<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 11, 1998
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAREY DIVERSIFIED LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN GOVERNING INSTRUMENT)
DELAWARE 6798 13-3912578
(State or Jurisdiction (Primary Standard Industrial (IRS Employer
of Organization or Classification Code Number) Identification
Incorporation) Number)
50 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
FRANCIS J. CAREY
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
CAREY DIVERSIFIED LLC
50 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
MICHAEL B. POLLACK, ESQUIRE
REED SMITH SHAW & MCCLAY LLP
2500 ONE LIBERTY PLACE
PHILADELPHIA, PENNSYLVANIA 19103
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At any time
and from time to time after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box /X/
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES BEING PRICE OFFERING REGISTRATION
BEING REGISTERED REGISTERED PER SHARE(1) PRICE(1) FEE(2)
- - ------------------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Listed Shares 5,000,000 $21.28 $106,400,000 $31,388
</TABLE>
(1) The proposed maximum offering price per share will be determined, from
time to time, by the Registrant in connection with the issuance by the
Registrant of the Securities registered hereunder.
(2) The registration fee was calculated based on the closing price of the
Shares on February 4, 1998.
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PROSPECTUS
DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN
5,000,000 LISTED SHARES
CAREY DIVERSIFIED LLC
Carey Diversified LLC, a Delaware limited liability company
(the "Company"), hereby offers participation in its Dividend Reinvestment and
Share Purchase Plan (the "Plan"). The Plan is designed to provide both
interested new investors as well as existing holders of the Company's limited
liability company interests, Listed Shares (the "Shares"), with an economical
and convenient method to designate all or a portion of the cash dividends on
their Shares for reinvestment in more Shares through the Dividend Reinvestment
Program and to purchase Shares under the Share Purchase Program. Some of the
significant features of the Plan are as follows:
- - - Participants may purchase additional Shares, if desired, by automatically
reinvesting all or a portion of their cash dividends in Shares in the
Dividend Reinvestment Program.
- - - Participants may also purchase additional Shares by making optional cash
payments of $500 to $25,000 per month or by making an initial optional cash
payment of $500 to $25,000 in the Share Purchase Program.
- - - Purchase of additional Shares with Optional cash payments in excess of
$25,000 may be made with permission of the Company. Such purchases may be
priced at a discount ranging from 0% to 5%, as determined by the Company in
its sole discretion from time to time.
- - - Shares will be purchased by the Plan Administrator directly from the
Company, in open market or in privately negotiated transactions, as
determined from time to time by the Company, to fulfill requirements for the
Plan.
- - - Participation in the Plan is entirely voluntary, and Participants may
terminate their participation at any time. Shareholders who do not choose to
participate in the Plan will continue to receive cash dividends, as
declared, in the usual manner. Participants may also request that any or all
of the Shares held in their account ("Plan Shares") be sold by the Plan
Administrator.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 11, 1998.
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This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such an offer or
solicitation in such jurisdiction. No person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offering made hereby, and if given or made,
such information or representations must not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create any implication that
information herein is correct as of any time subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission" or "SEC"). Reports, proxy statements and
other information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Seven World Trade Center, 13th Floor, New York, New York 10048, and at 500 West
Madison Street, Chicago, Illinois 60661. Copies may also be obtained from the
Public Reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Shares of the Company are
currently quoted on the New York Stock Exchange. Reports, proxy statements and
other information concerning the Company may be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006. In addition, holders of the Shares will receive annual reports containing
audited financial statements with a report thereon by the Company's independent
certified public accountants, and quarterly reports containing unaudited summary
financial information for each of the first three quarters of each fiscal year.
This Prospectus does not contain all information set forth in the Registration
Statement and Exhibits thereto which the Company has filed with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"), and to
which reference is hereby made. The Company files information electronically
with the Commission, and the Commission maintains a Web Site that contains
reports, proxy and information statements and other information regarding
registrants (including the Company) that file electronically with the
Commission. The address of the Commission's Web Site is (http://www.sec.gov).
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference the following
documents heretofore filed by the Company with the Commission:
(a) The description of the Company's Shares contained
in the Company's Registration Statement on Form
8-A, as amended (Reg. No. 1-13779), filed January
13, 1998, under the Exchange Act.
(b) The registration statement on Form S-4 filed on
October 15, 1997.
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(c) The Company's quarterly report for the quarter
ended September 30, 1997 on Form 10-Q.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the securities made hereby shall
be deemed to be incorporated by reference into this Prospectus.
The Company hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a Prospectus is delivered, upon
written or oral request of that person, a copy of any document incorporated
herein by reference (or incorporated into the documents that this Prospectus
incorporates by reference). Requests should be directed to Carey Diversified
LLC, 50 Rockefeller Plaza, New York, NY 10020, telephone (212) 492-1100.
CAREY DIVERSIFIED LLC
Carey Diversified LLC ("Carey Diversified", "CD" or the
"Company") is a Delaware limited liability company initially established to
consolidate nine publicly-registered real estate limited partnerships organized
by W.P. Carey & Co., Inc. between 1979 and 1991. These nine partnerships (the
"CPA(R) Partnerships") raised investor capital aggregating over $400 million and
invested the net proceeds primarily in triple-net-leased properties. Shares
issued to the holders of units in the CPA(R) Partnerships are listed on the New
York Stock Exchange.
Carey Diversified's objective is to increase shareholder value
and its Funds from Operations through prudent management of its real estate
assets and opportunistic investments. CD intends to capitalize on its status as
a publicly-traded real estate investment company to take immediate advantage of
the significant opportunities to make net-lease and other investments at
attractive returns. The Company expects to evaluate a number of different
opportunities in a variety of property types and geographic locations and to
pursue those that meet its stringent underwriting requirements.
The Company's business plan is an expansion of the business plans
of the CPA(R) Partnerships. In addition to acquiring additional net-leased
properties, the Company intends to:
- Seek additional investment and other opportunities that leverage
core management skills (which include in-depth credit analysis,
asset valuation and sophisticated structuring techniques);
- optimize the current portfolio of properties through expansion of
existing properties, timely dispositions and favorable lease
modifications;
- refinance existing debt; and
- increase the Company's access to capital.
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The Company expects to be a perpetual life, growth-oriented
company and therefore, instead of selling all of its properties as the CPA(R)
Partnerships had been designed to do, will continue to own properties as long as
it believes ownership helps attain its value-building objectives.
Additional information regarding the Company, including the
audited financial statements of the Company and descriptions of the Company, is
contained in the documents incorporated by reference herein. See "Incorporation
of Certain Information by Reference," above.
USE OF PROCEEDS
The Company may purchase Shares for the Plan on the open market
or may issue new Shares. If Shares are purchased on the open market, the Company
will not receive any proceeds from the Plan. The Plan would raise additional
capital for the Company to the extent that Shares issued hereunder are
previously unissued shares or treasury shares (rather than shares acquired in
the open market). In the event the Company issues previously unissued Shares or
treasury shares pursuant to this Plan, the proceeds will be used for
acquisitions and general Company purposes.
THE PLAN
The Plan was adopted by the Board of Directors on February 11,
1998 and became effective on February 11, 1998. The following description of
the Plan constitutes the Plan. Holders of Shares who do not participate in the
Plan will receive cash dividends, as declared and paid in the usual manner.
SUMMARY OF PLAN
The Plan provides both current owners of the Shares and
interested new investors with a convenient and attractive method of investing
cash dividends and optional cash payments of $500 to $25,000 per month in Shares
at the Market Price without payment of a brokerage commission or service charge.
In addition, optional cash payments in excess of the $25,000 monthly limit may
be invested in Shares at a discount from the Market Price in cases where the
Company, at its discretion, approves a Request for Waiver for such stock
purchases. The discount is subject to change from time to time, but will not
vary from the range of 0% to 5%.
Optional cash payments of less than $500 and that portion of any
optional cash payment which exceeds the maximum monthly purchase limit of
$25,000, unless such upper limit has been waived, are subject to return to the
Participant without interest. For Shares purchased with optional cash payments,
Participants may elect to have the certificates for such shares sent to them
free of charge or retained by the Plan Administrator for safekeeping, and
additional certificates may be sent to the Plan Administrator for safekeeping
without payment of any fee. Participants may also request that any or all Shares
held in the Plan be sold by the Plan Administrator on behalf of such
Participants for a nominal fee, any transfer fees and any applicable stock
transfer taxes on the resales, all of which will be deducted by the Plan
Administrator from the proceeds of the sale and the balance sent to the
Participant.
Capitalized terms not defined in the body of the Prospectus are
included in the Glossary beginning on page 23.
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PURPOSE OF THE PLAN
The primary purpose of the Plan is to provide both current
holders of Shares and interested new investors with an economical and convenient
method of increasing their investment in the Company by investing cash dividends
in additional Shares at the Market Price and/or by investing optional cash
payments in Shares at the Market Price without payment of any brokerage
commission or service charge. To the extent Shares are purchased from the
Company under the Plan, the Company will receive additional funds for
acquisitions and general Company purposes.
The Plan may also be used by the Company to raise additional
capital through the sale each month of a portion of the Shares available for
issuance under the Plan to purchasers of Shares (including brokers or dealers)
who, in connection with any resales of such shares, may be deemed to be
underwriters. These sales will be effected through the Company's ability to
waive limitations applicable to the amounts which Participants may invest
pursuant to the Plan's Share Purchase Program. However, the Plan is primarily
intended for the benefit of long-term investors, and not for the benefit of
individuals or institutions who engage in short-term trading activities that
could cause aberrations in the composite trading volume of the Company's Shares.
The Company reserves the right to modify, suspend or terminate participation in
the Plan by otherwise eligible holders of Shares in order to eliminate practices
which are not consistent with the purposes of the Plan.
