DB HEDGE STRATEGIES FUND LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT of DB Hedge Strategies
Fund LLC (the "Fund") is dated ___, 2002 and effective as of October 23, 2001 by
and among the Organizational Member, each Director, the Investment Adviser, and
each person hereinafter admitted to the Fund and reflected on the books of the
Fund as a Member.
W I T N E S S E T H :
WHEREAS, the Fund heretofore has been formed as a limited liability company
under the Delaware Act, pursuant to the Certificate dated as of October 23, 2001
and filed with the Secretary of State of the State of Delaware on October 23,
2001;
NOW, THEREFORE, for and in consideration of the foregoing and the mutual
covenants hereinafter set forth, it is hereby agreed as follows:
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ARTICLE I
DEFINITIONS
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For purposes of this Agreement:
1.1 ADVISERS ACT means the Investment Advisers Act of 1940 and the rules,
regulations, and orders thereunder, as amended from time to time, or any
successor law.
1.2 AFFILIATE means affiliated person as such term is defined in the 1940
Act, as hereinafter defined.
1.3 AGREEMENT means this Limited Liability Company Operating Agreement, as
amended and/or restated from time to time.
1.4 BOARD means the Board of Directors established pursuant to Section 2.6
and each Director on the Board shall be deemed a "Manager" of the Fund within
the meaning of the Delaware Act.
1.5 CAPITAL ACCOUNT means, with respect to each Member, the capital account
established and maintained on behalf of each Member pursuant to Section 5.3.
1.6 CAPITAL CONTRIBUTION means the contribution, if any, made, or to be
made, as the context requires, to the capital of the Fund by a Member.
1.7 CAPITAL PERCENTAGE means a percentage established for each Member as of
each Expense Allocation Date. The Capital Percentage of a Member on an Expense
Allocation Date shall be determined by dividing the amount of capital
contributed to the Fund by the Member pursuant to Section 5.1 by the sum of the
capital contributed to the Fund by each Member pursuant to Section 5.1 on or
prior to such Expense Allocation Date. The sum of the Capital Percentages of all
Members on each Expense Allocation Date shall equal 100%.
1.8 CERTIFICATE means the Certificate of Formation of the Fund and any
amendments thereto as filed with the office of the Secretary of State of the
State of Delaware.
1.9 CLASS means any class of limited liability company interests
established by the Board from time to time.
1.10 CLOSING means the closing of a subscription to purchase a Unit.
1.11 CODE means the United States Internal Revenue Code of 1986, as amended
and as hereafter amended from time to time, or any successor law.
1.12 CONFIDENTIAL INFORMATION shall have the meaning as set forth in
Section 8.11(a).
1.13 DELAWARE ACT means the Delaware Limited Liability Company Act (6
XXX.X.xx.xx. 18-101, et seq.) as in effect on the date hereof and as amended
from time to time, or any successor law.
1.14 DIRECTOR means initially each natural person listed on Schedule I who
serves on the Board and any other natural person who, from time to time,
pursuant to this Agreement shall serve on the Board as indicated in the records
of the Fund. Each Director shall be deemed a "Manager" of the Fund within the
meaning of the Delaware Act.
1.15 EXPENSE ALLOCATION DATE means the initial Closing, and thereafter each
day, through and including the date which is twelve months after the initial
Closing, as of which a contribution to the capital of the Fund is made pursuant
to Section 5.1.
1.16 FISCAL PERIOD means the period commencing on the initial Closing, and
thereafter each period commencing on the day immediately following the last day
of the preceding Fiscal Period, and ending at the close of business on the first
to occur of the following dates:
(1) the last day of a Fiscal Year;
(2) the day preceding any day as of which a contribution to the
capital of the Fund is made pursuant to Section 5.1;
(3) the day as of which the Fund repurchases all or a portion of the
Units of any Member pursuant to this Agreement;
(4) any day as of which there is any distribution to a Member pursuant
to Section 5.8;
(5) any other day as of which this Agreement provides for any amount
to be credited to or debited against the Capital Account of any Member, other
than an amount to be credited to or debited against the Capital Accounts of all
Members in accordance with their respective Fund Percentages;
(6) the date as of which the Fund terminates; or
(7) any other date as established by the Board.
1.17 FISCAL YEAR, for accounting purposes, means the period commencing on
the initial Closing and ending on March 31 and thereafter each period commencing
on April 1 of each year and ending on March 31 of each year (or on the date of a
final distribution pursuant to Section 6.2 hereof), unless the Directors shall
designate another fiscal year for the Fund that is a permissible taxable year
under the Code. For tax purposes, the 12-month period ending December 31 of each
year will be the Fund's taxable year.
1.18 FORM N-2 means the Fund's Registration Statement on Form N-2 or any
successive form filed with the Securities and Exchange Commission, as amended
from time to time.
1.19 FUND means the limited liability company governed hereby, as such
limited liability company may from time to time be constituted.
1.20 FUND PERCENTAGE means a percentage established for each Member on the
Fund's books as of the first day of each Fiscal Period. The Fund Percentage of a
Member for a Fiscal Period shall be determined by dividing the balance of the
Member's Capital Account as of the commencement of such Fiscal Period by the sum
of the Capital Accounts of all of the Members as of the commencement of such
Fiscal Period. The sum of the Fund Percentages of all Members for each Fiscal
Period shall equal 100%.
1.21 INDEPENDENT DIRECTORS means those Directors who are not "interested
persons" of the Fund as such term is defined in the 1940 Act.
1.22 INTEREST means the entire limited liability company interest (as
defined in the Delaware Act) in the Fund at any particular time of a Member or
other person to whom an Interest or portion thereof has been transferred
pursuant to this Agreement, including the rights and obligations of such Member
or other person under this Agreement and the Delaware Act.
1.23 INVESTED CAPITAL means, with respect to any Member, the amount of such
Member's aggregate Net Capital Contributions to the Fund, subject to any
adjustments made and decreased by any withdrawals, repurchases, or
distributions.
1.24 INVESTMENT ADVISER means the person who at any particular time serves
as the Investment Adviser to the Fund pursuant to a written agreement with the
Fund.
1.25 INVESTMENT FUNDS means unregistered investment funds and/or registered
investment companies.
1.26 INVESTMENT MANAGEMENT AGREEMENT means a separate written agreement
between the Fund and the Investment Adviser pursuant to which the Investment
Adviser performs certain investment advisory and supervisory services to the
Fund.
1.27 MANAGEMENT FEE means the fee paid to the Investment Adviser out of the
Fund's assets, and debited against Members' Capital Accounts.
1.28 MEMBER means any person who shall have been admitted to the Fund as a
member or a substitute Member who is admitted to the Fund pursuant to this
Agreement, in such person's capacity as a member of the Fund until the Fund
repurchases the entire Interest of such person as a Member pursuant to Section
4.5 hereof or a substituted Member or Members are admitted with respect to any
such person's entire Interest as a Member pursuant to Section 4.4 hereof. The
Members shall constitute a single class or group of members.
1.29 NET ASSET VALUE means the total value of all assets of the Fund as
valued pursuant to Section 7.3, less an amount equal to all accrued debts,
liabilities, and obligations of the Fund, calculated before giving effect to any
repurchase of Interests.
1.30 NET CAPITAL CONTRIBUTION means the Member's Capital Contribution minus
fees or expenses, if any.
1.31 NET PROFIT OR NET LOSS means the amount by which the Net Assets as of
the close of business on the last day of a Fiscal Period exceed (in the case of
Net Profit) or are less than (in the case of Net Loss) the Net Assets as of the
commencement of the same Fiscal Period, such amount to be adjusted to exclude:
(1) any items to be allocated among the Capital Accounts of the
Members on a basis that is not in accordance with the
respective Fund Percentages of all Members as of the
commencement of such Fiscal Period pursuant to this
Agreement; and
(2) Organizational Expenses allocated among the Capital Accounts
of the Members pursuant to Section 5.9 hereof.
1.32 1940 ACT means the Investment Company Act of 1940 and the rules,
regulations, and orders thereunder, as amended from time to time, or any
successor law.
1.33 1934 ACT means the Securities Exchange Act of 1934 and the rules,
regulations, and orders thereunder, as amended from time to time, or any
successor law.
1.34 OFFERING PERIOD means the period beginning when the Fund commences the
sale of Units.
1.35 ORGANIZATIONAL EXPENSES means the expenses, including initial
registration fees with the Securities Exchange Commission, incurred by the Fund
in connection with its formation, its initial registration as an investment
company under the 1940 Act, and the initial offering of Units.
1.36 ORGANIZATIONAL MEMBER means Xxxx X. Xxxxxxxx.
1.37 PERSON means any individual, entity, corporation, partnership,
association, limited liability company, joint-stock company, trust, estate,
joint venture, organization, or unincorporated organization.
1.38 PORTFOLIO MANAGERS means portfolio managers of the Investment Funds in
which the Fund invests, among which the Fund deploys some or all of its assets.
1.39 POSITIVE BASIS shall have the meaning as set forth in Section 5.7.
1.40 POSITIVE BASIS MEMBER shall have the meaning as set forth in Section
5.7.
1.41 REPURCHASE VALUATION DATE shall have the meaning set forth in Section
4.5.
1.42 SECURITIES means securities (including, without limitation, equities,
debt obligations, options, and other "securities" as that term is defined in
Section 2(a)(36) of the 0000 Xxx) and any contracts for forward or future
delivery of any security, debt obligation, currency, or commodity, all manner of
derivative instruments and any contracts based on any index or group of
securities, debt obligations, currencies, or commodities, and any options
thereon.
1.43 SECURITIES ACT means the Securities Act of 1933, as amended and any
regulations promulgated thereunder.
1.44 SERIES means any series of limited liability company interests
established by the Board relating to a distinct portfolio and having separate
rights and powers with respect to the assets of the Fund allocated to such
Series.
1.45 TAX MATTERS MEMBER means the Member designated as "tax matters member"
of the Fund pursuant to Section 8.18 hereof.
1.46 TRANSFER means the assignment, transfer, sale, or other disposition of
all or any portion of an Interest, including any right to receive any
allocations and distributions attributable to an Interest.
