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CAREY DIVERSIFIED
5,000,000 LISTED SHARES
DIVIDEND REINVESTMENT
AND
SHARE PURCHASE PLAN
PROSPECTUS
February 11, 1998
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CAREY DIVERSIFIED
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:
o 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.
o 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.
o 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.
o 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.
o 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.
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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 March 11, 1998.
Carey Diversified LLC, 50 Rockefeller Plaza, New York, NY 10020
212-492-1100 Fax 212-977-3022
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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. (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.
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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 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:
o Seek additional investment and other opportunities that leverage core
management skills (which include in-depth credit analysis, asset
valuation and sophisticated structuring techniques);
o optimize the current portfolio of properties through expansion of
existing properties, timely dispositions and favorable lease
modifications;
o refinance existing debt; and
o increase the Company's access to capital.
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.
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THE PLAN
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 Share 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 18.
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.
The Plan was adopted by the Board of Directors on February 11, 1998 and
became effective on that date. 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.
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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 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.
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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 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.
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
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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.
Consult with your brokerage firm 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 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
30 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.
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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. See the Glossary for a definition of Market Price. 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.
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.
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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.
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
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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.
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. See the Glossary for the definition of Market Price.
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 two 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
two 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 (212) 977-3024 or by mail at
50 Rockefeller Plaza, New York, NY 10020. At least two 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. This determination will be made by the Company
in its discretion after a review of such considerations as transaction costs,
current market conditions, the level of participation
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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 (212) 492-8921 to hear a pre-recorded
message. A Request for Waiver must then be received by the Company via facsimile
at (212) 977-3024 for that month by noon, New York time on the business day
before the Optional Cash Due Date. The Company will then notify the Participant
if the Request for Waiver has been approved no later than 5:00 p.m. New York
time on the business day prior to the Optional Cash Due Date. See Schedule A for
the applicable dates.
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
participation of the Participant in the Dividend Reinvestment Program, 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.
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
11
<PAGE>
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 high and low price on the NYSE
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, 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. 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. 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.
12
<PAGE>
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 (212)
492-1100.
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.
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 provides 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,
13
<PAGE>
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 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.
14
<PAGE>
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) 200-8690
Please mention Carey Diversified LLC and this Plan in all correspondence.
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
15
<PAGE>
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 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,
16
<PAGE>
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.
Shares acquired under the Share Purchase Program will have a tax basis
determined as described above. The fair market value of an Investment Date may
differ from the Market Price determined under the Plan for such shares.
A Participant's holding period for Shares acquired 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 the proceeds of such sale less a nominal fee per
transaction paid to the Plan Administrator (if such resale is made
17
<PAGE>
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 LLP, 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, 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 on the business day immediately preceding the
Investment Date. With respect to reinvested dividends and optional cash payments
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
18
<PAGE>
optional cash payments for the related month. With respect to optional cash
payment that 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 during the Pricing Period, subject to any Threshold Price
established by the Company.
"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 reinvestment of dividends, the Record
Date declared by the Board of Directors for such dividend.
"RECORD OWNER" means shareholders who own 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.
19
<PAGE>
SCHEDULE A
Optional Cash Payments
Purchase between $500 and $25,000 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>
20
<PAGE>
Purchases over $25,000
<TABLE>
<CAPTION>
Threshold Price Request for Optional Cash Pricing Period
& Waiver Waiver Due Date Payment Commencement Investment
Discount (by 12:00 Noon) Due Date Date Date (1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March 11, 1998 March 12, 1998 March 13, 1998 March 16, 1998 March 30, 1998
April 13, 1998 April 14, 1998 April 15, 1998 April 16, 1998 April 30, 1998
May 12, 1998 May 13, 1998 May 14, 1998 May 15, 1998 June 1, 1998
June 11, 1998 June 12, 1998 June 15, 1998 June 16, 1998 June 30, 1998
July 13, 1998 July 14, 1998 July 15, 1998 July 16, 1998 July 30, 1998
August 12, 1998 August 13, 1998 August 14, 1998 August 17, 1998 August 31, 1998
September 11, 1998 September 14, 1998 September 15, 1998 September 18, 1998 September 30, 1998
October 13, 1998 October 14, 1998 October 15, 1998 October 16, 1998 October 30, 1998
November 11, 1998 November 12, 1998 November 13, 1998 November 16, 1998 December 1, 1998
December 11, 1998 December 14, 1998 December 15, 1998 December 16, 1998 December 31, 1998
January 13, 1999 January 14, 1999 January 15, 1999 January 19, 1999 February 2, 1999
February 10, 1999 February 11, 1999 February 12, 1999 February 16, 1999 March 2, 1999
March 11, 1999 March 12, 1999 March 15, 1999 March 18, 1999 March 30, 1999
April 13, 1999 April 14, 1999 April 15, 1999 April 16, 1999 April 30, 1999
May 12, 1999 May 13, 1999 May 14, 1999 May 17, 1999 June 1, 1999
June 11, 1999 June 14, 1999 June 15, 1999 June 16, 1999 June 30, 1999
July 13, 1999 July 14, 1999 July 15, 1999 July 16, 1999 July 30, 1999
August 11, 1999 August 12, 1999 August 13, 1999 August 16, 1999 August 30, 1999
September 13, 1999 September 14, 1999 September 15, 1999 September 16, 1999 September 30, 1999
October 13, 1999 October 14, 1999 October 15, 1999 October 18, 1999 November 1, 1999
November 11, 1999 November 12, 1999 November 15, 1999 November 16, 1999 December 1, 1999
December 13, 1999 December 14, 1999 December 15, 1999 December 16, 1999 December 31, 1999
January 12, 2000 January 13, 2000 January 14, 2000 January 18, 2000 February 1, 2000
February 11, 2000 February 14, 2000 February 15, 2000 February 16, 2000 March 2, 2000
</TABLE>
<TABLE>
<CAPTION>
Dividend Reinvestments (2)
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.
21
<PAGE>
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TABLE OF CONTENTS
Page
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Available Information 2
Incorporation of Certain Information by Reference 2
Carey Diversified LLC 3
Use of Proceeds 3
The Plan 4
Summary of Plan 4
Purpose of the Plan 4
Options Available to Participants 5
Advantages and Disadvantages of the Plan 5
Administration of the Plan 6
Dividend Reinvestment Program 6
Share Purchase Program 9
Source of Shares Purchased Under the Plan 13
Report to Participants 13
Certificates for Shares 13
Other Information 14
Certain Federal Income Tax Considerations 15
Dividends 17
Plan of Distribution 17
Legal Matters 18
Experts 18
Glossary 18
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