Exhibit 4
WEST ▇▇▇▇▇▇ HOUSING INVESTORS III LLC
LIMITED LIABILITY COMPANY AGREEMENT
This Limited Liability Company Agreement (as the same may be amended
from time to time, this "Agreement") of West ▇▇▇▇▇▇ Housing Investors III LLC, a
Delaware limited liability company (the "Company"), is made and entered into by
and among the persons executing this Agreement as Members and shall be effective
as of the Effective Date (as defined below).
Article One
DEFINITIONS
For purposes of this Agreement, unless the context otherwise
requires, terms shall be used with the meanings given to them under the Act, and
the following terms shall have the meanings set forth hereafter:
1.1. "Act" means the Delaware Limited Liability Company Act and any and all
amendments and modifications thereto.
1.2. "Change of Control" means, with respect to a given Member, that
(a) any Person becomes the beneficial owner of 50% or more of such
Member's voting equity interests; provided, however, that a Change of Control
will not occur if the Person owning the voting equity interests of such Member
as of the Effective Date transfers the economic rights of such Member's voting
equity interests to one or more immediate family members but retains the voting
rights of such voting equity interests;
(b) individuals or entities who constitute the managing member(s),
director(s), general partner(s) or other governing individuals or body of such
Member at the time of such Member is admitted as a member of the Company cease
to constitute a majority of such governing individuals or body;
(c) any merger or consolidation of a Member with or into any other entity
is approved by the equity holders thereof; or
(d) the equity holders of such Member approve a plan of liquidation of
such Member or an agreement for the sale or disposition by the Member of all or
substantially all of such Member's assets.
1.3. "Capital Contribution" means any contribution of Property actually made by
or on behalf of a Member.
1.4. "Disposition" means any sale, assignment, transfer, exchange, mortgage,
pledge, grant, hypothecation or other transfer, whether absolute or as security
or encumbrance (including dispositions by operation of law). "Dispose" means to
make a Disposition.
1.5. "Dissolution Event" means an event, the occurrence of which will result in
the dissolution of the Company under Article Eight hereof.
1.6. "Effective Date" means the date on which the certificate of formation of
the Company was filed with the Delaware Secretary of State.
1.7. "Managing Member" means West ▇▇▇▇▇▇ Housing Investors II LLC or any Person
elected as a successor Managing Member pursuant to the terms of this Agreement.
1.8. "Member" means each Person who executes this Agreement as a Member for so
long as such Person remains a member of the Company and any successor or other
Person subsequently admitted as a member of the Company.
1.9. "Percentage Interest" means a Member's percentage ownership interest of the
equity in the Company as set forth in Schedule A hereto, as the same may be
amended from time to time.
1.10. "Person" means any individual, estate, corporation, trust, joint venture,
partnership or limited liability company of every kind and nature, and any other
individual or entity in its own or any representative capacity.
1.11. "Property" means any property, real or personal, tangible or intangible,
including money, and any legal or equitable interest in such property, but
excluding services and promises to perform services in the future.
Article Two
FORMATION
2.1. Organization. The Members hereby organize the Company as a Delaware limited
liability company pursuant to the provisions of the Act.
2.2. Term. The Company shall be dissolved and its affairs wound up as provided
in the Act and this Agreement on July 15, 2050, unless the Company shall be
sooner dissolved and its affairs wound up in accordance with the Act or this
Agreement.
2.3. Registered Agent and Office. The registered agent for the service of
process and the registered office shall be Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. In the event the registered agent
ceases to act as such for any reason or the registered office shall change, the
Members shall promptly designate a replacement registered agent or file a notice
of change of address, as the case may be.
2.4. Principal Office. The principal office of the Company shall be located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other location as
the Managing Member shall designate by notice to the Members.
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Article Three
PURPOSE
The Company has been formed for the principal purpose of acquiring
and investing in certain limited partnership interests, and buying, selling,
investing, reinvesting, owning, managing and otherwise dealing with any other
type of property hereafter acquired by the Company, whether real or personal,
tangible or intangible. The Company may engage in any other lawful act or
activity for which a limited liability company may be formed under the Act,
including, without limitation, borrowing money and entering into loan, security,
guarantee and or other agreements related thereto.