OPTIONS AVAILABLE TO PARTICIPANTS
Dividend Reinvestment Program. Holders of Shares who wish to
participate in the Plan, whether Record Owners, Beneficial Owners or interested
new investors who make an initial investment through the Share Purchase Program
described below (each, a "Participant") may elect to have all or a portion of
the cash dividends paid on their Shares automatically reinvested in additional
Shares when and as declared by the Company's Board of Directors, generally on a
quarterly basis. Subject to the availability of Shares registered for issuance
under the Plan, there is no limitation on the amount of dividends a Participant
may reinvest under the Dividend Reinvestment Program.
Share Purchase Program. Each month, Participants may also elect
to invest optional cash payments in Shares, subject to a minimum monthly
purchase limit of $500 and a maximum monthly purchase limit of $25,000. The
maximum limit is subject to waiver at the Company's discretion. Participants may
make optional cash payments each month even if dividends on their Shares are not
being reinvested and whether or not a dividend has been declared. Participants
are not required to enroll any Shares purchased through the Share
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Purchase Program in the Dividend Reinvestment Program but may designate all or a
portion of such Shares for such participation on the Authorization Form if
desired.
ADVANTAGES AND DISADVANTAGES OF THE PLAN
ADVANTAGES
(a) The Plan provides Participants with the opportunity to
reinvest cash dividends paid on all or a portion of their Shares in additional
Shares without payment of a brokerage commission or service charge.
(b) The Plan provides Participants with the opportunity to make
monthly investments of optional cash payments, subject to minimum and maximum
amounts, for the purchase of Shares without payment of a brokerage commission or
service charge. The Participant may designate any portion of such Plan Shares to
be enrolled in the Dividend Reinvestment Program.
(c) All cash dividends paid on Participants' Plan Shares enrolled
in the Dividend Reinvestment Program can be fully invested in additional Shares
because the Plan permits fractional Shares to be credited to Plan accounts.
Dividends on such fractional Shares, as well as on whole Shares, will also be
reinvested in additional Shares which will be credited to Plan accounts.
(d) The Plan Administrator, at no charge and at the election of
Participants, either sends certificates to Participants for optional Shares
purchased or provides for the safekeeping of share certificates for Shares
credited to each Plan account.
(e) A Participant may also elect to deposit with the Plan
Administrator certificates for the Participant's other Shares registered in his
or her name for safekeeping without charge.
(f) Periodic statements reflecting all current activity,
including Plan Share purchases and the most recent Plan account balance,
simplify Participants' record keeping.
DISADVANTAGES
(a) No interest will be paid by the Company or the Plan
Administrator on dividends or optional cash payments held pending reinvestment
or investment. In addition, optional cash payments of less than $500 and that
portion of any optional cash payment which exceeds the maximum monthly purchase
limit of $25,000, unless such upper limit has been waived, are subject to return
to the Participant without interest. Moreover, purchases above the $25,000 per
month limit that have been granted a waiver may also be subject to return under
certain circumstances.
(b) With respect to Shares acquired from the Company, the actual
number of Shares to be issued to the Participant or the Participant's Plan
account will not be determined
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until after the end of the relevant Pricing Period. Therefore, Participants will
not know the actual price per Share or number of Shares they have purchased
until the Investment Date.
(c) Because optional cash payments must be received by the Plan
Administrator by the Optional Cash Payment Due Date, such payments may be
exposed to changes in market conditions for a longer period of time than in the
case of typical secondary market transactions.
(d) Resales of Shares credited to a Participant's account under
the Plan will involve a nominal fee per transaction to be deducted from the
proceeds of the sale by the Plan Administrator (if such resale is made by the
Plan Administrator at the request of a Participant), plus any brokerage
commission and any applicable stock transfer taxes on the resales.
ADMINISTRATION OF THE PLAN
The Company has designated Mellon Bank, N.A., (the "Plan
Administrator"), to administer the Plan and act as agent for the Participants.
Mellon Bank N.A. has designated its affiliates, ChaseMellon Shareholder
Services, L.L.C., Dreyfus and other agents to perform certain services for the
Plan. These companies will purchase and hold Shares for Participants, keep
records and statements and perform other duties required by the Plan.
Certificates for Plan Shares purchased pursuant to the Share Purchase Program
but not designated for investment in the Dividend Reinvestment Program will be
sent to the Participant or held by the Plan Administrator, at the Participant's
discretion, free of charge. Plan Shares designated for the Dividend Reinvestment
Program will be held by the Plan Administrator and registered in the
Participant's name. The Plan Administrator will credit dividends to
Participants' accounts on the basis of whole or fractional Plan Shares held in
such accounts, and will automatically reinvest such dividends in additional
Shares according to the portion of the Participants' Shares designated to
participate in the Dividend Reinvestment Program. Any remaining portion of cash
dividends not designated for reinvestment will be sent to the Participant. If
the Plan Administrator resigns or otherwise ceases to act as plan administrator,
the Company will appoint a new plan administrator to administer the Plan.
Participants will incur no brokerage commissions or service
charges in connection with the reinvestment of dividends and in connection with
all purchases made pursuant to optional cash payments under the Plan. The
Company will pay all costs of administration of the Plan. Additionally,
Participants may elect to send the certificates for their other Shares to the
Plan Administrator for safekeeping, and there is no fee for this service.
However, Participants who request that the Plan Administrator sell all or any
portion of their shares must pay a nominal fee per transaction to the Plan
Administrator, any related brokerage commissions and applicable stock transfer
taxes.
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DIVIDEND REINVESTMENT PROGRAM
ENROLLMENT
Shareholders who already own Shares and whose Shares are
registered in their own name may participate immediately by signing and
returning a completed Authorization Form to the Plan Administrator. If a
Shareholder owns Shares held in a brokerage account, arrangements should be made
with the brokerage firm to allow for participation in the Plan. Individuals who
do not own any Shares may participate by making an initial investment in Shares
through the Share Purchase Program. See "Share Purchase Program" below.
The dividend reinvestment feature will be effective on the first
record date after receipt of the Authorization Form. Once in the Plan, a
Participant remains in the Plan until he or she withdraws from the Plan, the
Company terminates his or her participation in the Plan or the Company
terminates the Plan.
The Company reserves the right to refuse to permit any broker,
bank, nominee or other Record Owner to participate in the Plan if the terms of
such participation would, in the Company's judgment, result in excessive cost or
burden to the Company.
The Authorization Form appoints the Plan Administrator as agent
for the Participant and directs the Company to pay to the Plan Administrator the
Participant's cash dividends on the Shares owned by the Participant on the
applicable Record Date and enrolled in the Dividend Reinvestment Program, and
thereafter including all whole and fractional Shares credited to the
Participant's Plan account as they are added with each reinvestment or optional
purchase designated for reinvestment. Such cash dividends with respect to Shares
enrolled in the Dividend Reinvestment Program will be automatically reinvested
by the Plan Administrator in Shares. Any remaining cash dividends not enrolled
in the Dividend Reinvestment Program are paid directly to the Participant.
Whole Shares purchased with reinvested dividends on Shares registered in the
Plan through a brokerage firm will be credited to a Participant's brokerage
account. The brokerage firm should be consulted to determine how it handles
fractional Shares.
Additionally, the Authorization Form directs the Plan
Administrator to purchase Shares with a Participant's optional cash payments, if
any, and whether to enroll any of such new Plan Shares in the Dividend
Reinvestment Program.
PARTIAL PARTICIPATION POSSIBLE UNDER THE DIVIDEND REINVESTMENT PLAN
Participants may designate any desired percentage of their Shares
for which dividends are to be reinvested. Dividends will thereafter be
reinvested only on the percentage of Shares specified, and the Participant will
continue to receive cash dividends on the remainder of the Shares.
INVESTMENT DATES
The Investment Date with respect to the Shares acquired pursuant
to dividend reinvestments will be (i) if acquired directly from the Company, the
quarterly dividend payment
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date declared by the Board of Directors (generally the 15th day of the month,
unless such date is not a business date in which case it is the first business
day immediately thereafter), or (ii) in the case of open market purchases, the
date or dates of actual investment, but no later than 10 business days following
the dividend payment date.
When open market purchases are made by the Plan Administrator,
such purchases may be made on any securities exchange where the Shares are
traded, in the over-the-counter market or by negotiated transactions, and may be
subject to such terms with respect to price, delivery and other matters as
agreed to by the Plan Administrator.
Shares will be allocated and credited to Participants' accounts
on the appropriate Investment Date. NO INTEREST WILL BE PAID ON CASH DIVIDENDS
PENDING REINVESTMENT UNDER THE TERMS OF THE PLAN.
PURCHASE PRICE OF SHARES PURCHASED UNDER THE DIVIDEND REINVESTMENT PROGRAM
Shares purchased with reinvested dividends will be purchased for
the Plan at the Market Price. The Market Price, in the case of shares purchased
directly from the Company, will be the average closing price of the Shares on
the New York Stock Exchange ("NYSE") or other applicable securities exchange, as
reported in the Wall Street Journal, during the Pricing Period. The Market
Price, in the case of Shares purchased in the open market, will be the actual
cost of such Shares.
Neither the Company nor any Participant shall have any
authorization or power to direct the time or price at which Shares will be
purchased or the selection of the broker or dealer through or from whom
purchases are to be made by the Plan Administrator. However, when open market
purchases are made by the Plan Administrator, the Plan Administrator shall use
its best efforts to purchase the Shares at the lowest possible price.
DETERMINATION OF THE NUMBER OF SHARES PURCHASED FOR A PARTICIPANT
A Participant's account in the Plan will be credited with the
number of Shares, including fractions computed to four decimal places, equal to
the total amount to be invested on behalf of such Participant divided by the
applicable Market Price per Share. The total amount to be invested will depend
on the amount of any dividends paid on the number of Shares owned by the
Participant and designated for reinvestment, plus dividends on the Plan Shares
in such Participant's Plan account designated for reinvestment. Participants
will be credited with dividends on fractions of Shares. Subject to the
availability of Shares registered for issuance under the Plan, there is no total
maximum number of Shares available for issuance pursuant to the reinvestment of
dividends.
