the Managing Member may take such steps
as it, in its sole and absolute discretion, deems necessary or appropriate to
admit any person as a member of the Company or to issue any Membership
Interests, including, without limitation, amending the Company's Certificate of
Formation, or any other provision of this Second Amendment.
2.3. SCI Members.
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(a) The SCI Members of the Company are as set forth on Schedule A-1 and
each SCI Member has the respective Capital Account as of the date hereof set
forth on Schedule A-1. Each SCI Member set forth on Schedule A-1 shall continue
as a Member upon its execution and delivery of a signature page to this Second
Amendment.
(b) Each SCI Member owns the Special Common Interests in the amounts set
forth for such SCI Member on Schedule A-1. Each of the Special Common Interests
issued by the Company to the SCI Members has been duly authorized and validly
issued and is a fully paid and nonassessable limited liability company interest
in the Company.
2.4. CI Member.
---------
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(a) The CI Member of the Company is as set forth on Schedule A-2, and the
CI Member has the Capital Account as of the date hereof set forth on Schedule
A-2. The CI Member shall continue as a Member of the Company upon its execution
of a counterpart signature page to this Second Amendment.
(b) The CI Member shall own Common Interests in the amount set forth on
Schedule A-2.
2.5. Certificates.
(a) The Company shall issue one or more certificates in the name of the
Members representing Interests. Each certificate shall be signed by the Managing
Member or an Officer on behalf of the Company.
(b) The Company shall issue a certificate in place of any certificate
previously issued if the holder of the Interests represented by such
certificate, as reflected on the books and records of the Company:
(i) makes proof by affidavit, in form and substance satisfactory
to the Managing Member, that such previously issued certificate has
been lost, stolen or destroyed;
(ii) requests the issuance of a new certificate before the
Managing Member has notice that such previously issued certificate has
been acquired by a purchaser for value in good faith and without
notice of an adverse claim;
(iii) if requested by the Managing Member, delivers to the
Company a bond, in form and substance satisfactory to the Managing
Member, with such surety or sureties as the Managing Member may
direct, to indemnify the Company and the Managing Member against any
claim that may be made on account of the alleged loss, destruction or
theft of the previously issued certificate; and
(iv) satisfies any other reasonable requirements imposed by the
Managing Member.
(c) Upon a Member's transfer in accordance with the provisions of this
Second Amendment of the Interests represented by a certificate, the transferee
of the Interests shall deliver such certificate endorsed by the transferring
Member to the Managing Member for cancellation, and the Managing Member shall
thereupon issue a new certificate to such transferee representing the
transferred Interests and, to the extent such transfer was not a transfer of all
of the Interests of the transferring Member, a new certificate to such Member
for the Interests not transferred.
(d) The Company shall maintain books for the purpose of registering the
transfer of Interests. The transfer of Interests in accordance with this Second
Amendment shall be effective upon registration of such transfer on the books and
records of the Company.
2.6. Article 8 Securities. Each Interest shall constitute a "security" within
the meaning of, and be governed by, (i) Article 8 of the Uniform Commercial Code
(including Section 8-102(a)(15) thereof) as in effect from time to time in the
State of Delaware, and (ii) Article 8 of the Uniform Commercial Code of any
other applicable jurisdiction that now or hereafter substantially includes the
1994 revisions to Article 8 thereof as adopted by the American Law Institute and
the National Conference of Commissioners on Uniform State Laws and approved by
the American Bar Association on February 14, 1995.
ARTICLE THREE
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Distributions
3.1. Distributions.
(a) The Managing Member shall cause the Company to distribute to the SCI
Members, on each CharterMac Distribution Date, and prior to any distributions to
the Managing Member or any other Members, an amount equal to the Preferred
Return per Special Common Interest (or an applicable percentage thereof to the
extent distributions are made quarterly or otherwise more than once per Company
Year), provided, however, that (i) in respect of each issuance of Special Common
Interests, the distribution of Preferred Return in respect of the first
CharterMac Distribution Date after the date of issuance of such Special Common
Interests shall be prorated for the period from the date of such issuance to the
end of the applicable distribution period, and (ii) in no event may a Member
receive a distribution with respect to an Interest (or portion thereof) if such
Member is entitled to receive a distribution with respect to CharterMac Common
Shares for which such Interest has been exchanged covering the period or portion
thereof to which such distribution relates. If by virtue of Section 3.1(d), the
Company is prohibited from making a distribution equal in amount to the full
Preferred Return to which holders of Special Common Interests are entitled on a
CharterMac Distribution Date, the Company shall apportion the amount it is able
to distribute, if any, among the holders of the Special Common Interests in
accordance with the ratio that the Special Common Interests of each bears to all
Special Common Interests then outstanding. Amounts of the Preferred Return that
are not paid on a CharterMac Distribution Date shall accumulate and be paid as
promptly as practicable thereafter.
(b) Subject to the preceding Section 3.1(a), the Managing Member shall make
distributions to the Managing Member and/or other Members, in such amounts as
determined by the Managing Member in its sole and absolute discretion.
(c) The record date for SCI Members entitled to receive distributions of
the Preferred Return shall be the same record date as the corresponding dividend
payable with respect to the CharterMac Common Shares on the CharterMac
Distribution Date.
(d) Notwithstanding any other provision contained in this Second Amendment,
the Company, and the Managing Member on behalf of the Company, shall not be
required to make a distribution to any Member in respect of its Interest if such
distribution would violate the Delaware Act or other applicable law.
3.2. Distributions Upon Liquidation. Proceeds from a Terminating Capital
Transaction and any other cash received or reductions in reserves made after the
dissolution and during the period of winding up of the Company shall be
distributed to the Members in accordance with Article Eight.
3.3. Withholding.
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 Member or to which the Company becomes subject with respect to any
Interest, the Company shall have the right to withhold amounts distributable to
such Member or with respect to such Interests, to the extent of the amount of
such withholding tax or other similar tax liability or obligation pursuant to
the provisions contained in Section 6.6(b). Prior to withholding, the Managing
Member shall endeavor to (i) provide reasonable advance notice to the SCI
Members and the CI Members,
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which shall provide the basis for withholding and (ii) if requested, discuss the
need to withhold with the SCI Members and the CI Members.
ARTICLE FOUR
Rights and Duties of the Members
4.1. Management.
(a) (i) Except as expressly provided in this Second Amendment, full,
complete and exclusive discretion to manage and control the business
and affairs of the Company is and shall be vested in the Managing
Member.
(ii) In addition to the powers now or hereafter granted a
managing member of a limited liability company under applicable law or which are
granted to the Managing Member under any other provision of this Second
Amendment, the Managing Member shall have full power and authority to do all
things deemed necessary or desirable by it to conduct the business of the
Company, to exercise all powers, and to effectuate the purposes, set forth in
this Second Amendment.