Article Four
RIGHTS AND DUTIES OF MEMBERS
4.1. Management Rights.
(a) Subject to Section 4.1(b), the business and affairs of the Company
shall be managed by its Managing Member and, except as may be specifically
provided in this Agreement, no other Member, as such, shall have the right or
authority to bind the Company. Subject to Section 4.1(b), the Managing Member
shall have the power, on behalf of the Company, to do all things necessary or
convenient to carry out the business and affairs of the Company. West ▇▇▇▇▇▇
Housing Investors II LLC shall be the initial Managing Member of the Company and
shall continue in that capacity until it is dissolved or resigns or is removed
by the Members. In the event that the Managing Member shall die, be dissolved,
resign, or be removed, the Members shall elect one or more successor Managing
Member(s) by vote of Members holding a majority of all Percentage Interests. Any
action which may be taken at a meeting of the Members may be taken without a
meeting if Members casting votes sufficient to approve such action consent
thereto in writing.
(b) Notwithstanding anything in Section 4.1(a) to the contrary, the
following actions by the Company shall require the unanimous consent of the
Members:
(i) altering any of the terms of any tender offer conducted by the
Company for the units of limited partnership interest ("Units") of Secured
Income L.P., a Delaware limited partnership ("Secured Income"), including,
without limitation, extending or terminating such tender offer or changing the
per-Unit purchase price thereof;
(ii) exercising any rights as a holder of Units, including, without
limitation, selling or otherwise disposing such Units or exercising the voting
rights of such Units;
(iii) making any distribution of Company Property to Unit Holders;
or
(iv) causing the Company to be dissolved or liquidated or its
affairs to be wound up.
(c) In carrying out its duties and responsibilities hereunder, the
Managing Member may, but shall not be obligated to, appoint individuals as
officers of the Company in each of the following positions: President, Executive
Vice President,
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Senior Vice President, Vice President, Assistant Vice President, Secretary and
Treasurer. Each of such individuals shall serve at the pleasure of the Managing
Member. An officer may but need not be a Member or an employee of a Member of
the Company.
4.2. Authority to Bind the Company. Unless all of the Members otherwise agree in
writing, no agreement, undertaking, instrument, written obligation, certificate
or other commitment shall be made by or on behalf of the Company unless made in
an instrument signed by the Managing Member.
4.3. Percentage Interests. The Percentage Interests may be adjusted from time to
time as agreed by all of the Members. The Managing Member may amend Schedule A
hereto from time to time to reflect any addition, withdrawal, or change in
Members or any adjustments to any Member's Capital Contribution or Percentage
Interest.
4.4. Reimbursement. The Managing Member and any affiliates of the Managing
Member shall be reimbursed for all costs and expenses incurred by them on behalf
of the Company, including, but not limited to, legal fees relating to the
formation of the company, current and recurring legal and accounting expenses,
and other costs associated with the Company's operations.
4.5. Liability. Except as otherwise provided under Section 4.6, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company. The Managing Member, any other Member, and their respective members,
officers, and other controlling persons through which the Managing Member or
Member acts (collectively, "Controlling Persons") shall not be obligated
personally for any such debt, obligation or liability of the Company or any
other Member solely by reason of being the Managing Member, a Member, or a
Controlling Person. The failure of the Company to observe any formalities or
requirements relating to the exercise of its powers or management of its
business or affairs under this Agreement or the Act shall not be grounds for
imposing personal liability on a Managing Member, any other Member, or any
Controlling Person for the liabilities of the Company.
4.6. Exculpation. The Managing Member, any other Member, their respective
Controlling Persons, and any officer of the Company shall not be liable to the
Company or any Member for any loss, damage or claim incurred by reason of any
act or omission of such Person in good faith on behalf of the Company and in a
manner reasonably believed to be within the scope of authority conferred on such
Person by this Agreement.
