------------------------------------
EXCELSIOR MULTI-STRATEGY HEDGE FUND
OF FUNDS (TI 2), LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
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LIMITED LIABILITY COMPANY AGREEMENT
DATED AS OF AUGUST 31, 2009
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000 XXXX XXXXX XXXX
XXXXXXXX, XX 00000
(000) 000-0000
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
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ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS
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2.1 Formation of Limited Liability Company..............................6
2.2 Name................................................................6
2.3 Principal and Registered Office.....................................6
2.4 Duration............................................................6
2.5 Objective and Business of the Company...............................6
2.6 Board of Managers...................................................7
2.7 Members.............................................................7
2.8 Organizational Member...............................................8
2.9 Both Managers and Members...........................................8
2.10 Limited Liability...................................................8
ARTICLE III
MANAGEMENT
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3.1 Management and Control..............................................8
3.2 Actions by the Board of Managers....................................9
3.3 Officers............................................................9
3.4 Meetings of Members................................................10
3.5 Custody of Assets of the Company...................................11
3.6 Other Activities of Members and Managers...........................11
3.7 Duty of Care.......................................................11
3.8 Indemnification....................................................12
3.9 Fees, Expenses and Reimbursement...................................14
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ARTICLE IV
TERMINATION OF STATUS OF
MANAGERS, TRANSFERS AND REPURCHASES
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4.1 Termination of Status of a Manager.................................14
4.2 Removal of the Managers............................................15
4.3 Transfer of Interests of Members...................................15
4.4 Repurchase of Interests............................................16
ARTICLE V
CAPITAL
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5.1 Contributions to Capital...........................................18
5.2 Rights of Members to Capital.......................................19
5.3 Capital Accounts...................................................19
5.4 Allocation of Net Profit and Net Loss..............................20
5.5 Allocation of Certain Expenditures.................................20
5.6 Reserves...........................................................20
5.7 Tax Allocations....................................................21
5.8 Distributions......................................................22
5.9 Withholding........................................................22
ARTICLE VI
DISSOLUTION AND LIQUIDATION
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6.1 Dissolution........................................................23
6.2 Liquidation of Assets..............................................23
ARTICLE VII
ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS
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7.1 Accounting and Reports.............................................24
7.2 Determinations by the Board of Managers............................25
7.3 Valuation of Assets................................................25
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
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8.1 Amendment of Limited Liability Company Agreement...................26
8.2 Special Power of Attorney..........................................27
8.3 Notices............................................................28
8.4 Agreement Binding Upon Successors and Assigns......................28
8.5 Applicability of 1940 Act and Form N-2.............................28
8.6 Choice of Law; Arbitration.........................................29
8.7 Not for Benefit of Creditors.......................................30
8.8 Consents...........................................................30
8.9 Merger and Consolidation...........................................30
8.10 Pronouns...........................................................30
8.11 Confidentiality....................................................30
8.12 Certification of Non-Foreign Status................................31
8.13 Severability.......................................................31
8.14 Filing of Returns..................................................32
8.15 Tax Matters Partner................................................32
8.16 Section 754 Election...............................................32
8.17 Member Tax Basis...................................................33
iii
EXCELSIOR MULTI-STRATEGY HEDGE FUND OF FUNDS (TI 2), LLC
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT of Excelsior Multi-Strategy
Hedge Fund of Funds (TI 2), LLC (the "Company") is dated as of August 31, 2009
by and among Xxxx Xxxxx, Xxxx X. Xxxxx XX, Xxxxxx X. Xxxxxxx, Xx., Xxxxxxx X.
Xxxxxx and Xxxxxx X. Xxxxxx, and those persons hereinafter admitted as Members.
W I T N E S S E T H :
WHEREAS, the Company has heretofore been formed as a limited liability
company under the Delaware Limited Liability Company Act pursuant to an initial
Certificate of Formation (the "Certificate") dated and filed with the Secretary
of State of Delaware on July 24, 2009;
NOW, THEREFORE, for and in consideration of the foregoing and the
mutual covenants hereinafter set forth, it is hereby agreed as follows:
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ARTICLE I
DEFINITIONS
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For purposes of this Agreement:
1940 Act The Investment Company Act of 1940, as amended,
and the rules, regulations and orders thereunder,
as amended from time to time, or any successor
law.
Administrator The person who provides administrative services to
the Company pursuant to an administrative services
agreement.
Advisers ACT The Investment Advisers Act of 1940 and the
rules, regulations and orders thereunder, as
amended from time to time, or any successor law.
Affiliate An affiliated person of a person, as such term is
defined in the 1940 Act.
Agreement This Limited Liability Company Agreement, as
amended from time to time.
Board of Managers The Board of Managers established pursuant to
Section 2.6.
Capital Account With respect to each Member, the capital account
established and maintained on behalf of each
Member pursuant to Section 5.3 hereof.
Certificate The Certificate of Formation of the Company and
any amendments thereto as filed with the office of
the Secretary of State of Delaware.
Closing Date The first date on or as of which a Member other
than the Organizational Member is admitted to the
Company.
Code The United States Internal Revenue Code of 1986,
as amended from time to time, or any successor
law.
Company The limited liability company governed hereby, as
such limited liability company may from time to
time be constituted.
Delaware Act The Delaware Limited Liability Company Act as in
effect on the date hereof and as amended from time
to time, or any successor law.
Fiscal Period Each period commencing on the day immediately
following the last day of the preceding Fiscal
Period, and ending at the close of business on the
first to occur of the following dates:
(1) the last day of a Fiscal Year;
(2) the last day of a Taxable Year;
(3) the day preceding any day as of which a
contribution to the capital of the
Company is made pursuant to Section 5.1;
or
(4) any day (other than one specified in
clause (2) above) as of which this
Agreement provides for any amount to be
credited to or debited against the
Capital Account of any Member, other
than an amount to be credited to or
debited against the Capital Accounts of
all Members in accordance with their
respective Investment Percentages.
Fiscal Year Each period commencing on April 1 of each year and
ending on March 31 of each year (or on the date of
a final distribution pursuant to Section 6.2
hereof), unless the Board of Managers shall elect
another fiscal year for the Company.
Form N-2 The Company's Registration Statement on Form
N-2 filed with the Securities and Exchange
Commission, as amended from time to time.
Independent Managers Those Managers who are not "interested persons" of
the Company as such term is defined in the 1940
Act.
Interest The entire ownership interest in the Company at
any particular time of a Member, or other person
to whom an Interest of a Member or portion thereof
has been transferred pursuant to Section 4.3
hereof, including the rights and obligations of
such Member or other person under this Agreement
and the Delaware Act.
Investment Funds Unregistered investment funds and registered
investment companies.
Investment Managers Investment advisers who enter into advisory
agreements to manage a designated portfolio of
investments for the Company or who manage
Investment Funds in which the Company has
invested.
Investment Percentage A percentage established for each Member on the
Company's books as of the first day of each Fiscal
Period. The Investment Percentage of a Member for
a Fiscal Period shall be determined by dividing
the balance of the Member's Capital Account as of
the commencement of such Fiscal Period by the sum
of the Capital Accounts of all of the Members as
of the commencement of such Fiscal Period. The sum
of the Investment Percentages of all Members for
each Fiscal Period shall equal 100%.
Management Agreement A separate written agreement entered into by the
Company pursuant to which the Management Services
Provider provides Management Services to the
Company.
Management Services Such administrative and other services as the
Management Services Provider is required to
provide to the Company pursuant to the Management
Agreement.
Management Services The person who at any particular time provides
Provider non-investment advisory related management
services and certain administrative services to
the Company pursuant to a Management Agreement.
Manager An individual designated or elected as a manager
of the Company pursuant to the provisions of
Section 2.6 of this Agreement and who serves on
the Board of Managers of the Company.
Member Any person who shall have been admitted to the
Company as a member (including any Manager in such
person's capacity as a member of the Company but
excluding any Manager in such person's capacity as
a Manager of the Company) until the Company
repurchases the entire Interest of such person as
a member pursuant to Section 4.4 hereof or a
substituted Member or Members are admitted with
respect to any such person's entire Interest as a
member pursuant to Section 4.3 hereof; such term
includes the Management Service Provider to the
extent the Management Service Provider makes a
capital contribution to the Company and shall have
been admitted to the Company as a member.
Net Assets The total value of all assets of the Company, less
an amount equal to all accrued debts, liabilities
and obligations of the Company, calculated before
giving effect to any repurchases of Interests.
Net Profit or Net Loss The amount by which the Net Assets as of the close
of business on the last day of a Fiscal Period
exceed (in the case of Net Profit) or are less
than (in the case of Net Loss) the Net Assets as
of the commencement of the same Fiscal Period (or,
with respect to the initial Fiscal Period of the
Company, at the close of business on the Closing
Date), such amount to be adjusted to exclude any
items to be allocated among the Capital Accounts
of the Members on a basis which is not in
accordance with the respective Investment
Percentages of all Members as of the commencement
of such Fiscal Period pursuant to Sections 5.5 and
5.6 hereof.
OFFICER An individual designated as an officer of the
Company pursuant to the provisions of Section 3.3
of the Agreement and who serves as an officer of
the Company.
ORGANIZATIONAL MEMBER Xxxxxx X. Xxxx
SECURITIES Securities (including, without limitation,
equities, debt obligations, options, and other
"securities" as that term is defined in Section
2(a)(36) of the 0000 Xxx) and any contracts for
forward or future delivery of any security, debt
obligation or currency, or commodity, all manner
of derivative instruments and any contracts based
on any index or group of securities, debt
obligations or currencies, or commodities, and any
options thereon, as well as shares of or interests
in Investment Funds, including but not limited to
another Investment Fund that has the same
investment objective and substantially the same
investment policies as the Company.