1.47 UNIT means the interest of a Member in the Fund represented by an
original Capital Contribution of $1,000 at the initial Closing of subscriptions
for Interests in the Fund, and with a net asset value determined from time to
time thereafter as provided in Section 7.3.
1.48 VALUATION DATE means any date in which the Net Asset Value of the Fund
is computed.
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ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS; BOARD
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2.1 FORMATION OF LIMITED LIABILITY COMPANY. The Organizational Member and
any person designated by the Board hereby are designated as authorized persons,
within the meaning of the Delaware Act, to execute, deliver, and file all
certificates (and any amendments and/or restatements thereof) required or
permitted by the Delaware Act to be filed in the office of the Secretary of
State of the State of Delaware. The Board shall cause to be executed and filed
with applicable governmental authorities any other instruments, documents, and
certificates which, in the opinion of the Fund's legal counsel, may from time to
time be required by the laws of the United States of America, the State of
Delaware, or any other jurisdiction in which the Fund shall determine to do
business, or any political subdivision or agency thereof, or which such legal
counsel may deem necessary or appropriate to effectuate, implement, and continue
the valid existence and business of the Fund.
2.2 NAME. The initial name of the Fund was DB Absolute Return Fund LLC
pursuant to the Certificate dated as of October 23, 2001 and filed with the
Secretary of State of the State of Delaware on October 23, 2001. The name of the
Fund, as changed by an amendment to the Certificate dated January 11, 2002 and
filed with the Secretary of State of the State of Delaware on January 11, 2002,
shall be DB Hedge Strategies Fund LLC or such other name as the Board hereafter
may adopt upon (i) causing an appropriate amendment to the Certificate to be
filed in accordance with the Delaware Act and (ii) sending notice thereof to
each Member. The Fund's business may be conducted under the name of the Fund or,
to the fullest extent permitted by law, any other name or names deemed advisable
by the Board.
2.3 PRINCIPAL AND REGISTERED OFFICE. The Fund shall have its principal
office at the principal office of the Investment Adviser, or at such other place
designated from time to time by the Board.
The Fund shall have its registered office in the State of Delaware at 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000, and shall have the
Corporation Trust Company as its registered agent at such registered office for
service of process in the State of Delaware, unless a different registered
office or agent is designated from time to time by the Board in accordance with
the Delaware Act.
2.4 DURATION. The term of the Fund commenced on the filing of the
Certificate with the Secretary of State of the State of Delaware and shall
continue perpetually unless and until the Fund is dissolved pursuant to Section
6.1 hereof.
2.5 BUSINESS OF THE FUND. The business of the Fund is, without limitation,
to purchase, sell, invest, and trade in Securities, both directly and through
the purchase of limited partnership and other interests in the Investment Funds
and to engage in any financial or derivative transactions relating thereto or
otherwise and to engage in such other activities and to exercise such rights and
powers as permitted by limited liability companies under the Delaware Act. On
behalf of the Fund, the officers of the Fund may execute, deliver, and perform
all contracts, agreements, and other undertakings and engage in all activities
and transactions as may in the opinion of the Board be necessary or advisable to
carry out the Fund's business and any amendments to any such contracts,
agreements, and other undertakings, all without any further act, vote, or
approval of any other person, notwithstanding any other provision of this
Agreement.
2.6 THE BOARD.
(a) The Organizational Member hereby designates those persons listed on
Schedule I who shall agree to be bound by all of the terms of this Agreement to
serve as Directors on the initial Board. The Board may, subject to the
provisions of paragraphs (a) and (b) of this Section 2.6 with respect to the
number of and vacancies in the position of Director and the provisions of
Section 3.3 hereof with respect to the election of Directors by Members,
designate any person who shall agree to be bound by all of the terms of this
Agreement as a Director. The names and mailing addresses of the Directors shall
be set forth in the books and records of the Fund. The number of Directors shall
be fixed from time to time by a written instrument signed, or by resolution
approved at a duly constituted meeting, by a majority of the Board, provided
however that the number of Directors shall at all times be at least one and no
more than ten as determined, from time to time, by the Directors pursuant to
this Agreement.
(b) Each Director shall serve as a Director for the duration of the term of
the Fund, unless his or her status as a Director shall be sooner terminated
pursuant to Section 4.2 hereof. If any vacancy in the position of a Director
occurs, the remaining Directors may appoint a person to serve in such capacity,
provided such appointment is in accordance with the 1940 Act. The Directors may
call a meeting of Members to fill any vacancy in the position of Director, and
shall do so when required by the 1940 Act.
(c) In the event that no Director remains to continue the business of the
Fund, the Investment Adviser shall promptly call a meeting of the Members, to be
held within 60 days after the date on which the last Director ceased to act in
that capacity, for the purpose of determining whether to continue the business
of the Fund and, if the business shall be continued, of electing the required
number of Directors to the Board. If the Members shall determine at such meeting
not to continue the business of the Fund or if the required number of Directors
is not elected within 60 days after the date on which the last Director ceased
to act in that capacity, then the Fund shall be dissolved pursuant to Section
6.1 hereof and the assets of the Fund shall be liquidated and distributed
pursuant to Section 6.2 hereof.
2.7 MEMBERS.
(a) The Board may admit one or more Members at such times as the Board may
determine. Members may be admitted to the Fund subject to the condition that
each such Member execute an appropriate signature page of this Agreement,
application, subscription agreement, or without such execution, if such Member
orally, in writing, or by other action, including, but not limited to payment
for Units, complies with the conditions for becoming a Member and pursuant to
which such Member agrees to be bound by all the terms and provisions hereof.
This Agreement shall not be unenforceable by reason of it not having been signed
by a person being admitted as a Member. The Board, in its sole and absolute
discretion, may reject applications or subscription agreements for Units in the
Fund. The admission of any person as a Member shall be effective upon the
revision of the books and records of the Fund to reflect the name and the
contribution to the capital of the Fund of such additional Member. Such record
of Members shall also set forth the number of Units that each Member holds. The
Organizational Member hereby is admitted as a Member on the date hereof.
(b) If a Member is admitted to the Fund prior to the initial Closing, the
Invested Capital of such Member shall be adjusted by any Net Profit or Net Loss
allocable to such Member for the period through the initial Closing.
2.8 BOTH DIRECTORS AND MEMBERS. A Member may at the same time be a
Director, a Member, or an Investment Adviser, and a Member in which event such
Member's rights and obligations in each capacity shall be determined separately
in accordance with the terms and provisions hereof and as provided in the
Delaware Act and the 1940 Act. A Director need not be a Member.
2.9 ORGANIZATIONAL MEMBER. Xxxx X. Xxxxxxxx shall be the Organizational
Member of the Fund.
2.10 LIMITED LIABILITY. To the fullest extent permitted under applicable
law, a Member shall not be liable for the Fund's debts, obligations, or
liabilities in any amount in excess of the Capital Account balance of such
Member. To the fullest extent permitted under applicable law, the Investment
Adviser and Directors shall not be liable for the Fund's debts, obligations, and
liabilities.
2.11 SERIES. The Fund may create one or more Series and/or classes from
time to time. With respect to any Series established by the Fund, the following
provisions shall apply:
(a) Separate and distinct records shall be maintained for each Series, and
the assets associated with any such Series shall be held and accounted for
separately from the other assets of the Fund or any other Series;
(b) the debts, liabilities and obligations incurred, contracted for or
otherwise existing with respect to a particular Series shall be enforceable
against the assets of such Series only, and not against the assets of the Fund
generally or any other Series;
(c) the Board, in its sole and absolute discretion, shall have authority to
restrict allocations or transfers of Member Capital Contributions to or from any
Series; and
(d) notwithstanding Section 18-215 of the Delaware Act, the failure of a
Series to have any Member associated with it shall not be the basis for the
dissolution of the Series and the winding up of its affairs unless in accordance
with the provisions of Article VI.
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ARTICLE III
MANAGEMENT
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3.1 MANAGEMENT AND CONTROL.
(a) Management and control of the business of the Fund shall be vested in
the Board, which shall have the right, power, and authority, on behalf of the
Fund and in its name, to exercise all rights, powers, and authority of
"managers" under the Delaware Act and to do all things necessary and proper to
carry out the objective and business of the Fund and its duties hereunder. No
Director shall have the authority individually to act on behalf of or to bind
the Fund except within the scope of such Director's authority as delegated by
the Board. The parties hereto intend that, except to the extent otherwise
expressly provided herein, (i) each Director shall be vested with the same
powers, authority, and responsibilities on behalf of the Fund as are customarily
vested in each director of a Delaware corporation and (ii) each Independent
Director shall be vested with the same powers, authority, and responsibilities
on behalf of the Fund as are customarily vested in each director of a closed-end
management investment company registered under the 1940 Act that is organized as
a Delaware corporation who is not an "interested person" of such company as such
term is defined in the 1940 Act. During any period in which the Fund shall have
no Directors, the Investment Adviser shall continue to serve as the adviser to
the Fund. The Directors may make Capital Contributions and own Units in the
Fund.
(b) Each Member agrees not to treat, on his personal income tax return or
in any claim for a tax refund, any item of income, gain, loss, deduction, or
credit in a manner inconsistent with the treatment of such item by the Fund. The
Board shall have the exclusive authority and discretion to make any elections
required or permitted to be made by the Fund under any provisions of the Code or
any other revenue laws.
(c) Members shall have no right to participate in and shall take no part in
the management or control of the Fund's business, except to the extent
specifically provided herein, and shall have no right, power, or authority to
act for or bind the Fund. Members shall have the right to vote on any matters
only as provided in this Agreement or on any matters that require the approval
of the holders of voting securities under the 1940 Act or as otherwise required
in the Delaware Act.
(d) The Board may delegate to any person, including officers of the Fund,
any rights, power, and authority vested by this Agreement in the Board to the
extent permissible under applicable law.
3.2 ACTIONS BY THE BOARD.
(a) Unless provided otherwise in this Agreement, the Board shall act only:
(i) by the affirmative vote of a majority of the Directors (which majority shall
include any requisite number of Independent Directors required by the 0000 Xxx)
present at a meeting duly called at which a quorum of the Directors shall be
present (in person or, if in person attendance is not required by the 1940 Act,
in person or by telephone) or (ii) by unanimous written consent of all of the
Directors without a meeting, if permissible under the 1940 Act.
