Exhibit A
---------
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
OF
SPECIAL VALUE OPPORTUNITIES FUND, LLC
a Delaware Limited Liability Company
Dated as of July 12, 2004
TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS.....................................................................................1
SECTION 2. LIMITED LIABILITY COMPANY FORMATION AND IDENTIFICATION............................................7
2.1 Formation.........................................................................................7
2.2 Name and Place of Business........................................................................7
2.3 Records of Members................................................................................7
2.4 Limited Liability Company.........................................................................8
SECTION 3. PURPOSE, NATURE OF BUSINESS AND POWERS............................................................8
SECTION 4. TERM 9
SECTION 5. SHARES OF MEMBERSHIP INTEREST.....................................................................9
5.1 Beneficial Interest...............................................................................9
5.2 Classes and Series................................................................................9
5.3 Issuance of Shares................................................................................9
5.4 Rights of Members................................................................................10
SECTION 6. REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS...............................................10
SECTION 7. CAPITAL CONTRIBUTIONS............................................................................10
7.1 Capital Contributions of Members.................................................................10
7.2 Contribution of the Special Member...............................................................14
7.3 Withdrawal of Capital............................................................................14
SECTION 8. DISTRIBUTIONS....................................................................................14
8.1 Distributions....................................................................................14
SECTION 9. MANAGEMENT AND BOARD OF DIRECTORS................................................................16
9.1 Management Generally.............................................................................16
9.2 Board of Directors...............................................................................17
9.3 Expenses of the Company..........................................................................20
9.4 Members' Consent.................................................................................21
9.5 Exculpation......................................................................................21
9.6 Indemnification; No Duty of Investigation; Reliance on Experts...................................21
9.7 Director Limited Liability.......................................................................23
9.8 Certain Other Activities.........................................................................23
SECTION 10. MEMBERS.........................................................................................24
10.1 Identity, Contributions and Common Share Commitments.............................................24
10.2 No Management Power or Liability.................................................................24
10.3 Amendments.......................................................................................24
10.4 Merger, Consolidation, Liquidation...............................................................26
10.5 List of Members..................................................................................26
10.6 Limitations......................................................................................26
10.7 Meetings.........................................................................................27
10.8 Action Without a Meeting.........................................................................27
10.9 Procedures.......................................................................................27
10.10 Voting...........................................................................................28
SECTION 11. ADMISSION OF ADDITIONAL MEMBERS; ASSIGNMENTS OR TRANSFERS OF SHARES..............................
11.1 Admission of Additional Members..................................................................29
11.2 Assignments or Transfers of Shares...............................................................29
SECTION 12. POWER OF ATTORNEY...............................................................................31
12.1 Appointment of Investment Manager................................................................31
12.2 Nature of Special Power..........................................................................32
SECTION 13. BOOKS, RECORDS AND REPORTS......................................................................33
13.1 Books............................................................................................33
13.2 Reports..........................................................................................34
SECTION 14. VALUATION OF INTERESTS..........................................................................35
SECTION 15. BANK ACCOUNTS; CUSTODIAN........................................................................35
15.1 Bank Accounts Generally..........................................................................35
15.2 Custodian........................................................................................35
SECTION 16. DISSOLUTION AND TERMINATION OF THE COMPANY......................................................36
16.1 Dissolution Generally............................................................................36
16.2 Continuation of Company..........................................................................36
16.3 Events Causing Dissolution.......................................................................36
16.4 Distribution of Assets on Liquidation............................................................36
16.5 Liquidation Statement............................................................................37
16.6 Director's Liability Upon Dissolution or Removal.................................................37
16.7 Restriction on Liquidation.......................................................................37
SECTION 17. GENERAL PROVISIONS..............................................................................37
17.1 Notices and Distributions........................................................................37
17.2 Survival of Rights...............................................................................38
17.3 Construction.....................................................................................38
17.4 Section Headings.................................................................................38
17.5 Agreement in Counterparts........................................................................38
17.6 Governing Law....................................................................................38
17.7 Additional Documents.............................................................................38
17.8 Severability.....................................................................................39
17.9 Pronouns.........................................................................................39
17.10 Entire Agreement.................................................................................39
17.11 Arbitration......................................................................................39
17.12 Waiver of Partition..............................................................................39
17.13 Non-Petition Covenant............................................................................39
17.14 Filing...........................................................................................40
Appendix A Statement of Preferences of Series S Preferred Share.....................................A-1
Appendix B Statement of Preferences of Series Z Preferred Shares....................................B-1
Appendix C Statement of Preferences of Money Market Cumulative Preferred Shares.....................C-1
Appendix D Form of Notice of Transfer...............................................................D-1
Appendix E Subscription Agreement...................................................................E-1
Appendix F Schedule of Members..........................................................................F-1
SPECIAL VALUE OPPORTUNITIES FUND, LLC
A Delaware Limited Liability Company
SECOND AMENDED AND RESTATED OPERATING AGREEMENT
This Second Amended and Restated Operating Agreement, dated
as of July 12, 2004 (this "Agreement"), has been approved by a majority of the
Board of Directors of the Company and the sole Member of the Company in
accordance with Section 10.3(b) of the Amended and Restated Operating Agreement
and, when executed by Xxxxxx Xxxxxxxxx, as Secretary of the Company, in
accordance with Section 17.14 of the Amended and Restated Operating Agreement,
shall amend and replace in its entirety the Amended and Restated Operating
Agreement.
Upon the terms and subject to the conditions described below,
the parties to this Agreement, which shall include all Persons becoming Members
at any time, as a condition of becoming and for so long as they remain Members,
agree as follows:
SECTION 1.
DEFINED TERMS
The terms set forth below shall have the indicated meanings.
"Advisers Act" means the Investment Advisers Act of 1940 and
the rules and regulations promulgated thereunder and applicable exemptions
granted therefrom, as amended from time to time.
"Advisory Agreement" means the Investment Management
Agreement between the Company and the Investment Manager, dated on or about the
Initial Drawdown Date, as such agreement may be amended, modified, revised or
restated, from time to time, in accordance with the terms hereof and thereof,
and any substantially similar agreement with a successor Investment Manager
permitted by the terms hereof and thereof.
"Advisory Fee" means the fee payable to the Investment
Manager under the Advisory Agreement.
"Affiliated Person" has the meaning set forth in the
Investment Company Act.
"Aggregate Capital Contributions" means, with respect to any
Member as of any date, the aggregate amount of all Capital Contributions made
by such Member on or prior to such date.
"Agreement" or "Operating Agreement" means this Second
Amended and Restated Operating Agreement, as originally executed and as amended
from time to time.
"Ambac" means Ambac Assurance Corporation.
"Amended and Restated Operating Agreement" means the Amended
and Restated Operating Agreement, dated as of June 18, 2004, as originally
executed.
"Assets" means all cash, Cash Equivalents, securities,
investments and other property and assets of any type of the Company.
"Base Rate" means, on any date, a variable rate per annum
equal to the rate of interest published from time to time by The Wall Street
Journal as the "prime rate" at large U.S. money center banks.
"Board of Directors" means the board of directors of the
Company.
"Business Day" means any day other than a Saturday, Sunday or
any other day on which banks in New York, New York or Los Angeles, California
are required by law to be closed. All references to Business Day herein shall
be based on the time in New York, New York.
"By-Laws" has the meaning set forth in Section 9.2(g).
"Capital Contribution" means a contribution to the Company in
cash by a Member or by any predecessor holder of the Shares held by such
Member.
"Cash Equivalents" has the meaning assigned to such term in
the Credit Agreement; provided that if the Credit Agreement is terminated
without replacement, such term shall have the meaning assigned to it in the
relevant Statement of Preferences (or if the Statement of Preferences has been
terminated, those provisions in effect on the date of such termination).
"Certificate" means the Certificate of Formation of the
Company, filed with the Secretary of State on February 18, 2004, and any and
all amendments thereto and restatements thereof filed with the Secretary of
State.
"Co-Advisory Agreement" means the Co-Management Agreement
among the Company, the Co-Manager and the Investment Manager, dated on or about
the Initial Drawdown Date, as such agreement may be amended, modified, revised
or restated, from time to time, in accordance with the terms hereof and
thereof.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
"Co-Manager" means Xxxxx X. Xxxxxx & Company Inc. (to be
known as Babson Capital Management LLC as of July 1, 2004), a Massachusetts
corporation, in its capacity as co-investment manager to the Company and any
successor thereto selected in accordance with the Co-Advisory Agreement and the
Investment Company Act.
"Common Member" means a Member holding Common Shares of the
Company.
"Common Share Commitment" means, when referring to a dollar
amount, an amount committed by a Common Member or prospective Common Member for
investment in the Common Shares of the Company pursuant to (a) a Subscription
Agreement and (b) an assumption by such Member of any Common Share Commitment
of a Defaulting Member pursuant to Section 7.1(d) or of a transferring Member.
"Common Shares" means the common Shares of membership
interests of the Company having the rights and other terms set forth in this
Agreement.
"Company" means Special Value Opportunities Fund, LLC, a
Delaware limited liability company, as it may from time to time be constituted.
"Consent Dividend" shall have the meaning assigned to such
term in Section 8.1(g).
"Credit Agreement" means (a) the Credit Agreement, dated on
or about the Initial Drawdown Date, by and among the Company, certain lenders
party thereto and CDC Financial Products Inc., as arranger and administrative
agent, as the same may be amended, modified, restated, supplemented,
refinanced, extended, refunded or replaced (in whole or in part) (including
with lenders other than the initial lenders) from time to time and (b) any
related agreements or instruments in respect of any amendment, modification,
restatement, supplement, refinancing, extension, refunding or replacement of
senior indebtedness (including one or more replacement credit agreements).
"Custodial Account" means one or more segregated trust
accounts maintained pursuant to the requirements of the Investment Company Act
and other applicable law to hold the Assets.
"Custodian" means an entity which maintains the Custodial
Account pursuant to the requirements of the Investment Company Act and other
applicable law.
"Defaulting Member" shall have the meaning assigned to such
term in Section 7.1(d).
"Delaware Act" means the Delaware Limited Liability Company
Act (6 Del.C. ss. 18-101, et seq.), as amended from time to time and any
successor thereto.
"Director" means each director of the Company who at the time
in question has been duly elected or appointed and has qualified as a director
in accordance with the provisions hereof and is then in office.
"Disabling Conduct" shall have the meaning set forth in
Section 9.5.
"Disinterested Non-Party Directors" shall have the meaning
set forth in Section 9.6.
"Distribution Restriction Event" means (i) a violation of the
Over-Collateralization Test (without giving effect to the grace period provided
therein) under the Credit Agreement, or (ii) an Event of Default under the
Credit Agreement, or (iii) Company Equity (including any outstanding Affiliate
Equity Security) being less than Adjusted Contributed Company Capital under the
Credit Agreement. Terms used in this definition and not defined herein shall
have the meanings given to such terms in the Credit Agreement.
"Drawdown Date" means each date that the Company draws down
Common Share Commitments.
"Fiscal Quarter" means a three calendar month period ending
March 31, June 30, September 30 or December 31 of a Fiscal Year.
"Fiscal Year" means the Company's fiscal year, which shall
end on each December 31 unless otherwise determined by the Board of Directors.
"Incapacity" or "Incapacitated" means, as to any Person, the
bankruptcy, insolvency, death, disability, adjudication of incompetence or
insanity, dissolution or termination, as the case may be, of such Person.
"Indemnified Person" shall have the meaning assigned to such
term in Section 9.5.
"Independent Director" means a Director that is not an
Interested Person.
"Initial Drawdown Date" means the date on which the first
Capital Contributions in respect of the Common Share Commitments are made with
respect to the Common Shares.
"Initial Member" means Xxxxxx Xxxxxxxxx, in his capacity as
Initial Member of the Company.
"Interested Person" has the meaning given to such term in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940 and the rules and regulations promulgated thereunder and applicable
exemptions granted therefrom, as amended from time to time.
"Investment Manager" means Xxxxxxxxxx Capital Partners, LLC,
a Delaware limited liability company, in its capacity as investment manager to
the Company, and any successor thereto selected in accordance with the Advisory
Agreement and the Investment Company Act.
"Investment Period" means the period commencing on the
Initial Drawdown Date and ending on July 13, 2014.
"Manager Affiliate" shall have the meaning set forth in
Section 9.8.
"Member" means any Person that is admitted as a Common
Member, Preferred Member or Special Member of the Company in accordance with
the terms of this Agreement at the time of reference thereto.
"Money Market Preferred Shares" means the Money Market
Cumulative Preferred Shares of the Company, the Statement of Preferences of
which is attached hereto as Exhibit C.
"Money Market Preferred Shares Policy" means the surety
policy issued pursuant to an insurance and indemnity agreement between the
Company and Ambac with respect to the Money Market Preferred Shares.