SUBADVISORS Those Investment Managers for which a separate
investment vehicle has been created in which the
Investment Manager serves as general partner and
the Company is the sole limited partner and those
Investment Managers who manage the Company's
assets directly through a separate managed
account.
TAXABLE YEAR The 12-month period ending December 31 of each
year.
TRANSFER The assignment, transfer, sale, encumbrance,
pledge or other disposition of all or any portion
of an Interest, including any right to receive any
allocations and distributions attributable to an
Interest.
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ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS
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2.1 FORMATION OF LIMITED LIABILITY COMPANY.
The Board of Managers shall execute and file in accordance with the
Delaware Act any amendment to the Certificate and shall execute and file with
applicable governmental authorities any other instruments, documents and
certificates that, in the opinion of the Company's legal counsel, may from time
to time be required by the laws of the United States of America, the State of
Delaware or any other jurisdiction in which the Company shall determine to do
business, or any political subdivision or agency thereof, or that such legal
counsel may deem necessary or appropriate to effectuate, implement and continue
the valid existence and business of the Company.
2.2 NAME.
The name of the Company shall be "Excelsior Multi-Strategy Hedge Fund of
Funds (TI 2), LLC" or such other name as the Board of Managers may hereafter
adopt upon (i) causing an appropriate amendment to the Certificate to be filed
in accordance with the Delaware Act and (ii) sending notice thereof to each
Member.
2.3 PRINCIPAL AND REGISTERED OFFICE.
The Company shall have its principal office at 000 Xxxx Xxxxx Xxxx,
Xxxxxxxx, XX 00000, or at such other place designated from time to time by the
Board of Managers.
The Company shall have its registered office in Delaware at 000 Xxxxx
XxXxxx Xxxxxxx, Xxxxx, Xxxxxxxx 00000, and shall have National Corporate
Research, Ltd. as its registered agent for service of process in Delaware,
unless a different registered office or agent is designated from time to time by
the Board of Managers.
2.4 DURATION.
The term of the Company commenced on the filing of the Certificate with the
Secretary of State of Delaware and shall continue until the Company is dissolved
pursuant to Section 6.1 hereof.
2.5 OBJECTIVE AND BUSINESS OF THE COMPANY.
(a) The objective and business of the Company is to purchase, sell
(including short sales), invest and trade in Securities, on margin or otherwise,
and to engage in any financial or derivative transactions relating thereto or
otherwise. The Company may execute, deliver and perform all contracts,
agreements, subscription documents and other undertakings and engage in all
activities and transactions as may in the opinion of the Board of Managers be
necessary or advisable to carry out its objective or business. The Company shall
be operated subject to any applicable restrictions of the Bank Holding Company
Act of 1956, as amended. Subject to approval by the Board of Managers, the
Company may pursue its investment objective by investing substantially all of
its assets in another Investment Fund that has the same investment objective and
substantially the same investment policies as the Company.
(b) The Company shall operate as a closed-end, non-diversified, management
investment company in accordance with the 1940 Act and subject to any
fundamental policies and investment restrictions set forth in the Form N-2.
2.6 BOARD OF MANAGERS.
(a) The Board of Managers may, subject to the provisions of paragraphs (a)
and (b) of this Section 2.6 with respect to the number of and vacancies in the
position of Manager and the provisions of Section 3.4 hereof with respect to the
election of Managers to the Board of Managers by Members, designate any person
who shall agree to be bound by all of the terms of this Agreement as a Manager.
The names and mailing addresses of the Managers shall be set forth in the books
and records of the Company. The number of Managers shall be fixed from time to
time by the Board of Managers.
(b) Each Manager shall serve on the Board of Managers for the duration of
the term of the Company, unless his or her status as a Manager shall be sooner
terminated pursuant to Section 4.1 hereof. In the event of any vacancy in the
position of Manager, the remaining Managers may appoint an individual to serve
in such capacity, so long as immediately after such appointment at least
two-thirds (2/3) of the Managers then serving would have been elected by the
Members. The Board of Managers may call a meeting of Members to fill any vacancy
in the position of Manager, and shall do so within 60 days after any date on
which Managers who were elected by the Members cease to constitute a majority of
the Managers then serving on the Board of Managers.
(c) In the event that no Manager remains to continue the business of the
Company, the Management Services Provider shall promptly call a meeting of the
Members, to be held within 60 days after the date on which the last Manager
ceased to act in that capacity, for the purpose of determining whether to
continue the business of the Company and, if the business shall be continued, of
electing the required number of Managers to the Board of Managers. If the
Members shall determine at such meeting not to continue the business of the
Company or if the required number of Managers is not elected within 60 days
after the date on which the last Manager ceased to act in that capacity, then
the Company shall be dissolved pursuant to Section 6.1 hereof and the assets of
the Company shall be liquidated and distributed pursuant to Section 6.2 hereof.
2.7 MEMBERS.
The Board of Managers may admit one or more Members as of the first day of
each month or more or less frequently in the sole discretion of the Board of
Managers. Subject to the foregoing terms, Members may be admitted to the Company
subject to the condition that each such Member shall execute an appropriate
signature page of this Agreement or of the Company's subscription agreement
pursuant to which such Member agrees to be bound by all the terms and provisions
hereof. The Board of Managers may in its absolute discretion reject any
subscription for Interests. The admission of any person as a Member shall be
effective upon the revision of the books and records of the Company to reflect
the name and the contribution to the capital of the Company of such additional
Member.
2.8 ORGANIZATIONAL MEMBER.
The initial contribution of capital to the Company by the Organizational
Member shall be represented by an Interest, which Interest shall have the same
rights as other Interests.
2.9 BOTH MANAGERS AND MEMBERS
A Member may at the same time be a Manager and a Member, in which event
such Member's rights and obligations in each capacity shall be determined
separately in accordance with the terms and provisions hereof or as provided in
the Delaware Act.
2.10 LIMITED LIABILITY
Except as provided under applicable law, a Member shall not be liable for
the Company's debts, obligations and liabilities in any amount in excess of the
Capital Account balance of such Member, plus such Member's share of
undistributed profits and assets. Except as provided under applicable law, a
Manager shall not be liable for the Company's debts, obligations and
liabilities.
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ARTICLE III
MANAGEMENT
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3.1 MANAGEMENT AND CONTROL.
(a) Management and control of the business of the Company shall be vested
in the Board of Managers, which shall have the right, power and authority, on
behalf of the Company and in its name, to exercise all rights, powers and
authority of Managers under the Delaware Act and to do all things necessary and
proper to carry out the objective and business of the Company and their duties
hereunder. No Manager shall have the authority individually to act on behalf of
or to bind the Company except within the scope of such Manager's authority as
delegated by the Board of Managers. The parties hereto intend that, except to
the extent otherwise expressly provided herein, (i) each Manager shall be vested
with the same powers, authority and responsibilities on behalf of the Company as
are customarily vested in each director of a Delaware corporation and (ii) each
Independent Manager shall be vested with the same powers, authority and
responsibilities on behalf of the Company as are customarily vested in each
director of a closed-end management investment company registered under the 1940
Act that is organized as a Delaware corporation who is not an "interested
person" of such company as such term is defined in the 1940 Act. During any
period in which the Company shall have no Managers, the Management Services
Provider shall continue to serve as the Management Services Provider to the
Company and to provide the Management Services to the Company.
(b) Each Member agrees not to treat, on such Member's personal income tax
return or in any claim for a tax refund, any item of income, gain, loss,
deduction or credit in a manner inconsistent with the treatment of such item by
the Company. The Board of Managers shall have the exclusive authority and
discretion to make any elections required or permitted to be made by the Company
under any provisions of the Code or any other revenue laws.
(c) Members shall have no right to participate in and shall take no part in
the management or control of the Company's business and shall have no right,
power or authority to act for or bind the Company. Members shall have the right
to vote on any matters only as provided in this Agreement or on any matters that
require the approval of the holders of voting securities under the 1940 Act or
as otherwise required in the Delaware Act.
(d) The Board of Managers may delegate to any other person any rights,
power and authority vested by this Agreement in the Board of Managers to the
extent permissible under applicable law, and may appoint persons to serve as
Officers.
3.2 ACTIONS BY THE BOARD OF MANAGERS.
(a) Unless provided otherwise in this Agreement, the Board of Managers
shall act only: (i) by the affirmative vote of a majority of the Managers
(including the vote of a majority of the Independent Managers if required by the
0000 Xxx) present at a meeting duly called at which a quorum of the Managers
shall be present (in person or, if in person attendance is not required by the
1940 Act, by telephone) or (ii) by unanimous written consent of all of the
Managers without a meeting, if permissible under the 0000 Xxx.
(b) The Board of Managers may designate from time to time a Principal
Manager who shall preside at all meetings. Meetings of the Board of Managers may
be called by the Principal Manager or by any two Managers, and may be held on
such date and at such time and place as the Board of Managers shall determine.
Each Manager shall be entitled to receive written notice of the date, time and
place of such meeting within a reasonable time in advance of the meeting. Notice
need not be given to any Manager who shall attend a meeting without objecting to
the lack of notice or who shall execute a written waiver of notice with respect
to the meeting. Managers may attend and participate in any meeting by telephone
except where in person attendance at a meeting is required by the 1940 Act. A
majority of the Managers shall constitute a quorum at any meeting.