(iii) The Managing Member may, from time to time as it deems
advisable, select natural persons who are employees or agents of the Company and
designate them as officers of the Company (the "Officers") and assign titles
(including, without limitation, President, Vice President, Secretary, and
Treasurer) to any such person. Unless the Managing Member decides otherwise, if
the title is one commonly used for officers of a business corporation formed
under the Delaware General Corporation Law, the assignment of such title shall
constitute the delegation to such person of the authorities and duties that are
normally associated with that office. The Managing Member may delegate to any
Officer any of the Managing Member's powers under this Second Amendment,
including, without limitation, the power to bind the Company. Any delegation
pursuant to this Section 4.1(a) may be revoked at any time by the Managing
Member. An Officer may be removed with or without cause by the Managing Member.
(iv) The Managing Member may from time to time delegate its
authority to agents, officers and other employees of itself or the Company which
it may appoint, hire or contract with at the Company's expense.
(v) The Managing Member may not be removed, with or without
cause.
(b) (i) Each of the SCI Members and the CI Members agrees that,
notwithstanding any other provision in this Second Amendment except
Section 4.9(b)(ii)to the contrary, the Managing Member is authorized
to execute, deliver and perform all agreements and transactions on
behalf of the Company without any further act, approval or vote of the
Members to the fullest extent permitted under the Delaware Act or
other applicable law, rule or regulation.
(ii) The execution, delivery or performance by the Managing
Member or the Company of any agreement authorized or permitted under this Second
Amendment shall not constitute a breach by the Managing Member of any duty that
the Managing Member may owe the Company, the SCI
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Members, the CI Members or any other Persons under this Second Amendment or of
any duty stated or implied by law or equity.
4.2. Reimbursement of the Managing Member
(a) The Managing Member shall be reimbursed for all out-of-pocket expenses
that it incurs on behalf of the Company.
(b) Such reimbursement shall be in addition to (but without duplication of)
any reimbursement made as a result of indemnification pursuant to Section 5.1
hereof.
4.3. Outside Activities of the Managing Member. Notwithstanding any duty
(fiduciary or otherwise) otherwise existing at law or in equity, the Managing
Member and its Affiliates may directly or indirectly enter into or conduct any
business whether or not in connection with the business of the Company and
whether or not competitive with the business of the Company, and such activities
as are incidental thereto.
4.4. Contracts with Affiliates
(a) The Company may lend or contribute funds or other assets to its
Affiliates or other Persons in which it has an equity investment and such
Affiliates and Persons may borrow funds from the Company, on terms and
conditions established in the sole and absolute discretion of the Managing
Member.
(b) The Company may Transfer assets to entities in which it is or thereby
becomes a participant upon such terms and subject to such conditions consistent
with this Second Amendment and applicable law as the Managing Member, in its
sole and absolute discretion, may determine.
(c) The Company may enter into contracts with the Managing Member or its
Affiliates (to obtain or provide goods or services, to purchase or sell assets
or for any other purpose) on such terms as the Managing Member, in its sole and
absolute discretion, may determine.
4.5. Liability of the Managing Member.
(a) Notwithstanding anything to the contrary set forth in this Second
Amendment, to the fullest extent permitted by law, the Officers and the Managing
Member and its officers and directors shall not be liable for monetary damages
to the Company, any Members or any Assignees for losses sustained or liabilities
incurred as a result of errors in judgment or mistakes of fact or law or of any
act or omission unless such Person acted in bad faith or breached an explicit
term of this Second Amendment and the act or omission was material to the matter
giving rise to the loss, liability or benefit not derived.
(b) The SCI Members and the CI Members expressly acknowledge that the
Managing Member is under no obligation (fiduciary or otherwise) to consider the
separate interests of the SCI Members and the CI Members in deciding whether to
cause the Company to take (or decline to take) any actions, and that the
Managing Member shall not be liable for monetary damages for losses sustained,
liabilities incurred, or benefits not derived by SCI Members or CI Members in
connection with such decisions, provided that the Managing Member has acted in
good faith.
(c) The Managing Member shall not be responsible for any misconduct or
negligence on the part of any agent appointed by the Managing Member in good
faith.
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(d) To the fullest extent permitted by law and notwithstanding any other
provision of this Second Amendment, whenever this Second Amendment or any other
agreement contemplated hereby provides that the Managing Member or any of its
Affiliates is permitted or required to make a decision (i) in its "discretion"
or under a grant of similar authority or latitude, the Managing Member or such
Affiliate shall be entitled to consider such interests and factors as it desires
and shall have no duty or obligation to give any consideration to any interest
of or factors affecting any Member, or (ii) in its "good faith" or under another
express standard, the Managing Member or such Affiliate shall act under such
express standard and shall not be subject to any other or different standards
imposed by this Second Amendment, any other agreement contemplated hereby or
applicable law or equitable principles.
(e) The Members agree that the provisions of this Second Amendment, to the
extent they restrict or eliminate the duties and liabilities of the Managing
Member or any of its Affiliates otherwise existing at law or in equity,
completely replace such other duties and liabilities of the Managing Member or
such Affiliate.
4.6. Other Matters Concerning the Managing Member.
(a) The Managing Member may rely and shall be protected in acting, or
refraining from acting, upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, bond, debenture, or other
paper or document believed by it in good faith to be genuine and to have been
signed or presented by the proper party or parties.
(b) The Managing Member may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects, engineers,
environmental consultants and other consultants and advisers selected by it, and
any act taken or omitted to be taken in reliance upon the opinion of such
Persons as to matters which such Managing Member reasonably believes to be
within such Person's professional or expert competence shall be conclusively
presumed to have been done or omitted in good faith and in accordance with such
opinion.
(c) (i) The Managing Member shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its
duly authorized officers and duly appointed attorneys in fact.
(ii) In the event an attorney in fact is acting on behalf of the
Managing Member, such attorney in fact shall, to the extent provided by the
Managing Member in the power of attorney, have full power and authority to do
and perform each and every act and duty which is permitted or required to be
done by the Managing Member hereunder.
