Exhibit 99.2a(ii)
THE TOPIARY MASTER FUND FOR BENEFIT PLAN INVESTORS (BPI) LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT of The Topiary Master
Fund for Benefit Plan Investors (BPI) LLC (the "Master Fund") is made
effective as of July 16, 2004 by and among the Organizational Member, the
Investment Adviser, and each person hereinafter admitted to the Master Fund
and reflected on the books of the Master Fund as a Member.
W I T N E S S E T H :
WHEREAS, the Master Fund heretofore has been formed as a limited
liability company under the Delaware Act, pursuant to the Certificate dated as
of July 16, 2004 and filed with the Secretary of State of the State of
Delaware on July 16, 2004;
NOW, THEREFORE, for and in consideration of the foregoing and the mutual
covenants hereinafter set forth, it is hereby agreed as follows:
------------------------------------------------------------
ARTICLE I
DEFINITIONS
------------------------------------------------------------
For purposes of this Agreement:
1.1 ADVISERS ACT means the Investment Advisers Act of 1940 and the rules,
regulations, and orders thereunder, as amended from time to time, or any
successor law.
1.2 AFFILIATE means affiliated person as such term is defined in the 1940
Act, as hereinafter defined.
1.3 AGREEMENT means this Limited Liability Company Operating Agreement,
as amended and/or restated from time to time.
1.4 BOARD means the Board of Directors established pursuant to Section
2.6 and each Director on the Board shall be deemed a "Manager" of the Master
Fund within the meaning of the Delaware Act.
1.5 CAPITAL ACCOUNT means, with respect to each Member, the capital
account established and maintained on behalf of each Member pursuant to
Section 5.3.
1.6 CAPITAL CONTRIBUTION means the contribution, if any, made, or to be
made, as the context requires, to the capital of the Master Fund by a Member.
1.7 CERTIFICATE means the Certificate of Formation of the Master Fund and
any amendments thereto as filed with the office of the Secretary of State of
the State of Delaware.
1.8 CLASS means any class of limited liability company interests
established by the Board from time to time.
1.9 CLOSING means the closing of a subscription to purchase an Interest.
1.10 CODE means the United States Internal Revenue Code of 1986, as
amended and as hereafter amended from time to time, or any successor law.
1.11 CONFIDENTIAL INFORMATION shall have the meaning as set forth in
Section 8.12(a).
1.12 DELAWARE ACT means the Delaware Limited Liability Company Act (6
DEL.C. Sections 18-101, et seq.) as in effect on the date hereof and as
amended from time to time, or any successor law.
1.13 DIRECTOR means each person who initially serves on the Board
pursuant to Section 2.6 or who, from time to time, pursuant to this Agreement
shall serve on the Board as indicated in the records of the Master Fund. Each
Director shall be deemed a "Manager" of the Master Fund within the meaning of
the Delaware Act.
1.14 EXPENSE ALLOCATION DATE means the initial Closing, and thereafter
each day, through and including the date which is twelve months after the
initial Closing, as of which a contribution to the capital of the Master Fund
is made pursuant to Section 5.1.
1.15 FISCAL PERIOD means the period commencing on the initial Closing,
and thereafter each period commencing on the day immediately following the
last day of the preceding Fiscal Period, and ending at the close of business
on the first to occur of the following dates:
(1) the last day of a Fiscal Year;
(2) the day preceding any day as of which a contribution to the
capital of the Master Fund is made pursuant to Section 5.1;
(3) the day as of which the Master Fund repurchases all or a portion
of an Interest of any Member pursuant to this Agreement;
(4) any day as of which there is any distribution to a Member
pursuant to Section 5.8;
(5) any other day as of which this Agreement provides for any amount
to be credited to or debited against the Capital Account of any Member,
other than an amount
- 2 -
to be credited to or debited against the Capital Accounts of all Members
in accordance with their respective Master Fund Percentages;
(6) the date as of which the Master Fund terminates; or
(7) any other date as established by the Board.
1.16 FISCAL YEAR, for accounting purposes, means the period commencing on
the initial Closing and ending on March 31 and thereafter each period
commencing on April 1 of each year and ending on March 31 of each year (or on
the date of a final distribution pursuant to Section 6.2 hereof), unless the
Directors shall designate another fiscal year for the Master Fund that is a
permissible taxable year under the Code. For tax purposes, the 12-month period
ending December 31 of each year will be the Master Fund's taxable year.
1.17 FORM N-2 means the Master Fund's Registration Statement on Form N-2
or any successive form filed with the Securities and Exchange Commission
("SEC"), as amended from time to time.
1.18 INDEPENDENT DIRECTORS means those Directors who are not "interested
persons" of the Master Fund as such term is defined in the 1940 Act.
1.19 INTEREST means the entire limited liability company interest (as
defined in the Delaware Act) in the Master Fund at any particular time of a
Member or other person to whom an Interest or portion thereof has been
transferred pursuant to this Agreement, including the rights and obligations
of such Member or other person under this Agreement and the Delaware Act.
1.20 INVESTED CAPITAL means, with respect to any Member, the amount of
such Member's aggregate Net Capital Contributions to the Master Fund, subject
to any adjustments made and decreased by any repurchases or distributions.
1.21 INVESTMENT ADVISER means the person who at any particular time
serves as the investment adviser to the Master Fund pursuant to the Investment
Management Agreement.
1.22 INVESTMENT FUNDS means unregistered investment funds and/or
registered investment companies in which the Master Fund will invest.
1.23 INVESTMENT MANAGEMENT AGREEMENT means the separate written agreement
between the Master Fund and the Investment Adviser pursuant to which the
Investment Adviser performs certain investment advisory and supervisory
services to the Master Fund.
1.24 MANAGEMENT FEE means the management fee paid to the Investment
Adviser out of the Master Fund's assets pursuant to an Investment Management
Agreement, and debited against Members' Capital Accounts.
- 3 -
1.25 MASTER FUND means the limited liability company governed hereby, as
such limited liability company may from time to time be constituted.
1.26 MASTER FUND PERCENTAGE means a percentage established for each
Member on the Master Fund's books as of the first day of each Fiscal Period.
The Master Fund Percentage of a Member for a Fiscal Period shall be determined
by dividing the balance of the Member's Capital Account as of the commencement
of such Fiscal Period by the sum of the Capital Accounts of all of the Members
as of the commencement of such Fiscal Period. The sum of the Master Fund
Percentages of all Members for each Fiscal Period shall equal 100%.
1.27 MEMBER means any person who shall have been admitted to the Master
Fund as a member or a substitute Member who is admitted to the Master Fund
pursuant to this Agreement, in such person's capacity as a Member until the
Master Fund repurchases the entire Interest of such person as a Member
pursuant to Section 4.5 hereof or a substituted Member or Members are admitted
with respect to any such person's entire Interest as a Member pursuant to
Section 4.4 hereof. The Members shall constitute a single class or group of
members.
1.28 NEGATIVE BASIS shall have the meaning set forth in Section 5.7.
1.29 NEGATIVE BASIS MEMBER shall have the meaning as set forth in Section
5.7.
1.30 NET ASSETS means the total value of all assets of the Master Fund,
less an amount equal to all accrued debts, liabilities and obligations of the
Master Fund, calculated before giving effect to any repurchases of Interests.
The Net Assets of the Master Fund will be computed as of the close of business
on the last day of each Fiscal Period. In computing Net Assets, the Master
Fund will value its interests in the Investment Funds at the respective net
asset values provided by the Investment Funds to the Master Fund, subject to
the Board's review to assure that such values reflect fair value. Other
securities and assets of the Master Fund will be valued at market value, if
market quotations are readily available, or will be valued at fair value as
determined in good faith by the Board or in accordance with procedures adopted
by the Board. Expenses of the Master Fund and its liabilities (including the
amount of any borrowings) are taken into account for purposes of computing Net
Assets.
1.31 NET ASSET VALUE means the total value of all assets of the Master
Fund as valued pursuant to Section 7.3, less an amount equal to all accrued
debts, liabilities, and obligations of the Master Fund, calculated before
giving effect to any repurchase of Interests.
1.32 NET CAPITAL CONTRIBUTION means a Member's Capital Contribution minus
fees or expenses, if any.
1.33 NET PROFIT OR NET LOSS means the amount by which the Net Assets as
of the close of business on the last day of a Fiscal Period exceed (in the
case of Net Profit) or are less than (in the case of Net Loss) the Net Assets
as of the commencement of the same Fiscal Period, such amount to be adjusted
to exclude any items to be allocated among the Capital Accounts of the Members
on a basis that is not in accordance with the respective Master Fund
- 4 -
Percentages of all Members as of the commencement of such Fiscal Period
pursuant to this Agreement.
1.34 1940 ACT means the Investment Company Act of 1940 and the rules,
regulations, and orders thereunder, as amended from time to time, or any
successor law.
1.35 1934 ACT means the Securities Exchange Act of 1934 and the rules,
regulations, and orders thereunder, as amended from time to time, or any
successor law.
1.36 OFFERING EXPENSES means the expenses of offering Interests in the
Master Fund.
1.37 ORGANIZATIONAL EXPENSES means the expenses incurred by the Master
Fund in connection with its formation and initial registration as an
investment company under the 0000 Xxx.
1.38 ORGANIZATIONAL MEMBER means Xxxx X. Xxxxxxxx.
1.39 PERSON means any individual, entity, corporation, partnership,
association, limited liability company, joint-stock company, trust, estate,
joint venture, organization, or unincorporated organization.
1.40 PORTFOLIO MANAGERS means portfolio managers of the Investment Funds
in which the Master Fund will invest, among which the Master Fund will deploy
some or all of its assets.
1.41 POSITIVE BASIS shall have the meaning as set forth in Section 5.7.
1.42 POSITIVE BASIS MEMBER shall have the meaning as set forth in Section
5.7.
1.43 REPURCHASE VALUATION DATE shall have the meaning set forth in
Section 4.5.
1.44 SECURITIES means securities (including, without limitation,
equities, debt obligations, options, and other "securities" as that term is
defined in Section 2(a)(36) of the 0000 Xxx) and any contracts for forward or
future delivery of any security, debt obligation, currency, or commodity, all
manner of derivative instruments, and any contracts based on any index or
group of securities, debt obligations, currencies, or commodities, and any
options thereon.
1.45 SERIES means any series of limited liability company interests
established by the Board relating to a distinct portfolio and having separate
rights and powers with respect to the assets of the Master Fund allocated to
such Series.
1.46 TAX MATTERS MEMBER means the Member designated as "tax matters
member" of the Master Fund pursuant to Section 8.18 hereof.
- 5 -
1.47 TRANSFER means the assignment, transfer, sale, or other disposition
of all or any portion of an Interest, including any right to receive any
allocations and distributions attributable to an Interest.