(b) The Board may designate from time to time a Chairperson who shall
preside at all meetings. Meetings of the Board may be called by the Chairperson
or any two Directors, and may be held on such date and at such time and place as
the Board shall determine. Each Director shall be entitled to receive written
notice of the date, time, and place of such meeting within a reasonable time in
advance of the meeting. Notice need not be given to any Director who shall
attend a meeting without objecting to the lack of notice or who shall execute a
written waiver of notice with respect to the meeting. Directors may attend and
participate in any meeting by telephone, except where in person attendance at a
meeting is required by the 1940 Act. A majority of the Directors then in office
shall constitute a quorum at any meeting.
(c) The Board may designate from time to time agents and employees of the
Fund, including without limitation employees of the Investment Adviser, who
shall have the same powers and duties on behalf of the Fund (including the power
to bind the Fund) as are customarily vested in officers of a Delaware
corporation, and designate them as officers of the Fund.
3.3 MEETINGS OF MEMBERS.
(a) Actions requiring the vote of the Members may be taken at any duly
constituted meeting of the Members at which a quorum is present. Meetings of the
Members may be called by the Board or by Members holding a majority of the total
number of votes eligible to be cast by all Members, and may be held at such
time, date, and place as the Board shall determine. The Board shall arrange to
provide written notice of the meeting, stating the date, time, and place of the
meeting and the record date therefor, to each Member entitled to vote at the
meeting within a reasonable time prior thereto. Failure to receive notice of a
meeting on the part of any Member shall not affect the validity of any act or
proceeding of the meeting, so long as a quorum shall be present at the meeting.
Only matters set forth in the notice of a meeting may be voted on by the Members
at a meeting. The presence in person or by proxy of Members holding a majority
of the total number of votes eligible to be cast by all Members as of the record
date shall constitute a quorum at any meeting. In the absence of a quorum, a
meeting of the Members may be adjourned by action of a majority of the Members
present in person or by proxy without additional notice to the Members. Except
as otherwise required by any provision of this Agreement or of the 1940 Act, (i)
those candidates receiving a plurality of the votes cast at any meeting of
Members shall be elected as Directors and (ii) all other actions of the Members
taken at a meeting shall require the affirmative vote of Members holding a
majority of the total number of votes eligible to be cast by those Members who
are present in person or by proxy at such meeting.
(b) Each Member shall be entitled to cast at any meeting of Members a
number of votes equivalent to such Member's Fund Percentage as of the record
date for such meeting. The Board shall establish a record date not less than 10
nor more than 60 days prior to the date of any meeting of Members to determine
eligibility to vote at such meeting and the number of votes which each Member
will be entitled to cast thereat, and shall maintain for each such record date a
list setting forth the name of each Member and the number of votes that each
Member will be entitled to cast at the meeting.
(c) A Member may vote at any meeting of Members by a proxy properly
executed in writing by the Member and filed with the Fund before or at the time
of the meeting. A proxy may be suspended or revoked, as the case may be, by the
Member executing the proxy by a later writing delivered to the Fund at any time
prior to exercise of the proxy or if the Member executing the proxy shall be
present at the meeting and decide to vote in person. Any action of the Members
that is permitted to be taken at a meeting of the Members may be taken without a
meeting if consents in writing, setting forth the action taken, are signed by
Members holding a majority of the total number of votes eligible to be cast or
such greater percentage as may be required in order to approve such action.
3.4 CUSTODY OF ASSETS OF THE FUND. The physical possession of all funds,
Securities, or other property of the Fund shall at all times, be held,
controlled, and administered by one or more custodians retained by the Fund in
accordance with the requirements of the 1940 Act. 3.5 OTHER ACTIVITIES OF
MEMBERS AND DIRECTORS.
(a) The Directors shall not be required to devote full time to the affairs
of the Fund, but shall devote such time as may reasonably be required to perform
their obligations under this Agreement.
(b) Any Member, Director, or Affiliate of the foregoing may engage in or
possess an interest in other business ventures or commercial dealings of every
kind and description, independently or with others, including, but not limited
to, acquisition and disposition of Securities, provision of investment advisory
or brokerage services, serving as directors, officers, employees, advisers, or
agents of other companies, partners of any partnership, members of any limited
liability company, or Directors of any trust, or entering into any other
commercial arrangements. No Member shall have any rights in or to such
activities of any other Member or Director, or any profits derived therefrom.
3.6 DUTY OF CARE.
(a) A Director shall not be liable to the Fund or to any of its Members for
any loss or damage occasioned by any act or omission in the performance of the
Director's services under this Agreement, unless it shall be determined by final
judicial decision in a court of competent jurisdiction on the merits from which
there is no further right to appeal that such loss is due to an act or omission
of such person constituting willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of such Director's
office or as otherwise required by law.
(b) A Member not in breach of any obligation hereunder or under any
agreement pursuant to which the Member subscribed for Units shall be liable to
the Fund, any other Member, or third parties only as required by the Delaware
Act or otherwise provided in this Agreement.
3.7 INDEMNIFICATION.
(a) To the fullest extent permitted by law, the Fund shall, subject to
Section 3.7(b) hereof, indemnify each Director (including for this purpose their
executors, heirs, assigns, successors, or other legal representatives), the
Investment Adviser and Tax Matters Member (including for this purpose each
affiliate, shareholder, partner, member, officer, director, principal, employee,
or agent of the Investment Adviser and the Tax Matters Member) and the
executors, heirs, assigns, successors, or other legal representatives of each of
the foregoing, and of any person who controls or is under common control, or
otherwise affiliated, with the Investment Adviser and the Tax Matters Member
(and their executors, heirs, assigns, successors, or other legal
representatives) against all losses, claims, damages, liabilities, costs, and
expenses, including, but not limited to, amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties, and reasonable counsel fees,
incurred in connection with the defense or disposition of any action, suit,
investigation, or other proceeding, whether civil or criminal, before any
judicial, arbitral, administrative, or legislative body, in which such
indemnitee may be or may have been involved as a party or otherwise, or with
which such indemnitee may be or may have been threatened, while in office or
thereafter, by reason of being or having been a Director, Investment Adviser, or
the Tax Matters Member, as the case may be, of the Fund or the past or present
performance of services to the Fund by such indemnitee, except to the extent
such loss, claim, damage, liability, cost, or expense shall have been finally
determined in a decision on the merits in any such action, suit, investigation,
or other proceeding to have been incurred or suffered by such indemnitee by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of such indemnitee's office. The
rights of indemnification provided under this Section 3.7 shall not be construed
so as to provide for indemnification of an indemnitee for any liability
(including liability under federal securities laws which, under certain
circumstances, impose liability even on persons that act in good faith) to the
extent (but only to the extent) that such indemnification would be in violation
of applicable law, but shall be construed so as to effectuate the applicable
provisions of this Section 3.7 to the fullest extent permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred by any such
indemnitee (but excluding amounts paid in satisfaction of judgments, in
compromise, or as fines or penalties), may be paid from time to time by the Fund
in advance of the final disposition of any such action, suit, investigation, or
proceeding upon receipt of an undertaking by or on behalf of such indemnitee to
repay to the Fund amounts so paid if it shall ultimately be determined that
indemnification of such expenses is not authorized under Section 3.7(a) hereof;
provided, however, that (i) such indemnitee shall provide security for such
undertaking, (ii) the Fund shall be insured by or on behalf of such indemnitee
against losses arising by reason of such indemnitee's failure to fulfill his or
its undertaking, or (iii) a majority of the Directors (excluding any Director
who is seeking advancement of expenses hereunder or is or has been a party to
any action, suit, investigation, or proceeding involving claims similar to those
involved in the action, suit, investigation, or proceeding giving rise to a
claim for advancement of expenses hereunder) or independent legal counsel in a
written opinion shall determine based on a review of readily available facts (as
opposed to a full trial-type inquiry) that there is reason to believe such
indemnitee ultimately will be entitled to indemnification.
(c) As to the disposition of any action, suit, investigation, or proceeding
(whether by a compromise payment, pursuant to a consent decree, or otherwise)
without an adjudication or a decision on the merits by a court of competent
jurisdiction, or by any other body before which the proceeding shall have been
brought, that an indemnitee is liable to the Fund or its Members by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of such indemnitee's office, indemnification
shall be provided pursuant to Section 3.7(a) hereof if (i) approved as in the
best interests of the Fund by a majority of the Directors (excluding any
Director who is seeking indemnification hereunder or is or has been a party to
any action, suit, investigation, or proceeding involving claims similar to those
involved in the action, suit, investigation, or proceeding giving rise to a
claim for advancement of expenses hereunder) upon a determination based upon a
review of readily available facts (as opposed to a full trial-type inquiry) that
such indemnitee acted in good faith and in the reasonable belief that such
actions were in the best interests of the Fund and that such indemnitee is not
liable to the Fund or its Members by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
such indemnitee's office, or (ii) the Directors secure a written opinion of
independent legal counsel based upon a review of readily available facts (as
opposed to a full trial-type inquiry) to the effect that such indemnitee acted
in good faith and in the reasonable belief that such actions were in the best
interests of the Fund and that such indemnitee is not liable to the Fund or its
Members by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of such indemnitee's
office.
(d) Any indemnification or advancement of expenses made pursuant to this
Section 3.7 shall not prevent the recovery from any indemnitee of any such
amount if such indemnitee subsequently shall be determined in a final decision
on the merits in a court of competent jurisdiction in any action, suit,
investigation, or proceeding involving the liability or expense that gave rise
to such indemnification or advancement of expenses to be liable to the Fund or
its Members by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of such indemnitee's
office. In any suit brought by an indemnitee to enforce a right to
indemnification under this Section 3.7 it shall be a defense that, and in any
suit in the name of the Fund to recover any indemnification or advancement of
expenses made pursuant to this Section 3.7 the Fund shall be entitled to recover
such expenses upon a final adjudication that, the indemnitee has not met the
applicable standard of conduct set forth in this Section 3.7. In any such suit
brought to enforce a right to indemnification or to recover any indemnification
or advancement of expenses made pursuant to this Section 3.7, the burden of
proving that the indemnitee is not entitled to be indemnified, or to any
indemnification or advancement of expenses, under this Section 3.7 shall be on
the Fund (or any Member acting derivatively or otherwise on behalf of the Fund
or its Members).