4.7. Power of Attorney. Each SCI Member, each CI Member and each Assignee hereby
constitutes and appoints the Managing Member, any Liquidator, and authorized
officers and attorneys in fact of each, and each of those acting singly, in each
case with full power of substitution, as its true and lawful agent and attorney
in fact, with full power and authority in its name, place and stead to execute,
swear to, acknowledge, deliver, file and record in the appropriate public
offices:
(a) all certificates, documents and other instruments that the Managing
Member or the Liquidator deems appropriate or necessary to form, qualify or
continue the existence or qualification of the Company as a limited liability
company in all jurisdictions in which the Company may or plans to conduct
business or own property, provided that such certificates and other instruments
do not include any substantive provisions inconsistent with or not included in
this Second Amendment;
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(b) all instruments that the Managing Member deems appropriate or necessary
to reflect any amendment, change, modification or restatement of this Second
Amendment, provided such amendment, change, modification or restatement has been
adopted in accordance with this Second Amendment;
(c) all conveyances and other instruments or documents that the Managing
Member or the Liquidator deems appropriate or necessary to reflect the
dissolution and winding up of the Company pursuant to the terms of this Second
Amendment, including, without limitation, a certificate of cancellation; and
(d) all instruments relating to the admission, resignation, removal or
substitution of any Member pursuant to, or other events described in, Article
Seven or Article Eight hereof or the capital contribution of any Member.
The foregoing power of attorney is hereby declared to be irrevocable and a power
coupled with an interest, in recognition of the fact that each of the Members
will be relying upon the power of the Managing Member and any Liquidator to act
as contemplated by this Second Amendment in any filing or other action by it on
behalf of the Company, and it shall survive and not be affected by the
subsequent Incapacity of any SCI Member, CI Member or Assignee and the Transfer
of all or any portion of such SCI Member's, CI Member's or Assignee's Interests
and shall extend to such SCI Member's, CI Member's or Assignee's heirs,
successors, assigns and personal representatives.
4.8. Reliance by Third Parties
(a) Notwithstanding anything to the contrary in this Second Amendment, any
Person dealing with the Company shall be entitled to assume that the Managing
Member has full power and authority, without consent or approval of any other
Member or Person, to encumber, sell or otherwise use in any manner any and all
assets of the Company and to enter into any contracts on behalf of the Company,
and take any and all actions on behalf of the Company, and such Person shall be
entitled to deal with the Managing Member as if the Managing Member were the
Company's sole party in interest, both legally and beneficially.
(b) In no event shall any Person dealing with the Managing Member or its
representatives be obligated to ascertain that the terms of this Second
Amendment have been complied with or to inquire into the necessity or expediency
of any act or action of the Managing Member or its representatives.
4.9. Rights and Obligations of SCI Members and CI Members.
(a) Limitation of Liability. The SCI Members and the CI Members shall have
no liability under this Second Amendment except as expressly provided in this
Second Amendment, including Section 6.6(b) of this Second Amendment, or under
the Delaware Act.
(b) Management of Business.
(i) No SCI Member, CI Member or Assignee (other than the
Managing Member in its capacity as such) shall take part in
the operation, management or control of the Company's
business, transact any business in the Company's name or
have the power to sign documents for or otherwise bind the
Company. No SCI Member or CI Member (other than the Managing
Member) shall have the right to vote on or grant or withhold
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consent to any matter hereunder or under the Delaware Act,
except as otherwise provided in this Second Amendment.
(ii) Notwithstanding any other provision in this Second
Amendment, the Managing Member shall not, without the prior
Consent of the SCI Members, which may be granted in their
sole and absolute discretion, cause the Company to amend
this Second Amendment in a manner which would alter the
rights of SCI Members to receive distributions in respect of
Special Common Interests issued to the SCI Members or that
would alter the limited liability of SCI Members as members
of the Company and holders of Special Common Interests
issued to the SCI Members.
(c) Outside Activities of SCI Members and CI Members. Subject to any
agreements entered into pursuant to Section 4.4 hereof and any other agreements
entered into by an SCI Member or CI Member or their Affiliates with the Company,
its Affiliates or any of its Subsidiaries (including, without limitation, the
Employment Agreements (as such term is defined in the SPA)), notwithstanding any
duty (fiduciary or otherwise) otherwise existing at law or in equity, any SCI
Member or CI Member and any officer, director, employee, agent, trustee,
Affiliate or shareholder of any SCI Member, CI Member or Assignee shall be
entitled to and may engage in or possess an interest in any other business
venture, of every nature and description, independently or with others, whether
or not competitive with the business of the Company.
(d) Return of Capital.
(i) Except pursuant to the Exchange Rights Agreement, no SCI
Member or CI Member shall be entitled to the withdrawal or
return of any of its capital contributions, except to the
extent of distributions made pursuant to this Second
Amendment or upon dissolution and winding up of the Company
as provided in this Second Amendment.
(ii) Except to the extent provided by Schedule B, or as
otherwise expressly provided in this Second Amendment,
including Article III, no SCI Member, CI Member or Assignee
shall have priority over any other Member or Assignee,
either as to the return of capital contributions or as to
Net Income, Net Loss, or distributions.
(e) Exchange Rights Agreement.
(i) The SCI Members have been granted the right to exchange
all or a portion of their Special Common Interests for cash
from the Company or, at the option of the Managing Member,
for CharterMac Common Shares from the Managing Member on the
terms and subject to the conditions and restrictions
contained in the Exchange Rights Agreement. If Special
Common Interests are exchanged for CharterMac Common Shares,
the Capital Account of the Managing Member shall be
increased in the amount that the Capital Accounts of the SCI
Members exchanging such Special Common Interests are
decreased.
(ii) The SCI Members and all successors, assignees and
transferees (whether by operation of law, including without
limitation by merger or
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consolidation, dissolution or liquidation of an Entity that
is an SCI Member) shall be bound by the provisions of the
Exchange Rights Agreement.
(f) Information Rights. Each SCI Member and CI Member shall have the right,
upon written request, to obtain a copy of this Second Amendment and the
Company's Certificate of Formation, and all amendments and restatements to each
of them, but, except as otherwise required by the Delaware Act, no SCI Member or
CI Member shall be entitled to receive from the Company or the Managing Member
any other information regarding the status, business or financial condition of
the Company, or any other matters relating to the Company, including, without
limitation, the types of information referred to in Section 18-305 of the
Delaware Act. Notwithstanding the foregoing, each SCI Member and CI Member shall
be entitled to receive a form K-1 or any successor federal tax form annually and
the tax-related information set forth in Section 6.6(a).
ARTICLE FIVE
Indemnification
5.1. Indemnification
(a) To the fullest extent permitted by Delaware law, the Company shall
indemnify each Indemnitee (as defined below) from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including,
without limitation, reasonable attorneys' fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that such Indemnitee becomes subject to or
liable for by reason of the formation, operation, dissolution or termination of
the Company or the authorized actions of such Indemnitee in connection with the
conduct of the affairs of the Company, except to the extent it is finally
determined by a court of competent jurisdiction, from which no further appeal
may be taken, that such Indemnitee's action constituted intentional acts or
omissions constituting willful misconduct or fraud.
