LIMITED LIABILITY COMPANY AGREEMENT
OF
FORTRESS BROOKDALE INVESTMENT FUND LLC
This LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") of
Fortress Brookdale Investment Fund LLC, a Delaware limited liability
company (the "Company"), is made as of the 6th day of September, 2000, by
and among the members and whose names and addresses are listed from time to
time as members on Schedule A hereto, as members (each, a "Member" and
collectively, the "Members") and has been executed for the purpose of
providing for the operation of the Company pursuant to the provisions of
the Delaware Limited Liability Company Act.
Accordingly, in consideration of the mutual covenants contained
herein, the Members agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following
meanings and all such terms which relate to accounting matters shall be
interpreted in accordance with generally accepted accounting principles in
effect from time to time except as otherwise specifically provided herein:
"Act" means the Delaware Limited Liability Company Act, as at any
time now existing or in the future.
"Adjusted Capital Account Deficit" shall mean, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of
the end of the relevant Fiscal Period, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amounts which such
Member is obligated to restore or is deemed to be obligated to
restore pursuant to Treasury Regulations Sections 1.704-2(g) and
1.704-2(i)(5); and
(ii) Debit to such Capital Account the items described in
Treasury Regulations Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulations Section
1.704-l(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Advisory Member" shall mean any Investment Advisor admitted as a
Member pursuant to Section 6.3.
"Agreement" means this Limited Liability Company Agreement as
originally executed and as amended, modified, supplemented or restated from
time to time.
"Applicable Rate" shall mean a rate per annum equal, at the time of
determination, to the sum of (i) the highest "prime rate" then published in
the "Money Rates" section of The Wall Street Journal or in such successor
publication as shall be acceptable to the Board of Managers, and (ii) two
percent (2%).
"Appropriate Officer" means an officer of the Company appointed in
accordance with Section 4.6(d), who has not resigned, been removed, or
become Incapacitated.
"Board of Managers" shall mean those natural persons who at any given
time are serving as Managers of the Company in accordance with this
Agreement.
"Capital Accounts" shall have the meaning specified in Section 7.2.
"Capital Commitment" shall mean, for any Member, the amount set forth
opposite his, her or its name on Schedule A hereto, as amended from time to
time (i) to take account of additional Capital Contributions made by
Members, and (ii) as otherwise provided in this Agreement provided that
Schedule A shall not be amended with respect to any Member without the
consent of such Member.
"Capital Contribution" shall mean with respect to any Member, the
amount contributed by such Member to the capital of the Company pursuant to
this Agreement.
"Capital Demand Date" shall have the meaning specified in Section
7.1(b).
"Capital Demand Notice" shall have the meaning specified in Section
7.1(b).
"Capital Investment" shall mean, with respect to any Member, the
Capital Contribution of such Member net of the return to such Member, by
the Company of any portion thereof.
"Certificate of Designation" shall mean the certificate of
designations setting forth the relative rights, powers, preferences,
duties, liabilities and obligations of the Preferred Interests attached
hereto as Appendix B and incorporated into and made a part of this
Agreement.
"Closing Date" shall have the meaning specified in Section 7.1(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provision of succeeding law).
"Company" means Fortress Brookdale Investment Fund LLC, a Delaware
limited liability company .
"Company Expenses" means any expenses incurred by the Company during
a Fiscal Period including, but not limited to, fees and expenses of the
Board of Managers; fees of the Investment Adviser; expenses of registering
the Shares and Preferred Interests for sale under state securities laws and
other expenses in connection with the offering of the Shares and the
Preferred Interests; interest; taxes; fees and expenses of the Company's
legal counsel and independent accountants; fees and expenses of the
Company's administrator, transfer agent and custodian; expenses of printing
and mailing Share and Preferred Interest certificates (if any), reports to
Members, notices to Members, proxy statements; reports to regulatory
bodies; brokerage and other expenses in connection with the execution,
recording and settlement of portfolio security transactions; expenses in
connection with the acquisition and disposition of portfolio securities or
the registration of privately issued portfolio securities; costs of third
party evaluations or appraisals of the Company (or its assets) or its
investments; expenses of membership in investment company and other trade
associations; expenses of fidelity bonding and other insurance premiums;
expenses of Members' meetings; indemnification costs and expenses; and all
of the Company's other business and operating expenses.
"Defaulting Member" shall have the meaning specified in Section
7.5(a).
"Disinterested Manager" shall mean any member of the Board of
Managers that is not an "interested person" of the Company as such term is
defined in the Investment Company Act.
"Failed Capital Commitment" shall have the meaning specified in
Section 7.5(b).
"Fair Market Value" shall mean the fair market value of the Company's
assets as determined by the Company's Valuation Policies.
"Fiscal Period" means the period commencing on the Closing Date, 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:
(i) December 31 of such period; and
(ii) any other day as determined in the sole and absolute discretion
of the Board of Managers.
"Fiscal Year" means the period commencing on the Closing Date and
ending on the first December 31st following the Closing Date, and
thereafter each period commencing on January 1st of each year and ending on
December 31st of each year (or on the date of a final distribution pursuant
to Section 13.2), unless the Board of Managers shall designate another
fiscal year for the Company.
"FBA" shall mean Fortress Brookdale Acquisition LLC.
"40 Act Majority of Members" means the lesser of (a) the holders of
67% or more of the outstanding Shares and Preferred Interests present at a
meeting of Members and entitled to vote at which the holders of more than
50% of the outstanding Shares and Preferred Interests entitled to vote are
present in person or by proxy or (b) more than 50% of the outstanding
Shares and Preferred Interests entitled to vote.
"Indemnified Liabilities" shall have the meaning specified in Section
11.2(a).
"Indemnified Person" shall have the meaning specified in Section
11.2(a).
"Incapacity" shall mean as to any Person, the entry of an order for
relief in a bankruptcy proceeding ("bankruptcy"), entry of an order of
incompetence or insanity or the death, dissolution or termination (other
than by merger or consolidation), as the case may be, of such Person.
"Interest" shall mean a Member's rights and interest in the Company.
"Interested Manager" shall mean any member of the Board of Managers
that is an "interested person" of the Company as such term is defined in
the Investment Company Act, as the same may be amended from time to time.
"Investment Advisor" means initially FIG Advisors LLC and shall
include any person appointed by the Board of Managers pursuant to Section
6.1 that is responsible for identifying, evaluating, structuring,
monitoring and disposing of the Company's investments and providing such
other services for the Company.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
"Investment Proceeds" shall have the meaning specified in Section
8.2.
"Key Person Trigger Date" shall have the meaning set forth in Section
6.2.
"Majority in Interest of the Members" means Members who in the
aggregate own more than 50% of the outstanding Shares and Preferred
Interests entitled to vote on a matter.
"Manager" shall mean a member of the Board of Managers of the
Company.
"Member" means any Person admitted to the Company as a member of the
Company pursuant to the provisions of this Agreement and named as a member
of the Company in the books and records of the Company, including any
Person admitted as a Substituted Member, in such Person's capacity as a
member of the Company. "Members" means two or more Persons acting in their
capacity as members of the Company.
"NAV" shall have the meaning specified in Section 7.8.
"Net Loss" shall mean the net loss of the Company with respect to a
Fiscal Period, as determined for federal income tax purposes, provided that
such loss shall be decreased by the amount of all income during such period
that is exempt from federal income tax and increased by the amount of all
expenditures made by the Company during such period that are not deductible
for federal income tax purposes and that do not constitute capital
expenditures.
"Net Profit" shall mean the net income of the Company with respect to
a Fiscal Period, as determined for federal income tax purposes, provided
that such income shall be increased by the amount of all income during such
period that is exempt from federal income tax and decreased by the amount
of all expenditures made by the Company during such period that are not
deductible for federal income tax purposes and that do not constitute
capital expenditures.
"Nonrecourse Deductions" shall have the meaning set forth in Treasury
Regulations Section 1.704-2(b)(1).
"Nonrecourse Liability" shall have the meaning set forth in Treasury
Regulations Section 1.752-l(a)(2).
"Partner Nonrecourse Debt Minimum Gain" shall have the meaning set
forth in Treasury Regulations Section 1.704-2(i)(2).
"Partnership Minimum Gain" shall have the meaning set forth in
Treasury Regulations Section 1.704-2(b)(2).
"Pass-Through Member" shall have the meaning set forth in Section
10.5.
"Permitted Transfer" shall have the meaning specified in Section
9.2(a).
"Person" means any natural person, individual, corporation,
partnership, trust, estate, limited liability company, custodian,
unincorporated organization or association or any other entity.
"Portfolio Company" shall mean FBA.
"Portfolio Investments" means investments in FBA and Short-Term
Investments.
"Preferred Interest" shall mean a preferred limited liability company
equity interest in the Company with the relative rights, powers,
preferences, duties, liabilities and obligations set forth in the
Certificate of Designations and an aggregate liquidation preference not to
exceed US$100,000. After the issuance of Shares, holders of Preferred
Interests will have one vote per Preferred Interest on any matter on which
Preferred Interests are entitled to vote.
"Preferred Member" shall mean any Member that holds a Preferred
Interest.
"Principals" shall mean Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxxx
X. Xxxxxx, Xxxxxx X. Xxxxxxx and Xxxx X. Xxxxxxx
"Qualified Income Offset" shall have the meaning set forth in
Treasury Regulations Section 1.704-1(b)(2).
"Real Estate-Related Assets" shall mean any of the following, whether
denominated in dollars or in another currency, whether located in the
United States or a foreign jurisdiction and howsoever interests therein may
be acquired: (a) mortgage loans and non-mortgage receivables; (b)
securities secured by or evidencing interests in assets described in clause
(a); (c) fee or leasehold interests in real properties, whether improved or
unimproved, whether commercial, residential or multifamily; (d) debt
interests (whether secured or unsecured, recourse or non-recourse, senior
or subordinated, convertible or otherwise), equity interests (whether
preferred or common) and derivative interests in entities (whether in the
form of partnerships, limited liability companies, trusts, corporations or
otherwise) the assets of which consist primarily of assets described in
clauses (a), (b) or (c) hereof, or in entities that otherwise have
substantial assets of the type described in clauses (a), (b) or (c) hereof
or in entities that provide services to or management in connection with
any other asset included in this definition; (e) options, including without
limitation, rights of first refusal, rights of first offer, and puts or
calls with respect to in any of the foregoing; and (f) xxxxxx relating to
any of the foregoing.
"Regulatory Allocations" shall have the meaning set forth in Section
7.3(e).
"Share" means a limited liability company equity interest in the
Company (other than the interests of the Advisory Member and the interests
of holders of Preferred Interests) and includes fractions of Shares as well
as whole Shares. Shares shall have an initial NAV of $500 per Share.
"Short-Term Investments" means United States government and agency
obligations with maturities of not more than one (1) year and one (1) day
from the date of acquisition, commercial paper with maturities of not more
than six (6) months and one (1) day from the date of acquisition and having
a rating assigned to such commercial paper by Standard & Poor's Ratings
Services, a Division of the XxXxxx-Xxxx Companies, Inc. ("S&P") or Xxxxx'x
Investor Service, Inc. ("Moody's") (or, if neither such organization shall
rate such commercial paper at such time, by any nationally recognized
statistical rating organization in the United States of America) equal to
one of the two highest commercial paper ratings assigned by such
organization, it being understood that as of the date hereof such ratings
by S&P are "P1" and "P2" and such ratings by Moody's are "Al" and "A2," and
interest bearing deposits in dollars in United States banks with an
unrestricted surplus of at least two hundred fifty million dollars
($250,000,000), maturing within one (1) year.
"Subscription Agreement" means a contract for the purchase of Shares
or Preferred Interests.
"Substituted Member" means any Person admitted to the Company as a
Member pursuant to the provisions of Section 9.5 and shown as a Member in
the books and records of the Company.
"Supermajority of Members" means Members who in the aggregate own
more than 67% of the outstanding Shares and Preferred Interests entitled to
vote on a matter.
"Tax Matters Member" shall have the meaning set forth in Section
10.5.
"Transfer" shall have the meaning specified in Section 9.2(a).
"Treasury Regulations" shall mean the income tax regulations,
including temporary regulations, promulgated under the Code, as the same
may be amended hereafter from time to time (including corresponding
provisions of succeeding income tax regulations).
"Trigger Notification" shall have the meaning set forth in Section
6.2.
"Unpaid Capital Obligation" shall mean an amount equal to the Capital
Commitment of a Member that has not at the time been contributed to the
Company.
"Valuation Policies" shall mean the valuation policies adopted by the
Board of Managers at the Company's organizational meeting, as amended from
time to time.
ARTICLE II
GENERAL PROVISIONS
2.1 Formation. Fortress Brookdale Investment Fund LLC has been
formed as a limited liability company under the laws of the State of
Delaware by the filing of the Certificate of Formation on the 30th day of
August, 2000 pursuant to the Act. Except as expressly provided herein to
the contrary, the rights and obligations of the Members and the
administration and termination of the Company shall be governed by the Act.
2.2 Name. The name of the Company is "Fortress Brookdale
Investment Fund LLC" The name of the Company may be changed from time to
time by the Board of Managers, except that the name of the Company shall
not be changed to include the name of any Member without that Member's
prior written consent.
2.3 Organizational Certificates and other Filings. If requested
by the Managers, the Members shall promptly execute all certificates and
other documents, and any amendments or renewals of such certificates and
other documents as thereafter reasonably required, consistent with the
terms of this Agreement, necessary for the Board of Managers to accomplish
all filing, recording, publishing and other acts as may be appropriate to
comply with all requirements for (a) the formation, continuation and
operation of the Company as a limited liability company under the laws of
the State of Delaware, (b) if the Board of Managers deems it advisable, the
operation of the Company as a limited liability company, in all
jurisdictions where the Company proposes to operate and (c) all other
filings required under any applicable law, rule or regulation to be made by
the Company. Each Member hereby grants to the Board of Managers a power of
attorney, in the event such Member fails to comply with the foregoing
provisions of this Section 2.3, to execute all such certificates and other
documents, and amendments or renewals of such certificates and other
documents provided for in this Section 2.3, in the name and on behalf of
such Member as the Board of Managers deems appropriate, the foregoing power
of attorney being irrevocable and coupled with an interest. Additionally,
Xxxxxx X. Xxxxxxx, of the Investment Advisor and Xxxxxxx Xxxxxxx of the New
York, New York office and Xxxx Xxxxx and Xxxxxxx Xxxxxx of the Wilmington,
Delaware office of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP are authorized
to execute and file the Certificate on behalf of the Company, and, at the
request of the Board of Managers, to publish any certificates contemplated
in this Section 2.3 for so long as such persons are employed by the
identified firms and are acting on behalf of the Company.