3.3 OFFICERS.
(a) The Board of Managers may elect one or more Officers. The Board of
Managers may also delegate to an Officer the authority to appoint, remove or fix
the duties, compensation or terms of office of, one or more other Officers as
the Board of Managers shall at any time and from time to time deem to be
advisable. A person holding more than one office may not act in more than one
capacity to execute, acknowledge or verify on behalf of the Company any
instrument required by law to be executed, acknowledged and verified by more
than one Officer. No Officer need also be a Manager.
(b) Each Officer shall hold office until his successor is elected or
appointed or until his earlier displacement from office by resignation, removal
or otherwise; provided, that if the term of office of any Officer shall have
been fixed by the Board of Managers, or by an Officer acting under authority
delegated by the Board of Managers, such Officer shall cease to hold such office
no later than the date of expiration of such term, regardless of whether any
other person shall have been elected or appointed to succeed him. Any Officer
may resign at any time by written notice to the Company. Any Officer may be
removed at any time by the Board of Managers or by an Officer acting under
authority delegated by the Board of Managers if in its or his judgment the best
interest of the Company would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an Officer shall not of itself create contract rights
between the Company and such Officer.
(c) If the office of any Officer becomes vacant for any reason, the vacancy
may be filled by the Board of Managers or by the Officer acting under authority
delegated by the Board of Managers. Each Officer elected or appointed to fill a
vacancy shall hold office for the balance of the term for which his predecessor
was elected or appointed.
(d) All Officers as between themselves and the Company shall have such
powers, perform such duties and be subject to such restrictions, if any, in the
management of the Company as may be provided in this Agreement or, to the extent
not so provided, as may be prescribed by the Board of Managers or by the Officer
acting under authority delegated by the Board of Managers.
3.4 MEETINGS OF MEMBERS.
(a) Actions requiring the vote of the Members may be taken at any duly
constituted meeting of the Members at which a quorum is present. Meetings of the
Members may be called by the Board of Managers or by Members holding 25% or more
of the total number of votes eligible to be cast by all Members, and may be held
at such time, date and place as the Board of Managers shall determine. The Board
of Managers shall arrange to provide written notice of the meeting, stating the
date, time and place of the meeting and the record date therefor, to each Member
entitled to vote at the meeting within a reasonable time prior thereto. Failure
to receive notice of a meeting on the part of any Member shall not affect the
validity of any act or proceeding of the meeting, so long as a quorum shall be
present at the meeting, except as otherwise required by applicable law. Only
matters set forth in the notice of a meeting may be voted on by the Members at a
meeting. The presence in person or by proxy of Members holding a majority of the
total number of votes eligible to be cast by all Members as of the record date
shall constitute a quorum at any meeting. In the absence of a quorum, a meeting
of the Members may be adjourned by action of Members present at such meeting in
person or by proxy holding a majority of the total number of votes eligible to
be cast by such Members, without additional notice to the Members. Except as
otherwise required by any provision of this Agreement or of the 1940 Act, (i)
those candidates receiving a plurality of the votes cast at any meeting of
Members shall be elected as Managers and (ii) all other actions of the Members
taken at a meeting shall require the affirmative vote of Members holding a
majority of the total number of votes eligible to be cast by those Members who
are present in person or by proxy at such meeting.
(b) Each Member shall be entitled to cast at any meeting of Members a
number of votes equivalent to such Member's Investment Percentage as of the
record date for such meeting. The Board of Managers shall establish a record
date not less than 10 nor more than 60 days prior to the date of any meeting of
Members to determine eligibility to vote at such meeting and the number of votes
that each Member will be entitled to cast thereat, and shall maintain for each
such record date a list setting forth the name of each Member and the number of
votes that each Member will be entitled to cast at the meeting.
(c) A Member may vote at any meeting of Members by a proxy properly
executed in writing by the Member and filed with the Company before or at the
time of the meeting. A proxy may be suspended or revoked, as the case may be, by
the Member executing the proxy by a later writing delivered to the Company at
any time prior to exercise of the proxy or if the Member executing the proxy
shall be present at the meeting and decide to vote in person. Any action of the
Members that is permitted to be taken at a meeting of the Members may be taken
without a meeting if consents in writing, setting forth the action taken, are
signed by Members holding a majority of the total number of votes eligible to be
cast or such greater percentage as may be required in order to approve such
action.
3.5 CUSTODY OF ASSETS OF THE COMPANY.
The physical possession of all funds, Securities or other properties of the
Company shall at all times, be held, controlled and administered by one or more
custodians retained by the Company in accordance with the requirements of the
1940 Act and the rules thereunder.
3.6 OTHER ACTIVITIES OF MEMBERS AND MANAGERS.
(a) The Managers shall not be required to devote full time to the affairs
of the Company, but shall devote such time as may reasonably be required to
perform their obligations under this Agreement.
(b) Any Member or Manager, and any Affiliate of any Member or Manager, may
engage in or possess an interest in other business ventures or commercial
dealings of every kind and description, independently or with others, including,
but not limited to, acquisition and disposition of Securities, provision of
investment advisory or brokerage services, serving as directors, officers,
employees, advisors or agents of other companies, partners of any partnership,
members of any limited liability company, or trustees of any trust, or entering
into any other commercial arrangements. No Member or Manager shall have any
rights in or to such activities of any other Member or Manager, or any profits
derived therefrom.
3.7 DUTY OF CARE.
(a) A Manager shall not be liable to the Company or to any of its Members
for any loss or damage occasioned by any act or omission in the performance of
his or her services under this Agreement, unless it shall be determined by final
judicial decision on the merits from which there is no further right to appeal
that such loss is due to an act or omission of such Manager constituting willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Manager's office.
(b) Members not in breach of any obligation hereunder or under any
agreement pursuant to which the Member subscribed for an Interest shall be
liable to the Company, any Member or third parties only as provided under the
Delaware Act.
3.8 INDEMNIFICATION.
(a) To the fullest extent permitted by law, the Company shall, subject to
Section 3.8(b) hereof, indemnify each Manager (including for this purpose his or
her respective executors, heirs, assigns, successors or other legal
representatives), against all losses, claims, damages, liabilities, costs and
expenses, including, but not limited to, amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties, and reasonable counsel fees,
incurred in connection with the defense or disposition of any action, suit,
investigation or other proceeding, whether civil or criminal, before any
judicial, arbitral, administrative or legislative body, in which such indemnitee
may be or may have been involved as a party or otherwise, or with which such
indemnitee may be or may have been threatened, while in office or thereafter, by
reason of being or having been a Manager of the Company or the past or present
performance of services to the Company by such indemnitee, except to the extent
such loss, claim, damage, liability, cost or expense shall have been finally
determined in a decision on the merits in any such action, suit, investigation
or other proceeding to have been incurred or suffered by such indemnitee by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of such indemnitee's office. The
rights of indemnification provided under this Section 3.8 shall not be construed
so as to provide for indemnification of a Manager for any liability (including
liability under federal securities laws which, under certain circumstances,
impose liability even on persons that act in good faith) to the extent (but only
to the extent) that such indemnification would be in violation of applicable
law, but shall be construed so as to effectuate the applicable provisions of
this Section 3.8 to the fullest extent permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred by any such
indemnitee (but excluding amounts paid in satisfaction of judgments, in
compromise, or as fines or penalties), may be paid from time to time by the
Company in advance of the final disposition of any such action, suit,
investigation or proceeding upon receipt of an undertaking by or on behalf of
such indemnitee to repay to the Company amounts so paid if it shall ultimately
be determined that indemnification of such expenses is not authorized under
Section 3.8(a) hereof; PROVIDED, HOWEVER, that (i) such indemnitee shall provide
security for such undertaking, (ii) the Company shall be insured by or on behalf
of such indemnitee against losses arising by reason of such indemnitee's failure
to fulfill such undertaking, or (iii) a majority of the Managers (excluding any
Manager who is either seeking advancement of expenses hereunder or is or has
been a party to any other action, suit, investigation or proceeding involving
claims similar to those involved in the action, suit, investigation or
proceeding giving rise to a claim for advancement of expenses hereunder) or
independent legal counsel in a written opinion shall determine based on a review
of readily available facts (as opposed to a full trial-type inquiry) that there
is reason to believe such indemnitee ultimately will be entitled to
indemnification.
(c) As to the disposition of any action, suit, investigation or proceeding
(whether by a compromise payment, pursuant to a consent decree or otherwise)
without an adjudication or a decision on the merits by a court, or by any other
body before which the proceeding shall have been brought, that an indemnitee is
liable to the Company or Members by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
such indemnitee's office, indemnification shall be provided pursuant to Section
3.8(a) hereof if (i) approved as in the best interests of the Company by a
majority of the Managers (excluding any Manager who is either seeking
indemnification hereunder or is or has been a party to any other action, suit,
investigation or proceeding involving claims similar to those involved in the
action, suit, investigation or proceeding giving rise to a claim for
indemnification hereunder) upon a determination based upon a review of readily
available facts (as opposed to a full trial-type inquiry) that such indemnitee
acted in good faith and in the reasonable belief that such actions were in the
best interests of the Company and that such indemnitee is not liable to the
Company or its Members by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of such
indemnitee's office, or (ii) the Board of Managers secures a written opinion of
independent legal counsel based upon a review of readily available facts (as
opposed to a full trial-type inquiry) to the effect that such indemnification
would not protect such indemnitee against any liability to the Company or its
Members to which such indemnitee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of such indemnitee's office.
