Exhibit A
SPECIAL VALUE EXPANSION FUND, LLC
A Delaware Limited Liability Company
AMENDED AND RESTATED OPERATING AGREEMENT
This Amended and Restated Operating Agreement, dated as of August 19,
2004 (this "Agreement"), is entered into by Xxxxxx Xxxxxxxxx, as Initial
Member.
Upon the terms and subject to the conditions described below, the
parties to this Agreement, which shall include all Persons becoming Members at
any time, as a condition of becoming and for so long as they remain Members,
agree as follows:
SECTION 1.
DEFINED TERMS
The terms set forth below shall have the indicated meanings.
"Advisers Act" means the Investment Advisers Act of 1940 and the
rules and regulations promulgated thereunder and applicable exemptions granted
therefrom, as amended from time to time.
"Advisory Agreement" means the Investment Management Agreement
between the Company and the Investment Manager, dated on or about the Initial
Drawdown Date, as such agreement may be amended, modified, revised or
restated, from time to time, in accordance with the terms hereof and thereof,
and any substantially similar agreement with a successor Investment Manager
permitted by the terms hereof and thereof.
"Advisory Fee" means the fee payable to the Investment Manager under
the Advisory Agreement.
"Affiliated Person" has the meaning set forth in the Investment
Company Act.
"Aggregate Capital Contributions" means, with respect to any Member
as of any date, the aggregate amount of all Capital Contributions made by such
Member on or prior to such date.
"Agreement" or "Operating Agreement" means this Amended and Restated
Operating Agreement, as originally executed and as amended from time to time.
"Assets" means all cash, securities, investments and other property
and assets of any type of the Company.
"Base Rate" means, on any date, a variable rate per annum equal to
the rate of interest published from time to time by The Wall Street Journal as
the "prime rate" at large U.S. money center banks.
"Board of Directors" means the board of directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which banks in New York, New York or Los Angeles, California are
required by law to be closed. All references to Business Day herein shall be
based on the time in New York, New York.
"By-Laws" has the meaning set forth in Section 9.2(g).
"Capital Contribution" means a contribution to the Company in cash by
a Member or by any predecessor holder of the Shares held by such Member.
"Certificate" means the Certificate of Formation of the Company,
filed with the Secretary of State on August 12, 2004, and any and all
amendments thereto and restatements thereof filed with the Secretary of State.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
"Common Member" means a Member holding Common Shares of the Company.
"Common Share Commitment" means, when referring to a dollar amount,
an amount committed by a Common Member or prospective Common Member for
investment in the Common Shares of the Company pursuant to (a) a Subscription
Agreement and (b) an assumption by such Member of any Common Share Commitment
of a Defaulting Member pursuant to Section 7.1(d) or of a transferring Member.
"Common Shares" means the common Shares of membership interests of
the Company having the rights and other terms set forth in this Agreement.
"Company" means Special Value Expansion Fund, LLC, a Delaware limited
liability company, as it may from time to time be constituted.
"Consent Dividend" shall have the meaning assigned to such term in
Section 8.1(g).
"Custodial Account" means one or more segregated trust accounts
maintained pursuant to the requirements of the Investment Company Act and
other applicable law to hold the Assets.
"Custodian" means an entity which maintains the Custodial Account
pursuant to the requirements of the Investment Company Act and other
applicable law.
"Defaulting Member" shall have the meaning assigned to such term in
Section 7.1(d).
"Delaware Act" means the Delaware Limited Liability Company Act (6
Del.C. ss. 18-101, et seq.), as amended from time to time and any successor
thereto.
"Director" means each director of the Company who at the time in
question has been duly elected or appointed and has qualified as a director in
accordance with the provisions hereof and is then in office.
"Disabling Conduct" shall have the meaning set forth in Section 9.5.
"Disinterested Non-Party Directors" shall have the meaning set forth
in Section 9.6.
"Drawdown Date" means each date that the Company draws down Common
Share Commitments.
"Fiscal Quarter" means a three calendar month period ending March 31,
June 30, September 30 or December 31 of a Fiscal Year.
"Fiscal Year" means the Company's fiscal year, which shall end on
each December 31 unless otherwise determined by the Board of Directors.
"Incapacity" or "Incapacitated" means, as to any Person, the
bankruptcy, insolvency, death, disability, adjudication of incompetence or
insanity, dissolution or termination, as the case may be, of such Person.
"Indemnified Person" shall have the meaning assigned to such term in
Section 9.5.
"Independent Director" means a Director that is not an Interested
Person.
"Initial Drawdown Date" means the date on which the first Capital
Contributions in respect of the Common Share Commitments are made with respect
to the Common Shares.
"Initial Member" means Xxxxxx Xxxxxxxxx, in his capacity as Initial
Member of the Company.
"Interested Person" has the meaning given to such term in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder and applicable exemptions
granted therefrom, as amended from time to time.
"Investment Manager" means Xxxxxxxxxx Capital Partners, LLC, a
Delaware limited liability company, in its capacity as investment manager to
the Company, and any successor thereto selected in accordance with the
Advisory Agreement and the Investment Company Act.
"Investment Period" means the period commencing on the Initial
Drawdown Date and ending on September 1, 2014.
"Manager Affiliate" shall have the meaning set forth in Section 9.8.
"Member" means any Person that is admitted as a Common Member,
Preferred Member or Special Member of the Company in accordance with the terms
of this Agreement at the time of reference thereto.
"Net Asset Value" means the value of the Assets less the liabilities
of the Company, calculated pursuant to Section 14 in accordance with generally
accepted accounting principles and in compliance with the Investment Company
Act.
"Offering Memorandum" means the Confidential Private Offering
Memorandum, dated August 9, 2004, relating to the Common Shares, as amended or
supplemented from time to time.
"Other Accounts" shall have the meaning set forth in Section 9.8.
"Person" means any human being, partnership, limited liability
company, corporation, trust or other entity.
"Portfolio Company" means any Person that has issued any securities
or incurred any obligations that are then owned, or that previously were
owned, by the Company.
"Preferred Member" means a Member holding Preferred Shares of the
Company.
"Preferred Shares" means the preferred Shares of membership interests
of the Company having the rights and other terms set forth in the Statement of
Preferences for the applicable series thereof, including without limitation
any Series S Preferred Shares and any Series Z Preferred Shares.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder and applicable exemptions granted
therefrom, as amended from time to time.
"Shares" means the units of beneficial interest into which the
membership interests of the Company shall be divided from time to time and
includes fractions of Shares as well as whole Shares.
"Special Member" means SVOF/MM, LLC, a Delaware limited liability
company, in its capacity as the Special Member of the Company, or any
successor thereto in accordance with this Agreement.
"Special Share" means the Series S Preferred Share provided for
pursuant to Section 7.2.
"Statement of Preferences" means any statement of preferences setting
forth the rights and other terms of any Preferred Shares issued by the
Company.
"Subscription Agreement" means each subscription agreement and any
related supplemental subscription agreement executed by any existing or
prospective Member relating to such Member's investment in the Company.
"Subscription Period" means the period commencing on the Initial
Drawdown Date and ending on or prior to September 1, 2006.
"Subsequent Drawdown Date" has the meaning assigned to such term in
Section 7.1(b).
"Substituted Member" means any Person admitted as a Member pursuant
to Section 11.2(b).
"Substituted Special Member" means any Person admitted as the Special
Member pursuant to Section 11.2(b).
"Transfer" or "Transferred" means, with respect to any legal or
beneficial interest in the Company, a direct or indirect sale, transfer,
assignment, gift, pledge, hypothecation or other disposition or encumbrance of
any nature of or on such interest, whether by operation of law or otherwise
(including a transfer as a result of a merger or consolidation involving a
Member or a sale of all or substantially all of a Member's assets).
"Transferee" means, with respect to any legal or beneficial interest
in the Company, the Person to whom the Transferor of such interest desires to
Transfer or has Transferred such interest.
"Transferor" means, with respect to any legal or beneficial interest
in the Company, the Member or other Person desiring to Transfer such interest.
"Treasury Regulations" means the United States Treasury regulations
promulgated under the Code.
"Unfunded Commitment" means, with respect to any Common Member as of
any date, the amount of such Common Member's Common Share Commitment minus
such Common Member's Aggregate Capital Contributions previously made.
"Valuation Date" means (i) the last Business Day of each Fiscal
Quarter, (ii) a date selected by the Company within 48 hours prior to each
issuance (exclusive of Sundays and holidays) of Common Shares by the Company,
(iii) each distribution declaration date (after giving effect to the relevant
declaration), (iv) the date on which the Company terminates, and (v) such
other dates as determined by the Board of Directors, in accordance with the
valuation policies and guidelines approved from time to time by the Board of
Directors.
SECTION 2.
LIMITED LIABILITY COMPANY FORMATION AND IDENTIFICATION
2.1 Formation
The Company has been formed as a limited liability company pursuant
to the Delaware Act by the filing of the Certificate with the Secretary of
State, Division of Corporations, in accordance with the Delaware Act on August
12, 2004. The Company is hereby continued under, and its business and affairs
shall be conducted in accordance with, the Delaware Act, and this Agreement
shall be governed by the laws of the State of Delaware. Upon its execution of
this Agreement in its capacity as the Special Member, SVOF/MM, LLC shall be
admitted as the Special Member of the Company. Common Members shall be
admitted as Members of the Company upon the Investment Manager's execution of
this Agreement as the attorney-in-fact for such Common Members. Preferred
Members shall be admitted as Members of the Company pursuant to the provisions
of the applicable Statement of Preferences. In addition, any Member will be
admitted as a Member of the Company upon the execution of a counterpart of
this Agreement by such Member.
2.2 Name and Place of Business
The name of the Company shall be "Special Value Expansion Fund, LLC"
or such other name or names as may be selected by the Investment Manager from
time to time with written notice given to the Members of such change. The
principal office of the Company shall be at the principal place of business of
the Investment Manager at 0000 00xx Xxxxxx, Xxxxx 0000, Xxxxx Xxxxxx,
Xxxxxxxxxx 00000, or other or additional places of business as may be selected
from time to time by the Company.
2.3 Records of Members
The addresses and schedules of capital accounts and other matters
related to the Members shall be those set forth in the Company records. A
Member may change its address by written notice to the Company, in care of the
Investment Manager, at the address set forth in Section 2.2.
2.4 Limited Liability Company
The Company has been formed as a limited liability company under and
pursuant to the Delaware Act. The Board of Directors and the Members
specifically intend and agree that the Company shall, for purposes of the Code
and state tax laws, be classified as a regulated investment company and none
of them shall make any election or take any other action that would cause
their relationship under this Agreement to be excluded from the application of
all or any part of Subchapter M of the Code (or any successor provisions). The
Members specifically intend and agree that the Company shall not be a
partnership (including, but not necessarily limited to, a limited partnership)
or any other venture, but a limited liability company under and pursuant to
the Delaware Act. No Member shall be construed to be a partner in the Company
or a partner of any Member or other Person in the Company, and the
Certificate, this Agreement and the relationships created thereby and arising
therefrom shall not be construed to suggest otherwise. The Members hereby
acknowledge and agree that the Investment Manager and any persons that may be
appointed as such by the Board of Directors or the Investment Manager are
"authorized persons" within the meaning of Section 18-204 of the Delaware Act.
SECTION 3.
PURPOSE, NATURE OF BUSINESS AND POWERS
(a) The purposes of the Company and the business to be carried on by
it, subject to the limitations contained elsewhere in this Agreement, are to
engage in any business lawful for a corporation or partnership formed under
the laws of the State of Delaware, including to act as an investment company.
(b) The Company shall have the power to do any and all acts
necessary, appropriate, proper, advisable, incidental or convenient to or for
the furtherance of the purposes and business described herein and for the
protection and benefit of the Company, and shall have, without limitation, any
and all of the powers of a business corporation or partnership organized under
the laws of the State of Delaware.
(c) All property owned by the Company, real or personal, tangible or
intangible, shall be deemed to be owned by the Company as an entity, and no
Member or Director, individually, shall have any ownership of such property.