1.48 VALUATION DATE means any date in which the Net Asset Value of the
Master Fund is computed.
------------------------------------------------------------
ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS; BOARD
------------------------------------------------------------
2.1 FORMATION OF LIMITED LIABILITY COMPANY. The Organizational Member and
any person designated by the Board hereby are designated as authorized
persons, within the meaning of the Delaware Act, to execute, deliver, and file
all certificates (and any amendments and/or restatements thereof) required or
permitted by the Delaware Act to be filed in the office of the Secretary of
State of the State of Delaware. The Board shall cause to be executed and filed
with applicable governmental authorities any other instruments, documents, and
certificates which, in the opinion of the Master Fund's legal counsel, may
from time to time be required by the laws of the United States of America, the
State of Delaware, or any other jurisdiction in which the Master Fund shall
determine to do business, or any political subdivision or agency thereof, or
which such legal counsel may deem necessary or appropriate to effectuate,
implement, and continue the valid existence and business of the Master Fund.
2.2 NAME. The name of the Master Fund shall be The Topiary Master Fund
for Benefit Plan Investors (BPI) LLC, pursuant to the Certificate dated as of
July 16, 2004 and filed with the Secretary of State of the State of Delaware
on July 16, 2004, or such other name as the Board hereafter may adopt upon:
(i) causing an appropriate amendment to the Certificate to be filed in
accordance with the Delaware Act; and (ii) sending notice thereof to each
Member. The Master Fund's business may be conducted under the name of the
Master Fund or, to the fullest extent permitted by law, any other name or
names deemed advisable by the Board.
2.3 PRINCIPAL AND REGISTERED OFFICE. The Master Fund shall have its
principal office at the principal office of the Investment Adviser, or at such
other place designated from time to time by the Board.
The Master Fund shall have its registered office in the State of Delaware
at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000, and
shall have the Corporation Trust Company as its registered agent at such
registered office for service of process in the State of Delaware, unless a
different registered office or agent is designated from time to time by the
Board in accordance with the Delaware Act.
- 6 -
2.4 DURATION. The term of the Master Fund shall commence on the filing of
the Certificate with the Secretary of State of the State of Delaware and shall
continue perpetually unless and until the Master Fund is dissolved pursuant to
Section 6.1 hereof.
2.5 BUSINESS OF THE PORTFOLIO COMPANY. The business of the Master Fund
is, without limitation, to purchase, sell, invest, and trade in Securities,
both directly and through the purchase of interests in the Investment Funds
and to engage in any financial or derivative transactions relating thereto or
otherwise and to engage in such other activities and to exercise such rights
and powers as permitted by limited liability companies under the Delaware Act.
On behalf of the Master Fund, the officers of the Master Fund may execute,
deliver, and perform all contracts, agreements, and other undertakings and
engage in all activities and transactions as may in the opinion of the Board
be necessary or advisable to carry out the Master Fund's business and any
amendments to any such contracts, agreements, and other undertakings, all
without any further act, vote, or approval of any other person,
notwithstanding any other provision of this Agreement.
2.6 THE BOARD.
(a) The Organizational Member shall serve as the sole Director on the
initial Board as of [_______, 2004], until the proper designation of those
persons first listed on Schedule I who shall agree to be bound by all of the
terms of this Agreement to serve as Directors on the initial Board, which
agreement to be bound shall be effective as of the date of their acceptance of
their appointment as Director. The Board may, subject to the provisions of
paragraphs (a) and (b) of this Section 2.6 with respect to the number of and
vacancies in the position of Director and the provisions of Section 3.3 hereof
with respect to the election of Directors by Members, designate any person who
shall agree to be bound by all of the terms of this Agreement as a Director.
The names and mailing addresses of the Directors shall be set forth in the
books and records of the Master Fund. The number of Directors shall be fixed
from time to time by a written instrument signed by, or by resolution approved
at a duly constituted meeting by vote of, a majority of the Board, provided
however that the number of Directors shall at all times be at least one and no
more than ten as determined, from time to time, by the Directors pursuant to
this Agreement.
(b) Each Director shall serve as a Director for the duration of the term
of the Master Fund, unless his or her status as a Director shall be sooner
terminated pursuant to Section 4.2 hereof. If any vacancy in the position of a
Director occurs, the remaining Directors may appoint a person to serve in such
capacity, provided such appointment is in accordance with the 1940 Act. The
Directors may call a meeting of Members to fill any vacancy in the position of
Director, and shall do so when required by the 1940 Act.
(c) In the event that no Director remains to continue the business of the
Master Fund, the Investment Adviser shall promptly call a meeting of the
Members, to be held within 60 days after the date on which the last Director
ceased to act in that capacity, for the purpose of determining whether to
continue the business of the Master Fund and, if the business shall be
continued, of electing the required number of Directors to the Board. If the
Members shall determine at such meeting not to continue the business of the
Master Fund or if the required
- 7 -
number of Directors is not elected within 60 days after the date on which the
last Director ceased to act in that capacity, then the Master Fund shall be
dissolved pursuant to Section 6.1 hereof and the assets of the Master Fund
shall be liquidated and distributed pursuant to Section 6.2 hereof.
2.7 MEMBERS.
(a) The Board may admit one or more Members at such times as the Board
may determine. Members may be admitted to the Master Fund subject to the
condition that each such Member execute an appropriate signature page of this
Agreement, application, subscription agreement, or without such execution, if
such Member orally, in writing, or by other action, including, but not limited
to payment for an Interest, complies with the conditions for becoming a Member
and pursuant to which such Member agrees to be bound by all the terms and
provisions hereof. This Agreement shall not be unenforceable by reason of it
not having been signed by a person being admitted as a Member. The Board, in
its sole and absolute discretion, may reject applications or subscription
agreements for Interests in the Master Fund. The admission of any person as a
Member shall be effective upon the revision of the books and records of the
Master Fund to reflect the name and the contribution to the capital of the
Master Fund of such additional Member. Such record of Members shall also set
forth the number of Interests that each Member holds. The Organizational
Member and the Investment Adviser hereby are admitted as Members on the date
hereof.
(b) If a Member is admitted to the Master Fund prior to the initial
Closing, the Invested Capital of such Member shall be adjusted by any Net
Profit or Net Loss allocable to such Member for the period through the initial
Closing.
2.8 BOTH DIRECTORS AND MEMBERS. A Member may at the same time be a
Director, a Member, or an Investment Adviser, and a Member in which event such
Member's rights and obligations in each capacity shall be determined
separately in accordance with the terms and provisions hereof and as provided
in the Delaware Act and the 1940 Act. A Director need not be a Member.
2.9 ORGANIZATIONAL MEMBER. Xxxx X. Xxxxxxxx shall be the Organizational
Member of the Master Fund.
2.10 LIMITED LIABILITY. To the fullest extent permitted under applicable
law, a Member shall not be liable for the Master Fund's debts, obligations, or
liabilities in any amount in excess of the Capital Account balance of such
Member. To the fullest extent permitted under applicable law, the Investment
Adviser and Directors shall not be liable for the Master Fund's debts,
obligations, or liabilities.
2.11 SERIES. The Master Fund may create one or more Series and/or classes
from time to time. With respect to any Series established by the Master Fund,
the following provisions shall apply:
- 8 -
(a) separate and distinct records shall be maintained for each Series,
and the assets associated with any such Series shall be held and accounted for
separately from the other assets of the Master Fund or any other Series;
(b) the debts, liabilities, and obligations incurred, contracted for, or
otherwise existing with respect to a particular Series shall be enforceable
against the assets of such Series only, and not against the assets of the
Master Fund generally or any other Series;
(c) the Board, in its sole and absolute discretion, shall have authority
to restrict allocations or transfers of Member Capital Contributions to or
from any Series; and
(d) notwithstanding Section 18-215 of the Delaware Act, the failure of a
Series to have any Member associated with it shall not be the basis for the
dissolution of the Series and the winding up of its affairs unless in
accordance with the provisions of Article VI.
------------------------------------------------------------
ARTICLE III
MANAGEMENT
------------------------------------------------------------
3.1 MANAGEMENT AND CONTROL.
(a) Management and control of the business of the Master Fund shall be
vested in the Board, which shall have the right, power, and authority, on
behalf of the Master Fund and in its name, to exercise all rights, powers, and
authority of "managers" under the Delaware Act and to do all things necessary
and proper to carry out the objective and business of the Master Fund and its
duties hereunder. No Director shall have the authority individually to act on
behalf of or to bind the Master Fund except within the scope of such
Director's authority as delegated by the Board. The parties hereto intend
that, except to the extent otherwise expressly provided herein: (i) each
Director shall be vested with the same powers, authority, and responsibilities
on behalf of the Master Fund as are customarily vested in each director of a
Delaware corporation; and (ii) each Independent Director shall be vested with
the same powers, authority, and responsibilities on behalf of the Master Fund
as are customarily vested in each director of a closed-end management
investment company registered under the 1940 Act that is organized as a
Delaware corporation who is not an "interested person" of such company as such
term is defined in the 1940 Act. During any period in which the Master Fund
shall have no Directors, the Investment Adviser shall continue to serve as the
adviser to the Master Fund. The Directors may make Capital Contributions and
own Interests in the Master Fund.
(b) Each Member agrees not to treat, on his personal income tax return or
in any claim for a tax refund, any item of income, gain, loss, deduction, or
credit in a manner inconsistent with the treatment of such item by the Master
Fund. The Board shall have the exclusive authority and discretion to make any
elections required or permitted to be made by the Master Fund under any
provisions of the Code or any other revenue laws.
- 9 -
(c) Members shall have no right to participate in and shall take no part
in the management or control of the Master Fund's business, except to the
extent specifically provided herein, and shall have no right, power, or
authority to act for or bind the Master Fund. Members shall have the right to
vote on any matters only as provided in this Agreement or on any matters that
require the approval of the holders of voting securities under the 1940 Act or
as otherwise required in the Delaware Act.
(d) The Board may delegate to any person, including officers of the
Master Fund, any rights, power, and authority vested by this Agreement in the
Board to the extent permissible under applicable law.
3.2 ACTIONS BY THE BOARD.
(a) Unless provided otherwise in this Agreement, the Board shall act
only: (i) by the affirmative vote of a majority of the Directors (which
majority shall include any requisite number of Independent Directors required
by the 0000 Xxx) present at a meeting duly called at which a quorum of the
Directors shall be present (in person, which may include any means of
communication that allows all Directors participating to hear each other
simultaneously during the meeting, as permitted by the SEC and/or the 1940
Act, or, if in person attendance is not required by the 1940 Act, in person or
by telephone); or (ii) by unanimous written consent of all of the Directors
without a meeting, if permissible under the 1940 Act.