(d) Any indemnification or advancement of expenses made pursuant to this
Section 3.8 shall not prevent the recovery from any indemnitee of any such
amount if such indemnitee subsequently shall be determined in a decision on the
merits in any action, suit, investigation or proceeding involving the liability
or expense that gave rise to such indemnification or advancement of expenses to
be liable to the Company or its Members by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of such indemnitee's office. In (i) any suit brought by a Manager (or
other person entitled to indemnification hereunder) to enforce a right to
indemnification under this Section 3.8 it shall be a defense that, and (ii) in
any suit in the name of the Company to recover any indemnification or
advancement of expenses made pursuant to this Section 3.8 the Company shall be
entitled to recover such expenses upon a final adjudication that, the Manager or
other person claiming a right to indemnification under this Section 3.8 has not
met the applicable standard of conduct set forth in this Section 3.8. In any
such suit brought to enforce a right to indemnification or to recover any
indemnification or advancement of expenses made pursuant to this Section 3.8,
the burden of proving that the Manager or other person claiming a right to
indemnification is not entitled to be indemnified, or to any indemnification or
advancement of expenses, under this Section 3.8 shall be on the Company (or any
Member acting derivatively or otherwise on behalf of the Company or its
Members).
(e) An indemnitee may not satisfy any right of indemnification or
advancement of expenses granted in this Section 3.8 or to which such indemnitee
may otherwise be entitled except out of the assets of the Company, and no Member
shall be personally liable with respect to any such claim for indemnification or
advancement of expenses.
(f) The rights of indemnification provided hereunder shall not be exclusive
of or affect any other rights to which any person may be entitled by contract or
otherwise under law. Nothing contained in this Section 3.8 shall affect the
power of the Company to purchase and maintain liability insurance on behalf of
any Manager or other person.
3.9 FEES, EXPENSES AND REIMBURSEMENT.
(a) So long as the Management Services Provider provides Management
Services to the Company, it shall be entitled to receive fees for such services
as may be agreed to by the Management Services Provider and the Company pursuant
to the Management Agreement.
(b) The Board of Managers may cause the Company to compensate each Manager
who is not an officer or employee of the Management Services Provider (or of any
Affiliate of the Management Services Provider) for his or her services as such.
In addition, the Managers shall be reimbursed by the Company for reasonable
out-of-pocket expenses incurred by them in performing their duties under this
Agreement.
(c) The Company shall bear all of its own operating expenses other than
those specifically required to be borne by the Management Services Provider or
another party pursuant to the Management Agreement or another agreement with the
Company. The Management Services Provider shall be entitled to reimbursement
from the Company for any expenses that it pays on behalf of the Company.
(d) Subject to procuring any required regulatory approvals, from time to
time the Company may, alone or in conjunction with other accounts for which the
Management Services Provider, or any Affiliate of the Management Services
Provider, acts as general partner or investment adviser, purchase insurance in
such amounts, from such insurers and on such terms as the Board of Managers
shall determine.
---------------------------------
ARTICLE IV
TERMINATION OF STATUS OF
MANAGERS, TRANSFERS AND REPURCHASES
---------------------------------
4.1 TERMINATION OF STATUS OF A MANAGER.
The status of a Manager shall terminate if the Manager (i) shall die; (ii)
shall be adjudicated incompetent; (iii) shall voluntarily withdraw as a Manager
(upon not less than 90 days' prior written notice to the other Managers); (iv)
shall be removed; (v) shall be certified by a physician to be mentally or
physically unable to perform his or her duties hereunder; (vi) shall be declared
bankrupt by a court with appropriate jurisdiction, file a petition commencing a
voluntary case under any bankruptcy law or make an assignment for the benefit of
creditors; (vii) shall have a receiver appointed to administer the property or
affairs of such Manager; or (viii) shall otherwise cease to be a Manager of the
Company under the Delaware Act.
4.2 REMOVAL OF THE MANAGERS.
Any Manager may be removed either by (a) the vote or written consent of at
least two-thirds (2/3) of the Managers not subject to the removal vote or (b)
the vote or written consent of Members holding not less than two-thirds (2/3) of
the total number of votes eligible to be cast by all Members.
4.3 TRANSFER OF INTERESTS OF MEMBERS.
(a) An Interest of a Member may be Transferred only (i) by operation of law
pursuant to the death, divorce, bankruptcy, insolvency or dissolution of such
Member or (ii) with the written consent of the Board of Managers (which may be
withheld in its sole discretion); PROVIDED, HOWEVER, that the Board of Managers
may not consent to any Transfer other than a Transfer (i) in which the tax basis
of the Interest in the hands of the transferee is determined, in whole or in
part, by reference to its tax basis in the hands of the transferor (E.G.,
certain Transfers to affiliates, gifts and contributions to family
partnerships), (ii) to members of the Member's immediate family (brothers,
sisters, spouse, parents and children), or (iii) a distribution from a qualified
retirement plan or an individual retirement account, unless it consults with
counsel to the Company and counsel to the Company confirms that such Transfer
will not cause the Company to be treated as a "publicly traded partnership"
taxable as a corporation.
(b) The Board of Managers may not consent to a Transfer of an Interest or a
portion thereof of a Member unless: (i) the person to whom such Interest is
Transferred is a person whom the Company believes is an accredited investor, as
such term is defined in Regulation D under the Securities Act of 1933 or any
successor thereto; (ii) the person to whom such Interest is Transferred (or each
of such person's beneficial owners if such a person is a "private investment
company" as defined in paragraph (d)(3) of Rule 205-3 under the Advisers Act) is
a person whom the Company believes meets the requirements of paragraph (d)(1) of
Rule 205-3 under the Advisers Act and all then applicable qualification
requirements to invest in the Company as established by the Board of Managers;
and (iii) the entire Interest of the Member is Transferred to a single
transferee or, after the Transfer of a portion of an Interest, the balance of
the Capital Account of each of the transferee and transferor is not less than
$50,000. Any transferee that acquires an Interest by operation of law as the
result of the death, divorce, bankruptcy, insolvency or dissolution of a Member
or otherwise, shall be entitled to the allocations and distributions allocable
to the Interest so acquired and to Transfer such Interest in accordance with the
terms of this Agreement, but shall not be entitled to the other rights of a
Member unless and until such transferee becomes a substituted Member. If a
Member transfers an Interest with the approval of the Board of Managers, the
Board of Managers shall promptly take all necessary actions so that the
transferee to whom such Interest is transferred is admitted to the Company as a
Member. Each Member effecting a Transfer and its transferee agree to pay all
expenses, including attorneys' and accountants' fees, incurred by the Company in
connection with such Transfer.
(c) Each Member shall indemnify and hold harmless the Company, the
Managers, the Management Services Provider, each other Member and any Affiliate
of the foregoing against all losses, claims, damages, liabilities, costs and
expenses (including legal or other expenses incurred in investigating or
defending against any such losses, claims, damages, liabilities, costs and
expenses or any judgments, fines and amounts paid in settlement), joint or
several, to which such persons may become subject by reason of or arising from
(i) any Transfer made by such Member in violation of this Section 4.3 and (ii)
any misrepresentation by such Member in connection with any such Transfer.
4.4 REPURCHASE OF INTERESTS.
(a) Except as otherwise provided in this Agreement, no Member or other
person holding an Interest or portion thereof shall have the right to withdraw
or tender to the Company for repurchase that Interest or portion thereof. The
Board of Managers from time to time, in its complete and exclusive discretion
and on such terms and conditions as it may determine, may cause the Company to
repurchase Interests or portions thereof pursuant to written tenders. However,
the Company shall not offer to repurchase Interests on more than two occasions
during any one Fiscal Year unless it has been advised by counsel to the Company
to the effect that such more frequent offers would not cause any adverse tax
consequences to the Company or the Members. In determining whether to cause the
Company to repurchase Interests or portions thereof pursuant to written tenders,
the Board of Managers shall consider the recommendation of the Management
Services Provider, and shall also consider the following factors, among others:
(1) whether any Members have requested to tender Interests or
portions thereof to the Company;
(2) the liquidity of the Company's assets;
(3) the investment plans and working capital requirements of the
Company;
(4) the relative economies of scale with respect to the size of the
Company;
(5) the history of the Company in repurchasing Interests or portions
thereof;
(6) the economic condition of the securities markets; and
(7) the anticipated tax consequences of any proposed repurchases of
Interests or portions thereof.
The Board of Managers shall cause the Company to repurchase Interests or
portions thereof pursuant to written tenders only on terms fair to the Company
and to all Members or one or more classes of Members (including persons holding
Interests acquired from Members), as applicable.
(b) A Member who tenders for repurchase only a portion of such Member's
Interest shall be required to maintain a Capital Account balance at least equal
to $50,000, or such lesser amount as may be established by the Board of
Managers.
(c) The Management Services Provider may tender its Interest or a portion
thereof as a Member under Section 4.4(a) hereof.
(d) The Board of Managers may cause the Company to repurchase an Interest
or portion thereof of a Member or any person acquiring an Interest or portion
thereof from or through a Member in the event that the Board of Managers
determines or has reason to believe that:
(1) such an Interest or portion thereof has been transferred in
violation of Section 4.4 hereof, or such an Interest or portion
thereof has vested in any person by operation of law as the
result of the death, divorce, dissolution, bankruptcy or
adjudication of incompetence of a Member;
(2) ownership of such an Interest by a Member or other person will
cause the Company to be in violation of, or require registration
of any Interest or portion thereof under, or subject the Company
to additional registration or regulation under, the securities
laws of the United States or any other relevant jurisdiction;
(3) continued ownership of such an Interest may be harmful or
injurious to the business or reputation of the Company, the
Managers or the Management Services Provider, or may subject the
Company or any of the Members to an undue risk of adverse tax or
other fiscal consequences;
(4) any of the representations and warranties made by a Member in
connection with the acquisition of an Interest or portion thereof
was not true when made or has ceased to be true;
(5) it would be in the best interests of the Company, as determined
by the Board of Managers in its absolute discretion, for the
Company to repurchase such an Interest or portion thereof; or
(6) such repurchase is necessary to correct an administrative error
made by the Company or its agent in connection with the sale or
purchase of an Interest.