(b) Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding shall, to the fullest extent permitted by law, be paid or reimbursed
by the Company in advance of the final disposition of the proceeding so long as
such Indemnitee or a Person on such Indemnitee's behalf shall have provided the
Company with a written undertaking to reimburse the Company for all amounts
advanced if it is ultimately determined that such Indemnitee is not entitled to
indemnification hereunder.
(c) The indemnification provided by this Section 5.1 shall be in addition
to any other rights to which an Indemnitee or any other Person may be entitled
under any agreement, pursuant to any vote or consent of the Members, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity unless otherwise provided in a written agreement pursuant
to which such Indemnitee is indemnified.
(d) In this Second Amendment, "Indemnitee" means (a) any person made a
party to a proceeding by reason of such Person's status as (i) the Managing
Member or an Affiliate of the Managing Member, (ii) an Officer, (iii) a director
or officer of the Managing Member, an Affiliate of the Managing Member, or (iv)
a director, trustee, member, or officer of any other entity, if such Person is
serving in such capacity at the request of the Company or the Managing Member;
and (b) such other Persons (including Affiliates
11
of the Managing Member or the Company) as the Managing Member may designate from
time to time (whether before or after the event giving rise to potential
liability), in its sole and absolute discretion.
ARTICLE SIX
Allocations
6.1. The following capitalized terms and those in Exhibit A, when used herein,
shall have the meanings set forth or referred to below:
"Adjusted Capital Account Deficit" means with respect to any Member, the
negative balance, if any, in such Member's Capital Account as of the end of any
fiscal year, determined after giving effect to the following adjustments:
(a) credit to such Capital Account any portion of such negative
balance which such Member (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 Regulations, or (ii) is deemed to be
obligated to restore to the Company pursuant to the penultimate
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
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 Regulations.
"Affected Gain" has the meaning set forth in Section 6.5(b).
"Code" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Depreciation" means, with respect to any asset of the Company for any
fiscal year or other period, the depreciation, depletion, amortization or other
cost recovery deduction, as the case may be, allowed or allowable for federal
income tax purposes in respect of such asset for such fiscal year or other
period; provided, however, that if there is a difference between the Gross Asset
Value and the adjusted tax basis of such asset at the beginning of such fiscal
year or other period, Depreciation for such asset shall be an amount that bears
the same ratio to the beginning Gross Asset Value of such asset as the federal
income tax depreciation, depletion, amortization or other cost recovery
deduction for such fiscal year or other period bears to the beginning adjusted
tax basis of such asset; provided, further, that if the federal income tax
depreciation, depletion, amortization or other cost recovery deduction for such
asset for such fiscal year or other period is zero, Depreciation of such asset
shall be determined with reference to the beginning Gross Asset Value of such
asset using any reasonable method selected by the Managing Member.
"Gross Asset 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 Gross Asset Value of any contributed property shall be the
gross fair market value of such contributed property, without
reduction for liabilities, as determined by the Managing Member 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 Members, the Gross Asset Values of all Company assets shall be
adjusted in accordance with Sections 1.704-1(b)(2)(iv)(f) and (g) of
the Regulations to equal their respective gross fair market values,
12
without reduction for liabilities, as reasonably determined by
the Managing Member as of the following times:
(i) a Capital Contribution (other than a de minimis
Capital Contribution) to the Company by a new or
existing Member as consideration for an interest;
(ii) the distribution by the Company to a Member of more
than a de minimis amount of Company assets as
consideration for the repurchase of an interest; or
(iii) the liquidation of the Company within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations.
(c) The Gross Asset Values of Company assets distributed to any Member
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.
(d) The Gross Asset Values 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
Regulations; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this subsection (d) to the extent that the
Managing Member reasonably determines that an adjustment pursuant to
subsection (b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to
this subsection (d).
(e) At all times, Gross Asset Values shall be adjusted by any Depreciation
taken into account with respect to the Company's assets for purposes
of computing Net Income and Net Loss.
"Net Income" or "Net Loss" means, for each fiscal year or other period, an
amount equal to the Company's taxable income or loss for such year or period as
determined for federal income tax purposes by the Managing Member, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) of the Code shall be included in taxable income or loss),
adjusted as follows:
13
(a) by including as an item of gross income any tax exempt income received
by the Company and not otherwise taken into account in computing Net
Income or Net Loss;
(b) by treating as a deductible expense any expenditure of the Company
described in Section 705(a)(2)(B) of the Code (or which is treated as
a Section 705(a)(2)(B) expenditure pursuant to Section
1.704-1(b)(2)(iv)(i) of the Regulations) and not otherwise taken into
account in computing Net Income or Net Loss, including amounts paid or
incurred to promote the sale of interests in the Company, and by
treating deductions for any losses incurred in connection with the
sale or exchange of Company property disallowed pursuant to Section
267(a)(1) or 707(b) of the Code as expenditures described in Section
705(a)(2)(B) of the Code;
(c) by taking into account Depreciation in lieu of depreciation,
depletion, amortization and other cost recovery deductions taken into
account in computing taxable income or loss;
(d) by computing gain or loss resulting from any disposition of Company
property with respect to which gain or loss is recognized for federal
income tax purposes by reference to the Gross Asset Value of such
property rather than its adjusted tax basis;
(e) in the event of an adjustment of the Gross Asset Value of any Company
asset which requires that the Capital Accounts of the Company be
adjusted pursuant to Sections 1.704-1(b)(2)(iv)(e), (f) and (g) of the
Regulations, by taking into account the amount of such adjustment as
if such adjustment represented additional Net Income or Net Loss
pursuant to this Article 6; and
(f) by not taking into account in computing Net Income or Net Loss items
separately allocated to the Members pursuant to this Article 6.
"Nonrecourse Deductions" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Regulations.
"Nonrecourse Liabilities" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"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 Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in Regulations Section
1.704-2(b)(4).
"Partner Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with
respect to a Partner Nonrecourse Debt for a Company year shall be determined in
accordance with the rules of Regulations Section 1.704-2(i)(2).
"Partnership Minimum Gain" has the meaning set forth in Regulations Section
1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net
increase or decrease in Partnership Minimum Gain, for a Company year shall be
determined in accordance with the rules of Regulations Section 1.704-2(d).
"Precontribution Gain" has the meaning set forth in Section 6.5(c).
"Regulations" means the final, temporary or proposed Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Tax Items" has the meaning set forth in Section 6.5(a).
6.2. Net Income, Net Loss and other Company items shall be allocated to the SCI
Members and the CI
14
Members pursuant to the provisions of Schedule B. Other than allocations to SCI
Members and CI Members pursuant to the provisions of Schedule B, Net Income, Net
Loss and other Company items shall be allocated to the Managing Member.