(b) The Board may designate from time to time a Chairperson who shall
preside at all meetings. Meetings of the Board may be called by the
Chairperson or any two Directors, and may be held on such date and at such
time and place as the Board shall determine. Each Director shall be entitled
to receive written notice of the date, time, and place of such meeting within
a reasonable time in advance of the meeting. Notice need not be given to any
Director who shall attend a meeting without objecting to the lack of notice or
who shall execute a written waiver of notice with respect to the meeting.
Directors may attend and participate in any meeting by telephone, except where
in person attendance at a meeting is required by the 1940 Act. A majority of
the Directors then in office shall constitute a quorum at any meeting.
(c) The Board may designate from time to time agents and employees of the
Master Fund, including without limitation employees of the Investment Adviser,
who shall have the same powers and duties on behalf of the Master Fund
(including the power to bind the Master Fund) as are customarily vested in
officers of a Delaware corporation, and designate them as officers of the
Master Fund.
3.3 MEETINGS OF MEMBERS.
(a) Actions requiring the vote of the Members may be taken at any duly
constituted meeting of the Members at which a quorum is present. Meetings of
the Members may be called by the Board or by Members holding a majority of the
total number of votes eligible to be cast by all Members, and may be held at
such time, date, and place as the Board shall determine. The Board shall
arrange to provide written notice of the meeting, stating the date, time, and
place of
- 10 -
the meeting and the record date therefor, to each Member entitled to vote at
the meeting within a reasonable time prior thereto. Failure to receive notice
of a meeting on the part of any Member shall not affect the validity of any
act or proceeding of the meeting, so long as a quorum shall be present at the
meeting. Only matters set forth in the notice of a meeting may be voted on by
the Members at a meeting. The presence in person or by proxy of Members
holding a majority of the total number of votes eligible to be cast by all
Members as of the record date shall constitute a quorum at any meeting. In the
absence of a quorum, a meeting of the Members may be adjourned by action of a
majority of the Members present in person or by proxy without additional
notice to the Members. Except as otherwise required by any provision of this
Agreement or of the 1940 Act: (i) those candidates receiving a plurality of
the votes cast at any meeting of Members shall be elected as Directors; and
(ii) all other actions of the Members taken at a meeting shall require the
affirmative vote of Members holding a majority of the total number of votes
eligible to be cast by those Members who are present in person or by proxy at
such meeting.
(b) Each Member shall be entitled to cast at any meeting of Members a
number of votes equivalent to such Member's Master Fund Percentage as of the
record date for such meeting. The Board shall establish a record date not less
than 10 nor more than 60 days prior to the date of any meeting of Members to
determine eligibility to vote at such meeting and the number of votes which
each Member will be entitled to cast thereat, and shall maintain for each such
record date a list setting forth the name of each Member and the number of
votes that each Member will be entitled to cast at the meeting.
(c) A Member may vote at any meeting of Members by a proxy properly
executed in writing by the Member and filed with the Master Fund before or at
the time of the meeting. A proxy may be suspended or revoked, as the case may
be, by the Member executing the proxy by a later writing delivered to the
Master Fund at any time prior to exercise of the proxy or if the Member
executing the proxy shall be present at the meeting and decide to vote in
person. Any action of the Members that is permitted to be taken at a meeting
of the Members may be taken without a meeting if consents in writing, setting
forth the action taken, are signed by Members holding a majority of the total
number of votes eligible to be cast or such greater percentage as may be
required in order to approve such action.
3.4 CUSTODY OF ASSETS OF THE PORTFOLIO COMPANY. The physical possession
of all funds, Securities, or other property of the Master Fund shall at all
times, be held, controlled, and administered by one or more custodians
retained by the Master Fund in accordance with the requirements of the 1940
Act.
3.5 OTHER ACTIVITIES OF MEMBERS AND DIRECTORS.
(a) The Directors shall not be required to devote full time to the
affairs of the Master Fund, but shall devote such time as may reasonably be
required to perform their obligations under this Agreement.
- 11 -
(b) Any Member, Director, or Affiliate of the foregoing may engage in or
possess an interest in other business ventures or commercial dealings of every
kind and description, independently or with others, including, but not limited
to, acquisition and disposition of Securities, provision of investment
advisory or brokerage services, serving as directors, officers, employees,
advisers, or agents of other companies, partners of any partnership, members
of any limited liability company, or trustees of any trust, or entering into
any other commercial arrangements. No Member shall have any rights in or to
such activities of any other Member or Director, or any profits derived
therefrom.
3.6 DUTY OF CARE.
(a) A Director shall not be liable to the Master Fund or to any of its
Members for any loss or damage occasioned by any act or omission in the
performance of the Director's services under this Agreement, unless it shall
be determined by final judicial decision in a court of competent jurisdiction
on the merits from which there is no further right to appeal that such loss is
due to an act or omission of such person constituting willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of such Director's office or as otherwise required by law.
(b) A Member not in breach of any obligation hereunder or under any
agreement pursuant to which the Member subscribed for an Interest shall be
liable to the Master Fund, any other Member, or third parties only as required
by the Delaware Act or otherwise provided in this Agreement.
3.7 INDEMNIFICATION.
(a) To the fullest extent permitted by law, the Master Fund shall,
subject to Section 3.7(b) hereof, indemnify each Director (including for this
purpose their executors, heirs, assigns, successors, or other legal
representatives), the Investment Adviser and Tax Matters Member (including for
this purpose each affiliate, shareholder, partner, member, officer, director,
principal, employee, or agent of the Investment Adviser and the Tax Matters
Member) and the executors, heirs, assigns, successors, or other legal
representatives of each of the foregoing, and of any person who controls or is
under common control, or otherwise affiliated, with the Investment Adviser or
the Tax Matters Member (and their executors, heirs, assigns, successors, or
other legal representatives) against all losses, claims, damages, liabilities,
costs, and expenses, including, but not limited to, amounts paid in
satisfaction of judgments, in compromise, or as fines or penalties, and
reasonable counsel fees, incurred in connection with the defense or
disposition of any action, suit, investigation, or other proceeding, whether
civil or criminal, before any judicial, arbitral, administrative, or
legislative body, in which such indemnitee may be or may have been involved as
a party or otherwise, or with which such indemnitee may be or may have been
threatened, while in office or thereafter, by reason of being or having been a
Director, Investment Adviser, or the Tax Matters Member, as the case may be,
of the Master Fund or the past or present performance of services to the
Master Fund by such indemnitee, except to the extent such loss, claim, damage,
liability, cost, or expense shall have been finally determined in a decision
on the merits in any such action, suit, investigation, or other proceeding
- 12 -
to have been incurred or suffered by such indemnitee by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of such indemnitee's office. The rights of
indemnification provided under this Section 3.7 shall not be construed so as
to provide for indemnification of an indemnitee for any liability (including
liability under federal securities laws which, under certain circumstances,
impose liability even on persons that act in good faith) to the extent (but
only to the extent) that such indemnification would be in violation of
applicable law, but shall be construed so as to effectuate the applicable
provisions of this Section 3.7 to the fullest extent permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred by any such
indemnitee (but excluding amounts paid in satisfaction of judgments, in
compromise, or as fines or penalties), may be paid from time to time by the
Master Fund in advance of the final disposition of any such action, suit,
investigation, or proceeding upon receipt of an undertaking by or on behalf of
such indemnitee to repay to the Master Fund amounts so paid if it shall
ultimately be determined that indemnification of such expenses is not
authorized under Section 3.7(a) hereof; provided, however, that: (i) such
indemnitee shall provide security for such undertaking, (ii) the Master Fund
shall be insured by or on behalf of such indemnitee against losses arising by
reason of such indemnitee's failure to fulfill his or its undertaking; or
(iii) a majority of the Directors (excluding any Director who is seeking
advancement of expenses hereunder or is or has been a party to any action,
suit, investigation, or proceeding involving claims similar to those involved
in the action, suit, investigation, or proceeding giving rise to a claim for
advancement of expenses hereunder) or independent legal counsel in a written
opinion shall determine based on a review of readily available facts (as
opposed to a full trial-type inquiry) that there is reason to believe such
indemnitee ultimately will be entitled to indemnification.
(c) As to the disposition of any action, suit, investigation, or
proceeding (whether by a compromise payment, pursuant to a consent decree, or
otherwise) without an adjudication or a decision on the merits by a court of
competent jurisdiction, or by any other body before which the proceeding shall
have been brought, that an indemnitee is liable to the Master Fund or its
Members by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of such indemnitee's
office, indemnification shall be provided pursuant to Section 3.7(a) hereof
if: (i) approved as in the best interests of the Master Fund by vote of a
majority of the Directors (excluding any Director who is seeking
indemnification hereunder or is or has been a party to any action, suit,
investigation, or proceeding involving claims similar to those involved in the
action, suit, investigation, or proceeding giving rise to a claim for
advancement of expenses hereunder) upon a determination based upon a review of
readily available facts (as opposed to a full trial-type inquiry) that such
indemnitee acted in good faith and in the reasonable belief that such actions
were in the best interests of the Master Fund and that such indemnitee is not
liable to the Master Fund or its Members by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of such indemnitee's office; or (ii) the Directors secure a written
opinion of independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry) to the effect that such
indemnitee acted in good faith and in the reasonable belief that such actions
were in the best interests of the Master Fund and that such indemnitee is not
liable
- 13 -
to the Master Fund or its Members by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct
of such indemnitee's office.
(d) Any indemnification or advancement of expenses made pursuant to this
Section 3.7 shall not prevent the recovery from any indemnitee of any such
amount if such indemnitee subsequently shall be determined in a final decision
on the merits in a court of competent jurisdiction in any action, suit,
investigation, or proceeding involving the liability or expense that gave rise
to such indemnification or advancement of expenses to be liable to the Master
Fund or its Members by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
such indemnitee's office. In any suit brought by an indemnitee to enforce a
right to indemnification under this Section 3.7 it shall be a defense that,
and in any suit in the name of the Master Fund to recover any indemnification
or advancement of expenses made pursuant to this Section 3.7 the Master Fund
shall be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met the applicable standard of conduct set forth in this
Section 3.7. In any such suit brought to enforce a right to indemnification or
to recover any indemnification or advancement of expenses made pursuant to
this Section 3.7, the burden of proving that the indemnitee is not entitled to
be indemnified, or to any indemnification or advancement of expenses, under
this Section 3.7 shall be on the Master Fund (or any Member acting
derivatively or otherwise on behalf of the Master Fund or its Members).
(e) An indemnitee may not satisfy any right of indemnification or
advancement of expenses granted in this Section 3.7 as to which he, she, or it
may otherwise be entitled except out of the assets of the Master Fund, and no
Member shall be personally liable with respect to any such claim for
indemnification or advancement of expenses.