SECTION 4.
TERM
The existence of the Company commenced on the date the Certificate
was filed in the Office of the Secretary of State and shall continue in full
force and effect until the end of the Investment Period, plus up to two
one-year extensions if requested by the Investment Manager and approved by a
majority of the outstanding Shares.
SECTION 5.
SHARES OF MEMBERSHIP INTEREST
5.1 Beneficial Interest
The interest of the Members in the Company hereunder shall be divided
into an unlimited number of shares of membership interest, par value $.001 per
share. All Shares issued in accordance with the terms hereof, including,
without limitation, Shares issued in connection with a dividend in Shares or a
split of Shares, shall be fully paid and nonassessable when the consideration
determined by the Company (if any) therefor shall have been received by the
Company.
5.2 Classes and Series
The Directors shall have the authority, without the approval of any
Members of the Company, to classify and reclassify issued and unissued Shares
into one or more classes and one or more series of any or all of such classes,
each of which classes and series thereof shall have such designations, powers,
preferences, voting, conversion and other rights, limitations, qualifications
and terms and conditions as the Directors shall determine from time to time
with respect to each such class or series; provided, however, that no
reclassification of any issued and outstanding Shares and no modifications of
any of the designations, powers, preferences, voting, conversion or other
rights, limitations, qualifications and terms and conditions of any issued and
outstanding Shares may be made by the Directors without the affirmative vote
of the Shares specified in Section 10.3 to the extent required thereby and the
satisfaction of any conditions to such reclassification as set forth in the
applicable Statement of Preferences.
5.3 Issuance of Shares
The Directors, in their discretion, may from time to time without
vote of the Members issue Shares of any class or any series of any such class
to such Person or Persons and for such amount and type of consideration,
including cash or property, at such time or times, and on such terms as the
Directors may determine, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of, liabilities) and businesses. The Directors may from time to
time divide or combine the Shares of any class or any series of any such class
into a greater or lesser number without thereby changing the proportionate
beneficial interest in such Shares. Issuances and repurchases of Shares may be
made in whole Shares and/or fractions as the Directors may determine.
5.4 Rights of Members
The Shares shall be personal property giving only the rights in this
Agreement specifically set forth. The ownership of the Assets of every
description is vested in the Company. The right to conduct and supervise the
conduct of the business of the Company is vested exclusively in the Directors
(subject to the right of the Board of Directors to delegate all or any part of
authority to any person or group of persons, including, without limitation,
the Investment Manager), and the Members shall have no interest therein other
than the beneficial interest conferred by their Shares, and they shall have no
right to call for any partition or division of any property, profits, rights
or interests of the Company nor can they be called upon to share or assume any
losses of the Company or suffer an assessment of any kind by virtue of their
ownership of Shares. No Shares of any class or series shall entitle the holder
to preference, preemptive, appraisal, conversion or exchange rights (except as
otherwise specified in this Agreement or as specified by the Directors in the
designation or redesignation of any such class or series).
SECTION 6.
REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS
The Corporation Trust Company is hereby designated, subject to change
by the Investment Manager, as the registered office of the Company and as the
agent upon whom process issued by authority of or under any law of the State
of Delaware may be served.
SECTION 7.
CAPITAL CONTRIBUTIONS
7.1 Capital Contributions of Members
(a) Each prospective initial Common Member, to be admitted as a
Member of the Company at the Initial Drawdown Date, must deliver to the
Investment Manager a completed, executed Subscription Agreement, which must be
satisfactory to the Investment Manager, and in which, among other things, such
prospective Common Member represents that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and a "qualified client"
within the meaning of Rule 205-3 of the Advisers Act. The minimum Common Share
Commitment to which a Common Member may subscribe shall be $125,000,000;
provided, however, that the Investment Manager may, in its sole discretion,
waive this requirement. On the Initial Drawdown Date, each initial prospective
Common Member shall contribute to the Company 20% of its Common Share
Commitment or such other proportion as the Board of Directors shall have
determined. On the date of original issuance of each series of Preferred
Shares, each Person who is admitted as a Member holding Preferred Shares of
such series in accordance with the applicable Statement of Preferences shall,
in connection therewith, contribute to the Company an amount in cash equal to
the purchase price for such Preferred Shares.
(b) Subsequent to the Initial Drawdown Date, the Company will draw
down Common Share Commitments on multiple Drawdown Dates (each, a "Subsequent
Drawdown Date"). On each Drawdown Date, the Company will issue Common Shares
at Net Asset Value per Common Share as calculated within 48 hours prior to
issuance (exclusive of Sundays and holidays) in an aggregate amount equal to
the percentage of the Common Share Commitments drawn down.
(c) Unfunded Commitments may be called by the Company at any time
during the Subscription Period in any amount on not less than 15 days prior
written notice to the Common Members; provided, however, that (i) all Capital
Contributions for Common Shares shall be on a pro rata basis in proportion to
each Common Member's respective Unfunded Commitment, (ii) the aggregate amount
of Capital Contributions required on each Subsequent Drawdown Date shall be at
least 10% of the aggregate Common Share Commitments (or, with respect to the
last Subsequent Drawdown Date, any amount left undrawn), and (iii) all calls
for Capital Contributions shall be made so that they are required to be funded
on or prior to the end of the Subscription Period.
(d) If any Common Member fails to make full payment of any portion of
its Common Share Commitment or any other payment required hereunder when due
(a "Defaulting Member"), the Company shall give such Defaulting Member written
notice of its default in payment and in the event such default shall continue
beyond the tenth calendar day following such notice, the Company may, in its
sole discretion, take any one or more of the following actions:
(i) The Company may assist the Defaulting Member in finding
a buyer for the Defaulting Member's Common Shares which buyer will
assume the Defaulting Member's obligations hereunder, subject to the
restrictions on transfer contained in Section 11.2 (in which case
such Person shall, as a condition of purchasing such Common Shares,
become a party to this Agreement and assume such Defaulting Member's
obligation to make both defaulted and future Capital Contributions).
(ii) The Company may pursue and enforce all rights and
remedies the Company may have against the Defaulting Member,
including a lawsuit to collect the overdue amount, with interest
calculated thereon at a rate equal to the Base Rate plus six percent
(6%) per annum or, if greater, the annualized rate of total return
per Common Share over the prior four fiscal quarters (or since
commencement of operations if less than four fiscal quarters) (but
not in excess of the highest rate per annum permitted by applicable
law).
(iii) The Company may offer a Defaulting Member's Common
Shares to the Common Members (other than any Defaulting Member),
which offer shall be made pro rata in accordance with the
non-defaulting Members' respective Common Share Commitments, at a
discount to the Net Asset Value of such Common Shares. The purchase
price for such Common Shares will be determined in the sole
discretion of a majority of the Independent Directors; provided,
however, that such Defaulting Member shall receive not less than 66%
of the most recently determined Net Asset Value of such Common
Shares. If a non-defaulting Member elects not to purchase all of the
Common Shares offered to it, such unpurchased Common Shares shall be
reoffered pro rata to the non-defaulting Members who have purchased
all of the Common Shares offered to them until either all of such
Common Shares are acquired or no non-defaulting Member wishes to make
a further investment. At the closing of such purchase (on a date and
at a place designated by the Company), each purchasing Member shall,
as payment in full for the Defaulting Member's Common Shares being
purchased, (A) deliver a non-interest bearing, non-recourse
promissory note (in a form approved by the Company) payable upon the
earlier to occur of ten years after delivery of the note or
liquidation of the Company, secured only by the Defaulting Member's
Common Shares being purchased by such Member (excluding the portion
of such Common Shares represented by contributions made by such
purchaser with respect to such Common Shares), payable to the
Defaulting Member in an amount equal to the purchase price of the
portion of the Defaulting Member's Common Shares being purchased by
such Member, and (B) assume the portion of the Defaulting Member's
obligation to make both defaulted and future Capital Contributions
and other payments pursuant to its Common Share Commitment and this
Agreement which are commensurate with the portion of the Defaulting
Member's Common Shares being purchased by such Member. Upon the
closing of such purchase, each purchasing Member shall make a Capital
Contribution in an aggregate amount equal to that portion of the
assumed Common Share Commitment representing the defaulted Common
Share Commitment of the Defaulting Member, and the balance of the
assumed Common Share Commitment shall be added to such purchasing
Member's Common Share Commitment for all purposes under this
Agreement. The Company shall specify the procedures for making and
accepting the offers contemplated by this subparagraph and shall, in
its discretion, set time limits for acceptance. All Capital
Contributions made by the purchasing Members shall be "Capital
Contributions" made under this Agreement and Common Shares shall be
issued to such Members accordingly. If all of the Defaulting Member's
Common Shares are not purchased pursuant to the immediately preceding
provisions, the Company may offer any remaining Common Shares to any
other Person on the same terms as originally offered to the Members
pursuant to such provisions, subject to the restrictions on transfer
contained in Section 11.2 (in which case such Person shall, as a
condition of purchasing such Common Shares, become a Member party to
this Agreement and assume such Defaulting Member's obligation to make
both defaulted and future Capital Contributions).
(iv) The Company may repurchase, retire and cancel such
Defaulting Member's Common Shares at a discount to the Net Asset
Value of such Common Shares. The consideration to be paid to such
Defaulting Member upon any repurchase, retirement or cancellation of
such Common Shares will be determined in the sole discretion of a
majority of the Independent Directors; provided, however, that such
Defaulting Member shall receive not less than 66% of the Net Asset
Value of such Common Shares.
(v) The Company may offer to the Common Members (other than
such Defaulting Member) for assumption by the non-defaulting Members
such Defaulting Member's Common Share Commitment to make its Capital
Contribution which was not made ("Defaulted Commitment"), which offer
shall be made pro rata in accordance with the non-defaulting Members'
respective Common Shares. If a non-defaulting Member elects not to
assume the entire portion of the Defaulted Commitment offered to it,
such unassumed Defaulted Commitment shall be reoffered pro rata to
the non-defaulting Members who have elected to assume the entire
portion of the Defaulted Commitment offered to them until either all
of such Defaulted Commitment is assumed or no non-defaulting Member
wishes to make a further assumption of the Defaulted Commitment. At
the closing of such offer (on a date and at a place designated by the
Company), each assuming Member shall make a Capital Contribution in
an amount equal to that portion of the Defaulted Commitment assumed
by it in accordance with the provisions of this subparagraph which is
then due or past due. The Investment Manager shall specify the
procedures for making and accepting the offers contemplated by this
subparagraph and shall, in its discretion, set time limits for
acceptance. If the entire Defaulted Commitment is not assumed
pursuant to the preceding provisions, the Company may offer to any
other Person for assumption any remaining portion of the Defaulted
Commitment, subject to the restrictions on transfer contained in
Section 11.2 (in which case such third party or parties shall become
a party to this Agreement). All Capital Contributions made by the
non-defaulting Members and other Persons pursuant to this
subparagraph (v) shall be "Capital Contributions" made under this
Agreement, and the Common Shares of each of such Members and other
Persons shall be adjusted accordingly. Such Defaulting Member's
Common Share Commitment shall be reduced by the aggregate amount of
Defaulted Commitment assumed by the non-defaulting Members and such
other Persons and for which payments have been actually received by
the Company.
(vi) The Company may reduce (effective on the date of the
default) the Defaulting Member's Common Share Commitment (to the
extent it has not been assumed by another Member or Person) to the
amount of Capital Contributions actually made by such Defaulting
Member (net of distributions pursuant to Section 8.1), and the
aggregate Common Share Commitment of such Defaulting Member shall be
commensurately reduced; provided, however, that the Common Share
Commitments of the non-defaulting Members shall not be reduced.