2.4 Investment Objective. The Company has been organized for
the purpose of seeking capital appreciation and income by (i) acquiring,
owning, holding and selling or otherwise transferring limited liability
company interests in FBA; (ii) making Short-Term Investments; and (iii)
engaging in all activities and transactions as the Board of Managers may
deem reasonably necessary, advisable or incidental in connection therewith.
2.5 Principal Place of Business. The Company shall maintain its
office and principal place of business at, and its business shall be
conducted from, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or
such place or places inside the United States as the Board of Managers may
determine.
2.6 Registered Office and Registered Agent. The address of the
Company's registered office and registered agent for service of process in
the State of Delaware is The Corporation Trust Company, The Corporation
Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx
00000. The address of the Company's registered office and registered agent
for service of process in the State of Delaware of the Company may be
changed from time to time by the Board of Managers.
2.7 Term. Unless terminated earlier in accordance with the Act,
the Company shall terminate on the earlier to occur of (1) the first
anniversary of the termination of FBA (provided that for purposes of this
Section 2.7, the merger, amalgamation, sale of substantially all of the
assets of or other combination of Brookdale Living Communities, Inc. with
or in to FBA or any of its affiliates shall not be deemed to be a
termination of FBA), or (2) a determination to terminate the Company by a
vote of the holders of 75% of the then outstanding Shares and 75% of the
then outstanding Preferred Interests.
2.8 Title to Company Property. All property owned by the
Company, whether real or personal, tangible or intangible, shall be owned
by the Company as an entity, and no Member or Manager, individually, shall
have title to or any interest in such property.
2.9 No State Law Partnership. The Members intend that the
Company not be a partnership (including a limited partnership) or joint
venture and that no Member or Manager be a partner or joint venturer of any
other Member or Manager for any purposes other than applicable tax laws.
This Agreement may not be construed to suggest otherwise. Notwithstanding
the foregoing, the Members intend that the Company shall be treated as a
partnership for tax purposes.
2.10 No Liability of Members. All debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and
no Member shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of being a Member.
ARTICLE III
MEMBERS; CAPITAL STRUCTURE; AND MEETINGS
3.1 Members. The name, address and Capital Commitment of each
initial Member is as set forth on Schedule A hereto. From time to time, the
books and records of the Company shall, and Schedule A hereto shall, be
amended to reflect the name, address and Capital Commitment of each Member
(including, as permitted by this Agreement, adding the name, address and
Capital Contribution of each additional Member who is admitted or becomes a
Substituted Member pursuant to the transfer of Interests and deleting the
name, address and Capital Commitment of Persons ceasing to be Members). The
Members shall have the management and voting rights set forth in this
Agreement and provided under the Act and the Investment Company Act and
shall have all rights to any allocations and to any distributions as may be
authorized and set forth under this Agreement and under the Act.
3.2 Capital Structure.
(a) Subject to the terms of this Agreement, the Company is
authorized to issue limited liability company interests in the Company
designated as "Shares," which shall constitute an unlimited number of
limited liability company interests under the Act. The relative rights,
powers, preferences, duties, liabilities and obligations of holders of the
Shares shall be as set forth herein. Other than as set forth in this
Agreement, each Share shall be identical in all respects with each other
Share. Subject to the terms of this Agreement, the Company is authorized to
issue limited liability company interests in the Company designated as
"Preferred Interests" with an aggregate liquidation preference not to
exceed $100,000, which shall have the relative rights, powers, preferences,
duties, liabilities and obligations set forth in the Certificate of
Designation. The capital structure of the Company shall consist of just the
Shares, the Advisory Members interest and the Preferred Interests.
(b) The Company is authorized to issue Shares to any Person at
NAV in exchange for cash capital contributions.
(c) In consideration for services provided and expenses
incurred by FIG Advisors LLC in connection with the organization of the
Company, the Company is authorized, and shall issue and deliver, to FIG
Advisors LLC 100 Preferred Interests, which Preferred Interests shall be
duly authorized, validly issued, fully paid and nonassessable without any
further consideration paid by, or services provided by, FIG Advisors LLC.
(d) The number of Shares and Preferred Interests issued to
Members shall be listed in the membership records of the Company, which
shall be amended from time to time by the Company as required to reflect
issuances of Shares and Preferred Interests to new Members, changes in the
number of Shares and Preferred Interests held by Members and to reflect the
addition or cessation of Members. The number of Shares and Preferred
Interests held by each Member shall not be affected by any (i) issuance by
the Company of Shares or Preferred Interests to other Members or (ii)
change in the Capital Account of such Member (other than such changes to
reflect additional Capital Contributions from such Member in exchange for
new Shares or Preferred Interests).
(e) In the sole discretion of the Board of Managers, the issued
and outstanding Shares and Preferred Interests may be represented by
certificates.
3.3 Issuance of Shares and Preferred Interests. The Board of
Managers in their discretion may cause the Company to issue Shares and
Preferred Interests to Persons from whom the Company has accepted, on or
prior to September 6, 2000 binding agreements to subscribe therefor, as the
case may be. No additional Shares or Preferred Interests may be issued
after September 6, 2000 without the consent of Majority in Interest of the
Members. All issuances of Shares and Preferred Interests shall be in
accordance with the terms of the relevant forms of subscription agreements.
The maximum aggregate dollar amount of Shares for which subscription
agreements may be accepted is $100 million. The maximum aggregate dollar
amount of Preferred Interests for which Subscription Agreements may be
accepted is $100,000.
3.4 No Management Responsibility. No Member, other than a
Manager, Appropriate Officer or Advisory Member, shall participate in the
management or control of the business of or transact any business for the
Company, but may exercise the voting rights and powers of a Member set
forth in this Agreement. All management responsibility is vested in the
Board of Managers. The Members hereby consent to the taking of any action
by the Board of Managers, Appropriate Officers and the Advisory Member
contemplated under this Agreement or otherwise permitted under the Act.
3.5 No Authority to Act. No Member, other than a Manager, an
Appropriate Officer and the Advisory Member, shall have the power to
represent, act for, sign for, or to bind the Company. All authority to act
on behalf of the Company is vested in the Board of Managers, Appropriate
Officers, and the Advisory Member. The Members consent to the exercise by
the Board of Managers, Appropriate Officers and the Advisory Member of the
powers conferred on them under this Agreement or otherwise permitted under
the Act.
3.6 No Preemptive Rights. Holders of Shares will have no
preemptive rights with respect to the issuance of any membership or other
equity interest in the Company or any other securities of the Company
convertible into, or carrying rights or options to purchase any such
membership or other equity interest.
3.7 Redemption or Repurchase Rights. Except as otherwise
provided in this Agreement, the Company shall not redeem or repurchase any
Member's Shares and no Member shall have the right to withdraw from the
Company, except as provided in Article IX, or to receive any return of any
Capital Commitment, except upon dissolution of the Company pursuant to
Article XIII.
3.8 Member Meetings. Unless required by the Act or other
applicable law, the Company shall not be required to hold an annual meeting
of Members or any other regular, periodic meetings of members. Special
meetings of the Members may be called to consider any matter requiring the
consent of all or any of the Members pursuant to this Agreement. Special
meetings of the Members may be called by the Board of Managers or by
Members who are the holders of not less than 51% of the outstanding Shares.
Meetings so requested by Members shall be held no less than twenty (20)
days nor more than sixty (60) days after receipt of the request.
3.9 Place of Meetings. The Board of Managers may designate any
place within the State of Delaware as the place of meeting for any annual
meeting or for any special meeting called by the Managers. If no
designation is made, or if a special meeting be otherwise called, the place
of meeting shall be the principal executive offices of the Company. Members
may participate in a meeting in person, by proxy or by means of a telephone
conference call or similar communications equipment by which all persons
participating in the meeting can hear and speak to each other at the same
time, and any such participation in a meeting shall constitute presence in
person of such Member at such meeting.
3.10 Notice of Members' Meetings.
(a) Written notice stating the place, day, and hour of the
meeting and, in case of a special meeting, the purpose for which the
meeting is called shall be delivered not less than ten days nor more than
ninety days before the date of the meeting, either personally, by
facsimile, electronic mail or by postal mail, by or at the direction of the
Board of Managers or Member calling the meeting to each Member of record
entitled to vote at such meeting.
(b) Notice to Members, if mailed by post, shall be deemed
delivered as to any Member when deposited in the United States mail,
addressed to the Member, with postage prepaid, but, if two successive
letters mailed to the last-known address of any Member are returned as
undeliverable, no further notices to such Member shall be necessary until
another address for such Member is made known to the Company. Notice to
Members, if by facsimile or by electronic mail, shall be deemed delivered
upon receipt of a confirmation of transmission.
(c) At an adjourned meeting, the Company may transact any
business which might have been transacted at the original meeting without
additional notice.
3.11 Waiver of Notice.
(a) When any notice is required to be given to any Member of
the Company under the provisions of this Agreement, a waiver thereof in
writing signed by the Person entitled to such notice, whether before, at,
or after the time stated therein, shall be equivalent to the giving of such
notice.
(b) By attending a meeting, a Member:
(i) Waives objection to lack of notice or defective
notice of such meeting unless the Member, at the beginning of the
meeting, objects to the holding of the meeting or the transacting of
business at the meeting; and
(ii) Waives objection to consideration at such meeting of
a particular matter not within the purpose or purposes described in
the meeting notice unless the Member objects to considering the
matter when it is presented.
3.12 Record Dates. For the purpose of determining the Members
who are entitled to vote or act at any meeting or any adjournment thereof,
or who are entitled to participate in any dividend or distribution, or for
the purpose of any other action, the Managers may fix a date and time at
least ten (10) days and not more than ninety (60) days prior to the date of
any meeting of Members or other action as the date and time of record for
the determination of Members entitled to vote at such meeting or any
adjournment thereof or to be treated as Members of record for purposes of
such other action, and any Member who was a Member at the date and time so
fixed shall be entitled to vote at such meeting or any adjournment thereof
or to be treated as a Member of record for purposes of such other action,
even though he has since that date and time disposed of his Shares or
Preferred Interests, and no Member becoming such after that date and time
shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Member of record for purposes of such other action.
3.13 Voting Record. The Person having charge of the membership
records of the Company shall make, at least two days before such meeting of
Members, a complete record of the Members entitled to vote at each meeting
of Members or any adjournment thereof, with the address of each. The
record, for a period of two days prior to such meeting, shall be kept on
file at the principal executive offices of the Company, and shall be
subject to inspection by any Member for any proper purpose germane to the
meeting at any time during usual business hours. Such records shall be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any Member during the whole time of the
meeting for the purposes thereof. The original membership records shall be
the prima facie evidence as to who are the Members entitled to examine the
record or transfer books or to vote at any meeting of Members.
3.14 Proxies, etc. At any meeting of Members, any holder of
Shares or Preferred Interests entitled to vote thereat may vote by properly
executed proxy, provided that no proxy shall be voted at any meeting unless
it shall have been placed on file with a Secretary, or with such other
officer of the Company as a Secretary may direct, for verification prior to
or simultaneously with the time at which such vote shall be taken. Pursuant
to a resolution of a majority of the Managers, proxies may be solicited in
the name of one or more Managers or one or more of the officers of the
Company. Only Members of record shall be entitled to vote. When any Share
or Preferred Interest is held jointly by several persons, any one of them
may vote at any meeting in person or by proxy in respect of such Share or
Preferred Interest, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received
in respect of such Share or Preferred Interest, as the case may be. A proxy
purporting to be executed by or on behalf of a Member shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share or
Preferred Interest is a minor or a person of unsound mind, and subject to
guardianship or to the legal control of any other person as regards the
charge or management of such Share or Preferred Interest, he may vote by
his guardian or such other person appointed or having such control, and
such vote may be given in person or by proxy.
3.15 Voting; Quorum of Members; Vote Required. (a) Except as
otherwise set forth herein, each Member shall be entitled to one vote per
Share or Preferred Interest upon all matters upon which such Member shall
have the right to vote based upon the membership records of the Company.
The presence, in person or by proxy, of Members holding more than 50% of
the Shares and Preferred Interests entitled to vote at the time of the
action taken constitutes a quorum at any meeting of holders of Members. If
a quorum is present, the affirmative vote, in person or by proxy, of the
owners of more than 50% of the Shares and Preferred Interests then
outstanding and represented in person or by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the Members,
unless the vote of a greater proportion or number or voting by classes is
required by the Act, the 1940 Act or this Agreement. If a quorum is not
represented at any meeting of the Members, such meeting may be adjourned.
(b) If the Preferred Interests are required to vote as a
separate class under the 1940 Act, the presence, in person or by proxy, of
Members holding more than 50% of the Preferred Interests entitled to vote
at the time of the action taken constitutes a quorum at any meeting of
holders of Preferred Interests. If a quorum is present, the affirmative
vote, in person or by proxy, of the owners of more than 50% of the
Preferred Interests then outstanding and represented in person or by proxy
at the meeting and entitled to vote on the subject matter shall be the act
of the holders of Preferred Interests, unless the vote of a greater
proportion or number is required by the Act, the 1940 Act or this
Agreement. If a quorum is not represented at any meeting of the Members,
such meeting may be adjourned.
