Exhibit 99.7
EXECUTION COPY
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AMENDED AND RESTATED
OPERATING AGREEMENT
OF
CHARTERMAC CAPITAL COMPANY, LLC
SCHEDULES
Schedule A - Addresses for Notices
EXHIBITS
Exhibit A - Members and Membership Interests
Exhibit B - Allocations
Exhibit C - Exchange Rights Agreement
Exhibit D - Form of Certificate
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
CHARTERMAC CAPITAL COMPANY, LLC
THIS AMENDED AND RESTATED OPERATING AGREEMENT OF CHARTERMAC CAPITAL
COMPANY, LLC, a Delaware limited liability company (the "Company"), dated as of
November 17, 2003 (this "Agreement"), is entered into by and among CharterMac
Corporation, a Delaware corporation, as managing member (the "Managing Member"),
and the Persons (as defined below) whose names are set forth as Investor Members
(as defined below) on Exhibit A attached hereto (as it may be amended from time
to time), upon the execution and delivery by them of additional signature pages
to this Agreement.
WHEREAS, the Company was formed under the Delaware Limited Liability
Company Act (6 Del. C. Section 18-101, et seq.) (as amended from time to time,
the "Company Act"), by the filing of a Certificate of Formation of the Company
with the Delaware Secretary of State on November 14, 2002 (as amended from time
to time, the "Certificate") and the execution and delivery by the Managing
Member of an operating agreement dated as of November 14, 2002 (the "Original
Agreement");
WHEREAS, the Company and certain of the Initial Investor Members (as
defined below) entered into that certain contribution agreement dated as of
December 17, 2002 (as amended from time to time, the "Contribution Agreement"),
and the Company and the other Initial Investor Members entered into that certain
contribution agreement dated as of November 17, 2003 (the "Fried Contribution
Agreement") pursuant to which the parties thereto agreed that, subject to the
terms of the Contribution Agreement and the Fried Contribution Agreement, as
applicable, upon the occurrence of the closing under the Contribution Agreement
and the Fried Contribution Agreement (the "Closing"), the Initial Investor
Members would transfer the assets described in the Contribution Agreement and
the Fried Contribution, as applicable, in exchange for the issuance by the
Company to the Initial Investor Members of limited liability company interests
in the Company and the payment of cash;
WHEREAS, Closing under the Contribution Agreement and the Fried
Contribution Agreement has occurred concurrently with the execution and delivery
of this Agreement and each of the Persons identified on Exhibit A as an Investor
Member is being admitted to the Company as an Investor Member in accordance with
terms of this Agreement; and
WHEREAS, the parties hereto desire that this Agreement amend and restate
the Original Agreement in its entirety.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties do hereby agree as follows:
ARTICLE 1
DEFINED TERMS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"Additional Investor Member" means a Person (other than an Initial
Investor Member) that has executed and delivered an additional investor member
signature page, has been admitted to the Company as an Investor Member pursuant
to Section 4.3 hereof and is shown as such on Exhibit A to this Agreement.
"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
Company 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.
"Adjusted Contribution" means the Capital Contributions of any Investor
Member reduced by the total distributions to such Member other than
distributions made pursuant to Section 5.1(a) and Section 5.1(b).
"Adjustment" has the meaning set forth in the Contribution Agreement.
"Affiliate" means,
(a) with respect to any individual Person, (i) such Person's
spouse, parents, parents-in-law, lineal descendents, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, stepchildren,
sons-in-law and daughters-in-law or their respective spouses; (ii) any
corporation, limited partnership or limited liability company in which
all of the shares, partnership interests or membership interests are
owned by such Person or the persons listed in (i); (iii) in the case of
the death of such Persons or the persons listed in (i), a transfer by
will or by the laws of intestate succession to executors,
administrators, testamentary trustees, legatees or beneficiaries; and
(iv) trusts, the only beneficiaries of which are listed in (i), (ii) or
(iii) and/or are charitable organizations; and
(b) with respect to any Entity, any Person which, directly or
indirectly through one or more intermediaries, controls, is controlled
by, or is under common control with, any such Entity. The term "control"
means the possession, direct or indirect, of the power to direct or
cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Operating Agreement, as
originally executed and as amended, modified, supplemented or restated from time
to time, as the context requires.
"Assignee" means a Permitted Transferee who has not become a Substituted
Investor Member and who has the rights set forth in Section 11.5.
"Available Cash" means, with respect to the applicable period, the
excess, if any, of
(a) the gross cash receipts of the Company and its Subsidiaries
for such period from all sources whatsoever, over
(b) the total cash paid by the Company and its Subsidiaries
during such period for all purposes of the Company whatsoever but not
including (i) distributions to Members; (ii) any loans made by the
Company to CharterMac, the Managing Member or any of their Affiliates
that the Company does not control, directly or indirectly; (iii) any
payments made with respect to any loans made by the Managing Member or
its Affiliates to the Company; or (iv) any amounts paid by the Company
pursuant to Section 7.5,
plus any previously undistributed Available Cash from any prior period.
Notwithstanding the foregoing, Available Cash shall not include any cash
received or reductions in reserves, or take into account any disbursements made
or reserves established, after the dissolution of the Company.
"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 it does not have a
material adverse effect on the amounts distributable to any Investor Member
pursuant to Article 13 hereof upon the dissolution of the Company.
"Capital Contribution" means, with respect to any Member, any cash, cash
equivalents or the Gross Asset Value of Contributed Property (less any debt
assumed by the Company in respect thereof or to which such Contributed Property
is subject) which such Member contributes or is deemed to contribute to the
Company pursuant to Article 4 hereof.
"Certificate" has the meaning set forth in the preamble.
"CharterMac" means CharterMac, a statutory trust formed under the laws
of Delaware.
"CharterMac Distribution Date" means each date on which CharterMac makes
a distribution with respect to CharterMac Common Shares.
"CharterMac Common Shares" means common shares of beneficial interest of
CharterMac.
"CharterMac Extraordinary Cash Transaction" has the meaning set forth in
8.2(d).
"CharterMac Extraordinary Non-Cash Transaction" has the meaning set
forth in 8.2(d).
"CharterMac Extraordinary Transaction" means, with respect to
CharterMac, a liquidation, dissolution, sale of all or substantially all of its
assets, merger or consolidation (whether or not CharterMac is the surviving
entity) the effect of which is the disposition of all or substantially all of
CharterMac's assets or equity interests.
"Closing" has the meaning set forth in the preamble.
"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 Share Amount" has the meaning set forth in the Exchange Rights
Agreement.
"Common Units" means Units issued to the Managing Member.
"Company" has the meaning set forth in the preamble.
"Company Act" has the meaning set forth in the preamble.
"Company Record Date" means the record date of the Company for the
distribution of Available Cash pursuant to Section 5.1 hereof, which record date
shall be the same as the record date established by CharterMac for a
distribution to its beneficial owners with respect to CharterMac Common Shares.
"Company Year" means the fiscal year of the Company, as set forth in
Section 9.2 hereof.
"Consent of the Investor Members" means the consent or approval of a
proposed action by Investor Members holding at least __% [insert percentage
equal to ▇▇▇▇' Membership Interest plus .1%] of the Special Common Units given
in accordance with Section 14.2 hereof; provided that if at any time there is no
Investor Member which, together with its Affiliates, holds more than 50% of the
outstanding Special Common Units, the "Consent of the Investor Members" shall
mean the consent or approval of a proposed action by Investor Members holding
more than 50% of the Special Common Units.
"Contributed Property" means each asset contributed or deemed
contributed to the Company by any Member.
"Contribution Agreement" has the meaning set forth in the preamble.
"Depreciation" means, with respect to any asset of the Company for any
Company 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 Company 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 Company
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 Company 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 Company 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 with the
Consent of the Investor Members, which shall not be unreasonably withheld.
"Effective Date" means the date that the Closing occurs under the
Contribution Agreement.
"Employment Agreements" means those certain employment agreements
between certain of the Investor Members or certain Affiliates of the Investor
Members and the Company or its Affiliates (as amended from time to time).
"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 Right" 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 Investor Members dated as of the
date hereof (as amended from time to time).
"Fried Contribution Agreement" has the meaning set forth in the
preamble.
"Future Relations Agreement" means the Future Relations Agreement to be
entered into between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and certain affiliated parties and
CharterMac on or about the date hereof (as amended from time to time).
"GAAP" means United States generally accepted accounting principles, as
in effect from time to time.
"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 contributing Member and 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, without reduction for liabilities, as reasonably determined by
the Managing Member with the consent of the contributing Members, which
shall not be unreasonably withheld, 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 a Membership Interest; or
(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 a Membership 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; and
(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).
The Managing Member shall obtain the Consent of the Investor Members,
which shall not be unreasonably withheld, to its determination of value under
clause (c) and under clause (a), if the Managing Member or an Affiliate is
contributing assets.
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.
"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;
(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" means
(a) any Person made a party to a proceeding by reason of such
Person's status as
(i) the Managing Member,
(ii) an officer of the Company,
(iii) a director or officer 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 of a 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.
"Initial Investor Members" means APH Associates L.P., DLK Associates
L.P., Marc Associates L.P., SJB Associates L.P., Fried Family 2001 Trust, J.
▇▇▇▇▇▇▇ ▇▇▇▇▇ and Related General II, L.P.
"Interest Rate" means the prime rate of interest published from time to
time by Citibank, N.A., or its successor, or, if such rate is not published, as
determined by the Managing Member by any other reasonable means.
"Investor Member" means each Person named as an Investor Member in
Exhibit A, as such Exhibit may be amended from time to time, including any
Substituted Investor Member or Additional Investor Member, in such Person's
capacity as a member of the Company.
"Investor Member Interest" means a Membership Interest of an Investor
Member in the Company. An Investor Member Interest may be expressed as a number
of Special Common Units.
"IRS" means the Internal Revenue Service of the United States.
"Joint and Several Guaranty" means the Joint and Several Guaranty to be
entered into by Related Capital Company LLC, CharterMac, the Company and the
Managing Member in favor of Fleet National Bank, as agent for itself, ▇▇▇▇▇▇▇
▇▇▇▇▇ Community Development Company, LLC, and Citicorp USA, Inc.
"Lien" means any lien, security interest, mortgage, deed of trust,
charge, claim, encumbrance, pledge, option, right of first offer or first
refusal and any other right or interest of
others of any kind or nature, actual or contingent, or other similar encumbrance
of any nature whatsoever.
"Liquidating Event" has the meaning set forth in Section 13.1 hereof.
"Liquidator" has the meaning set forth in Section 13.2 hereof.
"Lock-Up Agreement" means those certain Lock-Up Agreements from each
Initial Investor Member, other than Fried Family 2001 Trust and J. ▇▇▇▇▇▇▇
▇▇▇▇▇, in favor of the Company and CharterMac dated as of the date hereof (as
amended from time to time).
"Make-Whole Distribution" means a distribution from the Company to the
Investor Members in an amount equal to (a) the product of (i) the gain or income
allocated to the Investor Members pursuant to Section 704(c) of the Code and
(ii) the maximum federal, state and local income tax rate (expressed as a
decimal) of the Investor Members in the tax year in which such gain or income is
recognized (taking into account whether income is treated as ordinary income or
long-term capital gain, and not taking into account individual tax attributes
such as passive losses) (b) divided by the difference between one (1) and such
rate. In determining the maximum tax rate, there shall be taken into account any
tax benefit actually realized by such Investor Members from the deductibility
for federal income tax purposes of state and local income taxes.
"Managing Member" has the meaning set forth in the preamble.
"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 Units.
"Member" means the Managing Member or an Investor Member, and "Members"
means the Managing Member and the Investor 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 Agreement or in the
Company Act, together with all obligations of such Person to comply with the
terms and provisions of this Agreement. A Membership Interest may be expressed
as a number of Units.