"Net Asset Value" means the value of the Assets less the
liabilities of the Company, calculated pursuant to Section 14 in accordance
with generally accepted accounting principles and in compliance with the
Investment Company Act.
"Offering Memorandum" means the Confidential Private Offering
Memorandum, dated June 30, 2004, relating to the Common Shares, as amended or
supplemented from time to time.
"Other Accounts" shall have the meaning set forth in Section
9.8.
"Person" means any human being, partnership, limited
liability company, corporation, trust or other entity.
"Placement Agents" means, collectively, Xxxxxx Xxxxxxx & Co.
Incorporated, Xxxxxx Xxxxxxx & Co. International Limited, Xxxxxx Brothers Inc.
and such other placement agents as may be designated by the Investment Manager
and approved by the Board of Directors.
"Portfolio Company" means any Person that has issued any
securities or incurred any obligations that are then owned, or that previously
were owned, by the Company.
"Preferred Member" means a Member holding Preferred Shares of
the Company.
"Preferred Shares" means the preferred Shares of membership
interests of the Company having the rights and other terms set forth in the
Statement of Preferences for the applicable series thereof, including without
limitation any Money Market Cumulative Preferred Shares, any Series S Preferred
Shares and any Series Z Preferred Shares.
"Secretary of State" means the Secretary of State of the
State of Delaware.
"Securities Act" means the Securities Act of 1933 and the
rules and regulations promulgated thereunder and applicable exemptions granted
therefrom, as amended from time to time.
"Shares" means the units of beneficial interest into which
the membership interests of the Company shall be divided from time to time and
includes fractions of Shares as well as whole Shares.
"Special Member" means SVOF/MM, LLC, a Delaware limited
liability company, in its capacity as the Special Member of the Company, or any
successor thereto in accordance with this Agreement.
"Special Share" means the Series S Preferred Share provided
for pursuant to Section 7.2.
"Statement of Preferences" means any statement of preferences
setting forth the rights and other terms of any Preferred Shares issued by the
Company.
"Subscription Agreement" means each subscription agreement
and any related supplemental subscription agreement executed by any existing or
prospective Member relating to such Member's investment in the Company.
"Subscription Period" means the period commencing on the
Initial Drawdown Date and ending on or prior to July 13, 2006.
"Subsequent Drawdown Date" has the meaning assigned to such
term in Section 7.1(b).
"Substituted Member" means any Person admitted as a Member
pursuant to Section 11.2(b).
"Substituted Special Member" means any Person admitted as the
Special Member pursuant to Section 11.2(b).
"Transaction Documents" has the meaning assigned to such term
in the Credit Agreement.
"Transfer" or "Transferred" means, with respect to any legal
or beneficial interest in the Company, a direct or indirect sale, transfer,
assignment, gift, pledge, hypothecation or other disposition or encumbrance of
any nature of or on such interest, whether by operation of law or otherwise
(including a transfer as a result of a merger or consolidation involving a
Member or a sale of all or substantially all of a Member's assets).
"Transferee" means, with respect to any legal or beneficial
interest in the Company, the Person to whom the Transferor of such interest
desires to Transfer or has Transferred such interest.
"Transferor" means, with respect to any legal or beneficial
interest in the Company, the Member or other Person desiring to Transfer such
interest.
"Treasury Regulations" means the United States Treasury
regulations promulgated under the Code.
"Unfunded Commitment" means, with respect to any Common
Member as of any date, the amount of such Common Member's Common Share
Commitment minus such Common Member's Aggregate Capital Contributions
previously made.
"Valuation Date" means (i) the last Business Day of each
Fiscal Quarter, (ii) a date selected by the Company within 48 hours prior to
each issuance (exclusive of Sundays and holidays) of Common Shares by the
Company, (iii) each distribution declaration date (after giving effect to the
relevant declaration), (iv) the date on which the Company terminates, and (v)
such other dates as determined by the Board of Directors, in accordance with
the valuation policies and guidelines approved from time to time by the Board
of Directors.
SECTION 2.
LIMITED LIABILITY COMPANY FORMATION AND IDENTIFICATION
2.1 Formation
The Company has been formed as a limited liability company
pursuant to the Delaware Act by the filing of the Certificate with the
Secretary of State, Division of Corporations, in accordance with the Delaware
Act on February 18, 2004. The Company is hereby continued under, and its
business and affairs shall be conducted in accordance with, the Delaware Act,
and this Agreement shall be governed by the laws of the State of Delaware. Upon
its execution of this Agreement in its capacity as the Special Member, SVOF/MM,
LLC shall be admitted as the Special Member of the Company. Common Members
shall be admitted as Members of the Company upon the Investment Manager's
execution of this Agreement as the attorney-in-fact for such Common Members.
Preferred Members shall be admitted as Members of the Company pursuant to the
provisions of the applicable Statement of Preferences. In addition, any Member
will be admitted as a Member of the Company upon the execution of a counterpart
of this Agreement by such Member.
2.2 Name and Place of Business
The name of the Company shall be "Special Value Opportunities
Fund, LLC" or such other name or names as may be selected by the Investment
Manager from time to time with written notice given to the Members of such
change. The principal office of the Company shall be at the principal place of
business of the Investment Manager at 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000 and, after August 1, 2004, 0000 00xx Xxxxxx,
Xxxxx 0000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000, or other or additional places of
business as may be selected from time to time by the Company.
2.3 Records of Members
The addresses and schedules of capital accounts and other
matters related to the Members shall be those set forth in the Company records.
A Member may change its address by written notice to the Company, in care of
the Investment Manager, at the address set forth in Section 2.2.
2.4 Limited Liability Company
The Company has been formed as a limited liability company
under and pursuant to the Delaware Act. The Board of Directors and the Members
specifically intend and agree that the Company shall, for purposes of the Code
and state tax laws, be classified as a regulated investment company and none of
them shall make any election or take any other action that would cause their
relationship under this Agreement to be excluded from the application of all or
any part of Subchapter M of the Code (or any successor provisions). The Members
specifically intend and agree that the Company shall not be a partnership
(including, but not necessarily limited to, a limited partnership) or any other
venture, but a limited liability company under and pursuant to the Delaware
Act. No Member shall be construed to be a partner in the Company or a partner
of any Member or other Person in the Company, and the Certificate, this
Agreement and the relationships created thereby and arising therefrom shall not
be construed to suggest otherwise. The Members hereby acknowledge and agree
that the Investment Manager and any persons that may be appointed as such by
the Board of Directors or the Investment Manager are "authorized persons"
within the meaning of Section 18-204 of the Delaware Act.
SECTION 3.
PURPOSE, NATURE OF BUSINESS AND POWERS
(a) The purposes of the Company and the business to be
carried on by it, subject to the limitations contained elsewhere in this
Agreement, are to engage in any business lawful for a corporation or
partnership formed under the laws of the State of Delaware, including to act as
an investment company.
(b) The Company shall have the power to do any and all acts
necessary, appropriate, proper, advisable, incidental or convenient to or for
the furtherance of the purposes and business described herein and for the
protection and benefit of the Company, and shall have, without limitation, any
and all of the powers of a business corporation or partnership organized under
the laws of the State of Delaware.
(c) All property owned by the Company, real or personal,
tangible or intangible, shall be deemed to be owned by the Company as an
entity, and no Member or Director, individually, shall have any ownership of
such property.
(d) Notwithstanding anything to the contrary contained
herein, the Company shall not invest more than 5% of the sum of Common Share
Commitments, the maximum amount available to be drawn under the Credit
Agreement and the aggregate liquidation preference of the Money Market
Preferred Shares available to be issued by the Company in companies that have
the manufacture or sale of alcohol, tobacco or firearms as a core business
(which means 25% or more of such company's total gross revenues are derived
from such activities).
SECTION 4.
TERM
The existence of the Company commenced on the date the
Certificate was filed in the Office of the Secretary of State and shall
continue in full force and effect until the end of the Investment Period, plus
up to two one-year extensions if requested by the Investment Manager and
approved by a majority of the outstanding Shares.
SECTION 5.
SHARES OF MEMBERSHIP INTEREST
5.1 Beneficial Interest
The interest of the Members in the Company hereunder shall be
divided into an unlimited number of shares of membership interest, par value
$.001 per share. All Shares issued in accordance with the terms hereof,
including, without limitation, Shares issued in connection with a dividend in
Shares or a split of Shares, shall be fully paid and nonassessable when the
consideration determined by the Company (if any) therefor shall have been
received by the Company.
.2 Classes and Series
The Directors shall have the authority, without the approval
of any Members of the Company, to classify and reclassify issued and unissued
Shares into one or more classes and one or more series of any or all of such
classes, each of which classes and series thereof shall have such designations,
powers, preferences, voting, conversion and other rights, limitations,
qualifications and terms and conditions as the Directors shall determine from
time to time with respect to each such class or series; provided, however, that
no reclassification of any issued and outstanding Shares and no modifications
of any of the designations, powers, preferences, voting, conversion or other
rights, limitations, qualifications and terms and conditions of any issued and
outstanding Shares may be made by the Directors without the affirmative vote of
the Shares specified in Section 10.3 to the extent required thereby and the
satisfaction of any conditions to such reclassification as set forth in the
applicable Statement of Preferences.
5.3 Issuance of Shares
The Directors, in their discretion, may from time to time
without vote of the Members issue Shares of any class or any series of any such
class to such Person or Persons and for such amount and type of consideration,
including cash or property, at such time or times, and on such terms as the
Directors may determine, and may in such manner acquire other assets (including
the acquisition of assets subject to, and in connection with the assumption of,
liabilities) and businesses. The Directors may from time to time divide or
combine the Shares of any class or any series of any such class into a greater
or lesser number without thereby changing the proportionate beneficial interest
in such Shares. Issuances and repurchases of Shares may be made in whole Shares
and/or fractions as the Directors may determine.
5.4 Rights of Members
The Shares shall be personal property giving only the rights
in this Agreement specifically set forth. The ownership of the Assets of every
description is vested in the Company. The right to conduct and supervise the
conduct of the business of the Company is vested exclusively in the Directors
(subject to the right of the Board of Directors to delegate all or any part of
authority to any person or group of persons, including, without limitation, the
Investment Manager), and the Members shall have no interest therein other than
the beneficial interest conferred by their Shares, and they shall have no right
to call for any partition or division of any property, profits, rights or
interests of the Company nor can they be called upon to share or assume any
losses of the Company or suffer an assessment of any kind by virtue of their
ownership of Shares. No Shares of any class or series shall entitle the holder
to preference, preemptive, appraisal, conversion or exchange rights (except as
otherwise specified in this Agreement or as specified by the Directors in the
designation or redesignation of any such class or series).
SECTION 6.
REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS
The Corporation Trust Company is hereby designated, subject
to change by the Investment Manager, as the registered office of the Company
and as the agent upon whom process issued by authority of or under any law of
the State of Delaware may be served.
SECTION 7.
CAPITAL CONTRIBUTIONS
7.1 Capital Contributions of Members
(a) Each prospective initial Common Member, to be admitted as
a Member of the Company at the Initial Drawdown Date, must deliver to the
Investment Manager a completed, executed Subscription Agreement, which must be
satisfactory to the Investment Manager, and in which, among other things, such
prospective Common Member represents that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and a "qualified client" within
the meaning of Rule 205-3 of the Advisers Act. The minimum Common Share
Commitment to which a Common Member may subscribe shall be $10,000,000;
provided, however, that the Investment Manager may, in its sole discretion,
waive this requirement. On the Initial Drawdown Date, each initial prospective
Common Member shall contribute to the Company 20% of its Common Share
Commitment or such other proportion as the Board of Directors shall have
determined. On the date of original issuance of each series of Preferred
Shares, each Person who is admitted as a Member holding Preferred Shares of
such series in accordance with the applicable Statement of Preferences shall,
in connection therewith, contribute to the Company an amount in cash equal to
the purchase price for such Preferred Shares.
(b) Subsequent to the Initial Drawdown Date, the Company will
draw down Common Share Commitments on multiple Drawdown Dates (each, a
"Subsequent Drawdown Date"). On each Drawdown Date, the Company will issue
Common Shares at Net Asset Value per Common Share as calculated within 48 hours
prior to issuance (exclusive of Sundays and holidays) in an aggregate amount
equal to the percentage of the Common Share Commitments drawn down.