(e) An indemnitee may not satisfy any right of indemnification or
advancement of expenses granted in this Section 3.7 or to which he, she, or it
may otherwise be entitled except out of the assets of the Fund, and no Member
shall be personally liable with respect to any such claim for indemnification or
advancement of expenses.
(f) The rights of indemnification provided hereunder shall not be exclusive
of or affect any other rights to which any person may be entitled by contract or
otherwise under law. Nothing contained in this Section 3.7 shall affect the
power of the Fund to purchase and maintain liability insurance on behalf of any
Director or other person.
3.8 FEES, EXPENSES, AND REIMBURSEMENT.
(a) So long as the Investment Adviser (or its affiliates) provides
management services to the Fund, it shall be entitled to receive fees for such
services as may be agreed to by the Investment Adviser and the Fund pursuant to
an Investment Management Agreement, provided however, the Board has approved
such agreement and fees. The Management Fee will be computed based on the
Capital Account of each Member as of the end of business on the last business
day of each month, after adjustment for any subscriptions effective on such date
and before giving effect to any repurchase of Units effective as of such date.
The Investment Adviser may waive or reduce the Management Fee calculated with
respect to, and deducted from, the Capital Account of any Member and may pay all
or part of the Management Fee to third parties for services rendered in
connection with the placement of Units.
(b) The Board may cause the Fund to compensate each Director for his or her
services hereunder. In addition, the Fund shall reimburse the Directors for
reasonable out-of-pocket expenses incurred by them in performing their duties
under this Agreement.
(c) The Fund shall bear all of its own operating expenses incurred in the
business of the Fund other than those specifically required to be borne by the
Investment Adviser or another party pursuant to a separate written agreement
with the Fund as contemplated by Section 3.8(a) hereof. Expenses to be borne by
the Fund include, but are not limited to, the following:
(1) all costs and expenses related to portfolio transactions and
positions for the Fund's account, including, but not limited
to, brokerage commissions, research fees, interest and
commitment fees on loans and debit balances, borrowing
charges on Securities sold short, dividends on Securities
sold short but not yet purchased, custodial fees, margin
fees, transfer taxes and premiums, and taxes withheld on
foreign dividends and indirect expenses from investments in
Investment Funds;
(2) all costs and expenses associated with the organization,
operation, and registration of the Fund, offering costs, and
the costs of compliance with any applicable Federal or state
laws;
(3) the costs and expenses of holding meetings of the Board and
any meetings of Members that are regularly scheduled,
permitted, or are required to be held by this Agreement, the
1940 Act, or other applicable law;
(4) fees and disbursements of any attorneys, accountants
(including tax preparation fees), auditors, and other
consultants and professionals engaged on behalf of the Fund
to assist in connection with its operations;
(5) the costs of a fidelity bond and any liability insurance
obtained on behalf of the Fund, the Investment Adviser, or
the Directors;
(6) any fees payable to the Investment Adviser;
(7) all costs and expenses associated with the organization of
any subsidiary vehicle deemed necessary for the investment
operations of the Fund;
(8) all costs and expenses of preparing, printing, and
distributing reports and other communications to Members;
(9) the fees of custodians and other persons providing
administrative services to the Fund;
(10) all expenses in computing the net asset value of the Fund
and the Units, including any equipment or services obtained
for such purposes;
(11) administrative and member service fees incurred by the Fund
will be allocated among its various classes based on the net
asset value of the Fund attributable to each such class; and
(12) such other types of expenses as may be approved from time to
time by the Board.
The Investment Adviser shall be entitled to reimbursement from the
Fund for any of the above expenses that it pays on behalf of the Fund.
(d) Subject to procuring any required regulatory approvals, the Fund from
time to time, alone or in conjunction with other accounts for which the
Investment Adviser, or any Affiliate of the Investment Adviser, acts as general
partner, managing member, or investment Adviser, may purchase insurance in such
amounts, from such insurers and on such terms as the Board shall determine.
-------------------------------------------------
ARTICLE IV
TERMINATION OF STATUS OF INVESTMENT ADVISER AND DIRECTORS;
TRANSFERS, REPURCHASES, AND REDEMPTIONS
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4.1 TERMINATION OF STATUS OF THE INVESTMENT ADVISER. The status of the
Investment Adviser shall terminate if the Investment Management Agreement with
the Investment Adviser terminates and the Fund does not enter into a new
Investment Management Agreement with the Investment Adviser, effective as of the
date of such termination.
4.2 TERMINATION OF STATUS OF A DIRECTOR. The status of a Director shall
terminate if the Director (i) shall die; (ii) shall be adjudicated incompetent;
(iii) shall voluntarily withdraw as a Director (upon not less than 90 days'
prior written notice to the other Directors, unless the other Directors waive
such notice); (iv) shall be removed; (v) shall be certified by a physician to be
mentally or physically unable to perform his or her duties hereunder; (vi) shall
be declared bankrupt by a court with appropriate jurisdiction, file a petition
commencing a voluntary case under any bankruptcy law, or make an assignment for
the benefit of creditors; or (vii) shall have a receiver appointed to administer
the property or affairs of such Director.
4.3 REMOVAL OF THE DIRECTORS. Any Director may be removed by (i) the vote
or written consent of at least two-thirds (2/3) of the Directors not subject to
the removal or vote or (ii) the vote or written consent of Members holding not
less than two-thirds (2/3) of the total number of votes eligible to be cast by
all Members.
4.4 TRANSFER OF UNITS OF MEMBERS.
(a) Units held by a Member may be transferred only (i) by operation of law
pursuant to the death, divorce, bankruptcy, insolvency, or dissolution of such
Member or (ii) under extremely limited circumstances, with the written consent
of the Board (which may be withheld in its sole and absolute discretion). If any
transferee does not meet such investor eligibility requirements, the Fund
reserves the right to redeem its Units. If the Board does not consent to a
transfer by operation of law, the Fund shall redeem the Unit from the Member's
successor. Any transfer must comply with the Securities Act. The Board of
Directors generally will not consent to a transfer unless the following
circumstances are met: (i) the transfer is (x) one in which the tax basis of the
Units in the hands of the transferee is determined, in whole or in part, by
reference to its tax basis in the hands of the transferring Member (e.g. certain
gifts and contributions to family entities), or (y) to members of the
transferring Member's immediate family (siblings, spouse, parents, and
children). The foregoing permitted transferees will not be allowed to become
substituted Members without the consent of the Board, which may be withheld in
its sole and absolute discretion. Each transferring Member and transferee agrees
to pay all expenses, including but not limited to attorneys' and accountants'
fees, incurred by the Fund in connection with any transfer.
(b) By subscribing for Units, each Member agrees to indemnify and hold
harmless the Fund, the Board, the Investment Adviser, or each other Member, and
any Affiliate of the foregoing against all losses, claims, damages, liabilities,
costs, and expenses (including legal or other expenses incurred in investigating
or defending against any losses, claims, damages, liabilities, costs, and
expenses or any judgments, fines, and amounts paid in settlement), joint or
several, to which such persons may become subject by reason of or arising from
any transfer made by that Member in violation of this Section 4.4 or any
misrepresentation made by that Member in connection with any such transfer. (c)
Each transferring Member shall indemnify and hold harmless the Fund, the Board,
the Investment Adviser, or each other Member and any Affiliate of the foregoing
against all losses, claims, damages, liabilities, costs, and expenses (including
legal or other expenses incurred in investigating or defending against any such
losses, claims, damages, liabilities, costs, and expenses or any judgments,
fines, and amounts paid in settlement), joint or several, to which such persons
may become subject by reason of or arising from (i) any transfer made by such
Member in violation of this Section 4.4 and (ii) any misrepresentation by such
Member in connection with any such transfer.
4.5 REPURCHASE OF UNITS.
(a) General. Except as otherwise provided in this Agreement, no Member or
other person holding Units or portion thereof shall have the right to require
the Fund to redeem its Units. The Board of the Fund, from time to time, and in
its sole and absolute discretion, may determine to cause the Fund to offer to
repurchase Units from Members, including the Investment Adviser, on such terms
and conditions as set forth in this Agreement. However, the Fund shall not offer
to repurchase Units on more than four occasions during any one Fiscal Year
unless it has been advised by counsel to the Fund to the effect that more
frequent offers would not cause any adverse tax consequences to the Fund or its
Members. In accordance with the terms and conditions as are set forth in this
Agreement, in determining whether to cause the Fund to repurchase Units pursuant
to written requests by Members, the Board shall consider, among other things,
the recommendation of the Investment Adviser and shall also consider the
following factors, among others, in making such determination:
(1) whether any Members have requested that the Fund repurchase
their Units;
(2) the liquidity of the Fund's assets;
(3) the investment plans and working capital requirements of the
Fund;
(4) the relative economies of scale with respect to the size of
the Fund;
(5) the history of the Fund in repurchasing Units;
(6) the economic condition of the securities markets; or
(7) the anticipated tax consequences of any proposed repurchases
of Units.
(b) Discretionary Repurchases. The Board shall cause the Fund to repurchase
Units on terms fair to the Fund and to all Members or one or more classes of
Members (including persons holding Units acquired from Members), as applicable,
in the following manner:
(1) The Board will provide written notice to Members when it has
determined, in its sole and absolute discretion, that the Fund will
repurchase Units. Such notice will describe the terms of the
repurchase offer, including:
(i) the commencement date of the repurchase offer;
(ii) the date on which repurchase requests must be received
by the Fund (the "Repurchase Request Deadline"); and
(iii) other information that Members should consider in
deciding whether and how to participate in such repurchase
opportunity.