The Members shall have the following voting rights:
(a) to the extent required by the Investment Company Act
or as otherwise provided for herein, the right to elect Managers by the
affirmative vote of a plurality of votes cast;
(b) as provided herein, the right to remove Managers for
cause by the affirmative vote of a Supermajority of Members at a meeting of
Members duly called for such purpose;
(c) to the extent required by the Investment Company Act,
the right to approve any proposed investment advisory agreement or to
disapprove and terminate any such existing agreement by the affirmative
vote of a 40 Act Majority of Members; provided, however, in the case of
approval that such agreement is also approved by a majority of Managers who
are not parties to such contract or "interested persons" of any such party
as such term is defined in the Investment Company Act, as the same may be
amended from time to time;
(d) to the extent required by the Investment Company Act,
the right to ratify the appointment of the independent accountants of the
Company by the affirmative vote of more than 50% of the Shares and/or
Preferred Interests then outstanding and represented in person or by proxy
at the meeting and entitled to vote; provided, however, that such
appointment is approved by a majority of the Disinterested Managers;
(e) to the extent required by the Investment Company Act,
the right to terminate the Company's independent accountants by the
affirmative vote of a 40 Act Majority of Members;
(f) to the extent required by Section 13.2, the selection
of a liquidator by the affirmative vote of a Majority of Interests of the
Members;
(g) to the extent required by Section 14.1 or 14.3, the
right to approve certain amendments to this Agreement by the affirmative
vote of a Majority of Interests of the Members;
(h) so long as the Company is subject to the provisions
of the Investment Company Act, the right to approve any other matters that
the Investment Company Act requires to be approved by the Members by the
affirmative vote of Members as specified in the Investment Company Act;
(i) with respect to any merger, consolidation, other
business combination, voluntary bankruptcy, liquidation or other
dissolution of the Company, or the entering into of any agreement
contemplating any of the foregoing; the right to approve by the affirmative
vote of a Majority of Interests of the Members; and
(j) with respect to the disposition of all or
substantially all of the Company's assets, the rights to approve by the
affirmative vote of a Majority of Interests of the Members.
3.16 Inspectors. The Board of Managers may, in advance of any
meeting of shareholders, appoint one or more inspectors to act at such
meeting or any adjournment thereof. If the inspector shall not be so
appointed or if any of them shall fail to appear or act, the chairman of
the meeting may, and on the request of any shareholder entitled to vote
thereat shall, appoint inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath to execute faithfully
the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors shall determine the
number of Shares and Preferred Interests outstanding and the voting powers
of each, the number of Shares and Preferred Interests represented at the
meeting, the existence of a quorum, the validity and effect of proxies, and
shall receive votes, ballots or consents, hear and determine all challenges
and questions arising in connection with the right to vote, count and
tabulate all votes, ballots or consents, determine the result, and do such
acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the chairman of the meeting or any shareholder
entitled to vote thereat, the inspectors shall make a report in writing of
any challenge, request or matter determined by them and shall execute a
certificate of any fact found by them. No Manager or candidate for the
office of Manager shall act as inspector of an election of managers.
Inspectors need not be shareholders.
3.17 No Consent Required. Notwithstanding the foregoing, no
vote, approvals, or other consent shall be required of the Members to amend
this Agreement in any of the following respects: (i) to reflect any change
in the amount of the Capital Contribution of any Member provided that the
affected Member agrees in writing to the change; (ii) to admit a
Substituted Member or withdraw a Member in accordance with the terms of
this Agreement; (iii) to correct any false or erroneous statement, or to
make a change in any statement in order that such statement shall
accurately represent the agreement among the Members in this Agreement
provided that if a Member is adversely affected by such a change, that
Member has consented to the change; (iv) a change that is necessary to
qualify the Company as a limited liability company under the laws of any
state or that is necessary or advisable in the opinion of the Board of
Managers to assure that the Company will not be treated as a publicly
traded partnership or otherwise treated as a corporation for federal income
tax purposes; (v) to reflect any change in the name or principal place of
business of the Company in accordance with the terms of this Agreement;
provided that such change or Amendment has been approved by a majority of
the Board of Managers and a majority of the Disinterested Managers.
3.18 Limitations on Requirements for Consents. Notwithstanding
any other provisions of this Agreement, but subject to the requirements of
the Investment Company Act, in the event that counsel for the Company or
counsel designated by Members holding not less than 10% of the Shares owned
by all Members shall have delivered to the Company an opinion to the effect
that either the existence of a particular consent right or particular
consent rights or the exercise thereof will violate the provisions of the
Act or the laws of the other jurisdictions in which the Company is then
formed or qualified, will adversely affect the limited liability of the
Members, or will adversely affect the classification of the Company as a
partnership for federal or state income tax purposes a special meeting of
Members shall be immediately called to allow the Members to review the
opinion and remedy the matter on which the opinion has been delivered.
Should the special meeting of Members fail to remedy the matter then,
notwithstanding the other provisions of this agreement, the Members shall
no longer have such right, or shall not be entitled to exercise such right
in the instant case, as the case may be.
3.19 Informal Action by Members. Any action that may be taken
by Members at a meeting of Members may be taken without a meeting without
prior notice and without a vote if consent in writing setting forth the
action to be taken is signed by the Members holding not less than the
minimum percentage of Shares and/or Preferred Interests that would be
necessary to authorize or take such action at a meeting at which all the
Members were present and voted provided that all Members receive at least
twenty (20) days notice of any action proposed to be taken by written
consent. Members may waive this notice requirement. Written consent by the
Members has the same force and effect as a vote of such Members held at a
duly held meeting of the Members and may be stated as such in any document.
3.20 Voting by Ballot. Voting on any question or in any
election may be by voice vote unless the presiding officer shall order or
any Member shall demand that voting be by ballot.
3.21 No Cumulative Voting. No Members shall be entitled to
cumulative voting in any circumstance.
ARTICLE IV
MANAGEMENT OF COMPANY
4.1 Board of Managers. Prior to the issuance of any Shares, the
number of Managers shall be one (1) or such other the number of Managers as
shall be fixed from time to time by a written instrument signed by a
majority of the Managers, of whom, following the issuance of any Shares, at
least 40% shall be Disinterested Managers; provided, however, that the
number of Managers shall in no event, following the issuance of any Shares,
be less than two (2). The initial Manager shall be Xxxxxx X. Xxxxx. The
Managers shall hold office until their successors are approved and elected,
unless they are sooner removed pursuant to Section 4.3 or sooner resign
pursuant to Section 4.2 or sooner are incapacitated pursuant to Section
4.4, as the case may be. Managers may succeed themselves in office. No
reduction in the number of Managers shall have the effect of removing any
Manager from office unless specially removed pursuant to Section 4.3 at the
time of such decrease. Subject to the requirements of the Investment
Company Act, the Board of Managers may designate successors to fill
vacancies created by an authorized increase in the number of Managers, the
resignation of a Manager pursuant to Section 4.2, the removal of a member
of the Board of Managers pursuant to Section 4.3 or the incapacity of a
Manager pursuant to Section 4.4. In the event that no Managers remain, the
Appropriate Officers shall continue the business of the Company and shall
perform all duties of the Managers under this Agreement and shall as soon
as practicable call a special meeting of Members for the purpose of
approving and electing Managers. When Managers are subject to election by
Members, Managers are elected by a plurality of the Shares voting at the
meeting. Managers may, but need not be, admitted to the Company as Members
to act in their capacity as Managers.
4.2 Resignation by a Manager. A Manager may voluntarily resign
from the Board of Managers upon the giving of notice thereof to the
Company, such resignation to take effect upon receipt of such notice by the
Company or such later date as set forth in such notice.
4.3 Removal of a Manager; Designation of a Successor Manager.
(a) Any Manager may be removed either: (i) for cause by
the action of at least two-thirds of the remaining Managers, including in
the case of a Disinterested Manager 50% or more of the remaining
Disinterested Managers; (ii) by failure to be re-elected by the Members; or
(iii) with or without cause by the affirmative vote of a Supermajority of
Members. The removal of a Manager shall in no way derogate from any rights
or powers of such Manager, or the exercise thereof, or the validity of any
actions taken pursuant thereto, prior to the date of such removal.
(b) The remaining Managers shall designate a successor
Manager to fill any vacancy existing in the number of Managers fixed
pursuant to Section 4.1 resulting from removal of a Manager. Any such
successor Manager shall hold office until his or her successor has been
approved and elected. The designation of a Disinterested Manager shall be
made by the remaining Disinterested Manager(s).
(c) Any removal of a Manager shall not affect any rights
or liabilities of the removed Manager that matured prior to such removal.
4.4 Incapacity of a Manager.
(a) In the event of the Incapacity of a Manager, the
business of the Company shall be continued with the Company property by the
remaining Managers. The remaining Managers shall, within 90 days, call a
meeting of the Board of Managers for the purpose of designating a successor
Manager. Any such successor Manager shall hold such office until his or her
successor has been approved and elected. The Managers shall make such
amendments to the certificate of formation and execute and file for
recordation such amendments or other documents or instruments as are
necessary and required by the Act or this Agreement to reflect the fact
that such Incapacitated Manager has ceased to be a Manager, and the
appointment of such successor Manager.
(b) In the event of the Incapacity of all Managers, the
Investment Advisor shall as promptly as practicable convene a meeting of
Members for the purpose of electing new Managers nominated by the Advisory
Member. Upon the Incapacity of a Manager, the Manager shall immediately
cease to be a Manager.
(c) Any such termination of a Manager shall not affect
any rights or liabilities of the Incapacitated Manager that matured prior
to such Incapacity.
4.5 Continuation. In the event of the withdrawal, removal, or
retirement of a Manager, the Company shall not be dissolved and the
business of the Company shall be continued by the remaining Managers.
4.6 Board of Managers Powers. Subject to the terms hereof, the
Managers shall have full and complete discretion in the management and
control of the affairs of the Company, shall make all decisions affecting
Company affairs and shall have all of the rights, powers, and obligations
with respect to the Company as the directors of a corporation have with
respect to a corporation under the Delaware General Corporations Law. The
Board of Managers shall provide overall guidance and supervision with
respect to the operations of the Company, shall perform all duties imposed
on the directors of registered investment companies by the Investment
Company Act, and shall monitor the activities of the Appropriate Officers,
the Investment Advisor and any administrator to the Company. Except as
otherwise expressly provided in this Agreement, the Board of Managers is
hereby granted the right, power, and authority to do on behalf of the
Company all things which, in its sole judgment, are necessary or
appropriate to manage the Company's affairs and fulfill the purposes of the
Company. Any determination as to what is in the interests of the Company
made by the Managers in good faith shall be conclusive. In construing the
provisions of the Agreement, the presumption shall be in the favor of a
grant of power to the Managers. The powers of the Managers include, by way
of illustration and not by way of limitation, the power and authority from
time to time to do the following:
(a) invest the assets of the Company or cause the assets
of the Company to be invested only in such investments as are consistent
with the Company's purpose as set forth in Section 2.4 hereof;
(b) incur all expenses permitted by this Agreement;
(c) to the extent that funds are available, cause to be
paid all expenses, debts, and obligations of the Company;
(d) appoint and dismiss such Persons to serve as officers
of the Company ("Appropriate Officers") with such powers and authority as
may be provided to such Persons by the Board of Managers or by this
Agreement;
(e) employ and dismiss from employment such agents,
employees, managers, accountants, attorneys, consultants, registrars,
transfer agents, custodians, paying agents, administrations and other
Persons necessary or appropriate to carry out the business and affairs of
the Company, whether or not any such Persons so employed are affiliated
persons of any Manager, and to pay such compensation to such Persons as is
competitive with the compensation paid to unaffiliated Persons in the area
for similar services;
(f) subject to the indemnification provisions in this
Agreement, pay, extend, renew, modify, adjust, submit to arbitration,
prosecute, defend, or settle, upon such terms it deems sufficient, any
obligation, suit, liability, cause of action, or claim (including, in
consultation with the Tax Matters Member in accordance with Section 10.5,
tax audits), either in favor of or against the Company;
(g) sell Shares pursuant to the Subscription Agreements;
(h) sell Preferred Interests in an aggregate principal
amount of up to US$100,000; (i) borrow money pursuant to Section 7.9 and
issue multiple classes of senior indebtedness or a single class of
Preferred Interests senior to the Shares to the extent permitted by the
Investment Company Act and repay, in whole or in part, any such borrowing
or indebtedness and repurchase or retire, in whole or in part, any such
Preferred Interests senior to the Shares; and in connection with such loans
or senior instruments to mortgage, pledge, assign, or otherwise encumber
any or all properties or assets owned by the Company, including any income
therefrom, to secure such borrowing or provide repayment thereof;
(j) establish valuation principles and periodically apply
such principles to the Company's investment portfolio;
(k) to the extent permitted by the Investment Company
Act, designate and appoint one or more agents for the Company who shall
have such authority as may be conferred upon them by the Board of Managers
and who may perform any of the duties of, and exercise any of the powers
and authority conferred upon, the Board of Managers hereunder including,
but not limited to, designation of one or more agents as authorized
signatories on any bank accounts maintained by the Company;
(l) subject to the other provisions of this Agreement, to
enter into, make, and perform such contracts, agreements, and other
undertakings, and to do such other acts, as it may deem necessary or
advisable for, or as may be incidental to, the conduct of the business
contemplated by this Agreement, including, without in any manner limiting
the generality of the foregoing, contracts, agreements, undertakings, and
transactions with any Member, Manager, Appropriate Officer or Investment
Advisor or with any other person, firm, or corporation having any business,
financial, or other relationship with any Member, Manager, Appropriate
Officer or Investment Advisor, provided, however, such transactions with
such Persons and entities (i) shall only be entered into to the extent
permitted under the Investment Company Act and (ii) shall be on terms no
less favorable to the Company than are generally afforded to unrelated
third parties in comparable transactions;
(m) purchase, rent, or lease equipment for Company purposes;
(n) purchase and maintain, at the Company's expense,
liability and other insurance to protect the Company's assets from third
party claims; and cause the Company to purchase or bear the cost of any
insurance covering any potential liabilities of the Members, Managers,
Appropriate Officers, Advisory Member or agents of the Company, or
officers, employees, directors, members or partners of the Investment
Advisor or any agent of the Company as well as the potential liabilities of
any Person serving at the request of the Investment Advisor as a director
of or advisor to the Portfolio Company;
(o) cause to be paid any and all taxes, charges, and
assessments that may be levied, assessed or imposed upon any of the assets
of the Company;
(p) make or caused to be made any election on behalf of
the Company under the Code and other tax laws and supervise the preparation
and filing of all tax and information returns that the Company may be
required to file provided that such election is consistent with this
Agreement;
(q) take any action that may be necessary or appropriate
for the continuation of the Company's valid existence as a limited
liability company under the laws of the State of Delaware and of each other
jurisdiction in which such existence is necessary to protect the limited
liability of the Members or to enable the Company to conduct the business
in which it is engaged;
(r) admit Members to the Company in accordance with
Sections 3.3 and 7.1; admit an assignee of a Member's Interest to be a
Substituted Member in the Company, pursuant to and subject to the terms of
Section 9.5, without the consent of any Member;
(s) delegate all or any portion of its rights, powers and
authority to any committee or subset of the Board of Managers, or to
Appropriate Officers or agents of the Company, subject to the control and
supervision of the Managers; and
(t) perform all normal business functions, and otherwise
operate and manage the business and affairs of the Company, in accordance
with and as limited by this Agreement.