(f) The rights of indemnification provided hereunder shall not be
exclusive of or affect any other rights to which any person may be entitled by
contract or otherwise under law. Nothing contained in this Section 3.7 shall
affect the power of the Master Fund to purchase and maintain liability
insurance on behalf of any Director or other person.
3.8 FEES, EXPENSES, AND REIMBURSEMENT.
(a) So long as the Investment Adviser (or its affiliates) provides
management services to the Master Fund, it shall be entitled to receive fees
for such services as may be agreed to by the Investment Adviser and the Master
Fund pursuant to an Investment Management Agreement, provided however, the
Board has approved such agreement and fees. The Management Fee will be
computed based on the Capital Account of each Member as of the end of business
on the last business day of each month, after adjustment for any subscriptions
effective on such date and before giving effect to any repurchase of Interests
effective as of such date. To the extent permitted by the 1940 Act, the
Investment Adviser may waive or reduce the Management Fee calculated with
respect to, and deducted from, the Capital Account of any Member and may pay
all or part of the Management Fee to third parties for services rendered in
connection with the placement of Interests.
- 14 -
(b) The Board may cause the Master Fund to compensate each Director for
his or her services hereunder. In addition, the Master Fund shall reimburse
the Directors for reasonable out-of-pocket expenses incurred by them in
performing their duties under this Agreement.
(1) The Master Fund shall bear all of its own operating expenses
incurred in the business of the Master Fund other than those specifically
required to be borne by the Investment Adviser or another party pursuant
to a separate written agreement with the Master Fund as contemplated by
Section 3.8(a) hereof. Expenses to be borne by the Master Fund include,
but shall not be limited to: any fees payable to the Investment Adviser
(including the Management Fee); fees and expenses in connection with the
organization of the Master Fund, including offering expenses; brokerage
commissions; interest and fees on any borrowings by the Master Fund; fees
and expenses of outside legal counsel (including fees and expenses
associated with review of documentation for prospective investments by
the Master Fund), including foreign legal counsel; independent auditors'
fees; fees and expenses in connection with repurchase offers and any
repurchases of Interests; taxes and governmental fees (including tax
preparation fees); administration and custody fees; expenses of
preparing, printing, and distributing offering memoranda and
prospectuses, and any other sales material (and any supplements or
amendments thereto), reports, notices, other communications to Members,
and proxy materials; expenses of preparing, printing, and filing reports
and other documents with government agencies; expenses of Members'
meetings; expenses of corporate data processing and related services;
Member recordkeeping and Member account services, fees, and
disbursements; fees and expenses of the Directors not employed by the
Investment Adviser, the Distributor, or their respective affiliates;
insurance premiums; extraordinary expenses such as litigation expenses;
and such other types of expenses as may be approved from time to time by
the Board.
(2) The Investment Adviser shall be entitled to reimbursement from
the Master Fund for any of the above expenses that it pays on behalf of
the Master Fund.
(c) Subject to procuring any required regulatory approvals, the Master
Fund from time to time, alone or in conjunction with other accounts for which
the Investment Adviser, or any Affiliate of the Investment Adviser, acts as
general partner, managing member, or investment adviser, may purchase
insurance in such amounts, from such insurers and on such terms as the Board
shall determine.
------------------------------------------------------------
ARTICLE IV
TERMINATION OF STATUS OF INVESTMENT ADVISER AND DIRECTORS;
TRANSFERS, REPURCHASES, AND REDEMPTIONS
------------------------------------------------------------
4.1 TERMINATION OF STATUS OF THE INVESTMENT ADVISER. The status of the
Investment Adviser shall terminate if the Investment Management Agreement with
the
- 15 -
Investment Adviser terminates and the Master Fund does not enter into a new
Investment Management Agreement with the Investment Adviser, effective as of
the date of such termination.
4.2 TERMINATION OF STATUS OF A DIRECTOR. The status of a Director shall
terminate if the Director: (i) shall die; (ii) shall be adjudicated
incompetent; (iii) shall voluntarily withdraw as a Director (upon not less
than 90 days' prior written notice to the other Directors, unless the other
Directors waive such notice); (iv) shall be removed; (v) shall be certified by
a physician to be mentally or physically unable to perform his or her duties
hereunder; (vi) shall be declared bankrupt by a court with appropriate
jurisdiction, file a petition commencing a voluntary case under any bankruptcy
law, or make an assignment for the benefit of creditors; or (vii) shall have a
receiver appointed to administer the property or affairs of such Director.
4.3 REMOVAL OF THE DIRECTORS. Any Director may be removed by: (i) the
vote or written consent of at least two-thirds (2/3) of the Directors not
subject to the removal or vote; or (ii) the vote or written consent of Members
holding not less than two-thirds (2/3) of the total number of votes eligible
to be cast by all Members.
4.4 TRANSFER OF INTERESTS OF MEMBERS.
(a) An Interest held by a Member may be transferred in whole or in part
only: (i) by operation of law pursuant to the death, divorce, bankruptcy,
insolvency, or dissolution of such Member; or (ii) under extremely limited
circumstances, with the written consent of the Board (which may be withheld
for any reason in its sole and absolute discretion). If any transferee does
not meet such investor eligibility requirements, the Master Fund reserves the
right to redeem its Interest. If the Board does not consent to a transfer by
operation of law, the Master Fund shall redeem the Interest from the Member's
successor. Any transfer must comply with the Securities Act. The Board
generally will not consent to a transfer unless the transfer is: (i) one in
which the tax basis of the Interest in the hands of the transferee is
determined, in whole or in part, by reference to its tax basis in the hands of
the transferring Member (e.g,. certain gifts and contributions to family
entities); or (ii) to members of the transferring Member's immediate family
(siblings, spouse, parents, and children). The foregoing permitted transferees
will not be allowed to become substituted Members without the consent of the
Board, which may be withheld in its sole and absolute discretion. Each
transferring Member and transferee agrees to pay all expenses, including, but
not limited, to attorneys' and accountants' fees, incurred by the Master Fund
in connection with any transfer.
(b) By subscribing for an Interest, each Member agrees to indemnify and
hold harmless the Master Fund, the Board, the Investment Adviser, or each
other Member, and any Affiliate of the foregoing against all losses, claims,
damages, liabilities, costs, and expenses (including legal or other expenses
incurred in investigating or defending against any losses, claims, damages,
liabilities, costs, and expenses or any judgments, fines, and amounts paid in
settlement), joint or several, to which such persons may become subject by
reason of or arising
- 16 -
from any transfer made by that Member in violation of this Section 4.4 or any
misrepresentation made by that Member in connection with any such transfer.
(c) Each transferring Member shall indemnify and hold harmless the Master
Fund, the Board, the Investment Adviser, or each other Member and any
Affiliate of the foregoing against all losses, claims, damages, liabilities,
costs, and expenses (including legal or other expenses incurred in
investigating or defending against any such losses, claims, damages,
liabilities, costs, and expenses or any judgments, fines, and amounts paid in
settlement), joint or several, to which such persons may become subject by
reason of or arising from: (i) any transfer made by such Member in violation
of this Section 4.4; and (ii) any misrepresentation by such Member in
connection with any such transfer.
4.5 REPURCHASE OF INTERESTS.
(a) General. Except as otherwise provided in this Agreement, no Member or
other person holding an Interest or portion thereof shall have the right to
require the Master Fund to redeem its Interest. The Board of the Master Fund,
from time to time, and in its sole and absolute discretion, may determine to
cause the Master Fund to offer to repurchase Interests from Members, including
the Investment Adviser, on such terms and conditions as set forth in this
Agreement. However, the Master Fund shall not offer to repurchase Interests on
more than two occasions during any one Fiscal Year unless it has been advised
by counsel to the Master Fund to the effect that more frequent offers would
not cause any adverse tax consequences to the Master Fund or its Members. In
accordance with the terms and conditions as are set forth in this Agreement,
in determining whether to cause the Master Fund to repurchase Interests
pursuant to written requests by Members, the Board shall consider, among other
things, the recommendation of the Investment Adviser and shall also consider
the following factors, among others, in making such determination:
(1) whether any Members have requested that the Master Fund
repurchase their Interests;
(2) the liquidity of the Master Fund's assets;
(3) the investment plans and working capital requirements of the
Master Fund;
(4) the relative economies of scale with respect to the size of the
Master Fund;
(5) the history of the Master Fund in repurchasing Interests;
(6) the economic condition of the securities markets; or
(7) the anticipated tax consequences of any proposed repurchases of
Interests.
- 17 -
(b) Discretionary Repurchases. The Board shall cause the Master Fund to
repurchase Interests on terms fair to the Master Fund and to all Members or
one or more classes of Members (including persons holding Interests acquired
from Members), as applicable, in the following manner:
(1) The Board will provide written notice to Members when it has
determined, in its sole and absolute discretion, that the Master Fund
will repurchase Interests. Such notice will describe the terms of the
repurchase offer, including:
(i) the commencement date of the repurchase offer;
(ii) the date on which repurchase requests must be received by
the Master Fund (the "Repurchase Request Deadline"); and
(iii) other information that Members should consider in
deciding whether and how to participate in such repurchase
opportunity.
(2) Members must submit, in writing, requests for repurchase to the
Master Fund or its designated agent. The Repurchase Request Deadline will
be a date set by the Board occurring no sooner than 20 business days
after the commencement date of the repurchase offer and such Repurchase
Request Deadline may be extended by the Board in its sole and absolute
discretion. The Master Fund will not accept any repurchase request
received by it or its designated agent after the Repurchase Request
Deadline.
(3) Payment for Interests, accepted by the Master Fund for
repurchase will be made in whole or in part in accordance with Section
4.5(b)(6). The amount due to any Member whose Interest is repurchased
will be equal to the value of the Member's Capital Account or relevant
portion thereof based on the estimated unaudited net asset value of the
Master Fund's assets as of the effective date of repurchase (the
"Repurchase Valuation Date"), after giving effect to all allocations to
be made to the Member's Capital Account as of such date. The Repurchase
Valuation Date is the last business day of the quarter in which the
Repurchase Request Deadline occurs, which will be approximately 65 days
after the Repurchase Request Deadline. Payment amounts shall ordinarily
be calculated within 10 business days after the Repurchase Valuation Date
in accordance with the Master Fund's valuation procedures as adopted by
the Master Fund's Board.
(4) The Master Fund may suspend or postpone any repurchase offer, by
vote of a majority of the Board, including a majority of the Independent
Directors, including but not limited to:
(i) for any period during which an emergency exists as a result
of which it is not reasonably practicable for the Master Fund to
dispose of securities it owns or to determine the value of the
Master Fund's nets assets;
- 18 -
(ii) for any other periods that the SEC permits by order for
the protection of Members; or
(iii) under such other unusual circumstances as the Board deems
advisable for the benefit of the Master Fund and its Members.
