Exhibit A
AGREEMENT AND DECLARATION OF TRUST
OF
HIGHLAND CORPORATE OPPORTUNITIES FUND
a Delaware Statutory Trust
Dated as of May 16, 2005
TABLE OF CONTENTS
Page
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SECTION 1. DEFINED TERMS..........................................................................................1
SECTION 2. FORMATION AND IDENTIFICATION...........................................................................6
2.1 Formation...........................................................................................6
2.2 Name and Place of Business..........................................................................6
2.3 Records of Shareholders.............................................................................6
2.4 Statutory Trust.....................................................................................6
SECTION 3. PURPOSE, NATURE OF BUSINESS AND POWERS.................................................................6
SECTION 4. TERM ..................................................................................................7
SECTION 5. SHARES OF BENEFICIAL INTEREST..........................................................................8
5.1 Beneficial Interest.................................................................................8
5.2 Classes and Series..................................................................................8
5.3 Issuance of Shares..................................................................................8
5.4 Rights of Shareholders..............................................................................8
SECTION 6. REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS.....................................................9
SECTION 7. CAPITAL CONTRIBUTIONS..................................................................................9
7.1 Capital Contributions of Shareholders...............................................................9
7.2 Contribution of the Special Shareholder.............................................................9
7.3 Withdrawal of Capital...............................................................................9
SECTION 8. DISTRIBUTIONS.........................................................................................10
8.1 Distributions......................................................................................10
SECTION 9. MANAGEMENT AND BOARD OF TRUSTEES......................................................................11
9.1 Management Generally...............................................................................11
9.2 Board of Trustees..................................................................................11
9.3 Expenses of the Company............................................................................14
9.4 Shareholders' Consent..............................................................................14
9.5 Exculpation........................................................................................14
9.6 Indemnification; No Duty of Investigation; Reliance on Experts.....................................15
9.7 Trustee Limited Liability..........................................................................16
9.8 Certain Other Activities...........................................................................16
SECTION 10. SHAREHOLDERS.........................................................................................17
10.1 Identity, Contributions and Common Share Commitments...............................................17
10.2 No Management Power or Liability...................................................................17
10.3 Amendments.........................................................................................17
10.4 Merger, Consolidation, Liquidation.................................................................19
10.5 Limitations........................................................................................19
10.6 Meetings...........................................................................................19
10.7 Action Without a Meeting...........................................................................20
10.8 Procedures.........................................................................................20
10.9 Voting.............................................................................................20
10.10 Redemption; Conversion.............................................................................22
10.11 Certain Transactions...............................................................................22
SECTION 11. ASSIGNMENTS OR TRANSFERS OF SHARES...................................................................24
11.1 Assignments or Transfers of Shares.................................................................24
SECTION 12. BOOKS, RECORDS AND REPORTS...........................................................................25
12.1 Books..............................................................................................25
12.2 Reports............................................................................................26
SECTION 13. VALUATION OF INTERESTS...............................................................................27
SECTION 14. BANK ACCOUNTS; CUSTODIAN.............................................................................27
14.1 Bank Accounts Generally............................................................................27
14.2 Custodian..........................................................................................27
SECTION 15. DISSOLUTION AND TERMINATION OF THE COMPANY...........................................................28
15.1 Dissolution Generally..............................................................................28
15.2 Continuation of Company............................................................................28
15.3 Events Causing Dissolution.........................................................................28
15.4 Distribution of Assets on Liquidation..............................................................28
15.5 Liquidation Statement..............................................................................29
15.6 Trustee's Liability Upon Dissolution or Removal....................................................29
SECTION 16. GENERAL PROVISIONS...................................................................................29
16.1 Notices and Distributions..........................................................................29
16.2 Survival of Rights.................................................................................30
16.3 Construction.......................................................................................30
16.4 Section Headings...................................................................................30
16.5 Agreement in Counterparts..........................................................................30
16.6 Governing Law......................................................................................30
16.7 Additional Documents...............................................................................31
16.8 Severability.......................................................................................31
16.9 Pronouns...........................................................................................31
16.10 Entire Agreement...................................................................................31
16.11 Arbitration........................................................................................31
16.12 Waiver of Partition................................................................................32
16.13 Filing.............................................................................................32
APPENDIX A Statement of Preferences of Series S Preferred Share................................................A-1
APPENDIX B Statement of Preferences of Series P Preferred Shares...............................................B-1
APPENDIX C Form of Notice of Transfer..........................................................................C-1
HIGHLAND CORPORATE OPPORTUNITIES FUND
A Delaware Statutory Trust
AGREEMENT AND DECLARATION OF TRUST
This Agreement and Declaration of Trust, made as of May 16, 2005 (this
"Agreement"), by the undersigned;
WITNESSETH:
WHEREAS, Highland Corporate Opportunities Fund (the "Company") has
been formed to carry on the business of an investment fund as set forth more
particularly hereinafter; and
WHEREAS, the Company is authorized to issue an unlimited number of its
shares of beneficial interest in accordance with the provisions hereinafter set
forth; and
WHEREAS, the Trustees (as hereinafter defined) have agreed to manage
all property coming into their hands as trustees of a Delaware statutory trust
in accordance with the provisions hereinafter set forth; and
WHEREAS, the parties hereto intend that the Company created by this
Agreement and the Certificate of Trust filed with the Secretary of State of the
State of Delaware on March 21, 2005 shall constitute a statutory trust under
the Delaware Statutory Trust Act and that this Agreement shall constitute the
governing instrument of such statutory trust.