(vii) If the Defaulting Member is an entity formed for the
purpose of investing in the Company and such Defaulting Member's
failure to make any portion of a Capital Contribution when required
is caused by the failure of one or more of such Defaulting Member's
investors to either (i) make an equity contribution or (ii) deliver
payment in exchange for any notes issued to such investor, to such
Defaulting Member, the Company may, in its sole discretion, apply the
provisions of this Section 7.1(d) to such Defaulting Member's Common
Shares and/or Common Share Commitments on a pro rata basis to
appropriately reflect the effect of the failure of such Defaulting
Member's defaulting equity investors in a manner which is equitable
to such Defaulting Member's non-defaulting equity investors.
(e) No consent of any Member shall be required as a condition
precedent to any transfer, assignment, assumption or other disposition of a
Defaulting Member's Common Shares or Common Share Commitment, as the case may
be, pursuant to Section 7.1(d). If all of the Defaulting Member's Common
Shares and its Common Share Commitments are purchased in the manner set forth
in Section 7.1(d), such Defaulting Member shall cease to be a Common Member in
the Company and shall cease to have the power to exercise any rights or powers
of a Common Member.
7.2 Contribution of the Special Member
The Special Member shall receive one Special Share in exchange for
its contribution of $1,000.00 on the Initial Drawdown Date. The Special Share
shall have the designations, powers, preferences, voting and other rights,
limitations, qualifications and terms and conditions set forth in the
Statement of Preferences therefor attached hereto as Appendix A.
7.3 Withdrawal of Capital
No Member shall have any right to withdraw from the Company except in
connection with the admission of one or more Transferees of all of such
Member's Shares in the Company. No Member shall have any right to require the
Company to repurchase or redeem all or any portion of its Shares except as
provided in or pursuant to any Statement of Preferences. Further, no Common
Member shall have any right to withdraw its Common Share Commitment.
SECTION 8.
DISTRIBUTIONS
8.1 Distributions
(a) The Company shall from time to time distribute among the Shares
(or one or more classes or series thereof) such portion of the net profits,
surplus (including paid-in surplus), capital, or assets held by the Company as
the Directors may deem proper or as may otherwise be determined pursuant to
this Agreement or the Statement of Preferences therefor, which need not be
ratable with respect to distributions in respect of Shares of any other class
or series thereof of the Company, but must be ratable within each class or
series of Shares. The Preferred Shares shall not be entitled to receive, and
the Directors shall be prohibited from declaring or distributing in respect of
any of the Preferred Shares, any amount in excess of the distributions
specified for such Preferred Shares in the applicable Statement of Preferences
therefor. Such distributions may be made in cash or property (including
without limitation any type of obligations of the Company or any assets
thereof) or any combination thereof.
(b) Distributions may be made to the holders of record of the Shares
entitled to such distribution at the time such distribution is declared or at
such later date as shall be determined by the Company prior to the date of
payment.
(c) The Directors may always retain from any source such amount as
they may deem necessary to pay the debts or expenses of the Company or to meet
obligations of the Company, or as they otherwise may deem desirable to use in
the conduct of its affairs or to retain for future requirements or extensions
of the business of the Company.
(d) Any distribution by the Company pursuant to the terms of this
Section 8.1 or Section 16 to the Person shown on the Company's records as a
Member or to its legal representatives, or to the assignee of the right to
receive such distributions as provided herein, shall relieve the Company, the
Directors and the Investment Manager of all liability to any other Person who
may be interested in such distribution by reason of any Transfer of any
interest in any of such Member's Shares (including a Transfer thereof by
operation of law or by reason of death, incompetence, bankruptcy or
liquidation of such Member, as the case may be).
(e) Notwithstanding any provision to the contrary contained in this
Agreement, neither the Company, the Directors nor the Investment Manager on
behalf of the Company shall make any distribution to a Member on account of
its Shares if such distribution would violate Section 18-607 of the Delaware
Act or other applicable law.
(f) Notwithstanding any other provision of this Agreement, the
Company may set aside reasonable reserves for anticipated liabilities,
obligations or commitments of the Company which it determines to be reasonably
necessary or desirable, in its sole judgment.
(g) Each Common Member agrees, within ten (10) calendar days
following the receipt of each written request from the Company, in the event
the Company is prevented from making distributions to the Common Members
pursuant to the terms of any indebtedness incurred by the Company such that
its deduction for dividends paid during the taxable year does not equal at
least ninety-eight percent (98%) of each of (i) the Company's investment
company taxable income (as determined for purposes of Section 852 of the Code)
and (ii) the amount described in Section 852(a)(1)(B) of the Code, to execute
and deliver to the Company, or an agent of the Company specified by the
Company, with respect to any such taxable year, a consent in accordance with
Section 565 of the Code and the Treasury Regulations promulgated thereunder,
and any successor provision, in the manner specified by the Company, to treat
the amount specified by the Company in such request as a dividend (the
"Consent Dividend") for United States federal income tax purposes for the
taxable year indicated by the Company.
(h) In the case that a Common Member reasonably believes that there
may be a withholding tax imposed on a Consent Dividend under the laws of the
United States or any political subdivision thereof, upon the written request
of such Common Member given to the Company within five (5) Business Days of
the written request by the Company for the Consent Dividend forms and
documentation described in Section 8.1(g) hereof, such Common Member shall not
be required to execute or deliver such Consent Dividend forms unless the
Company has delivered to such Common Member a certificate signed by an
authorized officer of the Company stating that the Company has sufficient
funds available to make the payments required and shall make such payments;
provided that such Common Member shall execute and deliver to the Company such
Consent Dividend forms and documentation within five (5) Business Days of the
receipt of such certificate.
(i) If it is determined by the Board of Directors that the requisite
consents for a Consent Dividend have not been obtained from the Common
Members, after taking such actions, if any, as the Board of Directors deems
appropriate to enforce the provisions of Section 8.1(g) hereof, but a dividend
payment or distribution would otherwise be required to be made on the Common
Shares in order to preserve the U.S. federal income tax status of the Company
as a regulated investment company or to avoid the imposition of the excise tax
under Section 4982 of the Code, such payment or distribution shall be
distributed for the benefit of the Common Members and deposited into one or
more escrow accounts. If any amounts deposited in the escrow accounts are paid
over to the senior secured creditors of the Company, the Common Members will
have an unsecured, recourse claim against the Company for any such amounts
paid to such senior secured creditors. For United States federal, state and
local tax purposes, each Common Member agrees to treat its share of any amount
so deposited as a dividend received by such Common Member at the time of such
deposit.
SECTION 9.
MANAGEMENT AND BOARD OF DIRECTORS
9.1 Management Generally
(a) Subject to the voting rights of the Shares, the management of the
Company shall be vested exclusively in the Board of Directors, which shall
have all of the power and authority of a "manager" of the Company within the
meaning of the Delaware Act, including the authority to appoint officers and
to authorize persons to act on behalf of the Company and engage third parties
to provide services to the Company and to perform any permissible activity and
is further authorized to delegate such power and authority to such officers or
authorized Persons as it determines to be appropriate, subject to the
requirements of the Investment Company Act. The Board of Directors may
designate one or more committees each of which shall have all or such lesser
portion of the power and authority of the entire Board of Directors as the
Directors shall determine from time to time, except to the extent that action
by the entire Board of Directors or particular Directors is required by the
Investment Company Act.
(b) Except as expressly set forth herein, the Members, in their
capacity as such, shall have no part in the management of the Company, and
shall have no authority or right to act on behalf of the Company in connection
with any matter. Employees, officers, authorized Persons and agents of the
Company shall have authority to act on behalf and in the name of the Company
to the extent authorized by the Board of Directors or pursuant to authority
granted by it. It is contemplated that the Board of Directors will delegate
substantially all of its power and authority with respect to the operations of
the Company to the Investment Manager and other authorized Persons.
9.2 Board of Directors
(a) Subject to the terms of each Statement of Preferences, the number
of Directors shall be such number, not less than three, as shall be approved
from time to time by a majority of Directors then in office. No reduction in
the number of Directors shall have the effect of removing any Director from
office prior to the expiration of his or her term. An individual nominated as
a Director shall be at least 21 years of age and not older than such age as
shall be approved from time to time by not less than two-thirds of the
Directors then in office and shall not be under legal disability. Directors
need not own Shares and may succeed themselves in office. The names and
addresses of the Directors shall be set forth in the records of the Company.
(b) Any Director may resign as a Director (without need for prior or
subsequent accounting) by an instrument in writing signed by him and delivered
or mailed to the Chairman, if any, the President or the Secretary and such
resignation shall be effective upon such delivery, or at a later date provided
in such instrument. Subject to the rights of the Preferred Shares with respect
to Directors elected solely by the Preferred Shares pursuant to the Investment
Company Act, any Director may be removed (provided that the aggregate number
of Directors after such removal shall not be less than the minimum number
specified in Section 9.2(a) hereof) for cause at any time by the act of a
majority of the remaining Directors, specifying the date when such removal
shall become effective. Subject to the rights of the Preferred Shares with
respect to Directors elected solely by the Preferred Shares pursuant to the
Investment Company Act, any Independent Director may be removed (provided that
the aggregate number of Directors after such removal shall not be less than
the minimum number Section 9.2(a) hereof) without cause at any time by the act
of two-thirds of the remaining Directors, and any Director can be removed
without cause by vote of not less than two-thirds of the aggregate number of
Shares entitled to vote in the election of such Director, specifying the date
when such removal shall become effective.
(c) The term of office of a Director shall terminate and a vacancy
shall occur in the event of the removal, resignation, incompetence or other
incapacity to perform the duties of the office, or death, of a Director.
Subject to the rights of the Preferred Shares with respect to Directors
elected solely by the Preferred Shares pursuant to the Investment Company Act
and pursuant to any Statement of Preferences, whenever a vacancy in the Board
of Directors shall occur, the remaining Directors may fill such vacancy by
appointing an individual having the qualifications described in this Agreement
by a written instrument signed or adopted by a majority of the Directors then
in office or by election of the holders of Shares, or may leave such vacancy
unfilled, or may reduce the number of Directors (provided that the aggregate
number of Directors after such removal shall not be less than the minimum
number specified in Section 9.2(a) hereof). Any vacancy created by an increase
in Directors may be filled by the appointment of an individual having the
qualifications described in this Agreement by a majority of the Directors then
in office or by election of the holders of Shares. No vacancy shall operate to
annul this Agreement or to revoke any existing agency created pursuant to the
terms of this Agreement. Whenever a vacancy in the number of Directors shall
occur, until such vacancy is filled as provided herein, the Directors in
office, regardless of their number, shall have all the powers granted to the
Directors and shall discharge all the duties imposed upon the Directors by
this Agreement.
(d) Meetings of the Directors shall be held from time to time upon
the call of the Chairman, if any, the President, the Secretary or any two
Directors. Regular meetings of the Directors may be held without call or
notice at a time and place fixed by resolution of the Directors. Notice of any
other meeting shall be mailed via overnight courier not less than 48 hours
before the meeting or otherwise actually delivered orally or in writing not
less than 24 hours before the meeting, but may be waived in writing by any
Director either before or after such meeting. The attendance of a Director at
a meeting shall constitute a waiver of notice of such meeting except where a
Director attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting has not been
lawfully called or convened. The Directors may act with or without a meeting.
A quorum for all meetings of the Directors shall be one-third of the Directors
then in office. Unless provided otherwise in this Agreement, any action of the
Directors may be taken at a meeting by vote of a majority of the Directors
present (a quorum being present) or without a meeting by written consent of a
majority of the Directors or such other proportion as shall be specified
herein for action at a meeting at which all Directors then in office are
present.
(i) Any committee of the Directors may act with or without a
meeting. A quorum for all meetings of any such committee shall be one
third of the members thereof. Unless provided otherwise in this
Agreement, any action of any such committee may be taken at a meeting
by vote of a majority of the members of such committee present (a
quorum being present) or without a meeting by written consent of a
majority of the members of such committee or such other proportion as
shall be specified herein for action at a meeting at which all
committee members are present.
(ii) With respect to actions of the Directors and any
committee of the Directors, Directors who are Interested Persons in
any action to be taken may be counted for quorum purposes under this
Section and shall be entitled to vote to the extent not prohibited by
the Investment Company Act.