"Net Income" or "Net Loss" means, for each calendar year or other
applicable 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:
(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 organize the Company (unless an election is made pursuant to
Section 709(b) of the Code) or 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 Exhibit B; and
(f) by not taking into account in computing Net Income or Net
Loss items separately allocated to the Members pursuant to Sections 1
and 2 of Exhibit B.
"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.
"Original Agreement" has the meaning set forth in the preamble.
"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).
"Permitted Members" has the meaning set forth in Section 1(b) of Exhibit
B.
"Permitted Transferee" means any person to whom Units are Transferred in
accordance with Section 11.3 of this Agreement.
"Person" means an individual or Entity.
"Precontribution Gain" has the meaning set forth in Section 3(c) of
Exhibit B.
"Preferred Return" means, as of the date hereof, an amount equal to
$1.9444 per annum for each Special Common Unit. Such amount shall be increased
or decreased proportionally with, and at the same time as, increases (including
extraordinary distributions) or decreases in the dividends paid on the
immediately preceding dividend payment date (including any date on which
extraordinary dividends were paid) and the then current dividend payment date
paid with respect to CharterMac Common Shares, as adjusted for the Exchange
Factor.
"Quarter" means each of the three month periods ending on March 31, June
30, September 30 and December 31.
"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).
"Restricted Member" has the meaning set forth in Section 1(b) of Exhibit
B.
"Section 5.1(c) Distribution" has the meaning set forth in Section 5.1.
"Seventh Amended and Restated Loan Agreement" means the Seventh Amended
and Restated Loan Agreement to be entered into among RCC Credit Facility,
L.L.C., CharterMac, the Company and the Managing Member in favor of Fleet
National Bank, as agent for itself, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Community Development Company,
LLC and Citicorp USA, Inc.
"Special Common Units" means Units issued to the Investor Members.
"Special Preferred Shares" has the meaning set forth in the Exchange
Rights Agreement.
"Subsidiary" means, with respect to any Person, any Entity of which a
majority of
(a) the voting power of the voting equity securities or
(b) the outstanding equity interests,
is owned, directly or indirectly, by such Person.
"Substituted Investor Member" means a Person who is admitted to the
Company as a Member pursuant to Section 11.4 hereof.
"Tax Items" has the meaning set forth in Section 3(a) of Exhibit B.
"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" as a noun, means any sale, assignment, conveyance, pledge,
hypothecation, gift, encumbrance or other transfer, and as a verb, means to
sell, assign, convey, pledge, hypothecate, give, encumber or otherwise transfer.
"Trust Agreement" means the Second Amended and Restated Trust Agreement
of CharterMac dated as of November 17, 2003, as amended from time to time.
"Unit" means a fractional, undivided share of the Membership Interests
of all Members issued pursuant to Sections 4.1, 4.2 and 4.3. The number of Units
outstanding in the Company are set forth in Exhibit A, as such Exhibit may be
amended from time to time. The ownership of Units shall be evidenced by
certificates for Units, which certificates shall be substantially in the form
attached hereto as Exhibit D, unless the Managing Member determines in writing
that the Units shall be uncertificated. Units held by the Managing Member shall
be "Common Units" and Units held by the Investor Members shall be "Special
Common Units".
Certain additional terms and phrases have the meanings set forth in the
preamble and text of this Agreement and Exhibit B hereto.
ARTICLE 2
ORGANIZATIONAL MATTERS
2.1 Continuation
The Members hereby agree to continue the Company under and
pursuant to the Company Act. Except as expressly provided herein to the
contrary, the rights and obligations of the Members and the administration and
termination of the Company shall be governed by the Company Act. The Membership
Interest of each Member shall be personal property for all purposes.
2.2 Name
The name of the Company shall continue to be CharterMac Capital
Company, LLC. The Company's business may be conducted under any other name or
names deemed advisable by the Managing Member.
2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Company in the State
of Delaware and the name and address of the registered agent for service of
process on the Company in the State of Delaware is United Corporate Services,
Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The principal
office of the Company shall be ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or such
other place as the Managing Member may from time to time designate by notice to
the Investor Members. The Company may maintain offices at such other place or
places within or outside the State of Delaware as the Managing Member deems
advisable.
2.4 Power of Attorney
(a) Each Investor 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:
(i) 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 Agreement;
(ii) all instruments that the Managing Member deems
appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement provided such
amendment, change, modification or restatement has been adopted
in accordance with this Agreement;
(iii) 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 Agreement, including,
without limitation, a certificate of cancellation; and
(iv) all instruments relating to the admission,
resignation, removal or substitution of any Member pursuant to,
or other events described in, Article 11, 12 or 13 hereof or the
Capital Contribution of any Member;.
Nothing contained herein shall be construed as authorizing the Managing Member
or any Liquidator to amend this Agreement except in accordance with Article 14
hereof or as may be otherwise expressly provided for in this Agreement.
(b) 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 Agreement 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 Investor Member or Assignee and the
Transfer of all or any portion of such Investor Member's or Assignee's
Units and shall extend to such Investor Member's or Assignee's heirs,
successors, assigns and personal representatives.
2.5 Term
The term of the Company commenced on the date of filing of the
Certificate and shall continue until the Company is dissolved pursuant to the
provisions of Article 13 or as otherwise provided by law.
2.6 Authorized Person
The Managing Member is hereby designated as the "authorized
person" of the Company within the meaning of the Company Act, and shall execute,
deliver and file any amendments and/or restatements of the Certificate and any
other certificates (and any corrections, amendments and/or restatements thereof)
required or permitted by the Company Act to be filed with the Secretary of State
of the State of Delaware.
ARTICLE 3
PURPOSE
3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Company is to conduct any business that may be lawfully conducted by a limited
liability company organized pursuant to the Company Act including, without
limitation, to engage in the following activities:
(i) to acquire, hold, own, improve, maintain, operate,
sell, lease, transfer, encumber, convey, exchange, and otherwise
dispose of or deal with the assets acquired pursuant to the
Contribution Agreement and the Fried Contribution Agreement;
(ii) to undertake such other activities as may be
necessary, advisable, desirable or convenient to the business of
the Company; and
(iii) to engage in such other ancillary activities as
shall be necessary or desirable to effectuate the foregoing
purposes.
3.2 Powers
In connection with carrying out the purpose and business of the
Company set forth in Section 3.1, but subject to all of the terms, covenants,
conditions and limitations contained in the Trust Agreement, this Agreement and
any other agreement entered into by the Company, the Company shall have full
power and authority to enter into, perform, and carry out contracts of any kind,
to borrow money and to issue evidences of indebtedness, whether or not
secured by mortgage, trust deed, pledge or other Lien, and, directly or
indirectly, to do any and all acts and things necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and accomplishment of
the purposes and business described herein and for the protection and benefit of
the Company. The Company also is empowered to do any and all acts and things
necessary, appropriate or advisable to ensure that the Company will not be
classified as a "publicly traded partnership" for purposes of Section 7704 of
the Code.
ARTICLE 4
CAPITAL CONTRIBUTIONS
4.1 Capital Contributions of the Members
(a) The Members have made initial Capital Contributions having
the respective values set forth on Exhibit A.
(b) Each Member shall own Units in the amounts set forth for
such Member in Exhibit A. If required pursuant to the Contribution
Agreement, the Company shall issue additional Special Common Units to
Investor Members in payment of the Adjustment.
(c) Except as provided in Sections 4.2 and 10.5, the Members
shall have no obligation to make any additional Capital Contributions or
loans to the Company.
4.2 Additional Funds
(a) The sums of money required to finance the business and
affairs of the Company shall be derived from the initial Capital
Contributions made to the Company by the Members as set forth in Section
4.1 and from funds generated from the operations and business of the
Company.
(b) In the event additional financing is needed from sources
other than as set forth in Section 4.2(a) for any reason, the Managing
Member may, in its sole and absolute discretion, in such amounts and at
such times as it solely shall determine to be necessary or appropriate
(subject to the requirements of Section 4.2(d)),
(i) Subsequent to the date that the provisions of
Section 8.2(b) are no longer applicable, cause the Company to
issue additional Membership Interests and admit Additional
Investor Members in accordance with Section 4.3;
(ii) make additional Capital Contributions to the
Company;
(iii) cause the Company to borrow money, enter into loan
arrangements, issue debt securities, obtain letters of credit or
otherwise borrow money on a secured or unsecured basis;
(iv) make a loan or loans to the Company, provided, that
the Company shall not borrow money from the Managing Member,
CharterMac or any of their respective Affiliates unless
repayment thereof is expressly prohibited except if the
Company has sufficient cash to make the distributions due to the
Investor Members for the period of such borrowing, and all
accrued but unpaid Preferred Returns, and interest thereon; or
(v) subject to Section 8.2(b), sell any assets or
properties directly or indirectly owned by the Company.
(c) Except as provided in Section 10.5, the Investor Members
shall not be required to make any additional Capital Contributions or
any loans to, or otherwise provide any financial accommodation for the
benefit of, the Company.
(d) (i) During each Company Year, in respect of each CharterMac
Distribution Date which relates to a distribution period ending within
such Company Year, if the Company does not have Available Cash
sufficient to make the distributions described in Section 5.1(a) (the
amount of each such insufficiency, a "Quarterly Distribution
Shortfall"), the Managing Member shall contribute to the Company, on or
prior to such CharterMac Distribution Date, cash in the amount equal to
the lesser of (1) such Quarterly Distribution Shortfall and (2) the
amount equal to (x) the aggregate Preferred Return for all Special
Common Units for such Company Year (which shall be determined by
annualizing the distributions over such Company Year, except for the
distribution relating to the final distribution period during such
Company Year which will be based on the actual distributions made in
such Company Year) minus (y) $5,000,000 (provided, however, that in the
initial Company Year, such amount shall be pro rated based on (i) the
number of days between the Closing and the end of the initial Company
Year divided by (ii) 365) minus (z) the aggregate contributions or loans
previously made pursuant to this Section 4.2(d)(i) with respect to
distribution periods ending within such Company Year. The Managing
Member may make any such contribution by means of a loan complying with
Section 4.2(b)(iv) (in which case such contribution shall not be deemed
a Capital Contribution) or by a Capital Contribution; the amount of such
loan or Capital Contribution shall be distributed in accordance with
Section 5.1 on such CharterMac Distribution Date.
(ii) If, at the end of the last distribution period
within such Company Year in which there is not sufficient
Available Cash to pay the Preferred Return, the aggregate amount
contributed by the Managing Member for all prior distribution
periods within such Company Year exceeds the amount equal to (A)
the aggregate Preferred Return for all Special Common Units for
such Company Year minus (B) $5,000,000 (provided, however, that
in the initial Company Year, such amount shall be pro rated
based on (i) the number of days between the Closing and the end
of the initial Company Year divided by (ii) 365), then the
amount of such excess shall be subtracted from the amount
otherwise required to be distributed to the Investor Members
pursuant to Section 5.1(a) on the last CharterMac Distribution
Date which relates to such last distribution period within such
Company Year; provided, that, if the amount to be subtracted
exceeds the amount to be distributed to the Investor Members on
such CharterMac Distribution Date, then the Investor Members
shall be required to contribute on such CharterMac Distribution
Date such excess to the Company,
pro rata according to their proportionate share of the Special
Common Units on such CharterMac Distribution Date (and the
amount so contributed shall reduce distributions for purposes of
Section 2(h) of Exhibit B).
(e) In the event that, in respect of any CharterMac Distribution
Date, the Company does not have Available Cash (after giving effect to
any contributions made pursuant to Section 4.2(d) and the penultimate
sentence of Section 5.1) sufficient to make the distributions described
in Section 5.1(a) and Section 5.1(b), to the extent that the Company has
made any loan to the Managing Member or its Affiliates, which has not
been fully repaid, or made any payments pursuant to Section 7.5, which
have not been fully reimbursed, the Managing Member or its Affiliates
shall repay such loan and/or reimburse such indemnification payment,
prior to such CharterMac Distribution Date, in cash in the amount equal
to such insufficiency.