(c) Unfunded Commitments may be called by the Company at any
time during the Subscription Period in any amount on not less than 15 days
prior written notice to the Common Members; provided, however, that (i) all
Capital Contributions for Common Shares shall be on a pro rata basis in
proportion to each Common Member's respective Unfunded Commitment, (ii) the
aggregate amount of Capital Contributions required on each Subsequent Drawdown
Date shall be at least 10% of the aggregate Common Share Commitments (or, with
respect to the last Subsequent Drawdown Date, any amount left undrawn), and
(iii) all calls for Capital Contributions shall be made so that they are
required to be funded on or prior to the end of the Subscription Period. (d) If
any Common Member fails to make full payment of any portion of its Common Share
Commitment or any other payment required hereunder when due (a "Defaulting
Member"), the Company shall give such Defaulting Member written notice of its
default in payment and in the event such default shall continue beyond the
tenth calendar day following such notice, the Company may, in its sole
discretion, take any one or more of the following actions:
(i) The Company may assist the Defaulting Member in
finding a buyer for the Defaulting Member's Common Shares which buyer
will assume the Defaulting Member's obligations hereunder, subject to
the restrictions on transfer contained in Section 11.2 (in which case
such Person shall, as a condition of purchasing such Common Shares,
become a party to this Agreement and assume such Defaulting Member's
obligation to make both defaulted and future Capital Contributions).
(ii) The Company may pursue and enforce all rights and
remedies the Company may have against the Defaulting Member, including
a lawsuit to collect the overdue amount, with interest calculated
thereon at a rate equal to the Base Rate plus six percent (6%) per
annum or, if greater, the annualized rate of total return per Common
Share over the prior four fiscal quarters (or since commencement of
operations if less than four fiscal quarters) (but not in excess of
the highest rate per annum permitted by applicable law).
(iii) The Company may offer a Defaulting Member's
Common Shares to the Common Members (other than any Defaulting
Member), which offer shall be made pro rata in accordance with the
non-defaulting Members' respective Common Share Commitments, at a
discount to the Net Asset Value of such Common Shares. The purchase
price for such Common Shares will be determined in the sole discretion
of a majority of the Independent Directors; provided, however, that
such Defaulting Member shall receive not less than 66% of the most
recently determined Net Asset Value of such Common Shares. If a
non-defaulting Member elects not to purchase all of the Common Shares
offered to it, such unpurchased Common Shares shall be reoffered pro
rata to the non-defaulting Members who have purchased all of the
Common Shares offered to them until either all of such Common Shares
are acquired or no non-defaulting Member wishes to make a further
investment. At the closing of such purchase (on a date and at a place
designated by the Company), each purchasing Member shall, as payment
in full for the Defaulting Member's Common Shares being purchased, (A)
deliver a non-interest bearing, non-recourse promissory note (in a
form approved by the Company) payable upon the earlier to occur of ten
years after delivery of the note or liquidation of the Company,
secured only by the Defaulting Member's Common Shares being purchased
by such Member (excluding the portion of such Common Shares
represented by contributions made by such purchaser with respect to
such Common Shares), payable to the Defaulting Member in an amount
equal to the purchase price of the portion of the Defaulting Member's
Common Shares being purchased by such Member, and (B) assume the
portion of the Defaulting Member's obligation to make both defaulted
and future Capital Contributions and other payments pursuant to its
Common Share Commitment and this Agreement which are commensurate with
the portion of the Defaulting Member's Common Shares being purchased
by such Member. Upon the closing of such purchase, each purchasing
Member shall make a Capital Contribution in an aggregate amount equal
to that portion of the assumed Common Share Commitment representing
the defaulted Common Share Commitment of the Defaulting Member, and
the balance of the assumed Common Share Commitment shall be added to
such purchasing Member's Common Share Commitment for all purposes
under this Agreement. The Company shall specify the procedures for
making and accepting the offers contemplated by this subparagraph and
shall, in its discretion, set time limits for acceptance. All Capital
Contributions made by the purchasing Members shall be "Capital
Contributions" made under this Agreement and Common Shares shall be
issued to such Members accordingly. If all of the Defaulting Member's
Common Shares are not purchased pursuant to the immediately preceding
provisions, the Company may offer any remaining Common Shares to any
other Person on the same terms as originally offered to the Members
pursuant to such provisions, subject to the restrictions on transfer
contained in Section 11.2 (in which case such Person shall, as a
condition of purchasing such Common Shares, become a Member party to
this Agreement and assume such Defaulting Member's obligation to make
both defaulted and future Capital Contributions).
(iv) The Company may repurchase, retire and cancel such
Defaulting Member's Common Shares at a discount to the Net Asset Value
of such Common Shares. The consideration to be paid to such Defaulting
Member upon any repurchase, retirement or cancellation of such Common
Shares will be determined in the sole discretion of a majority of the
Independent Directors; provided, however, that such Defaulting Member
shall receive not less than 66% of the Net Asset Value of such Common
Shares.
(v) The Company may offer to the Common Members (other
than such Defaulting Member) for assumption by the non-defaulting
Members such Defaulting Member's Common Share Commitment to make its
Capital Contribution which was not made ("Defaulted Commitment"),
which offer shall be made pro rata in accordance with the
non-defaulting Members' respective Common Shares. If a non-defaulting
Member elects not to assume the entire portion of the Defaulted
Commitment offered to it, such unassumed Defaulted Commitment shall be
reoffered pro rata to the non-defaulting Members who have elected to
assume the entire portion of the Defaulted Commitment offered to them
until either all of such Defaulted Commitment is assumed or no
non-defaulting Member wishes to make a further assumption of the
Defaulted Commitment. At the closing of such offer (on a date and at a
place designated by the Company), each assuming Member shall make a
Capital Contribution in an amount equal to that portion of the
Defaulted Commitment assumed by it in accordance with the provisions
of this subparagraph which is then due or past due. The Investment
Manager shall specify the procedures for making and accepting the
offers contemplated by this subparagraph and shall, in its discretion,
set time limits for acceptance. If the entire Defaulted Commitment is
not assumed pursuant to the preceding provisions, the Company may
offer to any other Person for assumption any remaining portion of the
Defaulted Commitment, subject to the restrictions on transfer
contained in Section 11.2 (in which case such third party or parties
shall become a party to this Agreement). All Capital Contributions
made by the non-defaulting Members and other Persons pursuant to this
subparagraph (v) shall be "Capital Contributions" made under this
Agreement, and the Common Shares of each of such Members and other
Persons shall be adjusted accordingly. Such Defaulting Member's Common
Share Commitment shall be reduced by the aggregate amount of Defaulted
Commitment assumed by the non-defaulting Members and such other
Persons and for which payments have been actually received by the
Company.
(vi) The Company may reduce (effective on the date of
the default) the Defaulting Member's Common Share Commitment (to the
extent it has not been assumed by another Member or Person) to the
amount of Capital Contributions actually made by such Defaulting
Member (net of distributions pursuant to Section 8.1), and the
aggregate Common Share Commitment of such Defaulting Member shall be
commensurately reduced; provided, however, that the Common Share
Commitments of the non-defaulting Members shall not be reduced.
(vii) If the Defaulting Member is an entity formed for
the purpose of investing in the Company and such Defaulting Member's
failure to make any portion of a Capital Contribution when required is
caused by the failure of one or more of such Defaulting Member's
investors to either (i) make an equity contribution or (ii) deliver
payment in exchange for any notes issued to such investor, to such
Defaulting Member, the Company may, in its sole discretion, apply the
provisions of this Section 7.1(d) to such Defaulting Member's Common
Shares and/or Common Share Commitments on a pro rata basis to
appropriately reflect the effect of the failure of such Defaulting
Member's defaulting equity investors in a manner which is equitable to
such Defaulting Member's non-defaulting equity investors.
(e) No consent of any Member shall be required as a condition
precedent to any transfer, assignment, assumption or other disposition of a
Defaulting Member's Common Shares or Common Share Commitment, as the case may
be, pursuant to Section 7.1(d). If all of the Defaulting Member's Common Shares
and its Common Share Commitments are purchased in the manner set forth in
Section 7.1(d), such Defaulting Member shall cease to be a Common Member in the
Company and shall cease to have the power to exercise any rights or powers of a
Common Member.
7.2 Contribution of the Special Member
The Special Member shall receive one Special Share in
exchange for its contribution of $1,000.00 on the Initial Drawdown Date. The
Special Share shall have the designations, powers, preferences, voting and
other rights, limitations, qualifications and terms and conditions set forth in
the Statement of Preferences therefor attached hereto as Appendix A.
7.3 Withdrawal of Capital
No Member shall have any right to withdraw from the Company
except in connection with the admission of one or more Transferees of all of
such Member's Shares in the Company. No Member shall have any right to require
the Company to repurchase or redeem all or any portion of its Shares except as
provided in or pursuant to any Statement of Preferences. Further, no Common
Member shall have any right to withdraw its Common Share Commitment.
SECTION 8.
DISTRIBUTIONS
8.1 Distributions
(a) The Company shall from time to time distribute among the
Shares (or one or more classes or series thereof) such portion of the net
profits, surplus (including paid-in surplus), capital, or assets held by the
Company as the Directors may deem proper or as may otherwise be determined
pursuant to this Agreement or the Statement of Preferences therefor, which need
not be ratable with respect to distributions in respect of Shares of any other
class or series thereof of the Company, but must be ratable within each class
or series of Shares. The Preferred Shares shall not be entitled to receive, and
the Directors shall be prohibited from declaring or distributing in respect of
any of the Preferred Shares, any amount in excess of the distributions
specified for such Preferred Shares in the applicable Statement of Preferences
therefor. Such distributions may be made in cash or property (including without
limitation any type of obligations of the Company or any assets thereof) or any
combination thereof.
(b) Distributions may be made to the holders of record of the
Shares entitled to such distribution at the time such distribution is declared
or at such later date as shall be determined by the Company prior to the date
of payment.
(c) The Directors may always retain from any source such
amount as they may deem necessary to pay the debts or expenses of the Company
or to meet obligations of the Company, or as they otherwise may deem desirable
to use in the conduct of its affairs or to retain for future requirements or
extensions of the business of the Company.
(d) Any distribution by the Company pursuant to the terms of
this Section 8.1 or Section 16 to the Person shown on the Company's records as
a Member or to its legal representatives, or to the assignee of the right to
receive such distributions as provided herein, shall relieve the Company, the
Directors and the Investment Manager of all liability to any other Person who
may be interested in such distribution by reason of any Transfer of any
interest in any of such Member's Shares (including a Transfer thereof by
operation of law or by reason of death, incompetence, bankruptcy or liquidation
of such Member, as the case may be).
(e) Notwithstanding any provision to the contrary contained
in this Agreement, neither the Company, the Directors nor the Investment
Manager on behalf of the Company shall make any distribution to a Member on
account of its Shares if such distribution would violate Section 18-607 of the
Delaware Act or other applicable law.
(f) Notwithstanding any other provision of this Agreement,
the Company may set aside reasonable reserves for anticipated liabilities,
obligations or commitments of the Company which it determines to be reasonably
necessary or desirable, in its sole judgment.
(g) Each Common Member agrees, within ten (10) calendar days
following the receipt of each written request from the Company, in the event a
Distribution Restriction Event shall have occurred and is continuing so that
the Company is prevented from making distributions to the Common Members such
that its deduction for dividends paid during the taxable year does not equal at
least ninety-eight percent (98%) of each of (i) the Company's investment
company taxable income (as determined for purposes of Section 852 of the Code)
and (ii) the amount described in Section 852(a)(1)(B) of the Code, to execute
and deliver to the Company, or an agent of the Company specified by the
Company, with respect to any such taxable year, a consent in accordance with
Section 565 of the Code and the Treasury Regulations promulgated thereunder,
and any successor provision, in the manner specified by the Company, to treat
the amount specified by the Company in such request as a dividend (the "Consent
Dividend") for United States federal income tax purposes for the taxable year
indicated by the Company.
(h) In the case that a Common Member reasonably believes that
there may be a withholding tax imposed on a Consent Dividend under the laws of
the United States or any political subdivision thereof, upon the written
request of such Common Member given to the Company within five (5) Business
Days of the written request by the Company for the Consent Dividend forms and
documentation described in Section 8.1(g) hereof, such Common Member shall not
be required to execute or deliver such Consent Dividend forms unless the
Company has delivered to such Common Member a certificate signed by an
authorized officer of the Company stating that the Company has sufficient funds
available to make the payments required and shall make such payments; provided
that such Common Member shall execute and deliver to the Company such Consent
Dividend forms and documentation within five (5) Business Days of the receipt
of such certificate.
(i) If it is determined by the Board of Directors that the
requisite consents for a Consent Dividend have not been obtained from the
Common Members, after taking such actions, if any, as the Board of Directors
deems appropriate to enforce the provisions of Section 8.1(g) hereof, but a
dividend payment or distribution would otherwise be required to be made on the
Common Shares in order to preserve the U.S. federal income tax status of the
Company as a regulated investment company or to avoid the imposition of the
excise tax under Section 4982 of the Code, such payment or distribution shall
be distributed for the benefit of the Common Members and deposited into one or
more escrow accounts. If any amounts deposited in the escrow accounts are paid
over to the senior secured creditors of the Company, the Common Members will
have an unsecured, recourse claim against the Company for any such amounts paid
to such senior secured creditors. For United States federal, state and local
tax purposes, each Common Member agrees to treat its share of any amount so
deposited as a dividend received by such Common Member at the time of such
deposit.