NOW, THEREFORE, the Trustees hereby declare that all money and
property contributed to the trust established hereunder shall be held and
managed under this Agreement for the benefit of the holders, from time to time,
of the shares of beneficial interest to be issued hereunder and subject to the
provisions set forth below.
Upon the terms and subject to the conditions described below, the
parties to this Agreement agree as follows:
SECTION 1.
DEFINED TERMS
The terms set forth below shall have the indicated meanings.
"Advisers Act" means the Investment Advisers Act of 1940 and the rules
and regulations promulgated thereunder and applicable exemptions granted
therefrom, as amended from time to time.
"Affiliated Person" has the meaning set forth in the Investment
Company Act.
"Aggregate Capital Contributions" means, with respect to any
Shareholder as of any date, the aggregate amount of all Capital Contributions
made by such Shareholder on or prior to such date.
"Agreement" means this Agreement and Declaration of Trust, as
originally executed and as amended from time to time.
"Assets" means all cash, Cash Equivalents, securities, investments and
other property and assets of any type of the Company.
"Base Rate" means, on any date, a variable rate per annum equal to the
rate of interest published from time to time by The Wall Street Journal as the
"prime rate" at large U.S. money center banks.
"Board of Trustees" means the board of trustees of the Company.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which the New York Stock Exchange is closed, or banks in New York,
New York or Los Angeles, California are required by law to be closed. All
references to Business Day herein shall be based on the time in New York, New
York.
"By-Laws" has the meaning set forth in Section 9.2(g).
"Capital Contribution" means a contribution to the Company in cash by
a Shareholder or by any predecessor holder of the Shares held by such
Shareholder.
"Cash Equivalents" has the meaning assigned to such term in the
relevant Statement of Preferences (or if the Statement of Preferences has been
terminated, those provisions in effect on the date of such termination).
"Certificate" means the Certificate of Trust of the Company, filed
with the Secretary of State on March 21, 2005, and any and all amendments
thereto and restatements thereof filed with the Secretary of State.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
"Common Share Commitment" means, when referring to a dollar amount, an
amount committed by a Common Shareholder or prospective Common Shareholder for
investment in the Common Shares of the Company pursuant to a Subscription
Agreement.
"Common Shareholder" means a Person holding Common Shares of the
Company in accordance with the terms of this Agreement at the time of reference
thereto.
"Common Shares" means the common Shares of beneficial interests of the
Company having the rights and other terms set forth in this Agreement.
"Company" means Highland Corporate Opportunities Fund, a Delaware
statutory trust, as it may from time to time be constituted.
"Custodial Account" means one or more segregated trust accounts
maintained pursuant to the requirements of the Investment Company Act and other
applicable law to hold the Assets.
"Custodian" means an entity which maintains the Custodial Account
pursuant to the requirements of the Investment Company Act and other applicable
law.
"Delaware Statutory Trust Act" shall mean the Delaware Statutory Trust
Act, 12 Del. C. ss.ss.3801, et. seq., as such act may be amended from time to
time.
"Disabling Conduct" shall have the meaning set forth in Section 9.5.
"Disinterested Non-Party Trustees" shall have the meaning set forth in
Section 9.6.
"Fiscal Quarter" means a three calendar month period ending March 31,
June 30, September 30 or December 31 of a Fiscal Year.
"Fiscal Year" means the Company's fiscal year, which shall end on each
December 31 unless otherwise determined by the Board of Trustees.
"Incapacity" or "Incapacitated" means, as to any Person, the
bankruptcy, insolvency, death, disability, adjudication of incompetence or
insanity, dissolution or termination, as the case may be, of such Person.
"Indemnified Person" shall have the meaning assigned to such term in
Section 9.5.
"Independent Trustee" means a Trustee that is not an Interested
Person.
"Interested Person" has the meaning given to such term in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder and applicable exemptions
granted therefrom, as amended from time to time.
"Investment Management Agreement" means the Investment Management
Agreement between the Company and the Investment Manager, dated on or about May
16, 2005, as such agreement may be amended, modified, revised or restated, from
time to time, in accordance with the terms hereof and thereof, and any
substantially similar agreement with a successor Investment Manager permitted
by the terms hereof.
"Investment Manager" means Highland Capital Management, L.P., a
Delaware limited partnership, in its capacity as investment manager to the
Company, and any successor thereto selected in accordance with the Investment
Company Act.
"Management Fee" means the fee payable to the Investment Manager under
the Investment Management Agreement.
"Manager Affiliate" shall have the meaning set forth in Section 9.8.
"Net Asset Value" means the value of the Assets less the liabilities
of the Company, calculated pursuant to Section 14 in accordance with generally
accepted accounting principles and in compliance with the Investment Company
Act.
"Offering Memorandum" means the Confidential Private Offering
Memorandum, dated May, 2005, relating to the Common Shares, as amended or
supplemented from time to time.
"Other Accounts" shall have the meaning set forth in Section 9.8.
"Person" means any human being, partnership, limited liability
company, corporation, trust or other entity.
"Portfolio Company" means any Person that has issued any securities or
incurred any obligations that are then owned, or that previously were owned, by
the Company.
"Preferred Shareholder" means a Shareholder holding Preferred Shares
of the Company.
"Preferred Shares" means the preferred Shares of beneficial interests
of the Company having the rights and other terms set forth in the Statement of
Preferences for the applicable series thereof, including without limitation any
Series S Preferred Shares and any Series P Preferred Shares.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder and applicable exemptions granted therefrom,
as amended from time to time.
"Shareholder" means any Person that is admitted as a Common
Shareholder, Preferred Shareholder or Special Shareholder of the Company in
accordance with the terms of this Agreement at the time of reference thereto.