4.3 Issuance of Additional Membership Interests; Admission of Additional
Investor Members
(a) Subsequent to the date that the provisions of Section 8.2(b)
are no longer applicable, in addition to any additional Special Common
Units issuable to the Investor Members by the Company pursuant to
Section 4.1, the Managing Member is authorized (with any required
Consent of the Investor Members as provided in Section 8.2(b)) to cause
the Company to issue additional Membership Interests (or options
therefor) in the form of Units or other Membership Interests in one or
more series or classes, or in one or more series of any such class
senior or junior to the Units 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, (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 Interest upon dissolution and winding up of the Company.
(b) Subsequent to the date that the provisions of Section 8.2(b)
are no longer applicable and subject to the limitations set forth in
Section 4.3(a) and the provisions of Section 12.2, the Managing Member
may take such steps as it, in its sole and absolute discretion, deems
necessary or appropriate to admit any Person as an Additional Investor
Member of the Company or to issue any Membership Interests, including,
without limitation, amending the Certificate, Exhibit A or any other
provision of this Agreement.
4.4 No Third Party Beneficiary
To the maximum extent permitted by law and except for the rights
of Indemnitees under Section 7.5, no creditor or other third party having
dealings with the Company shall have the right to enforce the right or
obligations of any Member to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns.
4.5 No Preemptive Rights
Subject to any preemptive rights that may be granted in
connection with the issuance of additional Membership Interests pursuant to
Section 4.3, no Person shall have any preemptive or other similar right with
respect to
(a) additional Capital Contributions or loans to the Company; or
(b) issuance or sale of any Units or other Membership Interests.
ARTICLE 5
DISTRIBUTIONS
5.1 Regular Distributions
Except for distributions pursuant to Section 13.2 in connection
with the dissolution and winding up of the Company, and subject to the
provisions of Sections 5.2, 5.3 and 5.4, the Managing Member shall cause the
Company to distribute to the Members on each CharterMac Distribution Date an
amount of the Available Cash (plus any contributions or payments pursuant to
Section 4.2(d) or Section 4.2(e)), as of the applicable Company Record Date, as
follows:
(a) First, to the Investor Members, an amount equal to the
Preferred Return per Special Common Unit distributable to each Investor
Member (or an applicable percentage thereof to the extent distributions
are made quarterly or otherwise more than once per Company Year); and
(b) Second, to the Investor Members, an amount equal to the
amount of any Preferred Return not distributed on any prior CharterMac
Distribution Date because the Company had insufficient Available Cash
(including any contributions, loans or loan repayments pursuant to
Section 4.2(d) or Section 4.2(e)), together with interest on such amount
at the Interest Rate as in effect from time to time, compounded
annually; and
(c) Thereafter, to the Managing Member, such amount as is
determined by the Managing Member in its sole and absolute discretion.
provided, however, that (i) in respect of the first CharterMac Distribution Date
after the Effective Date, the Preferred Return distributable pursuant to Section
5.1(a) shall be prorated for the period from the Effective Date to the end of
the applicable distribution period, (ii) with respect to Special Common Units
issued in connection with the Adjustment, the Preferred Return shall accrue
from, and shall be prorated in arrears to, the Effective Date, (iii) in no event
may a Member receive a distribution of Available Cash with respect to a Unit (or
portion thereof) if such Member is entitled to receive a distribution with
respect to CharterMac Common Shares for which such Unit has been exchanged
covering the period or portion thereof to which such distribution of Available
Cash relates, and (iv) the Managing Member shall not make a distribution under
Section 5.1(c) at a time when there is accrued and unpaid Preferred Return, or
interest thereon, due to the Investor Members for any prior period. If, in any
Company Year, there have been distributions pursuant Section 5.1(c) (each, a
"Section 5.1(c) Distribution"),
and on a later CharterMac Distribution Date in such Company Year there exists a
Quarterly Distribution Shortfall, the Managing Member shall contribute to the
Company, prior to such CharterMac Distribution Date, cash in an amount equal to
the lesser of such Quarterly Distribution Shortfall and the aggregate of the
Section 5.1(c) Distributions for such Company Year, which shall be Available
Cash and which the Company shall distribute on such CharterMac Distribution Date
pursuant to this Section 5.1. The preceding sentence shall be applied prior to
the application of Section 4.2(d).
5.2 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 Unit, the Company shall have the right to withhold amounts of Available
Cash distributable to such Member or with respect to such Units, to the extent
of the amount of such withholding tax or other similar tax liability or
obligation pursuant to the provisions contained in Section 10.5. Prior to
withholding, the Managing Member shall endeavor to (i) provide reasonable
advance notice to the Investor Members, which shall provide the basis for
withholding and (ii) if requested, discuss the need to withhold with the
Investor Members.
5.3 Additional Membership Interests
Subsequent to the date that the provisions of Section 8.2(b) are
no longer applicable, if the Company issues additional Membership Interests in
accordance with Article 4, the distribution priorities set forth in Section 5.1
shall be amended by the Managing Member acting alone, as necessary or advisable,
to reflect the distribution priority of such Membership Interests and
corresponding amendments shall be made to the provisions of Exhibit B.
5.4 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 Section 13.2.
5.5 Limitations on Distributions
Notwithstanding any other provision contained in this Agreement,
the Company, and the Managing Member on behalf of the Company, shall not be
required to make any distribution to a Member in respect of its interest in the
Company if such distribution would violate the Company Act or other applicable
law.
ARTICLE 6
ALLOCATIONS
6.1 Allocations
Net Income, Net Loss and other Company items shall be allocated
pursuant to the provisions of Exhibit B.
6.2 Revisions to Allocations to Reflect Issuance of Membership
Interests
Subsequent to the date that the provisions of Section 8.2(b) are
no longer applicable, if the Company issues Membership Interests in accordance
with Article 4, the Managing Member shall make such revisions to this Article 6
and Exhibit B as it deems necessary to reflect the terms of the issuance of such
Membership Interests, including making preferential allocations to classes or
series of Membership Interests that are entitled thereto.
ARTICLE 7
MANAGEMENT AND OPERATIONS OF BUSINESS
7.1 Management
(a) (i) Except as set forth in Section 8.2(b) and subject to the
Trust Agreement, full, complete and exclusive discretion to manage and
control the business and affairs of the Company are and shall be vested
in the Managing Member, and no Investor Member shall have any authority
to act for or bind the Company or any right to participate in or
exercise control or management power over the business and affairs of
the Company.
(ii) Subject to the provisions of Section 8.2(b), 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 Agreement, 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 set forth in Section 3.2 hereof and to
effectuate the purposes set forth in Section 3.1 hereof.
(iii) 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 expense, provided, that the cost to the Company of
the services of such Persons who are also officers or employees
of Affiliates of the Managing Member shall be based on a pro
rata allocation of their time.
(iv) The Managing Member may not be removed, with or
without cause.
(b) (i) Each of the Investor Members agrees that, subject to
Section 8.2(b), 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 Company 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 Agreement shall not constitute a breach by
the Managing Member of any duty that the
Managing Member may owe the Company or the Investor Members or
any other Persons under this Agreement or of any duty stated or
implied by law or equity.
(iii) Notwithstanding any other provision of this
Agreement to the contrary, the execution, delivery and
performance by the Managing Member on behalf of the Company of
the Contribution Agreement and the Fried Contribution Agreement
are hereby ratified, approved and confirmed in all respects and
the Company, and the Managing Member on behalf of the Company,
may execute, deliver and perform the Exchange Rights Agreement,
the Lock-Up Agreements, the Shared Services Agreement, the Other
Services Agreement, the Trade Name License Agreement, the
Seventh Amended and Restated Loan Agreement, the Joint and
Several Guaranty and all documents, agreements, certificates or
financing statements contemplated thereby or related thereto,
all without any further act, vote or approval of any other
Person.
(c) Notwithstanding any other provision of this Agreement to the
contrary, without the prior determination by at least a majority of the
Independent Trustees (as defined in the Exchange Rights Agreement) that
in their business judgment there is a business reason (independent of
the impact of such action on distributions pursuant to Section 5.1) why
the Acquired Businesses (as defined in the Contribution Agreement)
should not be conducted by the Company or its Subsidiaries, neither the
Managing Member nor any of its Affiliates (other than the Company and
its Subsidiaries) shall, directly or indirectly, enter into or conduct
any of the Acquired Businesses conducted by Related Capital Company
prior to the Effective Date.
7.2 Reimbursement of the Managing Member; No Compensation
(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 7.5 hereof.
(c) The Managing Member may receive compensation from the
Company for the performance of its duties under this Agreement unless it
adversely impacts distributions pursuant to Section 5.1.
7.3 Outside Activities of the Managing Member
Subject to Section 7.1(c), 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.
7.4 Contracts with Affiliates
(a) (i) 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
(but provided that such terms are no less favorable to the Company than
arm's length).
(ii) The foregoing authority shall not create any right
or benefit in favor of any Affiliate or any other Person.
(b) Subject to any required Consent of the Investor Members
pursuant to Section 8.2(b)(v), the Company may in the ordinary course of
business Transfer assets to Entities in which it is or thereby becomes a
participant upon such terms and subject to such conditions consistent
with this Agreement 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 (but
provided that such terms are no less favorable to the Company than arm's
length).
(d) The Managing Member, in its sole and absolute discretion and
without approval of the Investor Members, may propose and adopt, on
behalf of the Company, employee benefit plans and similar plans funded
by the Company for the benefit of employees of the Company, the Managing
Member, any Subsidiaries of the Company or any Affiliate of any of them
in respect of services performed, directly or indirectly, for the
benefit of the Company, the Managing Member, any Subsidiaries of the
Company or any Affiliate of any of them, provided that such plans may
not provide for the issuance of Units or Membership Interests, or
options to acquire Units or Membership Interests, or other securities
convertible into or exchangeable for Units or Membership Interests,
except in accordance with Section 8.2(b).
(e) The Managing Member is expressly authorized to enter into,
in the name and on behalf of the Company, a "right of first opportunity"
or "right of first offer" arrangement, non-competition agreements and
other conflict avoidance agreements with various Affiliates of the
Company and the Managing Member, on such terms as the Managing Member,
in its sole and absolute discretion, believes are advisable, subject to
any applicable limitations on the authority of the Managing Member
otherwise set forth in this Agreement.
7.5 Indemnification
(a) (i) To the fullest extent permitted by Delaware law, the
Company shall indemnify each Indemnitee 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.
(ii) Any indemnification pursuant to this Section 7.5
shall be made only out of the assets of the Company, and neither
the Managing Member nor any Investor Member shall have any
obligation to contribute to the capital of the Company, or
otherwise provide funds, to enable the Company to fund its
obligations under this Section 7.5.
(b) Reasonable expenses incurred by an Indemnitee who is a party
to a proceeding shall 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 7.5 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) The Company may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnitees and such other Persons
as the Managing Member shall determine, against any liability that may
be asserted against or expenses that may be incurred by such Person in
connection with the Company's activities, regardless of whether the
Company would have the power to indemnify such Person against such
liability under the provisions of this Agreement.
(e) In no event may an Indemnitee subject any of the Members to
personal liability by reason of the indemnification provisions set forth
in this Agreement.
(f) An Indemnitee shall not be denied indemnification in whole
or in part under this Section 7.5 because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies if
the transaction was otherwise permitted by the terms of this Agreement.
(g) (i) The provisions of this Section 7.5 are for the benefit
of the Indemnitees, their heirs, successors, assigns and administrators
and shall not be deemed to create any rights for the benefit of any
other Persons.