(2) Members must submit, in writing, requests for repurchase to
the Fund or its designated agent. The Repurchase Request Deadline will
be a date set by the Board occurring no sooner than 20 business days
after the commencement date of the repurchase offer and such
Repurchase Request Deadline may be extended by the Board in its sole
and absolute discretion. The Fund will not accept any repurchase
request received by it or its designated agent after the Repurchase
Request Deadline.
(3) Payment for Units accepted by the Fund for repurchase will be
made in whole or in part in cash or Securities of equivalent value.
The amount due to any Member whose Units are repurchased will be equal
to the value of the Member's Capital Account or portion thereof based
on the net asset value of the Fund's assets as of the effective date
of repurchase (the "Repurchase Valuation Date"), after giving effect
to all allocations to be made to the Member's Capital Account as of
such date. The Repurchase Valuation Date is the last business day of
the quarter in which the Repurchase Request Deadline occurs, which
will be approximately 65 days after the Repurchase Request Deadline.
Payment amounts shall ordinarily be calculated within 10 business days
after the Repurchase Valuation Date in accordance with the Fund's
valuation procedures as adopted by the Fund's Board.
(4) Payment for Units accepted by the Fund for repurchase will
generally be made within 30 days of the Repurchase Valuation Date.
(5) The Fund may suspend or postpone any repurchase offer, by a
majority of the Board, including a majority of the Independent
Directors, including but not limited to:
(i) any period during which an emergency exists as a result
of which it is not reasonably practicable for the Fund to dispose
of securities it owns or to determine the value of the Fund's
nets assets;
(ii) for any other periods that the Securities and Exchange
Commission permits by order for the protection of Members; or
(iii) other unusual circumstances as the Board deems
advisable to the Fund and its Members.
(6) The Board, in its sole and absolute discretion, shall
determine the amount of Units to be repurchased, if any. If a greater
number of Units is submitted for repurchase by Members as of the
Repurchase Request Deadline than the repurchase offer amount, as
determined by the Board in its sole and absolute discretion, the Fund
may repurchase an additional amount of Units not to exceed 2% of the
Units outstanding on the Repurchase Request Deadline. If the Board
determines not to repurchase more than the repurchase offer amount or
if Members submit for repurchase Units in an amount exceeding the
repurchase offer amount plus 2% of the Units outstanding on the
Repurchase Request Deadline, the Fund shall repurchase the Units
submitted for repurchase on a pro rata basis, disregarding fractions,
according to the number of Units submitted for repurchase by each
Member as of the Repurchase Request Deadline; provided, however, that
this provision shall not prohibit the Fund from:
(i) accepting all Units submitted for repurchase by Members
who own, beneficially or of record, an aggregate of not more than
a specified percentage of such Units and who submit for
repurchase all their Units, before prorating Units submitted for
repurchase by other Members; or
(ii) accepting by lot Units submitted for repurchase by
Members who offer all Units held by them or who, when submitting
for repurchase their Units, elect to have either all or none or
at least a minimum amount or none accepted, if the Fund first
accepts all Units submitted for repurchase by Members who do not
so elect.
(7) The Board may, in its sole and absolute discretion, elect to
impose charges on Members or other persons who submit their Units for
repurchase. The Board may also, in its sole and absolute discretion,
allocate to tendering Members withdrawal or similar charges imposed by
Investment Funds if the Fund has requested withdrawal of its capital from
any Investment Funds in order to fund the repurchase of Units if such
charges were imposed on the Fund.
(8) A Member who submits for repurchase only a portion of such
Member's Units shall be required to maintain a Capital Account balance at
least equal to $50,000.
(9) The Investment Adviser may submit for repurchase its Unit(s) as a
Member under Section 4.5 hereof.
(c) Mandatory Redemptions. The Board may cause the Fund to redeem Units of
a Member or any person acquiring Units thereof from or through a Member in the
event that the Board determines or has reason to believe that, among other
things:
(1) such Units have been transferred or such Units have vested in any
person by operation of law as a result of the death, dissolution,
bankruptcy, or incompetency of a Member;
(2) ownership of such Unit by a Member or other person will cause the
Fund to be in violation of, or require registration of any Units, or
subject the Fund or the Investment Adviser to additional registration or
regulation under, the securities, commodities, or other laws of the United
States or any other relevant jurisdiction;
(3) continued ownership of such Units may be harmful or injurious to
the business or reputation of the Fund or the Investment Adviser, or may
subject the Fund or any of its Members to an undue risk of adverse tax or
other fiscal consequences;
(4) for any period during which an emergency exists as a result of
which it is not reasonably practicable for the Fund to dispose of
securities it owns or to determine the value of the Fund's net assets;
(5) any representation or warranty made by a Member in connection with
the acquisition of Units was not true when made or has ceased to be true;
or
(6) it would be in the best interests of the Fund, as determined by
the Board in its sole and absolute discretion, for the Fund to redeem such
an Unit.
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ARTICLE V
CAPITAL
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5.1 CONTRIBUTIONS TO CAPITAL.
(a) The minimum Capital Contribution of each Member to the capital of the
Fund shall be such amount as the Board in its sole and absolute discretion may
determine from time to time. The amount of the initial Capital Contribution of
each Member shall be recorded on the books and records of the Fund upon
acceptance as a contribution to the capital of the Fund. The Directors shall not
be entitled to make voluntary contributions of capital to the Fund as Directors
of the Fund, but may make voluntary contributions to the capital of the Fund as
Members. The Investment Adviser may make voluntary contributions to the capital
of the Fund as a Member.
(b) If permitted by the Board, a Member and the Investment Adviser, as a
Member, may make additional Capital Contributions of the Fund, effective as of
such times as the Board in its discretion may permit, subject to the limitations
applicable to the admission of Members pursuant to this Agreement. No Member
shall be obligated to make any additional Capital Contribution except to the
extent provided in this Agreement.
(c) Except as otherwise permitted by the Board, initial and any additional
contributions to the capital of the Fund by any Member shall be payable in cash.
(d) The minimum initial and additional Capital Contributions may be
increased or reduced by the Board.
(e) The Fund shall issue additional Units to Members making additional
Capital Contributions. The number of Units shall be determined by dividing the
amount of the additional Capital Contribution by the net asset value per Unit as
of the date the contribution is accepted.
5.2 RIGHTS OF MEMBERS TO CAPITAL.
No Member shall be entitled to interest on his or its contribution to the
capital of the Fund, nor shall any Member be entitled to the return of any
capital of the Fund except as otherwise specifically provided herein. No Member
shall be liable for the return of any such amounts. No Member shall have the
right to require partition of the Fund's property or to compel any sale or
appraisal of the Fund's assets.
5.3 CAPITAL ACCOUNTS.
(a) The Fund shall maintain a separate Capital Account for each Member.
(b) Each Member's Capital Account shall have an initial balance equal to
the amount of cash constituting such Member's Net Capital Contribution.
(c) Each Member's Capital Account shall be increased by the sum of (i) the
amount of cash constituting additional contributions by such Member to the
capital of the Fund permitted pursuant to Section 5.1, plus (ii) any amount
credited to such Member's Capital Account pursuant to this Article V.
(d) Each Member's Capital Account shall be reduced by the sum of (i) the
amount of any repurchase of the Units, or portion thereof, of such Member or
distributions to such Member pursuant to this Agreement plus (ii) any amounts
debited against such Member's Capital Account pursuant to this Article V.
(e) If all or a portion of the Units of a Member is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
Units.
(f) Increases or reductions pursuant to paragraphs (c) and (d) may be made
through adjustments to the number of Units of each Member.
5.4 ALLOCATION OF NET PROFIT AND LOSS.
As of the last day of each Fiscal Period, any Net Profit or Net Loss for
the Fiscal Period shall be allocated among and credited to or debited against
the Capital Accounts of the Members in accordance with their respective Fund
Percentages for such Fiscal Period.
5.5 ALLOCATION OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES.
(a) If the Fund incurs a withholding tax or other tax obligation with
respect to the share of Fund income allocable to any Member, then the Board,
without limitation of any other rights of the Fund or the Board, shall cause the
amount of such obligation to be debited against the Capital Account of such
Member when the Fund pays such obligation, and any amounts then or thereafter
distributable to such Member shall be reduced by the amount of such taxes. If
the amount of such taxes is greater than any such distributable amounts, then
such Member and any successor to such Member's Interest shall pay to the Fund as
a contribution to the capital of the Fund, upon demand of the Fund, the amount
of such excess. The Fund shall not be obligated to apply for or obtain a
reduction of or exemption from withholding tax on behalf of any Member that may
be eligible for such reduction or exemption; provided, that in the event that
the Fund determines that a Member is eligible for a refund of any withholding
tax, the Fund may, at the request and expense of such Member, assist such Member
in applying for such refund.
(b) Except as otherwise provided for in this Agreement and unless
prohibited by the 1940 Act, any expenditures payable by the Fund, to the extent
determined by the Board to have been paid or withheld on behalf of, or by reason
of particular circumstances applicable to, one or more but fewer than all of the
Members, shall be charged to only those Members on whose behalf such payments
are made or whose particular circumstances gave rise to such payments. Such
charges shall be debited from the Capital Accounts of such Members as of the
close of the Fiscal Period during which any such items were paid or accrued by
the Fund.
5.6 RESERVES.
(a) Appropriate reserves may be created, accrued, and charged against Net
Assets and proportionately against the Capital Accounts of the Members for
contingent liabilities, if any, as of the date any such contingent liability
becomes known to the Investment Adviser or the Board, such reserves to be in the
amounts which the Board in its sole and absolute discretion deem necessary or
appropriate. The Board may increase or reduce any such reserves from time to
time by such amounts as it in its sole and absolute discretion deems necessary
or appropriate. The amount of any such reserve, or any increase or decrease
therein, may be proportionately charged or credited, as appropriate, to the
Members' Capital Accounts. The amount of any such reserve, or any increase or
decrease therein, may be proportionately charged or credited, as appropriate, to
the Capital Accounts of those parties who are Members at the time when such
reserve is created, increased ,or decreased, as the case may be; provided,
however, that if any such individual reserve item, adjusted by any increase
therein, exceeds the lesser of $500,000 or 1% of the aggregate value of the
Capital Accounts of all such Members, the amount of such reserve, increase, or
decrease shall instead be charged or credited to those parties who were Members
at the time, as determined by the Board in its sole and absolute discretion, of
the act or omission giving rise to the contingent liability for which the
reserve was established, increased, or decreased in proportion to their Capital
Accounts at that time.