4.7. Indemnification. Any Person who was or is a Managing Member, Member,
Controlling Person, or officer of the Company (an "Indemnified Party") shall be
indemnified and held harmless by the Company from and against any and all
losses, claims, damages, liabilities, expenses (including reasonable legal and
other professional fees and disbursements), judgments, fines, settlements, and
other amounts incurred (collectively, the "Indemnification Obligations") in
connection with any and all claims, demands, actions, suits or proceedings
(civil, criminal, administrative, or investigative), actual or threatened, in
which such Indemnified Party may be involved, as a party or otherwise, by reason
of such Indemnified Party's service to, or on behalf of, or management of the
affairs of, the Company, or rendering of advice or consultation with respect
thereto, whether or not the Indemnified Party continues to be serving in the
above-
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described capacity at the time any such Indemnification Obligation is paid or
incurred. Notwithstanding the foregoing, the Company shall not provide
indemnification regarding any Indemnification Obligation to the extent resulting
from action or inaction of such Indemnified Party that, in each case,
constituted gross negligence, willful misconduct, a breach of the Indemnified
Party's fiduciary duty or duty of loyalty to the Company, or an act (a) that was
in bad faith, (b) that involved a knowing violation of law, or (c) from which
the Indemnified Party derived an improper personal benefit. The termination of a
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption that
such Indemnification Obligation resulted from the gross negligence or willful
misconduct of such Indemnified Party. Expenses (including reasonable legal and
other professional fees and disbursements) incurred in any proceeding will be
paid by the Company, as incurred, in advance of the final disposition of such
proceeding upon receipt of an undertaking by or on behalf of such Indemnified
Party to repay such amount if it shall ultimately be determined that such
Indemnified Party is not entitled to be indemnified by the Company as authorized
hereunder.
Article Five
CAPITAL CONTRIBUTIONS
5.1. Generally. The Members' Capital Contributions are as set forth beside their
respective names in Schedule A hereto. The Members shall make such additional
Capital Contributions to the Company as the Managing Member may require from
time to time. Any such capital contributions shall be made in proportion to the
Members' Percentage Interests in the Company. No interest shall accrue on any
such Capital Contribution, and no Member shall have the right to withdraw or be
repaid any such Capital Contribution, except as specifically provided in this
Agreement.
5.2. Capital Accounts.
(a) A capital account shall be established for each Member on the books of
the Company. Each Member's capital account shall be credited with such Member's
initial Capital Contribution as set forth in Schedule A hereto, any additional
Capital Contributions made by or on behalf of such Member, such Member's
distributive share of profits, and the amount of any Company liabilities that
are assumed by such Member or that are secured by any Company property
distributed to such Member.
(b) Each Member's capital account shall be debited with the amount of cash
and the value of any Company property distributed to such Member pursuant to any
provision of this Agreement, such Member's distributive share of losses, and the
amount of any liabilities of such Member that are assumed by the Company or that
are secured by any property contributed by such Member to the Company.
(c) In the event any Percentage Interest in the Company is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
capital account of the transferor to the extent it relates to the transferred
interest.
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(d) The Managing Member shall maintain the Members' capital accounts in
accordance with the Internal Revenue Code (the "Code") Section 704(b) and with
Treasury Regulation Section 1.704-1(b). In the event the Managing Member shall
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 is
not likely to have a material effect on the amounts distributable to any Member
pursuant to Article Seven hereof or upon the dissolution of the Company.
Article Six
ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS
The profits and losses from operations of the Company for any fiscal
year or other period or from the sale or other disposition of all or any part of
the Company's Property, whether or not they result in a dissolution and
liquidation of the Company, shall be allocated to the Members in accordance with
their Percentage Interests in the Company. Distributions of Property of the
Company shall be made at such times, in such manner and in such amounts as the
Managing Member may determine; provided, however, that each such distribution
shall be made to the Members in accordance with their respective Percentage
Interests in the Company.
Article Seven
DISPOSITION OF MEMBERSHIP INTERESTS
7.1. Generally.
(a) Restrictions on Dispositions.
(i) No Member shall sell, assign, transfer, bequeath, donate, or
grant a security interest in, encumber, pledge, or in any way dispose of its
interest in the Company (including any beneficial or economic interest therein)
or any part thereof, either voluntarily or involuntarily, or withdraw or retire
from the Company, without the consent of all Members, which consent may be
withheld arbitrarily; provided, however, that a Member may transfer its
membership interest to another entity that is under common control with such
Member following written notice to the Company without the consent of the
Members. For purposes of the preceding sentence, two Persons shall be deemed to
be under "common control" if a single Person, directly or through one or more
intermediaries, beneficially owns more than 50% of the voting equity interests
that have the right to manage the business and affairs of such two Persons.