"Shares" means the units of beneficial interest of the Company which
shall be divided from time to time and includes fractions of Shares as well as
whole Shares.
"Special Shareholder" means Highland Capital Management, L.P., a
Delaware limited partnership, in its capacity as the Special Shareholder of the
Company, or any successor thereto in accordance with this Agreement.
"Special Share" means the Series S Preferred Share provided for
pursuant to Section 7.2.
"Statement of Preferences" means the statement of preferences setting
forth the rights and other terms of any Preferred Shares issued by the Company.
"Subscription Agreement" means each subscription agreement and any
related supplemental subscription agreement executed by any existing or
prospective Shareholder relating to such Shareholder's investment in the
Company.
"Substituted Shareholder" means any Person admitted as a Shareholder
pursuant to Section 11.2(b).
"Substituted Special Shareholder" means any Person admitted as the
Special Shareholder pursuant to Section 11.2(b).
"Transfer" or "Transferred" means, with respect to any legal or
beneficial interest in the Company, a direct or indirect sale, transfer,
assignment, gift, pledge, hypothecation or other disposition or encumbrance of
any nature of or on such interest, whether by operation of law or otherwise
(including a transfer as a result of a merger or consolidation involving a
Shareholder or a sale of all or substantially all of a Shareholder's assets).
"Transferee" means, with respect to any legal or beneficial interest
in the Company, the Person to whom the Transferor of such interest desires to
Transfer or has Transferred such interest.
"Transferor" means, with respect to any legal or beneficial interest
in the Company, the Shareholder or other Person desiring to Transfer such
interest.
"Treasury Regulations" means the United States Treasury regulations
promulgated under the Code.
"Trustee" means each trustee of the Company who at the time in
question has been duly elected or appointed and has qualified as a trustee in
accordance with the provision hereof and is then in office.
"Valuation Date" means any date selected by the Company therefor by
the Investment Manager or the Board of Trustees.
SECTION 2.
FORMATION AND IDENTIFICATION
2.1 Formation
The Company has been formed as a statutory trust pursuant to the
laws of the State of Delaware.
2.2 Name and Place of Business
The name of the Company shall be "Highland Corporate Opportunities
Fund" or such other name or names as may be selected by the Investment Manager
from time to time with written notice given to the Shareholders of such change.
The principal office of the Company shall be at the principal place of business
of the Investment Manager at Two Galleria Tower, 00000 Xxxx Xxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000, or other or additional places of business as may be
selected from time to time by the Company.
2.3 Records of Shareholders
The addresses and schedules of capital accounts and other matters
related to the Shareholders shall be those set forth in the Company records. A
Shareholder may change its address by written notice to the Company, in care of
the Investment Manager, at the address set forth in Section 2.2.
2.4 Statutory Trust
The Company has been formed as a statutory trust under and
pursuant to the laws of the state of Delaware. The Board of Trustees and the
Shareholders specifically intend and agree that the Company shall, for purposes
of the Code and state tax laws, be classified as an association. No Shareholder
shall be construed to be a partner in the Company or a partner of any
Shareholder or other Person in the Company, and this Agreement and the
relationships created thereby and arising therefrom shall not be construed to
suggest otherwise.
SECTION 3.
PURPOSE, NATURE OF BUSINESS AND POWERS
(a) The purposes of the Company and the business to be carried on by
it, subject to the limitations contained elsewhere in this Agreement, are to
engage in any business lawful for a corporation or partnership formed under the
laws of the State of Delaware, including to act as an investment company.
(b) Subject to the limitations set forth in Section 2.4 and 3(a) of
this Agreement, the Company shall have the power to do any and all acts
necessary, appropriate, proper, advisable, incidental or convenient to or for
the furtherance of the purposes and business described herein and for the
protection and benefit of the Company, and shall have, without limitation, any
and all of the powers of a statutory trust organized under the laws of the
State of Delaware.
(c) Legal title to all the Assets shall be vested in the name of the
Company except that the Trustees shall have power to cause legal title to any
Assets to be held by or in the name of one or more of the Trustees, or in the
Trustees as joint tenants, or in the name of any other Person as nominee,
custodian or pledgee, on such terms as the Trustees may determine, provided
that the interest of the Company therein is appropriately protected.
Any right, title and interest of the Trustees in the Assets shall vest
automatically in each person who may hereafter become a Trustee upon his due
election and qualification. Upon the ceasing of any person to be a Trustee for
any reason, such person shall automatically cease to have any right, title or
interest in any of the Assets, and any right, title and interest of such
Trustee in the Assets shall vest automatically in the remaining Trustees. Any
such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.
(d) No purchaser, lender or other Person dealing with the Trustees or
any officer, employee or agent of the Trust or shall be bound to make any
inquiry concerning the validity of any transaction purporting to be made by the
Trustees or by said officer, employee or agent or be liable for the application
of money or property paid, loaned, or delivered to or on the order of the
Trustees or of said officer, employee or agent. Every obligation, contract,
instrument, certificate, Share, other security or undertaking of the Company
and every other act or thing whatsoever executed in connection with the Company
shall be conclusively presumed to have been executed or done by the executors
thereof only in their capacity as Trustees under this Agreement or in their
capacity as officers, employees or agents of the Company. Every written
obligation, contract, instrument, certificate, Share, other security or
undertaking of the Company may recite that the same is executed or made by them
not individually, but as Trustees under this Agreement, and that the
obligations of the Company under any such instrument are not binding upon any
of the Trustees or Shareholders individually, but bind only the Assets, and may
contain any further recital which they may deem appropriate, but the omission
of any such recital shall not operate to bind the Trustees or Shareholders
individually.