(j) Notwithstanding anything to the contrary contained in
this Agreement, commencing on the sixth anniversary of the Initial Drawdown
Date, the Company will not be permitted to enter into new investments (other
than investments in Cash Equivalents) unless the following conditions have been
satisfied: (i) for investments to be made during the period between the sixth
and seventh anniversaries of the Initial Drawdown Date, the Company must have
distributed to the Common Members a cumulative amount equal to or greater than
40% of their Capital Contributions on or before the commencement of such
period; (ii) for investments to be made during the period between the seventh
and eighth anniversaries of the Initial Drawdown Date, the Company must have
distributed to the Common Members a cumulative amount equal to or greater than
50% of their Capital Contributions on or before the commencement of such
period; (iii) for investments to be made during the period between the eighth
and ninth anniversaries of the Initial Drawdown Date, the Company must have
distributed to the Common Members a cumulative amount equal to or greater than
60% of their Capital Contributions on or before the commencement of such
period; and (iv) for investments to be made during the period between the ninth
and tenth anniversaries of the Initial Drawdown Date, the Company must have
distributed to Common Members a cumulative amount equal to or greater than 80%
of their Capital Contributions on or before the commencement of such period.
Notwithstanding the foregoing, the Company shall at all times have the right to
make new investments in an amount up to a maximum of 7.5% of Capital
Contributions at any such time. Such new investments would be anticipated, but
not required, to be used primarily for "follow on" and related investments.
SECTION 9.
MANAGEMENT AND BOARD OF DIRECTORS
9.1 Management Generally
(a) Subject to the voting rights of the Shares, the
management of the Company shall be vested exclusively in the Board of
Directors, which shall have all of the power and authority of a "manager" of
the Company within the meaning of the Delaware Act, including the authority to
appoint officers and to authorize persons to act on behalf of the Company and
engage third parties to provide services to the Company and to perform any
permissible activity and is further authorized to delegate such power and
authority to such officers or authorized Persons as it determines to be
appropriate, subject to the requirements of the Investment Company Act. The
Board of Directors may designate one or more committees each of which shall
have all or such lesser portion of the power and authority of the entire Board
of Directors as the Directors shall determine from time to time, except to the
extent that action by the entire Board of Directors or particular Directors is
required by the Investment Company Act.
(b) Except as expressly set forth herein, the Members, in
their capacity as such, shall have no part in the management of the Company,
and shall have no authority or right to act on behalf of the Company in
connection with any matter. Employees, officers, authorized Persons and agents
of the Company shall have authority to act on behalf and in the name of the
Company to the extent authorized by the Board of Directors or pursuant to
authority granted by it. It is contemplated that the Board of Directors will
delegate substantially all of its power and authority with respect to the
operations of the Company to the Investment Manager and other authorized
Persons.
9.2 Board of Directors
(a) Subject to the terms of each Statement of Preferences,
the number of Directors shall be such number, not less than three, as shall be
approved from time to time by a majority of Directors then in office. No
reduction in the number of Directors shall have the effect of removing any
Director from office prior to the expiration of his or her term. An individual
nominated as a Director shall be at least 21 years of age and not older than
such age as shall be approved from time to time by not less than two-thirds of
the Directors then in office and shall not be under legal disability. Directors
need not own Shares and may succeed themselves in office. The names and
addresses of the Directors shall be set forth in the records of the Company.
(b) Any Director may resign as a Director (without need for
prior or subsequent accounting) by an instrument in writing signed by him and
delivered or mailed to the Chairman, if any, the President or the Secretary and
such resignation shall be effective upon such delivery, or at a later date
provided in such instrument. Subject to the rights of the Preferred Shares with
respect to Directors elected solely by the Preferred Shares pursuant to the
Investment Company Act, any Director may be removed (provided that the
aggregate number of Directors after such removal shall not be less than the
minimum number specified in Section 9.2(a) hereof) for cause at any time by the
act of a majority of the remaining Directors, specifying the date when such
removal shall become effective. Subject to the rights of the Preferred Shares
with respect to Directors elected solely by the Preferred Shares pursuant to
the Investment Company Act, any Independent Director may be removed (provided
that the aggregate number of Directors after such removal shall not be less
than the minimum number Section 9.2(a) hereof) without cause at any time by the
act of two-thirds of the remaining Directors, and any Director can be removed
without cause by vote of not less than two-thirds of the aggregate number of
Shares entitled to vote in the election of such Director, specifying the date
when such removal shall become effective.
(c) The term of office of a Director shall terminate and a
vacancy shall occur in the event of the removal, resignation, incompetence or
other incapacity to perform the duties of the office, or death, of a Director.
Subject to the rights of the Preferred Shares with respect to Directors elected
solely by the Preferred Shares pursuant to the Investment Company Act and
pursuant to any Statement of Preferences, whenever a vacancy in the Board of
Directors shall occur, the remaining Directors may fill such vacancy by
appointing an individual having the qualifications described in this Agreement
by a written instrument signed or adopted by a majority of the Directors then
in office or by election of the holders of Shares, or may leave such vacancy
unfilled, or may reduce the number of Directors (provided that the aggregate
number of Directors after such removal shall not be less than the minimum
number specified in Section 9.2(a) hereof). Any vacancy created by an increase
in Directors may be filled by the appointment of an individual having the
qualifications described in this Agreement by a majority of the Directors then
in office or by election of the holders of Shares. No vacancy shall operate to
annul this Agreement or to revoke any existing agency created pursuant to the
terms of this Agreement. Whenever a vacancy in the number of Directors shall
occur, until such vacancy is filled as provided herein, the Directors in
office, regardless of their number, shall have all the powers granted to the
Directors and shall discharge all the duties imposed upon the Directors by this
Agreement.
(d) Meetings of the Directors shall be held from time to time
upon the call of the Chairman, if any, the President, the Secretary or any two
Directors. Regular meetings of the Directors may be held without call or notice
at a time and place fixed by resolution of the Directors. Notice of any other
meeting shall be mailed via overnight courier not less than 48 hours before the
meeting or otherwise actually delivered orally or in writing not less than 24
hours before the meeting, but may be waived in writing by any Director either
before or after such meeting. The attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting except where a Director attends a
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting has not been lawfully called or convened. The
Directors may act with or without a meeting. A quorum for all meetings of the
Directors shall be one-third of the Directors then in office. Unless provided
otherwise in this Agreement, any action of the Directors may be taken at a
meeting by vote of a majority of the Directors present (a quorum being present)
or without a meeting by written consent of a majority of the Directors or such
other proportion as shall be specified herein for action at a meeting at which
all Directors then in office are present.
(i) Any committee of the Directors may act with or
without a meeting. A quorum for all meetings of any such committee
shall be one third of the members thereof. Unless provided otherwise
in this Agreement, any action of any such committee may be taken at a
meeting by vote of a majority of the members of such committee present
(a quorum being present) or without a meeting by written consent of a
majority of the members of such committee or such other proportion as
shall be specified herein for action at a meeting at which all
committee members are present.
(ii) With respect to actions of the Directors and any
committee of the Directors, Directors who are Interested Persons in
any action to be taken may be counted for quorum purposes under this
Section and shall be entitled to vote to the extent not prohibited by
the Investment Company Act.
(iii) All or any one or more Directors may participate
in a meeting of the Directors or any committee thereof by means of a
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other;
participation in a meeting pursuant to any such communications system
shall constitute presence in person at such meeting except as
otherwise provided by the Investment Company Act.
(iv) The Directors may, but shall not be required to,
elect a Chairman of the Board of Directors, who shall not, in his or
her capacity as such, be an officer of the Company and who shall serve
at the pleasure of the Board of Directors. Any Chairman of the Board
of Directors elected by the Directors need not be an Independent
Director, unless otherwise required by applicable law.
(e) The Directors shall elect a Chief Executive Officer, a
Secretary and a Chief Financial Officer and any other authorized persons who
shall serve at the pleasure of the Board of Directors or until their successors
are elected. The Directors may elect or appoint or may authorize the Chairman,
if any, or Chief Executive Officer to appoint such other officers or agents or
other authorized persons with such other titles and powers as the Board of
Directors may deem to be advisable. Any Chairman shall, and the Chief Executive
Officer, Secretary and Chief Financial Officer may, but need not, be a
Director.
(f) The Directors and officers shall owe to the Company and
the holders of Shares the same fiduciary duties as owed by directors and
officers of corporations to such corporations and their stockholders under the
general corporation law of the State of Delaware. Directors elected by the
holders of Preferred Shares shall have no special duties to the holders of
Preferred Shares. The Directors shall have exclusive and absolute control over
the Assets and over the business of the Company to the same extent as if the
Directors were the sole owners of the property and business in their own right,
but with such powers of delegation as may be permitted by this Agreement. The
Directors shall have power to engage in any activity not prohibited by Delaware
law. The enumeration of any specific power herein shall not be construed as
limiting the aforesaid power. The Directors may perform such acts as in their
sole discretion are proper for conducting the business of the Company. The
powers of the Directors may be exercised without order of or resort to any
court. No Director shall be obligated to give any bond or other security for
the performance of any of his duties or powers hereunder.
(g) The Board of Directors may adopt and from time to time
amend or repeal By-Laws ("By-Laws") for the conduct of the business of the
Company. Such By-Laws shall be binding on the Company and the Members unless
inconsistent with the provisions of this Agreement. The Members shall not have
authority to adopt, amend or repeal By-Laws.
(h) Any determination as to what is in the interests of the
Company made by the Directors in good faith shall be conclusive. In construing
the provisions of this Agreement, the presumption shall be in favor of a grant
of power to the Directors.
(i) The Directors shall have the power, without any amendment
to this Agreement or any Statement of Preferences adopted hereunder, to impose
restrictions on the activities of Members with respect to the Company or any
Portfolio Company to prevent limitations on the Company's ability to invest in
certain industries, such as utilities, communications, gambling, interstate
transportation and insurance. Such limitations shall be binding upon all
Members.
9.3 Expenses of the Company
(a) The Company shall have power to incur and pay out of the
Assets or income of the Company any expenses necessary or appropriate to carry
out any of the purposes of this Agreement, and the business of the Company. The
Directors may pay themselves such compensation as they in good faith may deem
reasonable and may be reimbursed for expenses reasonably incurred by themselves
on behalf of the Company.
(b) The Company shall pay all, and shall reimburse the
Investment Manager, the Co-Manager and each of their respective Affiliates for,
any costs and expenses that, in the good faith judgment of the Board of
Directors, are incurred in the formation, financing or operation of the
Company, including, without limitation, the Advisory Fees and other costs and
expenses specified herein or in the Advisory Agreement or the Co-Advisory
Agreement to be paid by the Company; fees and expenses of offering Shares or
debt instruments and enhancing or assuring the credit quality thereof; fees and
expenses relating to short-term investments of cash and investments in
Portfolio Companies including the structuring, negotiation, acquisition,,
syndication, holding, restructuring, recapitalization and disposition thereof
or relating to proposed portfolio investments which are not consummated;
reasonable premiums for insurance protecting the Company, the Investment
Manager, the Co-Manager, any of their respective Affiliates and any of their
respective employees and agents; legal, compliance, administrative, custodial
and accounting expenses; auditing expenses; appraisal expenses; expenses
relating to organizing companies through or in which investments in Portfolio
Companies will be made; expenses incurred in maintaining the places of business
of the Company; costs and expenses of preparing and maintaining the books and
records of the Company and entities through which it invests; costs and
expenses that are classified as extraordinary expenses under generally accepted
accounting principles; taxes or other governmental charges payable by the
Company; costs and expenses incurred in connection with any actual or
threatened litigation, and any judgments or settlements paid in connection with
litigation, involving the Company, a Portfolio Company or a Person entitled to
indemnification from the Company; expenses (including legal fees and expenses)
incurred in connection with the bankruptcy or reorganization of any Portfolio
Company; costs of reporting to the Members, creditors and regulatory
authorities; costs of responding to regulatory inquiries; costs of Member
meetings and the solicitation of Member consents; costs incurred in valuing
assets; costs of winding up and liquidating the Company; expenses incurred in
connection with a Member that defaults in respect of a Capital Contribution or
any payment due to the Company; and interest, distributions and fees under the
Credit Agreement, other indebtedness incurred by the Company and the Shares.
(c) The Company shall pay, and shall reimburse the Investment
Manager, the Co-Manager and each of their Affiliates for, all legal, tax,
accounting and other expenses (including organizational expenses) incurred in
connection with the Credit Agreement, the Preferred Shares and the formation of
the Company and related entities, and all fees payable to the Placement Agents
in connection with subscriptions for the Shares and to any other agents,
lenders, arrangers or other Persons in connection with the Credit Agreement and
the placement and sale of the Preferred Shares.