4.7 Certain Restrictions. Except upon approval by a Majority in
Interest of Members and a majority of Managers, the Company will not engage
in any of the investment practices set forth in Appendix A hereto, except
to the extent described in such Appendix A.
4.8 Meetings. Meetings of the Managers shall be held from time
to time upon the call of a Chairman, if any, President, Secretary or
Manager. Regular meetings of the Managers may be held at a time and place
fixed by the by-laws or by resolution of the Managers. Notice of any
in-person meetings of the Board or any committee thereof shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a
hard copy by overnight courier) not less than ten (10) nor more than ninety
(90) days before such meeting. Notice of any telephonic meetings of the
Managers or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than five (5) days before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of
the meeting. The presence (whether in person or by telephone) of a Manager
at a meeting shall constitute a waiver of notice of such meeting except
where a Manager attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in this Agreement or
as required by the Investment Company Act, any action of the Managers may
be taken at a meeting by vote of a majority of the Managers present
(whether in person or by telephone) and eligible to vote with respect to
such matter, provided that a quorum is present, or without a meeting by the
unanimous written consent of the Managers.
4.9 Quorum for Board of Managers Meetings. A majority of the
number of Managers shall constitute a quorum for the transaction of
business at any meeting of the Board of Managers, but if less than such
majority is present at a meeting, a majority of the Managers present may
adjourn the meeting from time to time without further notice.
4.10 Manner of Acting for Board of Managers. Except as
otherwise required by the Act, the act of the majority of the Managers
present at a meeting at which a quorum is present shall be the act of the
Board of Managers. Each Manager shall be entitled to one vote upon all
matters submitted to the Board of Managers.
4.11 Written Consent by Board of Managers. Unless otherwise
required by the Investment Company Act, any action required or permitted to
be taken at any meeting of the Board of Managers or by a committee thereof
may be taken without a meeting without prior notice and without a vote if
all members of the Board of Managers or such committee consent thereto in
writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Managers or such committee.
4.12 Committees of Managers. By resolution adopted by the Board
of Managers, the Board of Managers may designate two or more Managers to
constitute a committee, any of which shall have such authority in the
management of the Company as the Board of Managers shall designate.
4.13 Manager Presumption of Assent. A Manager of the Company
who is present at a meeting of the Board of Managers at which action on any
matter taken shall be presumed to have assented to the action taken unless
a dissent shall be entered in the minutes of the meeting or unless the
Manager files a written dissent to such action with the person acting as
the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary of the Company
immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Manager who voted in favor of such action.
4.14 Manager Power to Bind Company. Unless the Board of
Managers consists of one Manager, no Manager (acting in his capacity as
such) shall have any authority to bind the Company to any third party with
respect to any matter except pursuant to a resolution expressly authorizing
such action which resolution is duly adopted by the Board of Managers by
the affirmative vote required for such matter pursuant to the terms of this
Agreement.
4.15 Liability of the Managers. No Manager shall be (i)
personally liable for the debts, obligations or liabilities of the Company,
including any such debts, obligations or liabilities arising under a
judgement decree or order of a court; (ii) obligated to cure any deficit in
any Capital Account; (iii) required to return all or any portion of any
Capital Contribution; or (iv) required to lend any funds to the Company.
4.16 Reliance by Third Parties. Persons dealing with the
Company are entitled to rely conclusively upon the power and authority of
the Board of Managers, Appropriate Officers and the Advisory Member of the
Company herein set forth.
4.17 Appointment of Auditors. Subject to the approval or
ratification of the Members and the Disinterested Managers if and to the
extent required under the Investment Company Act, the Board of Managers, in
the name and on behalf of the Company, is authorized to appoint independent
certified public accountants for the Company.
4.18 Contracts with Affiliates. The Board of Managers may, on
behalf of the Company, subject to approval by a majority of the Managers
who do not have an interest in the contract and a majority of the
Disinterested Managers and to compliance with the Investment Company Act,
enter into contracts for goods or services with any affiliate of a Manager,
Member, Appropriate Officer or the Investment Advisor, provided that the
charges for such goods or services do not exceed those charged by
unaffiliated Persons in the area for similar goods and services.
4.19 Obligations of the Managers. The Managers shall devote
such time and effort to the Company business as, in their judgment, may be
necessary or appropriate to oversee the affairs of the Company.
4.20 Other Business of Managers. Any Manager and any affiliate
of any Manager may engage in or possess any interest in other business
ventures of any kind, nature or description, independently or with others,
whether such ventures are competitive with the Company or otherwise.
Neither the Company nor any Manager shall have any rights or obligations by
virtue of this Agreement or the relationship created hereby in or to such
independent ventures or the income or profits or losses derived therefrom,
and the pursuit of such ventures, even if competitive with the business of
the Company, shall not be deemed wrongful or improper. Neither the Managers
nor any affiliate of the Managers shall be obligated to present any
investment opportunity to the Company.
4.21 Limitations on Board of Managers and Appropriate Officers.
(a) Notwithstanding anything expressed or implied to the
contrary in this Agreement (other than Article IX), the Board of Managers
and the Appropriate Officers shall not authorize or otherwise cause or
allow the Company to purchase all or any portion of any Member's Interest
(or any attributes thereof).
(b) Notwithstanding anything expressed or implied to the
contrary in this Agreement, the Board of Managers and the Appropriate
Officers shall not (i) participate in the establishment of a secondary
market (or the substantial equivalent thereof) with respect to the
Interests for purposes of Treasury Regulation ss. 1.7704-1(d)(1) or (ii)
take any action that would have the effect of causing the Company (A) to be
treated as a publicly traded partnership for purposes of Section 7704(b) of
the Code or (B) otherwise to be treated as a corporation for federal income
tax purposes.
ARTICLE V
OFFICERS
5.1 Executive Officers. The Appropriate Officers of the Company
shall be chosen by the Board of Managers and shall be one or more co-Chief
Executive Officers, one or more Co-Presidents, a Secretary and a Treasurer.
The Board of Managers may also choose one or more Co-Chairman of the Board
of Managers (who must be a Manager), Vice Chairman of the Board, one or
more Vice Presidents, a Chief Operating Officer, a Chief Financial Officer,
one or more Assistant Secretaries and one or more Assistant Treasurers. In
addition, the Board of Managers may elect or appoint such other officers
with such powers and duties as they shall deem necessary or proper. Any
number of offices may be held by the same person, unless otherwise
prohibited by law. The officers of the Company need not be Members of the
Company nor, except in the case of the Chairman of the Board, need such
officers be Managers of the Company.
5.2 Election of Officers. The officers of the Company shall
hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board
of Managers; and all officers of the Company shall hold office until their
successors are chosen and qualified, or until their earlier death,
resignation or removal. Any officer elected by the Board of Managers may be
removed at any time, with or without cause, by the affirmative vote of the
Board of Managers or upon the Incapacity of such officer. Any vacancy
occurring in any office of the Company shall be filled by the Board of
Managers. The officers of the Company shall not be compensated.
5.3 Voting Securities Owned by the Company. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Company may be executed in the name of
and on behalf of the Company by the President or any Vice President or any
other officer authorized to do so by the Board of Managers and any such
officer may, in the name of and on behalf of the Company, take all such
action as any such officer may deem advisable to vote in person or by proxy
at any meeting of security holders of any entity in which the Company may
own securities and at any such meeting shall possess and may exercise any
and all rights and power incident to the ownership of such securities and
which, as the owner thereof, the Company might have exercised and possessed
if present. The Board of Managers may, by resolution, from time to time
confer like powers upon any other person or persons.
5.4 Chairman of the Board of Managers. The Chairman of the
Board of Managers, if there be one, shall preside at all meetings of the
Members and of the Board of Managers. The Chairman of the Board of Managers
shall be selected from time to time by the Board of Managers. The Chairman
of the Board of Managers shall possess the same power as the President to
sign all contracts, certificates and other instruments of the Company which
may be authorized by the Board of Managers. During the absence or
disability of the President, the Chairman of the Board of Managers shall
exercise all the powers and discharge all the duties of the President. The
Chairman of the Board of Managers shall also perform such other duties and
may exercise such other powers as may from time to time be assigned by this
Agreement or by the Board of Managers.
5.5 President. The President shall, subject to the control of
the Board of Managers and, if there be one, the Chairman of the Board of
Managers, have general supervision of the business of the Company and shall
see that all orders and resolutions of the Board of Managers are carried
into effect. The President or, when authorized by this Agreement, the Board
of Managers or the President, the other officers of the Company shall
execute all bonds, mortgages, contracts, documents and other instruments of
the Company. In the absence or disability of the Chairman of the Board of
Managers, or if there be none, the President, shall preside at all meetings
of the Members and the Board of Managers. Unless the Board of Managers
shall otherwise designate, the President shall be the Chief Executive
Officer of the Company. The President shall also perform such other duties
and may exercise such other powers as may from time to time be assigned to
such officer by this Agreement or by the Board of Managers.
5.6 Vice Presidents. At the request of the President or in the
President's absence or in the event of the President's inability or refusal
to act (and if there be no Chairman of the Board of Managers), the Vice
President, or the Vice Presidents if there is more than one (in the order
designated by the Board of Managers), shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Each Vice President shall
perform such other duties and have such other powers as the Board of
Managers from time to time may prescribe. If there be no Chairman of the
Board of Managers and no Vice President, the Board of Managers shall
designate the officer of the Company who, in the absence of the President
or in the event of the inability or refusal of the President to act, shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President.
5.7 Secretary. The Secretary shall attend all meetings of the
Board of Managers and all meetings of Members and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Managers when required. The Secretary shall give, or cause to be given,
notice of all meetings of the Members and special meetings of the Board of
Managers, and shall perform such other duties as may be prescribed by the
Board of Managers, the Chairman of the Board of Managers or the President,
under whose supervision the Secretary shall act. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
Members and special meetings of the Board of Managers, and if there be no
Assistant Secretary, then either the Board of Managers or the President may
choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Company, if any, and the Secretary or
any Assistant Secretary, if there be one, shall have authority to affix the
same to any instrument requiring it and when so affixed, it may be attested
by the signature of the Secretary or by the signature of any such Assistant
Secretary. The Board of Managers may give general authority to any other
officer to affix the seal of the Company and to attest to the affixing by
such officer's signature. The Secretary shall see that all books, reports,
statements, certificates and other documents and records required by law to
be kept or filed are properly kept or filed, as the case may be.
5.8 Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Company and shall
deposit all moneys and other valuable effects in the name and to the credit
of the Company in such depositories as may be designated by the Board of
Managers. The Treasurer shall disburse the funds of the Company as may be
ordered by the Board of Managers, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Managers,
at its regular meetings, or when the Board of Managers so requires, an
account of all transactions as Treasurer and of the financial condition of
the Company. If required by the Board of Managers, the Treasurer shall give
the Company a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Managers for the faithful performance of the
duties of the office of the Treasurer and for the restoration to the
Company, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other
property of whatever kind in the Treasurer's possession or under the
Treasurer's control belonging to the Company.
5.9 Assistant Secretaries. Assistant Secretaries, if there be
any, shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Managers, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to act,
shall perform the duties of the Secretary, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the
Secretary.
5.10 Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Managers, the President, any Vice
President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of the Treasurer's disability or refusal to act,
shall perform the duties of the Treasurer, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the
Treasurer. If required by the Board of Managers, an Assistant Treasurer
shall give the Company a bond in such sum and with such surety or sureties
as shall be satisfactory to the Board of Managers for the faithful
performance of the duties of the office of Assistant Treasurer and for the
restoration to the Company, in case of the Assistant Treasurer's death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging
to the Company.
5.11 Other Officers. Such other officers as the Board of
Managers may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Managers, the Chairman
of the Board of Managers or the President. The Board of Managers may
delegate to any other officer of the Company the power to choose such other
officers and to prescribe their respective duties and powers.
ARTICLE VI
INVESTMENT ADVISOR
6.1 Investment Advisor. (a) The Board of Managers shall appoint
an Investment Advisor for the Company. Subject to the direction and control
of the Managers, the Investment Advisor shall, consistent with the
investment objective set forth in Section 2.4, (i) act as investment
advisor for and supervise and manage the investment and reinvestment of the
Company's assets and in connection therewith have complete discretion,
subject to the Company's restrictions and limitations on investments as set
forth herein, in purchasing and selling securities and other assets for the
Company and in voting, exercising consents and exercising all other rights
appertaining to such securities and other assets on behalf of the Company;
(ii) supervise continuously the investment program of the Company and the
composition of its investment portfolio; (iii) supervise the operations and
employees of the Company's affiliates; (iv) arrange, subject to the
provisions of this Section 6.1 hereof, for the purchase and sale of
securities and other assets held in the investment portfolio of the
Company; (v) arrange for the administration of all other affairs of the
Company and its affiliates and, in this regard, provide supervision of
third parties engaged in such administration; (vi) maintain all of the
Company's books and records other than those maintained by a third party
administrator, transfer agent, custodian or accountant; and (vii) provide
the Company with adequate office space and all necessary office equipment
and services.
(b) The Investment Advisor will use its best efforts to
(i) cause the Company's outstanding securities (other than short-term
paper) to be beneficially owned at all times by more than 100 persons as
determined in accordance with the provisions of Section 3(c)(1) of the
Investment Company Act and (ii) cause the Company not to be a company
described in Sections 3(c)(5) and/or 3(c)(6) of the Investment Company Act.