(ii) Prior written notice of any transfer shall be promptly
provided to the other Members and the Company, and such transfer shall not be
deemed finally effected in the books and records of the Company unless and until
the transferee shall execute such documents, as shall be prepared by counsel to
the Company, to confirm the foregoing and to accept the terms and provisions of
this Agreement.
(b) The transferee of any Member's interest in the Company shall be
subject to all the terms, conditions, restrictions and obligations of this
Agreement, including the provisions of this Section.
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(c) Change of Control.
(i) Each Member shall give prompt written notice to the Company of
any Change in Control with respect to such Member. The Company shall have the
option to purchase the interest of such Member or its successor for a period of
six (6) months from the date of such notice. The option shall be exercised by
written notice to the Member or its successor. The purchase price, payment
method and manner of closing shall be as set forth in Sections 7.1(d) and (e).
(ii) If the Company shall not elect to purchase the entire interest
of such Member within the six (6) month period described above, the remaining
Members shall have the option to purchase all or the remaining part thereof, as
the case may be, from such Member or its successor for a period of an additional
three (3) months, in proportion to their interests in the Company. Members
electing to purchase the interest of such Member shall have the right to
purchase, pro rata, any portion of the interest not subscribed for by the other
remaining Members. The Company and the other remaining Members in the aggregate
must elect to purchase the entire interest offered or the option shall be deemed
not exercised. The purchase price, payment method and manner of closing shall be
as set forth in Sections 7.1(d) and (e).
(d) Exercise of purchase option.
(i) If the Company or remaining Members shall exercise the option
granted pursuant to 7.1(c), the purchase price of such Member's interest in the
Company shall be determined as hereinafter set forth.
(ii) If the Company (or remaining Members) and the Member or its
successor agree on a purchase price for the Member's interest, such agreed upon
price shall be the purchase price. If the parties cannot agree on a purchase
price for a Member's interest within ninety (90) days from the date of the
written notice of election by the Company or remaining Members, the purchase
price for such Member's interest shall be an amount equal to the net fair market
value (i.e., after debts and obligations) of the Company's Property multiplied
by such Member's Percentage Interest in the Company. In determining net fair
market value, the Company (or remaining Members) and the Member or its successor
in interest shall agree upon an appraiser who shall determine the net fair
market value of the Company's Property. If the parties cannot agree upon an
appraiser, each shall appoint an appraiser and the two appraisers so chosen
shall appoint a third appraiser. If the two appraisers cannot agree upon a third
appraiser, the third appraiser shall be selected under the Commercial
Arbitration Rules of the American Arbitration Association. All of the appraisers
shall be MAI certified unless all of the parties waive this requirement. The
three appraisers shall determine the net fair market value of the Company's
Property. However, if they are unable to agree upon a net fair market value,
each appraiser shall submit a report as to his or its determination of net fair
market value, and the average of the two closest computed net fair market values
shall be the net fair market value. Each side shall bear the cost of its
appraiser and shall share equally the cost of the third appraiser. The
determination of net fair market value by the appraisers shall be made within
forty-five (45) days after the expiration of the ninety (90) day period referred
to above.
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(e) Closing of purchase option sale. The closing of a sale pursuant to
Section 7.1(d) shall be held at a mutually convenient place and on a mutually
convenient business day within thirty (30) days following the determination of
the purchase price. The Company (or remaining Members) shall have the right to
elect to pay up to eighty percent (80%) of the purchase price by delivering a
promissory note which (i) shall be due within five (5) years of the closing
date, (ii) shall provide for interest at the "Prime Rate" announced by Fleet
Bank, National Association, Hartford, Connecticut, as of the commencement date
of each year that the note exists and payable on the outstanding principal
balance of the note at the time payments of principal shall be due, (iii) shall
provide for quarterly payments of principal at the end of each quarter that the
note exists, which shall be sufficient to amortize the principal amount of the
note over the term of the note, (iv) shall permit prepayment in full or in part
without penalty or premium, together with all accrued and unpaid interest, (v)
shall allow the holder to receive reasonable costs including attorneys' fees for
collection of the note and (vi) shall provide for the acceleration of the note
in the event of: the sale of all or substantially all of the assets of the
Company (and, where purchased by remaining Members, the sale of any interest in
the Company by any such remaining Member) of or a default in the payment of
principal or interest on the note continuing for fifteen (15) days after the
same is due. The note shall also contain such other acceleration and default
provisions as typically would be contained in such a commercial note.