(ii) Any amendment, modification or repeal of this
Section 7.5 or any provision hereof shall be prospective only
and shall not in any way affect the Company's liability to any
Indemnitee under this Section 7.5, as in effect immediately
prior to such amendment, modification, or repeal with respect to
claims arising from or relating to matters occurring, in whole
or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
7.6 Liability of the Managing Member
(a) Notwithstanding anything to the contrary set forth in this
Agreement, 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 the Managing Member acted in bad faith or breached an explicit
term of this Agreement and the act or omission was material to the
matter giving rise to the loss, liability or benefit not derived.
(b) The Investor Members expressly acknowledge that the Managing
Member is acting on behalf of the Company and the Managing Member's
Affiliates (including CharterMac) collectively, that the Managing
Member, subject to the provisions of Section 8.2(b) and Section 8.2(d)
hereof, is under no obligation (fiduciary or otherwise) to consider the
separate interest of the Investor Members (including, without
limitation, the tax consequences to Investor Members or Assignees) 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 Investor 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.
(d) Whenever this Agreement or any other agreement contemplated
hereby provides that the Managing Member, any of its Affiliates or any
Indemnitee 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 or Indemnitee 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 the Company or any Member, or (ii) in its "good faith" or
under another express standard, the Managing Member, such Affiliate or
any Indemnitee shall act under such express standard and shall not be
subject to any other or different standards imposed by this Agreement,
any other agreement contemplated hereby or applicable law or equitable
principles.
(e) To the extent that, at law or in equity, the Managing
Member, any of its Affiliates or any Indemnitee has duties (including
fiduciary duties) and liabilities relating thereto, to the Company or
any Member, the Managing Member or such Affiliate or Indemnitee acting
under this Agreement shall not be liable to the Company or any Member
for its good faith reliance on the provisions of this Agreement;
provided that nothing contained in this Section 7.6(e) shall relieve the
Managing Member from liability under Section 7.6(a) in respect of a
breach of an explicit term of this Agreement. The provisions of this
Agreement, to the extent they restrict the duties and liabilities of the
Managing Member, any of its Affiliates or any such Indemnitee otherwise
existing at law or in equity, are agreed by the Members to completely
replace such other duties and liabilities of the Managing Member or such
Affiliate or Indemnitee.
(f) Any amendment, modification or repeal of this Section 7.6 or
any provision hereof shall be prospective only and shall not in any way
affect the limitations on the Managing Member's and its officers' and
directors' liability to the Company and the Investor Members under this
Section 7.6 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating
to matters occurring, in whole or in part, prior to such amendment,
modification or repeal, regardless of when such claims may arise or be
asserted.
7.7 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.
7.8 Reliance by Third Parties
(a) Except in connection with actions requiring the Consent of
the Investor Members under Section 8.2(b), but otherwise notwithstanding
anything to the contrary in this Agreement, 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) Each Investor Member hereby waives any and all defenses or
other remedies which may be available against such Person to contest,
negate or disaffirm any action of the Managing Member in connection with
any such dealing other than in connection with actions requiring the
Consent of the Investor Members under Section 8.2(b).
(c) Except in connection with actions requiring the Consent of
the Investor Members under Section 8.2(b), in no event shall any Person
dealing with the Managing Member or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to
inquire into the necessity or expediency of any act or action of the
Managing Member or its representatives.
(d) Except in connection with actions requiring the Consent of
the Investor Members under Section 8.2(b), each and every certificate,
document or other instrument executed on behalf of the Company by the
Managing Member or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder
that
(i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full
force and effect;
(ii) the Person executing and delivering such
certificate, document or instrument was duly authorized and
empowered to do so for and on behalf of the Company; and
(iii) such certificate, document or instrument was duly
executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Company.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF INVESTOR MEMBERS
8.1 Limitation of Liability
The Investor Members shall have no liability under this
Agreement except as expressly provided in this Agreement, including Section 10.5
hereof, or under the Company Act.
8.2 Management of Business
(a) No Investor Member or Assignee (other than the Managing
Member or any authorized officer, director, employee or agent of the
Managing Member or the Company, in their 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 Investor Member
shall have the right to vote on or grant or withhold consent to any
matter hereunder or under the Company Act, except as otherwise provided
in this Agreement.
(b) Notwithstanding Section 8.2(a) but subject to Section
8.2(c), the Managing Member shall not, without the prior Consent of the
Investor Members, which may be granted in their sole and absolute
discretion, cause the Company (and in the case of clauses (ii), (iii),
(v) and (vi), the Company's Subsidiaries) to:
(i) dissolve or liquidate;
(ii) sell, assign, transfer or pledge assets outside the
ordinary course of business, provided however, that such Consent
shall not be required if such sale, assignment, transfer or
pledge (which actions may take the form of a merger or
consolidation in which neither the Company nor its Affiliates
retains any interest) is to an unaffiliated third party and at
the time of the transaction the Company distributes to the
Investor Members, in addition to amounts to which they are
otherwise entitled pursuant to this Agreement, the Make-Whole
Distribution and provided further that the foregoing proviso
shall not affect the provisions of this Agreement relating to
CharterMac Extraordinary Transactions, which transactions are
subject to such other provisions of this Agreement;
(iii) merge or consolidate with another entity where the
Company (or, in the case of a merger or consolidation of a
Subsidiary of the Company, such Subsidiary) (x) is not the
surviving entity; (y) issues Units in connection with such
merger or consolidation; or (z) makes any change in this
Agreement or in the Certificate;
(iv) except as provided in Section 8.6 or Section
13.2(b), distribute to the Investor Members assets other than
cash;
(v) transfer assets or effect a transaction that in
either case would accelerate the recognition of gain or income
to the Investor Members pursuant to Section 704(c) of the Code
or otherwise change the method of allocation pursuant to Section
704(c) of the Code, provided however, that such Consent shall
not be required if such transfer is to, or transaction is with
(which actions may take the form of a merger or consolidation in
which neither the Company nor its Affiliates retains any
interest), an unaffiliated third party and at the time of the
transaction the Company distributes to the Investor Members, in
addition to amounts to which they are otherwise entitled
pursuant to this Agreement, the Make-Whole Distribution and
provided further that the foregoing proviso shall not affect the
provisions of this Agreement relating to CharterMac
Extraordinary Transactions, which transactions are subject to
such other provisions of this Agreement;
(vi) issue additional Units or Membership Interests, or
options to acquire Units or Membership Interests, or other
securities convertible into or exchangeable for Units or
Membership Interests, except in accordance with Section 4.1;
(vii) amend this Agreement except as expressly permitted
by Article 14; and
(viii) revoke the tax elections described in Sections
10.2(a) or (b).
(c) The Managing Member shall not be required to obtain the
Consent of the Investor Members pursuant to this Agreement in the
following instances:
(i) subject to satisfaction of the requirements of
Section 8.2(d), if any of the events otherwise requiring Consent
of the Investor Members pursuant to Section 8.2(b) will occur in
connection with (i) a CharterMac Extraordinary Non-Cash
Transaction that is consummated more than five years after the
Effective Date or (ii) CharterMac Extraordinary Cash
Transaction;
(ii) with respect to the consent right set forth in
Section 8.2(b)(vi), at the time there is no more than one
Investor Member, if the Managing Member determines to issue up
to one hundred Common Units to an Affiliate of the Managing
Member;
(iii) except with respect to the consent right set forth
in Section 8.2(b)(vii) (which action shall always require the
Consent of the Investor Members), from and after the time when
Investor Members own in the aggregate less than 25% of the
Special Common Units held by all Investor Members following the
completion of the issuance of Special Common Units pursuant to
the Contribution Agreement;
(iv) except with respect to the consent right set forth
in Section 8.2(b)(vii) (which action shall always require the
Consent of the Investor Members), (x) from and after five (5)
years following the Effective Date with respect to Sections
8.2(b)(ii), (iii) and (v) if the transaction is with an
unaffiliated third party (at which time the obligation to pay
the Make-Whole Distribution shall also terminate) and (y) from
and after ten (10) years following the Effective Date with
respect to Sections 8.2(b)(i), (ii), (iii), (iv), (v), (vi) and
(viii); and
(v) if any of the events otherwise requiring Consent of
the Investor Members pursuant to Sections 8.2(b)(ii), (iii), (v)
and (vi) are undertaken by a Subsidiary of the Company or the
Company (x) with respect to assets acquired by such Subsidiary
of the Company or the Company after the date hereof (so long as
such event does not accelerate the recognition of gain or income
pursuant to Section 704(c) of the Code with respect to assets
contributed pursuant to the Contribution Agreement) or (y) with
respect to any assets owned by the Company or a Subsidiary of
the Company in a manner which (A) does not cause the Investor
Members to accelerate the recognition of gain or income pursuant
to Section 704(c) of the Code with respect to assets contributed
pursuant to the Contribution Agreement and (B) if in connection
with a merger or consolidation contemplated by Section
8.2(b)(iii) in which the Company or its Affiliates retain an
interest, does not involve (A) an entity other than the Company
or its
subsidiary, if applicable, being the surviving entity, (B) the
issuance of Units in connection with such merger or
consolidation; or (C) any change in this Agreement or in the
Certificate.
(d) With respect to a CharterMac Extraordinary Transaction:
(i) For a period of ten years following the Effective
Date, CharterMac shall use its reasonable efforts to structure
any CharterMac Extraordinary Cash Transaction in a manner that
would permit the Investor Members to continue to be entitled to
own their Special Common Units and be entitled to their rights
under this Agreement, including this Section 8.2(d), so long as
such structuring does not adversely affect the economics
available to CharterMac's beneficial owners generally pursuant
to such CharterMac Extraordinary Cash Transaction. For the
avoidance of doubt, after the ten-year period following the
Effective Date, there shall be no restrictions on how CharterMac
structures a CharterMac Extraordinary Cash Transaction.
(A) In connection with a CharterMac
Extraordinary Cash Transaction which cannot reasonably
be structured so that the Investor Members continue to
own their Special Common Units and be entitled to their
rights under this Agreement, including this Section
8.2(d), the Investor Members shall be required to
exchange their Special Common Units pursuant to the
Exchange Rights Agreement upon the closing of such
CharterMac Extraordinary Cash Transaction.
(ii) In connection with a CharterMac Extraordinary
Non-Cash Transaction occurring during the five-year period
following the Effective Date, the Investor Members shall
continue to be entitled to own their Special Common Units and be
entitled to their rights under this Agreement, including this
Section 8.2(d), during the five year period following the
Effective Date.
(iii) In connection with a CharterMac Extraordinary
Non-Cash Transaction occurring during the ten-year period
following the Effective Date, CharterMac shall use its
reasonable efforts to structure such CharterMac Extraordinary
Non-Cash Transaction in a manner that would permit the Investor
Members to continue to be entitled to own their Special Common
Units and be entitled to their rights under this Agreement,
including this Section 8.2(d), during the period commencing five
years after the Effective Date and ending ten years after the
Effective Date, so long as such structuring does not adversely
affect the economics available to CharterMac's beneficial owners
generally pursuant to such CharterMac Extraordinary Non-Cash
Transaction. For the avoidance of doubt, after the ten-year
period following the Effective Date, there shall be no
restrictions on how CharterMac structures a CharterMac
Extraordinary Non-Cash Transaction.
(A) In connection with a CharterMac
Extraordinary Non-Cash Transaction occurring after the
fifth anniversary of the Effective Date,
which cannot reasonably be structured so that the
Investor Members continue to be entitled to own their
Special Common Units and be entitled to their rights
under this Agreement, including this Section 8.2(d), the
Investor Members shall be required to exchange their
Special Common Units pursuant to the Exchange Rights
Agreement upon the closing of such CharterMac
Extraordinary Non-Cash Transaction.