The Investment Advisor will provide the Managers a compliance report at
each quarterly meeting reviewing each factor related to the Manager's
regulatory and tax obligations described.
(c) Subject to Section 6.1 (h) hereof, in the performance
of its duties under this Agreement, the Investment Advisor shall at all
times conform to, and act in accordance with, any requirements imposed by
(i) the provisions of the Investment Company Act and of the Investment
Advisor Act of 1940, as amended, including any rules or regulations in
force thereunder; (ii) any other applicable provision of law; (iii) the
provisions of this Agreement, as amended from time to time; (iv) the
investment objective, policies and restrictions of the Company as set forth
in the Company's registration statement on Form N-2, as amended from time
to time, and any resolutions adopted by requisite approval of the Managers
and/or requisite approval of Members holders and (v) any other policies and
determinations of the Managers. In addition, the Investment Advisor shall
use its best efforts to cause the Company not to engage in any transaction
involving any person known to the Investment Advisor to be subject to
Sections 17(a), 17(d) or 17(e) of the Investment Company Act and the rules
thereunder with respect to the Company such that any such person would
violate any such provision of the Investment Company Act or the rules
thereunder.
(d) The Investment Advisor will bear all costs and
expenses of its directors, officers and employees, any overhead incurred in
connection with its duties hereunder, the costs of any compensation of any
officers or Managers of the Company who are partners, directors, officers
or employees of the Investment Advisor and all other costs and expenses of
the Company not expressly stated in the sections below to be borne by the
Company.
(e) In the event of the dissolution, bankruptcy,
insolvency or resignation of the Investment Advisor, the Company may award
investment advisory responsibilities to another party with the consent of a
Majority in Interest of the Members; otherwise, the Company will promptly
wind up its affairs.
(f) Nothing shall prevent the Investment Advisor or any
director, officer, employee or other affiliate thereof from acting as
investment advisor for any other person, firm or corporation, or from
engaging in any other lawful activity, and shall not in any way limit or
restrict the Company or any of its directors, officers, employees or agents
from buying, selling or trading any securities for its or their own
accounts or for the accounts of others for who it or they may be acting,
provided, however that the Investment Advisor, will undertake no activities
which, in its judgment, will adversely affect the performance of its
obligations under this Agreement.
(g) Other investment companies or accounts which the
Investment Advisor manages may also own the same investments as the
Company. Investment decisions for the Company are made independently from
those of such other investment companies or accounts; however, from time to
time, the same investment decision may be made for more than one company or
account. Subject to the foregoing, when two or more investment companies or
accounts managed by the Investment Advisor seek to purchase or sell the
same securities, the securities actually purchased or sold will be
allocated among the companies and accounts on a good faith equitable basis
by the Investment Advisor in its discretion in accordance with the
accounts' various investment objectives. In some cases, this system may
adversely affect the price or size of the position obtainable for the
Company. In other cases, however, the ability of the Company to participate
in volume transactions may produce better execution for the Company.
(h) The Investment Advisor shall, for the purchase and
sale of the Company's portfolio securities, employ such securities dealers
as will, in the reasonable judgment of the Investment Advisor, result in
the Company's obtaining the best net results taking into account such
factors as price, including dealer spread, the size, type and difficulty of
the transaction involved, the firm's general execution and operational
facilities and the firm's risk in positioning the securities involved.
Consistent with this requirement, the Investment Advisor is authorized to
direct the execution of the Company's portfolio transactions to dealers and
brokers furnishing statistical information or research reasonably deemed by
the Investment Advisor to be useful or valuable to the performance of its
investment advisory functions for the Company subject to the general
supervision of the Board of Managers.
(i) The Investment Advisor may continue to serve as such
for no more than two years from the date hereof unless its service beyond
such date is specifically approved by the Board of Managers, including a
majority of the Board of Managers who are not "interested persons" of the
Company or the Investment Advisor, at an in person meeting called for that
purpose or by a vote of a 40 Act Majority of the Members, which approval
shall be required annually after such initial two year period. The
Investment Advisor's services hereunder may be terminated at any time,
without the payment of any penalty, by the Board of Managers or by a vote
of a 40 Act Majority of the Members, in either case on not more than 60
days written notice to the Investment Advisor. The Investment Advisor's
services hereunder shall terminate automatically in the event of the
assignment of its services.
(j) The Investment Advisor will not receive any
compensation pursuant to Section 7.3(a)(1) except for those periods in
which the investment advisory arrangement contained in this Section 6.1 has
been approved by the Board of Managers in accordance with Section 15 of the
1940 Act.
6.2 Key Management Personnel. For so long as FIG Advisors LLC
acts as the Investment Advisor for the Company, the Board of Managers shall
promptly notify (each such notice, a "Trigger Notification") each of the
Members in writing if either (i) Mr. Xxxxxx Xxxxx or (ii) two (2) or more
of the Principals other than Xx. Xxxxx cease to oversee the affairs of the
Investment Advisor and the date as of which such oversight ceased or will
cease (the "Key Person Trigger Date"). As of the Key Person Trigger Date
the Company shall be prohibited from entering into any new investments or
selling or otherwise transferring or liquidating investments of the Company
unless the Board of Managers first procures from two thirds (2/3) in
Interest of all the Members the written consent of such Members to continue
the investment advisory agreement between the Company and FIG Advisors LLC.
If such consent to continue such investment advisory agreement is not given
within sixty (60) days following the date of a Trigger Notification, the
Board Managers shall promptly call a meeting of the Members to be held as
soon thereafter as practicable, provided that the date of such meeting
shall not be later than forty-five (45) days after the expiration of such
sixty (60)-day period and, at such meeting, a Majority in Interest of
Members may require cancellation of the investment advisory arrangement
between the Investment Advisor and the Company and/or the liquidation and
winding up of the affairs of the Company in an orderly manner.
6.3 The Board of Managers may admit any Investment Adviser as a
Member of the Company with the rights, powers and obligations of an
Advisory Member as set forth herein. An Advisory Member shall not make a
Capital Contribution to the Company in its capacity as Advisory Member and
shall not be issued any Shares or Preferred Interests representing its
interest as a Advisory Member. After the Closing Date, no Advisory Member
shall have any voting rights in the Company.
6.4 The Board of Managers may admit any Investment Advisor as a
Member of the Company with the rights, powers and obligations of an
Advisory Member as set forth herein. After the Closing Date, the Advisory
Member shall have no voting rights in the Company.
ARTICLE VII
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND ALLOCATIONS
7.1 Capital Contributions. (a) The initial Member or Members
are as set forth on Schedule A hereto. Each Member making a Capital
Commitment shall make an initial contribution to the Company at the
Advisory Member's discretion on September 6, 2000 (the "Closing Date")
which initial contribution may equal a Member's Capital Contribution.
(b) On each Capital Demand Date, each Member making a
Capital Commitment shall further contribute to the Company an amount equal
to all or a portion of such Member's Unpaid Capital Obligation as set forth
in the respective Capital Demand Notice. For purposes of this Agreement,
(i) the "Capital Demand Date" shall mean the date specified by an
Appropriate Officer on which Members are required to contribute all or a
portion of Unpaid Capital Obligation to the Company, which, shall be (A)
specified by the Company in a Capital Demand Notice sent by the Company to
each of the Members or their representatives and (B) no less than seven (7)
days from the date such Capital Demand Notice is sent by the Company and
(ii) a "Capital Demand Notice" shall mean a written notice requiring the
contribution of capital to the Company, which notice shall (A) be by the
Company to each Member and (B) call for contribution to the Company of the
Unpaid Capital Obligation of each Member. All capital calls will be made on
a pro rata basis in proportion to each Member's Unpaid Capital Obligation.
(c) Capital Contributions by the Members shall be made in
dollars by wire transfer of federal funds to an account or accounts of the
Company as specified by the Company in the Capital Demand Notice or in such
other manner as the Company may direct. No Member shall be entitled to any
interest or compensation by reason of his, her or its Capital Contributions
or by reason of being a Member. No Member shall be required to lend any
funds to the Company.
(d) On each Capital Demand Date, Schedule A hereto shall
be amended appropriately to reflect the Unpaid Capital Obligations of the
Members. Further, the Appropriate Officers shall cause Schedule A hereto to
be amended from time to time to reflect the transfer of a Member's
Interests and the admission and withdrawal of Members which are
accomplished in accordance with the provisions hereof.
(e) Except as may be required by law, no Member shall be
required to reimburse the Company for any negative balance in such Member's
Capital Account; provided, however, that each Member shall remain fully
liable to make contributions of capital to the extent of such Member's
Unpaid Capital Obligation.
7.2 Capital Accounts. A capital account ("Capital Account")
shall be established and maintained on the Company's books with respect to
each Member, in accordance with the provisions of Treasury Regulations
Section 1.704-1(b).
7.3 Allocation of Net Profits from Operations. (a) The Net
Profits of the Company for each Fiscal Year shall be allocated as follows:
(i) First, to the Advisory Member in an amount equal to a
cumulative return of 1.5% per annum on all Capital Contributions
provided that for any period in which the Advisory Member does not
serve as Investment Advisor pursuant to an investment advisory
arrangement that has been approved according to the applicable
provisions of the 1940 Act, the Advisory Member shall be receive an
annual allocation based on a percentage equal to the days the
Advisory Member served as Investment Advisor pursuant to a duly
approved investment advisory arrangement divided by 365 days;
(ii) Second, to the holders of the Preferred Interests in
accordance with the Certificate of Designation;
(iii)Third, to the Members other than the Advisory Member
who have negative balances in their Capital Accounts, in proportion
to the respective amounts of such negative balances; and
(iv) Fourth, to the Members other than the Advisory
Member pro rata in accordance with such Member's respective Capital
Accounts.
(b) All provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with the Code and
Treasury Regulations thereunder and shall be interpreted and applied in a
manner consistent with such law. Upon notification to the Members, the
Managers shall make any necessary modifications to this Section 7.3 in the
event unanticipated events occur that might otherwise cause this Agreement
not to comply with such law or any changes thereto.
(c) Additional Rule. In furtherance and not in limitation
of Section 7.6(a), (b) and (c), and except as otherwise provided in this
Agreement, the Board of Managers may, in its sole and absolute discretion,
allocate Net Profit (and items thereof) and Net Loss (and items thereof)
for any Fiscal Period in a manner that the Board of Managers deems
necessary or appropriate in order to effectuate the intended economic
sharing arrangement of the Members as reflected in Article VIII.
(d) Regulatory and Related Allocations. Notwithstanding
anything expressed or implied to the contrary in this Agreement, the
following special allocations shall be made in the following order:
(i) Minimum Gain Charge back. If there is a net decrease
in Partnership Minimum Gain during any Fiscal Period, each Member
shall be specially allocated items of Company income and gain for
such Fiscal Period (and, if necessary, subsequent Fiscal Periods) in
an amount equal to the greater of (i) the portion of such Member's
share of the net decrease in such Partnership Minimum Gain, as
determined in accordance with Treasury Regulations Section
1.704-2(d)(1), that is allocable to the disposition of Company
property, subject to Nonrecourse Liabilities or (ii) if such Member
would otherwise have an Adjusted Capital Account Deficit attributable
solely to such Member's Capital Account at the end of such Fiscal
Period, an amount sufficient to eliminate such Adjusted Capital
Account Deficit. Allocations pursuant to the previous sentence shall
be made in proportion to the respective amounts required to be
allocated to the Members pursuant thereto. The items to be so
allocated shall be determined in accordance with Treasury Regulations
Section 1.704-2. This Section 7.3(d)(i) is intended to comply with
the minimum gain charge back requirement in such Treasury Regulations
and shall be interpreted consistently therewith. To the extent
permitted by such Treasury Regulations and for purposes of this
Section 7.3(d)(i) only, each Member's Adjusted Capital Account
Deficit shall be determined prior to any other allocations pursuant
to this Article VII with respect to such Fiscal Period.
(ii) Partner Minimum Gain Chargeback. If there is a net
increase in Partner Nonrecourse Debt Minimum Gain attributable to
partner nonrecourse debt (as defined in Treasury Regulations Section
1.704-2(b)(4)) during any Fiscal Period, each Member shall be
specially allocated items of Company income and gain for such Fiscal
Period (and, if necessary, subsequent Fiscal Periods) in an amount
equal to the portion of such Member's share of the net decrease in
Partner Nonrecourse Debt Minimum Gain attributable to such Member's
nonrecourse debt, as determined in accordance with Treasury
Regulations Section 1.704-2(i). This Section 7.3(d)(ii) is intended
to comply with the minimum gain chargeback requirements in such
Treasury Regulations and shall be interpreted consistently therewith.
(iii)Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations or distributions
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) with respect to such Member's Capital Account, items of
Company income and gain shall be specially allocated to each such
Member in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the Adjusted Capital Account
Deficit of such Member as quickly as possible; provided, however,
that an allocation pursuant to this Section 7.3(d)(iii) shall be made
only if and to the extent that such Member would have an Adjusted
Capital Account Deficit after all other allocations provided for
herein have been tentatively made as if this Section 7.3(d)(iii) were
not in this Agreement.
(iv) Nonrecourse Deductions. Any Nonrecourse Deductions
for any Fiscal Period shall be allocated to the Members in proportion
to their respective Capital Contributions.
(v) Gross Income Allocation. In the event any Member has
an Adjusted Capital Account Deficit, items of Company income and gain
shall be specially allocated to such Member in an amount and manner
sufficient to eliminate such Member's Adjusted Capital Account
Deficit as quickly as possible; provided, however, that an allocation
pursuant to this Section 7.3(d)(v) shall be made only if and to the
extent that such Member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this Section 7.3
(other than Section 7.3(d)(iii)) have been tentatively made as if
this Section 7.3(e)(v) were not in this Agreement.
(vi) Loss Allocation Limitation. No allocation of Net
Loss (or items thereof) shall be made to any Member to the extent
that such allocation would create or increase an Adjusted Capital
Account Deficit with respect to such Member.