SECTION 4.
TERM
The existence of the Company commenced on the date the Certificate was
filed in the Office of the Secretary of State, and the Company shall have
perpetual existence unless terminated in accordance with Section 15.3 hereof.
SECTION 5.
SHARES OF BENEFICIAL INTEREST
5.1 Beneficial Interest
The interest of the Shareholders in the Company hereunder shall be
divided into an unlimited number of shares of beneficial interest, par value
$.001 per share. All Shares issued in accordance with the terms hereof,
including, without limitation, Shares issued in connection with a dividend in
Shares or a split of Shares, shall be fully paid and nonassessable when the
consideration determined by the Company (if any) therefor shall have been
received by the Company.
5.2 Classes and Series
The Trustees shall have the authority, without the approval of any
Shareholders of the Company, to classify and reclassify issued and unissued
Shares into one or more classes and one or more series of any or all of such
classes, each of which classes and series thereof shall have such designations,
powers, preferences, voting, conversion and other rights, limitations,
qualifications and terms and conditions as the Trustees shall determine from
time to time with respect to each such class or series; provided, however, that
no reclassification of any issued and outstanding Shares and no modifications
of any of the designations, powers, preferences, voting, conversion or other
rights, limitations, qualifications and terms and conditions of any issued and
outstanding Shares may be made by the Trustees without the affirmative vote of
the Shares specified in Section 10.3 to the extent required thereby and the
satisfaction of any conditions to such reclassification as set forth in the
applicable Statement of Preferences.
5.3 Issuance of Shares
The Trustees, in their discretion, may from time to time without
vote of the Shareholders issue Shares of any class or any series of any such
class to such Person or Persons and for such amount and type of consideration,
including cash or property, at such time or times, and on such terms as the
Trustees may determine, and may in such manner acquire other assets (including
the acquisition of assets subject to, and in connection with the assumption of,
liabilities) and businesses. The Trustees may from time to time divide or
combine the Shares of any class or any series of any such class into a greater
or lesser number without thereby changing the proportionate beneficial interest
in such Shares. Issuances and repurchases of Shares may be made in whole Shares
and/or fractions as the Trustees may determine.
5.4 Rights of Shareholders
The Shares shall be personal property giving only the rights in
this Agreement specifically set forth. The ownership of the Assets of every
description is vested in the Trustees as set forth in Section 3(c). The right
to conduct and supervise the conduct of the business of the Company is vested
exclusively in the Trustees (subject to the right of the Board of Trustees to
delegate all or any part of authority to any person or group of persons,
including, without limitation, the Investment Manager), and the Shareholders
shall have no interest therein other than the beneficial interest conferred by
their Shares, and they shall have no right to call for any partition or
division of any property, profits, rights or interests of the Company nor can
they be called upon to share or assume any losses of the Company or suffer an
assessment of any kind by virtue of their ownership of Shares. No Shares of any
class or series shall entitle the holder to preference, preemptive, appraisal,
conversion or exchange rights (except as otherwise specified in this Agreement
or as specified by the Trustees in the designation or redesignation of any such
class or series).
SECTION 6.
REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS
The Corporation Trust Company is hereby designated, subject to
change by the Investment Manager, as the registered office of the Company and
as the agent upon whom process issued by authority of or under any law of the
State of Delaware may be served.
SECTION 7.
CAPITAL CONTRIBUTIONS
7.1 Capital Contributions of Shareholders
Each Person subscribing to acquire Common Shares from the Company
shall deliver to the Investment Manager a completed, executed Subscription
Agreement, which must be satisfactory to the Company, and in which, among other
things, such Person represents that it is an "accredited investor" as defined
in Rule 501(a) under the Securities Act and a "qualified client" within the
meaning of Rule 205-3 of the Advisers Act. The minimum Common Share Commitment
to which a Common Shareholder may subscribe shall be $25,000; provided,
however, that the Investment Manager may, in its sole discretion, waive this
requirement.
7.2 Contribution of the Special Shareholder
After the Board of Trustees determines it is permissible to pay
the Carried Interest as a dividend on a special share, the Special Shareholder
shall be entitled to acquire from the Company one Special Share in exchange for
its contribution of $1,000.00. The Special Share shall have the designations,
powers, preferences, voting and other rights, limitations, qualifications and
terms and conditions set forth in the Statement of Preferences therefor
attached hereto as Appendix A together with any changes as shall be acceptable
to the Board of Trustees and the Investment Manager.
7.3 Withdrawal of Capital
No Shareholder shall have any right to withdraw from the Company
except in connection with the admission of one or more Transferees of all of
such Shareholder's Shares in the Company. No Shareholder shall have any right
to require the Company to repurchase or redeem all or any portion of its Shares
except as provided in or pursuant to any Statement of Preferences or agreement
between such Shareholder and the Company.
SECTION 8.
DISTRIBUTIONS
8.1 Distributions
(a) The Company shall from time to time distribute among the
Shares (or one or more classes or series thereof) such portion of the net
profits, surplus (including paid-in surplus), capital, or assets held by the
Company as the Trustees may deem proper or as may otherwise be determined
pursuant to this Agreement or the Statement of Preferences therefor, which need
not be ratable with respect to distributions in respect of Shares of any other
class or series thereof of the Company, but must be ratable within each class
or series of Shares. The Preferred Shares shall not be entitled to receive, and
the Trustees shall be prohibited from declaring or distributing in respect of
any of the Preferred Shares, any amount in excess of the distributions
specified for such Preferred Shares in the applicable Statement of Preferences
therefor. Such distributions may be made in cash or property (including without
limitation any type of obligations of the Company or any assets thereof) or any
combination thereof.