WITHDRAWAL FROM THE PLAN
Participants may withdraw from the Plan with respect to all or a
portion of the Shares held in his or her account in the Plan at any time. If the
request to withdraw is received prior to a dividend Record Date, the request
will be processed on the day following receipt of the request by the Plan
Administrator.
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If the request to withdraw is received by the Plan Administrator
on or after a dividend Record Date, but before the payment date, the Plan
Administrator, in its sole discretion, may either pay such dividend in cash or
reinvest it in Shares for the Participant's account. The request for withdrawal
will then be processed as promptly as possible following such dividend payment
date. All dividends subsequent to the effective date of the withdrawal will be
paid in cash unless a shareholder re-enrolls in the Plan, which may be done at
any time.
HOW TO WITHDRAW FROM THE PLAN
A Participant who wishes to withdraw from the Plan with respect
to all or a portion of the Shares held in his or her account in the Plan must
notify the Plan Administrator in writing. Upon a Participant's withdrawal from
the Plan or termination of the Plan by the Company, certificates for the
appropriate number of whole shares credited to his or her account under the Plan
will be issued free of charge. A cash payment will be made for any fraction of a
Share.
Upon withdrawal from the Plan, a Participant may also request in
writing that the Plan Administrator sell all or part of the Shares credited to
his or her account in the Plan. The Plan Administrator will sell the shares as
requested within 10 business days after processing the request for withdrawal.
The Participant will receive the proceeds of the sale, less a nominal fee per
transaction paid to the Plan Administrator, any brokerage fees or commissions
and any applicable stock transfer taxes, generally within five business days of
the sale.
AUTOMATIC TERMINATION PROVISIONS
Participation in the Plan will be terminated if the Plan
Administrator receives written notice of the death or adjudicated incompetency
of a Participant, together with satisfactory supporting documentation of the
appointment of a legal representative at least five business days before the
next Record Date for purchases made through the reinvestment of dividends or
Optional Cash Payment Due Date for payments received for optional cash
investments, as applicable. In the event written notice of death or adjudicated
incompetency and such supporting documentation is received by the Plan
Administrator less than five business days before the next Record Date or
Optional Cash Payment Due Date for purchases made through the reinvestment of
dividends or optional cash payments, as applicable, the Plan Administrator, in
its sole discretion, may either pay such dividends in cash or invest such
dividends in additional Shares. Participation in the Plan will not terminate
until after such dividend or payment has been reinvested. Thereafter, no
additional purchase of Shares will be made for the Participant's account and the
Participant's Shares and any cash dividends paid thereon will be forwarded to
such Participant's legal representative.
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SHARE PURCHASE PROGRAM
ENROLLMENT IN SHARE PURCHASE PROGRAM
Any person who has timely signed an Authorization Form indicating
his or her intention to participate in the Share Purchase Program of the Plan
are eligible to make optional cash payments during any month, whether or not a
dividend is declared. The Authorization Form allows any investor to make
optional cash investments, including an initial investment in Shares, for any
amount between $500 and $25,000 by enclosing a check or money order payable to
"Mellon Bank, N.A. -- Carey Diversified LLC DRP" with the Authorization Form and
sending them directly to the Plan Administrator. Each statement sent to Plan
participants will include a form to accompany subsequent cash investments they
may wish to make in any amount between $500 and $25,000 per month. Optional cash
payments must be accompanied by an Authorization Form. Each month, the Plan
Administrator will apply any optional cash payment received from a Participant
no later than the Optional Cash Payment Due Date to the purchase of additional
Shares for the account of the Participant on the following Investment Date and
will enroll the portion of such Shares in the Dividend Reinvestment Program as
so directed by the Participant on the Authorization Form.
LIMITATIONS ON OPTIONAL CASH PAYMENTS
For any Investment Date, each optional cash payment is subject to
a minimum of $500 and a maximum of $25,000 (subject to waiver). For purposes of
these limitations, all accounts under common control, management or
representation by or on behalf of the same beneficial owner will be aggregated.
Optional cash payments of less than $500 and that portion of any cash payment
which exceeds the maximum monthly purchase limit of $25,000, unless such maximum
limit has been waived by the Company, will be returned to the Participant
without interest at the end of the relevant Pricing Period.
DUE DATES AND INVESTMENT DATES FOR OPTIONAL CASH PAYMENTS
In order for funds to be invested on the next Investment Date,
the Plan Administrator must have received an Authorization Form and a check,
money order or wire transfer by the Optional Cash Payment Due Date and such
check, money order or wire transfer must have cleared before the related
Investment Date or generally, the 20th day of each month or the business day
immediately preceding the 20th day of the month if the 20th day of the month is
not a business day. See Schedule A. Wire transfers may be used only if approved
verbally in advance by the Plan Administrator. Checks and money orders are
accepted subject to timely collection as good funds and verification of
compliance with the terms of the Plan. Checks or money orders should be made
payable to "Mellon Bank, N.A. -- Carey Diversified LLC DRP." Checks returned for
any reason will not be resubmitted for collection.
Optional cash payments will be invested every month on the
related Investment Date. Optional cash payments received by the Plan
Administrator by the Optional Cash Payment Due Date will be applied to the
purchase of Shares on the Investment Date immediately after the Optional Cash
Payment Due Date on which such payment is received.
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NO INTEREST WILL BE PAID BY THE COMPANY OR THE PLAN
ADMINISTRATOR ON OPTIONAL CASH PAYMENTS HELD PENDING INVESTMENT. SINCE NO
INTEREST IS PAID ON CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE IN
THE BEST INTEREST OF A PARTICIPANT TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY
BEFORE THE OPTIONAL CASH PAYMENT DUE DATE.
PURCHASE PRICE OF SHARES PURCHASED UNDER THE SHARE PURCHASE PROGRAM
Shares purchased under the Share Purchase Program will be
purchased for the Plan at the Market Price. The Market Price of Shares purchased
directly from the Company will be the average closing price of the Shares on the
New York Stock Exchange ("NYSE") or other applicable securities exchange, as
reported in the Wall Street Journal, during the Pricing Period. The Market Price
will be the actual cost of such Shares in the case of Shares purchased in the
open market.
Neither the Company nor any Participant shall have any
authorization or power to direct the time or price at which Shares will be
purchased or the selection of the broker or dealer through or from whom
purchases are to be made by the Plan Administrator. However, when open market
purchases are made by the Plan Administrator, the Plan Administrator shall use
its best efforts to purchase the shares at the lowest possible price.
RETURN OF OPTIONAL CASH PAYMENTS
Upon telephone or written request to the Plan Administrator
received at least five business days prior to the Optional Cash Payment Due Date
for the Investment Date with respect to which optional cash payments have been
delivered to the Plan Administrator, such optional cash payments will be
returned to the Participant as soon as practicable. In the case of requests
received less than five business days prior to such date, the Plan
Administrator, in its sole discretion, may either return or invest such cash
payments. Each optional cash payment, to the extent that it does not either
conform to the limitations described herein or clear within the prescribed time
limit, will be subject to return to the Participant as soon as practicable.
WAIVER OF MONTHLY OPTIONAL PAYMENT LIMIT
A Participant may seek a waiver of the $25,000 per month limit on
optional cash investments. The following describes the manner in which such a
waiver may be obtained and the rules applicable to such an investment.
Request for Waiver. Optional cash payments in excess of $25,000
per month may be made only pursuant to a Request for Waiver approved by the
Company. Participants who wish to submit an optional cash payment in excess of
$25,000 for any Investment Date must obtain the prior written approval of the
Company, and a copy of such written approval must accompany any such optional
cash payment. In order to receive a Request for Waiver Form, Participants should
request the form from the Company via facsimile at
or by mail at 50 Rockefeller Plaza, New York, NY 10020. At least five business
days prior to the applicable Optional Cash Payment Due Date, the Company will
determine whether to waive the $25,000 monthly limit and whether to establish a
Threshold Price and/or a Waiver Discount. See Schedule A. This determination
will be made by the Company in its discretion after a review of
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such considerations as transaction costs, current market conditions, the level
of participation in the Plan, and current projected capital needs. After the
Threshold Price and Waiver Discount set date, Participants may ascertain whether
a Threshold Price has been set or waived, and obtain the Waiver Discount, for
the given Pricing Period [by telephoning the Company at
to hear a pre-recorded message.] A Request for Waiver must then be received by
the Company via U.S. mail or facsimile at for that
month at least two business days before the Optional Cash Due Date. The Company
will then notify the Participant if the Request for Waiver has been approved no
later than one business day prior to the Optional Cash Due Date.
THE COMPANY HAS SOLE DISCRETION WHETHER TO GRANT ANY APPROVAL FOR
OPTIONAL CASH PAYMENTS IN EXCESS OF THE ALLOWABLE MAXIMUM AMOUNT. The Company
expects to grant Requests for Waiver to financial intermediaries, including
brokers and dealers, and other Participants in the future. Grants of Requests
for Waiver will be made in the sole discretion of the Company based on a variety
of factors, which may include: the Company's current and projected capital
needs, the alternatives available to the Company to meet those needs, the
prevailing market price for Shares, general economic and market conditions,
expected aberrations in the price or trading volume of the Shares, the potential
disruption of the price of the Shares by a financial intermediary, the number of
Shares held by the Participant submitting the Request for Waiver, the past
actions of a Participant under the Plan, the aggregate amount of optional cash
payments for which such Requests for Waivers have been submitted, the
administrative constraints associated with granting such Requests for Waivers
and other factors deemed relevant by the Company. If such Requests for Waivers
are granted, a portion of the Shares available for issuance under the Plan will
be purchased by Participants (including brokers or dealers) who, in connection
with any resales of such Shares, may be deemed to be underwriters within the
meaning of the Securities Act. To the extent that Requests for Waiver are
granted, it is expected that a greater number of Shares will be issued under the
Share Purchase Program of the Plan as opposed to the Dividend Reinvestment
Program of the Plan. Subject to the availability of Shares registered for
issuance under the Plan, there is no pre-established maximum limit on the number
of Shares that may be purchased pursuant to approved Requests for Waivers.