(e) Curative Allocations. The allocations set forth in
Section 7.3(d) (the "Regulatory Allocations") are intended to comply with
certain requirements of Treasury Regulations Section 1.704-l(b).
Notwithstanding any other provision of this Article VII (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken into
account in allocating other Company items of income, gain, loss, deduction
and expense among the Members so that, to the extent possible, the net
amount of such allocations of other Company items and the Regulatory
Allocations shall be equal to the net amount that would have been allocated
to the Members pursuant to this Section 7.3 if the Regulatory Allocations
had not occurred.
(f) Section 754 Adjustments. Pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(m), to the extent an adjustment to
the adjusted tax basis of any Company asset under Section 734(b) or Section
743(b) of the Code is required to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts
shall be treated as an item of gain (if the adjustment increases the basis
of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Members in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Treasury Regulations.
(g) Transfer of or Change in Interests. The Managers are
authorized to adopt any convention or combination of conventions that will
be upheld for federal income tax purposes regarding the allocation and/or
special allocation of items of Company income, gain, loss, deduction and
expense with respect to a newly issued Interest, a transferred Interest and
a redeemed Interest. Upon admission as a Substituted Member, a transferee
of an Interest shall succeed to the Capital Account of the transferor
Member to the extent it relates to the transferred Interest.
(h) Expenses. Syndication and organization expenses, as
defined in Section 709 of the Code, and other Company Expenses (and, to the
extent necessary as determined in the sole and absolute discretion of the
Managers, any other items) shall be allocated to the Capital Accounts of
the Members so that, as nearly as possible, the cumulative amount of such
syndication expenses, organization expenses, and other Company Expenses
(and other items, if relevant) allocated with respect to each dollar of
Capital Commitment for each Member is the same amount.
(i) Allocation Periods and Unrealized Items. Subject to
applicable Treasury Regulations and other applicable law and
notwithstanding anything expressed or implied to the contrary in this
Agreement, the Managers may, in their sole and absolute discretion,
determine allocations to Capital Accounts no lees frequently than annually
and/or on realized and upon additional investment in the Company by a new
or existing Member, the transfers of a Member's Interest or the redemption
of a Member's Interest on unrealized net increases or net decreases (as the
case may be) in the Fair Market Value of Company property.
7.4 Allocation of Net Losses from Operations. The Net Losses of
the Company for each Fiscal Year shall be allocated as follows:
(a) First, to the Members other than the Advisory Member
and the holders of the Preferred Interests pro rata in accordance with such
Member's respective Capital Accounts, until such Member's Capital Accounts
have a zero balance;
(b) Second, to the holders of the Preferred Interests
until their Capital Accounts have a zero balance; and
(c) Third, to the Members other than the Advisory Member
and the holders of the Preferred Interests.
7.5 Defaulting Member. (a) If any Member fails to contribute,
in a timely manner, any portion of the Capital Commitment required to be
contributed by such Member pursuant to this Agreement and such failure
continues for five (5) Business Days after delivery by the Appropriate
Officer to such Member of notice of such failure, then such Member shall be
deemed a "Defaulting Member," and this Section 7.5 shall apply. An
Appropriate Officer shall deliver to each non-Defaulting Member written
notice of such default as promptly as practicable after its occurrence.
(b) The Company may exercise any remedy available to it
at law or equity against a Defaulting Member. Not in limitation of any of
the Fund's remedies, interest will accrue on the portion of the Defaulting
Member's Capital Commitment that such Member has failed to fund ("Failed
Capital Commitment"), at the prime rate plus 2% per annum, up to the
highest rate permitted by law. The Company shall also be entitled to
reimbursement from a Defaulting Member for any and all costs and expenses
in collecting any portion of a Failed Capital Commitment including, without
limitation, attorney's fees and disbursements (to the extent permitted by
applicable law).
7.6 Tax Allocations.
(a) Items of Company income, gain, loss, deduction and
expense shall be allocated, for federal, state and local income tax
purposes, among the Members in the same manner as the Net Profit (and items
thereof) and Net Loss (and items thereof) of which such items are
components were allocated pursuant to Sections 7.3 and 7.4; provided,
however, that tax allocations shall be made in accordance with Section
704(c) of the Code and the Treasury Regulations promulgated thereunder, to
the extent so required thereby.
(b) Allocations pursuant to this Section 7.6 are solely
for federal, state and local income tax purposes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account
or share of Net Profit (and items thereof) or Net Loss (and items thereof).
(c) The Members are aware of the tax consequences of the
allocations made by this Section 7.6 and hereby agree to be bound by the
provisions of this Section 7.6 in reporting their shares of items of
Company income, gain, loss, deduction and expense.
7.7 Determinations by Managers. All matters concerning the
computation of Capital Accounts, the allocation of Net Profit (and items
thereof) and Net Loss (and items thereof), the allocation of items of
Company income, gain, loss, deduction and expense for tax purposes and the
adoption of any accounting procedures not expressly provided for by the
terms of this Agreement shall be determined by the Managers in accordance
with accounting principles generally accepted in the United States in their
reasonable discretion. Such determination shall be final and conclusive as
to all the Members. Notwithstanding anything expressed or implied to the
contrary in this Agreement, in the event the Managers shall determine, in
their reasonable discretion, that it is prudent to modify the manner in
which the Capital Accounts, or any debits or credits thereto, are computed
in order to effectuate the intended economic sharing arrangement of the
Members as reflected in Article VIII, the Managers may make such
modification in their reasonable discretion without the approval of
Members.
7.8 Net Asset Value. The net asset value (the "NAV") of the
Company will be calculated quarterly as of each March 31, June 30,
September 30 and December 31, in connection with each issuance of Shares or
Preferred Interests by the Company, as of each distribution declaration
date (after giving effect to the relevant declaration), as of the first
anniversary of the Company's operations, as of the date on which the
Company terminates, and more frequently as determined by the Investment
Advisor or a majority of the Managers, in accordance with Valuation
Policies and guidelines approved from time to time by a majority of the
Managers.
7.9 Borrowing by the Company. The Company may borrow money or
otherwise incur indebtedness for temporary or emergency purposes in an
amount up to $500,000. The Company may not borrow for investment purposes.
ARTICLE VIII
WITHDRAWALS AND DISTRIBUTIONS OF CAPITAL
8.1 Withdrawals and Distributions in General. No Member shall
be entitled to withdraw any amount from any Capital Account other than as
provided in this Agreement.
8.2 Distributions. After provision for Company Expenses and
establishment of working capital and other reserves as the Appropriate
Officers shall deem appropriate, the Managers may cause all cash and other
property received by the Company in respect of its investments in any
Fiscal Period (collectively, "Investment Proceeds") to be distributed:
First, to the Advisory Member in an amount equal to its
allocation set forth in 7.3(a)(i);
Second, to holders of Preferred Interests on the record
date set by the Managers with respect to such distribution as required by
the Certificate of Designations; and
Third, to the holders of the Shares on the record date
set by the Managers with respect to such distribution, in proportion to
such Member's respective Capital Investment.
8.3 Restrictions on Distributions. Notwithstanding anything
expressed or implied to the contrary in this Agreement, no distribution
shall be made if, as determined in the sole and absolute discretion of the
Managers, (i) such distribution would violate any contract or agreement to
which the Company is then a party or any law, rule, regulation, order or
directive of any governmental authority then applicable to the Company or
(ii) the amount to be distributed pursuant to this Article VIII is
immaterial.
8.4 Deemed Sale of Assets. For all purposes of this Agreement,
(i) any property (other than United States dollars) that is distributed
in-kind to one or more Members with respect to a Fiscal Period (including,
without limitation, any such in kind property that is distributed upon the
dissolution and winding up of the Company) shall be deemed to have been
sold for cash equal to its Fair Market Value, (ii) the unrealized gain or
loss inherent in such property shall be treated as recognized gain or loss
for purposes of determining the Net Profit and Net Loss, (iii) such gain or
loss shall be allocated pursuant to Sections 7.3 and 7.4 for such Fiscal
Period and (iv) such in-kind distribution shall be made after giving effect
to such allocation.
8.5 Withholding. Notwithstanding anything expressed or implied
to the contrary in this Agreement, the Appropriate Officers are authorized
to take any action that they determine to be necessary or appropriate to
cause the Company to comply with any United States federal, state or local
withholding requirement with respect to any allocation, payment or
distribution by the Company to any Member or other Person. All amounts so
withheld, and, in the manner determined by the Appropriate Officers,
amounts withheld with respect to any allocation, payment or distribution by
any Person to the Company, shall be treated as distributions to the
applicable Members under the applicable provision of this Agreement. If any
such withholding requirement with respect to any Member exceeds the amount
distributable to such Member under this Agreement, or if any such
withholding requirement was not satisfied with respect to any amount
previously allocated, paid or distributed to such Member, such Member or
any successor or assignee with respect to such Member's Interest hereby
indemnifies and agrees to hold harmless the other Members and the Company
for such excess amount or such withholding requirement, as the case may be
(including any interest, additions and penalties).
ARTICLE IX
WITHDRAWAL OF MEMBERS; TRANSFER OF INTERESTS; ADMISSION OF
SUBSTITUTED MEMBERS; EFFECT OF DEATH, ETC.
9.1 Withdrawal of Members
(a) Except as otherwise provided herein, no Member shall
have the right to withdraw from the Company.
(b) The Managers may (but shall not be required to)
terminate the Interest of any Member and cause that Member to withdraw from
the Company at any time based on the advice of counsel and after a
reasonable opportunity for consultation with that Member. Upon a
determination by the Managers that the continued participation of that
Member in the Company might adversely affect the Company by jeopardizing
the treatment of the Company as a partnership for federal income tax
purposes, involve the Company in any litigation arising out of or relating
to the participation of that Member in the Company or subject the Company
to restrictions or other adverse consequences as a result of applicable
laws or regulations. In the event that the Managers terminate a Member's
Interest, that Member shall immediately withdraw from the Company and cease
to be a Member of the Company. Such withdrawal shall occur automatically
upon termination without the necessity of any further act by the member or
any other Person. The date of termination shall be the effective date of
withdrawal of the terminated Member.
(c) The Company shall pay to the terminated Member 90% of
the amount of the terminated Member's Capital Account balance (determined
in accordance with the next sentence) within 90 days of termination or as
soon thereafter as the Company shall have sufficient funds available and
shall pay the remainder upon completion of that year's audit. Such amounts
paid to a terminated Member shall not be entitled to interest for any
period after the date of termination.
(d) From and after the effective date of withdrawal of a
Member, such withdrawn Member shall cease to be a Member of the Company for
all purposes and the Shares or Preferred Interests of a withdrawn Member
shall not be included in calculating the Shares or Preferred Interests of
the Members required to take any action under this Agreement.
9.2 General Provisions Relating to Transfers of Interests.
(a) A Member shall be entitled to transfer, assign, sell,
pledge, hypothecate or otherwise dispose of all or any portion of its
Interests (collectively, a "Transfer") upon the Managers' determination,
which determination the Managers shall make in their reasonable discretion,
that the Transfer meets each of the following conditions (a "Permitted
Transfer"):
(i) such Transfer, itself or together with any other
Transfers, would not result in the Company being treated as a
publicly traded partnership within the meaning of Section 7704(b) of
the Code or otherwise being treated as a corporation for federal
income tax purposes;
(ii) such Transfer does not require the registration or
qualification of such Interests pursuant to any applicable federal or
state securities or "blue sky" laws;
(iii)such Transfer does not result in a violation of
other laws ordinarily applicably to such transactions;
(iv) the transferor and purported transferee each shall
have represented to the Manager in writing that such Transfer was not
effected through a broker-dealer or matching agent that makes a
market in Interests or that provides a readily available, regular and
ongoing opportunity to Members to sell or exchange their Interests;
(v) the transferor shall reaffirm, and the purported
transferee shall affirm, in writing his, her or its agreement to
indemnify as described in Section 9.4;
(vi) such Transfer would not result in employee benefit
plans (as defined in Section 3(3) of ERISA or Code Section 497(e))
and other benefit plan investors (as defined in Section 2510.3-101(f)
of the Department of Labor Regulations under ERISA), directly or
indirectly owning, in the aggregate, 25% or more of the Interests;
(vii)no facts are known to the Managers that cause the
Managers to conclude that such transfer will have a material adverse
effect on the Company; and
(viii) the transferee has agreed in writing to become a
Member to and subject to all of the terms, obligations and
limitations of this Agreement.
(b) The Managers may reasonably interpret, and are hereby
authorized to take such action as they deem necessary or desirable to
effect, the provisions of this Section 9.2. The Managers may, in their sole
and absolute discretion, amend the provisions of this Section 9.2 in such
manner as may be necessary or desirable (or eliminate or amend such
provisions to the extent they are no longer necessary or desirable) to
preserve the status of the Company as a partnership for federal income tax
purposes.
9.3 Effect of Transfers. Upon any Permitted Transfer, the
transferee of the transferred Interest shall be entitled to receive the
distributions and allocations to which the transferring Member would be
entitled with respect to such transferred Interest, but shall not be
entitled to exercise any of the other rights of a Member with respect to
such transferred Interest, including, without limitation, the right to
vote, unless and until such transferee is admitted to the Company as a
Substituted Member pursuant to Section 9.5.
9.4 Transfer Indemnity. Each Member hereby agrees to indemnify
and hold harmless the Company, the Investment Advisor, the Managers, each
Appropriate Officer and each other Member (and any successor or assign of
any of the foregoing) from and against all costs, claims, damages,
liabilities, losses and expenses (including losses, claims, damages,
liabilities, costs and expenses of any judgments, fines and amounts paid in
settlement), joint or several, to which those persons may become subject by
reason of or arising from any Transfer made in contravention of the
provisions of this Agreement or any misrepresentation made by such Member
in connection with any purported Transfer.