(iii) All or any one or more Directors may participate in a
meeting of the Directors or any committee thereof by means of a
conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other;
participation in a meeting pursuant to any such communications system
shall constitute presence in person at such meeting except as
otherwise provided by the Investment Company Act.
(iv) The Directors may, but shall not be required to, elect
a Chairman of the Board of Directors, who shall not, in his or her
capacity as such, be an officer of the Company and who shall serve at
the pleasure of the Board of Directors. Any Chairman of the Board of
Directors elected by the Directors need not be an Independent
Director, unless otherwise required by applicable law.
(e) The Directors shall elect a Chief Executive Officer, a Secretary
and a Chief Financial Officer and any other authorized persons who shall serve
at the pleasure of the Board of Directors or until their successors are
elected. The Directors may elect or appoint or may authorize the Chairman, if
any, or Chief Executive Officer to appoint such other officers or agents or
other authorized persons with such other titles and powers as the Board of
Directors may deem to be advisable. Any Chairman shall, and the Chief
Executive Officer, Secretary and Chief Financial Officer may, but need not, be
a Director.
(f) The Directors and officers shall owe to the Company and the
holders of Shares the same fiduciary duties as owed by directors and officers
of corporations to such corporations and their stockholders under the general
corporation law of the State of Delaware. Directors elected by the holders of
Preferred Shares shall have no special duties to the holders of Preferred
Shares. The Directors shall have exclusive and absolute control over the
Assets and over the business of the Company to the same extent as if the
Directors were the sole owners of the property and business in their own
right, but with such powers of delegation as may be permitted by this
Agreement. The Directors shall have power to engage in any activity not
prohibited by Delaware law. The enumeration of any specific power herein shall
not be construed as limiting the aforesaid power. The Directors may perform
such acts as in their sole discretion are proper for conducting the business
of the Company. The powers of the Directors may be exercised without order of
or resort to any court. No Director shall be obligated to give any bond or
other security for the performance of any of his duties or powers hereunder.
(g) The Board of Directors may adopt and from time to time amend or
repeal By-Laws ("By-Laws") for the conduct of the business of the Company.
Such By-Laws shall be binding on the Company and the Members unless
inconsistent with the provisions of this Agreement. The Members shall not have
authority to adopt, amend or repeal By-Laws.
(h) Any determination as to what is in the interests of the Company
made by the Directors in good faith shall be conclusive. In construing the
provisions of this Agreement, the presumption shall be in favor of a grant of
power to the Directors.
(i) The Directors shall have the power, without any amendment to this
Agreement or any Statement of Preferences adopted hereunder, to impose
restrictions on the activities of Members with respect to the Company or any
Portfolio Company to prevent limitations on the Company's ability to invest in
certain industries, such as utilities, communications, gambling, interstate
transportation and insurance. Such limitations shall be binding upon all
Members.
9.3 Expenses of the Company
(a) The Company shall have power to incur and pay out of the Assets
or income of the Company any expenses necessary or appropriate to carry out
any of the purposes of this Agreement, and the business of the Company. The
Directors may pay themselves such compensation as they in good faith may deem
reasonable and may be reimbursed for expenses reasonably incurred by
themselves on behalf of the Company.
(b) The Company shall pay all, and shall reimburse the Investment
Manager and its Affiliates for, any costs and expenses that, in the good faith
judgment of the Board of Directors, are incurred in the formation, financing
or operation of the Company, including, without limitation, the Advisory Fees
and other costs and expenses specified herein or in the Advisory Agreement to
be paid by the Company; fees and expenses of offering Shares or debt
instruments and enhancing or assuring the credit quality thereof; fees and
expenses relating to short-term investments of cash and investments in
Portfolio Companies including the structuring, negotiation, acquisition,,
syndication, holding, restructuring, recapitalization and disposition thereof
or relating to proposed portfolio investments which are not consummated;
reasonable premiums for insurance protecting the Company, the Investment
Manager, any of its respective Affiliates and any of its respective employees
and agents; legal, compliance, administrative, custodial and accounting
expenses; auditing expenses; appraisal expenses; expenses relating to
organizing companies through or in which investments in Portfolio Companies
will be made; expenses incurred in maintaining the places of business of the
Company; costs and expenses of preparing and maintaining the books and records
of the Company and entities through which it invests; costs and expenses that
are classified as extraordinary expenses under generally accepted accounting
principles; taxes or other governmental charges payable by the Company; costs
and expenses incurred in connection with any actual or threatened litigation,
and any judgments or settlements paid in connection with litigation, involving
the Company, a Portfolio Company or a Person entitled to indemnification from
the Company; expenses (including legal fees and expenses) incurred in
connection with the bankruptcy or reorganization of any Portfolio Company;
costs of reporting to the Members, creditors and regulatory authorities; costs
of responding to regulatory inquiries; costs of Member meetings and the
solicitation of Member consents; costs incurred in valuing assets; costs of
winding up and liquidating the Company; expenses incurred in connection with a
Member that defaults in respect of a Capital Contribution or any payment due
to the Company; and interest, distributions and fees with respect to any
indebtedness incurred by the Company and the Shares.
(c) The Company shall pay, and shall reimburse the Investment Manager
and its Affiliates for, all legal, tax preparation, accounting and other
expenses (including organizational expenses) incurred in connection with any
indebtedness incurred by the Company, the Preferred Shares and the formation
of the Company and related entities, and all fees payable to any placement
agents in connection with subscriptions for the Shares and to any other
agents, lenders, arrangers or other Persons in connection with any
indebtedness incurred by the Company and the placement of any Preferred
Shares.
9.4 Members' Consent
To the fullest extent permitted by law, each Member hereby consents
to the exercise by the Board of Directors and the Investment Manager of the
powers conferred on them by this Agreement.
9.5 Exculpation
No Member shall be subject in such capacity to any personal liability
whatsoever to any Person in connection with the Assets or the acts,
obligations or affairs of the Company. Members shall have the same limitation
of personal liability as is extended to stockholders of a private corporation
for profit incorporated under the general corporation law of the State of
Delaware. Except as otherwise required by law, the Directors, the Investment
Manager and their respective Affiliated Persons, or any officer, director,
member, manager, employee, stockholder, assign, representative or agent of any
such Person (each an "Indemnified Person", and collectively, the "Indemnified
Persons") shall not be liable, responsible or accountable in damages or
otherwise to the Company, any Member or any other Person for any loss,
liability, damage, settlement cost, or other expense (including reasonable
attorneys' fees) incurred by reason of any act or omission or any alleged act
or omission performed or omitted by such Indemnified Person (other than solely
in such Indemnified Person's capacity as a Member, if applicable) in
connection with the establishment, management or operations of the Company or
the management of the Assets (including in connection with serving on any
creditors' committee or board of directors for any Portfolio Company ), except
that an Indemnified Person shall be liable to the Company or any Member, as
the case may be, if such act or failure to act arises out of the bad faith,
willful misfeasance, gross negligence or reckless disregard of such Person's
duty to the Company or such Member, as the case may be (such conduct,
"Disabling Conduct"). Subject to the foregoing, all such Persons shall look
solely to the Assets (including, without limitation, the Unfunded Commitments)
for satisfaction of claims of any nature arising in connection with the
affairs of the Company. If any Indemnified Person is made a party to any suit
or proceeding to enforce any such liability, subject to the foregoing
exception, such Indemnified Person shall not, on account thereof, be held to
any personal liability.
9.6 Indemnification; No Duty of Investigation; Reliance on Experts
(a) To the fullest extent permitted by applicable law, each of the
Indemnified Persons shall be held harmless and indemnified by the Company (out
of the Assets (including, without limitation, the Unfunded Commitments) and
not out of the separate assets of any Member) against any liabilities and
expenses, including amounts paid in satisfaction of judgments, in compromise
or as fines and penalties, and reasonable counsel fees reasonably incurred by
such Indemnified Person in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court
or administrative or investigative body in which such Indemnified Person may
be or may have been involved as a party or otherwise (other than as authorized
by the Directors, as the plaintiff or complainant) or with which such
Indemnified Person may be or may have been threatened, while acting in such
Person's capacity as an Indemnified Person, except with respect to any matter
as to which such Indemnified Person shall not have acted in good faith in the
reasonable belief that such Person's action was in the best interest of the
Company or, in the case of any criminal proceeding, as to which such
Indemnified Person shall have had reasonable cause to believe that the conduct
was unlawful, provided, however, that an Indemnified Person shall only be
indemnified hereunder if (i) such Indemnified Person's activities do not
constitute Disabling Conduct and (ii) there has been a determination (a) by a
final decision on the merits by a court or other body of competent
jurisdiction before whom the issue of entitlement to indemnification was
brought that such Indemnified Person is entitled to indemnification or, (b) in
the absence of such a decision, by (1) a majority vote of a quorum of those
Directors who are neither "interested persons" of the Company (as defined in
Section 2(a)(19) of the Investment Company Act) nor parties to the proceeding,
that the Indemnified Person is entitled to indemnification (the "Disinterested
Non-Party Directors"), or (2) if such quorum is not obtainable or even if
obtainable, if such majority so directs, independent legal counsel in a
written opinion that concludes that the Indemnified Person should be entitled
to indemnification. Notwithstanding the foregoing, with respect to any action,
suit or other proceeding voluntarily prosecuted by any Indemnified Person as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such Indemnified Person was authorized by
a majority of the Directors. All determinations to make advance payments in
connection with the expense of defending any proceeding shall be authorized
and made in accordance with the immediately succeeding paragraph (b) below.
(b) The Company shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might
be sought hereunder if the Company receives a written affirmation by the
Indemnified Person of the Indemnified Person's good faith belief that the
standards of conduct necessary for indemnification have been met and a written
undertaking to reimburse the Company unless it is subsequently determined that
he is entitled to such indemnification and if a majority of the Directors
determine that the applicable standards of conduct necessary for
indemnification appear to have been met. In addition, at least one of the
following conditions must be met: (1) the Indemnified Person shall provide
adequate security for his undertaking, (2) the Company shall be insured
against losses arising by reason of any lawful advances, or (3) a majority of
a quorum of the Disinterested Non-Party Directors, or if a majority vote of
such quorum so direct, independent legal counsel in a written opinion, shall
conclude, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is substantial reason to believe that the
Indemnified Person ultimately will be found entitled to indemnification.
(c) The rights accruing to any Indemnified Person under these
provisions shall not exclude any other right to which he may be lawfully
entitled.
(d) Notwithstanding the foregoing, subject to any limitations
provided by the Investment Company Act and this Agreement, the Company shall
have the power and authority to indemnify Persons providing services to the
Company to the full extent provided by law as if the Company were a
corporation organized under the Delaware General Corporation Law provided that
such indemnification has been approved by a majority of the Directors or, with
respect to agreements to which the Investment Manager is not a party, by the
Investment Manager.
(e) No purchaser, lender, transfer agent or other person dealing with
the Directors or with any officer, employee or agent of the Company shall be
bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Directors or by said officer, employee or agent
or be liable for the application of money or property paid, loaned, or
delivered to or on the order of the Directors or of said officer, employee or
agent. Every obligation, contract, undertaking, instrument, certificate, Share
and other security of the Company, and every other act or thing whatsoever
executed in connection with the Company shall be conclusively taken to have
been executed or done by the executors thereof only in their capacity as
Directors under this Agreement or in their capacity as officers, employees or
agents of the Company. The Company may maintain insurance for the protection
of the Assets, its Members, Directors, officers, employees or agents in such
amounts as the Directors shall deem adequate to cover possible liability, and
such other insurance as the Directors in their sole judgment shall deem
advisable or is required by the Investment Company Act.
(f) Each Indemnified Person shall, in the performance of its duties,
be fully and completely justified and protected with regard to any act or any
failure to act resulting from reliance in good faith upon the books of account
or other records of the Company, upon an opinion of counsel, or upon reports
made to the Company by any of the Company's officers or employees or by any
advisor, administrator, manager, distributor, selected dealer, accountant,
appraiser or other expert or consultant selected with reasonable care by the
Directors, officers or employees of the Company, regardless of whether such
counsel or other person may also be a Director.