6.3. If the Company issues additional Interests, subject to Section 4.9(b)(ii),
the Managing Member shall make such revisions to this Article 6 as it deems
necessary to reflect the terms of the issuance of such interests, including
making preferential allocations to classes or series of Interests that are
entitled thereto.
6.4. Notwithstanding any provisions of this Article 6, the following special
allocations shall be made:
(a) 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 Company Year, each Member shall be specially
allocated items of Company income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such Member's share of the net decrease
in Partnership Minimum Gain to the extent required by Regulations Section
1.704-2(f). The items to be so allocated shall be determined in accordance with
Sections 1.704-2(f) and (i) of the Regulations. This Section 6.4(a) is intended
to comply with the minimum gain chargeback requirement in said section of the
Regulations and shall be interpreted consistently therewith. Allocations
pursuant to this Section 6.4(a) shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant hereto.
(b) Partner Minimum Gain Chargeback. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Company Year,
each Member 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 Regulations, shall be specially allocated items of Company income and gain
for such year (and, if necessary, subsequent years) in an amount equal to that
Member'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 Regulations. The items to be so allocated shall be
determined in accordance with Sections 1.704-2(i)(4) and (j)(2) of the
Regulations. This Section 6.4(b) is intended to comply with the minimum gain
chargeback requirement with respect to Partner Nonrecourse Debt contained in
said section of the Regulations and shall be interpreted consistently therewith.
Allocations pursuant to this Section 6.4(b) shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant hereto.
(c) Qualified Income Offset. In the event a Member unexpectedly receives
any adjustments, allocations or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, and such Member has an
Adjusted Capital Account Deficit, items of Company income (including gross
income) and gain shall be specially allocated to such Member in an amount and
manner sufficient to eliminate the Adjusted Capital Account Deficit as quickly
as possible as required by the Regulations. This Section 6.4(c) 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.
(d) Other Chargeback of Impermissible Negative Capital Account. To the
extent any Member has an Adjusted Capital Account Deficit at the end of any
Company Year, each such Member shall be specially allocated items of Company
income (including gross income) and gain in the amount of such excess as quickly
as possible, provided that an allocation pursuant to this Section 6.4(d) shall
be made if and only to the extent that such Member would have an Adjusted
Capital Account Deficit after all other
15
allocations provided for in this Article 6 have been tentatively made as if this
Section 6.4(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or
other applicable period shall be allocated to the Managing Member.
(f) Partner 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 Member that bears 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 Regulations).
(g) Section 754 Adjustment. To the extent an adjustment to the adjusted tax
basis of any asset of the Company pursuant to Section 734(b) of the Code or
Section 743(b) of the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m)
of the Regulations, to be taken into account in determining Capital Accounts,
the amount of such adjustment to the Capital Accounts shall be treated as an
item of gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases such basis) and such gain or loss shall be specially
allocated among the Members in a manner consistent with the manner in which each
of their respective Capital Accounts are required to be adjusted pursuant to
such section of the Regulations.(1)
6.5. Tax Allocations.
(a) Items of Income or Loss. Except as is otherwise provided in this
Article 6, an allocation of Net Income or Net Loss to a Member shall be treated
as an allocation to such Member of the same share of each item of income, gain,
loss, deduction and item of tax-exempt income or Section 705(a)(2)(B)
expenditure (or item treated as such expenditure pursuant to Regulations Section
1.704-1(b)(2)(iv)(i)) ("Tax Items") that is taken into account in computing Net
Income or Net Loss.
(b) Section 1245/1250 Recapture. If any portion of gain from the sale of
Company assets is treated as gain which is ordinary income by virtue of the
application of Code Sections 1245 or 1250 ("Affected Gain"), then such Affected
Gain shall be allocated among the Members in the same proportion that the
depreciation and amortization deductions giving rise to the Affected Gain were
allocated. This Section 6.5(b) shall not alter the amount of Net Income (or
items thereof) allocated among the Members, but merely the character of such Net
Income (or items thereof). For purposes hereof, in order to determine the
proportionate allocations of depreciation and amortization deductions for each
fiscal year or other applicable period, such deductions shall be deemed
allocated on the same basis as Net Income and Net Loss for such respective
period.
(c) Precontribution Gain, Revaluations. With respect to any contributed
property, the Company shall use the traditional allocation method contained in
the Regulations promulgated under Section 704(c) of the Code to take into
account any variation between the adjusted basis of such asset and the fair
market value of such asset as of the time of the contribution ("Precontribution
Gain"). Each Member hereby agrees to report income, gain, loss and deduction on
such Member's federal income tax return in a manner consistent with the method
used by the Company. If any asset has a Gross Asset Value which is different
from the Company's adjusted basis for such asset for federal income tax purposes
because the Company has revalued such asset pursuant to Regulations Section
1.704-1(b)(2)(iv)(f), the allocations of Tax Items shall be made in accordance
with the principles of Section 704(c) of the Code and the Regulations and the
traditional allocation method.
-----------------------
1 Comment made with respect to equity election will be reviewed by tax
department.
16
(d) The "tax matters partner", as defined in Section 6231(a)(7) of the
Code, shall be the Managing Member. No person, including the Managing Member,
shall be permitted to file an election classifying the Company as an entity
other than a partnership for federal, state and local income tax purposes.
6.6. Tax Matters.
(a) Preparation of Tax Returns. The Managing Member shall arrange for the
preparation and timely filing of all returns of Company income, gains,
deductions, losses and other items required of the Company for federal and state
income tax purposes and shall use commercially reasonable efforts to furnish,
within one hundred twenty (120) days of the close of each taxable year, the tax
information reasonably required by SCI Members and CI Members for federal and
state income tax reporting purposes. In addition, the Managing Member shall,
within seventy-five (75) days after the close of each taxable year, furnish each
SCI Member and CI Member with a list of states where Company income is
reportable for such taxable year, together with an estimate of such income
allocable to each such state.
(b) Withholding. Each SCI Member and CI Member hereby authorizes the
Company to (x) pay using distributions that would otherwise be made to the SCI
Member or CI Member or (y) withhold from such SCI Member or CI Member any amount
of federal, state, local, or foreign taxes that the Managing Member determines
that the Company is required to pay or withhold with respect to any amount
distributable or allocable to such SCI Member or CI Member pursuant to this
Second Amendment, including, without limitation, any taxes required to be paid
or withheld by the Company pursuant to Sections 1441, 1442, 1445, or 1446 of the
Code. Prior to withholding, the Managing Member shall endeavor to (A) provide
reasonable advance notice to the SCI Members and CI Members, which shall provide
the basis for withholding and (B) if requested, discuss the need to withhold
with the SCI Members and CI Members. The Managing Member shall permit an SCI
Member and CI Member who is subject to withholding to contest the obligation to
withhold at its own expense.