(d) The Company shall pay, and shall reimburse the Co-Manager
for, any reasonable transportation and other travel costs and expenses incurred
by the Co-Manager in connection with making any representative on any
investment committee available for meetings with the other members of such
investment committee.
9.4 Members' Consent
To the fullest extent permitted by law, each Member hereby
consents to the exercise by the Board of Directors and the Investment Manager
of the powers conferred on them by this Agreement.
9.5 Exculpation
No Member shall be subject in such capacity to any personal
liability whatsoever to any Person in connection with the Assets or the acts,
obligations or affairs of the Company. Members shall have the same limitation
of personal liability as is extended to stockholders of a private corporation
for profit incorporated under the general corporation law of the State of
Delaware. Except as otherwise required by law, the Directors, the Investment
Manager, the Co-Manager, and their respective Affiliated Persons, or any
officer, director, member, manager, employee, stockholder, assign,
representative or agent (including the Placement Agents) of any such Person
(each an "Indemnified Person", and collectively, the "Indemnified Persons")
shall not be liable, responsible or accountable in damages or otherwise to the
Company, any Member or any other Person for any loss, liability, damage,
settlement cost, or other expense (including reasonable attorneys' fees)
incurred by reason of any act or omission or any alleged act or omission
performed or omitted by such Indemnified Person (other than solely in such
Indemnified Person's capacity as a Member, if applicable) in connection with
the establishment, management or operations of the Company or the management of
the Assets (including in connection with serving on any creditors' committee or
board of directors for any Portfolio Company ), except that an Indemnified
Person shall be liable to the Company or any Member, as the case may be, if
such act or failure to act arises out of the bad faith, willful misfeasance,
gross negligence or reckless disregard of such Person's duty to the Company or
such Member, as the case may be (such conduct, "Disabling Conduct"). Subject to
the foregoing, all such Persons shall look solely to the Assets (including,
without limitation, the Unfunded Commitments) for satisfaction of claims of any
nature arising in connection with the affairs of the Company. If any
Indemnified Person is made a party to any suit or proceeding to enforce any
such liability, subject to the foregoing exception, such Indemnified Person
shall not, on account thereof, be held to any personal liability.
9.6 Indemnification; No Duty of Investigation; Reliance on Experts
(a) To the fullest extent permitted by applicable law, each
of the Indemnified Persons shall be held harmless and indemnified by the
Company (out of the Assets (including, without limitation, the Unfunded
Commitments) and not out of the separate assets of any Member) against any
liabilities and expenses, including amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, and reasonable counsel fees reasonably
incurred by such Indemnified Person in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or investigative body in which such
Indemnified Person may be or may have been involved as a party or otherwise
(other than as authorized by the Directors, as the plaintiff or complainant) or
with which such Indemnified Person may be or may have been threatened, while
acting in such Person's capacity as an Indemnified Person, except with respect
to any matter as to which such Indemnified Person shall not have acted in good
faith in the reasonable belief that such Person's action was in the best
interest of the Company or, in the case of any criminal proceeding, as to which
such Indemnified Person shall have had reasonable cause to believe that the
conduct was unlawful, provided, however, that an Indemnified Person shall only
be indemnified hereunder if (i) such Indemnified Person's activities do not
constitute Disabling Conduct and (ii) there has been a determination (a) by a
final decision on the merits by a court or other body of competent jurisdiction
before whom the issue of entitlement to indemnification was brought that such
Indemnified Person is entitled to indemnification or, (b) in the absence of
such a decision, by (1) a majority vote of a quorum of those Directors who are
neither "interested persons" of the Company (as defined in Section 2(a)(19) of
the Investment Company Act) nor parties to the proceeding, that the Indemnified
Person is entitled to indemnification (the "Disinterested Non-Party
Directors"), or (2) if such quorum is not obtainable or even if obtainable, if
such majority so directs, independent legal counsel in a written opinion that
concludes that the Indemnified Person should be entitled to indemnification.
Notwithstanding the foregoing, with respect to any action, suit or other
proceeding voluntarily prosecuted by any Indemnified Person as plaintiff,
indemnification shall be mandatory only if the prosecution of such action, suit
or other proceeding by such Indemnified Person was authorized by a majority of
the Directors. All determinations to make advance payments in connection with
the expense of defending any proceeding shall be authorized and made in
accordance with the immediately succeeding paragraph (b) below.
(b) The Company shall make advance payments in connection
with the expenses of defending any action with respect to which indemnification
might be sought hereunder if the Company receives a written affirmation by the
Indemnified Person of the Indemnified Person's good faith belief that the
standards of conduct necessary for indemnification have been met and a written
undertaking to reimburse the Company unless it is subsequently determined that
he is entitled to such indemnification and if a majority of the Directors
determine that the applicable standards of conduct necessary for
indemnification appear to have been met. In addition, at least one of the
following conditions must be met: (1) the Indemnified Person shall provide
adequate security for his undertaking, (2) the Company shall be insured against
losses arising by reason of any lawful advances, or (3) a majority of a quorum
of the Disinterested Non-Party Directors, or if a majority vote of such quorum
so direct, independent legal counsel in a written opinion, shall conclude,
based on a review of readily available facts (as opposed to a full trial-type
inquiry), that there is substantial reason to believe that the Indemnified
Person ultimately will be found entitled to indemnification.
(c) The rights accruing to any Indemnified Person under these
provisions shall not exclude any other right to which he may be lawfully
entitled.
(d) Notwithstanding the foregoing, subject to any limitations
provided by the Investment Company Act and this Agreement, the Company shall
have the power and authority to indemnify Persons providing services to the
Company to the full extent provided by law as if the Company were a corporation
organized under the Delaware General Corporation Law provided that such
indemnification has been approved by a majority of the Directors or, with
respect to agreements to which the Investment Manager is not a party, by the
Investment Manager.
(e) No purchaser, lender, transfer agent or other person
dealing with the Directors or with any officer, employee or agent of the
Company shall be bound to make any inquiry concerning the validity of any
transaction purporting to be made by the Directors or by said officer, employee
or agent or be liable for the application of money or property paid, loaned, or
delivered to or on the order of the Directors or of said officer, employee or
agent. Every obligation, contract, undertaking, instrument, certificate, Share
and other security of the Company, and every other act or thing whatsoever
executed in connection with the Company shall be conclusively taken to have
been executed or done by the executors thereof only in their capacity as
Directors under this Agreement or in their capacity as officers, employees or
agents of the Company. The Company may maintain insurance for the protection of
the Assets, its Members, Directors, officers, employees or agents in such
amounts as the Directors shall deem adequate to cover possible liability, and
such other insurance as the Directors in their sole judgment shall deem
advisable or is required by the Investment Company Act.
(f) Each Indemnified Person shall, in the performance of its
duties, be fully and completely justified and protected with regard to any act
or any failure to act resulting from reliance in good faith upon the books of
account or other records of the Company, upon an opinion of counsel, or upon
reports made to the Company by any of the Company's officers or employees or by
any advisor, administrator, manager, distributor, selected dealer, accountant,
appraiser or other expert or consultant selected with reasonable care by the
Directors, officers or employees of the Company, regardless of whether such
counsel or other person may also be a Director.
9.7 Director Limited Liability
Except as otherwise provided by law, the Directors shall not
be obligated personally for any debt, obligation or liability of the Company
solely by reason of being the manager of the Company, and the debt, obligations
and liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company.
9.8 Certain Other Activities
The Investment Manager, the Co-Manager and their respective
Affiliated Persons, employees and associates (collectively, the "Manager
Affiliates") may manage funds and accounts other than the Assets ("Other
Accounts") that invest in assets eligible for purchase by the Company. Subject
to the requirements of the Investment Company Act and the Advisers Act, the
Manager Affiliates are in no way prohibited from spending, and may spend,
substantial business time in connection with other businesses or activities,
including, but not limited to, managing Other Accounts, managing investments,
advising or managing entities whose investment objectives are the same as or
overlap with those of the Company, participating in actual or potential
investments of the Company or any Member, providing consulting, merger and
acquisition, structuring or financial advisory services, including with respect
to actual, contemplated or potential investments of the Company, or acting as a
director, officer, manager, member or creditors' committee member of, or
adviser to, or participant in, any corporation, company, limited liability
company, trust or other Person. Subject to the requirements of the Investment
Company Act and the Advisers Act, the Manager Affiliates are in no way
prohibited from receiving, and may receive, fees or other compensation from
third parties for any of these activities, which fees will be for their own
account and not for the account of the Company. Such fees may relate to actual,
contemplated or potential investments of the Company and may be payable by
entities in which the Company directly or indirectly has invested or
contemplates investing. Neither the Company nor any Member shall, by virtue of
this Agreement, have any right, title or interest in or to the businesses or
activities permitted by this Section 9.8 or in or to any fees or consideration
derived therefrom. Allocation of investments or opportunities among the Company
and Other Accounts will be made as described in the Offering Memorandum or as
otherwise approved by the Board of Directors in accordance with the Investment
Company Act, the Advisers Act and any exemptive order obtained from the U.S.
Securities and Exchange Commission.
SECTION 10.
MEMBERS
10.1 Identity, Contributions and Common Share Commitments
The names and addresses of the Members, the Shares owned by
each Member and the Capital Contributions, Common Share Commitments and
Unfunded Commitments of each will be set forth in the Company's records.
10.2 No Management Power or Liability
Subject to the requirements of the Investment Company Act,
except as otherwise provided herein, the Members as such shall have no right or
power to, and shall not, take part in the management of or transact any
business for the Company, including but not limited to, any acts or decisions
relating to investment activities of the Company, and shall have no power to
sign for or bind the Company. Except as otherwise required by law, no Member,
in its capacity as such, shall be personally liable for any debt, loss,
obligation or liability of the Company in excess of its Unfunded Commitment (if
applicable). Except to the extent expressly provided in the preceding sentence,
the Company shall indemnify and hold harmless each Member (in its capacity as
such) in the event such Member becomes liable for any debt, loss, obligation or
liability of the Company unless such Member has engaged in fraud, willful
misconduct, gross negligence or criminal conduct constituting a felony with
respect to such debt, loss, obligation or liability.
10.3 Amendments
(a) If a vote of the holders of Shares is required by
applicable law or this Agreement to amend this Agreement, or if the Directors
determine to submit an amendment to a vote of the holders of Shares, then,
other than with respect to Sections of this Agreement where a different
affirmative vote is specifically required, this Agreement may be amended, after
a majority of the Directors then in office have approved a resolution therefor,
by the affirmative vote set forth in Section 10.10. Section 10.10 may only be
amended, after a majority of Directors then in office have approved a
resolution therefor, by the affirmative vote of the holders of not less than
75% of the affected Shares then outstanding. Section 16.7 may only be amended,
after a majority of Directors then in office have approved a resolution
therefor, by the affirmative vote of the holders of not less than 100% of the
Money Market Preferred Shares then outstanding. Notwithstanding the foregoing,
without the unanimous approval of all of the Members affected thereby, no such
amendment may:
(i) require any Common Member to make Capital
Contributions in excess of its Common Share Commitment, require any
Member that is not a Common Member to make additional Capital
Contributions in excess of its contractual commitment or otherwise
increase the liability of any Member hereunder; or
(ii) adversely affect distributions to such Member;
or
(iii) modify this Section 10.3(a).
(b) Subject to the requirements of the Investment Company Act
and other applicable law, notwithstanding the foregoing provisions of this
Section 10.3, the Board of Directors may amend this Agreement, without the
consent of any Member, (i) to change the name of the Company or any class or
series of Shares, (ii) to make any change that does not adversely affect the
relative rights or preferences of any class or series of Shares, (iii) to
conform this Agreement to the requirements of the Investment Company Act or any
other applicable law; (iv) in connection with qualifying the Company to permit
limited liability under the laws of any state; (v) to prevent any material and
adverse effect to any Member or the Company arising from the application of
legal restrictions to any Member, the Investment Manager, the Co-Manager or the
Company, subject to the requirement that the Members not be materially and
adversely affected; (vi) to make any change that is necessary or desirable to
cure any ambiguity or inconsistency, subject to the requirement that the
Members not be materially and adversely affected; (vii) to make any other
changes similar to the foregoing, subject to the requirement that the Members
not be materially and adversely affected; or (viii) notwithstanding Section
10.4 hereof, to the extent permitted by applicable law and only if no Member is
materially harmed thereby, restructure the Company as provided for in Section
6(b) of the Investment Management Agreement; provided that the Board of
Directors shall not be liable for failing to do so. Prior to entering into any
amendment pursuant to this Section 10.3(b), the Board of Directors shall notify
the Members in writing of the material terms of such amendment. The Board of
Directors may reflect in its records changes made in the composition of the
Members and their respective Capital Contributions and Shares in accordance
with the provisions of this Agreement without the consent of the Members.
(c) After any amendment to this Agreement becomes effective,
the Company shall send to the Members a copy of such amendment.