(e) Repurchases of Interests or portions thereof by the Company shall be
payable promptly after the date of each such repurchase or, in the case of an
offer by the Company to repurchase Interests, promptly after the expiration date
of such repurchase offer in accordance with the terms of the Company's
repurchase offer. Payment of the purchase price for an Interest (or portion
thereof) shall consist of: (i) cash or a promissory note, which need not bear
interest, in an amount equal to such percentage, as may be determined by the
Board of Managers, of the estimated unaudited net asset value of the Interest
(or portion thereof) repurchased by the Company determined as of the date of
such repurchase (the "Initial Payment"); and, if determined to be appropriate by
the Board of Managers or if the Initial Payment is less than 100% of the
estimated unaudited net asset value, (ii) a promissory note entitling the holder
thereof to a contingent payment equal to the excess, if any, of (x) the net
asset value of the Interest (or portion thereof) repurchased by the Company as
of the date of such repurchase, determined based on the audited financial
statements of the Company for the Fiscal Year in which such repurchase was
effective, over (y) the Initial Payment. Notwithstanding anything in the
foregoing to the contrary, the Board of Managers, in its discretion, may pay all
or any portion of the repurchase price in marketable Securities (or any
combination of marketable Securities and cash) having a value, determined as of
the date of repurchase, equal to the amount to be repurchased. Any promissory
note given to satisfy the Initial Payment shall be due and payable not more than
45 days after the date of repurchase or, if the Company has requested withdrawal
of its capital form any Investment Funds in order to fund the repurchase of
Interests, 10 business days after the Company has received at least 90% of the
aggregate amount withdrawn by the Company from such Investment Funds. All
repurchases of Interests shall be subject to any and all conditions as the Board
of Managers may impose in its sole discretion. The amount due to any Member
whose Interest or portion thereof is repurchased shall be equal to the value of
such Member's Capital Account or portion thereof, as applicable, as of the
effective date of repurchase, after giving effect to all allocations to be made
to such Member's Capital Account as of such date.
------------------------------------
ARTICLE V
CAPITAL
------------------------------------
5.1 CONTRIBUTIONS TO CAPITAL.
(a) The minimum initial contribution of each Member to the capital of the
Company shall be such amount as the Board of Managers, in its discretion, may
determine from time to time, but in no event shall be less than $50,000. The
amount of the initial contribution of each Member shall be recorded on the books
and records of the Company upon acceptance as a contribution to the capital of
the Company. The Managers shall not be entitled to make voluntary contributions
of capital to the Company as Managers of the Company, but may make voluntary
contributions to the capital of the Company as Members. The Management Services
Provider may make voluntary contributions to the capital of the Company as a
Member.
(b) The Members and the Management Services Provider, as a Member, may make
additional contributions to the capital of the Company of at least $10,000,
effective as of such times as the Board of Managers, in its discretion, may
permit, subject to the limitations applicable to the admission of Members
pursuant to Section 2.7 hereof, but no Member shall be obligated to make any
additional contribution to the capital of the Company except to the extent
provided in Section 5.6 hereof.
(c) Except as otherwise permitted by the Board of Managers, (i) initial and
any additional contributions to the capital of the Company by any Member shall
be payable in cash or in such Securities that the Board of Managers, in its
absolute discretion, may agree to accept on behalf of the Company, and (ii)
initial and any additional contributions in cash shall be payable in readily
available funds at the date of the proposed acceptance of the contribution. The
Company shall charge each Member making a contribution in Securities to the
capital of the Company such amount as may be determined by the Board of Managers
not exceeding 2% of the value of such contribution in order to reimburse the
Company for any costs incurred by the Company by reason of accepting such
Securities, and any such charge shall be due and payable by the contributing
Member in full at the time the contribution to the capital of the Company to
which such charges relate is due. The value of contributed Securities shall be
determined in accordance with Section 7.3 hereof as of the date of contribution.
(d) The minimum initial and additional contributions set forth in (a) and
(b) of this Section 5.1 may be reduced by the Board of Managers in accordance
with such schedule of reductions as may be adopted by the Board of Managers in
its sole discretion.
5.2 RIGHTS OF MEMBERS TO CAPITAL.
No Member shall be entitled to interest on any contribution to the capital
of the Company, nor shall any Member be entitled to the return of any capital of
the Company except (i) upon the repurchase by the Company of a part or all of
such Member's Interest pursuant to Section 4.4 hereof, (ii) pursuant to the
provisions of Section 5.6(c) hereof or (iii) upon the liquidation of the
Company's assets pursuant to Section 6.2 hereof. No Member shall be liable for
the return of any such amounts. No Member shall have the right to require
partition of the Company's property or to compel any sale or appraisal of the
Company's assets.
5.3 CAPITAL ACCOUNTS.
(a) The Company shall maintain a separate Capital Account for each Member.
(b) Each Member's Capital Account shall have an initial balance equal to
the amount of cash and the value of any Securities (determined in accordance
with Section 7.3 hereof) (net of any liabilities secured by such Securities that
the Company is considered to assume or take subject to under Section 752 of the
Code) constituting such Member's initial contribution to the capital of the
Company.
(c) Each Member's Capital Account shall be increased by the sum of (i) the
amount of cash and the value of any Securities (determined in accordance with
Section 7.3 hereof) (net of any liabilities secured by such Securities that the
Company is considered to assume or take subject to Section under 752 of the
Code) constituting additional contributions by such Member to the capital of the
Company permitted pursuant to Section 5.1 hereof, plus (ii) all amounts credited
to such Member's Capital Account pursuant to Sections 5.4 through 5.6 hereof.
(d) Each Member's Capital Account shall be reduced by the sum of (i) the
amount of any repurchase of the Interest, or portion thereof, of such Member or
distributions to such Member pursuant to Sections 4.4, 5.8 or 6.2 hereof which
are not reinvested (net of any liabilities secured by any asset distributed that
such Member is deemed to assume or take subject to under Section 752 of the
Code), plus (ii) any amounts debited against such Member's Capital Account
pursuant to Sections 5.4 through 5.6 hereof.
5.4 ALLOCATION OF NET PROFIT AND NET LOSS.
As of the last day of each Fiscal Period, any Net Profit or Net Loss for
the Fiscal Period shall be allocated among and credited to or debited against
the Capital Accounts of the Members in accordance with their respective
Investment Percentages for such Fiscal Period.
5.5 ALLOCATION OF CERTAIN EXPENDITURES.
Except as otherwise provided for in this Agreement and unless prohibited by
the 1940 Act, any expenditures payable by the Company, to the extent determined
by the Board of Managers to have been paid or withheld on behalf of, or by
reason of particular circumstances applicable to, one or more but fewer than all
of the Members, shall be charged to only those Members on whose behalf such
payments are made or whose particular circumstances gave rise to such payments.
Such charges shall be debited from the Capital Accounts of such Members as of
the close of the Fiscal Period during which any such items were paid or accrued
by the Company.
5.6 RESERVES.
(a) Appropriate reserves may be created, accrued and charged against Net
Assets and proportionately against the Capital Accounts of the Members for
contingent liabilities, if any, as of the date any such contingent liability
becomes known to the Management Services Provider or the Board of Managers, such
reserves to be in the amounts that the Board of Managers, in its sole
discretion, deems necessary or appropriate. The Board of Managers may increase
or reduce any such reserves from time to time by such amounts as the Board of
Managers, in its sole discretion, deems necessary or appropriate. The amount of
any such reserve, or any increase or decrease therein, shall be proportionately
charged or credited, as appropriate, to the Capital Accounts of those parties
who are Members at the time when such reserve is created, increased or
decreased, as the case may be; PROVIDED, HOWEVER, that if any such individual
reserve item, adjusted by any increase therein, exceeds the lesser of $500,000
or 1% of the aggregate value of the Capital Accounts of all such Members, the
amount of such reserve, increase, or decrease shall instead be charged or
credited to those parties who were Members at the time, as determined by the
Board of Managers, in its sole discretion, of the act or omission giving rise to
the contingent liability for which the reserve was established, increased or
decreased in proportion to their Capital Accounts at that time.
(b) If at any time an amount is paid or received by the Company (other than
contributions to the capital of the Company, distributions or repurchases of
Interests or portions thereof) and such amount exceeds the lesser of $500,000 or
1% of the aggregate value of the Capital Accounts of all Members at the time of
payment or receipt and such amount was not accrued or reserved for but would
nevertheless, in accordance with the Company's accounting practices, be treated
as applicable to one or more prior Fiscal Periods, then such amount shall be
proportionately charged or credited, as appropriate, to those parties who were
Members during such prior Fiscal Period or Periods.