ARTICLE SEVEN
Transfers of Interests
7.1. SCI Members' and CI Members' Rights to Transfer.
(a) Subject to Section 7.1(c), an SCI Member or CI Member may not, without
the prior written consent of the Managing Member (which may be granted or
withheld in its sole and absolute discretion), Transfer all or any portion of
its Interests.
(b) If an SCI Member or CI Member is Incapacitated, such Member shall cease
to be a Member of the Company and the executor, administrator, trustee,
committee, guardian, conservator or receiver of such SCI Member's or CI Member's
estate shall have all of the rights of an SCI Member or CI Member, for the
purpose of settling the SCI Member's or CI Member's estate or administering the
SCI Member's or CI Member's property and such power as the Incapacitated SCI
Member or CI Member possessed to Transfer all or any part of his or its
Interests.
(c) Notwithstanding Section 7.1(a), an SCI Member or CI Member may Transfer
all or any portion of its Interests (i) pursuant to the Exchange Rights
Agreement; (ii) to (A) the SCI Members, (B) any spouse, parent, lineal
descendent, parent-in-law, nephew, niece, brother, sister, brother-in-law,
sister-in-
17
law, stepchild, son-in-law and daughter-in-law of any of the persons referred to
in the preceding (A) or their respective spouses; (C) in case of the death of
any of the Persons referred to in the preceding (A) and (B), a transfer by will
or by the laws of the intestate succession to executors, administrators,
testamentary trustees, legatees or beneficiaries; or (D) trusts, limited
partnerships or limited liability companies, the only beneficiaries, partners or
members of which are listed in the preceding (A), (B) and/or (C) (Persons
referred to in the preceding (A), (B), (C) and (D), collectively, "Permitted
Transferees"), provided, in each instance that such Person agrees in writing
with the Managing Member to be bound by the transfer restrictions set forth
herein. Notwithstanding the foregoing, the consent of the Managing Member shall
be required and may be withheld in its sole and absolute discretion if a
Transfer (x) would cause the number of SCI Members, CI Members and Assignees to
exceed ninety-nine, or (y) would violate then applicable federal or state
securities laws rules or regulations.
(d) Any Transfer in contravention of any of the provisions of this Section
7.1 shall, to the fullest extent permitted by law, be void and ineffectual and
shall not be binding upon, or recognized by, the Company.
7.2. Substituted SCI and CI Members.
(a) (i) No SCI Member or CI Member shall have the right to cause a
Transferee to be admitted to the Company as an SCI Member or CI Member,
respectively, in his place other than a Permitted Transferee pursuant to Section
7.1(c) above.
(ii) Except with respect to a Permitted Transferee pursuant to
Section 7.1(c) above, a Transferee of the Interest of an SCI Member or CI Member
shall only be admitted as a Substituted SCI Member or Substituted CI Member, as
applicable, pursuant to this Section 7.2 with the consent of the Managing
Member, which consent may be given or withheld by the Managing Member in its
sole and absolute discretion.
(iii) The Managing Member's failure or refusal to permit any
Transferee, other than a Permitted Transferee pursuant to Section 7.1(c) above,
to become a Substituted SCI Member or Substituted CI Member shall not give rise
to any cause of action against the Company or any Member.
(b) A Transferee who has been admitted as a Substituted SCI Member or
Substituted CI Member in accordance with this Article Seven shall have all the
rights and powers and be subject to all the restrictions and liabilities of an
SCI Member or CI Member under this Second Amendment.
(c) (i) No Transferee will be admitted as a Substituted SCI Member or
Substituted CI Member unless such transferee has furnished to the Managing
Member:
(A) evidence of acceptance in form satisfactory to the
Managing Member of all of the terms and conditions of this Second
Amendment and the Exchange Rights Agreement, and
(B) such other documents or instruments as may be required
in the sole and absolute discretion of the Managing Member in
order to effect such Person's admission as a Substituted SCI
Member or Substituted CI Member.
(ii) Upon the admission of a Substituted SCI Member or
Substituted CI Member, without the need for any additional act or consent of any
Person, the Managing Member shall amend
18
Schedule A-1 or Schedule A-2, as applicable, to reflect the name, address,
number of Interests Transferred, and to eliminate or adjust, if necessary, the
name, address and number of Interests of the predecessor of such Substituted SCI
Member or Substituted CI Member.
7.3. Assignees.
(a) If the Managing Member, in its sole and absolute discretion, does not
consent to the admission of any Transferee other than a Permitted Transferee as
a Substituted SCI Member or Substituted CI Member, as described in Section
7.2(a), such Transferee shall be considered an Assignee for purposes of this
Second Amendment.
(b) An Assignee shall be deemed to have had assigned to it, and shall be
entitled to receive distributions from the Company and the share of Net Income,
Net Losses and any other items, gain, loss deduction and credit of the Company
attributable to the Interests assigned to such Assignee, but shall not be deemed
to be a holder of Interests for any other purpose under this Second Amendment,
and shall not be entitled to vote such Interests in any matter presented to the
Members for a vote (such Interests being deemed to have been voted on such
matter in the same proportion as all other Interests held by Members are voted).
(c) In the event any Transferee desires to make a further assignment of any
such Interests, such Transferee shall be subject to all of the provisions of
this Article Seven to the same extent and in the same manner as any Member
desiring to make an assignment of Interests.
ARTICLE EIGHT
Liquidation; Winding Up
8.1. Dissolution. The Company shall dissolve, and its affairs shall be wound up,
only upon the first to occur of any Liquidating Event.
8.2. Winding Up.
(a) Upon the occurrence of a Liquidating Event, the Company shall continue
solely for the purposes of winding up its affairs in an orderly manner,
liquidating its assets, and satisfying the claims of its creditors and Members.
(b) No Member shall take any action that is inconsistent with, or not
necessary to or appropriate for, the winding up of the Company's business and
affairs.