(5) The Board, in its sole and absolute discretion, shall determine
the amount of Interests to be repurchased, if any. If a greater amount of
Interests is submitted for repurchase by Members as of the Repurchase
Request Deadline than the repurchase offer amount, as determined by the
Board in its sole and absolute discretion, the Master Fund may repurchase
an additional amount of Interests not to exceed 2% of the Interests
outstanding on the Repurchase Request Deadline. If the Board determines
not to repurchase more than the repurchase offer amount or if Members
submit for repurchase Interests in an amount exceeding the repurchase
offer amount plus 2% of the Interests outstanding on the Repurchase
Request Deadline, the Master Fund shall repurchase the Interests
submitted for repurchase on a pro rata basis, disregarding fractions,
according to the amount of Interests submitted for repurchase by each
Member as of the Repurchase Request Deadline; provided, however, that
this provision shall not prohibit the Master Fund from:
(i) accepting all Interests submitted for repurchase by Members
who own, beneficially or of record, an aggregate of not more than a
specified percentage of such Interest and who submit for repurchase
all their Interest, before prorating Interests submitted for
repurchase by other Members; or
(ii) accepting by lot Interests submitted for repurchase by
Members who offer all the Interest held by them or who, when
submitting for repurchase their Interest, elect to have either all
or none or at least a minimum amount or none accepted, if the Master
Fund first accepts all Interests submitted for repurchase by Members
who do not so elect.
(6) Repurchases of Interests or portions thereof by the Master Fund
shall be payable promptly after the date of each such repurchase or, in
the case of an offer by the Master Fund to repurchase Interests, promptly
after the expiration date of such repurchase offer in accordance with the
terms of such offer. Payment of the purchase price for an Interest (or
portion thereof) shall consist of cash or a promissory note, which need
not bear interest, in an amount equal to 100% of the unaudited net asset
value of the portion of the Interest redeemed, unless the relevant Member
has requested the repurchase of 90% or more of the Interest held by such
Member, in which case such Member shall receive: (i) cash or a promissory
note, which need not bear interest, in an amount equal to 90% of the
estimated unaudited net asset value of the Interest (or portion thereof)
repurchased by the Master Fund determined as of the Repurchase Valuation
Date (the "Initial Payment"); (ii) a promissory note entitling the holder
thereof to the balance of the proceeds, to be paid following the
expiration of the later of (x) 90 days following the applicable
Repurchase Valuation Date, so as to effectuate an orderly liquidation of
- 19 -
enough Investment Funds in which the Master Fund is invested or
otherwise, or (y) such longer period as the Board of Directors in its
discretion deems necessary to protect the interests of the remaining
Members. Notwithstanding anything in the foregoing to the contrary, the
Board of Directors, in its discretion, may pay any portion of the
repurchase price in Securities (or any combination of Securities and
cash) having a value, determined as of the Repurchase Valuation Date,
equal to the amount to be repurchased; provided that the Board of
Directors, in its discretion, may make payment of the purchase price for
an Interest by in-kind distribution of Securities held by the Master
Fund. The purchase price of an Interest will be determined as of the
Repurchase Valuation Date.
(7) The Board may, in its sole and absolute discretion, elect to
impose charges on Members or other persons who submit their Interests for
repurchase. The Board may also, in its sole and absolute discretion,
allocate to tendering Members withdrawal or similar charges imposed by
Investment Funds if the Master Fund has requested withdrawal of its
capital from any Investment Funds in order to fund the repurchase of
Interests and such charges were imposed on the Master Fund.
(8) The Investment Adviser may submit for repurchase its Interest as
a Member under Section 4.5 hereof.
(c) Mandatory Redemptions. The Board may cause the Master Fund to redeem
the Interest of a Member or of any person acquiring such an Interest from or
through a Member in the event that the Board determines or has reason to
believe that, among other things:
(1) such Interest has been transferred or such Interest has vested
in any person by operation of law as a result of the death, dissolution,
bankruptcy, or incompetency of a Member;
(2) ownership of such Interest by a Member or other person will
cause the Master Fund to be in violation of, or require registration of
any Interests, or subject the Master Fund or the Investment Adviser to
additional registration or regulation under, the securities, commodities,
or other laws of the United States or any other relevant jurisdiction;
(3) continued ownership of such Interest may be harmful or injurious
to the business or reputation of the Master Fund or the Investment
Adviser, or may subject the Master Fund or any of its Members to an undue
risk of adverse tax or other fiscal consequences;
(4) for any period during which an emergency exists as a result of
which it is not reasonably practicable for the Master Fund to dispose of
securities it owns or to determine the value of the Master Fund's net
assets;
(5) any representation or warranty made by a Member in connection
with the acquisition of such Interest was not true when made or has
ceased to be true; or
- 20 -
(6) it would be in the best interests of the Master Fund, as
determined by the Board in its sole and absolute discretion, for the
Master Fund to redeem such Interest.
------------------------------------------------------------
ARTICLE V
CAPITAL
------------------------------------------------------------
5.1 CONTRIBUTIONS TO CAPITAL.
(a) The minimum Capital Contribution of each Member to the capital of the
Master Fund shall be such amount as the Board in its sole and absolute
discretion may determine from time to time. The amount of the initial Capital
Contribution of each Member shall be recorded on the books and records of the
Master Fund upon acceptance as a contribution to the capital of the Master
Fund. The Directors shall not be entitled to make voluntary contributions of
capital to the Master Fund as Directors of the Master Fund, but may make
voluntary contributions to the capital of the Master Fund as Members. The
Investment Adviser may make voluntary contributions to the capital of the
Master Fund as a Member.
(b) If permitted by the Board, a Member and the Investment Adviser, as a
Member, may make additional Capital Contributions of the Master Fund,
effective as of such times as the Board in its discretion may permit, subject
to the limitations applicable to the admission of Members pursuant to this
Agreement. No Member shall be obligated to make any additional Capital
Contribution except to the extent provided in this Agreement.
(c) Except as otherwise permitted by the Board, initial and any
additional contributions to the capital of the Master Fund by any Member shall
be payable in cash.
(d) The minimum initial and additional Capital Contributions may be
increased or reduced by the Board.
(e) The Master Fund shall increase the Interest of any Member making an
additional Capital Contribution.
5.2 RIGHTS OF MEMBERS TO CAPITAL.
No Member shall be entitled to interest on his or its contribution to the
capital of the Master Fund, nor shall any Member be entitled to the return of
any capital of the Master Fund except as otherwise specifically provided
herein. No Member shall be liable for the return of any such amounts. No
Member shall have the right to require partition of the Master Fund's property
or to compel any sale or appraisal of the Master Fund's assets.
5.3 CAPITAL ACCOUNTS.
- 21 -
(a) The Master Fund shall maintain a separate Capital Account for each
Member.
(b) Each Member's Capital Account shall have an initial balance equal to
the amount of cash constituting such Member's Net Capital Contribution.
(c) Each Member's Capital Account shall be increased by the sum of: (i)
the amount of cash constituting additional contributions by such Member to the
capital of the Master Fund permitted pursuant to Section 5.1; plus (ii) any
amount credited to such Member's Capital Account pursuant to this Article V.
(d) Each Member's Capital Account shall be reduced by the sum of: (i) the
amount of any repurchase of the Interest, or portion thereof, of such Member
or distributions to such Member pursuant to this Agreement; plus (ii) any
amounts debited against such Member's Capital Account pursuant to this Article
V.
(e) If all or a portion of the Interest of a Member is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to
the Capital Account of the transferor to the extent it relates to the
transferred Interest or relevant portion thereof.
5.4 ALLOCATION OF NET PROFIT AND LOSS.
As of the last day of each Fiscal Period, any Net Profit or Net Loss for
the Fiscal Period shall be allocated among and credited to or debited against
the Capital Accounts of the Members in accordance with their respective Master
Fund Percentages for such Fiscal Period.
5.5 ALLOCATION OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES.
(a) If the Master Fund incurs a withholding tax or other tax obligation
with respect to the share of Master Fund income allocable to any Member, then
the Board, without limitation of any other rights of the Master Fund or the
Board, shall cause the amount of such obligation to be debited against the
Capital Account of such Member when the Master Fund pays such obligation, and
any amounts then or thereafter distributable to such Member shall be reduced
by the amount of such taxes. If the amount of such taxes is greater than any
such distributable amounts, then such Member and any successor to such
Member's Interest shall pay to the Master Fund as a contribution to the
capital of the Master Fund, upon demand of the Master Fund, the amount of such
excess. The Master Fund shall not be obligated to apply for or obtain a
reduction of or exemption from withholding tax on behalf of any Member that
may be eligible for such reduction or exemption; provided, that in the event
that the Master Fund determines that a Member is eligible for a refund of any
withholding tax, the Master Fund may, at the request and expense of such
Member, assist such Member in applying for such refund.
(b) Except as otherwise provided for in this Agreement and unless
prohibited by the 1940 Act, any expenditures payable by the Master Fund, to
the extent determined by the Board to have been paid or withheld on behalf of,
or by reason of particular circumstances applicable
- 22 -
to, one or more but fewer than all of the Members, shall be charged to
only those Members on whose behalf such payments are made or whose particular
circumstances gave rise to such payments. Such charges shall be debited from
the Capital Accounts of such Members as of the close of the Fiscal Period
during which any such items were paid or accrued by the Master Fund.
5.6 RESERVES.
(a) Appropriate reserves may be created, accrued, and charged against Net
Assets and proportionately against the Capital Accounts of the Members for
contingent liabilities, if any, as of the date any such contingent liability
becomes known to the Investment Adviser or the Board, such reserves to be in
the amounts which the Board in its sole and absolute discretion deems
necessary or appropriate. The Board may increase or reduce any such reserves
from time to time by such amounts as it in its sole and absolute discretion
deems necessary or appropriate. The amount of any such reserve, or any
increase or decrease therein, may be proportionately charged or credited, as
appropriate, to the Members' Capital Accounts. The amount of any such reserve,
or any increase or decrease therein, may be proportionately charged or
credited, as appropriate, to the Capital Accounts of those parties who are
Members at the time when such reserve is created, increased, or decreased, as
the case may be; provided, however, that if any such individual reserve item,
adjusted by any increase therein, exceeds the lesser of $500,000 or 1% of the
aggregate value of the Capital Accounts of all such Members, the amount of
such reserve, increase, or decrease shall instead be charged or credited to
those parties who were Members at the time, as determined by the Board in its
sole and absolute discretion, of the act or omission giving rise to the
contingent liability for which the reserve was established, increased, or
decreased in proportion to their Capital Accounts at that time.