(c) If any amount is required by paragraph (a) or (b) of this Section 5.6
to be charged or credited to a party who is no longer a Member, such amount
shall be paid by or to such party, as the case may be, in cash, with interest
from the date on which the Board of Managers determines that such charge or
credit is required. In the case of a charge, the former Member shall be
obligated to pay the amount of the charge, plus interest as provided above, to
the Company on demand; PROVIDED, HOWEVER, that (i) in no event shall a former
Member be obligated to make a payment exceeding the amount of such Member's
Capital Account at the time to which the charge relates; and (ii) no such demand
shall be made after the expiration of three years since the date on which such
party ceased to be a Member. To the extent that a former Member fails to pay to
the Company, in full, any amount required to be charged to such former Member
pursuant to paragraph (a) or (b), whether due to the expiration of the
applicable limitation period or for any other reason whatsoever, the deficiency
shall be charged proportionately to the Capital Accounts of the Members at the
time of the act or omission giving rise to the charge to the extent feasible,
and otherwise proportionately to the Capital Accounts of the current Members.
5.7 TAX ALLOCATIONS.
For each fiscal year, items of income, deduction, gain, loss or credit
shall be allocated for income tax purposes among the Members in such manner as
to reflect equitably amounts credited or debited to each Member's Capital
Account for the current and prior fiscal years (or relevant portions thereof).
Allocations under this Section 5.7 shall be made pursuant to the principles of
Sections 704(b) and 704(c) of the Code, and Treasury Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), 1.704-1(b)(4)(i) and 1.704-3(e) promulgated
thereunder, as applicable, or the successor provisions to such Section and
Treasury Regulations. Notwithstanding anything to the contrary in this
Agreement, there shall be allocated to the Members such gains or income as shall
be necessary to satisfy the "qualified income offset" requirements of Treasury
Regulations 1.704-1(b)(2)(ii)(d).
If the Company realizes ordinary income and/or capital gains (including
short-term capital gains) for Federal income tax purposes (collectively,
"income") for any Fiscal Year during or as of the end of which all the Interests
of one or more Positive Basis Members (as hereinafter defined) are repurchased
by the Company pursuant to Article IV, the Board of Managers, in its sole
discretion, may allocate such income as follows: (i) to allocate such income
among such Positive Basis Members, PRO RATA in proportion to the respective
Positive Basis (as hereinafter defined) of each such Positive Basis Member,
until either the full amount of such income shall have been so allocated or the
Positive Basis of each such Positive Basis Member shall have been eliminated;
and (ii) to allocate any income not so allocated to Positive Basis Members to
the other Members in such manner as shall equitably reflect the amounts
allocated to such Members' Capital Accounts pursuant to Section 5.3.
If the Company realizes deductions, ordinary losses and/or capital losses
(including long-term capital losses) for Federal income tax purposes
(collectively, "losses") for any fiscal year during or as of the end of which
all the Interests of one or more Negative Basis Members (as hereinafter defined)
are repurchased from the Company pursuant to Article IV, the Board of Managers
may elect to allocate such losses as follows: (i) to allocate such losses among
such Negative Basis Members, pro rata in proportion to the respective Negative
Basis (as hereinafter defined) of each such Negative Basis Member, until either
the full amount of such losses shall have been so allocated or the Negative
Basis of each such Negative Basis Member shall have been eliminated; and (ii) to
allocate any losses not so allocated to Negative Basis Members to the other
Members in such manner as shall equitably reflect the amounts allocated to such
Members' Capital Accounts pursuant to Section 5.3.
As used herein: (i) the term "Positive Basis" shall mean, with respect to
any Member and as of any time of calculation, the amount by which its Interest
as of such time plus an amount equal to any deemed distributions to such Member
for Federal income tax purposes pursuant to Section 752 of the Code exceeds its
"adjusted tax basis," for Federal income tax purposes, in its Interest as of
such time (determined without regard to such Member's share of the liabilities
of the Company under Section 752 of the Code); and (ii) the term "Positive Basis
Member" shall mean any Member whose Interest is repurchased by the Company and
who has Positive Basis as of the effective date of its withdrawal (determined
prior to any allocations made pursuant to this Section).
As used herein: (i) the term "Negative Basis" shall mean, with respect to
any Member and as of any time of calculation, the amount by which its Interest
as of such time plus an amount equal to any deemed distributions to such Member
for Federal income tax purposes pursuant to Section 752 of the Code is less than
its "adjusted tax basis," for Federal income tax purposes, in its Interest as of
such time (determined without regard to such Member's share of the liabilities
of the Company under Section 752 of the Code); and (ii) the term "Negative Basis
Member" shall mean any Member whose Interest is repurchased by the Company and
who has Negative Basis as of the effective date of its withdrawal (determined
prior to any allocations made pursuant to this Section).
5.8 DISTRIBUTIONS.
The Board of Managers, in its sole discretion, may authorize the Company to
make distributions in cash at any time to all of the Members on a PRO RATA basis
in accordance with the Members' Investment Percentages.
5.9 WITHHOLDING.
(a) The Board of Managers may withhold and pay over to the Internal Revenue
Service (or any other relevant taxing authority) taxes from any distribution to
any Member to the extent required by the Code or any other applicable law.
(b) For purposes of this Agreement, any taxes so withheld by the Company
with respect to any amount distributed by the Company to any Member shall be
deemed to be a distribution or payment to such Member, reducing the amount
otherwise distributable to such Member pursuant to this Agreement and reducing
the Capital Account of such Member. If the amount of such taxes is greater than
any such distributable amounts, then such Member and any successor to such
Member's Interest shall pay to the Company as a contribution to the capital of
the Company, upon demand of the Board of Managers, the amount of such excess.
(c) The Board of Managers shall not be obligated to apply for or obtain a
reduction of or exemption from withholding tax on behalf of any Member that may
be eligible for such reduction or exemption. To the extent that a Member claims
to be entitled to a reduced rate of, or exemption from, a withholding tax
pursuant to an applicable income tax treaty, or otherwise, the Member shall
furnish the Board of Managers with such information and forms as such Member may
be required to complete where necessary to comply with any and all laws and
regulations governing the obligations of withholding tax agents. Each Member
represents and warrants that any such information and forms furnished by such
Member shall be true and accurate and agrees to indemnify the Company and each
of the Members from any and all damages, costs and expenses resulting from the
filing of inaccurate or incomplete information or forms relating to such
withholding taxes.
--------------------------
ARTICLE VI
DISSOLUTION AND LIQUIDATION
---------------------------
6.1 DISSOLUTION.
The Company shall be dissolved:
(1) upon the affirmative vote to dissolve the Company by: (i) the
Board of Managers or (ii) Members holding at least two-thirds
(2/3) of the total number of votes eligible to be cast by all
Members;
(2) upon the failure of Members to elect a successor Manager at a
meeting called by the Management Services Provider in accordance
with Section 2.6(c) hereof when no Manager remains to continue
the business of the Company;
(3) upon the expiration of any two year period that commences on the
date on which any Member has submitted a written notice to the
Company requesting to tender its entire Interest for repurchase
by the Company if such Interest has not been repurchased by the
Company; or
(4) as required by operation of law.
Dissolution of the Company shall be effective on the later of the day on which
the event giving rise to the dissolution shall occur or the conclusion of any
applicable 60 day period during which the Board of Managers and Members may
elect to continue the business of the Company as provided above, but the Company
shall not terminate until the assets of the Company have been liquidated in
accordance with Section 6.2 hereof and the Certificate has been canceled.
6.2 LIQUIDATION OF ASSETS.
(a) Upon the dissolution of the Company as provided in Section 6.1 hereof,
the Board of Managers shall promptly appoint the Administrator as the liquidator
and the Administrator shall liquidate the business and administrative affairs of
the Company, except that if the Board of Managers does not appoint the
Administrator as the liquidator or the Administrator is unable to perform this
function, a liquidator elected by Members holding a majority of the total number
of votes eligible to be cast by all Members shall promptly liquidate the
business and administrative affairs of the Company. Net Profit and Net Loss
during the period of liquidation shall be allocated pursuant to Section 5.4
hereof. The proceeds from liquidation (after establishment of appropriate
reserves for contingencies in such amount as the Board of Managers or liquidator
shall deem appropriate in its sole discretion as applicable) shall be
distributed in the following manner:
(1) the debts of the Company, other than debts, liabilities or
obligations to Members, and the expenses of liquidation
(including legal and accounting expenses incurred in connection
therewith), up to and including the date that distribution of the
Company's assets to the Members has been completed, shall first
be paid on a pro rata basis;
(2) such debts, liabilities or obligations as are owing to the
Members shall next be paid in their order of seniority and on a
pro rata basis; and
(3) the Members shall next be paid on a pro rata basis in accordance
with their respective Capital Accounts after giving effect to all
allocations to be made to such Members' Capital Accounts for the
Fiscal Period ending on the date of the distributions under this
Section 6.2(a)(3).
(b) Anything in this Section 6.2 to the contrary notwithstanding, upon
dissolution of the Company, the Board of Managers or other liquidator may
distribute ratably in kind any assets of the Company; PROVIDED, HOWEVER, that if
any in-kind distribution is to be made (i) the assets distributed in kind shall
be valued pursuant to Section 7.3 hereof as of the actual date of their
distribution and charged as so valued and distributed against amounts to be paid
under Section 6.2(a) above, and (ii) any profit or loss attributable to property
distributed in-kind shall be included in the Net Profit or Net Loss for the
Fiscal Period ending on the date of such distribution.
-----------------------------
ARTICLE VII
ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS
-----------------------------
7.1 ACCOUNTING AND REPORTS.
(a) The Company shall adopt for tax accounting purposes any accounting
method that the Board of Managers shall decide in its sole discretion is in the
best interests of the Company. The Company's accounts shall be maintained in
U.S. currency.
(b) After the end of each Taxable Year, the Company shall furnish to each
Member such information regarding the operation of the Company and such Member's
Interest as is necessary for Members to complete Federal, state and local income
tax or information returns and any other tax information required by Federal,
state or local law.