(d) Nothing contained in this Agreement shall permit the
amendment of this Agreement to impair the exemption from personal liability of
the Members, Directors, officers, employees and agents of the Company and their
respective Affiliates, to permit assessments upon Members in excess of their
Unfunded Commitments or to permit the Company to be converted at any time from
a "closed-end investment company" to an "open-end investment company" as those
terms are defined by the Investment Company Act or a company obligated to
repurchase shares under Rule 23c-3 of the Investment Company Act.
(e) An amendment duly adopted by the requisite vote of the
Board of Directors and, if required, Members as aforesaid, shall become
effective at the time of such adoption or at such other time as may be
designated by the Board of Directors or Members, as the case may be. A
certification signed by a majority of the Directors or the Secretary setting
forth an amendment and reciting that it was duly adopted by the Directors and,
if required, Members as aforesaid, or a copy of the Agreement, as amended, and
executed by a majority of the Directors or the Secretary, shall be conclusive
evidence of such amendment when lodged among the records of the Company or at
such other time designated by the Directors.
(f) Notwithstanding any other provision hereof, until such
time as Shares are issued and outstanding, this Agreement may be terminated or
amended in any respect by the affirmative vote of a majority of the Directors
or by an instrument signed by a majority of the Directors then in office.
(g) Notwithstanding anything to the contrary contained
herein, no holder of Shares of any class or series, other than to the extent
expressly determined by the Directors with respect to Shares qualifying as
preferred stock pursuant to Section 18(a) of the Investment Company Act, shall
have any right to require the Company or any person controlled by the Company
to purchase any of such holder's Shares.
10.4 Merger, Consolidation, Liquidation
Subject to the provisions of the Investment Company Act and
other applicable law, the Company may merge or consolidate with any other
entity, or sell, lease or exchange all or substantially all of the Assets upon
approval by two-thirds of the Directors then in office and the affirmative vote
of not less than two-thirds of the outstanding Shares.
10.5 List of Members
A list of the names and addresses of all Members (to the
extent known to the Company) shall be made available to any Member or its
representative for inspection and, at the Member's cost, copying upon written
request and at reasonable times to the extent required by the Investment
Company Act with respect to trusts for any purpose.
10.6 Limitations
No Member shall have the right or power to (i) bring an
action for partition against the Company; (ii) cause the termination or
dissolution of the Company, except as set forth in this Agreement; or (iii)
demand property other than cash with respect to any distribution and then only
in accordance with the terms of this Agreement. For the avoidance of doubt,
Members shall not have the power provided for in Section 18-801(a)(3) of the
Delaware Act, and the Company may only be dissolved pursuant to the terms of
this Agreement. Except to the extent required for a Delaware business
corporation, the Members shall have no power to vote as to whether or not a
court action, legal proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Company or the
Members.
10.7 Meetings.
(a) The Company may, but shall not be required to, hold
annual meetings of the holders of any class or series of Shares. An annual or
special meeting of Members may be called at any time only by the Directors or
by Members in accordance with the requirements of the Investment Company Act
applicable to trusts. Any meeting of Members shall be held within or without
the State of Delaware on such day and at such time as the Directors shall
designate.
(b) Notice of all meetings of Members, stating the time,
place and purposes of the meeting, shall be given by the Directors by mail to
each Member of record entitled to vote thereat at its registered address,
mailed at least 10 days before the meeting or otherwise in compliance with
applicable law. Except with respect to an annual meeting, at which any business
required by the Investment Company Act may be conducted, only the business
stated in the notice of the meeting shall be considered at such meeting. Any
adjourned meeting may be held as adjourned one or more times without further
notice not later than 130 days after the record date. For the purposes of
determining the Members who are entitled to notice of and to vote at any
meeting the Directors may, without closing the transfer books, fix a date not
more than 100 days prior to the date of such meeting of Members as a record
date for the determination of the Persons to be treated as Members of record
for such purposes.
10.8 Action Without a Meeting
Any action that may be taken at a meeting of the Members may
be taken without a meeting if a consent in writing setting forth the action to
be taken is signed by Members owning not less than the minimum percentage of
the Shares of the Members that would be necessary to authorize or take such
action at a meeting at which all the Members were present and voted, and notice
of the action taken is provided to each Member. Any such written consent must
be filed with the records of the meetings of the Members.
10.9 Procedures
A Member shall be entitled to cast votes: (i) at a meeting,
in person, by written proxy or by a signed writing directing the manner in
which its vote is to be cast, which writing must be received by the Company at
or prior to the commencement of the meeting, or (ii) without a meeting, by a
signed writing directing the manner in which its vote is to be cast, which
writing must be received by the Company at or prior to the time and date on
which the votes are to be counted. Except as otherwise herein specifically
provided, all procedural matters relating to the holding of meetings of Members
or taking action by written consent, whether noticed or solicited by the
Company or others, including, without limitation, matters relating to the date
for the meeting or the counting of votes by written consent, the time period
during which written consents may be solicited, minimum or maximum notice
periods, record dates, proxy requirements and rules relating to the conduct of
meetings or the tabulation of votes, shall be as reasonably established by the
Directors. To the extent not otherwise provided by the Board of Directors
pursuant to Section 10.10 or otherwise, the laws of the State of Delaware
pertaining to the validity and use of proxies regarding the shares of business
corporations shall govern the validity and use of proxies given by Members.
10.10 Voting
(a) Members shall have no power to vote on any matter except
matters on which a vote of Shares is required by or pursuant to the Investment
Company Act, a Statement of Preferences, this Agreement, the By-Laws or any
resolution of the Directors. Any matter required to be submitted for approval
of any of the Shares and affecting one or more classes or series shall require
approval by the required vote of Shares of the affected class or classes and
series voting together as a single class and, if such matter affects one or
more classes or series thereof differently from one or more other classes or
series thereof or from one or more series of the same class, approval by the
required vote of Shares of such other class or classes or series or series
voting as a separate class shall be required in order to be approved with
respect to such other class or classes or series or series; provided, however,
that except to the extent required by the Investment Company Act and any
Statement of Preferences, there shall be no separate class votes on the
election or removal of Directors or the selection of auditors for the Company.
Members of a particular class or series thereof shall not be entitled to vote
on any matter that affects the rights or interests of only one or more other
classes or series of such other class or classes or only one or more other
series of the same class. There shall be no cumulative voting in the election
or removal of Directors.
(b) The holders of one-third of the outstanding Shares of the
Company on the record date present in person or by proxy shall constitute a
quorum at any meeting of the holders for purposes of conducting business on
which a vote of all Members of the Company is being taken. The holders of
one-third of the outstanding Shares of a class or classes on the record date
present in person or by proxy shall constitute a quorum at any meeting of the
holders of such class or classes for purposes of conducting business on which a
vote of holders of such class or classes is being taken. The holders of
one-third of the outstanding Shares of a series or series on the record date
present in person or by proxy shall constitute a quorum at any meeting of the
holders of such series or series for purposes of conducting business on which a
vote of holders of such series or series is being taken. Shares underlying a
proxy as to which a broker or other intermediary states its absence of
authority to vote with respect to one or more matters shall be treated as
present for purposes of establishing a quorum for taking action on any such
matter only to the extent so determined by the Directors at or prior to the
meeting of holders of Shares at which such matter is to be considered and shall
not be treated as present for purposes of voting or any other purpose except as
determined by the Directors.
(c) Subject to any provision of the Investment Company Act,
any Statement of Preferences or this Agreement specifying or requiring a
greater or lesser vote requirement for the transaction of any matter of
business at any meeting of Members or, in the absence of any such provision of
the Investment Company Act, any Statement of Preferences or this Agreement,
subject to any provision of the By-Laws or resolution of the Directors
specifying or requiring a greater or lesser vote requirement, (i) the
affirmative vote of a plurality (or, if provided by the By-Laws, a majority) of
the Shares present in person or represented by proxy and entitled to vote for
the election of any Director or Directors shall be the act of such Members with
respect to the election of such Director or Directors, (ii) the affirmative
vote of a majority of the Shares present in person or represented by proxy and
entitled to vote on any other matter who vote on such matter shall be the act
of the Members with respect to such matter, and (iii) where a separate vote of
one or more classes or series is required on any matter, the affirmative vote
of a majority of the Shares of such class or classes or series or series
present in person or represented by proxy and entitled to vote on such matter
who vote on such matter shall be the act of the Members of such class or
classes or series or series with respect to such matter.
(d) At any meeting of Members, any holder of Shares entitled
to vote thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Secretary, or with
such other officer or agent of the Company as the Secretary may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of a majority of the Directors, proxies may be solicited in the name
of one or more Directors or one or more of the officers or employees of the
Company. Only Members of record shall be entitled to vote. Each full Share
shall be entitled to one vote and each fractional Share shall be entitled to a
vote equal to its fraction of a full Share. When any Share is held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Share, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be given by or on behalf of a
Shareholder of record on the record date for a meeting shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy. The Directors shall
have the authority to make and modify from time to time regulations regarding
the validity of proxies. In addition to signed proxies, such regulations may
authorize facsimile, telephonic, Internet and other methods of appointing a
proxy that are subject to such supervision by or under the direction of the
Directors as the Directors shall determine.
SECTION 11.
ADMISSION OF ADDITIONAL MEMBERS;
ASSIGNMENTS OR TRANSFERS OF SHARES
11.1 Admission of Additional Members
No additional Members will be admitted after the
Initial Drawdown Date, except as provided in Sections 7.1
and 11.2.
11.2 Assignments or Transfers of Shares
(a) In no event shall all or any part of a Member's Preferred
Shares be Transferred, and any such purported Transfer shall be void and shall
not be recognized by the Company, unless all of the conditions set forth in the
applicable Statement of Preferences with respect thereto have been satisfied.
In no event shall all or any part of a Member's Common Shares or Common Share
Commitments be Transferred, and any such purported Transfer shall be void and
shall not be recognized by the Company or the Members, unless all of the
following conditions are satisfied:
(i) The Transferor, if requested by the Company in
its sole discretion, has delivered to the Company an opinion of
counsel reasonably acceptable to the Company that such Transfer (A)
would not violate the Securities Act or any state blue sky laws
(including any investor suitability standards) and, (B) would not
result in the breach of any agreement to which the Company is a party
or by which it or any of the Assets is bound;
(ii) The Transferor has demonstrated to the
reasonable satisfaction of the Company that the Transferee is both an
"accredited investor" as defined in Rule 501(a) under the Securities
Act and a "qualified client" within the meaning of Rule 205-3 of the
Advisers Act;
(iii) The Company has received a notice of Transfer
signed by both the Transferor and Transferee, such notice to be
substantially in the form of Appendix D attached hereto (or such other
document specified in the applicable Statement of Preferences); and
(iv) the Company consents in writing to such
Transfer (which consent may be withheld in the Company's reasonable
discretion).
(b) Provided the foregoing conditions are met, the Transferee
may become a Substituted Member or a Substituted Special Member if and only if,
with respect to Preferred Shares, any requirements set forth in the relevant
Statement of Preferences are satisfied and, with respect to Common Shares, each
of the following conditions is satisfied:
(i) The Company has consented in writing to the
substitution (which consent may be withheld in the Company's
reasonable discretion with respect to Transfers of Common Share
Commitments and may be withheld in the Company's reasonable discretion
with respect to Transfers of Common Shares only if the transfer
conditions described above have not been met or have not been waived);
(ii) The Transferor and Transferee execute,
acknowledge and deliver such instruments as the Company deems
necessary, appropriate or desirable to effect such substitution,
including the written acceptance and adoption by the Transferee of
this Agreement and the execution, acknowledgment and delivery to the
Company of a power of attorney, the substance of which shall be
consistent with Section 13; and
(iii) The Transferee agrees to bear all of the
Company's expenses and costs incurred in connection with the Transfer
and substitution, including legal fees and filing fees.
Upon the satisfaction of the conditions set forth in this
Section 11.2(b), the Company shall record on the books and records of the
Company the Substituted Member as a Member, or the Substituted Special Member
as the Special Member, of the Company.
(c) A Transferee, legal representative or successor in
interest of a Member shall be subject to all of the restrictions upon a Member
provided in this Agreement.
(d) A Transferee of Shares or Common Share Commitments who
desires to make a further Transfer shall be subject to all of the provisions of
this Section 11 to the same extent and in the same manner as a Member making
the initial Transfer.
(e) Notwithstanding anything to the contrary in this
Agreement, the Company may elect (in the Company's sole discretion) to treat a
Transferee who has not become a Substituted Member as a Member or the
Substituted Special Member as the Special Member in the place of the Transferor
should it determine such treatment to be in the best interests of the Company.
(f) Upon the Incapacity of an individual Member, such
Member's personal representative or other successor in interest shall have such
rights as the Incapacitated Member possessed to constitute a successor as a
Transferee of its Shares or Common Share Commitment and to join with such
Transferee in making application to substitute such Transferee as a Member, all
as provided in Sections 11.2(a) and (b).