(iv) If the Investor Members continue to own their
Special Common Units after a CharterMac Extraordinary
Transaction (A) the Preferred Return shall thereafter be fixed
at the amount per Special Common Unit applicable to the
distributions pursuant to Section 5.1 for the twelve (12) month
period ending at the quarter-end prior to the closing of such
CharterMac Extraordinary Transaction, and for purposes of
Section 5.1 the last day of each calendar quarter thereafter
shall be deemed to be a CharterMac Distribution Date, and (B) if
the CharterMac could not reasonably structure the transaction to
permit the Investor Members to continue to be entitled to own
their Special Common Units for the period of ten years following
the Effective Date in accordance with this Section 8.2(d), then
after the period ending five years following the Effective Date,
the Investor Members agree that they will submit their Special
Common Units for exchange pursuant to the Exchange Rights
Agreement within ten (10) business days following receipt of
written notice from the Company requesting such exchange.
For purposes of this Section 8.2(d), a "CharterMac Extraordinary
Cash Transaction" means any CharterMac Extraordinary Transaction in which the
cash consideration to be received by CharterMac's beneficial owners is greater
than 50% of the aggregate value of the consideration to be received by
CharterMac's beneficial owners and a "CharterMac Extraordinary Non-Cash
Transaction" means any CharterMac Extraordinary Transaction in which the cash
consideration to be received by CharterMac's beneficial owners is 50% or less of
the aggregate value of the consideration to be received by CharterMac beneficial
owners.
(e) The transaction of any of the Company's business by the
Managing Member or any officer, director, employee or agent of the
Managing Member or the Company, in their capacity as such, shall not
affect, impair or eliminate the limitations on the liability of the
Investor Members or Assignees under this Agreement.
8.3 Outside Activities of Investor Members
(a) Subject to any agreements entered into pursuant to Section
7.4 hereof and any other agreements entered into by an Investor Member
or its Affiliates with the Company, its Affiliates or any of its
Subsidiaries (including, without limitation, the Employment Agreements
and the Future Relations Agreement), any Investor Member and any
officer, director, employee, agent, trustee, Affiliate or shareholder of
any Investor 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.
(b) Subject to the Employment Agreements and the Future
Relations Agreement, as applicable, neither the Company nor any Members
shall have any rights by virtue of this Agreement in any business
ventures, or the income derived therefrom, of any Investor Member or
Assignee.
(c) Subject to the Future Relations Agreement, none of the
Investor Members shall have any rights by virtue of this Agreement or
the Company relationship established hereby in any business ventures of
any other Person and such Person shall have no obligation pursuant to
this Agreement to offer any interest in any such business ventures to
the Company, any Investor Member or any such other Person.
8.4 Return of Capital
(a) Except pursuant to the Exchange Rights Agreement, no
Investor Member shall be entitled to the withdrawal or return of its
Capital Contribution, except to the extent of distributions made
pursuant to this Agreement or upon dissolution and winding up of the
Company as provided herein.
(b) Except to the extent provided by Exhibit B, or as otherwise
expressly provided in this Agreement, no Investor 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.
8.5 Rights of Investor Members Relating to the Company
(a) In addition to the other rights provided by this Agreement
or by the Company Act, and except as limited by Section 8.5(b) hereof,
the Managing Member shall at all times cooperate with the Investor
Members to promptly provide to the Investor Members all information
reasonably requested by any or all of them in connection with any filing
requirements (whether related to tax or otherwise) applicable to any
Investor Member, and in addition, each Investor Member shall have the
right, provided that such request is for a purpose reasonably related to
such Investor Member's interest as a Member in the Company, upon written
demand with a statement of the purpose of such demand and at such
Investor Member's own expense:
(i) to obtain a copy of the Company's federal, state and
local income tax returns for each Company Year;
(ii) to obtain a current list of the name and last known
business, residence or mailing address of each Member; and
(iii) to obtain a copy of this Agreement and the
Certificate and all amendments or restatements thereto, together
with executed copies of all powers of attorney pursuant to which
this Agreement, the Certificate and all amendments and/or
restatements thereto have been executed.
(b) Notwithstanding any other provision of this Section 8.5, the
Managing Member may keep confidential from the Investor Members, for
such period of time as the Managing Member reasonably believes is
necessary, any information that
(i) the Managing Member reasonably believes to be in the
nature of trade secrets or other information, the disclosure of
which the Managing Member reasonably believes is not in the best
interests of the Company or could damage the Company or its
business; or
(ii) the Company is required by law or by agreements
with an unaffiliated third party to keep confidential;
provided, however, that notwithstanding the provisions of this Section
8.5(b), the Investor Members shall in any event be entitled to obtain copies of
the Company's tax returns and information reasonably needed by the Investor
Member to prepare tax returns.
8.6 Exchange Rights Agreement
(a) The Initial Investor Members have been granted the right
(and, in the event of a CharterMac Extraordinary Transaction, may in
accordance with Section 8.2(d), have the obligation) to exchange all or
a portion of their Special Common Units 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. Special Common
Units that are exchanged for cash or CharterMac Common Shares shall be
cancelled. If Special Common Units 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 Investor Members exchanging
such Special Common Units are decreased.
(b) The Initial Investor Members and all successors, assignees
and transferees (whether by operation of law, including without
limitation by merger or consolidation, dissolution or liquidation of an
Entity that is a Investor Member, or otherwise) shall be bound by the
provisions of the Exchange Rights Agreement.
ARTICLE 9
BOOKS, RECORDS, ACCOUNTING AND REPORTS
9.1 Records and Accounting
(a) The Managing Member shall keep or cause to be kept at the
principal office of the Company those records and documents required to
be maintained by the Company Act and other books and records deemed by
the Managing Member to be appropriate with respect to the Company's
business, and to provide to the Members any information, lists and
copies of documents required to be provided pursuant to Section 8.5(a)
hereof. Subject to Section 8.5(b) hereof, any Investor Member (or its
duly authorized representative), at the expense of such Investor Member,
shall have the right at any time to inspect and copy from such books,
records and documents during normal business hours upon reasonable
notice, provided that such inspection and copying do not
interfere with the normal business operations of the Company; and
provided further that such inspection is for a purpose reasonably
related to such Investor Member's interest as a Member of the Company.
(b) Any records maintained by or on behalf of the Company in the
regular course of its business may be kept on, or be in the form of,
punch cards, magnetic tape, photographs, micrographics or any other
information storage device, provided that the records so maintained are
convertible into clearly legible written form within a reasonable period
of time.
9.2 Fiscal Year
The fiscal year of the Company shall be the calendar year.
ARTICLE 10
TAX MATTERS
10.1 Preparation of Tax Returns
(a) 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 Investor
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 Investor 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.
10.2 Tax Elections
(a) The Managing Member shall, in its sole and absolute
discretion, determine whether to make any available election pursuant to
the Code; provided, however, that the Managing Member shall make the
election under Section 754 of the Code in accordance with applicable
regulations thereunder effective for the calendar year in which the
Effective Date occurs, except that, to the extent any such election
affects the amount or timing of recognition of gain or taxable income or
loss by the Investor Members, such election shall only be made with the
Consent of the Investor Members, which shall not be unreasonably
withheld.
(b) The Managing Member shall elect the traditional method
(without curative allocations) for purposes of eliminating the disparity
between the book value and the tax basis of property for purposes of
Section 704(c) of the Code (or reverse Section 704(c) allocation) with
respect to the assets acquired pursuant to the Contribution Agreement
and the Fried Contribution Agreement.
(c) The Managing Member shall have the right to seek to revoke
any tax election it makes, other than the elections described in the
proviso to clause (a) and in
clause (b) (which elections may be revoked only with the Consent of
Investor Members, which shall not be unreasonably withheld), upon the
Managing Member's determination, in its sole and absolute discretion,
that such revocation is in the best interests of the Members, except
that, to the extent any such revocation of election affects the amount
or timing of recognition of gain or taxable income or loss by the
Investor Members, such revocation of election shall only be made with
the Consent of the Investor Members, which shall not be unreasonably
withheld.
10.3 Tax Matters Member
(a) The Managing Member shall be the "tax matters partner" of
the Company for federal income tax purposes. Notwithstanding anything to
the contrary provided in this Agreement, the Managing Member shall
comply with tax positions described in the Contribution Agreement and
any audits shall be conducted in a manner provided for and consistent
with the Contribution Agreement.
(b) Upon receipt of notice from the IRS of the beginning of an
administrative proceeding with respect to the Company, the tax matters
partner shall furnish the IRS with the name, address, taxpayer
identification number, and profit interest of each of the Members and
the Assignees; provided, that such information is provided to the
Company by the Members and the Assignees. The Member and the Assignees
shall have the right at their expense to participate in any audits and
as and when provided in the Contribution Agreement shall be entitled to
control such audits.
(c) Except as provided in the Contribution Agreement, the tax
matters partner is authorized, but not required:
(i) to enter into any settlement with the IRS with
respect to any administrative or judicial proceedings for the
adjustment of Company items required to be taken into account by
a Member for income tax purposes (such administrative
proceedings being referred to as a "tax audit" and such judicial
proceedings being referred to as "judicial review"), and in the
settlement agreement the tax matters partner may expressly state
that such agreement shall bind all Members (provided that the
tax matters partner shall not enter into a settlement agreement
with the IRS with respect to matters addressed in the
Contribution Agreement without the consent of the Investor
Members, which consent shall be as provided in the Contribution
Agreement), except that such settlement agreement shall not bind
any Member
(A) who (within the time prescribed pursuant to
the Code and Regulations) files a statement with the IRS
providing that the tax matters partner shall not have
the authority to enter into a settlement agreement on
behalf of such Member; or
(B) who is a "notice partner" (as defined in
Section 6231(a)(8) of the Code) or a member of a "notice
group" (as defined in Section 6223(b)(2) of the Code);
(ii) in the event that a notice of a final
administrative adjustment at the Company level of any item
required to be taken into account by a Member for tax purposes
(a "final adjustment") is mailed to the tax matters partner, to
seek judicial review of such final adjustment, including the
filing of a petition for readjustment with the Tax Court or the
filing of a complaint for refund with the United States Claims
Court or the District Court of the United States for the
district in which the Company's principal place of business is
located;
(iii) to intervene in any action brought by any other
Member for judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment
with the IRS and, if any part of such request is not allowed by
the IRS, to file an appropriate pleading (petition or complaint)
for judicial review with respect to such request;
(v) to enter into an agreement with the IRS to extend
the period for assessing any tax which is attributable to any
item required to be taken account of by a Member for tax
purposes, or an item affected by such item; and
(vi) to take any other action on behalf of the Members
or the Company in connection with any tax audit or judicial
review proceeding to the extent permitted by applicable law or
regulations.
The taking of any action and the incurring of any expense by the
tax matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the Managing
Member set forth in Section 7.5 of this Agreement shall be fully applicable to
the tax matters partner in its capacity as such.
(d) (i) The tax matters partner shall receive no compensation
for its services as such.
(ii) All third party costs and expenses incurred by the
tax matters partner in performing its duties as such (including
legal and accounting fees and expenses) shall be borne by the
Company.
(iii) Nothing herein shall be construed to restrict the
Company from engaging an accounting firm to assist the tax
matters partner in discharging its duties hereunder, so long as
the compensation paid by the Company for such services is
reasonable.
(e) If there is a tax audit or judicial proceeding which could
affect the timing or amount of any Investor Member's recognition of
gain, taxable income or losses, then the Managing Member shall notify
the Investor Members of such tax audit or judicial proceeding, provide
the Investor Members with such information as the Investor Members shall
reasonably request concerning such tax audit or judicial proceeding,
permit the Investor Members to participate in such tax audit or judicial
proceeding at their own expense.
10.4 Organizational Expenses
The Company shall elect to deduct expenses, if any, incurred by
it in organizing the Company ratably over a sixty (60) month period as provided
in Section 709 of the Code.
10.5 Withholding
(a) Each Investor Member hereby authorizes the Company to
withhold from, or pay on behalf of or with respect to, such Investor
Member 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
Investor Member 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. Prior to
withholding, the Managing Member shall endeavor to (i) provide
reasonable advance notice to the Investor Members, which shall provide
the basis for withholding and (ii) if requested, discuss the need to
withhold with the Investor Members. The Managing Member shall permit an
Investor Member who is subject to withholding to contest the obligation
to withhold at its own expense.