9.5 Substituted Members. No transferee of a transferred
Interest shall be admitted as a Member ("Substituted Member") until each of
the following conditions has been satisfied:
(a) the written consent of the Managers, which may be
withheld or granted in the sole and absolute discretion of the Managers;
(b) the execution and delivery to the Company of a
counterpart of this Agreement by the Substituted Member or its agent or
attorney-in-fact;
(c) receipt by the Company of other written instruments
reasonably necessary to complete the transfer that are in form and
substance satisfactory to the Managers (as determined in their sole and
absolute discretion);
(d) payment by the Substituted Member to the Company of
an amount determined by the Managers to be equal to the costs and expenses
incurred in connection with such assignment, including, without limitation,
costs incurred in preparing and filing such amendments to this Agreement as
may be required;
(e) the updating of the books and records of the Company
and Schedule A hereto as soon as reasonably practicable to reflect the
Person's admission as a Substituted Member;
(f) if required by the Managers in their sole and
absolute discretion, execution and affirmation to an instrument by the
terms of which such Person acknowledges that the relevant transfer of
Interests have not been registered under the Securities Act of 1933, as
amended, or any applicable state securities laws, and covenants, represents
and warrants that such Person acquired the relevant Interests for
investment only and not with a view to the resale or distribution thereof;
and
(g) any other information or documentation similar to
that described in Section 9.5(f) as the Managers may request;
9.6 Effect of Death, Etc. The death, retirement, withdrawal,
expulsion, disability, incapacity, incompetency, bankruptcy, insolvency or
dissolution of a Member, or the occurrence of any other event under the Act
that terminates the continued membership of a Member as a member of the
Company, shall not cause the Company to be dissolved and its affairs to be
wound up so long as the Company has at least one Member at all times. Upon
the occurrence of any such event, the business of the Company shall be
continued without dissolution. The legal representatives, if any, of a
Member shall succeed as assignee to the Member's Interest upon death,
incapacity, incompetency, bankruptcy, insolvency or dissolution of a
Member, but shall not be admitted as a Substituted Member except under the
provisions of Section 9.5 of this Agreement and with the written consent of
the Managers, which written consent the Managers may withhold in their sole
and absolute discretion. Until such time, the Shares or Preferred Interests
held by such legal representative of a Member shall not be included in
calculating the Shares or Preferred Interests of the Members required to
take any action under this Agreement.
ARTICLE X
BOOKS AND RECORDS; REPORTS TO MEMBERS; TAX MATTERS
10.1 Books and Records. In compliance with Section 31 of the
Investment Company Act, the books and records of the Company, and a list of
the names and residence, business or mailing addresses and Interests of all
Members, shall be maintained at the principal executive offices of the
Company or such other location as the Managers' may approve. The Company
shall not be required to provide any documentation or other information to
Members except that which it is required to provide under the Investment
Company Act, the Act or other applicable law. Each Member shall have the
right to obtain from the Company from time to time upon reasonable demand
for any proper purpose reasonably related to the Member's interest as a
Member of the Company, and upon paying the costs of collection, duplication
and mailing, the documents and other information which the Company is
required to provide under the Investment Company Act, the Act or other
applicable law. Any demand by a Member pursuant to this section shall be in
writing. The Company may maintain such other books and records and may
provide such financial or other statements as the Managers or the
Appropriate Officers in their discretion deem advisable.
10.2 Reports to Current Members. The Board of Managers on
behalf of the Company will send to each of the Members (a) annual reports
with audited annual financial statements, together with a written
certification of the Board of Managers stating that the Company is in full
compliance with all material terms, conditions and guidelines as set forth
in this Agreement, unless otherwise specified, together with a statement of
the nature and plan of resolution for any non-compliant items, (b)
semiannual reports with unaudited financial statements, (c) quarterly
summaries and made a part hereof, each in the form of Appendix C with
respect to the Portfolio Company, (d) copies of all tax filings made by the
Company and (e) annual and semi-annual reports of FBA. In addition, the
Investment Advisor on behalf of the Company shall, within ninety (90) days
after the end of each fiscal year and within thirty (30) days after the end
of each calendar quarter, provide to each Member, with respect to such
period, (A) either (i) a statement that the Company did not generate UBTI
during such period or (ii) a statement representing the Investment
Advisor's best estimate of the amount of UBTI generated during such period
attributable to such Member, and (B) either (i) a statement that none of
the underlying assets of any of the Company's investments are "plan assets"
of any employee benefits plan or (ii) a statement identifying any
investments that are reasonably likely to hold plan assets. Any audited
financial statements required under this Section 10.1 shall be prepared by
a "Big 5" accounting firm selected by the Board of Managers.
10.3 Accounting; Tax Year.
(a) The books and records of the Company shall be kept on
the accrual basis. The Company shall report its operations for tax purposes
on the cash method or the accrual method, as determined by the Managers in
their sole and absolute discretion, subject to applicable tax laws. The
taxable year of the Company shall be the calendar year, unless the Managers
shall designate another taxable year for the Company that is a permissible
taxable year under the Code.
(b) The books and records of the Company shall be audited
by the Company's independent accountants as of the end of each Fiscal Year,
commencing with the first partial Fiscal Year, of the Company. The audit
required under this Section 10.3(b) shall be prepared by a "Big 5"
accounting firm selected by the Board of Managers.
10.4 Filing of Tax Returns. The Appropriate Officers shall
prepare and file, or cause the Company's accountants to prepare and file, a
federal information tax return and any required state and local income tax
and information returns for each taxable year of the Company. The Managers
have sole and absolute discretion as to whether or not to prepare and file
(or cause its accountants to prepare and file) composite, group or similar
state, local and foreign tax returns on behalf of the Members where and to
the extent permissible under applicable law. Each Member hereby agrees to
execute any relevant documents to furnish any relevant information and
otherwise to do anything necessary in order to facilitate, any such
composite, group or similar filing. Any taxes paid by the Company in
connection with any such composite, group or similar filing shall be
treated as an advance to the relevant Members (with interest being charged
thereon) and shall be recouped by the Company out of any distributions
subsequently made to such relevant Members. Such advances may be funded by
Company borrowing. Both the deduction for interest payable by the Company
with respect to any such borrowing, and the corresponding income from
interest received by the Company from the relevant Members, shall be
specifically allocated to such Members.
10.5 Tax Matters Member. The Advisory Member shall be
designated as the tax matters member of the Company (the "Tax Matters
Member") as provided in Section 6231(a)(7) of the Code. Each Person (for
purposes of this provision, a "Pass-Through Member") that holds or controls
an Interest on behalf of, or for the benefit of another Person or Persons,
or which Pass-Through Member is beneficially owned (directly or indirectly)
by another Person or Persons shall, within 30 days following receipt from
the Tax Matters Member of a notice or document, convey such notice or other
document in writing to all holders of beneficial interests in the Company
holding such Interest through such Pass-Through Member. In the event the
Company becomes the subject of an income tax audit by any federal, state or
local authority, to the extent the Company is treated as an entity for
purposes of such audit, including administrative settlement and judicial
review, the Advisory Member shall be authorized to act for, and its
decision shall be final and binding upon, the Company and each Member. The
Company shall bear all expenses incurred in connection with any such audit,
investigation, settlement or review.
10.6 Tax Information for Current and Former Members. Within 90
days after the end of each taxable year of the Company or as soon
thereafter as practicable, the Company shall prepare and distribute to each
Member (and, to the extent necessary, to each former Member (or such
Member's legal representatives)), at the expense of the Company, a report
setting forth in sufficient detail such information as shall enable such
Member or former Member (or such Member's legal representatives) to prepare
its respective federal, state and local income tax returns in accordance
with the laws, rules and regulations then prevailing. The Company shall
also provide Schedules K-1 to Members as soon as practicable after the end
of each taxable year of the Company and in any event within the time period
required by the Internal Revenue Service ("IRS") after the end of each
taxable year of the Company.
10.7. Meetings with the IRS. Each Member, prior to any hearing
before the IRS, shall receive prior written notice of such hearing. Members
shall have the right to consult with representatives of the Company prior
to the hearing and to send representatives to observe the hearing. In the
event of a disagreement among the Members with respect to any issue before
the IRS, the Investment Advisor, in its sole and absolute discretion, shall
present the Company's position before the IRS.
ARTICLE XI
LIABILITY AND INDEMNIFICATION
11.1 Liability of the Members and the Advisory Member. Except
as otherwise provided by applicable law, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company; none
of the Members, the Advisory Member nor any Person that is an affiliate of
any of them shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of being a Member, or the
Advisory Member or being a Person that is an affiliate of any of them. In
furtherance, and not in limitation, of the generality of the foregoing,
except for the obligations hereunder and under the Subscription Agreements,
including the obligations to make Capital Contributions pursuant to Section
7.1, the liability of the Members shall be limited to the maximum extent
permitted by the Limited Liability Company Act. In no event shall the
Members be obligated to make Capital Contributions in excess of their
respective Unpaid Capital Obligations. Losses and expenses incurred by the
Company during any fiscal year shall be allocated among the Members in
accordance with the procedures for allocating losses set forth in Section
7.4 hereof.
11.2 Indemnification. (a) None of the Investment Advisor, any
Manager, any Appropriate Officer or any of their respective affiliates,
shareholders, partners, officers, directors, members, employees, agents and
representatives (each an "Indemnified Person") shall have any liability,
responsibility or accountability in damages or otherwise to any Member or
the Company for, and the Company agrees, to the fullest extent permitted by
law, to indemnify, pay, protect and hold harmless each Indemnified Person
from and against, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or nature whatsoever (including, without
limitation, all reasonable costs and expenses of attorneys, defense, appeal
and settlement of any and all suits, actions or proceedings instituted or
threatened against the Indemnified Persons or the Company) and all costs of
investigation in connection therewith which may be imposed on, incurred by,
or asserted against the Indemnified Persons or the Company in any way
relating to or arising out of, or alleged to relate to or arise out of, any
action or inaction on the part of the Company, on the part of the
Indemnified Persons when acting on behalf of the Company or otherwise in
connection with the business or affairs of the Company or any Portfolio
Investment, or on the part of any brokers or agents when acting on behalf
of the Company or any Portfolio Investment (collectively, the "Indemnified
Liabilities") and the Indemnified Person shall not be released from such
Indemnified Person's willful misfeasance, bad faith or gross negligence in
the performance of his, her or its duties or by reason of his, her or its
reckless disregard of his, her or its obligations and duties. The
indemnification rights provided for in this Section 11.2(a) shall survive
the termination of the Company or this Agreement except that no claim may
be asserted by any Indemnified Person against any indemnitor after the
third anniversary of the termination of the Company unless written notice
of such claim shall have been provided to the indemnitor prior to the third
anniversary date. Any indemnification rights provided for in this Section
11.2(a) shall be retained by any removed, resigned or withdrawn Investment
Advisor, Manager or Appropriate Officer and its constituent Indemnified
Persons. Any indemnification rights provided for in this Section 11.2(a)
shall also be retained by any Person who has acted in the capacity of
officer, director, partner, employee, agent, stockholder or affiliate of an
Indemnified Person after such Persons shall have ceased to hold such
positions.
(b) The right of any Indemnified Person to the
indemnification provided herein shall be cumulative of, and in addition to,
any and all rights to which such Indemnified Person may otherwise be
entitled by contract or as a matter of law or equity and shall extend to
such Indemnified Person's successors, assigns and legal representatives.
(c) The provision of advances from Company funds to an
Indemnified Person for legal expenses and other costs incurred as a result
of any legal action or proceeding is permissible if (i) such suit, action
or proceeding relates to or arises out of, or is alleged to relate to or
arise out of, any action or inaction on the part of the Indemnified Person
in the performance of its duties or provision of its services on behalf of
the Company or otherwise in connection with the business or affairs of the
Company or any Portfolio Investment; and (ii) the Indemnified Person
undertakes to repay any funds advanced pursuant to this Section 11.2(c) in
any case in which such Indemnified Person would not be entitled to
indemnification under Section 11.2 (a). If advances are permissible under
this Section 11.2(c), the Indemnified Person shall furnish the Company with
an undertaking as set forth in clause (ii) of this paragraph and shall
thereafter have the right to xxxx the Company for, or otherwise request the
Company to pay, at any time and from time to time after such Indemnified
Person shall become obligated to make payment therefor, any and all amounts
for which such Indemnified Person believes in good faith that such
Indemnified Person is entitled to indemnification under Section 11.2(a)
with the approval of the Managers who are not seeking such indemnification,
or if all Managers are seeking such indemnification, the Investment
Advisor, which approval shall not be unreasonably withheld. The person
granting such approval may, but shall not be required unless otherwise
provided by applicable law, prior to approval require an opinion of counsel
to be in effect that such Indemnified Person is likely to be entitled to
indemnification. The Company shall pay any and all such bills and honor any
and all such requests for payment within sixty (60) days after such xxxx or
request is received by the Company, and the Company's rights to repayment
of such amounts shall be secured by the Indemnified Person's Interest in
the Company, if any, or by such other security as the Managers, or if all
Managers are seeking indemnification, the Investment Advisor may require.
In the event that a final judicial (or binding arbitration) determination
is made that the Company is not so obligated in respect of any amount paid
by it to a particular Indemnified Person, such Indemnified Person will
refund such amount within sixty (60) days of such final determination, and
in the event that a final determination is made that the Company is so
obligated in respect to any amount not paid by the Company to a particular
Indemnified Person, the Company will pay such amount to such Indemnified
Person within sixty (60) days of such final determination, in either case
together with interest (at the lesser of (x) the Applicable Rate and (y)
the maximum rate permitted by applicable law) from the date paid by the
Company until repaid by the Indemnified Person or the date it was obligated
to be paid by the Company until the date actually paid by the Company to
the Indemnified Person.
(d) Any of the foregoing to the contrary notwithstanding,
in the event that an Indemnified Person is a party defendant in an action
brought by a Majority in Interest of the Members (excluding for purposes of
calculating such Majority in Interest the Indemnified Person), the Company
shall not make such advances; provided, however, that in the event such
Indemnified Person prevails in such action, such Indemnified Person shall
be entitled to all rights afforded it under this Section 11.2.
(e) With respect to the liabilities of the Company, all
such liabilities:
(1) shall be liabilities of the Company as an
entity, and shall be paid or otherwise satisfied from the Company's
assets; and
(2) except to the extent otherwise required by law,
shall not in any event be payable in whole or in part by any Member,
Manager, Appropriate Officer or Investment Advisor, or by any
director, officer, trustee, employee, agent, shareholder,
beneficiary, member or partner of any of them.