(b) Distributions may be made to the holders of record of the
Shares entitled to such distribution at the time such distribution is declared
or at such later date as shall be determined by the Company prior to the date
of payment.
(c) The Trustees may always retain from any source such amount as
they may deem necessary to pay the debts or expenses of the Company, to redeem
Shares pursuant to the terms of this agreement, or to meet obligations of the
Company, or as they otherwise may deem desirable to use in the conduct of its
affairs or to retain for future requirements or extensions of the business of
the Company.
(d) Any distribution by the Company pursuant to the terms of this
Section 8.1 or Section 16 to the Person shown on the Company's records as a
Shareholder or to its legal representatives, or to the assignee of the right to
receive such distributions as provided herein, shall relieve the Company, the
Trustees and the Investment Manager of all liability to any other Person who
may be interested in such distribution by reason of any Transfer of any
interest in any of such Shareholder's Shares (including a Transfer thereof by
operation of law or by reason of death, incompetence, bankruptcy or liquidation
of such Shareholder, as the case may be).
(e) Notwithstanding any provision to the contrary contained in
this Agreement, neither the Company, the Trustees nor the Investment Manager on
behalf of the Company shall make any distribution to a Shareholder on account
of its Shares if such distribution would violate applicable law.
(f) Notwithstanding any other provision of this Agreement, the
Company may set aside reasonable reserves for anticipated liabilities,
obligations or commitments of the Company which it determines to be reasonably
necessary or desirable, in its sole judgment, including any amounts that are
contributed to the Company by the Investment Manager for such anticipated
expenses, provided that any amounts so contributed that are not used by the
Company to pay expenses of the Company will be distributed to the Investment
Manager upon the liquidation of the Company, subject to provisions of Section
16 hereof.
SECTION 9.
MANAGEMENT AND BOARD OF TRUSTEES
9.1 Management Generally
(a) Subject to the voting rights of the Shares, the management of
the Company shall be vested exclusively in the Board of Trustees, which shall
have all of the power and authority to manage the Company, including the
authority to appoint officers and to authorize persons to act on behalf of the
Company and engage third parties to provide services to the Company and to
perform any permissible activity and is further authorized to delegate such
power and authority to such officers or authorized Persons as it determines to
be appropriate, subject to the requirements of the Investment Company Act. The
Board of Trustees may designate one or more committees each of which shall have
all or such lesser portion of the power and authority of the entire Board of
Trustees as the Trustees shall determine from time to time, except to the
extent that action by the entire Board of Trustees or particular Trustees is
required by the Investment Company Act.
(b) Except as expressly set forth herein, the Shareholders, in
their capacity as such, shall have no part in the management of the Company,
and shall have no authority or right to act on behalf of the Company in
connection with any matter. Employees, officers, authorized Persons and agents
of the Company shall have authority to act on behalf and in the name of the
Company to the extent authorized by the Board of Trustees or pursuant to
authority granted by it. It is contemplated that the Board of Trustees will
delegate substantially all of its power and authority with respect to the
operations of the Company to the Investment Manager and other authorized
Persons.
9.2 Board of Trustees
(a) Subject to the terms of each Statement of Preferences, the
number of Trustees shall be such number, not less than three, as shall be
approved from time to time by a majority of Trustees then in office. No
reduction in the number of Trustees shall have the effect of removing any
Trustee from office prior to the expiration of his or her term. An individual
nominated as a Trustee shall be at least 21 years of age and not older than
such age as shall be approved from time to time by not less than two-thirds of
the Trustees then in office and shall not be under legal disability. Trustees
need not own Shares and may succeed themselves in office. The names and
addresses of the Trustees shall be set forth in the records of the Company.
(b) Any Trustee may resign as a Trustee (without need for prior or
subsequent accounting) by an instrument in writing signed by him and delivered
or mailed to the Chairman, if any, or the Secretary and such resignation shall
be effective upon such delivery, or at a later date provided in such
instrument. Subject to the rights of the Preferred Shares with respect to
Trustees elected solely by the Preferred Shares pursuant to the Investment
Company Act, any Trustee may be removed (provided that the aggregate number of
Trustees after such removal shall not be less than the minimum number specified
in Section 9.2(a) hereof) for cause at any time by the act of a majority of the
remaining Trustees, specifying the date when such removal shall become
effective. Subject to the rights of the Preferred Shares with respect to
Trustees elected solely by the Preferred Shares pursuant to the Investment
Company Act, any Independent Trustee may be removed (provided that the
aggregate number of Trustees after such removal shall not be less than the
minimum number specified in Section 9.2(a) hereof without cause at any time by
the act of two-thirds of the remaining Trustees, and any Trustee can be removed
without cause by vote of not less than two-thirds of the aggregate number of
Shares entitled to vote in the election of such Trustee, specifying the date
when such removal shall become effective.
(c) The term of office of a Trustee shall terminate and a vacancy
shall occur in the event of the removal, resignation, incompetence or other
incapacity to perform the duties of the office, or death, of a Trustee. Subject
to the rights of the Preferred Shares with respect to Trustees elected solely
by the Preferred Shares pursuant to the Investment Company Act and pursuant to
any Statement of Preferences, whenever a vacancy in the Board of Trustees shall
occur, the remaining Trustees may fill such vacancy by appointing an individual
having the qualifications described in this Agreement by a written instrument
signed or adopted by a majority of the Trustees then in office or by election
of the holders of Shares, or may leave such vacancy unfilled, or may reduce the
number of Trustees (provided that the aggregate number of Trustees after such
removal shall not be less than the minimum number specified in Section 9.2(a)
hereof). Any vacancy created by an increase in Trustees may be filled by the
appointment of an individual having the qualifications described in this
Agreement by a majority of the Trustees then in office or by election of the
holders of Shares. No vacancy shall operate to annul this Agreement or to
revoke any existing agency created pursuant to the terms of this Agreement.