(b) To the extent permitted under applicable law, if at any time an
amount is paid or received by the Master Fund (other than contributions to the
capital of the Master Fund, distributions, or repurchases of Interests or
portions thereof) and such amount exceeds the lesser of $500,000 or 1% of the
aggregate value of the Capital Accounts of all Members at the time of payment
or receipt and such amount was not accrued or reserved for but would
nevertheless, in accordance with the Master Fund's accounting practices, be
treated as applicable to one or more prior Fiscal Periods, then such amount
shall be proportionately charged or credited, as appropriate, to those parties
who were Members during such prior Fiscal Period or Periods.
(c) To the extent permitted under applicable law, if any amount is
required by paragraph (a) or (b) of this Section 5.6 to be charged or credited
to a party who is no longer a Member, such amount shall be paid by or to such
party, as the case may be, in cash, with interest from the date on which the
Board determines that such charge or credit is required. In the case of a
charge, the former Member shall be obligated to pay the amount of the charge,
plus interest as provided above, to the Master Fund on demand; provided,
however, that: (i) in no event shall a former Member be obligated to make a
payment exceeding the amount of such Member's Capital Account at the time to
which the charge relates; and (ii) no such demand shall be made after the
expiration of three years since the date on which such party ceased to be a
Member. To the extent that a former Member fails to pay to the Master Fund, in
full, any amount required to
- 23 -
be charged to such former Member pursuant to paragraph (a) or (b), whether due
to the expiration of the applicable limitation period or for any other reason
whatsoever, the deficiency shall be charged proportionately to the Capital
Accounts of the Members at the time of the act or omission giving rise to the
charge to the extent feasible, and otherwise proportionately to the Capital
Accounts of the current Members.
5.7 TAX ALLOCATIONS.
(a) For each Fiscal Year, items of income, deduction, gain, loss, or
credit shall be allocated for income tax purposes among the Members in such a
manner as to reflect equitably amounts credited or debited to each Member's
Capital Account for the current and prior Fiscal Years (or relevant portions
thereof). Allocations under this Section 5.7 shall be made pursuant to the
principles of Sections 704(b) and 704(c) of the Code, and in conformity with
Treasury Regulations Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(4)(i), and
1.704-3(e) promulgated thereunder, as applicable, or the successor provisions
to such Section and Regulations. Notwithstanding anything to the contrary in
this Agreement, there shall be allocated to the Members such gains or income
as shall be necessary to satisfy the "qualified income offset" requirement of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
(b) If the Master Fund realizes capital gains (including short-term
capital gains) for Federal income tax purposes for any Fiscal Year during or
as of the end of which one or more Positive Basis Members (as hereinafter
defined) withdraws from the Master Fund pursuant to Articles IV or VI hereof,
the Board, in its sole and absolute discretion, may elect to allocate such
gains as follows: (i) to allocate such gains among such Positive Basis
Members, pro rata in proportion to the respective Positive Basis (as
hereinafter defined) of each such Positive Basis Member, until either the full
amount of such gains shall have been so allocated or the Positive Basis of
each such Positive Basis Member shall have been eliminated; and (ii) to
allocate any gains not so allocated to Positive Basis Members to the other
Members in such manner as shall equitably reflect the amounts credited to such
Members' Capital Accounts pursuant to this Agreement.
(c) If the Master Fund realizes capital losses (including long-term
capital losses) for Federal income tax purposes for any Fiscal Year during or
as of the end of which one or more Negative Basis Members (as hereinafter
defined) withdraws from the Master Fund pursuant to Articles IV or VI hereof,
the Board, in its sole and absolute discretion, may elect to allocate such
losses as follows: (i) to allocate losses among such Negative Basis Members,
pro rata in proportion to the respective Negative Basis (as hereinafter
defined) of each such Negative Basis Member, until either the full amount of
such losses have been so allocated or the Negative Basis of each such Negative
Basis Member shall have been eliminated; and (ii) to allocate losses not so
allocated to Negative Basis Members to the other Members in such manner as
shall equitably reflect the amounts credited to such Members' Capital Accounts
pursuant to this Agreement.
(d) As used herein: (i) the term "Positive Basis" shall mean, with
respect to any Member and as of any time of calculation, the amount by which
the total of such Member's Capital Account as of such time exceeds its
"adjusted tax basis," for Federal income tax
- 24 -
purposes, in its Interest as of such time (determined without regard to any
adjustments made to such "adjusted tax basis" by reason of any transfer or
assignment of such Interest, including by reason of death and without regard
to such Member's share of the liabilities of the Master Fund under Section 752
of the Code); (ii) the term "Positive Basis Member" shall mean any Member who
withdraws from the Master Fund and who has a Positive Basis as of the
effective date of its withdrawal but such Member shall cease to be a Positive
Basis Member at such time as it shall have received allocations pursuant to
clause (i) of the Section 5.7(b) above equal to its Positive Basis as of the
effective date of its withdrawal; (iii) the term "Negative Basis" shall mean,
with respect to any Member and as of any time of calculation, the amount by
which the total of such Member's Capital Account as of such time is less than
its "adjusted tax basis," for Federal income tax purposes, in its Interest as
of such time (determined without regard to any adjustments made to such
"adjusted tax basis" by reason of any transfer or assignment of such Interest,
including by reason of death and without regard to such Member's share of the
liabilities of the Master Fund under Section 752 of the Code); and (iv) the
term "Negative Basis Member" shall mean any Member who withdraws from the
Master Fund and who has a Negative Basis as of the effective date of its
withdrawal but such Member shall cease to be a Negative Basis Member at such
time as it shall have received allocations pursuant to clause (i) of Section
5.7(c) above equal to its Negative Basis as of the effective date of its
withdrawal.
5.8 DISTRIBUTIONS.
(a) The Board, in its sole and absolute discretion, may authorize the
Master Fund to make distributions in cash at any time to all of the Members on
a pro rata basis in accordance with each Member's Master Fund Percentage.
(b) The Board may withhold and pay over to the Internal Revenue Service
(or any other relevant taxing authority) taxes from any distribution to any
Member to the extent required by the Code or any other applicable law. For
purposes of this Agreement, any taxes so withheld by the Master Fund with
respect to any amount distributed by the Master Fund to any Member shall be
deemed to be a distribution or payment to such Member, reducing the amount
otherwise distributable to such Member pursuant to this Agreement and, if
appropriate, reducing the Capital Account of such Member. If the amount of
such taxes is greater than any such distributable amounts, then such Member
and any successor to such Member's Interest shall pay to the Master Fund as a
contribution to the capital of the Master Fund, upon demand of the Board, the
amount of such excess.
(c) The Board shall not be obligated to apply for or obtain a reduction
of or exemption from withholding tax on behalf of any Member that may be
eligible for such reduction or exemption. To the extent that a Member claims
to be entitled to a reduced rate of, or exemption from, a withholding tax
pursuant to an applicable income tax treaty, or otherwise, the Member shall
furnish the Board with such information and forms as such Member may be
required to complete where necessary to comply with any and all laws and
regulations governing the obligations of withholding tax agents. Each Member
represents and warrants that any such information and forms furnished by such
Member shall be true and accurate and agrees to
- 25 -
indemnify the Master Fund and each of the Members from any and all damages,
costs, and expenses resulting from the filing of inaccurate or incomplete
information or forms relating to such withholding taxes.
(d) Notwithstanding anything to the contrary contained herein, none of
the Directors or the Members, nor any other person on behalf of the Master
Fund, shall make a distribution to the Members on account of their interests
in the Master Fund if such distribution would violate the Delaware Act or
other applicable law.
(e) The amount and times of any distributions will be determined in the
sole and absolute discretion of the Board.
5.9 ALLOCATION OF ORGANIZATIONAL, OFFERING, AND CERTAIN OTHER EXPENSES.
Organizational Expenses shall generally be amortized over the first twelve
month's of the Master Fund's operations. Offering Expenses, and any other
expenses in connection with offering Interests of the Master Fund and/or any
expenses related to or in connection with any transfer of Interests and/or
repurchasing Interests pursuant to Section 4.5, shall generally be treated as
expenses of the Master Fund included in the computation of Net Profit and/or
Net Loss (except to the extent that the Investment Adviser or another party
determines in its discretion that it will assume, reimburse, and/or waive such
expense). The Board may alternatively choose to amortize such expenses over a
period of time to be determined by the Board. The Board may also allocate
organizational and offering expenses (on an Expense Allocation Date or on such
other date chosen by the Board) among the Members in a manner that allocates
such expenses to Members purchasing Interests in one or more offerings of
Interests. The Board may also allocate expenses of any transfer of Interests
to either the transferor and/or transferee and expenses of any repurchase of
Interests may be allocated to the Members whose Interests are repurchased.
------------------------------------------------------------
ARTICLE VI
DISSOLUTION AND LIQUIDATION
------------------------------------------------------------
6.1 DISSOLUTION.
(a) The Master Fund shall be dissolved at any time there are no Members,
unless the Master Fund is continued in accordance with the Delaware Act, or
upon the occurrence of any of the following events:
(i) upon the affirmative vote to dissolve the Master Fund by:
(i) the Board; or (ii) Members holding at least two-thirds (2/3) of
the total number of votes eligible to be cast by all Members;
- 26 -
(ii) upon the failure of Members to elect a successor Board
member at a meeting called by the Investment Adviser in accordance
with this Agreement when no Board member remains to continue the
business of the Master Fund;
(iii) if any Member that has submitted a written request, in
accordance with the terms of the Operating Agreement, to tender all
of such Member's Interest for repurchase by the Master Fund has not
been given the opportunity to so tender within a period of two years
after the request (whether in a single repurchase offer or multiple
consecutive offers within the two-year period), provided, however,
that a Member who intends to cause the Master Fund to be dissolved
must so indicate in a separate written request submitted within the
applicable two-year period; or
(iv) as required by operation of law.
(b) Dissolution of the Master Fund shall be effective on the day on which
the event giving rise to the dissolution shall occur or the conclusion of any
applicable 60 day period during which the Board and Members may elect to
continue the business of the Master Fund as provided herein, but the Master
Fund shall not terminate until the assets of the Master Fund have been
liquidated in accordance with Section 6.2 hereof and the Certificate has been
canceled.