(f) The Managers may cause the Company, at the Company's
expense, to purchase insurance to insure the Indemnified Persons against
liability hereunder (including liability arising in connection with the
operation of the Company), including, without limitation, for a breach or
an alleged breach of their responsibilities hereunder.
ARTICLE XII
COMPENSATION AND REIMBURSEMENT
12.1 Board of Managers. As compensation for services rendered
to the Company, the Company will pay each Manager who is not an officer,
director or employee of the Investment Advisor or its affiliates (except
for any other investment company advised by the Investment Advisor) such
amounts as may be determined from time to time by the Disinterested
Managers.
12.2 Distributor, Administrator and Other Persons. As
compensation for services rendered to the Company or its Members, the
Company will pay each distributor, administrator, transfer agent,
custodian, accountant, attorney and other agent or independent contractor
duly engaged by or on behalf of the Company to provide such services. The
approval of any contract or agreement pursuant to which a Person serves as
a principal underwriter to the Company shall be subject to the applicable
requirements of the Investment Company Act.
12.3 Reimbursement for Company Expenses. The Company shall
reimburse the Investment Advisor for Company Expenses incurred by the
Investment Advisor and its affiliates in connection with the organization
of the Company, the Company's offer and sale of Shares and Preferred
Interests and the ongoing operations of the Company.
ARTICLE XIII
DISSOLUTION AND TERMINATION
13.1 Dissolution. The Company shall be dissolved upon the
occurrence of any of the following:
(a) the merger, consolidation, other business
combination, voluntary bankruptcy, liquidation or other dissolution of the
Company, or the entering into of any agreement contemplating any of the
foregoing;
(b) the sale or other disposition at any one time of all
or substantially all of the assets of the Company; and
(c) dissolution required by operation of law.
Dissolution of the Company shall be effective on the day on which the event
occurs giving rise to the dissolution, but the Company shall not terminate
until the assets of the Company have been distributed as provided in
Section 13.2 and the certificate of formation of the Company has been
canceled.
13.2 Liquidation. On dissolution of the Company, a liquidator
(who shall be selected by the Board of Managers, if still constituted, and
otherwise shall be a Person proposed and approved by a Majority in Interest
of the Members) and who may be the Investment Advisor or any of its
affiliates, shall cause to be prepared a statement setting forth the assets
and liabilities of the Company as of the date of dissolution, and such
statement shall be furnished to all of the Members. Then, those Company
assets that the liquidator determines should be liquidated shall be
liquidated as promptly as possible, but in an orderly and business-like
manner to minimize loss. Assets that the liquidator determines to
distribute in kind shall be so distributed in a manner consistent with
applicable law. If the liquidator determines that an immediate sale at the
time of liquidation of all or part of the Company assets would cause undue
loss to the Members, the liquidator may, in order to avoid such loss,
either defer liquidation and retain the assets for a reasonable time, or
distribute the assets to the Members in kind. The liquidator shall then
wind up the affairs of the Company and distribute the proceeds of the
Company by the end of the calendar year of the liquidation (or, if later,
within 90 days after the date of such liquidation) in the following order
or priority:
(a) to the payment of the expenses of liquidation and to
creditors (including Members who are creditors, to the extent permitted by
law) in satisfaction of liabilities of the Company other than liabilities
for distributions to Members, in the order of priority as provided by law;
(b) to the setting up of any reserves that the liquidator
may deem necessary or appropriate for any anticipated obligations or
contingencies of the Company or of the liquidator arising out of or in
connection with the operation or business of the Company. Such reserves may
be paid over by the liquidator to an escrow agent or trustee proposed and
approved by the liquidator to be disbursed by such escrow agent or trustee
in payment of any of the aforementioned obligations or contingencies and,
if any balance remains at the expiration of such period as the liquidator
shall deem advisable, to be distributed by such escrow agent or trustee in
the manner hereinafter provided;
(c) to the Members or their legal representatives in
accordance with the positive balances in their respective Capital Accounts,
as determined after taking into account all adjustments to Capital Accounts
for all periods.
13.3 Termination. The liquidator shall comply with any
requirements of the Act or other applicable law pertaining to the winding
up of a limited liability company, at which time the Company shall stand
terminated.
ARTICLE XIV
AMENDMENTS
14.1 Proposal of Amendments. Except as otherwise specified in
this Agreement, any amendment to this Agreement may be proposed by any
Manager, by the Investment Advisor or by Members who, in aggregate, own not
less than 51% of the Shares owned by all such Members. The Person or
Persons proposing such amendment shall submit to the Board of Managers: (i)
the text of such amendment; (ii) a statement of the purpose of such
amendment; and (iii) in the case of an amendment so proposed by the Members
(other than the Advisory Member), an opinion of counsel reasonably
acceptable to the Managers obtained by the Members proposing such amendment
to the effect that such amendment is permitted by the Investment Company
Act, the Act and the laws of any other jurisdiction where the Company is
qualified to do business, will not impair the limited liability of the
Managers or Members, and will not adversely affect the classification of
the Company as a partnership for federal and state income tax purposes. To
the extent required by the Investment Company Act, the Board of Managers
shall, within 40 days after receipt from Members of proposal under clause
(iii) of this Section 14.1 and the required opinion, give notification to
all Members of such proposed amendment, of such statement of purpose, and
of such opinion of counsel, together with the views, if any, of the Board
of Managers and the Investment Advisor with respect to such proposed
amendment. All amendments validly proposed by Members pursuant to clause
(iii) of this Section 14.1 or proposed by Managers or the Investment
Advisor but requiring the approval of Members shall be submitted to the
Members for a vote no less than 10 days nor more than 90 days after the
date of mailing of such notice and will be adopted if approved by an
affirmative vote of a Majority in Interest of the Members, subject to the
approval of any greater number of Members as may be required by applicable
law.
14.2 Amendments to Be Adopted Solely by the Board of Managers.
Subject to Section 14.3, the Board of Managers may, without the consent of
any member may (i) amend any provision of this Agreement which requires any
action to be taken by or on behalf of the Board of Managers or the Company
pursuant to requirements of Delaware law if the provisions of Delaware law
are amended, modified or revoked so that the taking of such action is no
longer required, (ii) take such action in light of changing regulatory
conditions or of the then current ERISA regulations, as the case may be, as
is necessary in order to permit the Company to continue in existence or
otherwise to comply with such ERISA or other regulations, (iii) correct any
clerical mistake or to correct or supplement any immaterial provision
herein or in the Certificate which may be inconsistent with any other
provision herein or therein, or correct any printing, stenographic or
clerical errors or omissions, which shall not be inconsistent with the
provisions of this Agreement or the status of the Company as a partnership
for federal income tax purposes, and (iv) change the name of the Company.
14.3 Amendments Not Allowable. Unless approved by the Members
affected thereby, no amendment to this Agreement shall be permitted if the
effect of such amendment would be to:
(a) impair the limited liability of Members provided for
in Section 11.1; or
(b) adversely affect in any way the federal income tax
status of the Company as a partnership.
(c) change the purpose, term, capital contribution,
allocation or distribution provisions of this Agreement.
ARTICLE XV
POWER OF ATTORNEY
15.1 Power of Attorney. Each Member hereby irrevocably
constitutes and appoints each Manager and each Appropriate Officer, and
their respective designees, as such Member's true and lawful agents and
attorneys-in-fact, with full power and authority in such Member's name,
place, and stead, to make, execute, acknowledge, deliver, file, and record
the following documents and instruments in accordance with the other
provisions of this Agreement;
(a) this Agreement and a certificate of formation, a
certificate of doing business under fictitious name and any other
instrument that may be required to be filed in connection with the
formation and operation of the Company under the laws of Delaware or any
other state;
(b) any and all amendments, restatements, cancellations,
or modifications of the instruments described in Section 15.1(a);
(c) any and all instruments related to the admission,
removal, or withdrawal of any Member; and
(d) all documents and instruments that may be necessary
or appropriate to effect the dissolution and termination of the Company,
pursuant to the terms hereof.
15.2 Irrevocability. The foregoing power of attorney is coupled
with an interest and such grant shall be irrevocable except that it shall
become revocable upon a Trigger Notification. Such power of attorney shall
survive the subsequent Incapacity of any such Member or the transfer of any
or all of such Member's Shares or Preferred Interests.
15.3 Priority of Agreement. In the event of any conflict
between provisions of this Agreement or any amendment hereto and any
documents executed, acknowledged, sworn to, or filed by any Manager or
Appropriate Officer under this power of attorney, this Agreement and its
amendments shall govern.
15.4 Exercise of Power. This power of attorney may be exercised
by any of Managers either by signing separately as attorney-in-fact for
each such Manager or by a single signature of any Manager or Appropriate
Officer acting as attorney-in-fact for all Managers.
ARTICLE XVI
MISCELLANEOUS
16.1 Certificate of Formation. On each subsequent change in the
Company specified in the Act, the Managers shall, to the extent required by
the Act, cause to be executed and acknowledged an amended certificate of
formation pursuant to the provisions of the Act, which will be duly filed
as prescribed by Delaware law.
16.2 Delaware Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by, and construed
and interpreted according to, the laws of Delaware.
16.3 Counterparts. This Agreement may be executed in
counterparts, and all counterparts so executed shall constitute one
agreement that shall be binding on all the parties hereto. Any counterpart
of this Agreement that has attached to it separate signature pages which
altogether contain the signatures of all Members or their attorneys-in-fact
shall for all purposes be deemed a fully executed instrument.
16.4 Binding upon Successors and Assigns. Subject to and unless
otherwise provided in this Agreement, each and all of the covenants, terms,
provisions, and agreements herein contained shall be binding upon and inure
to the benefit of the successors, successors-in-title, heirs and assigns
of the respective parties hereto.
16.5 Notices. Any notice, offer, consent, or demand permitted
or required to be made under this Agreement to any party hereto shall be
given in writing signed by the Person giving such notice either by (i)
personal delivery or (ii) by registered or certified mail, postage prepaid,
addressed to that party at the respective address shown on the Company's
books and records, or to such other address as that party shall indicate by
proper notice to the Board of Managers, in the same manner as provided
above. All notices shall be deemed effective upon receipt or five days
after the date of mailing in accordance with the above provisions.
16.6 Severability. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be effected thereby,
but shall be enforced to the maximum extent possible under applicable law.
16.7 Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the
subject hereof and supersedes all prior agreements or understandings,
written or oral, between the parties with respect thereto.
16.8 Headings, Etc. The headings in this Agreement are inserted
for convenience of reference only and shall not affect interpretation of
this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or the plural shall include the singular and
the plural, and pronouns stated in either the masculine or the neuter
genders shall include the masculine, the feminine and the neuter.
16.9 Legends. If certificates are issued evidencing a Member's
Shares or Preferred Interests, each such certificate shall bear such
legends as may be required by applicable federal and state laws, or as may
be deemed necessary or appropriate by the Board of Managers to reflect
restrictions upon transfer contemplated herein.
16.10 Waiver of Partition. Except as may otherwise be provided
by law in connection with the winding up, liquidation and dissolution of
the Company, each Member hereby irrevocably waives any and all rights that
it may have to maintain an action for partition of any of the Company's
property.
16.11 Survival of Certain Provisions. All indemnities and
reimbursement obligations made pursuant to this Agreement shall survive
dissolution and liquidation of the Company until the expiration of the
longest applicable statute of limitations (including extensions and
waivers) with respect to the matter for which a party would be entitled to
be indemnified or reimbursed, as the case may be.
16.12 Use of the Name "Fortress." Fortress has consented to the
use by the Company of the identifying word or name "Fortress" in the name
of the Company. Such consent is conditioned upon the employment of FIG
Advisors LLC as the Investment Advisor to the Company. The name or
identifying word "Fortress" may be used from time to time in other
connections and for other purposes by Fortress, Fortress Investment Corp.,
Fortress Investment Group, LLC or their respective affiliates. Fortress may
require the Company to cease using "Fortress" in the name of the Company if
the Company ceases to employ, for any reason, FIG Advisors LLC, any
successor thereto or any affiliate thereof as Investment Advisor of the
Company.
16.13 Transaction Origination and Other Fees. All transaction,
advisory, break-up, director's, origination and other similar fees earned
in connection with the Company's investment activities will be property of
the Company.
Appendix A
Fundamental Investment Restrictions
The Company's purpose as set forth in Section 2.4 hereof and the following
investment restrictions are fundamental and cannot be changed without
approval of a majority of the Managers and the approval of Majority in
Interest of Members. If a percentage restriction on investment or use of
assets set forth below is adhered to at the time a transaction is effected,
later changes in percentage resulting from changing market values will not
be considered a deviation from policy. Subject to the foregoing, the
Company may not:
(1) borrow money or issue senior securities except in compliance
with the Investment Company Act;
(2) make loans of money or property to any Person, except as may be
consistent with the Company's investment objectives and
policies;
(3) underwrite the securities of other issuers, except to the
extent that in connection with the disposition of portfolio
securities or the sale of its own Shares, Preferred Interests
or securities of its subsidiaries the Company may be deemed to
be an underwriter;
(4) purchase real estate or interests therein to the extent that as
a result of such investments the Company would not be (a) an
investment company by virtue of Section 3(c)(5)(C) of the
Investment Company Act or (b) a regulated investment company
under the Code;
(5) purchase or sell commodities or commodity contracts for any
purposes except as, and to the extent, permitted by applicable
law without the Company becoming subject to registration with
the Commodity Futures Trading Commission as a commodity pool;
or
(6) invest in excess of 25% of its capital in assets in any
industry other than the real estate and real estate financial
products industry, including mortgage loans and other Real
Estate-Related Assets of the types described herein except that
the Company may invest without limit in securities backed by
the credit of the United States of America or agencies or
instrumentalities thereof.
IN WITNESS WHEREOF, the undersigned have executed this Limited Liability
Company Agreement as of September 6, 2000.
ADVISORY MEMBER:
FIG Advisors LLC
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer
MEMBERS:
Northwestern Mutual Life Insurance Company
By: /s/ Xxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Authorized Representative
Weyerhauser Company Master Retirement Trust
By: /s/ Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Director