(g) Upon the Incapacity of a Member other than an individual,
the authorized representative of such entity shall have such rights as such
entity possessed to constitute a successor as a Transferee of its Shares or
Common Share Commitment and to join with such Transferee in making application
to substitute such Transferee as a Member, all as provided in Sections 11.2(a)
and (b).
(h) A Person who acquires Shares or Common Share Commitments
but is not admitted to the Company as a Substituted Member or Substituted
Special Member pursuant to Section 11.2(b) shall be entitled only to the
allocations and distributions with respect to such Shares or Common Share
Commitment in accordance with this Agreement or relevant Statement of
Preferences but shall have no right to any information or accounting of the
affairs of the Company and shall not have any voting or other rights of a
Member under this Agreement or relevant Statement of Preferences; provided,
however, that such Person shall be entitled to receive such information and
accountings as shall be consented to by the Company, which consent shall not be
unreasonably withheld. A Substituted Member or Substituted Special Member shall
succeed to all the rights and be subject to all the obligations of the
Transferor Member in respect of the Shares or other interest as to which it was
substituted.
SECTION 12.
POWER OF ATTORNEY
12.1 Appointment of Investment Manager
Each Member, by becoming a Member, makes, constitutes and
appoints the Investment Manager as its true and lawful attorney-in-fact, in its
name, place and stead, with full power to do any of the following:
(a) Execute on its behalf, file and record this Agreement and
all amendments to this Agreement made and otherwise approved in accordance with
Section 10.3 or otherwise made in accordance with the terms of this Agreement;
(b) Prepare, execute on its behalf, verify, file and record
amendments to this Agreement made in accordance with the terms of this
Agreement or to the books and records of the Company reflecting (i) a change of
the name or location of the principal place of business of the Company, (ii) a
change of the name or address of any Member, (iii) the addition of Members,
(iv) the disposal by a Member of its Shares or Common Share Commitment in any
manner, (v) a Person becoming or ceasing to be a Member of the Company, (vi)
the exercise by any Person of any right or rights hereunder, (vii) the
correction of typographical or similar errors, (viii) any amendments made in
accordance with Section 10.3, and (ix) any amendment and restatement of this
Agreement reflecting such amendments;
(c) Prepare, execute on its behalf and record any amendments
to the Certificate that the Investment Manager may deem advisable or necessary;
(d) Prepare, execute on its behalf, file and record any other
agreements, certificates, instruments and other documents required to continue
the Company, to admit Substituted Members or a Substituted Special Member, to
liquidate and dissolve the Company in accordance with Section 16, to comply
with applicable law, and to carry out the purposes of clauses (a) and (b)
above, to the extent consistent with this Agreement; and
(e) Take any further action that the Investment Manager shall
consider advisable in connection with the exercise of the authority granted in
this Section 12.1.
12.2 Nature of Special Power
The power of attorney granted under this Section 12 is a
special power of attorney coupled with an interest, is irrevocable and may be
exercised by the Investment Manager by listing all of the Members executing any
agreement, certificate, instrument or document with a single signature of such
attorney-in-fact acting as attorney-in-fact for all of them. The power of
attorney shall survive and not be affected by the Incapacity of a Member and
shall survive and not be affected by the Transfer by a Member of the whole or a
portion of its Shares or Common Share Commitment, as the case may be, except
where the Transfer is of all of the Shares or Common Share Commitment and the
Transferee thereof with the consent of the Company is admitted as a Substituted
Member or Substituted Special Member; provided, however, that this power of
attorney shall survive such Transfer for the sole purpose of enabling any such
attorney-in-fact to effect such substitution. This power of attorney does not
supersede any part of this Agreement, nor is it to be used to deprive any
Member of its rights hereunder. It is intended only to facilitate the execution
of documents and the carrying out of other procedural or ministerial functions.
SECTION 13.
BOOKS, RECORDS AND REPORTS
13.1 Books
(a) The Company shall maintain books and records required by
law for the Company at its principal office, which shall be in the United
States, and each Member shall have the right to inspect, examine and copy such
books and records at reasonable times and upon reasonable notice for the
purposes required by the Investment Company Act relating to trusts or as
authorized by the Directors or their delegate. All such books and records may
be in electronic format, including the register of Members and all capital
account and accounting records. Upon the request of a Member, the Company shall
promptly deliver to the requesting Member, at the expense of the Company, a
copy of any information which the Company is required by law to so provide in
paper or electronic format. Notwithstanding the foregoing inspection rights or
any other provision of this Section 13, the Company shall be entitled to keep
confidential from the Members certain information as and to the extent
permitted by Section 18-305(c) of the Delaware Act and the Investment Company
Act.
(b) A register shall be kept at the Company or any transfer
agent duly appointed by or under the direction of the Directors which shall
contain the names and addresses of the Members and the number of Shares held by
them respectively and a record of all transfers thereof. Separate registers
shall be established and maintained for each class and each series of each
class. Each such register shall be conclusive as to who are the holders of the
Shares of the applicable class and series and who shall be entitled to receive
dividends or distributions or otherwise to exercise or enjoy the rights of
Members. No Member shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein provided, until he has
given his address to a transfer agent or such other officer or agent of the
Directors as shall keep the register for entry thereon. Except as otherwise
provided in any Statement of Preferences, it is not contemplated that
certificates will be issued for the Shares; however, the Company may authorize
the issuance of share certificates and promulgate appropriate fees therefore
and rules and regulations as to their use.
(c) The Company shall have power to employ a transfer agent
or transfer agents, and a registrar or registrars, with respect to the Shares.
The transfer agent or transfer agents may keep the applicable register and
record therein, the original issues and transfers, if any, of the said Shares.
(d) Shares shall be transferable on the records of the
Company only by the record holder thereof or by its agent thereto duly
authorized in writing, upon delivery to the Company or a transfer agent of the
Company of a duly executed instrument of transfer, together with such evidence
of the genuineness of each such execution and authorization and of other
matters as may reasonably be required. Upon such delivery the transfer shall be
recorded on the applicable register of the Company. Until such record is made,
the Member of record shall be deemed to be the holder of such Shares for all
purposes hereof and neither the Directors nor any transfer agent or registrar
nor any officer, employee or agent of the Company shall be affected by any
notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of
the death, bankruptcy, or incompetence of any Member, or otherwise by operation
of law, shall be recorded on the applicable register of Shares as the holder of
such Shares upon production of the proper evidence thereof to the Directors or
a transfer agent of the Company, but until such record is made, the Member of
record shall be deemed to be the holder of such for all purposes hereof, and
neither the Directors nor any transfer agent or registrar nor any officer or
agent of the Company shall be affected by any notice of such death, bankruptcy
or incompetence, or other operation of law.
13.2 Reports
(a) The Company shall prepare and send to Members to the
extent and in the form required by the Investment Company Act and other
applicable law or any exchange on which Shares are listed a report of
operations containing financial statements of the Company prepared in
conformity with generally accepted accounting principles and applicable law and
a schedule setting forth the investments of the Company. Common Members shall
receive quarterly reports of operations.
(b) Within 60 days after the end of each Fiscal Year, the
Company shall communicate in writing to each Member (i) such information as is
necessary to complete such Member's United States federal and state income tax
or information returns and (ii) annual financial statements audited by an
accounting firm of national reputation.
(c) Further, the Directors may, in their sole and absolute
discretion, cause to be prepared (i) such reports or other information as may
be necessary with respect to any Member's qualification for the benefit of any
income tax treaty or provision of law reducing or eliminating any withholding
or other tax or governmental charge with respect to any Assets and (ii) such
other reports and financial statements of the Company as the Directors deem
appropriate for informing the Members about the operations of the Company.
The Company shall promptly distribute to the Members notice
of the occurrence of any Default or Event of Default (as defined in the Credit
Agreement) under the Credit Agreement.
(d) To the extent that the Company has access thereto and in
recognition of the various Members' obligations to comply with certain
regulatory requirements, the Company will also provide to each Member, with
reasonable promptness, such other data and information concerning the Company
or Company activities in response to a request by any applicable governmental
or regulatory agency as from time to time a Member may reasonably request. If
the Company is bound by confidentiality obligations with respect to any
information so requested, then the Company shall not be obligated to provide
such information. A Member shall, at the request of the Company, enter into a
confidentiality agreement relating to such information.
SECTION 14.
VALUATION OF INTERESTS.
The value of the Assets of the Company, the amount of
liabilities of the Company, the Net Asset Value, and the Net Asset Value of
each outstanding Common Share of the Company shall be determined on each
Valuation Date in accordance with generally accepted accounting principles and
the Investment Company Act. The method of determination of Net Asset Value
shall be determined by or under the supervision of the Board of Directors. The
making of Net Asset Value determinations and calculations may be delegated by
the Board of Directors.
SECTION 15.
BANK ACCOUNTS; CUSTODIAN
15.1 Bank Accounts Generally
Subject to the requirements of the Investment Company Act,
all funds received by the Company may be deposited in one or more Custodial
Accounts in the name of the Company at the Custodian. Subject to Section 15.2,
disbursements therefrom may be made by the Company in conformity with the
purposes of this Agreement and the requirements of the Investment Company Act.
The Company may designate from time to time those Persons authorized to execute
checks and other items on the Company bank accounts. The funds of the Company
shall not be commingled with the funds of any other Person.
15.2 Custodian
(a) The Company shall appoint one or more Custodians to hold
the Assets of the Company in one or more separately identified Custodial
Accounts or multiparty arrangements in accordance with the Advisory Agreement,
the Co-Advisory Agreement, the Credit Agreement, any Statement of Preferences,
the Custodial Agreement and the Pledge and Intercreditor Agreement (each as
defined in the Credit Agreement to the extent not defined herein) and in
compliance with the requirements of the Investment Company Act and other
applicable law. The Custodian shall at all times be responsible for the
physical custody of the Assets of the Company and for the collection of
interest, dividends and other income attributable to the Assets of the Company.
The Company will direct the Custodian to accept settlement instructions issued
by the Investment Manager and authorized Persons.
(b) Nothing contained in this Agreement shall be construed to
authorize or require the Board of Directors or the Investment Manager to take
or receive physical possession of any Asset of the Company or to take any
action in violation of law, it being understood that the Custodian shall solely
be responsible for the safekeeping of the Assets and the consummation of all
such purchases, sales and deliveries of the Assets in accordance with this
Agreement and the Advisory Agreement, the Co-Advisory Agreement, the Credit
Agreement, any Statement of Preferences, the Custodial Agreement and the Pledge
and Intercreditor Agreement and in compliance with the requirements of the
Investment Company Act and other applicable law.
SECTION 16.
DISSOLUTION AND TERMINATION OF THE COMPANY
16.1 Dissolution Generally
Except as provided in this Agreement, no Member shall have
the right to cause any dissolution of the Company before expiration of its
term.
16.2 Continuation of Company
The Company shall not be dissolved or terminated by the
Incapacity of any Member as such, the Transfer by any Member of its Shares or
Common Share Commitment or the admission of a new or substituted Director or
Member, and the existence and business of the Company shall be continued
notwithstanding the occurrence of any such event.
16.3 Events Causing Dissolution
Subject to the restriction on liquidation set forth in
Section 16.7, the Company may be dissolved prior to the time set forth in
Article 4 after two-thirds of the Directors then in office have approved a
resolution therefor, upon approval by Shares having at least 75% of the votes
of all of the Shares outstanding on the record date for such meeting, voting as
a single class except to the extent required by the Investment Company Act.
16.4 Distribution of Assets on Liquidation
(a) In liquidating the Company, the Company will make
distributions in cash, in kind, or partly in cash and partly in kind as the
Investment Manager, under the supervision of the Board of Directors, may, in
its sole discretion, determine; provided, however, that any distribution made
partly in cash and partly in kind shall be pro rata among the Members in
proportion to their interests to the extent reasonably practicable and if not
reasonably practicable, in such non-pro rata manner as is determined by the
Investment Manager, under the supervision of the Board of Directors, to be fair
and equitable; provided, further, that the Investment Manager will use
reasonable efforts to make all distributions in kind, if any, in the form of
freely tradable securities. The Investment Manager need not distribute all of
the Assets at once, but may make partial distributions and shall not be
required to redeem the Preferred Shares prior to making any liquidating
distribution in respect of the Common Shares so long as the Company has set
aside liquid assets in excess of liabilities sufficient to pay the liquidation
preference and all accumulated and unpaid distributions of the Preferred
Shares.