(b) To the extent permitted under applicable law, if at any time an amount
is paid or received by the Fund (other than contributions to the capital of the
Fund, distributions, or repurchases of Units or portions thereof) and such
amount exceeds the lesser of $500,000 or 1% of the aggregate value of the
Capital Accounts of all Members at the time of payment or receipt and such
amount was not accrued or reserved for but would nevertheless, in accordance
with the Fund's accounting practices, be treated as applicable to one or more
prior Fiscal Periods, then such amount shall be proportionately charged or
credited, as appropriate, to those parties who were Members during such prior
Fiscal Period or Periods.
(c) To the extent permitted under applicable law, if any amount is required
by paragraph (a) or (b) of this Section 5.6 to be charged or credited to a party
who is no longer a Member, such amount shall be paid by or to such party, as the
case may be, in cash, with interest from the date on which the Board determines
that such charge or credit is required. In the case of a charge, the former
Member shall be obligated to pay the amount of the charge, plus interest as
provided above, to the Fund on demand; provided, however, that (i) in no event
shall a former Member be obligated to make a payment exceeding the amount of
such Member's Capital Account at the time to which the charge relates; and (ii)
no such demand shall be made after the expiration of three years since the date
on which such party ceased to be a Member. To the extent that a former Member
fails to pay to the Fund, in full, any amount required to be charged to such
former Member pursuant to paragraph (a) or (b), whether due to the expiration of
the applicable limitation period or for any other reason whatsoever, the
deficiency shall be charged proportionately to the Capital Accounts of the
Members at the time of the act or omission giving rise to the charge to the
extent feasible, and otherwise proportionately to the Capital Accounts of the
current Members.
5.7 TAX ALLOCATIONS. For each Fiscal Year, items of income, deduction,
gain, loss, or credit shall be allocated for income tax purposes among the
Members in such a manner as to reflect equitably amounts credited or debited to
each Member's Capital Account for the current and prior Fiscal Years (or
relevant portions thereof). Allocations under this Section 5.7 shall be made
pursuant to the principles of Sections 704(b) and 704(c) of the Code, and in
conformity with Treasury Regulations Sections 1.704-1(b)(2)(iv)(f),
1.704-1(b)(4)(i), and 1.704-3(e) promulgated thereunder, as applicable, or the
successor provisions to such Section and Regulations. Notwithstanding anything
to the contrary in this Agreement, there shall be allocated to the Members such
gains or income as shall be necessary to satisfy the "qualified income offset"
requirement of Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
If the Fund realizes capital gains (including short-term capital gains) for
Federal income tax purposes for any Fiscal Year during or as of the end of which
one or more Positive Basis Members (as hereinafter defined) withdraw from the
Fund pursuant to Articles IV or VI hereof, the Board, in its sole and absolute
discretion, may elect to allocate such gains as follows: (i) to allocate such
gains among such Positive Basis Members, pro rata in proportion to the
respective Positive Basis (as hereinafter defined) of each such Positive Basis
Member, until either the full amount of such gains shall have been so allocated
or the Positive Basis of each such Positive Basis Member shall have been
eliminated and (ii) to allocate any gains not so allocated to Positive Basis
Members to the other Members in such manner as shall equitably reflect the
amounts credited to such Members' Capital Accounts pursuant to this Agreement.
As used herein, (i) the term "Positive Basis" shall mean, with respect to
any Member and as of any time of calculation, the amount by which the total of
such Member's Capital Account as of such time exceeds its "adjusted tax basis,"
for Federal income tax purposes, in its Interest as of such time (determined
without regard to any adjustments made to such "adjusted tax basis" by reason of
any transfer or assignment of such Interest, including by reason of death and
without regard to such Member's share of the liabilities of the Fund under
Section 752 of the Code), and (ii) the term "Positive Basis Member" shall mean
any Member who withdraws from the Fund and who has a Positive Basis as of the
effective date of its withdrawal but such Member shall cease to be a Positive
Basis Member at such time as it shall have received allocations pursuant to
clause (i) of the preceding sentence equal to its Positive Basis as of the
effective date of its withdrawal.
5.8 DISTRIBUTIONS.
(a) The Board, in its sole and absolute discretion, may authorize the Fund
to make distributions in cash at any time to all of the Members on a pro rata
basis in accordance with the Members' Fund Percentage.
(b) The Board may withhold and pay over to the Internal Revenue Service (or
any other relevant taxing authority) taxes from any distribution to any Member
to the extent required by the Code or any other applicable law. For purposes of
this Agreement, any taxes so withheld by the Fund with respect to any amount
distributed by the Fund to any Member shall be deemed to be a distribution or
payment to such Member, reducing the amount otherwise distributable to such
Member pursuant to this Agreement and, if appropriate, reducing the Capital
Account of such Member. If the amount of such taxes is greater than any such
distributable amounts, then such Member and any successor to such Member's
Interest shall pay to the Fund as a contribution to the capital of the Fund,
upon demand of the Board, the amount of such excess.
(c) The Board shall not be obligated to apply for or obtain a reduction of
or exemption from withholding tax on behalf of any Member that may be eligible
for such reduction or exemption. To the extent that a Member claims to be
entitled to a reduced rate of, or exemption from, a withholding tax pursuant to
an applicable income tax treaty, or otherwise, the Member shall furnish the
Board with such information and forms as such Member may be required to complete
where necessary to comply with any and all laws and regulations governing the
obligations of withholding tax agents. Each Member represents and warrants that
any such information and forms furnished by such Member shall be true and
accurate and agrees to indemnify the Fund and each of the Members from any and
all damages, costs, and expenses resulting from the filing of inaccurate or
incomplete information or forms relating to such withholding taxes.
(d) Notwithstanding anything to the contrary contained herein, none of the
Directors or the Members, nor any other person on behalf of the Fund, shall make
a distribution to the Members on account of their interest in the Fund if such
distribution would violate the Delaware Act or other applicable law.
(e) The amount and times of any distributions will be determined in the
sole and absolute discretion of the Board.
5.9 ALLOCATION OF ORGANIZATIONAL EXPENSES.
(a) As of the first Expense Allocation Date, Organizational Expenses shall
be allocated among and debited against the Capital Accounts of the Members in
accordance with their respective Fund Percentages on such Expense Allocation
Date.
(b) As of each Expense Allocation Date following the first Expense
Allocation Date, all amounts previously debited against the Capital Account of a
Member pursuant to this Section 5.9 on the preceding Expense Allocation Date
will be credited to the Capital Account of such Member, and Organizational
Expenses then shall be re-allocated among and debited against the Capital
Accounts of all Members in accordance with their respective Fund Percentages on
such Expense Allocation Date.
--------------------------------------------------------
ARTICLE VI
DISSOLUTION AND LIQUIDATION
--------------------------------------------------------
6.1 DISSOLUTION.
(a) The Fund shall be dissolved at any time there are no Members, unless
the Fund is continued in accordance with the Delaware Act, or upon the
occurrence of any of the following events:
(1) upon the affirmative vote to dissolve the Fund by (i) the Board
or (ii) Members holding at least two-thirds (2/3) of the total
number of votes eligible to be cast by all Members;
(2) upon the failure of Members to elect a successor Board member at
a meeting called by the Investment Adviser in accordance with
this Agreement when no Board member remains to continue the
business of the Fund;
(3) if any Member that has submitted a written request, in accordance
with the terms of the Operating Agreement, to tender all of such
Member's Units for repurchase by the Fund has not been given the
opportunity to so tender within a period of two years after the
request (whether in a single repurchase offer or multiple
consecutive offers within the two-year period), provided,
however, that a Member who intends to cause the Fund to be
dissolved must so indicate in a separate written request
submitted within the applicable two-year period; or
(4) as required by operation of law.
Dissolution of the Fund shall be effective on the day on which the
event giving rise to the dissolution shall occur or the conclusion of any
applicable 60 day period during which the Board and Members may elect to
continue the business of the Fund as provided herein, but the Fund shall not
terminate until the assets of the Fund have been liquidated in accordance with
Section 6.2 hereof and the Certificate has been canceled.
6.2 LIQUIDATION OF ASSETS.
(a) Upon the dissolution of the Fund as provided in Section 6.1 hereof, the
Board, acting directly or through a liquidator it selects, shall promptly
liquidate the business and administrative affairs of the Fund, except that if
the Board is unable to perform this function, a liquidator elected by Members
holding a majority of the total number of votes eligible to be cast by all
Members shall promptly liquidate the business and administrative affairs of the
Fund. Net Profit and Net Loss during the period of liquidation shall be
allocated pursuant to Article V. The proceeds from liquidation (after
establishment of appropriate reserves for contingencies in such amount as the
Board or liquidator shall deem appropriate in its sole and absolute discretion
as applicable) shall, subject to the Delaware Act, be distributed in the
following manner:
(1) in satisfaction (whether by payment or the making of
reasonable provision for payment thereof) of the debts and
liabilities of the Fund, including the expenses of
liquidation (including legal and accounting expenses
incurred in connection therewith), but not including debt
and liabilities to Members, up to and including the date
that distribution of the Fund's assets to the Members has
been completed, shall first be paid on a pro rata basis;
(2) such debts, liabilities, or obligations as are owing to the
Members shall be paid next in their order of seniority and
on a pro rata basis; and
(3) the Members shall be paid next on a pro rata basis the
positive balances of their respective Capital Accounts after
giving effect to all allocations to be made to such Members'
Capital Accounts for the Fiscal Period ending on the date of
the distributions under this Section 6.2(a)(3).
(b) Anything in this Section 6.2 to the contrary notwithstanding, but
subject to the priorities set forth in Section 6.2(a) above, upon dissolution of
the Fund, the Board or other liquidator may distribute ratably in kind any
assets of the Fund; provided, however, that if any in-kind distribution is to be
made (i) the assets distributed in kind shall be valued pursuant to Section 7.3
as of the actual date of their distribution and charged as so valued and
distributed against amounts to be paid under Section 6.2(a) above, and (ii) any
profit or loss attributable to property distributed in-kind shall be included in
the Net Profit or Net Loss for the Fiscal Period ending on the date of such
distribution.