Whenever a vacancy in the number of Trustees shall occur, until such vacancy is
filled as provided herein, the Trustees in office, regardless of their number,
shall have all the powers granted to the Trustees and shall discharge all the
duties imposed upon the Trustees by this Agreement.
(d) Meetings of the Trustees shall be held from time to time upon
the call of the Chairman, if any, the Secretary or any two Trustees. Regular
meetings of the Trustees may be held without call or notice at a time and place
fixed by resolution of the Trustees. Notice of any other meeting shall be
mailed via overnight courier not less than 48 hours before the meeting or
otherwise actually delivered orally or in writing not less than 24 hours before
the meeting, but may be waived in writing by any Trustee either before or after
such meeting. The attendance of a Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Trustee attends a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting has not been lawfully called or convened. The Trustees
may act with or without a meeting. A quorum for all meetings of the Trustees
shall be one-third of the Trustees then in office. Unless provided otherwise in
this Agreement, any action of the Trustees may be taken at a meeting by vote of
a majority of the Trustees present (a quorum being present) or without a
meeting by written consent of a majority of the Trustees or such other
proportion as shall be specified herein for action at a meeting at which all
Trustees then in office are present.
(i) Any committee of the Trustees may act with or without a
meeting. A quorum for all meetings of any such committee shall be one
third of the members thereof. Unless provided otherwise in this Agreement,
any action of any such committee may be taken at a meeting by vote of a
majority of the members of such committee present (a quorum being present)
or without a meeting by written consent of a majority of the members of
such committee or such other proportion as shall be specified herein for
action at a meeting at which all committee members are present.
(ii) With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons in any action to be
taken may be counted for quorum purposes under this Section and shall be
entitled to vote to the extent not prohibited by applicable law.
(iii) All or any one or more Trustees may participate in a
meeting of the Trustees or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other; participation in
a meeting pursuant to any such communications system shall constitute
presence in person at such meeting except as otherwise provided by
applicable law.
(iv) The Trustees may, but shall not be required to, elect a
Chairman of the Board of Trustees, who shall not, in his or her capacity
as such, be an officer of the Company and who shall serve at the pleasure
of the Board of Trustees. Any Chairman of the Board of Trustees elected by
the Trustees need not be an Independent Trustee, unless otherwise required
by applicable law.
(e) The Trustees shall elect a Chief Executive Officer, a Secretary
and a Chief Financial Officer and any other authorized persons who shall serve
at the pleasure of the Board of Trustees or until their successors are elected.
The Trustees may elect or appoint or may authorize the Chairman, if any, or
Chief Executive Officer to appoint such other officers or agents or other
authorized persons with such other titles and powers as the Board of Trustees
may deem to be advisable. Any Chairman shall, and the Chief Executive Officer,
Secretary and Chief Financial Officer may, but need not, be a Trustee.
(f) The Trustees and officers shall owe to the Company and the holders
of Shares the same fiduciary duties as owed by officers of corporations to such
corporations and their stockholders under the general corporation law of the
State of Delaware. Trustees elected by the holders of Preferred Shares shall
have no special duties to the holders of Preferred Shares. The Trustees shall
have exclusive and absolute control over the Assets and over the business of
the Company to the same extent as if the Trustees were the sole owners of the
property and business in their own right, but with such powers of delegation as
may be permitted by this Agreement. The Trustees shall have power to engage in
any activity not prohibited by Delaware law. The enumeration of any specific
power herein shall not be construed as limiting the aforesaid power. The
Trustees may perform such acts as in their sole discretion are proper for
conducting the business of the Company. The powers of the Trustees may be
exercised without order of or resort to any court. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties or powers hereunder.
(g) The Board of Trustees may adopt and from time to time amend or
repeal By-Laws ("By-Laws") for the conduct of the business of the Company. Such
By-Laws shall be binding on the Company and the Shareholders unless
inconsistent with the provisions of this Agreement. The Shareholders shall not
have authority to adopt, amend or repeal By-Laws.
(h) Any determination as to what is in the interests of the Company
made by the Trustees in good faith shall be conclusive. In construing the
provisions of this Agreement, the presumption shall be in favor of a grant of
power to the Trustees.
9.3 Expenses of the Company
(a) The Company shall have power to incur and pay out of the Assets or
income of the Company any expenses necessary or appropriate to carry out any of
the purposes of this Agreement, and the business of the Company. The Trustees
may pay themselves such compensation as they in good faith may deem reasonable
and the Trustees may be reimbursed for expenses reasonably incurred by
themselves on behalf of the Company.
(b) The Company shall pay all, and shall reimburse the Investment
Manager and its respective Affiliates for, any costs and expenses that, in the
good faith judgment of the Investment Manager, are incurred in the formation,
financing or operation of the Company and are not obligated to be paid for by
the Investment Manager pursuant to its agreements with the Company.
(c) The Company shall pay, and shall reimburse the Investment Manager
and each of its Affiliates for, all legal, tax, accounting and other expenses
(including organizational expenses) incurred in connection with the offering
and issuance of any of the Company's securities or indebtedness.