6.2 LIQUIDATION OF ASSETS.
(a) Upon the dissolution of the Master Fund as provided in Section 6.1
hereof, the Board, acting directly or through a liquidator it selects, shall
promptly liquidate the business and administrative affairs of the Master Fund,
except that if the Board is unable to perform this function, a liquidator
elected by Members holding a majority of the total number of votes eligible to
be cast by all Members shall promptly liquidate the business and
administrative affairs of the Master Fund. Net Profit and Net Loss during the
period of liquidation shall be allocated pursuant to Article V. The proceeds
from liquidation (after establishment of appropriate reserves for
contingencies in such amount as the Board or liquidator shall deem appropriate
in its sole and absolute discretion as applicable) shall, subject to the
Delaware Act, be distributed in the following manner:
(i) in satisfaction (whether by payment or the making of
reasonable provision for payment thereof) of the debts and
liabilities of the Master Fund, including the expenses of
liquidation (including legal and accounting expenses incurred in
connection therewith), but not including debt and liabilities to
Members, up to and including the date that distribution of the
Master Fund's assets to the Members has been completed, shall first
be paid on a pro rata basis;
(ii) such debts, liabilities, or obligations as are owing to
the Members shall be paid next in their order of seniority and on a
pro rata basis;
- 27 -
(iii) the Members shall be paid next on a pro rata basis the
positive balances of their respective Capital Accounts after giving
effect to all allocations to be made to such Members' Capital
Accounts for the Fiscal Period ending on the date of the
distributions under this Section 6.2(a)(iii).
(b) Anything in this Section 6.2 to the contrary
notwithstanding, but subject to the priorities set forth in Section
6.2(a) above, upon dissolution of the Master Fund, the Board or
other liquidator may distribute ratably in kind any assets of the
Master Fund; provided, however, that if any in-kind distribution is
to be made: (i) the assets distributed in kind shall be valued
pursuant to Section 7.3 as of the actual date of their distribution
and charged as so valued and distributed against amounts to be paid
under Section 6.2(a) above; and (ii) any profit or loss attributable
to property distributed in-kind shall be included in the Net Profit
or Net Loss for the Fiscal Period ending on the date of such
distribution.
------------------------------------------------------------
ARTICLE VII
ACCOUNTING, VALUATIONS, AND BOOKS AND RECORDS
------------------------------------------------------------
7.1 ACCOUNTING AND REPORTS.
(a) The Master Fund shall adopt for tax accounting purposes any
accounting method that the Board shall decide in its sole and absolute
discretion is in the best interests of the Master Fund. The Master Fund's
accounts shall be maintained in U.S. currency.
(b) After the end of each taxable year, the Master Fund shall furnish to
each Member such information regarding the operation of the Master Fund and
such Member's Interest as is necessary for Members to complete Federal and
state income tax or information returns and any other tax information required
by federal, state, or local law.
(c) Except as otherwise required by the 1940 Act or as may otherwise be
permitted by rule, regulation, or order, within 60 days after the close of the
period for which a report required under this Section 7.1(c) is being made,
the Master Fund shall furnish to each Member a semi-annual report containing
the information required by the 1940 Act and an annual report containing the
information required by the 1940 Act. The Master Fund shall cause financial
statements contained in each annual report furnished hereunder to be
accompanied by a certificate of independent public accountants based upon an
audit performed in accordance with generally accepted accounting principles.
The Master Fund may also furnish to each Member such other periodic reports as
it deems necessary or appropriate in its discretion.
7.2 DETERMINATIONS BY THE BOARD.
(a) All matters concerning the determination and allocation among the
Members of the amounts to be determined and allocated pursuant to Article V
hereof, including any taxes
- 28 -
thereon and accounting procedures applicable thereto, shall be determined by
the Board (either directly or by the Investment Adviser pursuant to delegated
authority) unless specifically and expressly otherwise provided for by the
provisions of this Agreement or as required by law, and such determinations
and allocations shall be final and binding on all the Members.
(b) The Board may make such adjustments to the computation of Net Profit
or Net Loss or any components (withholding any items of income, gain, loss, or
deduction) comprising any of the foregoing as it considers appropriate to
reflect fairly and accurately the financial results of the Master Fund and the
intended allocation thereof among the Members.
7.3 VALUATION OF ASSETS.
(a) Valuation of Securities and other assets shall be made by the Board
in accordance with the requirements of the 1940 Act and the valuation
procedures adopted by the Board.
(b) The value of Securities and other assets of the Master Fund and the
net worth of the Master Fund as a whole and the Interests determined pursuant
to this Section 7.3 shall be conclusive and binding on all of the Members and
all parties claiming through or under them.
------------------------------------------------------------
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------------------------------------------
8.1 AMENDMENT OF LIMITED LIABILITY COMPANY OPERATING AGREEMENT.
(a) Except as otherwise provided in this Section 8.1, this Agreement may
be amended, in whole or in part, with the approval of: (i) the Board
(including the vote of a majority of the Independent Directors, if required by
the 0000 Xxx); or (ii) a majority (as defined in the 0000 Xxx) of the
outstanding voting securities of the Master Fund.
(b) Any amendment that would:
(i) increase the obligation of a Member to make any
contribution to the capital of the Master Fund;
(ii) reduce the Capital Account of a Member other than in
accordance with Article V; or
(iii) modify the events causing the dissolution of the Master
Fund
may be made only if: (i) the written consent of each Member adversely
affected thereby is obtained prior to the effectiveness thereof; or (ii)
such amendment does not become
- 29 -
effective until (A) each Member has received written notice of such
amendment and (B) any Member objecting to such amendment has been
afforded a reasonable opportunity (pursuant to such procedures as may be
prescribed by the Board) to offer his or her entire Interest for
repurchase by the Master Fund.
(c) The power of the Board to amend this Agreement at any time without
the consent of the Members may include, but is not limited to:
(i) restate this Agreement together with any amendments hereto
that have been duly adopted in accordance with this Agreement to
incorporate such amendments in a single, integrated document;
(ii) amend this Agreement (other than with respect to the
matters set forth in Section 8.1(b) hereof) to effect compliance
with any applicable law or regulation or to cure any ambiguity or to
correct or supplement any provision hereof that may be inconsistent
with any other provision hereof, provided that such action does not
adversely affect the rights of any Member in any material respect;
and
(iii) amend this Agreement to make such changes as may be
necessary or desirable, based on advice of legal counsel to the
Master Fund, to assure the Master Fund's continuing eligibility to
be classified for U.S. Federal income tax purposes as a partnership
that is not treated as a corporation under Section 7704(a) of the
Code.
(d) The Board shall give written notice of any proposed amendment to this
Agreement (other than any amendment of the type contemplated by clause (i) of
Section 8.1(a) hereof) to each Member, which notice shall set forth: (i) the
text of the proposed amendment; or (ii) a summary thereof and a statement that
the text thereof will be furnished to any Member upon request.
8.2 SPECIAL POWER OF ATTORNEY.
(a) Each Member hereby irrevocably makes, constitutes, and appoints each
Director, acting severally, and any liquidator of the Master Fund's assets
appointed pursuant to Section 6.2 with full power of substitution, the true
and lawful representatives and attorneys-in-fact of, and in the name, place,
and stead of, such Member, with the power from time to time to make, execute,
sign, acknowledge, swear to, verify, deliver, record, file, and/or publish:
(i) any amendment to this Agreement that complies with the
provisions of this Agreement (including the provisions of Section
8.1 hereof);
(ii) any amendment to the Certificate required because this
Agreement is amended or as otherwise required by the Delaware Act;
and
- 30 -
(iii) all other such instruments, documents, and certificates
that, in the opinion of legal counsel to the Master Fund, from time
to time may be required by the laws of the United States of America,
the State of Delaware, or any other jurisdiction in which the Master
Fund shall determine to do business, or any political subdivision or
agency thereof, or that such legal counsel may deem necessary or
appropriate to effectuate, implement, and continue the valid
existence and business of the Master Fund as a limited liability
company under the Delaware Act.
(b) Each Member is aware that the terms of this Agreement permit certain
amendments to this Agreement to be effected and certain other actions to be
taken or omitted by or with respect to the Master Fund without such Member's
consent. If an amendment to the Certificate or this Agreement or any action by
or with respect to the Master Fund is taken in the manner contemplated by this
Agreement, each Member agrees that, notwithstanding any objection that such
Member may assert with respect to such action, the attorneys-in-fact appointed
hereby are authorized and empowered, with full power of substitution, to
exercise the authority granted above in any manner which may be necessary or
appropriate to permit such amendment to be made or action lawfully taken or
omitted. Each Member is fully aware that each Member will rely on the
effectiveness of this special power-of-attorney with a view to the orderly
administration of the affairs of the Master Fund.
(c) This power-of-attorney is a special power-of-attorney and is coupled
with an interest in favor of each Director, acting severally, and any
liquidator of the Master Fund's assets, appointed pursuant to Section 6.2
hereof, and as such:
(i) shall be irrevocable and continue in full force and effect
notwithstanding the subsequent death or incapacity of any party
granting this power-of-attorney, regardless of whether the Master
Fund, the Board, or any liquidator shall have had notice thereof;
and
(ii) shall survive the delivery of a Transfer by a Member of
the whole or any portion of such Member's Interest, except that
where the transferee thereof has been approved by the Board for
admission to the Master Fund as a substituted Member, this
power-of-attorney given by the transferor shall survive the delivery
of such assignment for the sole purpose of enabling the Board or any
liquidator to execute, acknowledge, and file any instrument
necessary to effect such substitution.
8.3 NOTICES.
(a) Notices that may be or are required to be provided under this
Agreement shall be made, if to a Member, by regular postal mail, hand
delivery, registered or certified mail return receipt requested, commercial
courier service, telex, or telecopier, electronic mail, the internet, computer
interface, or any other electronic method or device of document transfer or
telegraphic or other written communication, or, if to the Master Fund, by
regular postal mail, hand delivery,
- 31 -
registered or certified mail return receipt requested, commercial courier
service, telex, or telecopier, electronic mail, the internet, computer
interface, or any other electronic method or device of document transfer or
telegraphic or other written communication, and shall be addressed to the
respective parties hereto at their addresses as set forth on the books and
records of the Master Fund (or to such other addresses as may be designated by
any party hereto by notice addressed to the Master Fund in the case of notice
given to any Member, and to each of the Members in the case of notice given to
the Master Fund). Notices shall be deemed to have been provided when delivered
by hand, on the date indicated as the date of receipt on a return receipt or
when received if sent by regular mail, commercial courier service, telex,
telecopier, telegraphic, electronic, or other means of written communication.
A document that is not a notice and that is required to be provided under this
Agreement by any party to another party may be delivered by any reasonable
means.
(b) If any notice addressed to a Member at the address of that Member
appearing on the books and records of the Master Fund is returned to the
Master Fund marked to indicate that such notice is unable to be delivered to
the Member at that address, all future notices or reports shall be deemed to
have been duly given without further mailing if such future notices or reports
shall be kept available to the Member, upon written demand of the Member, at
the principal executive office of the Master Fund for a period of one year
from the date of the giving of the notice.