--------------------------------------------------
ARTICLE VII
ACCOUNTING, VALUATIONS, AND BOOKS AND RECORDS
---------------------------------------------------
7.1 ACCOUNTING AND REPORTS.
(a) The Fund shall adopt for tax accounting purposes any accounting method
that the Board shall decide in its sole and absolute discretion is in the best
interests of the Fund. The Fund's accounts shall be maintained in U.S. currency.
(b) After the end of each taxable year, the Fund shall furnish to each
Member such information regarding the operation of the Fund and such Member's
Interest as is necessary for Members to complete Federal and state income tax or
information returns and any other tax information required by federal, state, or
local law.
(c) Except as otherwise required by the 1940 Act or as may otherwise be
permitted by rule, regulation, or order, within 60 days after the close of the
period for which a report required under this Section 7.1(c) is being made, the
Fund shall furnish to each Member a semi-annual report containing the
information required by the 1940 Act and an annual report containing the
information required by the 1940 Act. The Fund shall cause financial statements
contained in each annual report furnished hereunder to be accompanied by a
certificate of independent public accountants based upon an audit performed in
accordance with generally accepted accounting principles. The Fund may also
furnish to each Member such other periodic reports as it deems necessary or
appropriate in its discretion.
7.2 DETERMINATIONS BY THE BOARD.
(a) All matters concerning the determination and allocation among the
Members of the amounts to be determined and allocated pursuant to Article V
hereof, including any taxes thereon and accounting procedures applicable
thereto, shall be determined by the Board (either directly or by the Investment
Adviser pursuant to delegated authority) unless specifically and expressly
otherwise provided for by the provisions of this Agreement or as required by
law, and such determinations and allocations shall be final and binding on all
the Members.
(b) The Board may make such adjustments to the computation of Net Profit or
Net Loss or any components (withholding any items of income, gain, loss, or
deduction) comprising any of the foregoing as it considers appropriate to
reflect fairly and accurately the financial results of the Fund and the intended
allocation thereof among the Members.
7.3 VALUATION OF ASSETS.
(a) Valuation of Securities and other assets shall be made by the Board of
Directors in accordance with the requirements of the 1940 Act and the valuation
procedures adopted by the Board.
(b) The net asset value of each Unit as of any date shall equal the net
asset value of the Fund, determined as provided in Section 7.3(a), divided by
the number of outstanding Units on such date.
(c) The value of Securities and other assets of the Fund and the net worth
of the Fund as a whole and the Units determined pursuant to this Section 7.3
shall be conclusive and binding on all of the Members and all parties claiming
through or under them.
---------------------------------------------------
ARTICLE VIII
MISCELLANEOUS PROVISIONS
---------------------------------------------------
8.1 AMENDMENT OF LIMITED LIABILITY COMPANY OPERATING AGREEMENT.
(a) Except as otherwise provided in this Section 8.1, this Agreement may be
amended, in whole or in part, with the approval of (i) the Board (including the
vote of a majority of the Independent Directors, if required by the 0000 Xxx) or
(ii) a majority (as defined in the 0000 Xxx) of the outstanding voting
securities of the Fund.
(b) Any amendment that would:
(1) increase the obligation of a Member to make any contribution
to the capital of the Fund;
(2) reduce the Capital Account of a Member other than in
accordance with Article V; or
(3) modify the events causing the dissolution of the Fund;
may be made only if (i) the written consent of each Member adversely affected
thereby is obtained prior to the effectiveness thereof or (ii) such amendment
does not become effective until (A) each Member has received written notice of
such amendment and (B) any Member objecting to such amendment has been afforded
a reasonable opportunity (pursuant to such procedures as may be prescribed by
the Board) to offer his or her entire Interest for repurchase by the Fund.
(c) The power of the Board to amend this Agreement at any time without the
consent of the Members may include, but is not limited to:
(1) restate this Agreement together with any amendments hereto
that have been duly adopted in accordance with this
Agreement to incorporate such amendments in a single,
integrated document;
(2) amend this Agreement (other than with respect to the matters
set forth in Section 8.1(b) hereof) to effect compliance
with any applicable law or regulation or to cure any
ambiguity or to correct or supplement any provision hereof
that may be inconsistent with any other provision hereof,
provided that such action does not adversely affect the
rights of any Member in any material respect; and
(3) amend this Agreement to make such changes as may be
necessary or desirable, based on advice of legal counsel to
the Fund, to assure the Fund's continuing eligibility to be
classified for U.S. Federal income tax purposes as a
partnership that is not treated as a corporation under
Section 7704(a) of the Code.
(d) The Board shall give written notice of any proposed amendment to this
Agreement (other than any amendment of the type contemplated by clause (i) of
Section 8.1(a) hereof) to each Member, which notice shall set forth (i) the text
of the proposed amendment or (ii) a summary thereof and a statement that the
text thereof will be furnished to any Member upon request.
8.2 SPECIAL POWER OF ATTORNEY.
(a) Each Member hereby irrevocably makes, constitutes, and appoints each
Director, acting severally, and any liquidator of the Fund's assets appointed
pursuant to Section 6.2 with full power of substitution, the true and lawful
representatives and attorneys-in-fact of, and in the name, place, and stead of,
such Member, with the power from time to time to make, execute, sign,
acknowledge, swear to, verify, deliver, record, file, and/or publish:
(1) any amendment to this Agreement that complies with the
provisions of this Agreement (including the provisions of
Section 8.1 hereof);
(2) any amendment to the Certificate required because this
Agreement is amended or as otherwise required by the
Delaware Act; and
(3) all other such instruments, documents, and certificates
that, in the opinion of legal counsel to the Fund, from time
to time may be required by the laws of the United States of
America, the State of Delaware, or any other jurisdiction in
which the Fund shall determine to do business, or any
political subdivision or agency thereof, or that such legal
counsel may deem necessary or appropriate to effectuate,
implement, and continue the valid existence and business of
the Fund as a limited liability company under the Delaware
Act.
(b) Each Member is aware that the terms of this Agreement permit certain
amendments to this Agreement to be effected and certain other actions to be
taken or omitted by or with respect to the Fund without such Member's consent.
If an amendment to the Certificate or this Agreement or any action by or with
respect to the Fund is taken in the manner contemplated by this Agreement, each
Member agrees that, notwithstanding any objection that such Member may assert
with respect to such action, the attorneys-in-fact appointed hereby are
authorized and empowered, with full power of substitution, to exercise the
authority granted above in any manner which may be necessary or appropriate to
permit such amendment to be made or action lawfully taken or omitted. Each
Member is fully aware that each Member will rely on the effectiveness of this
special power-of-attorney with a view to the orderly administration of the
affairs of the Fund.
(c) This power-of-attorney is a special power-of-attorney and is coupled
with an interest in favor of each Director, acting severally, and any liquidator
of the Fund's assets, appointed pursuant to Section 6.2 hereof, and as such:
(1) shall be irrevocable and continue in full force and effect
notwithstanding the subsequent death or incapacity of any
party granting this power-of-attorney, regardless of whether
the Fund, the Board, or any liquidator shall have had notice
thereof; and
(2) shall survive the delivery of a Transfer by a Member of the
whole or any portion of such Member's Interest, except that
where the transferee thereof has been approved by the Board
for admission to the Fund as a substituted Member, this
power-of-attorney given by the transferor shall survive the
delivery of such assignment for the sole purpose of enabling
the Board or any liquidator to execute, acknowledge, and
file any instrument necessary to effect such substitution.
8.3 NOTICES. Notices that may be or are required to be provided under this
Agreement shall be made, if to a Member, by regular postal mail, hand delivery,
registered or certified mail return receipt requested, commercial courier
service, telex, or telecopier, electronic mail, the internet, computer
interface, or any other electronic method or device of document transfer or
telegraphic or other written communication, or, if to the Fund, by regular
postal mail, hand delivery, registered or certified mail return receipt
requested, commercial courier service, telex, or telecopier, electronic mail,
the internet, computer interface, or any other electronic method or device of
document transfer or telegraphic or other written communication, and shall be
addressed to the respective parties hereto at their addresses as set forth on
the books and records of the Fund (or to such other addresses as may be
designated by any party hereto by notice addressed to the Fund in the case of
notice given to any Member, and to each of the Members in the case of notice
given to the Fund). Notices shall be deemed to have been provided when delivered
by hand, on the date indicated as the date of receipt on a return receipt or
when received if sent by regular mail, commercial courier service, telex,
telecopier, telegraphic, electronic, or other means of written communication. A
document that is not a notice and that is required to be provided under this
Agreement by any party to another party may be delivered by any reasonable
means.
If any notice addressed to a Member at the address of that Member
appearing on the books and records of the Fund is returned to the Fund marked to
indicate that such notice is unable to be delivered to the Member at that
address, all future notices or reports shall be deemed to have been duly given
without further mailing if such future notices or reports shall be kept
available to the Member, upon written demand of the Member, at the principal
executive office of the Fund for a period of one year from the date of the
giving of the notice.
8.4 AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors, assigns, executors, trustees, or other legal representatives,
but the rights and obligations of the parties hereunder may not be Transferred
or delegated except as provided in this Agreement and any attempted Transfer or
delegation thereof that is not made pursuant to the terms of this Agreement
shall be void.
8.5 APPLICABILITY OF 1940 ACT AND FORM N-2. The parties hereto acknowledge
that this Agreement is not intended to, and does not set forth the substantive
provisions contained in the 1940 Act and the Form N-2 which affect numerous
aspects of the conduct of the Fund's business and of the rights, privileges, and
obligations of the Members. Each provision of this Agreement shall be subject to
and interpreted in a manner consistent with the applicable provisions of the
1940 Act and the Form N-2 subject to any exemptive relief obtained thereunder
relating to the Fund.
8.6 CHOICE OF LAW; ARBITRATION.
(a) Notwithstanding the place where this Agreement may be executed by any
of the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed under the laws of the State of Delaware,
including the Delaware Act, without regard to the conflict of law principles of
such State.