9.7 Director Limited Liability
Except as otherwise provided by law, the Directors shall not be
obligated personally for any debt, obligation or liability of the Company
solely by reason of being the manager of the Company, and the debt,
obligations and liabilities of the Company, whether arising in contract, tort
or otherwise, shall be solely the debts, obligations and liabilities of the
Company.
9.8 Certain Other Activities
The Investment Manager and its Affiliated Persons and their employees
and associates (collectively, the "Manager Affiliates") may manage funds and
accounts other than the Assets ("Other Accounts") that invest in assets
eligible for purchase by the Company. Subject to the requirements of the
Investment Company Act and the Advisers Act, the Manager Affiliates are in no
way prohibited from spending, and may spend, substantial business time in
connection with other businesses or activities, including, but not limited to,
managing Other Accounts, managing investments, advising or managing entities
whose investment objectives are the same as or overlap with those of the
Company, participating in actual or potential investments of the Company or
any Member, providing consulting, merger and acquisition, structuring or
financial advisory services, including with respect to actual, contemplated or
potential investments of the Company, or acting as a director, officer,
manager, member or creditors' committee member of, or adviser to, or
participant in, any corporation, company, limited liability company, trust or
other Person; provided, however, that any such other activities shall be
conducted in respect of the business of investment management and related
financial services, charitable or community service activities or the
management of firm or family assets. Subject to the requirements of the
Investment Company Act and the Advisers Act, the Manager Affiliates are in no
way prohibited from receiving, and may receive, fees or other compensation
from third parties for any of these activities, which fees will be for their
own account and not for the account of the Company. Such fees may relate to
actual, contemplated or potential investments of the Company and may be
payable by entities in which the Company directly or indirectly has invested
or contemplates investing. Neither the Company nor any Member shall, by virtue
of this Agreement, have any right, title or interest in or to the businesses
or activities permitted by this Section 9.8 or in or to any fees or
consideration derived therefrom. Allocation of investments or opportunities
among the Company and Other Accounts will be made as described in the Offering
Memorandum or as otherwise approved by the Board of Directors in accordance
with the Investment Company Act, the Advisers Act and any exemptive order
obtained from the U.S. Securities and Exchange Commission.
SECTION 10.
MEMBERS
10.1 Identity, Contributions and Common Share Commitments
The names and addresses of the Members, the Shares owned by each
Member and the Capital Contributions, Common Share Commitments and Unfunded
Commitments of each will be set forth in the Company's records.
10.2 No Management Power or Liability
Subject to the requirements of the Investment Company Act, except as
otherwise provided herein, the Members as such shall have no right or power
to, and shall not, take part in the management of or transact any business for
the Company, including but not limited to, any acts or decisions relating to
investment activities of the Company, and shall have no power to sign for or
bind the Company. Except as otherwise required by law, no Member, in its
capacity as such, shall be personally liable for any debt, loss, obligation or
liability of the Company in excess of its Unfunded Commitment (if applicable).
Except to the extent expressly provided in the preceding sentence, the Company
shall indemnify and hold harmless each Member (in its capacity as such) in the
event such Member becomes liable for any debt, loss, obligation or liability
of the Company unless such Member has engaged in fraud, willful misconduct,
gross negligence or criminal conduct constituting a felony with respect to
such debt, loss, obligation or liability.
10.3 Amendments
(a) If a vote of the holders of Shares is required by applicable law
or this Agreement to amend this Agreement, or if the Directors determine to
submit an amendment to a vote of the holders of Shares, then, other than with
respect to Sections of this Agreement where a different affirmative vote is
specifically required, this Agreement may be amended, after a majority of the
Directors then in office have approved a resolution therefor, by the
affirmative vote set forth in Section 10.10. Section 10.10 may only be
amended, after a majority of Directors then in office have approved a
resolution therefor, by the affirmative vote of the holders of not less than
75% of the affected Shares then outstanding. Notwithstanding the foregoing,
without the unanimous approval of all of the Members affected thereby, no such
amendment may:
(i) require any Common Member to make Capital Contributions
in excess of its Common Share Commitment, require any Member that is
not a Common Member to make additional Capital Contributions in
excess of its contractual commitment or otherwise increase the
liability of any Member hereunder; or
(ii) adversely affect distributions to such Member;
(iii) modify this Section 10.3(a); or
(iv) modify Section 2.4.
(b) Subject to the requirements of the Investment Company Act and
other applicable law, notwithstanding the foregoing provisions of this Section
10.3, the Board of Directors may amend this Agreement, without the consent of
any Member, (i) to change the name of the Company or any class or series of
Shares, (ii) to make any change that does not adversely affect the relative
rights or preferences of any class or series of Shares, (iii) to conform this
Agreement to the requirements of the Investment Company Act or any other
applicable law; (iv) in connection with qualifying the Company to permit
limited liability under the laws of any state; (v) to prevent any material and
adverse effect to any Member or the Company arising from the application of
legal restrictions to any Member, the Investment Manager or the Company,
subject to the requirement that the Members not be materially and adversely
affected; (vi) to make any change that is necessary or desirable to cure any
ambiguity or inconsistency, subject to the requirement that the Members not be
materially and adversely affected; (vii) to make any other changes similar to
the foregoing, subject to the requirement that the Members not be materially
and adversely affected; or (viii) notwithstanding Section 10.4 hereof, to the
extent permitted by applicable law and only if no Member is materially harmed
thereby, restructure the Company as provided for in Section 6(b) of the
Investment Management Agreement; provided that the Board of Directors shall
not be liable for failing to do so. Prior to entering into any amendment
pursuant to this Section 10.3(b), the Board of Directors shall notify the
Members in writing of the material terms of such amendment. The Board of
Directors may reflect in its records changes made in the composition of the
Members and their respective Capital Contributions and Shares in accordance
with the provisions of this Agreement without the consent of the Members.
(c) After any amendment to this Agreement becomes effective, the
Company shall send to the Members a copy of such amendment.
(d) Nothing contained in this Agreement shall permit the amendment of
this Agreement to impair the exemption from personal liability of the Members,
Directors, officers, employees and agents of the Company and their respective
Affiliates, to permit assessments upon Members in excess of their Unfunded
Commitments or to permit the Company to be converted at any time from a
"closed-end investment company" to an "open-end investment company" as those
terms are defined by the Investment Company Act or a company obligated to
repurchase shares under Rule 23c-3 of the Investment Company Act.
(e) An amendment duly adopted by the requisite vote of the Board of
Directors and, if required, Members as aforesaid, shall become effective at
the time of such adoption or at such other time as may be designated by the
Board of Directors or Members, as the case may be. A certification signed by a
majority of the Directors or the Secretary setting forth an amendment and
reciting that it was duly adopted by the Directors and, if required, Members
as aforesaid, or a copy of the Agreement, as amended, and executed by a
majority of the Directors or the Secretary, shall be conclusive evidence of
such amendment when lodged among the records of the Company or at such other
time designated by the Directors.
(f) Notwithstanding any other provision hereof, until such time as
Shares are issued and outstanding, this Agreement may be terminated or amended
in any respect by the affirmative vote of a majority of the Directors or by an
instrument signed by a majority of the Directors then in office.
(g) Notwithstanding anything to the contrary contained herein, no
holder of Shares of any class or series, other than to the extent expressly
determined by the Directors with respect to Shares qualifying as preferred
stock pursuant to Section 18(a) of the Investment Company Act, shall have any
right to require the Company or any person controlled by the Company to
purchase any of such holder's Shares.
10.4 Merger, Consolidation, Liquidation
Subject to the provisions of the Investment Company Act and other
applicable law, the Company may merge or consolidate with any other entity, or
sell, lease or exchange all or substantially all of the Assets upon approval
by two-thirds of the Directors then in office and the affirmative vote of not
less than two-thirds of the outstanding Shares.
10.5 List of Members
A list of the names and addresses of all Members (to the extent known
to the Company) shall be made available to any Member or its representative
for inspection and, at the Member's cost, copying upon written request and at
reasonable times to the extent required by the Investment Company Act with
respect to trusts for any purpose.
10.6 Limitations
No Member shall have the right or power to (i) bring an action for
partition against the Company; (ii) cause the termination or dissolution of
the Company, except as set forth in this Agreement; or (iii) demand property
other than cash with respect to any distribution and then only in accordance
with the terms of this Agreement. For the avoidance of doubt, Members shall
not have the power provided for in Section 18-801(a)(3) of the Delaware Act,
and the Company may only be dissolved pursuant to the terms of this Agreement.
Except to the extent required for a Delaware business corporation, the Members
shall have no power to vote as to whether or not a court action, legal
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Company or the Members.
10.7 Meetings.
(a) The Company may, but shall not be required to, hold annual
meetings of the holders of any class or series of Shares. An annual or special
meeting of Members may be called at any time only by the Directors or by
Members in accordance with the requirements of the Investment Company Act
applicable to trusts. Any meeting of Members shall be held within or without
the State of Delaware on such day and at such time as the Directors shall
designate.
(b) Notice of all meetings of Members, stating the time, place and
purposes of the meeting, shall be given by the Directors by mail to each
Member of record entitled to vote thereat at its registered address, mailed at
least 10 days before the meeting or otherwise in compliance with applicable
law. Except with respect to an annual meeting, at which any business required
by the Investment Company Act may be conducted, only the business stated in
the notice of the meeting shall be considered at such meeting. Any adjourned
meeting may be held as adjourned one or more times without further notice not
later than 130 days after the record date. For the purposes of determining the
Members who are entitled to notice of and to vote at any meeting the Directors
may, without closing the transfer books, fix a date not more than 100 days
prior to the date of such meeting of Members as a record date for the
determination of the Persons to be treated as Members of record for such
purposes.
10.8 Action Without a Meeting
Any action that may be taken at a meeting of the Members may be taken
without a meeting if a consent in writing setting forth the action to be taken
is signed by Members owning not less than the minimum percentage of the Shares
of the Members that would be necessary to authorize or take such action at a
meeting at which all the Members were present and voted, and notice of the
action taken is provided to each Member. Any such written consent must be
filed with the records of the meetings of the Members.
10.9 Procedures
A Member shall be entitled to cast votes: (i) at a meeting, in
person, by written proxy or by a signed writing directing the manner in which
its vote is to be cast, which writing must be received by the Company at or
prior to the commencement of the meeting, or (ii) without a meeting, by a
signed writing directing the manner in which its vote is to be cast, which
writing must be received by the Company at or prior to the time and date on
which the votes are to be counted. Except as otherwise herein specifically
provided, all procedural matters relating to the holding of meetings of
Members or taking action by written consent, whether noticed or solicited by
the Company or others, including, without limitation, matters relating to the
date for the meeting or the counting of votes by written consent, the time
period during which written consents may be solicited, minimum or maximum
notice periods, record dates, proxy requirements and rules relating to the
conduct of meetings or the tabulation of votes, shall be as reasonably
established by the Directors. To the extent not otherwise provided by the
Board of Directors pursuant to Section 10.10 or otherwise, the laws of the
State of Delaware pertaining to the validity and use of proxies regarding the
shares of business corporations shall govern the validity and use of proxies
given by Members.
10.10 Voting
(a) Members shall have no power to vote on any matter except matters
on which a vote of Shares is required by or pursuant to the Investment Company
Act, a Statement of Preferences, this Agreement, the By-Laws or any resolution
of the Directors. Any matter required to be submitted for approval of any of
the Shares and affecting one or more classes or series shall require approval
by the required vote of Shares of the affected class or classes and series
voting together as a single class and, if such matter affects one or more
classes or series thereof differently from one or more other classes or series
thereof or from one or more series of the same class, approval by the required
vote of Shares of such other class or classes or series or series voting as a
separate class shall be required in order to be approved with respect to such
other class or classes or series or series; provided, however, that except to
the extent required by the Investment Company Act and any Statement of
Preferences, there shall be no separate class votes on the election or removal
of Directors or the selection of auditors for the Company. Members of a
particular class or series thereof shall not be entitled to vote on any matter
that affects the rights or interests of only one or more other classes or
series of such other class or classes or only one or more other series of the
same class. There shall be no cumulative voting in the election or removal of
Directors.