(c) The Managing Member, or, in the event there is no remaining Managing
Member, any Person elected with the Consent of the SCI Members and Consent of
the CI Members to act as liquidating trustee (the Managing Member or such other
Person being referred to herein as the "Liquidator"), shall be responsible for
overseeing the winding up of the Company and shall take full account of the
Company's liabilities and property and the Company property shall be liquidated
as promptly as is consistent with obtaining the fair value thereof, and the
proceeds therefrom (which may, to the extent determined by the Managing Member,
include shares of common stock or other securities of the Managing Member) shall
be applied and distributed in the following order, unless otherwise required by
mandatory provisions of applicable law:
19
(i) First, to the satisfaction of all of the Company's debts and
liabilities to creditors other than the Members (whether by payment or
reasonable provision for payment thereof);
(ii) Second, to the satisfaction of all of the Company's debts
and liabilities to the Managing Member and to the other Members (whether by
payment or reasonable provision for payment thereof), on a pari passu basis
among them, pro rata according to the amount of such debts and liabilities;
(iii) Third, to the satisfaction of the Preferred Return of the
SCI Members; and
(iv) The balance, if any, to the Managing Member, SCI Members and
CI Members to the extent of and in accordance with the positive balances in
their respective Capital Accounts, after giving effect to all contributions,
distributions, and allocations for all periods.
ARTICLE NINE
Miscellaneous
9.1. Subject to the provisions of Article 7, this Second Amendment will be
binding upon and inure to the benefit of the Members, and their successors and
assigns.
9.2. All pronouns shall be deemed to refer to the masculine, feminine, or
neuter, singular or plural, as the context in which they are used may require.
All headings herein are inserted only for convenience and ease of reference and
are not to be considered in the interpretation of any provision of this Second
Amendment. Numbered or lettered articles, sections and subsections herein
contained refer to articles, sections and subsections of this Second Amendment
unless otherwise expressly stated.
9.3. If any provision of this Second Amendment or the application of such
provision to any Person or circumstance shall be held invalid, the remainder of
this Second Amendment or the application of such provision to Persons or
circumstances other than those to which it is held invalid shall not be affected
thereby. Neither the failure of nor any delay on the part of the Members hereto
in exercising any right, power or privilege hereunder shall preclude other or
further exercise thereof; nor shall any waiver of any right, power, privilege or
default hereunder constitute a waiver of any right, power, privilege or default
or constitute a waiver of any other default of the same or of any other term or
provision.
9.4. Any notice to be given or to be served upon the Company or the Members in
connection with this Second Amendment must be in writing (which may include
facsimile) and will be deemed to have been given and received when delivered to
the address specified by the party to receive the notice. Such notices will be
given to the Company and the Managing Member at the following address: ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
9.5. All amendments to this Second Amendment will be in writing and signed by
the Managing Member.
9.6. The remedies under this Second Amendment are cumulative and shall not
exclude any
20
other remedies to which any Person may be lawfully entitled.
9.7. This Second Amendment shall be governed by and construed and enforced under
the laws of the State of Delaware without regard to conflict of laws principles.
9.8. Except as provided in Section 9.1, nothing herein shall be construed to be
to the benefit of or enforceable by any third party including, but not limited
to, any creditor of the Company.
9.9. No Obligation to Contribute Deficit. If any Member has a deficit balance in
his Capital Account (after giving effect to all contributions, distributions and
allocations for all taxable years, including the year during which such
liquidation occurs), such Member shall have no obligation to make any
contribution to the capital of the Company with respect to such deficit, and
such deficit shall not be considered a debt owed to the Company or to any other
Person for any purpose whatsoever.
9.10. Certain Amendments. (i) This Second Amendment shall not be amended without
the Consent of the SCI Members if such amendment would:
(a) modify the limited liability of an SCI Member in a manner adverse to
such SCI Member;
(b) alter rights of an SCI Member to receive distributions pursuant to
Sections 3.1 and 3.2;
(c) amend Section 4.9(b)(ii); or
(d) amend this Section 9.10.
(ii) This Second Amendment shall not be amended without the Consent of the
CI Members if such amendment would:
(a) modify the limited liability of a CI Member in a manner adverse to such
CI Member;
(b) alter rights of a CI Member to receive distributions pursuant to
Sections 3.1 and 3.2; or
(c) amend this Section 9.10.
9.11. No Rights as Stockholders or Beneficial Owners. Nothing contained in this
Second Amendment shall be construed as conferring upon the holders of the
Interests any rights whatsoever as stockholders of the Managing Member or
beneficial owners of CharterMac, including, without limitation, any right to
receive dividends or other distributions made to equity owners or to vote or to
consent or receive notice as equity owners in respect to any meeting of equity
owners for the election of directors of the Managing Member or trustees of
CharterMac or any other matter.
9.12. Counterparts. This Second Amendment may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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[Signature follows]
22
IN WITNESS WHEREOF, the undersigned have executed this Second Amendment
as of the date first above written.
CM ARCAP INVESTORS LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer and President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Signature Page to Second Amended and Restated LLC Agreement
of CM Investor LLC]
23
Exhibit A
Definitions
The following capitalized terms, when used in the Agreement (including in
Schedule B), shall have the meanings set forth or referred to below:
"Affiliate" of a Person means (a) any Person which controls, is controlled by or
is under common control with such Person and (b) any member of a controlled
group of corporations or a group of trades or businesses under common control
with such Person and (c) any director, executive officer, partner or member of
such Person. "Control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used herein, means the
possession, directly or indirectly, of the power in any form to direct or cause
the direction of the management and policies of the person in question.
"Assignee" means a Transferee who has not become a Substituted SCI Member or
Substituted CI Member and who has the rights set forth in Section 7.3.
"Capital Account" means, with respect to any Member, the capital account
maintained in accordance with Sections 1.704-1(b) and 1.704-2 of the
Regulations, and shall be interpreted and applied in a manner consistent with
such Regulations. In the event the Managing Member shall reasonably determine
that it is prudent to modify the manner in which the Capital Accounts, or any
debits or credits thereto, are computed in order to comply with such
Regulations, the Managing Member may make such modification, provided that such
modification does not materially affect the economic interests of the SCI
Members or CI Members.
"CharterMac" means CharterMac, a Delaware statutory trust.
"CharterMac Common Share(s)" means common share(s) of beneficial interest in
CharterMac.
"CharterMac Distribution Date" means each date on which CharterMac makes a
distribution with respect to CharterMac Common Shares.
"CI Member(s)" means each Person named as a CI Member on Schedule A-2, as such
Schedule may be amended from time to time, and any Substituted CI Member, in
such Person's capacity as a Member of the Company.
"CI Member Interest" means a Membership Interest of a CI Member in the Company.
A CI Member Interest may be expressed as a number of Common Interests.
"Code" means the Internal Revenue Code of 1986, as amended and in effect from
time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
"Common Interests" means Interests issued to the CI Members.
"Common Share Amount" has the meaning set forth in the Exchange Rights
Agreement.
"Company Year" means the fiscal year of the Company, which is the calendar year.
"Consent of the CI Members" means the consent or approval of a proposed action
by CI Members holding more than 66-2/3% of the Common Interests held by CI
Members.
"Consent of the SCI Members" means the consent or approval of a proposed action
by SCI Members holding more than 66-2/3% of the Special Common Interests held by
SCI Members.