7.2. Non-compliant Dispositions Void - Any attempted Disposition of a Member's
interest in the Company, or any part thereof, not in compliance with this
Article Seven is null and void ab initio.
Article Eight
DISSOLUTION AND WINDING UP
8.1. Dissolution. The Company shall be dissolved and its affairs wound up, upon
the first to occur of the following events (each of which shall constitute a
Dissolution Event):
(a) the expiration of the term established in Section 2.2 hereof;
(b) the written consent of all Members; or
(c) the entry of a decree of judicial dissolution under Section 18-802
of the Act.
8.2. Effect of Dissolution. Upon dissolution, the Company shall cease carrying
on and begin winding up the Company business, but the Company is not terminated,
and shall continue, until the winding up of the affairs of the Company is
completed and a certificate of cancellation has been filed with the Delaware
Department of State.
8.3. Distribution of Assets on Dissolution. Upon the winding up of the Company,
the Property of the Company shall be distributed as provided in the Act and
among the Members in accordance with their respective Percentage Interests in
the Company.
8.4. Winding Up and Certificate of Cancellation. The winding up of the Company
shall be completed when all debts, liabilities and obligations of the Company
have been paid and discharged or reasonably adequate provision therefor has been
made, and all of the remaining Property of the Company has been distributed to
the Members. Upon the completion of winding
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up of the Company, a certificate of cancellation, which shall set forth the
information required by the Act, shall be filed in the Delaware Department of
State.
Article Nine
MISCELLANEOUS PROVISIONS
9.1. Entire Agreement; Amendment. This Agreement represents the entire agreement
among the Members and between the Members and the Company with respect to the
subject matter hereof. This Agreement may be amended only by a written
instrument signed by all of the Members.
9.2. Rights of Creditors and Third Parties under Agreement. This Agreement is
entered into among the Company and the Members for the exclusive benefit of the
Company, the Members and their successors and permitted transferees. This
Agreement is expressly not intended for the benefit of any creditor of the
Company or any other Person. No such creditor or other Person shall have any
rights under this Agreement or any agreement between the Company and any Member
with respect to any capital contribution, any Member's interest in the Company
or otherwise.
9.3. Counterparts. This Agreement may be executed in two or more counterparts,
all of which taken together shall be deemed one agreement.
9.4. Notice. All notices made pursuant hereto shall be in writing. Notice to the
Company shall be addressed to the Company at the address of its principal office
established as provided in Section 2.4 hereof. Notice to a Member shall be
addressed to the Member at the address of such Member reflected in the records
of the Company. Notice shall be considered duly given (a) on the day when
delivered personally, (b) on the business day when sent by facsimile provided
receipt of such transmission is confirmed, (c) on the business day immediately
succeeding the day on which Notice is sent by recognized overnight courier, and
(d) when received if mailed by first class mail postage prepaid.
[Remainder of page intentionally left blank; signature page follows]
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IN WITNESS WHEREOF, the undersigned Members have executed this
Agreement as of the Effective Date.
WEST ▇▇▇▇▇▇ HOUSING INVESTORS II LLC
By West ▇▇▇▇▇▇ Housing Investors LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary
▇▇▇▇▇▇▇▇ CAPITAL VENTURES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. Nir
----------------------------
Name: ▇▇▇▇▇▇ ▇. Nir
Title: Managing Member
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Schedule A
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Member Name & Address Capital Contribution Percentage Interest
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West ▇▇▇▇▇▇ Housing Investors II LLC 50%
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ Capital Ventures, LLC 50%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ 1022
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