(b) The holders of one-third of the outstanding Shares of the Company
on the record date present in person or by proxy shall constitute a quorum at
any meeting of the holders for purposes of conducting business on which a vote
of all Members of the Company is being taken. The holders of one-third of the
outstanding Shares of a class or classes on the record date present in person
or by proxy shall constitute a quorum at any meeting of the holders of such
class or classes for purposes of conducting business on which a vote of
holders of such class or classes is being taken. The holders of one-third of
the outstanding Shares of a series or series on the record date present in
person or by proxy shall constitute a quorum at any meeting of the holders of
such series or series for purposes of conducting business on which a vote of
holders of such series or series is being taken. Shares underlying a proxy as
to which a broker or other intermediary states its absence of authority to
vote with respect to one or more matters shall be treated as present for
purposes of establishing a quorum for taking action on any such matter only to
the extent so determined by the Directors at or prior to the meeting of
holders of Shares at which such matter is to be considered and shall not be
treated as present for purposes of voting or any other purpose except as
determined by the Directors.
(c) Subject to any provision of the Investment Company Act, any
Statement of Preferences or this Agreement specifying or requiring a greater
or lesser vote requirement for the transaction of any matter of business at
any meeting of Members or, in the absence of any such provision of the
Investment Company Act, any Statement of Preferences or this Agreement,
subject to any provision of the By-Laws or resolution of the Directors
specifying or requiring a greater or lesser vote requirement, (i) the
affirmative vote of a plurality (or, if provided by the By-Laws, a majority)
of the Shares present in person or represented by proxy and entitled to vote
for the election of any Director or Directors shall be the act of such Members
with respect to the election of such Director or Directors, (ii) the
affirmative vote of a majority of the Shares present in person or represented
by proxy and entitled to vote on any other matter who vote on such matter
shall be the act of the Members with respect to such matter, and (iii) where a
separate vote of one or more classes or series is required on any matter, the
affirmative vote of a majority of the Shares of such class or classes or
series or series present in person or represented by proxy and entitled to
vote on such matter who vote on such matter shall be the act of the Members of
such class or classes or series or series with respect to such matter.
(d) At any meeting of Members, any holder of Shares entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Secretary, or with
such other officer or agent of the Company as the Secretary may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to
a resolution of a majority of the Directors, proxies may be solicited in the
name of one or more Directors or one or more of the officers or employees of
the Company. Only Members of record shall be entitled to vote. Each full Share
shall be entitled to one vote and each fractional Share shall be entitled to a
vote equal to its fraction of a full Share. When any Share is held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Share, but if more than one of them shall be present at
such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be given by or on behalf of a
Shareholder of record on the record date for a meeting shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy. The Directors shall
have the authority to make and modify from time to time regulations regarding
the validity of proxies. In addition to signed proxies, such regulations may
authorize facsimile, telephonic, Internet and other methods of appointing a
proxy that are subject to such supervision by or under the direction of the
Directors as the Directors shall determine.
SECTION 11.
ADMISSION OF ADDITIONAL MEMBERS;
ASSIGNMENTS OR TRANSFERS OF SHARES
11.1 Admission of Additional Members
No additional Members will be admitted after the Initial Drawdown
Date, except as provided in Sections 7.1 and 11.2.
11.2 Assignments or Transfers of Shares
(a) In no event shall all or any part of a Member's Preferred Shares
be Transferred, and any such purported Transfer shall be void and shall not be
recognized by the Company, unless all of the conditions set forth in the
applicable Statement of Preferences with respect thereto have been satisfied.
In no event shall all or any part of a Member's Common Shares or Common Share
Commitments be Transferred, and any such purported Transfer shall be void and
shall not be recognized by the Company or the Members, unless all of the
following conditions are satisfied:
(i) The Transferor, if requested by the Company in its sole
discretion, has delivered to the Company an opinion of counsel
reasonably acceptable to the Company that such Transfer (A) would not
violate the Securities Act or any state blue sky laws (including any
investor suitability standards) and, (B) would not result in the
breach of any agreement to which the Company is a party or by which
it or any of the Assets is bound;
(ii) The Transferor has demonstrated to the reasonable
satisfaction of the Company that the Transferee is both an
"accredited investor" as defined in Rule 501(a) under the Securities
Act and a "qualified client" within the meaning of Rule 205-3 of the
Advisers Act;
(iii) The Company has received a notice of Transfer signed
by both the Transferor and Transferee, such notice to be
substantially in the form of Appendix C attached hereto (or such
other document specified in the applicable Statement of Preferences);
and
(iv) the Company consents in writing to such Transfer (which
consent may be withheld in the Company's reasonable discretion).
(b) Provided the foregoing conditions are met, the Transferee may
become a Substituted Member or a Substituted Special Member if and only if,
with respect to Preferred Shares, any requirements set forth in the relevant
Statement of Preferences are satisfied and, with respect to Common Shares,
each of the following conditions is satisfied:
(i) The Company has consented in writing to the substitution
(which consent may be withheld in the Company's reasonable discretion
with respect to Transfers of Common Share Commitments and may be
withheld in the Company's reasonable discretion with respect to
Transfers of Common Shares only if the transfer conditions described
above have not been met or have not been waived);
(ii) The Transferor and Transferee execute, acknowledge and
deliver such instruments as the Company deems necessary, appropriate
or desirable to effect such substitution, including the written
acceptance and adoption by the Transferee of this Agreement and the
execution, acknowledgment and delivery to the Company of a power of
attorney, the substance of which shall be consistent with Section 13;
and
(iii) The Transferee agrees to bear all of the Company's
expenses and costs incurred in connection with the Transfer and
substitution, including legal fees and filing fees.
Upon the satisfaction of the conditions set forth in this Section
11.2(b), the Company shall record on the books and records of the Company the
Substituted Member as a Member, or the Substituted Special Member as the
Special Member, of the Company.
(c) A Transferee, legal representative or successor in interest of a
Member shall be subject to all of the restrictions upon a Member provided in
this Agreement.
(d) A Transferee of Shares or Common Share Commitments who desires to
make a further Transfer shall be subject to all of the provisions of this
Section 11 to the same extent and in the same manner as a Member making the
initial Transfer.
(e) Notwithstanding anything to the contrary in this Agreement, the
Company may elect (in the Company's sole discretion) to treat a Transferee who
has not become a Substituted Member as a Member or the Substituted Special
Member as the Special Member in the place of the Transferor should it
determine such treatment to be in the best interests of the Company.
(f) Upon the Incapacity of an individual Member, such Member's
personal representative or other successor in interest shall have such rights
as the Incapacitated Member possessed to constitute a successor as a
Transferee of its Shares or Common Share Commitment and to join with such
Transferee in making application to substitute such Transferee as a Member,
all as provided in Sections 11.2(a) and (b).
(g) Upon the Incapacity of a Member other than an individual, the
authorized representative of such entity shall have such rights as such entity
possessed to constitute a successor as a Transferee of its Shares or Common
Share Commitment and to join with such Transferee in making application to
substitute such Transferee as a Member, all as provided in Sections 11.2(a)
and (b).
(h) A Person who acquires Shares or Common Share Commitments but is
not admitted to the Company as a Substituted Member or Substituted Special
Member pursuant to Section 11.2(b) shall be entitled only to the allocations
and distributions with respect to such Shares or Common Share Commitment in
accordance with this Agreement or relevant Statement of Preferences but shall
have no right to any information or accounting of the affairs of the Company
and shall not have any voting or other rights of a Member under this Agreement
or relevant Statement of Preferences; provided, however, that such Person
shall be entitled to receive such information and accountings as shall be
consented to by the Company, which consent shall not be unreasonably withheld.
A Substituted Member or Substituted Special Member shall succeed to all the
rights and be subject to all the obligations of the Transferor Member in
respect of the Shares or other interest as to which it was substituted.
SECTION 12.
POWER OF ATTORNEY
12.1 Appointment of Investment Manager
Each Member, by becoming a Member, makes, constitutes and appoints
the Investment Manager as its true and lawful attorney-in-fact, in its name,
place and stead, with full power to do any of the following:
(a) Execute on its behalf, file and record this Agreement and all
amendments to this Agreement made and otherwise approved in accordance with
Section 10.3 or otherwise made in accordance with the terms of this Agreement;
(b) Prepare, execute on its behalf, verify, file and record
amendments to this Agreement made in accordance with the terms of this
Agreement or to the books and records of the Company reflecting (i) a change
of the name or location of the principal place of business of the Company,
(ii) a change of the name or address of any Member, (iii) the addition of
Members, (iv) the disposal by a Member of its Shares or Common Share
Commitment in any manner, (v) a Person becoming or ceasing to be a Member of
the Company, (vi) the exercise by any Person of any right or rights hereunder,
(vii) the correction of typographical or similar errors, (viii) any amendments
made in accordance with Section 10.3, and (ix) any amendment and restatement
of this Agreement reflecting such amendments;
(c) Prepare, execute on its behalf and record any amendments to the
Certificate that the Investment Manager may deem advisable or necessary;
(d) Prepare, execute on its behalf, file and record any other
agreements, certificates, instruments and other documents required to continue
the Company, to admit Substituted Members or a Substituted Special Member, to
liquidate and dissolve the Company in accordance with Section 16, to comply
with applicable law, and to carry out the purposes of clauses (a) and (b)
above, to the extent consistent with this Agreement; and
(e) Take any further action that the Investment Manager shall
consider advisable in connection with the exercise of the authority granted in
this Section 12.1.
12.2 Nature of Special Power
The power of attorney granted under this Section 12 is a special
power of attorney coupled with an interest, is irrevocable and may be
exercised by the Investment Manager by listing all of the Members executing
any agreement, certificate, instrument or document with a single signature of
such attorney-in-fact acting as attorney-in-fact for all of them. The power of
attorney shall survive and not be affected by the Incapacity of a Member and
shall survive and not be affected by the Transfer by a Member of the whole or
a portion of its Shares or Common Share Commitment, as the case may be, except
where the Transfer is of all of the Shares or Common Share Commitment and the
Transferee thereof with the consent of the Company is admitted as a
Substituted Member or Substituted Special Member; provided, however, that this
power of attorney shall survive such Transfer for the sole purpose of enabling
any such attorney-in-fact to effect such substitution. This power of attorney
does not supersede any part of this Agreement, nor is it to be used to deprive
any Member of its rights hereunder. It is intended only to facilitate the
execution of documents and the carrying out of other procedural or ministerial
functions.
SECTION 13.
BOOKS, RECORDS AND REPORTS
13.1 Books
(a) The Company shall maintain books and records required by law for
the Company at its principal office, which shall be in the United States, and
each Member shall have the right to inspect, examine and copy such books and
records at reasonable times and upon reasonable notice for the purposes
required by the Investment Company Act relating to trusts or as authorized by
the Directors or their delegate. All such books and records may be in
electronic format, including the register of Members and all capital account
and accounting records. Upon the request of a Member, the Company shall
promptly deliver to the requesting Member, at the expense of the Company, a
copy of any information which the Company is required by law to so provide in
paper or electronic format. Notwithstanding the foregoing inspection rights or
any other provision of this Section 13, the Company shall be entitled to keep
confidential from the Members certain information as and to the extent
permitted by Section 18-305(c) of the Delaware Act and the Investment Company
Act.
(b) A register shall be kept at the Company or any transfer agent
duly appointed by or under the direction of the Directors which shall contain
the names and addresses of the Members and the number of Shares held by them
respectively and a record of all transfers thereof. Separate registers shall
be established and maintained for each class and each series of each class.