(b) (i) Any amount paid on behalf of or with respect to an
Investor Member shall constitute a loan by the Company to such Investor
Member, which loan shall be repaid by such Investor Member within
fifteen (15) days after notice from the Managing Member that such
payment must be made unless
(A) first, the Company withholds such payment
from a distribution which would otherwise be made to the
Investor Member; or
(B) second, 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
Investor Member.
(ii) Any amounts withheld pursuant to the foregoing
clauses (A) or (B) shall be treated as having been distributed
to such Investor Member.
(c) (i) Each Investor Member hereby unconditionally and
irrevocably grants to the Company a security interest in such Investor
Member's Membership Interest to secure such Investor Member's obligation
to pay to the Company any amounts required to be paid pursuant to this
Section 10.5.
(ii) (A) In the event that a Investor Member fails to
pay when due any amounts owed to the Company pursuant to this
Section 10.5, the Managing Member may, in its sole and absolute
discretion, elect to make the payment to the Company on behalf
of such defaulting Investor Member, and in such event shall be
deemed to have loaned such amount to such defaulting Investor
Member and shall succeed to all rights and remedies of the
Company as against such defaulting Investor Member.
(B) Without limitation, in such event, the
Managing Member shall have the right to receive
distributions that would otherwise be distributable to
such defaulting Investor Member until such time as such
loan, together with all interest thereon, has been paid
in full, and any such distributions so received by the
Managing Member shall be treated as having been
distributed to the defaulting Investor Member and
immediately paid by the defaulting Investor Member to
the Managing Member in repayment of such loan.
(iii) Any amount payable by a Investor Member hereunder
shall bear interest at the Interest Rate plus four (4)
percentage points, but in no event higher than the maximum
lawful rate of interest on such obligation, such interest to
accrue from the date such amount is due (i.e., fifteen (15) days
after demand) until such amount is paid in full.
(iv) Each Investor Member shall take such actions as the
Company or the Managing Member shall request in order to perfect
or enforce the security interest created hereunder.
ARTICLE 11
TRANSFERS AND RESIGNATIONS
11.1 Transfer
(a) No Membership Interest shall be Transferred, in whole or in
part, except in accordance with the terms and conditions set forth in
this Article 11.
(b) Any Transfer or purported Transfer of a Membership Interest
not made in accordance with this Article 11 shall be null and void.
(c) The Incapacity of a Member, in and of itself, shall not
cause such Member to cease to be a Member or to dissolve or terminate
the Company.
11.2 Transfer of the Managing Member's Managing Member Interest
The Managing Member may Transfer any or all of its Managing
Member Interest to an Affiliate of the Managing Member. Except as expressly set
forth herein or in connection with a CharterMac Extraordinary Cash Transaction
permitted in accordance with Section 8.2(d), until five (5) years after the
Effective Date, the Managing Member shall not transfer its Managing Member
Interest without the Consent of the Investor Members, which may be withheld in
their sole and absolute discretion.
11.3 Investor Members' Rights to Transfer
(a) Subject to Section 11.3(c), an Investor 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 Membership Interest.
(b) If an Investor Member is Incapacitated, the executor,
administrator, trustee, committee, guardian, conservator or receiver of
such Investor Member's estate shall have all of the rights of an
Investor Member, for the purpose of settling the Investor Member's
estate or administering the Investor Member's property and such power as
the Incapacitated Investor Member possessed to Transfer all or any part
of his or its Membership Interest.
(c) Notwithstanding Section 11.3(a), an Investor Member may
Transfer all or any portion of its Membership Interest (i) pursuant to
the Exchange Rights Agreement; (ii) to an Affiliate; (iii) to a
charitable remainder trust or charitable annuity trust; or (iv) with
respect to pledges, including Transfers following foreclosure or other
exercise of remedies following default with respect to such pledges,
provided, however, in the case of an Investor Member who is a party to a
Lock-Up Agreement only to the extent such pledge is permitted pursuant
to such Lock-Up Agreement. 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 (w) would cause the number of
Investor Members and Assignees to exceed ninety nine, (x) would violate
then applicable federal or state securities laws rules or regulations,
(y) would result in the Company being treated as an association taxable
as a corporation for federal income tax purposes, or (z) would be to any
Person, other than an Affiliate, who holds, or who would have the right
to hold, as a result of such Transfer more than 10% of the CharterMac
Common Shares; provided that nothing in clauses (w) or (z) shall
prohibit a pledgee or purchaser upon foreclosure or exercise of rights
by a pledgee following a default by a pledgor pursuant to a pledge (to
the extent permitted by any applicable Lock-Up Agreement) from acquiring
title to the Special Common Units to the extent permitted under the
Lock-Up Agreements, except that to the extent such pledgee's taking of
title would result in the number of Investor Members and Assignees
exceeding ninety nine, such pledgee or such purchaser shall immediately
exchange such Special Common Units pursuant to the Exchange Rights
Agreement.
(d) Any Transfer in contravention of any of the provisions of
this Section 11.3 shall be void and ineffectual and shall not be binding
upon, or recognized by, the Company.
11.4 Substituted Investor Members
(a) (i) No Investor Member shall have the right to cause a
Permitted Transferee to be admitted to the Company as an Investor Member
in his place other than a Permitted Transferee pursuant to Section
11.3(c).
(ii) Except with respect to a Permitted Transferee
pursuant to Section 11.3(c), the Managing Member shall have the
right to consent to the admission of a Permitted Transferee of
the Membership Interest of an Investor Member pursuant to this
Section 11.4 as a Substituted Investor 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
such Permitted Transferee to become a Substituted Investor
Member shall not give rise to any cause of action against the
Company or any Member.
(b) A Permitted Transferee who has been admitted as a
Substituted Investor Member in accordance with this Article 11 shall
have all the rights and powers and be subject to all the restrictions
and liabilities of an Investor Member under this Agreement.
(c) (i) No Permitted Transferee will be admitted as a
Substituted Investor 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 Agreement and the Exchange Rights
Agreement, including, without limitation, the power of
attorney granted in Section 2.4 hereof, 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 Investor Member.
(ii) Upon the admission of a Substituted Investor
Member, without the need for any additional act or consent of
any Person, the Managing Member shall amend Exhibit A to reflect
the name, address, number of Units, and to eliminate or adjust,
if necessary, the name, address and interest of the predecessor
of such Substituted Investor Member.
11.5 Assignees
(a) If the Managing Member, in its sole and absolute discretion,
does not consent to the admission of any Permitted Transferee as a
Substituted Investor Member, as described in Section 11.4(a), such
transferee shall be considered an Assignee for purposes of this
Agreement.
(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 Units assigned
to such transferee, but shall not be deemed to be a holder of Units for
any other purpose under this Agreement, and shall not be entitled to
vote such Units in any matter presented to the Members for a vote (such
Units being deemed to have been voted on such matter in the same
proportion as all other Units held by Members are voted).
(c) In the event any Permitted Transferee desires to make a
further assignment of any such Units, such transferee shall be subject
to all of the provisions of this Article 11 to the same extent and in
the same manner as any Member desiring to make an assignment of Units.
11.6 General Provisions
(a) No Member may resign from the Company other than as a result
of a permitted Transfer of all of such Member's Units in accordance with
this Article 11.
(b) Any Member which shall Transfer all of its Units in a
Transfer permitted pursuant to this Article 11 shall cease to be a
Member upon the effective date of the Transfer.
(c) Other than pursuant to the Exchange Rights Agreement or with
the consent of the Managing Member, Transfers pursuant to this Article
11 may only be made as of the first day of a fiscal quarter of the
Company, or upon foreclosure or exercise of rights following a default
by a pledgor pursuant to a pledge permitted by a Lock-up Agreement.
(d) (i) If any Unit is transferred or assigned during a Company
Year in compliance with the provisions of this Article 11 or exchanged
pursuant to the Exchange Rights Agreement on any day other than the
first day of a Company Year, then Net Income, Net Losses, each item
thereof and all other items attributable to such Unit for such Company
Year shall be divided and allocated between the transferor Member and
the transferee Member by taking into account their varying interests
during the Company Year in accordance with Section 706(d) of the Code,
using the interim closing of the books method.
(ii) Solely for purposes of making such allocations,
each of such items for the calendar month in which the Transfer
or assignment occurs shall be allocated to the transferee
Member, and none of such items for the calendar month in which
an exchange, transfer or assignment occurs shall be allocated to
the transferor Member, provided, however, that the Managing
Member may adopt such other conventions relating to allocations
in connection with transfers, assignments, or exchanges as it
determines are necessary or appropriate.
(iii) All distributions of Available Cash attributable
to Units, with respect to which the Company Record Date is
before the date of such transfer, assignment, or exchange of
such Units, shall be made to the transferor Member, and in the
case of a transfer or assignment other than an exchange, all
distributions of Available Cash thereafter attributable to such
Units shall be made to the transferee Member.
11.7 Certificates for Units
At all times that the Units are certificated, the following
shall apply:
(a) Each certificate for Units shall be executed by such Persons
as are designated by the Managing Member.
(b) Upon surrender for registration of Transfer of any
certificate for Units, and subject to the further provisions of this
Section 11.7 and the limitations on Transfer
contained elsewhere in this Agreement, the Company will cause the
execution, in the name of the registered holder or the designated
transferee, of one or more new certificates, evidencing the same Units
as did the certificate surrendered. Every certificate surrendered for
registration of Transfer shall be duly endorsed, or be accompanied by a
written instrument of Transfer in form satisfactory to the Managing
Member duly executed, by the registered holder thereof or such holder's
authorized attorney.
(c) The Company shall issue a new certificate for Units in place
of any certificate previously issued if the record holder of the
certificate (i) makes proof by affidavit, in form and substance
satisfactory to the Managing Member, that a previously issued
certificate has been lost, destroyed or stolen, (ii) requests the
issuance of a new certificate before the Company has received notice
that the Certificate has been acquired by a purchaser for value in good
faith and without notice of an adverse claim, (iii) indemnifies the
Company, as registrar, against any claim that may be made on account of
the alleged loss, destruction or theft of the certificate, and (iv)
satisfies any other reasonable requirements imposed by the Managing
Member.
(d) Units in the Company evidenced by a certificate shall
constitute securities for all purposes of Article 8 of the Uniform
Commercial Code promulgated by the National Conference of Commissioners
on Uniform State Laws, as in effect in Delaware or any other applicable
jurisdiction (the "UCC"). Units in the Company not evidenced by a
certificate shall not constitute securities for all purposes of Article
8 of the UCC. Delaware law shall constitute the local law of the
Company's jurisdiction in its capacity as the issuer of Units.
ARTICLE 12
ADMISSION OF MEMBERS
12.1 Admission of Successor Managing Member
(a) A transferee of all of the Managing Member Interest pursuant
to Section 11 hereof who is proposed to be admitted as a successor
Managing Member shall be admitted to the Company as the Managing Member
effective immediately upon such transfer upon the satisfaction of the
terms and conditions set forth in Section 12.1(b).
(b) A Person shall be admitted as a substitute or successor
Managing Member of the Company only if the following terms and
conditions are satisfied:
(i) the Person to be admitted as a substitute or
additional Managing Member shall have accepted and agreed to be
bound by all the terms and provisions of this Agreement by
executing a counterpart thereof and such other documents or
instruments as may be reasonably required or appropriate as
determined by counsel for the Company in order to effect the
admission of such Person as a Managing Member; and
(ii) if the Person to be admitted as a substitute or
additional Managing Member is an Entity it shall have provided
the Company with evidence
satisfactory to counsel for the Company of such Person's
authority to become a Managing Member and to be bound by the
terms and provisions of this Agreement.