Financial intermediaries may purchase a significant portion of
the Shares issued pursuant to the Share Purchase Program of the Plan. The
Company does not have any formal or informal understanding with any such
organizations and, therefore, the extent of such financial intermediaries'
participation under the Plan cannot be estimated at this time. Participants that
are financial intermediaries that acquire Shares under the Plan with a view to
distribution of such shares or that offer or sell shares for the Company in
connection with the Plan may be deemed to be underwriters within the meaning of
the Securities Act.
From time to time, financial intermediaries, including brokers
and dealers, may engage in positioning transactions in order to benefit from the
discount from the Market Price of the Shares acquired through the reinvestment
of dividends under the Plan. Such transactions may cause fluctuations in the
trading volume of the Shares. Financial intermediaries that engage in
positioning transactions may be deemed to be underwriters within the meaning of
the Securities Act. The Plan is intended for the benefit of investors in the
Company and not for individuals who engage in transactions which may cause
aberrations in the price or trading volume of the Shares.
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<PAGE> 16
If Requests for Waiver are submitted for any Investment Date for
an aggregate amount in excess of the amount the Company is then willing to
accept, the Company may honor such requests in order of receipt, pro rata or by
any other method that the Company determines to be appropriate. There is no
pre-established maximum limit applicable to optional cash payments that may be
made pursuant to approved Requests for Waiver.
Threshold Price. The Company may establish for any Pricing Period
a Threshold Price applicable to optional cash payments made pursuant to Requests
for Waiver. If established for any Pricing Period, the Threshold Price will be
stated as a dollar amount that the average of the closing price on the NYSE, or
other applicable securities exchange, for each day of the applicable Pricing
Period must equal or exceed. In the event that the Threshold Price is not
satisfied for a Trading Day in the Pricing Period, then that day and the trading
prices for that day will be excluded from that Pricing Period. Thus, for
example, if the Threshold Price is not satisfied for three of the 10 days in a
Pricing Period, then the average sales price for purchases and the optional cash
payments which may be invested will be based on the remaining seven days when
the Threshold Price is satisfied. For each day during the Pricing Period for
which the Threshold Price is not satisfied, 1/10th of each optional cash payment
made pursuant to a Request for Waiver will be returned to such Participant by
check, without interest, as soon as practicable after the applicable Investment
Date.
The establishment of a Threshold Price and the possible return of
a portion of the investment applies only to optional cash payments made pursuant
to a Request for Waiver. Setting a Threshold Price for a Pricing Period shall
not affect the Threshold Price for any subsequent Pricing Period. Neither the
Company nor the Plan Administrator shall be required to provide any written
notice to Participants as to the Threshold Price for any Pricing Period.
Waiver Discount. Each month the Company may, but is not required,
to establish a discount from the Market Price applicable only to optional cash
payments made pursuant to a Request for Waiver. Such discount (the "Waiver
Discount") may be between 0% and 5% of the purchase price and may vary each
month, but once established will uniformly apply to all optional cash payments
made pursuant to an approved Request for Waiver for that month. Setting a Waiver
Discount for a particular month shall not affect the setting of or the level of
any Waiver Discount for any subsequent month. The Waiver Discount will apply to
the entire optional cash payment and not just the portion that exceeds $25,000.
If no Waiver Discount is established for a particular month, no discount will
apply to purchases in excess of $25,000.
Due Dates and Investment Dates for Optional Cash Payments Subject
to a Waiver. The Plan Administrator must receive an Authorization Form and a
check, money order or wire transfer no later than the business day immediately
preceding the Pricing Period. Wire transfers may be used only if approved
verbally in advance by the Plan Administrator. Checks and money orders are
accepted subject to timely collection as good funds and verification of
compliance with the terms of the Plan. Checks or money orders should be made
payable to "Mellon Bank, N.A. -- Carey Diversified LLC DRP." Checks returned for
any reason will not be resubmitted for collection.
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<PAGE> 17
Optional cash payments will be invested every month on the
related Investment Date. Optional cash payments received by the Plan
Administrator by the Optional Cash Payment Due Date will be applied to the
purchase of Shares on the Investment Date immediately after the Optional Cash
Payment Due Date on which such payment is received. Generally, optional cash
payments received after the Optional Cash Payment Due Date will be returned to
Participants without interest at the end of the Pricing Period; such optional
cash payments may be resubmitted by a Participant prior to the commencement of
the next or a later Pricing Period as to which the Company is entertaining
Requests for Waiver.
NO INTEREST WILL BE PAID BY THE COMPANY OR THE PLAN ADMINISTRATOR
ON OPTIONAL CASH PAYMENTS HELD PENDING INVESTMENT. SINCE NO INTEREST IS PAID ON
CASH HELD BY THE PLAN ADMINISTRATOR, IT NORMALLY WILL BE IN THE BEST INTEREST OF
A PARTICIPANT TO DEFER OPTIONAL CASH PAYMENTS UNTIL SHORTLY BEFORE THE OPTIONAL
CASH PAYMENT DUE DATE.
SOURCE OF SHARES PURCHASED UNDER THE PLAN
Plan Shares will be purchased either directly from the Company or
on the open market, or by a combination of the foregoing, at the option of the
Company, after a review of current market conditions and the Company's current
and projected capital needs. The Company will determine the source of the Shares
to be purchased under the Plan. Neither the Company nor the Plan Administrator
shall be required to provide any written notice to Participants as to the source
of the Shares to be purchased under the Plan, but current information regarding
the source of the Shares may be obtained by contacting the Company at .
REPORT TO PARTICIPANTS
Each Participant in the Plan will receive a statement of his or
her account following each purchase of additional Shares. The statements are the
Participant's continuing record of the cost of purchases and should be retained
for income tax purposes. In addition, Participants will receive copies of other
communications sent to holders of Shares, including the Company's annual report
to its shareholders, the notice of annual meeting and proxy statement in
connection with its annual meeting of shareholders and Internal Revenue Service
information necessary for the completion of the tax return of each Participant.
CERTIFICATES FOR SHARES
ISSUANCE OF CERTIFICATES
Normally, Shares purchased for Participants will be held in
book-entry form. No certificates will be issued to Participants for shares in
the Plan unless a Participant submits a written request to the Plan
Administrator. At any time, a Participant may request the Plan Administrator to
send a certificate for some or all of the whole Shares credited to a
Participant's account. This request should be mailed to the Plan Administrator.
There is no fee for this service. Any remaining whole Shares and any fractions
of Shares will remain credited to the Plan account. Certificates for fractional
shares will not be issued under any circumstances.
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<PAGE> 18
A Participant may also elect to deposit with the Plan
Administrator certificates for the shareholder's other Shares registered in his
or her name for safekeeping under the Plan without charge. Certificates
forwarded to the Plan Administrator by registered mail will be automatically
covered by a blanket bond up to the first $100,000 of value. Safekeeping
protects a convenient way to keep track of Shares. Only Shares held in
safekeeping may be sold through the Plan.
NAME IN WHICH CERTIFICATES ARE REGISTERED
Each Plan account is maintained in the name in which the related
Participant's certificates were registered at the time of enrollment in the
Plan. Certificates for those Shares purchased under the Plan will be similarly
registered when issued upon a Participant's request. A Participant who wishes to
pledge Shares credited to such Participant's Plan account must first withdraw
such Shares from the Plan.
OTHER INFORMATION
SALE OF SHARES
Shares may be sold at anytime by contacting the Plan
Administrator. The Plan Administrator will record sales orders on the date of
receipt, and process them, where practicable, on the next Business Day. The Plan
Administrator will send by check the proceeds from the sale of the Shares
(excluding a nominal fee, brokerage commissions and other costs).
If a Participant sells or transfers all of his or her Shares
other than the Plan Shares, the Participant will still remain in the Plan with
respect to any held Plan Shares and will continue to earn dividends unless the
Participant notifies the Plan Administrator to terminate participation by giving
the Plan Administrator a withdrawal notice prior to the next relevant dividend
Record Date.
DIVIDEND PAYABLE IN SHARES OR SHARE SPLITS
Any dividend payable in Shares and any additional Shares
distributed by the Company in connection with a Share split in respect of Shares
credited to a Participant's Plan account will be added to that account. Share
dividends or split Shares which are attributable to Shares registered in a
Participant's own name and not in his or her Plan account will be mailed
directly to the Participant as in the case of shareholders not participating in
the Plan.
VOTING OF PLAN SHARES AT MEETINGS OF SHAREHOLDERS
If the Participant is a Record Owner, the Participant will
receive a proxy card covering both directly held Shares and Shares held in the
Plan. If a proxy is returned properly signed and marked for voting, all of the
Shares covered by the proxy will be voted as marked. If a Participant is a
Beneficial Owner, the Participant will receive a proxy covering Plan Shares
through his or her bank, broker or other nominee. If a proxy is returned
properly signed but no voting instructions are given, all of the Participant's
Shares will be voted in accordance with
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<PAGE> 19
recommendations of the Board of Directors of the Company, unless applicable laws
require otherwise. If the proxy is not returned, or if it is returned unexecuted
or improperly executed, shares registered in a Participant's name may be voted
only by the Participant in person.