Each such register shall be conclusive as to who are the holders of the Shares
of the applicable class and series and who shall be entitled to receive
dividends or distributions or otherwise to exercise or enjoy the rights of
Members. No Member shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein provided, until he has
given his address to a transfer agent or such other officer or agent of the
Directors as shall keep the register for entry thereon. Except as otherwise
provided in any Statement of Preferences, it is not contemplated that
certificates will be issued for the Shares; however, the Company may authorize
the issuance of share certificates and promulgate appropriate fees therefore
and rules and regulations as to their use.
(c) The Company shall have power to employ a transfer agent or
transfer agents, and a registrar or registrars, with respect to the Shares.
The transfer agent or transfer agents may keep the applicable register and
record therein, the original issues and transfers, if any, of the said Shares.
(d) Shares shall be transferable on the records of the Company only
by the record holder thereof or by its agent thereto duly authorized in
writing, upon delivery to the Company or a transfer agent of the Company of a
duly executed instrument of transfer, together with such evidence of the
genuineness of each such execution and authorization and of other matters as
may reasonably be required. Upon such delivery the transfer shall be recorded
on the applicable register of the Company. Until such record is made, the
Member of record shall be deemed to be the holder of such Shares for all
purposes hereof and neither the Directors nor any transfer agent or registrar
nor any officer, employee or agent of the Company shall be affected by any
notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the
death, bankruptcy, or incompetence of any Member, or otherwise by operation of
law, shall be recorded on the applicable register of Shares as the holder of
such Shares upon production of the proper evidence thereof to the Directors or
a transfer agent of the Company, but until such record is made, the Member of
record shall be deemed to be the holder of such for all purposes hereof, and
neither the Directors nor any transfer agent or registrar nor any officer or
agent of the Company shall be affected by any notice of such death, bankruptcy
or incompetence, or other operation of law.
13.2 Reports
(a) The Company shall prepare and send to Members to the extent and
in the form required by the Investment Company Act and other applicable law or
any exchange on which Shares are listed a report of operations containing
financial statements of the Company prepared in conformity with generally
accepted accounting principles and applicable law and a schedule setting forth
the investments of the Company. In addition, the Company shall prepare and
send monthly reports to the Common Members containing such information as the
Company and the Common Members shall agree upon.
(b) Within 60 days after the end of each Fiscal Year, the Company
shall communicate in writing to each Member (i) such information as is
necessary to complete such Member's United States federal and state income tax
or information returns and (ii) annual financial statements audited by an
accounting firm of national reputation.
(c) Further, the Directors may, in their sole and absolute
discretion, cause to be prepared (i) such reports or other information as may
be necessary with respect to any Member's qualification for the benefit of any
income tax treaty or provision of law reducing or eliminating any withholding
or other tax or governmental charge with respect to any Assets and (ii) such
other reports and financial statements of the Company as the Directors deem
appropriate for informing the Members about the operations of the Company.
The Company shall promptly distribute to the Members notice of the
occurrence of any default or event of default under the terms of any
indebtedness incurred by the Company.
(d) To the extent that the Company has access thereto and in
recognition of the various Members' obligations to comply with certain
regulatory requirements, the Company will also provide to each Member, with
reasonable promptness, such other data and information concerning the Company
or Company activities in response to a request by any applicable governmental
or regulatory agency as from time to time a Member may reasonably request. If
the Company is bound by confidentiality obligations with respect to any
information so requested, then the Company shall not be obligated to provide
such information. A Member shall, at the request of the Company, enter into a
confidentiality agreement relating to such information.
SECTION 14.
VALUATION OF INTERESTS.
The value of the Assets of the Company, the amount of liabilities of
the Company, the Net Asset Value, and the Net Asset Value of each outstanding
Common Share of the Company shall be determined on each Valuation Date in
accordance with generally accepted accounting principles and the Investment
Company Act. The method of determination of Net Asset Value shall be
determined by or under the supervision of the Board of Directors. The making
of Net Asset Value determinations and calculations may be delegated by the
Board of Directors.
SECTION 15.
BANK ACCOUNTS; CUSTODIAN
15.1 Bank Accounts Generally
Subject to the requirements of the Investment Company Act, all funds
received by the Company may be deposited in one or more Custodial Accounts in
the name of the Company at the Custodian. Subject to Section 15.2,
disbursements therefrom may be made by the Company in conformity with the
purposes of this Agreement and the requirements of the Investment Company Act.
The Company may designate from time to time those Persons authorized to
execute checks and other items on the Company bank accounts. The funds of the
Company shall not be commingled with the funds of any other Person.
15.2 Custodian
(a) The Company shall appoint one or more Custodians to hold the
Assets of the Company in one or more separately identified Custodial Accounts
or multiparty arrangements in accordance with the Advisory Agreement, any
Statement of Preferences, any documentation relating to any indebtedness
incurred by the Company and the Custodial Agreement and in compliance with the
requirements of the Investment Company Act and other applicable law. The
Custodian shall at all times be responsible for the physical custody of the
Assets of the Company and for the collection of interest, dividends and other
income attributable to the Assets of the Company. The Company will direct the
Custodian to accept settlement instructions issued by the Investment Manager
and authorized Persons.
(b) Nothing contained in this Agreement shall be construed to
authorize or require the Board of Directors or the Investment Manager to take
or receive physical possession of any Asset of the Company or to take any
action in violation of law, it being understood that the Custodian shall
solely be responsible for the safekeeping of the Assets and the consummation
of all such purchases, sales and deliveries of the Assets in accordance with
this Agreement and the Advisory Agreement, any Statement of Preferences, any
documentation relating to any indebtedness incurred by the Company and the
Custodial Agreement and in compliance with the requirements of the Investment
Company Act and other applicable law.
SECTION 16.
DISSOLUTION AND TERMINATION OF THE COMPANY
16.1 Dissolution Generally
Except as provided in this Agreement, no Member shall have the right
to cause any dissolution of the Company before expiration of its term.
16.2 Continuation of Company
The Company shall not be dissolved or terminated by the Incapacity of
any Member as such, the Transfer by any Member of its Shares or Common Share
Commitment or the admission of a new or substituted Director or Member, and
the existence and business of the Company shall be continued notwithstanding
the occurrence of any such event.
16.3 Events Causing Dissolution
The Company may be dissolved prior to the time set forth in Article 4
after two-thirds of the Directors then in office have approved a resolution
therefor, upon approval by Shares having at least 75% of the votes of all of
the Shares outstanding on the record date for such meeting, voting as a single
class except to the extent required by the Investment Company Act.
16.4 Distribution of Assets on Liquidation
(a) In liquidating the Company, the Company will make distributions
in cash, in kind, or partly in cash and partly in kind as the Investment
Manager, under the supervision of the Board of Directors, may, in its sole
discretion, determine; provided, however, that any distribution made partly in
cash and partly in kind shall be pro rata among the Members in proportion to
their interests to the extent reasonably practicable and if not reasonably
practicable, in such non-pro rata manner as is determined by the Investment
Manager, under the supervision of the Board of Directors, to be fair and
equitable; provided, further, that the Investment Manager will use reasonable
efforts to make all distributions in kind, if any, in the form of freely
tradable securities. The Investment Manager need not distribute all of the
Assets at once, but may make partial distributions and shall not be required
to redeem the Preferred Shares prior to making any liquidating distribution in
respect of the Common Shares so long as the Company has set aside liquid
assets in excess of liabilities sufficient to pay the liquidation preference
and all accumulated and unpaid distributions of the Preferred Shares.
(b) In connection with the liquidation of the Company, the Assets
(after paying or otherwise providing for the claims of creditors of the
Company, the Advisory Fees, claims by the Board of Directors, the Investment
Manager or their respective Affiliated Persons for expenses of the Company
paid by any of them, any other liabilities of the Company and reasonable
reserves for any anticipated or contingent liabilities or obligations and all
accumulated and unpaid distributions on Preferred Shares) shall be distributed
to the Members in accordance with Section 8.1; provided, however, that the
Special Member's original $1,000 contribution shall be returned to it, without
interest.
16.5 Liquidation Statement
(a) Upon compliance by the Company with all applicable requirements
for dissolution, the Members shall cease to be such and the Company shall
execute, acknowledge and cause to be filed a Certificate of Cancellation of
the Company or other appropriate documents evidencing its dissolution and
winding up.
(b) Notwithstanding anything to the contrary contained herein, if the
Board of Directors has been removed and the Company has been dissolved, any
Member or other Person appointed by the Members may act as liquidating trustee
for the Company during the winding up period, and receive reasonable
compensation for such activity, all as approved by the Members holding Shares
that represent a majority of the outstanding Shares (which in this case shall
exclude any Shares held by the Investment Manager).
16.6 Director's Liability Upon Dissolution or Removal
None of the Directors shall be personally liable for the return of
all or any part of the contributions of the Members to the Company or for any
other distributions to be made by the Company. Any such return or
distributions shall be made solely from the Assets.
SECTION 17.
GENERAL PROVISIONS
17.1 Notices and Distributions
Except as otherwise provided herein, any notice, distribution, offer
or other communication which may be given to any Member in connection with the
Company or this Agreement shall be duly given if reduced to writing and:
(a) if to any Member, when personally delivered, or if sent by mail,
postage prepaid, overnight courier or facsimile transmission, when actually
received at the last address furnished by such Member pursuant to Section 2.3
for notice purposes at the time of such mailing, overnight courier or
facsimile transmission; and
(b) if to the Company or the Board of Directors, sent to 0000 00xx
Xxxxxx, Xxxxx 0000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X.
Xxxxxxxxx with a copy to the Investment Manager, 0000 00xx Xxxxxx, Xxxxx 0000,
Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx, personally
delivered or if sent by mail, overnight courier or facsimile transmission when
actually received at the address of the Company or the Board of Directors,
respectively, set forth above or at such other address as the Company or the
Board of Directors, respectively, may then have specified pursuant to the
terms of this Agreement.
All distributions to the Members shall be made by wire transfer to
the accounts specified by the Members, which accounts may be changed from time
to time by written notice to the Company.
17.2 Survival of Rights
This Agreement shall be binding upon and, as to permitted or accepted
successors, Transferees and assigns, inure to the benefit of the Members and
the Company and their respective heirs, legatees, legal representatives,
successors, Transferees and permitted assigns, in all cases whether by the
laws of descent and distribution, merger, consolidation, sale of assets,
operation of law, or otherwise.
17.3 Construction
The language in all parts of this Agreement shall be in all cases
construed simply according to its fair meaning and not strictly for or against
any Person.
17.4 Section Headings
The captions of the sections in this Agreement are for convenience
only and shall not be used in construing or interpreting this Agreement.
17.5 Agreement in Counterparts
This Agreement and any amendments hereto may be executed and
delivered by facsimile and in multiple counterparts, each of which shall be
deemed an original agreement and all of which shall constitute one and the
same agreement, notwithstanding the fact that all Members are not signatories
to the original or the same counterpart.
17.6 Governing Law
This Agreement has been executed by or on authority of a majority of
the Directors and the rights of all parties and the validity and construction
of every provision hereof shall be subject to and construed according to the
internal laws, and not the laws pertaining to choice or conflict of laws, of
the State of Delaware, and reference shall be specifically made to the general
corporation law of the State of Delaware as to the construction of matters not
specifically covered herein or as to which an ambiguity exists, although such
law shall not be viewed as limiting the powers otherwise granted to the
Directors hereunder and any ambiguity shall be viewed in favor of such powers.
17.7 Additional Documents
Each Member, upon the request of the Company, agrees to perform all
further acts and execute, acknowledge and deliver all further documents which
may be reasonably necessary, appropriate or desirable to carry out the
provisions of this Agreement, including but not limited to, acknowledging
before a Notary Public any signature heretofore or hereafter made by a Member.
17.8 Severability
Should any portion or provision of this Agreement be declared
illegal, invalid or unenforceable in any jurisdiction, then such portion or
provision shall be deemed to be severable from this Agreement to the extent
practicable while preserving the economic intention of the parties and, in any
event, such illegality, invalidity or unenforceability shall not affect the
remainder hereof.
17.9 Pronouns
All pronouns and defined terms and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the Persons referred to may require.