12.2 Admission of Additional Investor Members
(a) A Person who is issued Membership Interests in the Company
pursuant to Section 4.3 of this Agreement shall be admitted to the
Company as an Additional Investor Member only upon furnishing to the
Managing Member:
(i) evidence of acceptance in form satisfactory to the
Managing Member of all of the terms and conditions of this
Agreement and the Exchange Rights Agreement (if applicable),
including, without limitation, the power of attorney granted in
Section 2.4 hereof, and
(ii) 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 an
Additional Investor Member.
(b) (i) Notwithstanding anything to the contrary in this Section
12.2, no Person shall be admitted as an Additional Investor Member
without the Consent of the Investor Members in accordance with Section
8.2.
(ii) The admission of any Person as an Additional
Investor Member shall become effective on the date upon which
the name of such Person is recorded on Exhibit A to this
Agreement, following the Consent of the Investor Members to such
admission.
12.3 Amendment of Agreement and Certificate
For the admission to the Company of any Member, without the need
for any additional act or consent of any Person, the Managing Member shall take
all steps necessary and appropriate under the Company Act to amend the records
of the Company and, if necessary, to prepare as soon as practical an amendment
of this Agreement (including an amendment of Exhibit A) and, if required by law,
shall prepare and file an amendment to the Certificate and may for this purpose
exercise the power of attorney granted pursuant to Section 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
13.1 Dissolution
(a) The Company shall not be dissolved by the admission of
Substituted Investor Members or Additional Investor Members or by the
admission of a successor Managing Member in accordance with the terms of
this Agreement.
(b) The Company shall dissolve, and its affairs shall be wound
up, only upon the first to occur of any of the following ("Liquidating
Events"):
(i) an election to dissolve the Company made by the
Managing Member, with any required Consent of the Investor
Members in accordance with Section 8.2;
(ii) entry of a decree of judicial dissolution of the
Company pursuant to Section 18-802 of the Company Act;
(iii) the sale of all or substantially all of the assets
and properties of the Company; and
(iv) any time there are no members of the Company,
unless the Company is continued without dissolution in
accordance with the Company Act.
13.2 Winding Up
(a) (i) 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.
(ii) 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.
(iii) The Managing Member, or, in the event there is no
remaining Managing Member, any Person elected with the Consent
of the Investor 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 and dissolution 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:
(A) 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);
(B) Second, to the satisfaction of all of the
Company's debts and liabilities to the Managing Member
(whether by payment or reasonable provision for payment
thereof);
(C) Third to the satisfaction of all of the
Company's debts and liabilities to the other Members
(whether by payment or reasonable provision for payment
thereof); and
(D) The balance, if any, to the Managing Member
and Investor Members to the extent of and in accordance
with the positive balances in their Capital Accounts,
after giving effect to all contributions, distributions,
and allocations for all periods.
(iv) The Managing Member shall not receive any
additional compensation for any services performed pursuant to
this Article 13.
(v) Any distributions pursuant to this Section 13.2(a)
shall be made by the end of the Company's taxable year in which
the liquidation occurs (or, if later, within 90 days after the
date of the liquidation).
(b) (i) Notwithstanding the provisions of Section 13.2(a) hereof
which require liquidation of the assets of the Company, but subject to
the order of priorities set forth therein, if prior to or upon
dissolution of the Company the Liquidator determines that an immediate
sale of part or all of the Company's assets would be impractical or
would cause undue loss to the Members, the Liquidator may, in its sole
and absolute discretion, defer for a reasonable time the liquidation of
any asset except those necessary or advisable to satisfy liabilities of
the Company (including those to Members as creditors) or distribute to
the Members, in lieu of cash, as tenants in common and in accordance
with the provisions of Section 13.2(a) hereof, undivided interests in
such Company assets as the Liquidator deems not suitable for
liquidation.
(ii) Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such
distributions in kind are in the best interests of the Members,
and shall be subject to such conditions relating to the
disposition and management of such properties as the Liquidator
deems reasonable and equitable and to any agreements governing
the operation of such properties at such time.
(iii) The Liquidator shall determine the fair market
value of any property distributed in kind using such reasonable
method of valuation as it may adopt.
(c) In the reasonable discretion of the Liquidator, a pro rata
portion of the distributions that would otherwise be made to the
Managing Member and Investor Members pursuant to this Article 13 may be:
(i) distributed to a trust established for the benefit
of the Members for the purposes of liquidating Company assets,
collecting amounts owed to the Company, and paying any
contingent, conditional or unmatured liabilities or obligations
of the Company or the Managing Member arising out of or in
connection with the Company; the assets of any such trust shall
be distributed to the Members from time to time, in the
reasonable discretion of the Liquidator, in
the same proportions as the amount distributed to such trust by
the Company would otherwise have been distributed to the Members
pursuant to this Agreement; or
(ii) withheld or escrowed to provide a reasonable
reserve for Company liabilities (contingent, conditional,
unmatured or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Company, provided that
such withheld or escrowed amounts shall be distributed to the
Members in the manner and order of priority set forth in Section
13.2(a) hereof as soon as practicable.
13.3 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.
13.4 Rights of Investor Members
Except as otherwise provided in this Agreement, each Investor
Member shall look solely to the assets of the Company for the return of its
Capital Contributions and shall have no right or power to demand or receive
property other than cash from the Company.
13.5 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that
would, but for the provisions of an election by one or more Members pursuant to
Section 13.1 hereof, result in a dissolution of the Company, the Managing Member
shall, within thirty (30) days thereafter, provide written notice thereof to
each of the Members.
13.6 Termination of Company and Cancellation of Certificate
Upon the completion of the winding up of the Company's affairs,
as provided in Section 13.2 hereof, the Company shall be terminated by the
filing of a certificate of cancellation with the Secretary of State of the State
of Delaware pursuant to the Company Act, and all qualifications of the Company
as a foreign limited liability company in jurisdictions other than the State of
Delaware shall be canceled and such other actions as may be necessary to
terminate the Company in jurisdictions other than Delaware shall be taken.
13.7 Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding up of
the business and affairs of the Company and the liquidation of its assets
pursuant to Section 13.2 hereof in order to minimize any losses otherwise
attendant upon such winding up, and the provisions of this Agreement shall
remain in effect among the Members during the period of winding up.
13.8 Waiver of Partition
Each Member hereby waives any right to partition of the Company
property.
ARTICLE 14
AMENDMENT OF OPERATING AGREEMENT; MEETINGS
14.1 Amendments
(a) (i) Amendments to this Agreement may only be proposed by the
Managing Member.
(ii) (A) Except as set forth in Section 14.1(b) hereof,
the Managing Member shall submit any proposed amendment to the
Investor Members for their consent.
(B) Except as provided in Section 14.1(b) or
14.1(c) hereof a proposed amendment shall be adopted and
be effective as an amendment hereto if it is approved by
the Managing Member and it receives the Consent of the
Investor Members in accordance with Section 8.2 hereof.
(b) (i) Notwithstanding Section 14.1(a) hereof, the Managing
Member shall have the power, without the Consent of the Investor
Members, to amend this Agreement as may be required to facilitate or
implement any of the following purposes:
(A) to reflect the admission, substitution,
termination, or resignation of Members in accordance
with this Agreement (which may be effected through the
Amendment or replacement of Exhibit A);
(B) to set forth the designations, rights,
powers, duties, and preferences of the holders of any
additional Membership Interests issued pursuant to
Section 4.3 hereof; and
(C) to satisfy any requirements, conditions, or
guidelines contained in any order, directive, opinion,
ruling or regulation of a federal or state agency or
contained in federal or state law, provided that there
is no adverse effect on the Special Common Units or
rights pertaining thereto.
(ii) The Managing Member shall provide notice to the
Investor Members when any action under this Section 14.1(b) is
taken in the next regular communication to the Investor Members.
(c) Notwithstanding Section 14.1(a) and 14.1(b) hereof, this
Agreement shall not be amended with respect to any Member adversely
affected without the consent, in accordance with Section 14.2, of such
Member adversely affected if such amendment would:
(i) modify the limited liability of an Investor Member
in a manner adverse to such Investor Member;
(ii) alter rights of the Member to receive distributions
pursuant to Article 5 or Article 13, or the allocations
specified in Article 6 (except as permitted pursuant to Article
4 and Section 14.1(b)(i)(C) hereof); or
(iii) amend this Section 14.1(c).
This Section 14.1(c) does not require unanimous consent of all Members
adversely affected unless the amendment is to be effective against all Members
adversely affected.
14.2 Meetings of the Members
(a) (i) Meetings of the Members may be called from time to time
by the Managing Member and shall be called upon the receipt by the
Managing Member of a written request by Investor Members holding
twenty-five percent (25%) or more of the Special Common Units.
(ii) Notice of any such meeting shall be given to all
Members not less than seven (7) days nor more than thirty (30)
days prior to the date of such meeting.
(iii) The request shall state the nature of the business
to be transacted.
(iv) Members may vote in person or by proxy at such
meeting.
(v) Whenever the vote or consent of the Members is
permitted or required under this Agreement, such vote or consent
may be given at a meeting of the Members or class thereof or may
be given in accordance with the procedure prescribed in Section
14.2(b) hereof.
(b) (i) Any action required or permitted to be taken at a
meeting of the Members or class thereof may be taken without a meeting
if a written consent setting forth the action so taken is signed by the
Members holding the requisite percentage of Membership Interests as is
expressly required by this Agreement.
(ii) Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote
at a meeting.
(iii) Such consent shall be filed with the Managing
Member.
(iv) An action so taken shall be deemed to have been
taken at a meeting held on the effective date of the consent as
certified by the Managing Member.
(c) (i) Each Investor Member may authorize any Person or Persons
to act for him by proxy on all matters in which an Investor Member is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting.
(ii) Every proxy must be signed by the Investor Member
or his attorney in fact and a copy thereof delivered to the
Company.
(iii) No proxy shall be valid after the expiration of
eleven (11) months from the date thereof unless otherwise
provided in the proxy.
(iv) Every proxy shall be revocable at the pleasure of
the Investor Member executing it, such revocation to be
effective upon the Managing Member's receipt of written notice
of such revocation from the Investor Member executing such
proxy.
(d) Each meeting of the Members shall be conducted by the
Managing Member or such other Person as the Managing Member may appoint
pursuant to such rules for the conduct of the meeting as the Managing
Member or such other Person deems appropriate.
ARTICLE 15
GENERAL PROVISIONS
15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to
be given or made to a Member or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by overnight delivery or via facsimile to the Member or Assignee at the address
set forth in Schedule A or such other address of which the Member shall notify
the Managing Member in writing.
15.2 Titles and Captions
All article or section titles or captions in this Agreement are
for convenience only, shall not be deemed part of this Agreement and shall in no
way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.
15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
15.6 Creditors
Other than as expressly set forth herein with respect to the
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Company.
15.7 Waiver
No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
15.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all of the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
15.9 Applicable Law
This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.
15.11 Entire Agreement
This Agreement, together with the Contribution Agreement, the
Fried Contribution Agreement and the other Collateral Agreements (as defined in
the Contribution Agreement), contains the entire understanding and agreement
among the Members with respect
to the subject matter hereof and supersedes any other prior written or oral
understandings or agreements among them with respect thereto.
15.12 Merger
Subject to Section 8.2(b), solely upon the consent of the
Managing Member and without the need for the consent of any other Person,
including any Investor Member, the Company may merge with, or consolidate into,
any Person or Entity in accordance with the Company Act.
15.13 No Rights as Stockholders or Beneficial Owners
Nothing contained in this Agreement shall be construed as
conferring upon the holders of the Units 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.
[SIGNATURE PAGE FOLLOWS]
Signature Page to Amended and Restated Operating Agreement of CharterMac
Capital Company, LLC by and among the undersigned and the other parties thereto.
MANAGING MEMBER:
CHARTERMAC CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Operating Officer
INVESTOR MEMBERS:
APH ASSOCIATES L.P.