9.4 Shareholders' Consent
To the fullest extent permitted by law, each Shareholder hereby
consents to the exercise by the Board of Trustees and the Investment Manager of
the powers conferred on them by this Agreement.
9.5 Exculpation
The Investment Manager shall not be liable, responsible or accountable
in damages or otherwise to the Company or any shareholder for any loss,
liability, damage, settlement, costs, or other expense (including reasonable
attorneys' fees) incurred by reason of any act or omission or any alleged act
or omission performed or omitted by the Investment Manager and its employees,
partners and affiliates, in connection with the establishment, management or
operations of the Company or its investments (including in connection with
serving on creditors' committees and boards of directors for companies in the
Company's portfolio) unless such act or failure to act arises out of the bad
faith, willful misfeasance, gross negligence or reckless disregard of the
Investment Manager's duty to the Company or its shareholders, as the case may
be (such conduct, "Disabling Conduct"). Subject to the foregoing, all such
Persons shall look solely to the Assets (including, without limitation, the
Unfunded Commitments) for satisfaction of claims of any nature arising in
connection with the affairs of the Company. If any indemnitee is made a party
to any suit or proceeding to enforce any such liability, subject to the
foregoing exception, such indemnitee shall not, on account thereof, be held to
any personal liability.
9.6 Indemnification; No Duty of Investigation; Reliance on Experts
(a) The Company will indemnify the Trustees, officers and the
Investment Manager and any officer, director, member, manager, employee,
stockholder, assign, representative, agent or affiliate of any such person with
respect to any act or omission as long as (i) such person's activities do not
constitute Disabling Conduct and (ii) there has been a determination (a) by a
final decision on the merits by a court or other body of competent jurisdiction
before whom the issue of entitlement to indemnification was brought that such
indemnitee is entitled to indemnification or, (b) in the absence of such a
decision, by (1) a majority vote of a quorum of those Trustees who are neither
"interested persons" of the Company (as defined in Section 2(a)(19) of the
Investment Company Act) nor parties to the proceeding, that the indemnitee is
entitled to indemnification (the "Disinterested Non-Party Trustees"), or (2) if
such quorum is not obtainable or even if obtainable, if such majority so
directs, independent legal counsel in a written opinion concludes that the
indemnitee should be entitled to indemnification (each an "Indemnified Person",
and collectively, the "Indemnified Persons"). Notwithstanding the foregoing,
with respect to any action, suit or other proceeding voluntarily prosecuted by
any Indemnified Person as plaintiff, indemnification shall be mandatory only if
the prosecution of such action, suit or other proceeding by such Indemnified
Person was authorized by a majority of the Trustees. All determinations to make
advance payments in connection with the expense of defending any proceeding
shall be authorized and made in accordance with the immediately succeeding
paragraph (b) below.
(b) The Company shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Company receives a written affirmation by the
Indemnified Person of the Indemnified Person's good faith belief that the
standards of conduct necessary for indemnification have been met and a written
undertaking to reimburse the Company unless it is subsequently determined that
he is entitled to such indemnification and if a majority of the Trustees
determine that the applicable standards of conduct necessary for
indemnification appear to have been met. In addition, at least one of the
following conditions must be met: (1) the Indemnified Person shall provide
adequate security for his undertaking, (2) the Company shall be insured against
losses arising by reason of any lawful advances, (3) a majority of a quorum of
the Disinterested Non-Party Trustees, or if such quorum is not obtainable or
even if obtainable, if such majority so directs, independent legal counsel,
shall conclude, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is substantial reason to believe that the
Indemnified Person ultimately will be found entitled to indemnification or (4)
if there is not a Disinterested Non-Party Trustee, the Indemnified Person
provides the written affirmation referred to above.
(c) The rights accruing to any Indemnified Person under these
provisions shall not exclude any other right to which he may be lawfully
entitled.
(d) Notwithstanding the foregoing, subject to any limitations provided
by the Investment Company Act and this Agreement, the Company shall have the
power and authority to indemnify Persons providing services to the Company to
the full extent provided by law as if the Company were a corporation organized
under the Delaware General Corporation Law provided that such indemnification
has been approved by a majority of the Trustees or, with respect to agreements
to which the Investment Manager is not a party, by the Investment Manager.
(e) No purchaser, lender, transfer agent or other person dealing with
the Trustees or with any officer, employee or agent of the Company shall be
bound to make any inquiry concerning the validity of any transaction purporting
to be made by the Trustees or by said officer, employee or agent or be liable
for the application of money or property paid, loaned, or delivered to or on
the order of the Trustees or of said officer, employee or agent. Every
obligation, contract, undertaking, instrument, certificate, Share and other
security of the Company, and every other act or thing whatsoever executed in
connection with the Company shall be conclusively taken to have been executed
or done by the executors thereof only in their capacity as Trustees under this
Agreement or in their capacity as officers, employees or agents of the Company.
The Company may maintain insurance for the protection of the Assets, its
Shareholders, Trustees, officers, employees or agents in such amounts as the
Trustees shall deem adequate to cover possible liability, and such other
insurance as the Trustees in their sole judgment shall deem advisable or is
required by the Investment Company Act.
(f) Each Indemnified Person shall, in the performance of its duties,
be fully and completely justified and protected with regard to any act or any
failure to act resulting from reliance in good faith upon the books of account
or other records of the Company, upon an opinion of counsel, or upon reports
made to the Company by any of the Company's officers or employees or by any
advisor, administrator, manager, distributor, selected dealer, accountant,
appraiser or other expert or consultant selected with reasonable care by the
Trustees, officers or employees of the Company, regardless of whether such
counsel or other person may also be a Trustee.