17.10 Entire Agreement
This Agreement, any Statement of Preferences adopted pursuant hereto
and the Subscription Agreements executed and delivered by the Members (i)
constitute the entire Agreement of the Members with respect to the Company and
(ii) supersede all prior or contemporaneous written or oral agreements,
understandings or negotiations with respect to the Company. The parties hereto
acknowledge that the ability of the Members and of the Company to take certain
of the actions contemplated hereby may be limited by the terms of any
indebtedness incurred by the Company and any Statement of Preferences to the
extent provided therein.
17.11 Arbitration
To the extent permitted by law, any dispute relating to this
Agreement or the Company which cannot be amicably resolved among the parties
to such dispute shall be resolved by binding arbitration conducted in Los
Angeles, California in accordance with the rules of the American Arbitration
Association then prevailing, and the decisions of the arbitrators shall be
final and binding on all the parties. The costs of the arbitration (other than
fees and expenses of counsel, which shall be the responsibility of the parties
retaining such counsel) shall be allocated among the parties as determined by
the arbitrator.
17.12 Waiver of Partition
Each Member hereby irrevocably waives and forfeits any and all rights
that it may have, whether arising under contract or statute or by operation of
law, to maintain an action for partition of the Company or any of the Assets.
17.13 Filing
This Agreement and any amendment (including any supplement) hereto
shall be filed in such places as may be required or as the Company deem
appropriate. Each amendment shall be accompanied by a certificate signed and
acknowledged by an authorized Person stating that such action was duly taken
in a manner provided herein, and shall, upon insertion in the Company's minute
book, be conclusive evidence of all amendments contained therein. A restated
Agreement, containing the original Agreement as amended by all amendments
theretofore made, may be executed from time to time by an authorized Person
and shall, upon insertion in the Company's minute book, be conclusive evidence
of all amendments contained therein and may thereafter be referred to in lieu
of the original Agreement and the various amendments thereto.
IN WITNESS WHEREOF, the Initial Member of the Company has hereunto
set his hands as of the date first written above.
/s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Xxxxxx Xxxxxxxxx, as Initial Member
THE SPECIAL MEMBER:
SVOF/MM, LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title:
COMMON MEMBERS:
Those Persons subscribing for
Common Shares and admitted as
Members by the Investment Manager:
By: Xxxxxxxxxx Capital Partners,
LLC
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title:
APPENDIX A
Statement of Preferences of Series S Preferred Share
APPENDIX B
Statement of Preferences of Series Z Preferred Share
APPENDIX C
Form of Notice of Transfer
[Date]
Special Value Expansion Fund, LLC
c/x Xxxxxxxxxx Capital Partners, LLC
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
Ladies and Gentlemen:
This is to advise you that [_______________] (the "Purchaser") will purchase
(contingent only upon the approval of such purchase by Special Value Expansion
Fund, LLC, a Delaware limited liability company (the "Company")) in a private
resale (the "Purchase") from [___________________] (the "Seller") [insert
number or amount] of [Common Shares (the "Shares") or Seller's Common Share
Commitment (the "Commitment")] issued pursuant to the Operating Agreement of
the Company dated as of [ ] (as amended, modified or supplemented from time to
time, the "Operating Agreement"). Capitalized terms used herein and not
defined have the respective meanings assigned to them in the Operating
Agreement, a copy of which has been provided to the undersigned by the Seller.
Seller has also provided to the Purchaser the Confidential Private Placement
Memorandum, dated [ ], relating to the Common Shares of the Company, together
with any supplements thereto (the "Confidential Private Placement
Memorandum"); the Subscription Agreement, dated as of [________], 2004, by and
between the Company and the initial purchaser of the Shares (the "Subscription
Agreement"); and any other written materials furnished or made available to
the Seller by or on behalf of the Company and relating to the purchase of the
Shares (collectively, the "Offering Materials").
The undersigned hereby irrevocably agrees, represents and warrants on behalf
of the Purchaser that:
1. The Purchaser has been provided with and has truthfully and
accurately completed and returned to the Investment Manager a
subscription agreement, which is attached hereto, and the
representations and warranties made by the Purchaser in such
subscription agreement, including, without limitation, the
representations and warranties relating to the Purchaser's status as
an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act and as a "qualified client"
within the meaning of Rule 205-3 under the Investment Advisers Act of
1940, accurately describe the status of the Purchaser. The Purchaser
understands that the Company and the Investment Manager will rely on
the representations and warranties made by the Purchaser in the
subscription agreement in determining the eligibility of the
Purchaser to purchase the Shares.
2. If the Purchaser resells or transfers all or any portion of the
Shares, the Purchaser will obtain from each purchaser or transferee a
letter containing the same representations and agreements as set
forth herein and will have such purchaser or transferee complete a
subscription agreement.
3. The Purchaser (i) hereby agrees that this Transfer Certificate may be
attached to the Operating Agreement and (ii) by executing and
delivering this Transfer Certificate, with the consent of the
Company, hereby becomes a Substituted Member under the Operating
Agreement and agrees to be bound by all the terms thereof.
4. The Purchaser hereby constitutes and appoints the Investment Manager
its true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution for the Purchaser and in its name,
place and stead, in any and all capacities, to take any and all
actions as are authorized by the power of attorney contained in the
Operating Agreement.
The power of attorney granted hereby shall be deemed an irrevocable
special power of attorney, coupled with an interest, which the
Investment Manager may exercise for the Purchaser by the signature of
the Company or by listing the Purchaser as a Member, and executing
any instrument with the signature of the Company as attorney-in-fact
for the Purchaser. This grant of authority shall survive the
assignment by the Purchaser of all or any portion of its Shares or
Common Share Commitment, except where the assignment is of the
Purchaser's entire interest in the Company and the assignee thereof
with the consent of the Board of Directors is admitted as a
Substituted Member; provided, however, that this power of attorney
shall survive the delivery of such assignment for the sole purpose of
enabling the Board of Directors to effect such substitution.
5. The Purchaser agrees to bear all of the Company's expenses and costs
incurred in connection with the Transfer and substitution, including
all legal fees and filing fees.
6. If the Purchaser acquires the obligations of the Transferor under the
Transferor's Common Share Commitment with respect to all or any
portion of such Common Share Commitment, the Purchaser hereby agrees
to assume and timely and faithfully complete all of the Transferor's
obligations with respect to such Common Share Commitment.
Very truly yours,
[Name of Purchaser]
Address:
By: _______________________________ ___________________________
Name:
Title: ___________________________
This Transfer Certificate shall constitute (i) the notice of Transfer required
under subsection 12.2(a)(vi) of the Operating Agreement and (ii) the
instrument of transfer required under subsection 12.2(b)(ii) of the Operating
Agreement.
[Name of Seller]
Address:
By: _______________________________ ______________________________
Name:
Title: ______________________________
The undersigned, on behalf of the Company, hereby acknowledges receipt of this
Transfer Certificate and acknowledges and agrees that this Transfer
Certificate shall constitute the notice of Transfer required under subsection
12.2(a)(vi) of the Operating Agreement and the instrument of transfer required
under subsection 12.2(b)(ii) of the Operating Agreement. The undersigned, on
behalf of the Company, hereby consents to the Transfer which is the subject of
this notice of Transfer pursuant to subsections 12.2(a)(viii) and 12.2(b)(i)
of the Operating Agreement and hereby acknowledges and agrees that the
Purchaser shall become a Substituted Member under the Operating Agreement
pursuant to subsection 12.2(b) of the Operating Agreement. The proper
authorized Person -of the Company will record on the books and records of the
Company the Purchaser as a Member of the Company.
By: Xxxxxxxxxx Capital Partners, LLC,
Investment Manager of Special Value
Expansion Fund, LLC
By:
------------------------------------
Name:
Title:
Appendix D
Subscription Agreement
Appendix E
Schedule of Members
AMENDED AND RESTATED OPERATING AGREEMENT
OF
SPECIAL VALUE EXPANSION FUND, LLC
a Delaware Limited Liability Company
Dated as of August 19, 2004
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINED TERMS.............................................................1
SECTION 2. LIMITED LIABILITY COMPANY FORMATION AND IDENTIFICATION....................6
2.1 Formation.................................................................6
2.2 Name and Place of Business................................................6
2.3 Records of Members........................................................6
2.4 Limited Liability Company.................................................6
SECTION 3. PURPOSE, NATURE OF BUSINESS AND POWERS....................................7
SECTION 4. TERM......................................................................7
SECTION 5. SHARES OF MEMBERSHIP INTEREST.............................................7
5.1 Beneficial Interest.......................................................7
5.2 Classes and Series........................................................8
5.3 Issuance of Shares........................................................8
5.4 Rights of Members.........................................................8
SECTION 6. REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS........................9
SECTION 7. CAPITAL CONTRIBUTIONS.....................................................9
7.1 Capital Contributions of Members..........................................9
7.2 Contribution of the Special Member.......................................12
7.3 Withdrawal of Capital....................................................12
SECTION 8. DISTRIBUTIONS............................................................13
8.1 Distributions............................................................13
SECTION 9. MANAGEMENT AND BOARD OF DIRECTORS........................................14
9.1 Management Generally.....................................................14
9.2 Board of Directors.......................................................15
9.3 Expenses of the Company..................................................18
9.4 Members' Consent.........................................................19
9.5 Exculpation..............................................................19
9.6 Indemnification; No Duty of Investigation; Reliance on Experts...........19
9.7 Director Limited Liability...............................................21
9.8 Certain Other Activities.................................................21
SECTION 10. MEMBERS.................................................................22
10.1 Identity, Contributions and Common Share Commitments.....................22
10.2 No Management Power or Liability.........................................22
10.3 Amendments...............................................................22
10.4 Merger, Consolidation, Liquidation.......................................24
10.5 List of Members..........................................................24
10.6 Limitations..............................................................24
10.7 Meetings.................................................................25
10.8 Action Without a Meeting.................................................25
10.9 Procedures...............................................................25
10.10 Voting.....................................................................
SECTION 11. ADMISSION OF ADDITIONAL MEMBERS; ASSIGNMENTS OR TRANSFERS OF SHARES.....27
11.1 Admission of Additional Members..........................................27
11.2 Assignments or Transfers of Shares.......................................27
SECTION 12. POWER OF ATTORNEY.......................................................29
12.1 Appointment of Investment Manager........................................29
12.2 Nature of Special Power..................................................30
SECTION 13. BOOKS, RECORDS AND REPORTS..............................................30
13.1 Books....................................................................30
13.2 Reports..................................................................32
SECTION 14. VALUATION OF INTERESTS..................................................32
SECTION 15. BANK ACCOUNTS; CUSTODIAN................................................33
15.1 Bank Accounts Generally..................................................33
15.2 Custodian................................................................33
SECTION 16. DISSOLUTION AND TERMINATION OF THE COMPANY..............................33
16.1 Dissolution Generally....................................................33
16.2 Continuation of Company..................................................34
16.3 Events Causing Dissolution...............................................34
16.4 Distribution of Assets on Liquidation....................................34
16.5 Liquidation Statement....................................................34
16.6 Director's Liability Upon Dissolution or Removal.........................35
SECTION 17. GENERAL PROVISIONS......................................................35
17.1 Notices and Distributions................................................35
17.2 Survival of Rights.......................................................35
17.3 Construction.............................................................36
17.4 Section Headings.........................................................36
17.5 Agreement in Counterparts................................................36
17.6 Governing Law............................................................36
17.7 Additional Documents.....................................................36
17.8 Severability.............................................................36
17.9 Pronouns.................................................................37
17.10 Entire Agreement.........................................................37
17.11 Arbitration..............................................................37
17.12 Waiver of Partition......................................................37
17.13 Filing...................................................................37
Appendix A Statement of Preferences of Series S Preferred Share...............A-1
Appendix B Statement of Preferences of Series Z Preferred Shares..............B-1
Appendix C Form of Notice of Transfer.........................................C-1
Appendix D Subscription Agreement.............................................D-1
Appendix E Schedule of Members................................................E-1