"Delaware Act" has the meaning set forth in the Recitals.
"Entity" means any general partnership, limited partnership, corporation, joint
venture, trust, business trust, statutory trust, real estate investment trust,
limited liability company, limited liability partnership, cooperative,
association or other legal entity.
"Exchange Factor" has the meaning set forth in the Exchange Rights Agreement.
"Exchange Rights Agreement" means that certain Exchange Rights Agreement among
the Company, the Managing Member and the SCI Members dated as of the date hereof
(as amended from time to time).
"First Amended and Restated Agreement" has the meaning set forth in the
Recitals.
"Incapacity" or "Incapacitated" means,
(a) as to any individual Member, death, total physical disability or entry
by a court of competent jurisdiction of an order adjudicating him
incompetent to manage his person or his estate;
(b) as to any corporation which is a Member, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its
charter;
(c) as to any partnership which is a Member, the dissolution and
commencement of winding up of the partnership;
(d) as to any estate which is a Member, the distribution by the fiduciary of
the estate's entire interest in the Company;
(e) as to any trustee of a trust which is a Member, the termination of the
trust (but not merely the substitution of a new trustee); or
(f) as to any Member, the bankruptcy of such Member, which shall be deemed
to have occurred when:
(i) the Member commences a voluntary proceeding seeking liquidation,
reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect;
(ii) the Member is adjudged as bankrupt or insolvent, or a final and
non-appealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect has been entered against the
Member;
(iii) the Member executes and delivers a general assignment for the
benefit of the Member's creditors;
(iv) the Member files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against the
Member in any proceeding of the nature described in clause (ii) above;
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(v) the Member seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator for the Member or for all or any
substantial part of the Member's properties;
(vi) any proceeding seeking liquidation, reorganization or other relief
of or against such Member under any bankruptcy, insolvency or other
similar law now or hereafter in effect has not been dismissed within
one hundred twenty (120) days after the commencement thereof;
(vii) the appointment without the Member's consent or acquiescence of a
trustee, receiver or liquidator has not been vacated or stayed within
ninety (90) days of such appointment; or
(viii) an appointment referred to in clause (vii) which has been stayed
is not vacated within ninety (90) days after the expiration of any such
stay.
"Indemnitee" has the meaning ascribed thereto in Section 5.1(d).
"Interest" means a fractional, undivided share of the Membership Interests of
all Members issued pursuant to Article Two. The number of Interests outstanding
in the Company are set forth on Schedules A-1 and A-2, as such schedules may be
amended from time to time. The ownership of Interests shall be evidenced by
certificates for Interests, which certificates shall be substantially in the
form attached hereto as Exhibit B. Interests held by the CI Members shall be
"Common Interests" and Interests held by the SCI Members shall be "Special
Common Interests".
"Liquidating Event" means the occurrence of (i) an election to dissolve the
Company made by the Managing Member provided that the Managing Member has
provided sixty (60) days' prior written notice to the SCI Members, (ii) entry of
a decree of judicial dissolution of the Company pursuant to Section 18-802 of
the Delaware Act, (iii) the sale of all or substantially all of the assets and
properties of the Company or (iv) an event causing there to be no Members of the
Company unless the Company is continued in accordance with the Delaware Act.
"Liquidator" has the meaning ascribed thereto in Section 8.2(c).
"Managing Member" means CM ARCap Investors LLC, a Delaware limited liability
company, in its capacity as managing member of the Company.
"Managing Member Interest" means a Membership Interest held by the Managing
Member, in its capacity as Managing Member. A Managing Member Interest may be
expressed as a number of Common Interests.
"Member" means the Managing Member, an SCI Member or a CI Member, and "Members"
means the Managing Member, the SCI Members and the CI Members collectively.
"Membership Interest" means an ownership interest in the Company of a Member
representing a capital contribution by such Member and includes a limited
liability company interest and any and all benefits to which the holder of such
Membership Interest may be entitled as provided in this Second Amendment or in
the Delaware Act, together with all obligations of such Person to comply with
the terms and provisions of this Second Amendment. A Membership Interest may be
expressed as a number of Interests.
"Original LLC Agreement" has the meaning set forth in the Recitals.
A-3
"Permitted Transferee" means any person to whom Interests are Transferred in
accordance with Section 7.1(c) of this Second Amendment.
"Person" means an individual, partnership, limited partnership, limited
liability company, corporation, association, trust, unincorporated organization
or any other entity or organization, including a government or agency or
political subdivision thereof.
"Preferred Return" means, as of August 15, 2006, an amount equal to $1.72 per
annum for each Special Common Interest. Subsequent to August 15, 2006, such
amount shall be increased or decreased at the same time as, and in the amount of
ninety-five percent (95%) of the percentage increases (including extraordinary
distributions not addressed in the proviso to the definition of "Value" in the
Exchange Rights Agreement) or decreases in, the dividends paid on the
immediately preceding dividend payment date (including any date on which such
extraordinary dividends were paid) and the then current dividend payment date
paid with respect to CharterMac Common Shares, as adjusted for the Exchange
Factor.
"Regulations" means the final, temporary or proposed Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"SCI Member(s)" means each Person named as an SCI Member on Schedule A-1, as
such Schedule may be amended from time to time, including any Substituted SCI
Member, in such Person's capacity as a member of the Company.
"SCI Member Interest" means a Membership Interest of an SCI Member in the
Company. An SCI Member Interest may be expressed as a number of Special Common
Interests.
"Special Common Interests" means, as applicable, the Interests issued to the SCI
Members and the SCI Members.
"Subsidiary" of a Person means any sole proprietorship, general or limited
partnership, joint venture, limited liability company, corporation or other
entity of which such Person owns, whether existing or hereafter acquired,
directly or indirectly through one or more intermediaries, more than fifty
percent (50%) of the outstanding securities or ownership interests of any class
or classes ordinarily entitled, in the absence of contingencies, to elect a
majority of the corporate directors or managers (or persons performing similar
functions). "Subsidiaries" shall have the plural meaning of the preceding.
"Substituted CI Member" means a Person who is admitted to the Company as a CI
Member pursuant to Section 7.2 hereof.
"Substituted SCI Member" means a Person who is admitted to the Company as an SCI
Member pursuant to Section 7.2 hereof.
"Terminating Capital Transaction" means any sale or other disposition of all or
substantially all of the assets of the Company or a related series of
transactions that, taken together, result in the sale or other disposition of
all or substantially all of the assets of the Company.
"Transfer" means to, directly or indirectly, offer to sell, sell, contract to
sell, assign, pledge, grant any option to purchase, make any short sale,
exchange, encumber or otherwise dispose of.
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