THE RESPONSIBILITIES OF THE COMPANY AND THE PLAN ADMINISTRATOR UNDER THE PLAN
The Company and the Plan Administrator will not be liable in
administering the Plan for any act done in good faith or required by applicable
law or for any good faith omission to act including, without limitation, any
claim or liability arising out of failure to terminate a Participant's account
upon his or her death, with respect to the price at which Shares are purchased
and/or the times when such purchases are made or with respect to any fluctuation
in the market value before or after purchase or sale of shares. Notwithstanding
the foregoing, nothing contained in the Plan limits the Company's liability with
respect to alleged violations of federal securities laws.
The Company and the Plan Administrator shall be entitled to rely
on completed forms and the proof of due authority to participate in the Plan,
without further responsibility of investigation or inquiry.
AMENDMENT OR CANCELLATION OF THE PLAN
The Company may suspend, terminate or amend the Plan at any time.
Notice will be sent to Participants of any suspension or termination, or of any
amendment that alters the Plan terms and conditions, as soon as practicable
after such action by the Company. The Company may also substitute another
administrator or agent in place of the Plan Administrator at any time;
Participants will be promptly informed of any such substitution. Any questions
of interpretation arising under the Plan will be determined by the Company and
any such determination will be final.
RISK OF MARKET FLUCTUATIONS IN SHARES
A Participant's investment in Shares held in the Plan account is
no different from his or her investment in directly held Shares. The Participant
bears the risk of any loss and enjoys the benefits of any gain from market price
changes with respect to such shares.
CONTACT FOR QUESTIONS ABOUT THE PLAN
All correspondence regarding the Plan should be directed to:
Mellon Bank, N.A.
c/o ChaseMellon Shareholder Services
P.O. Box 3338
South Hackensack, NJ 07606-1938
Telephone: (800)
Please mention Carey Diversified LLC and this Plan in all correspondence.
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PLAN INTERPRETATION
Any questions of interpretation arising under the Plan will be
determined by the Company and any such determination will be final. The Company
may adopt rules and regulations to facilitate the administration of the Plan.
The terms and conditions of the Plan and its operation will be governed by the
laws of the State of Delaware.
PARTICIPANT RESPONSIBILITIES UNDER THE PLAN
Plan Shares are subject to escheat to the state in which the
Participant resides in the event that such shares are deemed, under such state's
laws, to have been abandoned by the Participant. Participant's, therefore,
should notify the Plan Administrator promptly in writing of any change of
address. Account statements and other communications to Participants will be
addressed to them at the last address of record provided by Participants to the
Plan Administrator.
Participants will have no right to draw checks or drafts against
their Plan accounts or to instruct the Plan Administrator with respect to any
Shares or cash held by the Plan Administrator except as expressly provided
herein.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary is based upon interpretations of current
federal tax law. IT IS IMPORTANT FOR PARTICIPANTS TO CONSULT THEIR OWN TAX
ADVISERS TO DETERMINE PARTICULAR TAX CONSEQUENCES, including state income tax
consequences, which vary from state to state and which may result from
participation in the Plan and subsequent disposition of shares acquired pursuant
to the Plan. Income tax consequences to Participants residing outside the United
States will vary from jurisdiction to jurisdiction.
Dividend Reinvestment Program
Each Shareholder will report on his personal income tax return
his distributive share of each item of the Company's income, gain, loss,
deduction, credit and tax preference. Each Shareholder will be taxed on his pro
rata share of the Company's taxable income, whether or not he has received or
will receive any cash distributions from the Company. Cash distributions (which
are considered to include any reduction in Participating Partnership and/or the
Company nonrecourse indebtedness) made to Shareholders, other than those in
exchange for or in redemption of all or part of their Shares, generally will not
affect a Shareholder's distributive share of income, gain or loss from the
Company. Such distributions may represent distributions of income, returns of
capital or both. A cash distribution to a Shareholder by the Company generally
does not result in any recognition of gain or loss for federal income tax
purposes but reduces a Shareholder's adjusted basis in his Shares.
Participants in the Dividend Reinvestment Program under the Plan
will be treated for federal income tax purposes as having received, on the
Investment Date, a distribution in an amount equal to the fair market value on
that date of the Shares acquired with reinvested
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<PAGE> 21
distributions. Such shares will have a tax basis equal their fair market value
increased by the Shareholder's share, if any, of the liabilities of the Company
(which include the Company's share of the liabilities of the Participating
Partnerships). That initial basis then will be increased by (i) his share of
items of income and gain of the Company and (ii) any increase in his
proportionate share of the Company's share of nonrecourse indebtedness to which
the Participating Partnerships' or the Company's Properties are subject (limited
to the fair market value of the property securing such indebtedness) and
reduced, but not below zero, by (a) the amount of his share of items of the
Company loss and deduction and expenditures which are neither properly
deductible nor properly chargeable to his capital account, (b) the amount of any
cash distributions (including any decrease in his share of liabilities) and (c)
the basis of any property distributions received by such Shareholder. For
federal income tax purposes, the fair market value of shares acquired under the
Plan will likely be treated as equal to 100% of the average of the high and low
sale prices of shares on the related Investment Date. The trading value on that
specific date may vary from the Market Price determined under the Plan for such
shares.
The IRS has ruled that a partner must maintain an aggregate
adjusted tax basis in his aggregate partnership interest (consisting of all
interests acquired in separate transactions). On the sale of a portion of such
aggregate interest, a partner would be required to allocate, on the basis of the
relative fair market values of such interests on the date of sale, his aggregate
tax basis between the portion of the interest sold and the portion of the
interest retained. This requirement, if applicable to the Company, effectively
would preclude a Shareholder owning Shares that were acquired at different
prices on different dates from controlling the timing of the recognition of the
inherent gain or loss in his Shares by selecting the specific Shares that he
would sell. The ruling does not address whether this aggregation requirement, if
applicable, results in the tacking of the holding period of older Shares on the
holding period of more recently acquired Shares. Because the application of this
ruling in the context of a publicly traded partnership, such as the Company, is
not clear, a person acquiring Shares and considering the subsequent purchase of
additional Shares should consult his professional tax advisor as to the possible
tax consequences of the ruling.
Any gain or loss recognized by a Shareholder upon the sale or
exchange of his Shares will generally be treated as capital gain or loss. In
determining the amount received upon the sale or exchange of a Share, a
Shareholder must include, among other things, his allocable share of
non-recourse indebtedness. Therefore, it is possible that the gain or other
income recognized on the sale of a Share may exceed the cash proceeds of the
sale and, in some cases, the income taxes payable with respect to the sale may
exceed such cash proceeds.
Share Purchase Program
The taxation of deemed distributions associated with optional
cash purchases is not entirely clear. Participants should be treated as having
received a distribution, upon the purchase of shares with an optional cash
payment, in an amount equal to the excess, if any, of the fair market value of
the shares on the Investment Date over the amount of the optional cash payment.
Participants should be aware that the Company will treat the entire amount of
such excess value as a distribution for tax reporting purposes as a cash
distribution, which will be taxable as described above. PARTICIPANTS ARE
STRONGLY ENCOURAGED TO CONSULT THEIR OWN TAX ADVISORS IN THIS REGARD.
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<PAGE> 22
Shares acquired under the Share Purchase Program under the Plan
will have a tax basis determined as described above. The fair market value on an
Investment Date may differ from the Market Price determined under the Plan for
such shares.
A Participant's holding period for Shares acquired pursuant to
either Program under the Plan will begin on the day following the Investment
Date.
A Participant will not realize any taxable income upon receipt of
certificates for whole shares credited to the Participant's account, either upon
the Participant's request for certain of those shares or upon termination under
the Plan. A Participant will be treated as receiving a cash distribution from
the Company upon receipt, following termination of participation in the Plan, of
a cash payment for any fractional share equivalent credited to the Participant's
account. Such distribution will be taxed as described above.
DIVIDENDS
In order to accommodate the provisions of this Plan, the Company
anticipates that Record Dates will normally be the last day of each calendar
quarter. The Company anticipates that dividends will be payable generally on the
15th day of the month subsequent to such Record Dates.
PLAN OF DISTRIBUTION
The Plan Administrator will either purchase Shares in open market
transactions or purchase Shares directly from the Company through the Plan. The
Company may sell Shares to owners of shares (including brokers or dealers) who,
in connection with any resales of such shares, may be deemed to be underwriters.
Such shares, including shares acquired pursuant to waivers granted with respect
to the Share Purchase Program of the Plan, may be resold in market transactions
(including coverage of short positions) on any national security exchange on
which Shares trade or in privately negotiated transactions. Under certain
circumstances, it is expected that a portion of the Shares available for
issuance under the Plan will be issued pursuant to such waivers. The difference
between the price such owners pay to the Company for Shares acquired under the
Plan, after deduction of the applicable discount from the Market Price, and the
price at which such shares are resold, may be deemed to constitute underwriting
commissions received by such owners in connection with such transactions.
Subject to the availability of Shares registered for issuance
under the Plan, there is no total maximum number of Shares that can be issued
pursuant to the reinvestment of dividends. From time to time, financial
intermediaries may engage in positioning transactions in order to benefit from
the discount from the Market Price of Shares acquired through the reinvestment
of dividends under the Plan.
The Company will pay any and all brokerage commissions and
related expenses incurred in connection with purchases of Shares under the Plan.
Upon withdrawal by a Participant from the Plan by the sale of Shares held under
the Plan, the Participant will receive
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<PAGE> 23
the proceeds of such sale less a nominal fee per transaction paid to the Plan
Administrator (if such resale is made by the Plan Administrator at the request
of a Participant), any related brokerage commissions and any applicable transfer
taxes.
Shares may not be available under the Plan in all states. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, any Shares or other securities in any state or any other jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
LEGAL MATTERS
The validity of the Shares offered hereby and certain legal and
tax matters will be passed upon by Reed Smith Shaw & McClay, Philadelphia, PA.