(b) Unless otherwise agreed in writing, each member agrees to submit all
controversies arising between or among members or one or more members and the
Fund in connection with the Fund or its businesses or concerning any
transaction, dispute, or the construction, performance, or breach of this or any
other agreement, whether entered into prior to, on, or subsequent to the date
hereof, to arbitration in accordance with the provisions set forth below. Each
member understands that:
(1) Arbitration is final and binding on the parties;
(2) The parties are waiving their rights to seek remedies in
court, including the right to jury trial;
(3) Pre-arbitration discovery is generally more limited than and
different from court proceedings;
(4) The arbitrator's award is not required to include factual
findings or legal reasoning and a party's right to appeal or
to seek modification of rulings by arbitrators is strictly
limited; and
(5) A panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities
industry.
(c) All controversies that may arise among members and one or more members
and the fund concerning this agreement shall be determined by arbitration in New
York City in accordance with the federal arbitration act, to the fullest extent
permitted by law. Any arbitration under this agreement shall be determined
before and in accordance with the rules then obtaining of either the New York
Stock Exchange, Inc. (the "NYSE") or the national association of securities
dealers, inc. (the "NASD"), as the member or entity instituting the arbitration
may elect. If the NYSE or NASD does not accept the arbitration for
consideration, the arbitration shall be submitted to, and determined in
accordance with the rules then obtaining of, the Center for Public Resources,
Inc. in New York City. Judgment on any award of any such arbitration may be
entered in the supreme court of the State of New York or in any other court
having jurisdiction of the person or persons against whom such award is
rendered. Any notice of such arbitration or for the confirmation of any award in
any arbitration shall be sufficient if given in accordance with the provisions
of this Agreement. Each member agrees that the determination of the arbitrators
shall be binding and conclusive upon them.
(d) No member shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement against
any person who has initiated in court a putative class action or who is a member
of a putative class who has not opted out of the class with respect to any
claims encompassed by the putative class action unless and until: (i) the class
certification is denied; or (ii) the class is decertified; or (iii) the member
is excluded from the class by the court. The forbearance to enforce an agreement
to arbitrate shall not constitute a waiver of any rights under this agreement
except to the extent stated herein.
8.7 NOT FOR BENEFIT OF CREDITORS. The provisions of this Agreement are
intended only for the regulation of relations among past, present, and future
Members (including the Investment Adviser), Directors, and the Fund. This
Agreement is not intended for the benefit of non-Member creditors and no rights
are granted to non-Member creditors under this Agreement.
8.8 CONSENTS. Any and all consents, agreements, or approvals provided for
or permitted by this Agreement shall be in writing and a signed copy thereof
shall be filed and kept with the books of the Fund.
8.9 MERGER AND CONSOLIDATION.
(a) The Fund may merge or consolidate with or into one or more limited
liability companies formed under the Delaware Act or other business entities (as
defined in Section 18-209(a) of the Delaware Act) pursuant to an agreement of
merger or consolidation which has been approved in the manner contemplated by
Section 18-209(b) of the Delaware Act.
(b) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, an agreement of merger or consolidation approved in accordance with
Section 18-209(b) of the Delaware Act may, to the extent permitted by Section
18-209(b) of the Delaware Act, (i) effect any amendment to this Agreement, (ii)
effect the adoption of a new limited liability company operating agreement for
the Fund if it is the surviving or resulting limited liability company in the
merger or consolidation, or (iii) provide that the limited liability company
operating agreement of any other constituent limited liability company to the
merger or consolidation (including a limited liability company formed for the
purpose of consummating the merger or consolidation) shall be the limited
liability company operating agreement of the surviving or resulting limited
liability company.
8.10 MASTER-FEEDER STRUCTURE. The Fund may, at the discretion of the Board,
as may be permitted by the 1940 Act, and upon the resolution of a majority of
the then Directors, convert to a master-feeder structure, in which the feeder
fund invests all of its assets into a master fund, rather than making
investments in securities directly. Existing series of the Fund may either
become feeders into a master fund, or themselves become master funds into which
other funds may be feeders.
8.11 PRONOUNS. All pronouns shall be deemed to refer to the masculine,
feminine, neuter, singular, or plural, as the identity of the person or persons,
firm, or corporation may require in the context thereof.
8.12 CONFIDENTIALITY.
(a) A Member may obtain from the Fund, for any purpose reasonably related
to the Member's Interest, certain confidential information regarding the
business affairs or assets of the Fund as is just and reasonable under the
Delaware Act, subject to reasonable standards (including standards governing
what information and documents are to be furnished, at what time and location,
and at whose expense) established by the Board (the "Confidential Information").
(b) Each Member covenants that, except as required by applicable law or any
regulatory body, it will not divulge, furnish, or make accessible to any other
person the name or address (whether business, residence, or mailing) of any
Member or any other Confidential Information without the prior written consent
of the Board, which consent may be withheld in its sole and absolute discretion.
(c) Each Member recognizes that in the event that this Section 8.11 is
breached by any Member or any of its principals, partners, members, trustees,
officers, directors, employees, or agents or any of its affiliates, including
any of such affiliates' principals, partners, members, trustees, officers,
directors, employees, or agents, irreparable injury may result to the
non-breaching Members and the Fund. Accordingly, in addition to any and all
other remedies at law or in equity to which the non-breaching Members and the
Fund may be entitled, such Members also shall have the right to obtain equitable
relief, including, without limitation, injunctive relief, to prevent any
disclosure of Confidential Information, plus reasonable attorneys' fees and
other litigation expenses incurred in connection therewith. In the event that
any non-breaching Member or the Fund determines that any of the other Members or
any of its principals, partners, members, trustees, officers, directors,
employees, or agents or any of its affiliates, including any of such affiliates'
principals, partners, members, directors, officers, employees, or agents should
be enjoined from or required to take any action to prevent the disclosure of
Confidential Information, each of the other non-breaching Members agrees to
pursue in a court of appropriate jurisdiction such injunctive relief.
(d) The Fund shall have the right to keep confidential from the Members for
such period of time as it deems reasonable any information that the Board
reasonably believes to be in the nature of trade secrets or other information
the disclosure of which the Board in good faith believes is not in the best
interest of the Fund or could damage the Fund or its business or that the Fund
is required by law or by agreement with a third party to keep confidential.
8.13 CERTIFICATION OF NON-FOREIGN STATUS.
Each Member or transferee of an Interest from a Member that is admitted to
the Fund in accordance with this Agreement shall certify, upon admission to the
Fund and at such other time thereafter as the Board may request, whether he or
she is a "United States Person" within the meaning of Section 7701(a)(30) of the
Code on forms to be provided by the Fund, and shall notify the Fund within 30
days of any change in such Member's status. Any Member who shall fail to provide
such certification when requested to do so by the Board may be treated as a
non-United States Person for purposes of U.S. Federal tax withholding.
8.14 SEVERABILITY.
If any provision of this Agreement is determined by a court of competent
jurisdiction not to be enforceable in the manner set forth in this Agreement,
each Member agrees that it is the intention of the Members that such provision
should be enforceable to the maximum extent possible under applicable law. If
any provisions of this Agreement are held to be invalid or unenforceable, such
invalidation or unenforceability shall not affect the validity or enforceability
of any other provision of this Agreement (or portion thereof).
8.15 ENTIRE AGREEMENT.
This Agreement (including the Schedule attached hereto which is
incorporated herein) constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
8.16 DISCRETION.
To the fullest extent permitted by law, whenever in this Agreement, a
person is permitted or required to make a decision (i) in its "sole discretion"
or "discretion" or under a grant of similar authority or latitude, such person
shall be entitled to consider only such interests and factors as it desires,
including its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Fund or the Members,
or (ii) in its "good faith" or under another express standard, then such person
shall act under such express standard and shall not be subject to any other or
different standards imposed by this Agreement or any other agreement
contemplated herein or by relevant provisions of law or in equity or otherwise.
8.17 COUNTERPARTS.
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart.
8.18 TAX MATTERS MEMBER.
The Investment Adviser will be the "tax matters member" under the Code for
the Fund or such other Member as may be designated by the Board.
THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY
BEFORE SIGNING, INCLUDING THE PRE-DISPUTE ARBITRATION CLAUSES SET FORTH IN
SECTION 8.6 AND THE CONFIDENTIALITY CLAUSES SET FORTH IN SECTION 8.12.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
By: ___________________________
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Organizational Member
By: ___________________________
Name: Xxxxx Xxxxxx
Title: Director
By: ___________________________
Name: Xxxxx Xxxxxx
Title: Director
By: ___________________________
Name: Xxxxxx Xxxxxx
Title: Director
By: ___________________________
Name: Xxxxxxx Xxxxx
Title: Director
By: ___________________________
Name: Xxxxxx Xxxxx
Title: Director
DB Investment Managers, Inc.
By:__________________________
Name:
Title:
ADDITIONAL MEMBERS:
Each person who has signed or has had signed on its behalf a Member
Signature Page, which shall constitute a counterpart hereof.
The undersigned understand and agree to the provisions of this Agreement
pertaining to the obligations of Directors.
SCHEDULE I
Xxxxx Xxxxxx Signed: ___________________________
[c/o DB Absolute Return Strategies
00 XxXxxxxx Xxxxxx
Xxxxxx, XX 00000]
Xxxxx Xxxxxx Signed: ___________________________
[c/o DB Absolute Return Strategies
00 XxXxxxxx Xxxxxx
Xxxxxx, XX 00000]
Xxxxxx Xxxxxx Signed: ___________________________
[c/o DB Absolute Return Strategies
00 XxXxxxxx Xxxxxx
Xxxxxx, XX 00000]
Xxxxxxx Xxxxx Signed: ___________________________
[c/o DB Absolute Return Strategies
00 XxXxxxxx Xxxxxx
Xxxxxx, XX 00000]
Xxxxxx Xxxxx Signed: ___________________________
[c/o DB Absolute Return Strategies
00 XxXxxxxx Xxxxxx
Xxxxxx, XX 00000]