By: APH Associates, Inc., its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
DLK ASSOCIATES L.P.
By: DLK Associates, Inc., its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
/s/ J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
FRIED FAMILY 2001 TRUST
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
Trustee
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Trustee
MARC ASSOCIATES, L.P.
By: Marc Associates, Inc., its general
partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
RELATED GENERAL II L.P.
By: RCMP, Inc., its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SJB ASSOCIATES L.P.
By: SJB Associates, Inc., its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Schedule A
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Addresses for Notices
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If to APH Associates L.P.:
c/o Related Capital Company
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇
If to DLK Associates L.P.:
c/o Related Capital Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to Marc Associates, L.P.:
c/o Related Capital Company
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
If to SJB Associates L.P.:
c/o Related Capital Company
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to Related General II L.P.:
c/o Related Capital Company
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
and with a copy to:
Proskauer Rose LLP
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
If to J. ▇▇▇▇▇▇▇ ▇▇▇▇▇ or the Fried Family 2001 Trust:
c/o Phoenix Realty Group
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Manatt, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
If to CharterMac Corporation:
c/o Related Capital Company
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
A-1
Exhibit A
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Members and Membership Interests
Type of Number of Initial Capital
Name Interest Units Contribution
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CharterMac Corporation Managing Member 100 Common Units $ 49,500,000
APH Associates L.P. Investor Member Special Common Units* $ ____
DLK Associates L.P. Investor Member Special Common Units* $ ____
Fried Family 2001 Trust Investor Member 330,896.138 Special $ 5,883,333.33
Common Units
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇ Investor Member 661,792.276 Special $ 11,766,666.67
Common Units
Marc Associates L.P. Investor Member Special Common Units* $ ____
SJB Associates L.P. Investor Member Special Common Units* $ ____
Related General II, L.P. Investor Member (i) 10,000,000 $ 177,800,000
Special Common Units
(ii) Special Common $ ____
Units*
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* The Special Common Units for these Investor Members (for the avoidance of
doubt, excluding the Fried entities), aggregating 4,912,823.586 Special Common
Units (excluding the 10,000,000 Special Common Units issued to Related General
II, L.P. at the Closing), will be allocated among such Investor Members as
determined among them post-Closing.
A-1
Exhibit B
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Allocations
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided in this Exhibit B, Net
Income (or items thereof) (other than Net Income, or items thereof, arising in
connection with a Terminating Capital Transaction) for any Company Year or other
applicable period shall be allocated to the holders of Common Units.
(b) Net Loss. Except as otherwise provided in this Exhibit B, Net Loss
(or items thereof) of the Company for each Company Year or other applicable
period shall be allocated to the holders of Common Units. Notwithstanding the
preceding sentence, to the extent any Net Loss (or items thereof) allocated to a
Member under this subsection (b) would cause such Member (hereinafter, a
"Restricted Member") to have an Adjusted Capital Account Deficit, or increase
the amount of an existing Adjusted Capital Account Deficit, as of the end of the
Company Year or other applicable period to which such Net Loss relates, such Net
Loss shall not be allocated to such Restricted Member and instead shall be
allocated to the other Member(s) (hereinafter, the "Permitted Members") pro rata
in accordance with each Permitted Member's Units.
(c) Terminating Capital Transaction; Liquidation. Allocations of Net
Income or Net Loss (or items thereof) in connection with a Terminating Capital
Transaction or liquidation of the Company shall be made as follows:
(i) first, so that, to the extent possible, each Investor
Member's Capital Account balance is equal to such Member's Adjusted
Contribution;
(ii) second, to the Investor Members an amount of Net Income (or
items thereof) equal to the Accrued Distributions and the interest thereon;
(iii) third, to the Managing Member an amount of Net Income (or
items thereof) equal to the sum of (A) .40 multiplied by the sum of (x) the
initial Adjusted Contributions of the Investor Members and (y) the unreturned
Capital Contributions of the Managing Member from time to time plus (B) 6% per
annum, compounded annually, on the foregoing amount;
(iv) fourth, any remaining Net Income shall be allocated to the
Investor Members and to the Managing Member in accordance with their
"Liquidation Percentages." The "Liquidation Percentage" of the Investor Members
shall be equal to 5% multiplied by a fraction, the numerator of which is the
number of Special Common Units held by the Investor Members on the date of
determination and the denominator of which is the number of Special Common Units
issued pursuant to the Contribution Agreement and the Fried Contribution
Agreement. The Liquidation Percentage of the Managing Member shall equal 100%
minus the Liquidation Percentage of the Investor Members;
B-1
(v) fifth, any remaining Net Loss shall be allocated to the
Members in accordance with the positive balances in their Capital Accounts; and
(vi) sixth, any remaining Net Loss shall be allocated to the
Members in accordance with their Liquidation Percentages.
Notwithstanding subparagraph (vi), to the extent any Net Loss (or items thereof)
would be allocated to a Restricted Member under this subsection (c), such Net
Loss shall not be allocated to such Restricted Member and instead shall be
allocated to the Permitted Members pro rata in accordance with each Permitted
Member's Units.
(d) Rules of Construction.
(i) Capital Account Increases. For purposes of making
allocations pursuant to subsection 1(c) of this Exhibit B, a Member's Capital
Account balance shall be deemed to be increased by such Member's share of any
Partnership Minimum Gain and Partner Minimum Gain remaining at the close of the
Company Year in respect of which such allocations are being made.
(ii) Change in Membership Interests. In the event any Member's
Membership Interest changes during a fiscal year for any reason, including
without limitation, the Transfer of any interest in the Company, the tax
allocations contained in this Exhibit B shall be applied as necessary to reflect
the varying interests of the Members during such year.
2. Special Allocations. Notwithstanding any provisions of section 1 of this
Exhibit B, 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 subsection
2(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 subsection 2(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
B-2
1.704-2(i)(4) and (j)(2) of the Regulations. This subsection 2(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 subsection 2(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 subsection 2(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 2(d) shall be
made if and only to the extent that such Member would have an Adjusted Capital
Account Deficit after all other allocations provided for in this Exhibit B have
been tentatively made as if this section 2(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year
or other applicable period shall be allocated to the Members in accordance with
their Liquidation Percentages.
(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.
(h) Gross Income Allocation. There shall be specially allocated to the
Investor Members an amount of Company gross income during each Company Year, or
portion thereof, before any other allocations are made hereunder other than the
Partner Minimum Gain Chargeback, which is equal to the excess, if any, of the
cumulative distributions made to the Investor Members under Section 5.1(a) and
Section 5.1(b) of the Agreement over the cumulative
B-3
allocations of Company gross income to the Investor Members pursuant to this
Section 2(h) of this Exhibit B.
(i) Allocation Among Investor Members. Any allocation to the Investor
Members will be made to each Investor Member in proportion to the number of
Special Common Units owned by such Investor Member.
3. Tax Allocations.
(a) Items of Income or Loss. Except as is otherwise provided in this
Exhibit B, 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 subsection 3(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 any permissible method contained in the
Regulations promulgated under Section 704(c) of the Code selected by the
Managing Member, with the Consent of the Investor Members, which shall not be
unreasonably withheld, 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"). Notwithstanding the foregoing, with
respect to the assets acquired pursuant to the Contribution Agreement and the
Fried Contribution Agreement, the Managing Member shall select the traditional
method (without curative allocations). In order to avoid duplicative allocations
of income, any allocation of income pursuant to Section 704(c) of the Code with
respect to receivables contributed to the Company pursuant to the Contribution
Agreement and the Fried Contribution Agreement shall reduce amounts to be
allocated pursuant to Section 2(h) of this Exhibit B. 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 methods of allocation promulgated
thereunder selected by the Managing Member, with the Consent of the Investor
Members, which shall not be unreasonably withheld.
B-4
Exhibit C
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Exchange Rights Agreement
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C-1
Exhibit D
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CERTIFICATE FOR [COMMON/SPECIAL COMMON] UNITS IN
CHARTERMAC CAPITAL COMPANY, LLC
A Delaware Limited Liability Company
THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), THE SECURITIES LAWS OF ANY STATE (THE "STATE ACTS") OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND ARE BEING OFFERED
AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE UNITS HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, BY ANY STATE SECURITIES COMMISSION OR BY ANY OTHER REGULATORY
AUTHORITY OF ANY OTHER JURISDICTION. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
NEITHER THE UNITS NOR ANY PART THEREOF MAY BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT OR FOR WHICH SUCH REGISTRATION IS OTHERWISE NOT REQUIRED AND (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER ANY APPLICABLE STATE ACTS OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER SUCH STATE ACTS
OR FOR WHICH SUCH REGISTRATION OTHERWISE IS NOT REQUIRED.
THE UNITS REPRESENTED BY THIS CERTIFICATE EVIDENCE THE PROPORTIONATE AMOUNT OF SUCH HOLDER'S LIMITED LIABILITY COMPANY INTEREST IN
THE COMPANY. THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TRANSFER RESTRICTIONS CONTAINED IN THE LIMITED LIABILITY
COMPANY AGREEMENT OF THE COMPANY. A STATEMENT OF THE RELATIVE RIGHTS AND PREFERENCES OF THE COMPANY'S LIMITED LIABILITY COMPANY
INTERESTS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON REQUEST WITHOUT CHARGE.
THERE IS NO PUBLIC MARKET FOR THE UNITS AND NONE IS EXPECTED TO DEVELOP. THEREFORE, RECIPIENTS OF UNITS WILL BE REQUIRED TO BEAR THE
RISK OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
Certificate No. ______________________ ______________________
No. of [Common/Special Common] Units
CharterMac Capital Company, LLC, a Delaware limited liability company (the "Company"), hereby certifies that
________________________________ _____________________(the "Holder") is the registered owner of ____ [Common Units/Special Common
Units] in the Company ("Units"). The rights, powers and privileges associated with such Units are set forth in the Amended and
Restated Limited Liability Company Agreement of the Company dated as of November 17, 2003 (the "Company Agreement"), as the same
may, from time to time, be amended or amended and restated, copies of which are on file at the principal office of the Company. The
terms of the Company Agreement are incorporated herein by reference.
The Holder, by accepting this Certificate, is deemed to have agreed to become a member of the Company, if admitted as such in
accordance with the terms of the Company Agreement, and to comply with and be bound by, and to have executed, the Company Agreement.
The Units in the Company evidenced by this certificate shall constitute securities for all purposes of Article 8 of the Uniform
Commercial Code promulgated by the National Conference of Commissioners on Uniform State Laws, as in effect in Delaware or any other
applicable jurisdiction. Delaware law shall constitute the local law of the Company's jurisdiction in its capacity as the issuer of
the Units.
This Certificate and the Units evidenced hereby are transferable in accordance with the terms of the Company Agreement (subject to
the limitations on transfer therein contained). No Units may be transferred unless and until this Certificate, or a written
instrument of transfer satisfactory to the Company, is duly endorsed or executed for transfer by the Holder or the Holder's duly
authorized attorney, and this Certificate (together with any separate written instrument of transfer) is delivered to the Company
for registration of transfer.
CHARTERMAC CAPITAL COMPANY, LLC
ATTEST:
___________________________ By: ___________________________
Secretary Name:
Title:
Dated: __________________________
[FORM OF REVERSE SIDE OF CERTIFICATE]
ASSIGNMENT OF INTEREST
FOR VALUE RECEIVED, the undersigned (the "Assignor"), hereby assigns, conveys, sells and transfers unto:
____________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________
Please print or typewrite Name and Address of Assignee
___________________________ Please insert Social Security or other Taxpayer
Identification Number of Assignee
__________ of the Units evidenced by this Certificate. Assignor irrevocably constitutes and appoints the Company as its
attorney-in-fact with full power of substitution to transfer the above-referenced number of Units on the books of the Company.
Date: _____________________ ____________________________________
Signature