EXPERTS
The balance sheet of the Company as of August 31, 1997 and the
combined balance sheets of the Corporate Property Associates Partnerships as of
December 31, 1996 and 1995 and the related combined statements of income,
partners' capital and cash flows for the three year period ended December 31,
1996 have been incorporated herein in reliance on the reports of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
GLOSSARY
"AUTHORIZATION FORM" means the form submitted by a shareholder
indicating his or her desire to enroll in the Plan and the preferences relating
to such enrollment.
"BENEFICIAL OWNERS" means shareholders who beneficially own
Shares that are registered in a name other than their own (for example, in the
name of a bank, broker or other nominee).
"BUSINESS DAY" means any day other than Saturday, Sunday or legal
holiday on which the NYSE or another applicable securities exchange is closed or
a day on which the Plan Administrator is authorized or obliged by law to close.
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" means Carey Diversified LLC, a Delaware limited
liability company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"INVESTMENT DATE" means, with respect to Shares acquired pursuant
to a dividend reinvestment, in the case of Shares acquired directly from the
Company, the quarterly dividend payment date declared by the Board of Directors
(unless such date is not a business day in which case it is the first business
day immediately thereafter) or, in the case of open market purchases,
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<PAGE> 24
the date or dates of actual investment, but not later than 10 business days
following the dividend payment date; and with respect to Shares acquired
pursuant to an optional cash payment, in the case of Shares acquired directly
from the Company, on or about the 21st day of each month; or in the case of open
market purchases, the last business day of each month.
"MARKET PRICE" means, with respect to reinvested dividends and
optional cash payments that do not exceed $25,000 for shares acquired directly
from the Company, the average high and low sales prices, computed to three
decimal places, of the Shares on the NYSE or another applicable securities
exchange, as reported in the Wall Street Journal, during the Pricing Period.
With respect to reinvested dividends and optional cash payments that do not
exceed $25,000 for shares to be acquired on the open market, Market Price means
the weighted average of the actual prices paid, computed to three decimal
places, for all of the Shares purchased by the Plan Administrator with all
Participants' reinvested dividends and optional cash payments for the related
month.
"NYSE" means the New York Stock Exchange.
"OPTIONAL CASH PAYMENT DUE DATE" means for optional cash payments
between $500 and $25,000 per month, one business day prior to the Investment
Date and for purchases in excess of $25,000, one business day prior to the first
day of the relevant Pricing Period. See Schedule A.
"PARTICIPANT" means a Record Owner of the Company's Shares or a
current non-shareholder who wishes to participate in the Plan upon making an
initial investment in the Shares offered herein.
"PLAN" means the Carey Diversified LLC Dividend Reinvestment and
Share Purchase Plan.
"PLAN ADMINISTRATOR" means a plan administrator that administers
the Plan, keeps records, sends statements of account to each Participant and
performs other duties related to the Plan. Mellon Bank, N.A., currently serves
as Plan Administrator of the Plan.
"PLAN SHARES" means all Shares held in a Participant's account
under the Plan, including shares purchased through the Share Purchase Program
and all whole and fractional shares credited to a Participant's Plan account as
the result of reinvestment of dividends on shares of the Company's Shares
enrolled in the Dividend Reinvestment Program.
"PRICING PERIOD" means the 10 days on which the NYSE or another
applicable securities exchange is open and for which trades in the Shares are
reported immediately preceding the relevant Investment Date, or, if no trading
occurs in the Shares on one or more of such days, for the 10 days immediately
preceding the Investment Date for which trades are reported.
"RECORD DATE" means, with respect to reinvestments of dividends,
the Record Date declared by the Board of Directors for such dividend.
-22-
<PAGE> 25
"RECORD OWNER" means shareholders who own shares of the Shares in
their own names.
"REQUEST FOR WAIVER" means a written request from a Participant
to make optional cash payments in excess of $25,000.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARE" means a limited liability company interest in the Company
representing an interest in the income, loss and capital of the Company.
"THRESHOLD PRICE" means the minimum price, if any, established by
the Company that the average high and low prices of the Shares must equal or
exceed during each day of the Pricing Period for optional cash payments made
pursuant to Requests for Waiver.
"WAIVER DISCOUNT" means the discount from the Market Price
applicable to optional cash payments made pursuant to Requests for Waiver. Such
discount will vary between 0% and 5% of the Market Price.
-23-
<PAGE> 26
SCHEDULE A
OPTIONAL CASH PAYMENTS
Purchase between $500 and $2,500 per month
<TABLE>
<CAPTION>
OPTIONAL CASH PAYMENT INVESTMENT
DUE DATE DATE (1)
- - ---------------------- ---------------------
<S> <C>
March 20, 1998 March 23, 1998
April 20, 1998 April 21, 1998
May 20, 1998 May 21, 1998
June 19, 1998 June 22, 1998
July 20, 1998 July 21, 1998
August 20, 1998 August 21, 1998
September 18, 1998 September 21, 1998
October 20, 1998 October 21, 1998
November 20, 1998 November 23, 1998
December 18, 1998 December 21, 1998
January 20, 1999 January 21, 1999
February 19, 1999 February 22, 1999
March 19, 1999 March 22, 1999
April 20, 1999 April 21, 1999
May 20, 1999 May 21, 1999
June 18, 1999 June 21, 1999
July 20, 1999 July 21, 1999
August 20, 1999 August 23, 1999
September 20, 1999 September 21, 1999
October 20, 1999 October 21, 1999
November 19, 1999 November 22, 1999
December 20, 1999 December 21, 1999
</TABLE>
-24-
<PAGE> 27
PURCHASES OVER $2,500
<TABLE>
<CAPTION>
THRESHOLD PRICE REQUEST FOR OPTIONAL CASH PRICING PERIOD INVESTMENT
& WAIVER WAIVER DUE DATE PAYMENT COMMENCEMENT DATE (1)
DISCOUNT SET DATE DUE DATE DATE
- - ----------------- --------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
February 28, 1998 March 4, 1998 March 6, 1998 March 9, 1998 March 23, 1998
March 30, 1998 April 1, 1998 April 3, 1998 April 6, 1998 April 21, 1998
April 29, 1998 May 4, 1998 May 6, 1998 May 7, 1998 May 21, 1998
May 29, 1998 June 3, 1998 June 5, 1998 June 8, 1998 June 22, 1998
June 29, 1998 July 2, 1998 July 6, 1998 July 7, 1998 July 21, 1998
July 30, 1998 August 4, 1998 August 6, 1998 August 7, 1998 August 21, 1998
August 27, 1998 Sept. 1, 1998 Sept. 3, 1998 Sept. 4, 1998 Sept. 21, 1998
Sept. 29, 1998 Oct. 2, 1998 Oct. 6, 1998 Oct. 7, 1998 Oct. 21, 1998
Oct. 30, 1998 Nov. 4, 1998 Nov. 6, 1998 Nov. 9, 1998 Nov. 23, 1998
Nov. 27, 1998 Dec. 2, 1998 Dec. 4, 1998 Dec. 7, 1998 Dec. 21, 1998
Dec. 29, 1998 Dec. 31, 1998 January 5, 1999 January 6, 1999 January 21, 1999
January 29, 1999 February 2, 1999 February 4, 1999 February 5, 1999 February 22, 1999
February 26, 1999 March 3, 1999 March 5, 1999 March 8, 1999 March 22, 1999
March 29, 1999 April 1, 1999 April 6, 1999 April 7, 1999 April 21, 1999
April 29, 1999 May 4, 1999 May 6, 1999 May 7, 1999 May 21, 1999
May 28, 1999 June 2, 1999 June 4, 1999 June 7, 1999 June 21, 1999
June 28, 1999 July 1, 1999 July 6, 1999 July 7, 1999 July 21, 1999
July 30, 1999 August 4, 1999 August 6, 1999 August 9, 1999 August 23, 1999
August 27, 1999 Sept. 1, 1999 Sept. 3, 1999 Sept. 7, 1999 Sept. 21, 1999
Sept. 29, 1999 October 4, 1999 October 6, 1999 October 7, 1999 October 21, 1999
October 29, 1999 Nov. 3, 1999 Nov. 5, 1999 Nov. 8, 1999 Nov. 22, 1999
Nov. 29, 1999 Dec. 2, 1999 Dec. 6, 1999 Dec. 7, 1999 Dec. 21, 1999
</TABLE>
-25-
<PAGE> 28
DIVIDEND REINVESTMENTS (2)
<TABLE>
<CAPTION>
RECORD DATE INVESTMENT DATE
------------------ -----------------
<S> <C>
March 31, 1998 April 15, 1998
June 30, 1998 July 15, 1998
September 30, 1998 October 15, 1998
December 31, 1998 January 15, 1999
March 31, 1999 April 15, 1999
June 30, 1999 July 15, 1999
September 30, 1999 October 15, 1999
December 31, 1999 January 18, 2000
</TABLE>
(1) The Investment Date may be as late as the last day of the
relevant month if purchases are made on the open market.
(2) The dates indicated are those expected to be applicable under the
Plan with respect to future dividends, if and when declared by
the Board of Directors. The actual record date and payment dates
will be determined by the Board of Directors.
-26-
<PAGE> 29
TABLE OF CONTENTS
Page
Available Information................................................. 3
Incorporation of Certain Information by Reference..................... 3
Carey Diversified LLC................................................. 4
Use of Proceeds....................................................... 5
Summary of Plan....................................................... 5
The Plan.............................................................. 6
Purpose of the Plan................................................... 6
Options Available to Participants..................................... 7
Advantages and Disadvantages of the Plan.............................. 7
Administration of the Plan............................................ 8
Dividend Reinvestment Program......................................... 9
Share Purchase Program................................................ 12
Source of Shares Purchased Under the Plan............................. 16
Report to Participants................................................ 17
Certificates for Shares............................................... 17
Other Information..................................................... 18
Certain Federal Income Tax Considerations............................. 20
Dividends............................................................. 22
Plan of Distribution.................................................. 22
Legal Matters......................................................... 23
Experts............................................................... 23
Glossary.............................................................. 23
5,000,000 Listed Shares
CD
CAREY DIVERSIFIED LLC
PROSPECTUS
February 11, 1998
-27-
<PAGE> 30
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the issuance
and distribution of the securities being registered are as set forth below. All
such expenses, except for the SEC registration and filing fees, are estimated:
<TABLE>
<S> <C>
SEC Registration............................................ 31,388
Legal Fees and Expenses..................................... 15,000
Accounting Fees and Expenses................................ 5,000
Printing and Engraving Fees................................. 15.000
Miscellaneous............................................... 15,000
----------
Total....................................................... $81,388
</TABLE>
Item 15. Indemnification of Directors and Officers.