(b) In connection with the liquidation of the Company, the
Assets (after paying or otherwise providing for the claims of creditors of the
Company, the Advisory Fees, claims by the Board of Directors, the Investment
Manager, the Co-Manager or their respective Affiliated Persons for expenses of
the Company paid by any of them, any other liabilities of the Company and
reasonable reserves for any anticipated or contingent liabilities or
obligations and all accumulated and unpaid distributions on Preferred Shares)
shall be distributed to the Members in accordance with Section 8.1; provided,
however, that the Special Member's original $1,000 contribution shall be
returned to it, without interest.
16.5 Liquidation Statement
(a) Upon compliance by the Company with all applicable
requirements for dissolution, the Members shall cease to be such and the
Company shall execute, acknowledge and cause to be filed a Certificate of
Cancellation of the Company or other appropriate documents evidencing its
dissolution and winding up.
(b) Notwithstanding anything to the contrary contained
herein, if the Board of Directors has been removed and the Company has been
dissolved, any Member or other Person appointed by the Members may act as
liquidating trustee for the Company during the winding up period, and receive
reasonable compensation for such activity, all as approved by the Members
holding Shares that represent a majority of the outstanding Shares (which in
this case shall exclude any Shares held by the Investment Manager).
16.6 Director's Liability Upon Dissolution or Removal
None of the Directors shall be personally liable for the
return of all or any part of the contributions of the Members to the Company or
for any other distributions to be made by the Company. Any such return or
distributions shall be made solely from the Assets.
16.7 Restriction on Liquidation
Notwithstanding anything to the contrary contained herein,
for so long as any Money Market Preferred Shares are outstanding and insured by
Ambac under the Money Market Preferred Shares Policy, the Company shall not
liquidate prior to July 13, 2014, without first redeeming in full all
outstanding shares of Money Market Preferred Shares.
SECTION 17.
GENERAL PROVISIONS
17.1 Notices and Distributions
Except as otherwise provided herein, any notice,
distribution, offer or other communication which may be given to any Member in
connection with the Company or this Agreement shall be duly given if reduced to
writing and:
(a) if to any Member, when personally delivered, or if sent
by mail, postage prepaid, overnight courier or facsimile transmission, when
actually received at the last address furnished by such Member pursuant to
Section 2.3 for notice purposes at the time of such mailing, overnight courier
or facsimile transmission; and
(b) if to the Company or the Board of Directors, sent to
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxxxxx with a copy to the Investment Manager, 00000
Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxxx, personally delivered or if sent by mail, overnight courier
or facsimile transmission when actually received at the address of the Company
or the Board of Directors, respectively, set forth above or at such other
address as the Company or the Board of Directors, respectively, may then have
specified pursuant to the terms of this Agreement.
All distributions to the Members shall be made by wire
transfer to the accounts specified by the Members, which accounts may be
changed from time to time by written notice to the Company.
17.2 Survival of Rights
This Agreement shall be binding upon and, as to permitted or
accepted successors, Transferees and assigns, inure to the benefit of the
Members and the Company and their respective heirs, legatees, legal
representatives, successors, Transferees and permitted assigns, in all cases
whether by the laws of descent and distribution, merger, consolidation, sale of
assets, operation of law, or otherwise.
17.3 Construction
The language in all parts of this Agreement shall be in all
cases construed simply according to its fair meaning and not strictly for or
against any Person.
17.4 Section Headings
The captions of the sections in this Agreement are for
convenience only and shall not be used in construing or interpreting this
Agreement.
17.5 Agreement in Counterparts
This Agreement and any amendments hereto may be executed and
delivered by facsimile and in multiple counterparts, each of which shall be
deemed an original agreement and all of which shall constitute one and the same
agreement, notwithstanding the fact that all Members are not signatories to the
original or the same counterpart.
17.6 Governing Law This Agreement has been executed by or on authority
of a majority of the Directors and the rights of all parties and the validity
and construction of every provision hereof shall be subject to and construed
according to the internal laws, and not the laws pertaining to choice or
conflict of laws, of the State of Delaware, and reference shall be specifically
made to the general corporation law of the State of Delaware as to the
construction of matters not specifically covered herein or as to which an
ambiguity exists, although such law shall not be viewed as limiting the powers
otherwise granted to the Directors hereunder and any ambiguity shall be viewed
in favor of such powers.
17.7 Additional Documents
Each Member, upon the request of the Company, agrees to
perform all further acts and execute, acknowledge and deliver all further
documents which may be reasonably necessary, appropriate or desirable to carry
out the provisions of this Agreement, including but not limited to,
acknowledging before a Notary Public any signature heretofore or hereafter made
by a Member.
17.8 Severability
Should any portion or provision of this Agreement be declared
illegal, invalid or unenforceable in any jurisdiction, then such portion or
provision shall be deemed to be severable from this Agreement to the extent
practicable while preserving the economic intention of the parties and, in any
event, such illegality, invalidity or unenforceability shall not affect the
remainder hereof.
17.9 Pronouns
All pronouns and defined terms and any variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the Persons referred to may require.
17.10 Entire Agreement
This Agreement, the Statement of Preferences adopted pursuant
hereto and the Subscription Agreements executed and delivered by the Members
(i) constitute the entire Agreement of the Members with respect to the Company
and (ii) supersede all prior or contemporaneous written or oral agreements,
understandings or negotiations with respect to the Company. The parties hereto
acknowledge that the ability of the Members and of the Company to take certain
of the actions contemplated hereby may be limited by the terms of the Credit
Agreement and the Statement of Preferences to the extent provided therein.
17.11 Arbitration
To the extent permitted by law, any dispute relating to this
Agreement or the Company which cannot be amicably resolved among the parties to
such dispute shall be resolved by binding arbitration conducted in Los Angeles,
California in accordance with the rules of the American Arbitration Association
then prevailing, and the decisions of the arbitrators shall be final and
binding on all the parties. The costs of the arbitration (other than fees and
expenses of counsel, which shall be the responsibility of the parties retaining
such counsel) shall be allocated among the parties as determined by the
arbitrator.
17.12 Waiver of Partition
Each Member hereby irrevocably waives and forfeits any and
all rights that it may have, whether arising under contract or statute or by
operation of law, to maintain an action for partition of the Company or any of
the Assets.
17.13 Non-Petition Covenant
Each Member hereby agrees not to cause the filing of a
petition in bankruptcy against the Company for any reason until at least 367
days (or, if longer, the preference period then in effect under applicable
federal and state law) after the termination of the Credit Agreement (without
any replacement thereof).
17.14 Filing
This Agreement and any amendment (including any supplement)
hereto shall be filed in such places as may be required or as the Company deem
appropriate. Each amendment shall be accompanied by a certificate signed and
acknowledged by an authorized Person stating that such action was duly taken in
a manner provided herein, and shall, upon insertion in the Company's minute
book, be conclusive evidence of all amendments contained therein. A restated
Agreement, containing the original Agreement as amended by all amendments
theretofore made, may be executed from time to time by an authorized Person and
shall, upon insertion in the Company's minute book, be conclusive evidence of
all amendments contained therein and may thereafter be referred to in lieu of
the original Agreement and the various amendments thereto.
IN WITNESS WHEREOF, the Secretary of the Company has hereunto
set his hands as of the date first written above.
SECRETARY:
/s/ Xxxxxx Xxxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxxx
THE SPECIAL MEMBER:
SVOF/MM, LLC
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Authorized Person
COMMON MEMBERS:
Those Persons subscribing for
Common Shares and admitted as
Members by the Investment Manager:
By: Xxxxxxxxxx Capital Partners, LLC
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Managing Partner
APPENDIX A
Statement of Preferences of Series S Preferred Share
APPENDIX B
Statement of Preferences of Series Z Preferred Shares
APPENDIX C
Statement of Preferences of Money Market Cumulative Preferred Shares
APPENDIX D
Form of Notice of Transfer
[Date]
Special Value Opportunities Fund, LLC
c/o Tennenbaum Capital Partners, LLC
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
Ladies and Gentlemen:
This is to advise you that [_______________] (the "Purchaser") will purchase
(contingent only upon the approval of such purchase by Special Value
Opportunities Fund, LLC, a Delaware limited liability company (the "Company"))
in a private resale (the "Purchase") from [___________________] (the "Seller")
[insert number or amount] of [Common Shares (the "Shares") or Seller's Common
Share Commitment (the "Commitment")] issued pursuant to the Operating Agreement
of the Company dated as of [ ] (as amended, modified or supplemented from time
to time, the "Operating Agreement"). Capitalized terms used herein and not
defined have the respective meanings assigned to them in the Operating
Agreement, a copy of which has been provided to the undersigned by the Seller.
Seller has also provided to the Purchaser the Confidential Private Placement
Memorandum, dated [ ], relating to the Common Shares of the Company, together
with any supplements thereto (the "Confidential Private Placement Memorandum");
the Subscription Agreement, dated as of [________], 2004, by and between the
Company and the initial purchaser of the Shares (the "Subscription Agreement");
and any other written materials furnished or made available to the Seller by or
on behalf of the Company and relating to the purchase of the Shares
(collectively, the "Offering Materials").
The undersigned hereby irrevocably agrees, represents and warrants on behalf of
the Purchaser that:
1. The Purchaser has been provided with and has truthfully and accurately
completed and returned to the Investment Manager a subscription
agreement, which is attached hereto, and the representations and
warranties made by the Purchaser in such subscription agreement,
including, without limitation, the representations and warranties
relating to the Purchaser's status as an "accredited investor" within
the meaning of Regulation D promulgated under the Securities Act and
as a "qualified client" within the meaning of Rule 205-3 under the
Investment Advisers Act of 1940, accurately describe the status of the
Purchaser. The Purchaser understands that the Company and the
Investment Manager will rely on the representations and warranties
made by the Purchaser in the subscription agreement in determining the
eligibility of the Purchaser to purchase the Shares.
2. If the Purchaser resells or transfers all or any portion of the
Shares, the Purchaser will obtain from each purchaser or transferee a
letter containing the same representations and agreements as set forth
herein and will have such purchaser or transferee complete a
subscription agreement.
3. The Purchaser (i) hereby agrees that this Transfer Certificate may be
attached to the Operating Agreement and (ii) by executing and
delivering this Transfer Certificate, with the consent of the Company,
hereby becomes a Substituted Member under the Operating Agreement and
agrees to be bound by all the terms thereof.
4. The Purchaser hereby constitutes and appoints the Investment Manager
its true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution for the Purchaser and in its name,
place and stead, in any and all capacities, to take any and all
actions as are authorized by the power of attorney contained in the
Operating Agreement.
The power of attorney granted hereby shall be deemed an irrevocable
special power of attorney, coupled with an interest, which the
Investment Manager may exercise for the Purchaser by the signature of
the Company or by listing the Purchaser as a Member, and executing any
instrument with the signature of the Company as attorney-in-fact for
the Purchaser. This grant of authority shall survive the assignment by
the Purchaser of all or any portion of its Shares or Common Share
Commitment, except where the assignment is of the Purchaser's entire
interest in the Company and the assignee thereof with the consent of
the Board of Directors is admitted as a Substituted Member; provided,
however, that this power of attorney shall survive the delivery of
such assignment for the sole purpose of enabling the Board of
Directors to effect such substitution.
5. The Purchaser agrees to bear all of the Company's expenses and costs
incurred in connection with the Transfer and substitution, including
all legal fees and filing fees.
6. If the Purchaser acquires the obligations of the Transferor under the
Transferor's Common Share Commitment with respect to all or any
portion of such Common Share Commitment, the Purchaser hereby agrees
to assume and timely and faithfully complete all of the Transferor's
obligations with respect to such Common Share Commitment.
Very truly yours,
[Name of Purchaser]
Address:
By: ________________________ __________________________
Name:
Title: __________________________
This Transfer Certificate shall constitute (i) the notice of Transfer required
under subsection 12.2(a)(vi) of the Operating Agreement and (ii) the instrument
of transfer required under subsection 12.2(b)(ii) of the Operating Agreement.
[Name of Seller]
Address:
By: ________________________ __________________________
Name:
Title: __________________________
The undersigned, on behalf of the Company, hereby acknowledges receipt of this
Transfer Certificate and acknowledges and agrees that this Transfer Certificate
shall constitute the notice of Transfer required under subsection 12.2(a)(vi)
of the Operating Agreement and the instrument of transfer required under
subsection 12.2(b)(ii) of the Operating Agreement. The undersigned, on behalf
of the Company, hereby consents to the Transfer which is the subject of this
notice of Transfer pursuant to subsections 12.2(a)(viii) and 12.2(b)(i) of the
Operating Agreement and hereby acknowledges and agrees that the Purchaser shall
become a Substituted Member under the Operating Agreement pursuant to
subsection 12.2(b) of the Operating Agreement. The proper authorized Person -of
the Company will record on the books and records of the Company the Purchaser
as a Member of the Company.
By: Xxxxxxxxxx Capital Partners, LLC,
Investment Manager of Special Value
Opportunities Fund, LLC
By: ___________________________
Name:
Title:
Appendix E
Subscription Agreement
Appendix F
Schedule of Members