(c) Except as otherwise required by the 1940 Act, or as may otherwise be
permitted by rule, regulation or order, within 60 days after the close of the
period for which a report required under this Section 7.1(c) is being made, the
Company shall furnish to each Member a semi-annual report and an annual report
containing the information required by such Act. The Company shall cause
financial statements contained in each annual report furnished hereunder to be
accompanied by a certificate of independent public accountants based upon an
audit performed in accordance with generally accepted accounting principles. The
Company may furnish to each Member such other periodic reports as it deems
necessary or appropriate in its discretion.
7.2 DETERMINATIONS BY THE BOARD OF MANAGERS.
(a) All matters concerning the determination and allocation among the
Members of the amounts to be determined and allocated pursuant to Article V
hereof, including any taxes thereon and accounting procedures applicable
thereto, shall be determined by the Board of Managers unless specifically and
expressly otherwise provided for by the provisions of this Agreement or required
by law, and such determinations and allocations shall be final and binding on
all the Members.
(b) The Board of Managers may make such adjustments to the computation of
Net Profit, Net Loss or any components comprising either of the foregoing as it
considers appropriate to reflect fairly and accurately the financial results of
the Company and the intended allocation thereof among Members.
7.3 VALUATION OF ASSETS.
(a) Except as may be required by the 1940 Act, the Board of Managers shall
value or have valued any Securities or other assets and liabilities of the
Company as of the close of business on the last day of each Fiscal Period in
accordance with such valuation procedures as shall be established from time to
time by the Board of Managers and which conform to the requirements of the 1940
Act. In determining the value of the assets of the Company, no value shall be
placed on the goodwill or name of the Company, or the office records, files,
statistical data or any similar intangible assets of the Company not normally
reflected in the Company's accounting records, but there shall be taken into
consideration any items of income earned but not received, expenses incurred but
not yet paid, liabilities, fixed or contingent, and any other prepaid expenses
to the extent not otherwise reflected in the books of account, and the value of
options or commitments to purchase or sell Securities or commodities pursuant to
agreements entered into prior to such valuation date.
(b) The value of Securities and other assets of the Company and the net
worth of the Company as a whole determined pursuant to this Section 7.3 shall be
conclusive and binding on all of the Members and all parties claiming through or
under them.
--------------------------
ARTICLE VIII
MISCELLANEOUS PROVISIONS
-----------------------------
8.1 AMENDMENT OF LIMITED LIABILITY COMPANY AGREEMENT.
(a) Except as otherwise provided in this Section 8.1, this Agreement may be
amended, in whole or in part, with: (i) the approval of the Board of Managers
(including the vote of a majority of the Independent Managers, if required by
the 0000 Xxx) and (ii) if required by the 1940 Act, the approval of Members by
such vote as is required by the 0000 Xxx.
(b) Any amendment that would:
(1) increase the obligation of a Member to make any contribution to
the capital of the Company;
(2) reduce the Capital Account of a Member other than in accordance
with Article V; or
(3) modify the events causing the dissolution of the Company;
may be made only if (i) the written consent of each Member adversely affected
thereby is obtained prior to the effectiveness thereof or (ii) such amendment
does not become effective until (A) each Member has received written notice of
such amendment and (B) any Member objecting to such amendment has been afforded
a reasonable opportunity (pursuant to such procedures as may be prescribed by
the Board of Managers) to tender its entire Interest for repurchase by the
Company.
(c) The power of the Board of Managers to amend this Agreement at any time
without the consent of Members as set forth in paragraph (a) of this Section
8.01 shall specifically include the power to:
(1) restate this Agreement together with any amendments hereto that
have been duly adopted in accordance herewith to incorporate such
amendments in a single, integrated document;
(2) amend this Agreement (other than with respect to the matters set
forth in Section 8.1(b) hereof) to effect compliance with any
applicable law or regulation, including but not limited to, to
satisfy the requirements, or to reflect any relaxation of such
requirements in the future, of the Bank Holding Company Act of
1956, as amended, or other U.S. banking laws, or any regulations,
guidelines or policies or interpretations of the banking
regulatory agencies or the staff thereof, or to cure any
ambiguity or to correct or supplement any provision hereof that
may be inconsistent with any other provision hereof; and
(3) amend this Agreement to make such changes as may be necessary or
advisable to ensure that the Company will not be treated as an
association or as a publicly traded partnership taxable as a
corporation as defined in Section 7704(b) of the Code.
(d) The Board of Managers shall cause written notice to be given of
any amendment to this Agreement (other than any amendment of the
type contemplated by clause (1) of Section 8.1(c) hereof) to each
Member, which notice shall set forth (i) the text of the
amendment or (ii) a summary thereof and a statement that the text
thereof will be furnished to any Member upon request.
8.2 SPECIAL POWER OF ATTORNEY.
(a) Each Member hereby irrevocably makes, constitutes and appoints each
Manager, acting severally, and any liquidator of the Company's assets appointed
pursuant to Section 6.2 hereof with full power of substitution, the true and
lawful representatives and attorneys-in-fact of, and in the name, place and
stead of, such Member, with the power from time to time to make, execute, sign,
acknowledge, swear to, verify, deliver, record, file and/or publish:
(1) any amendment to this Agreement that complies with the provisions
of this Agreement (including the provisions of Section 8.1
hereof);
(2) any amendment to the Certificate required because this Agreement
is amended, including, without limitation, an amendment to
effectuate any change in the membership of the Company; and
(3) all such other instruments, documents and certificates that, in
the opinion of legal counsel to the Company, may from time to
time be required by the laws of the United States of America, the
State of Delaware or any other jurisdiction in which the Company
shall determine to do business, or any political subdivision or
agency thereof, or that such legal counsel may deem necessary or
appropriate to effectuate, implement and continue the valid
existence and business of the Company as a limited liability
company under the Delaware Act.
(b) Each Member is aware that the terms of this Agreement permit certain
amendments to this Agreement to be effected and certain other actions to be
taken or omitted by or with respect to the Company without such Member's
consent. If an amendment to the Certificate or this Agreement or any action by
or with respect to the Company is taken in the manner contemplated by this
Agreement, each Member agrees that, notwithstanding any objection that such
Member may assert with respect to such action, the attorneys-in-fact appointed
hereby are authorized and empowered, with full power of substitution, to
exercise the authority granted above in any manner that may be necessary or
appropriate to permit such amendment to be made or action lawfully taken or
omitted. Each Member is fully aware that each Member will rely on the
effectiveness of this special power-of-attorney with a view to the orderly
administration of the affairs of the Company.
(c) This power-of-attorney is a special power-of-attorney and is coupled
with an interest in favor of each of the Managers and as such:
(1) shall be irrevocable and continue in full force and effect
notwithstanding the subsequent death or incapacity of any party
granting this power-of-attorney, regardless of whether the
Company or Board of Managers shall have had notice thereof; and
(2) shall survive the delivery of a Transfer by a Member of the whole
or any portion of such Member's Interest, except that where the
transferee thereof has been approved by the Board of Managers for
admission to the Company as a substituted Member, this
power-of-attorney given by the transferor shall survive the
delivery of such assignment for the sole purpose of enabling the
Board of Managers to execute, acknowledge and file any instrument
necessary to effect such substitution.
8.3 NOTICES.
Notices that may be or are required to be provided under this Agreement
shall be made, if to a Member, by regular mail, or if to the Board of Managers
or the Management Services Provider, by hand delivery, registered or certified
mail return receipt requested, commercial courier service, telex or telecopier,
and shall be addressed to the respective parties hereto at their addresses as
set forth in the books and records of the Company. Notices to the Company shall
be deemed to have been provided when delivered by hand, on the date indicated as
the date of receipt on a return receipt or when received if sent by regular
mail, commercial courier service, telex or telecopier. Notices to Members shall
be deemed to have been provided when mailed to Members at their addresses as set
forth in the books and records of the Company. A document that is not a notice
and that is required to be provided under this Agreement by any party to another
party may be delivered by any reasonable means. Each Member agrees to notify the
Company (or its designated agent) of any change of address.
8.4 AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, assigns, executors,
trustees or other legal representatives, but the rights and obligations of the
parties hereunder may not be Transferred or delegated except as provided in this
Agreement and any attempted Transfer or delegation thereof that is not made
pursuant to the terms of this Agreement shall be void.
8.5 APPLICABILITY OF 1940 ACT AND FORM N-2.
The parties hereto acknowledge that this Agreement is not intended to, and
does not, set forth the substantive provisions contained in the 1940 Act and the
Form N-2 that affect numerous aspects of the conduct of the Company's business
and of the rights, privileges and obligations of the Members. Each provision of
this Agreement shall be subject to and interpreted in a manner consistent with
the applicable provisions of the 1940 Act and the Form N-2.
8.6 CHOICE OF LAW; ARBITRATION.
(a) Notwithstanding the place where this Agreement may be executed by any
of the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed under the laws of the State of Delaware,
including the Delaware Act without regard to the conflict of law principles of
such State.
(b) Unless otherwise agreed in writing, each Member agrees to submit all
controversies arising between Members or one or more Members and the Company to
arbitration in accordance with the provisions set forth below and understands
that:
(1) arbitration is final and binding on the parties;
(2) they are waiving their right to seek remedies in court, including
the right to a jury trial;
(3) pre-arbitration discovery is generally more limited and different
from court proceedings;
(4) the arbitrator's award is not required to include factual
findings or legal reasoning and a party's right to appeal or to
seek modification of rulings by arbitrators is strictly limited;
and
(5) the panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities
industry.