No Directors or officers of the Company shall be liable, responsible or
accountable in damages or otherwise to the Company or any of the Shareholders
for any act or omission performed or omitted by him or her, or for any decision,
except in the case of fraudulent or illegal conduct of such Person. The fact
that an action, omission to act or decision is taken on the advice of counsel
for the Company shall be evidence of good faith and lack of fraudulent conduct.
To the fullest extent permitted by law, all Directors and officers of
the Company shall be entitled to indemnification from the Company for any loss,
damage or claim (including any reasonable attorney's fees incurred by such
person in connection therewith) due to any act or omission made by him or her,
except in the case of fraudulent or illegal conduct of such Person; provided,
that any indemnity shall be paid out of the assets of the Company only (or any
insurance proceeds available therefor), and no Shareholder shall have any
personal liability on account thereof.
The termination of any action, suit or proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Person acted fraudulently or
illegally.
The indemnification provided by the Operating Agreement is not
exclusive of any other rights to which those indemnified may be entitled under
any agreement, vote of Shareholders or Directors, or otherwise, and shall inure
to the benefit of the heirs executors and administrators of such a Person.
Any repeal or modification of the Indemnification provisions shall not
adversely affect any right or protection of a Director or officer of the Company
existing at the time of such repeal of modifications.
<PAGE> 31
The Company may, if the Board of Directors of the Company deems it
appropriate in its sole discretion, obtain insurance for the benefit of the
Company's Directors and officers, or enter into indemnification agreements with
such Directors and officers, relating to the liability of such Persons.
Item 16. Exhibits
5.1 Opinion of Reed Smith Shaw & McClay LLP, a professional
corporation, as to legality (including consent of such firm)
8.1 Opinion of Reed Smith Shaw & McClay LLP as to certain tax
matters (including consent of such firm)
23.1 Consent of Reed Smith Shaw & McClay LLP (included in Exhibit
5.1 and 8.1)
23.4 Consent of Coopers & Lybrand L.L.P., independent accountants
24.1 Power of Attorney (set forth on signature page)
99.1 Form of Request for Waiver form
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained
<PAGE> 32
in the periodic reports filed by the Registrant pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of Prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of Prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of this Registration Statement as of the time
it was declared effective; and (2) for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment that contains a
form of Prospectus shall be deemed to be a new Registration Statement relating
to the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities begin
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE> 33
POWERS OF ATTORNEY AND SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York on the 11th day of
February, 1998.
CAREY DIVERSIFIED LLC
By: /s/ Francis J. Carey
--------------------------------
Francis J. Carey, Chairman and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Francis J. Carey, Gordon F. DuGan,
John J. Park and Steven M. Berzin his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to this Registration Statement, and to file the same, with all exhibit thereto,
and any other documents in connection therewith, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
Signatures Title Date
/s/Francis J. Carey Chairman of the Board and Chief February 11, 1998
- - ------------------- Executive Officer (Principal
Francis J. Carey Executive Officer) of the Registrant
/s/William P. Carey Director of the Registrant February 11, 1998
- - -------------------
William P. Carey
/s/Gordon F. DuGan President and Director of the February 11, 1998
- - ------------------- Registrant
Gordon F. DuGan
/s/Steven M. Berzin Vice Chairman and Director of the February 11, 1998
- - ------------------- Registrant
Steven M. Berzin
/s/Claude Fernandez Executive Vice President of the February 11, 1998
- - ------------------- Registrant
Claude Fernandez
/s/ John J. Park Executive Vice President and Chief February 11, 1998
- - ------------------- Financial Officer of the Registrant
John J. Park (Principal Financial Officer)
<PAGE> 34
/s/ Barclay G. Jones III Director February 11, 1998
- - ------------------------
Barclay G. Jones III
/s/ Donald E. Nickelson Director February 11, 1998
- - ------------------------
Donald E. Nickelson
/s/ Charles C. Townsend, Jr. Director February 11, 1998
- - ----------------------------
Charles C. Townsend, Jr.
/s/ Eberhard Faber, IV Director February 11, 1998
- - ------------------------
Eberhard Faber, IV
/s/ Lawrence R. Klein Director February 11, 1998
- - ------------------------
Lawrence R. Klein
/s/ Reginald Winssinger Director February 11, 1998
- - ------------------------
Reginald Winssinger
<PAGE> 1
[REED SMITH SHAW & MCCLAY LLP LETTERHEAD]
February 4, 1998
Carey Diversified LLC
50 Rockefeller Plaza
New York, NY 10020
Re: Dividend Reinvestment and Share Purchase Plan
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Carey Diversified LLC, a Delaware
limited liability company (the "Company"), in connection with the matters set
forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of executed or
conformed counterparts, or copies otherwise proved to our satisfaction, of the
following:
(a) The Certificate of Formation of the Company, dated October
14, 1996 as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on October 15, 1996;
(b) The Limited Liability Company Agreement of the Company,
dated as of October 15, 1996;
(c) The Certificate of Amendment to Certificate of Formation
of the Company, dated July 15, 1997, as filed in the office of the Secretary of
State on July 15, 1997.
(d) The First Amendment to the Limited Liability Company
Agreement of the Company, dated as of July 15, 1997;
(e) The Amended and Restated Limited Liability Company
Agreement of the Company, dated as of October 13, 1997 (the "Agreement");
<PAGE> 2
REED SMITH SHAW & MCCLAY LLP
Carey Diversified LLC
February 4, 1998
Page 2
(f) The Bylaws of the Company , adopted on October 13, 1997
(the "Bylaws") (the Agreement, together with the Bylaws, is hereinafter referred
to as the "LLC Agreement");
Initially capitalized terms used herein and not otherwise
defined are used as defined in the LLC Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (f) above.
We have assumed that there exists no provision in any document that we have not
reviewed that is inconsistent with the opinions stated herein. We have conducted
no independent factual investigation of our own but rather have relied solely
upon the foregoing documents, the statements and information set forth therein
and the additional matters recited or assumed herein, all of which we have
assumed to be true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
that (i) all signatures on documents examined by us are genuine, (ii) all
documents submitted to us as originals are authentic, and (iii) all documents
submitted to us as copies conform with the original copies of those documents.
For purposes of this opinion, we have assumed (i) that the LLC
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the admission
of members to, and the creation, operation, management and termination of, the
Company, and that the LLC Agreement has not been amended, (ii) except to the
extent provided in paragraph 1 below, the due organization or due formation, as
the case may be, and valid existence in good standing of each party to the
documents examined by us under the laws of the jurisdiction governing its
organization or formation, (iii) the legal capacity of natural persons who are
signatories to the documents examined by us, (iv) that each of the parties
(other than the Company and its officers and directors) to the documents
examined by us has the power and authority to execute and deliver, and to
perform its obligations under, such documents, (v) the due authorization,
execution and delivery by all parties thereto (other than the Company and its
officers and directors) of all documents examined by us, including the LLC
Agreement by the Managing Member and Carey Property Advisors L.P., a Delaware
limited partnership, (vi) that the Shares are issued and sold to the
Shareholders in accordance with the LLC Agreement and the Registration
Statement, and (vii) that the Shareholders will not engage in tortious or
wrongful conduct and will fulfill all of their obligations as set forth in the
LLC Agreement.
<PAGE> 3
REED SMITH SHAW & MCCLAY LLP
Carey Diversified LLC
February 4, 1998
Page 3
This opinion is limited to the laws of the State of Delaware
and we have not considered and express no opinion on the laws of any other
jurisdiction, including federal laws and rules and regulations relating thereto.
Our opinions are rendered only with respect to Delaware laws and rules,
regulations and orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
(1) Upon the issuance and delivery of the Shares in accordance
with the terms set forth in the Registration Statement, the Shares will be
validly issued and, subject to the qualifications set forth in paragraph 2
below, fully paid and non-assessable limited liability company interests in the
Company.
(2) The Shareholders will not be obligated personally for any
of the debts, obligations or liabilities of the Company, whether arising in
contract, tort or otherwise, solely by reason of being a member of the Company,
except that a Shareholder may be obligated to repay any funds wrongfully
distributed to it.
Very truly yours,
/s/ REED SMITH SHAW & McCLAY LLP
----------------------------------
REED SMITH SHAW & McCLAY LLP
<PAGE> 1
[REED SMITH SHAW & MCCLAY LLP LETTERHEAD]
February 11, 1998
Carey Diversified LLC
50 Rockefeller Plaza
New York, New York 10020
Gentlemen:
You have requested our opinions with respect to certain Federal income
tax matters in connection with the Dividend Reinvestment and Share Purchase Plan
of Carey Diversified LLC (the "Company") (the "Plan"). The consolidation by
merger (the "Consolidation") of nine public limited partnerships in the
Corporate Property Associates series of limited partnerships is more fully
described in the Registration Statement on Form S-4, Registration No. 333-37901
dated October 16, 1997(the "Registration Statement"), and the Prospectus
included therein filed by Carey Diversified LLC (the "Company" or "LLC") with
the Securities and Exchange Commission. All terms used herein have the
respective meanings set forth in the Prospectus or Plan.