8.4 AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors, assigns, executors, trustees, or other legal
representatives, but the rights and obligations of the parties hereunder may
not be Transferred or delegated except as provided in this Agreement and any
attempted Transfer or delegation thereof that is not made pursuant to the
terms of this Agreement shall be void.
8.5 APPLICABILITY OF 1940 ACT AND FORM N-2. The parties hereto
acknowledge that this Agreement is not intended to, and does not set forth the
substantive provisions contained in the 1940 Act and the Form N-2 which affect
numerous aspects of the conduct of the Master Fund's business and of the
rights, privileges, and obligations of the Members. Each provision of this
Agreement shall be subject to and interpreted in a manner consistent with the
applicable provisions of the 1940 Act and the Form N-2 subject to any
exemptive relief obtained thereunder relating to the Master Fund.
8.6 CHOICE OF LAW; ARBITRATION.
(a) Notwithstanding the place where this Agreement may be executed by any
of the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed under the laws of the State of Delaware,
including the Delaware Act, without regard to the conflict of law principles
of the State of Delaware.
(b) Unless otherwise agreed in writing, each Member agrees to submit all
controversies arising between or among Members or one or more Members and the
Master Fund
- 32 -
in connection with the Master Fund or its businesses or concerning any
transaction, dispute, or the construction, performance, or breach of this or
any other agreement, whether entered into prior to, on, or subsequent to the
date hereof, to arbitration in accordance with the provisions set forth below.
Each Member understands that:
(i) Arbitration is final and binding on the parties;
(ii) The parties are waiving their rights to seek remedies in
court, including the right to jury trial;
(iii) Pre-arbitration discovery is generally more limited than
and different from court proceedings;
(iv) The arbitrator's award is not required to include factual
findings or legal reasoning and a party's right to appeal or to seek
modification of rulings by arbitrators is strictly limited; and
(v) A panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
(c) All controversies that may arise among Members and one or more
Members and the Master Fund concerning this Agreement shall be determined by
arbitration in New York City in accordance with the Federal Arbitration Act,
to the fullest extent permitted by law. Any arbitration under this Agreement
shall be determined before and in accordance with the rules then obtaining of
either the New York Stock Exchange, Inc. (the "NYSE") or the NASD Regulation,
Inc. (the "NASDR"), as the Member or entity instituting the arbitration may
elect. If the NYSE or NASDR does not accept the arbitration for consideration,
the arbitration shall be submitted to, and determined in accordance with the
rules then obtaining of, the Center for Public Resources, Inc. in New York
City. Judgment on any award of any such arbitration may be entered in the
Supreme Court of the State of New York or in any other court having
jurisdiction of the person or persons against whom such award is rendered. Any
notice of such arbitration or for the confirmation of any award in any
arbitration shall be sufficient if given in accordance with the provisions of
this Agreement. Each Member agrees that the determination of the arbitrators
shall be binding and conclusive upon the Member.
(d) No Member shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement against
any person who has initiated in court a putative class action or who is a
Member of a putative class who has not opted out of the class with respect to
any claims encompassed by the putative class action unless and until: (i) the
class certification is denied; (ii) the class is decertified; or (iii) the
Member is excluded from the class by the court. The forbearance to enforce an
agreement to arbitrate shall not constitute a waiver of any rights under this
Agreement except to the extent stated herein.
8.7 NOT FOR BENEFIT OF CREDITORS. The provisions of this Agreement are
intended only for the regulation of relations among past, present, and future
Members (including
- 33 -
the Investment Adviser), Directors, and the Master Fund. This Agreement is not
intended for the benefit of non-Member creditors and no rights are granted to
non-Member creditors under this Agreement.
8.8 CONSENTS. Any and all consents, agreements, or approvals provided for
or permitted by this Agreement shall be in writing and a signed copy thereof
shall be filed and kept with the books of the Master Fund.
8.9 MERGER AND CONSOLIDATION.
(a) The Master Fund, as permitted by the 1940 Act, may merge or
consolidate with or into one or more limited liability companies formed under
the Delaware Act or other business entities (as defined in Section 18-209(a)
of the Delaware Act) pursuant to an agreement of merger or consolidation which
has been approved in the manner contemplated by Section 18-209(b) of the
Delaware Act.
(b) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, an agreement of merger or consolidation approved in accordance with
Section 18-209(b) of the Delaware Act may, to the extent permitted by Section
18-209(b) of the Delaware Act: (i) effect any amendment to this Agreement;
(ii) effect the adoption of a new limited liability company operating
agreement for the Master Fund if it is the surviving or resulting limited
liability company in the merger or consolidation; or (iii) provide that the
limited liability company operating agreement of any other constituent limited
liability company to the merger or consolidation (including a limited
liability company formed for the purpose of consummating the merger or
consolidation) shall be the limited liability company operating agreement of
the surviving or resulting limited liability company.
8.10 MASTER-FEEDER STRUCTURE. As permitted by the 1940 Act, and pursuant
to a resolution of a majority of the Directors, the Master Fund forms part of
a master-feeder structure, in which the feeder fund invests all of its assets
into the Master Fund, rather than making investments in securities directly.
8.11 PRONOUNS. All pronouns shall be deemed to refer to the masculine,
feminine, neuter, singular, or plural, as the identity of the person or
persons, firm, or corporation may require in the context thereof.
8.12 CONFIDENTIALITY.
(a) A Member may obtain from the Master Fund, for any purpose reasonably
related to the Member's Interest, certain confidential information regarding
the business affairs or assets of the Master Fund as is just and reasonable
under the Delaware Act, subject to reasonable standards (including standards
governing what information and documents are to be furnished, at what time and
location, and at whose expense) established by the Board (the "Confidential
Information").
- 34 -
(b) Each Member covenants that, except as required by applicable law or
any regulatory body, it will not divulge, furnish, or make accessible to any
other person the name or address (whether business, residence, or mailing) of
any Member or any other Confidential Information without the prior written
consent of the Board, which consent may be withheld in its sole and absolute
discretion.
(c) Each Member recognizes that in the event that this Section 8.12 is
breached by any Member or any of its principals, partners, members, trustees,
officers, directors, employees, or agents or any of its affiliates, including
any of such affiliates' principals, partners, members, trustees, officers,
directors, employees, or agents, irreparable injury may result to the
non-breaching Members and the Master Fund. Accordingly, in addition to any and
all other remedies at law or in equity to which the non-breaching Members and
the Master Fund may be entitled, such Members also shall have the right to
obtain equitable relief, including, without limitation, injunctive relief, to
prevent any disclosure of Confidential Information, plus reasonable attorneys'
fees and other litigation expenses incurred in connection therewith. In the
event that any non-breaching Member or the Master Fund determines that any of
the other Members or any of its principals, partners, members, trustees,
officers, directors, employees, or agents or any of its affiliates, including
any of such affiliates' principals, partners, members, directors, officers,
employees, or agents should be enjoined from or required to take any action to
prevent the disclosure of Confidential Information, each of the other
non-breaching Members agrees to pursue in a court of appropriate jurisdiction
such injunctive relief.
(d) The Master Fund shall have the right to keep confidential from the
Members for such period of time as it deems reasonable any information that
the Board reasonably believes to be in the nature of trade secrets or other
information the disclosure of which the Board in good faith believes is not in
the best interest of the Master Fund or could damage the Master Fund or its
business or that the Master Fund is required by law or by agreement with a
third party to keep confidential.
8.13 CERTIFICATION OF NON-FOREIGN STATUS. Each Member or transferee of an
Interest from a Member that is admitted to the Master Fund in accordance with
this Agreement shall certify, upon admission to the Master Fund and at such
other time thereafter as the Board may request, whether he or she is a "United
States Person" within the meaning of Section 7701(a)(30) of the Code on forms
to be provided by the Master Fund, and shall notify the Master Fund within 30
days of any change in such Member's status. Any Member who shall fail to
provide such certification when requested to do so by the Board may be treated
as a non-United States Person for purposes of U.S. Federal tax withholding.
8.14 SEVERABILITY. If any provision of this Agreement is determined by a
court of competent jurisdiction not to be enforceable in the manner set forth
in this Agreement, each Member agrees that it is the intention of the Members
that such provision should be enforceable to the maximum extent possible under
applicable law. If any provisions of this Agreement are held to be invalid or
unenforceable, such invalidation or unenforceability shall not affect the
validity or enforceability of any other provision of this Agreement (or
portion thereof).
- 35 -
8.15 ENTIRE AGREEMENT. This Agreement (including the Schedule attached
hereto which is incorporated herein) constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements and understandings pertaining thereto.
8.16 DISCRETION. To the fullest extent permitted by law, whenever in this
Agreement, a person is permitted or required to make a decision: (i) in its
"sole discretion" or "discretion" or under a grant of similar authority or
latitude, such person shall be entitled to consider only such interests and
factors as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors affecting
the Master Fund or the Members; or (ii) in its "good faith" or under another
express standard, then such person shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement or any other agreement contemplated herein or by relevant provisions
of law or in equity or otherwise.
8.17 COUNTERPARTS. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
8.18 TAX MATTERS MEMBER. The Investment Adviser will be the "tax matters
member" under the Code for the Master Fund unless another Member is so
designated by the Board.
THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY
BEFORE SIGNING, INCLUDING THE PRE-DISPUTE ARBITRATION CLAUSES SET FORTH IN
SECTION 8.6 AND THE CONFIDENTIALITY CLAUSES SET FORTH IN SECTION 8.12.
- 36 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
By: ______________________________ Date: ___________
Xxxx X. Xxxxxxxx, Xx., as
Organizational Member
DB INVESTMENT MANAGERS, INC., in its capacity as
Investment Adviser
By: ______________________________ Date: ___________
ADDITIONAL MEMBERS:
Each person who has signed or has had signed on its behalf a Member
Signature Page, which shall constitute a counterpart hereof.
- 37 -
SCHEDULE I
The undersigned understand and agree to the provisions of this Agreement
pertaining to the obligations of Directors.
Xxxxx X. Xxxxxx Signed: _________________________
c/o DB Absolute Return Strategies
00 XxXxxxxx Xxxxxx Date: ________________________
Summit NJ 07046
Xxxxx X. Xxxxxx Signed: _________________________
c/o DB Absolute Return Strategies
00 XxXxxxxx Xxxxxx Date: ________________________
Xxxxxx XX 00000
Xxxxxxx X. Xxxxx Signed: _________________________
c/o DB Absolute Return Strategies
00 XxXxxxxx Xxxxxx Date: ________________________
Xxxxxx XX 00000
Xxxxxx X. Xxxxx Signed: _________________________
c/o DB Absolute Return Strategies
00 XxXxxxxx Xxxxxx Date: ________________________
Xxxxxx XX 00000
- 38 -