(c) All controversies that may arise among Members and one or more Members
and the Company concerning this Agreement shall be determined by arbitration in
New York City in accordance with the Federal Arbitration Act, to the fullest
extent permitted by law. Any arbitration under this Agreement shall be
determined before and in accordance with the rules then obtaining of either the
New York Stock Exchange, Inc. (the "NYSE") or the National Association of
Securities Dealers, Inc. (the "NASD"), as the Member or entity instituting the
arbitration may elect. If the NYSE or NASD does not accept the arbitration for
consideration, the arbitration shall be submitted to, and determined in
accordance with the rules then obtaining of, the Center for Public Resources,
Inc. in New York City. Judgment on any award of any such arbitration may be
entered in the Supreme Court of the State of New York or in any other court
having jurisdiction of the person or persons against whom such award is
rendered. Any notice of such arbitration or for the confirmation of any award in
any arbitration shall be sufficient if given in accordance with the provisions
of this Agreement. Each Member agrees that the determination of the arbitrators
shall be binding and conclusive upon them.
(d) No Member shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement against
any person who has initiated in court a putative class action; or who is a
member of a putative class who has not opted out of the class with respect to
any claims encompassed by the putative class action until: (i) the class
certification is denied; or (ii) the class is decertified; or (iii) the Member
is excluded from the class by the court. Such forbearance to enforce an
agreement to arbitrate shall not constitute a waiver of any rights under this
Agreement except to the extent stated herein.
8.7 NOT FOR BENEFIT OF CREDITORS.
The provisions of this Agreement are intended only for the regulation of
relations among past, present and future Members, Managers and the Company. This
Agreement is not intended for the benefit of non-Member creditors and no rights
are granted to non-Member creditors under this Agreement.
8.8 CONSENTS.
Any and all consents, agreements or approvals provided for or permitted by
this Agreement shall be in writing and a signed copy thereof shall be filed and
kept with the books of the Company.
8.9 MERGER AND CONSOLIDATION.
(a) The Company may merge or consolidate with or into one or more limited
liability companies formed under the Delaware Act or other business entities
pursuant to an agreement of merger or consolidation that has been approved in
the manner contemplated by Section 18-209(b) of the Delaware Act.
(b) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, an agreement of merger or consolidation approved in accordance with
Section 18-209(b) of the Delaware Act may, to the extent permitted by Section
18-209(f) of the Delaware Act, (i) effect any amendment to this Agreement, (ii)
effect the adoption of a new limited liability company agreement for the Company
if it is the surviving or resulting limited liability company in the merger or
consolidation, or (iii) provide that the limited liability company agreement of
any other constituent limited liability company to the merger or consolidation
(including a limited liability company formed for the purpose of consummating
the merger or consolidation) shall be the limited liability company agreement of
the surviving or resulting limited liability company.
8.10 PRONOUNS.
All pronouns shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identity of the person or persons, firm or
corporation may require in the context thereof.
8.11 CONFIDENTIALITY.
(a) A Member may obtain from the Company such information regarding the
affairs of the Company as is just and reasonable under the Delaware Act, subject
to reasonable standards (including standards governing what information and
documents are to be furnished, at what time and location and at whose expense)
established by the Board of Managers.
(b) Each Member covenants that, except as required by applicable law or any
regulatory body, it will not divulge, furnish or make accessible to any other
person the name and/or address (whether business, residence or mailing) of any
Member (collectively, "Confidential Information") without the prior written
consent of the Board of Managers, which consent may be withheld in its sole
discretion.
(c) Each Member recognizes that in the event that this Section 8.11 is
breached by any Member or any of its principals, partners, members, directors,
officers, employees or agents or any of its Affiliates, including any of such
Affiliates' principals, partners, members, directors, officers, employees or
agents, irreparable injury may result to the non-breaching Members and the
Company. Accordingly, in addition to any and all other remedies at law or in
equity to which the non-breaching Members and the Company may be entitled, such
Members shall also have the right to obtain equitable relief, including, without
limitation, injunctive relief, to prevent any disclosure of Confidential
Information, plus reasonable attorneys' fees and other litigation expenses
incurred in connection therewith. In the event that any non-breaching Member or
the Company determines that any of the other Members or any of its principals,
partners, members, directors, officers, employees or agents or any of its
Affiliates, including any of such Affiliates' principals, partners, members,
directors, officers, employees or agents should be enjoined from or required to
take any action to prevent the disclosure of Confidential Information, each of
the other non-breaching Members agrees to pursue in a court of appropriate
jurisdiction such injunctive relief.
(d) Notwithstanding anything in this Agreement to the contrary, each Member
(and each employee, representative, or other agent of such Member) may disclose
to any and all persons, without limitation of any kind, the tax treatment and
tax structure of (i) the Company and (ii) any of its transactions, and all
materials of any kind (including opinions or other tax analyses) that are
provided to the Member relating to such tax treatment and tax structure.
8.12 CERTIFICATION OF NON-FOREIGN STATUS.
Each Member or transferee of an Interest from a Member shall certify, upon
admission to the Company and at such other times thereafter as the Board of
Managers may request, whether such Member is a "United States Person" within the
meaning of Section 7701(a)(30) of the Code on forms to be provided by the
Company, and shall notify the Company within 30 days of any change in such
Member's status. Any Member who shall fail to provide such certification when
requested to do so by the Board of Managers may be treated as a non-United
States Person for purposes of U.S. federal tax withholding.
8.13 SEVERABILITY.
If any provision of this Agreement is determined by a court of competent
jurisdiction not to be enforceable in the manner set forth in this Agreement,
each Member agrees that it is the intention of the Members that such provision
should be enforceable to the maximum extent possible under applicable law. If
any provisions of this Agreement are held to be invalid or unenforceable, such
invalidation or unenforceability shall not affect the validity or enforceability
of any other provision of this Agreement (or portion thereof).
8.14 FILING OF RETURNS.
The Board of Managers or its designated agent shall prepare and file, or
cause the Administrator or accountants of the Company to prepare and file, a
Federal information tax return in compliance with Section 6031 of the Code and
any required state and local income tax and information returns for each tax
year of the Company.
8.15 TAX MATTERS PARTNER.
(a) A Manager who is a Member shall be designated on the Company's annual
Federal information tax return, and have full powers and responsibilities, as
the Tax Matters Partner of the Company for purposes of Section 6231(a)(7) of the
Code. In the event that no Manager is a Member, a Member shall be so designated.
Should any Member be designated as the Tax Matters Partner for the Company
pursuant to Section 6231(a)(7) of the Code, it shall, and each Member hereby
does, to the fullest extent permitted by law, delegate to a Manager selected by
the Board of Managers all of its rights, powers and authority to act as such Tax
Matters Partner and hereby constitutes and appoints such Manager as its true and
lawful attorney-in-fact, with power to act in its name and on its behalf,
including the power to act through such agents or attorneys as it shall elect or
appoint, to receive notices, to make, execute and deliver, swear to, acknowledge
and file any and all reports, responses and notices and to do any and all things
required or advisable, in the Manager's judgment, to be done by such a Tax
Matters Partner. Any Member designated as the Tax Matters Partner for the
Company under Section 6231(a)(7) of the Code shall be indemnified and held
harmless by the Company from any and all liabilities and obligations that arise
from or by reason of such designation.
(b) Each person (for purposes of this Section 8.15, called a "Pass-Thru
Member") that holds or controls an interest as a Member on behalf of, or for the
benefit of, another person or persons, or which Pass-Thru Member is beneficially
owned (directly or indirectly) by another person or persons, shall, within 30
days following receipt from the Tax Matters Partner of any notice, demand,
request for information or similar document, convey such notice or other
document in writing to all holders of beneficial interests in the Company
holding such interests through such Pass-Thru Member. In the event the Company
shall be the subject of an income tax audit by any Federal, state or local
authority, to the extent the Company is treated as an entity for purposes of
such audit, including administrative settlement and judicial review, the Tax
Matters Partner shall be authorized to act for, and its decision shall be final
and binding upon, the Company and each Member thereof. All expenses incurred in
connection with any such audit, investigation, settlement or review shall be
borne by the Company.
8.16 SECTION 754 ELECTION.
In the event of a distribution of Company property to a Member or an
assignment or other transfer (including by reason of death) of all or part of
the interest of a Member in the Company, the Board of Managers, in its
discretion, may cause the Company to elect, pursuant to Section 754 of the Code,
or the corresponding provision of subsequent law, to adjust the basis of the
Company's property as provided by Sections 734 and 743 of the Code.
8.17 MEMBER TAX BASIS.
Upon request of the Board of Managers, each Member agrees to provide to the
Board of Managers information regarding its adjusted tax basis in its interest
in the Company along with documentation substantiating such amount.
EACH OF THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS
ENTIRETY BEFORE SIGNING, INCLUDING THE PRE-DISPUTE ARBITRATION CLAUSE SET FORTH
IN SECTION 8.6 AND THE CONFIDENTIALITY CLAUSE SET FORTH IN SECTION 8.11.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MANAGERS:
/s/ Xxxx Xxxxx
----------------------------------
Name: Xxxx Xxxxx
/s/ Xxxx X. Xxxxx XX
----------------------------------
Name: Xxxx X. Xxxxx XX
/s/ Xxxxxx X. Xxxxxxx, Xx.
------------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
/s/ Xxxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
MEMBERS:
Each person who shall sign a Member Signature
Page and who shall be accepted by the Board of
Managers to the Company as a Member.