In connection with the Registration Statement, we have acted as your
counsel and have assisted in the preparation of the tax summary for such
Registration Statement. In rendering or confirming the opinions stated below and
referred to in the Plan and Registration Statement, we have examined and relied
upon the following:
1. Amended and Restated Agreements of Limited Partnership for the
Partnerships;
2. Amended and Restated Limited Liability Company Agreement of Carey
Diversified LLC (hereinafter the "Operating Agreement");
3. Bylaws of Carey Diversified LLC;
4. The Prospectus, Registration Statement and Plan; and
5. Such other documents, records and instruments as we have deemed
necessary in order to permit us to render and confirm the opinions referred to
herein.
<PAGE> 2
REED SMITH SHAW & MCCLAY LLP
Carey Diversified LLC
February 11, 1998
Page 2
In our examination, in those cases in which we have not been involved
directly in the preparation, execution or the filing of a document, we have
assumed that (i) the document reviewed by us is an original document, or a true
and accurate copy of the original document, and has not been subsequently
amended, (ii) the signatures on each original document are genuine, and (iii)
each party who executed the document had proper authority and capacity.
For purposes of rendering and confirming the opinions stated below and
referred to in the Plan and Prospectus, we have assumed and have relied on the
following:
(a) The truth and accuracy of the statements contained in the Plan and
Prospectus;
(b) The representations, views and beliefs of the Manager referred to
in the "Certain Federal Income Tax Considerations" section of the Plan and the
"Income Tax Consequences" section of the Prospectus and elsewhere in the Plan
and Prospectus are true, correct and accurate.
With respect to opinions (1) and (2) rendered below, we have
additionally assumed and have relied on the following:
(a) That the Partnerships have been organized and have been and will be
operated at all times during their existence in accordance with the provisions
of the Partnership Agreements, the description of their organization and
operation contained in the Prospectus, and all applicable state statutes
pertaining to limited partnerships, and the Partnership Agreements will not be
amended or modified in any manner which would adversely affect the
classification of the Partnerships as a partnership for Federal income tax
purposes;
(b) That the Company will be organized and operated at all times during
its existence in accordance with the provisions of the Operating Agreement, the
description of its organization and operation contained in the Prospectus, and
all applicable state statutes pertaining to Limited Liability Companies, and the
Operating Agreement will not be amended or modified in any manner which would
adversely affect the classification of the Company as a partnership for Federal
income tax purposes;
(c) That the Company will satisfy the gross income requirements of Code
Section 7704; and
<PAGE> 3
REED SMITH SHAW & MCCLAY LLP
Carey Diversified LLC
February 11, 1998
Page 3
(d) That each Partnership will satisfy the gross income requirements of
Section 7704 of the Code and/or will not be a "publicly traded partnership" as
that term is defined in Section 7704 of the Code.
Our opinions stated below and confirming those referred to in the Plan
are based upon the California Revised Limited Partnership Act, the Delaware
Limited Liability Company Act, the Delaware Revised Uniform Limited Partnership
Act, the Code, final and proposed Treasury Regulations, legislative history,
published administrative positions of the IRS and court decisions, all as of the
date of this letter. We can furnish no assurance that changes in the relevant
statutes, regulations, administrative positions or court decisions will not be
made in the future which would modify or supersede our opinions.
Additionally, our opinions are not binding on the IRS or the courts and
there can be no assurance that the IRS will not assert positions contrary to our
opinions or that a court considering the issues would not agree with the IRS.
Our opinions represent our conclusions based upon the documents, facts and
assumptions referred to above, any modifications to or changes of which might
affect our opinions. Although we have made such inquiries and performed such
investigation as we have deemed necessary to fulfill our professional
responsibilities as counsel, we have not attempted to verify independently each
of the facts and assumptions referred to above. On the other hand, nothing has
come to our attention which would cause us to question such facts and
assumptions.
In rendering our opinions stated below and confirming those referred to
in the Plan and Prospectus, we have considered the relevant professional
standards, including those expressed in American Bar Association Formal Opinion
346 (Revised), January 29, 1982, and have considered all material tax issues
which have a reasonable probability of being challenged by the IRS. Furthermore,
although we believe that the Plan and Prospectus contains full and fair
disclosure of such material tax issues, we can provide no assurance that the IRS
will not challenge the Federal income tax positions taken by the Company, the
Partnership or the Partners on grounds not disclosed in the Plan and Prospectus.
Finally, we express no opinion on any Federal income tax matter or
other matter except those set forth or confirmed below. Specifically, for the
reasons set forth in the Prospectus, it is
<PAGE> 4
REED SMITH SHAW & MCCLAY LLP
Carey Diversified LLC
February 11, 1998
Page 4
not possible for us to reach a conclusion as to the likely outcome (either
favorable or unfavorable) of certain Federal income tax matters, including but
not limited to: (1) whether the sale or disposition of any asset of the Company
or a Subsidiary Partnership might, at that time, be treated as being to a
customer of the Company or Subsidiary Partnership and in the ordinary course of
such entity's trade or business, thereby resulting in the entire gain recognized
upon such sale or disposition being treated as ordinary income rather than
capital gain; (2) whether the Company's or a Subsidiary Partnership's allocation
of basis between land and depreciable improvements will be respected for
purposes of computing depreciation or cost recovery (ACRS) deductions and
whether the Company's or any Subsidiary Partnership's allocation between real
estate assets and stock or warrants will be respected; (3) whether expenses
incurred by the Company prior to the time it was or is engaged in an active
trade or business will be deductible or required to be capitalized, and if the
latter, whether amortizable; and (4) whether the Company's or the Subsidiary
Partnerships' allocations of tax items have substantial economic effect.
Based upon and subject to the foregoing:
1. We are of the opinion that the Company and the Partnerships will be
classified as partnerships and not as associations taxable as corporations for
Federal income tax purposes.
2. Although the discussions set forth under the caption "Certain
Federal Income Tax Considerations" in the Plan and "Income Tax Consequences" in
the Prospectus do not purport to discuss all possible Federal income tax
consequences of the acquisition and ownership of the Company's shares acquired
under the Plan, such discussion constitutes, in all material respects, an
accurate summary of the Federal income tax considerations that are likely to be
material to a participant in the Plan.
Other than as expressly stated above, we express no opinion on any
issue relating to the Company or to any investment therein or under any law
other than the Federal income tax laws.
<PAGE> 5
REED SMITH SHAW & MCCLAY LLP
Carey Diversified LLC
February 11, 1998
Page 5
We hereby consent to the use of this letter as an exhibit to the Plan
and to the reference of this firm in the Prospectus in "Legal Matters".
Very truly yours,
/s/ REED SMITH SHAW & McCLAY LLP
-----------------------------------
REED SMITH SHAW & McCLAY LLP
WLK/fgy
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Carey Diversified LLC on Form S-3 (File No. 333- ) of our report dated
March 22, 1997, on our audits of the combined financial statements and
financial statement schedule of Corporate Property Associates Partnerships as
of December 31, 1996 and our report dated October 10, 1997, on our audit of the
balance sheet of Carey Diversified LLC as of August 31, 1997 which reports are
included in the Consent Solicitation Statement Prospectus/Registration
Statement on Form S-4 of Carey Diversified LLC. We also consent to the
reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand LLP
New York, New York
February 10, 1998
<PAGE> 1
REQUEST FOR WAIVER
CAREY DIVERSIFIED LLC DIVIDEND REINVESTMENT
AND SHARE PURCHASE PLAN
This form is to be used by Participants in the Carey Diversified LLC ("Carey
Diversified") Dividend Reinvestment and Share Purchase Plan (the "Plan") who are
requesting authorization from Carey Diversified to make an optional cash
investment under the Plan in excess of the $25,000 monthly maximum.
A new form must be completed each month the Participant wishes to make an
optional cash investment in excess of the $25,000 monthly maximum. This form
will not be accepted by Carey Diversified unless it is completed in its
entirety.
The Participant submitting this form hereby certifies that (a) the information
contained herein is true and correct as of the date of this form; (b) the
Participant has received a current copy of the Prospectus relating to the Plan
(the "Prospectus") and (c) the Participant must submit a copy of this Request
for Waiver (approved by Carey Diversified) to Mellon Bank, N.A. at the same time
an Authorization Form and the optional cash investment are submitted by the
Participant.
For information regarding the discount (if any) and threshold price (if any)
that may be applicable to optional cash investments made pursuant to an approved
Request for Waiver, please call (212) within five (5) business days
before the applicable Optional Cash Payment Due Date. THIS FORM SHOULD THEN BE
COMPLETED AND RETURNED (VIA FACSIMILE) TO CAREY DIVERSIFIED LLC, ATTENTION:
CHIEF FINANCIAL OFFICER, FAX NUMBER (212) 977-3022, by 10:00 a.m. Eastern Time
no later than two (2) business days prior to the Optional Cash Payment Due Date
for the applicable Investment Date. If approved by the Company, the approved
copy of this form must be returned with full payment on the Optional Cash
Payment Due Date. See the Prospectus for further information.
- - --------------------------------------------------------------------------------
Date Optional Cash Investment Amount Requested
Participant's Signature Social Security of Tax I.D. Number
Participant's Signature Street Address
<PAGE> 2
Print Name as it Appears on Share City State Zip
Certificate (or name of Beneficial
Owner)
Print Name as it Appears on Share
Certificate (or Phone Number,
Account Number and Location of
Shares Held by Beneficial Owner)
Method of Payment: Check Money Order Other* (Specify)
*Payment by other than Check or Money Order requires approval of Carey
Diversified
===============================================================================
APPROVED BY CAREY DIVERSIFIED LLC
By:
Optional Cash Investment Account Approved
Method of Payment Approved: Name:
Threshold Price, if any: Title:
Applicable Waiver Discount: Date:
- - --------------------------------------------------------------------------------
This Request for Waiver may be withdrawn by the Participant in accordance with
the terms of the Plan.
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