9.7 Trustee Limited Liability
Except as otherwise provided by law, the Trustees shall not be
obligated personally for any debt, obligation or liability of the Company
solely by reason of being a Trustee of the Company, and the debt, obligations
and liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company.
9.8 Certain Other Activities
The Investment Manager and its respective Affiliated Persons,
employees and associates (collectively, including the Investment Manager, the
"Manager Affiliates") may manage funds and accounts other than the Assets
("Other Accounts") that invest in assets eligible for purchase by the Company.
The Manager Affiliates are in no way prohibited from spending, and may spend,
substantial business time in connection with other businesses or activities,
including, but not limited to, managing Other Accounts, managing investments,
advising or managing entities whose investment objectives are the same as or
overlap with those of the Company, participating in actual or potential
investments of the Company or any Shareholder, providing consulting, merger and
acquisition, structuring or financial advisory services, including with respect
to actual, contemplated or potential investments of the Company, or acting as a
trustee, officer, manager, shareholder or creditors' committee member of, or
adviser to, or participant in, any corporation, company, limited liability
company, trust or other Person. The Manager Affiliates are in no way prohibited
from receiving, and may receive, fees or other compensation from third parties
for any of these activities, which fees will be for their own account and not
for the account of the Company. Such fees may relate to actual, contemplated or
potential investments of the Company and may be payable by entities in which
the Company directly or indirectly has invested or contemplates investing.
Neither the Company nor any Shareholder shall, by virtue of this Agreement,
have any right, title or interest in or to the businesses or activities
permitted by this Section 9.8 or in or to any fees or consideration derived
therefrom. Allocation of investments or opportunities among the Company and
Other Accounts will be made as described in the Offering Memorandum or as
otherwise approved by the Board of Trustees.
SECTION 10.
SHAREHOLDERS
10.1 Identity, Contributions and Common Share Commitments
The names and addresses of the Shareholders, the Shares owned by each
Shareholder and the Capital Contributions, if any, of each will be set forth in
the Company's records.
10.2 No Management Power or Liability
Except as otherwise provided herein, the Shareholders as such shall
have no right or power to, and shall not, take part in the management of or
transact any business for the Company, including but not limited to, any acts
or decisions relating to investment activities of the Company, and shall have
no power to sign for or bind the Company. Except as otherwise required by law,
no Shareholder, in its capacity as such, shall be personally liable for any
debt, loss, obligation or liability of the Company in excess of its
subscription (if applicable). Except to the extent expressly provided in the
preceding sentence, the Company shall indemnify and hold harmless each
Shareholder (in its capacity as such) in the event such Shareholder becomes
liable for any debt, loss, obligation or liability of the Company unless such
Shareholder has engaged in fraud, willful misconduct, gross negligence or
criminal conduct constituting a felony with respect to such debt, loss,
obligation or liability.
10.3 Amendments
(a) If a vote of the holders of Shares is required by applicable law
or this Agreement to amend this Agreement, or if the Trustees determine to
submit an amendment to a vote of the holders of Shares, then, other than with
respect to Sections of this Agreement where a different affirmative vote is
specifically required, this Agreement may be amended, after a majority of the
Trustees then in office have approved a resolution therefor, by the affirmative
vote set forth in Section 10.9. Section 10.9 (a), (b) and (c) may only be
amended, after a majority of Trustees then in office have approved a resolution
therefor, by the affirmative vote of the holders of not less than 75% of the
affected Shares then outstanding. Section 10.4 may only be amended, after 66
2/3% of the Trustees then in office have approved a resolution therefor, by the
affirmative vote of the holders of not less than 66 2/3% of the Shares then
outstanding. Notwithstanding the foregoing, without the unanimous approval of
all of the Shareholders affected thereby, no such amendment may:
(i) require any Person to make Capital Contributions in excess
of its subscription or otherwise increase the liability of any Shareholder
hereunder; or
(ii) adversely affect distributions to such Shareholder; or
(iii) modify this Section 10.3(a).
(b) Subject to the requirements of applicable law, notwithstanding the
foregoing provisions of this Section 10.3, the Board of Trustees may amend this
Agreement, without the consent of any Shareholder, (i) to change the name of
the Company or any class or series of Shares, (ii) to make any change that does
not materially adversely affect the relative rights or preferences of any class
or series of Shares, (iii) to conform this Agreement to the requirements of
applicable law; (iv) in connection with qualifying the Company to permit
limited liability under the laws of any state; (v) to prevent any material and
adverse effect to any Shareholder or the Company arising from the application
of legal restrictions to any Shareholder, the Investment Manager or the
Company, subject to the requirement that the Shareholders not be materially and
adversely affected; (vi) to make any change that is necessary or desirable to
cure any ambiguity or inconsistency, subject to the requirement that the
Shareholders not be materially and adversely affected; (vii) to make any other
changes similar to the foregoing, subject to the requirement that the
Shareholders not be materially and adversely affected; provided that the Board
of Trustees shall not be liable for failing to do so. The Company may reflect
in its records changes made in the composition of the Shareholders and their
respective Capital Contributions and Shares in accordance with the provisions
of this Agreement without the consent of the Shareholders.
(c) After any amendment to this Agreement becomes effective, the
Company shall provide to the Shareholders notice of such amendment.
(d) Nothing contained in this Agreement shall permit the amendment of
this Agreement (i) to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Company and their
respective Affiliates, to permit assessments upon Shareholders or (ii) such
that the proposed amendment, if adopted, would contradict any provision in any
agreement between the Company and a Shareholder unless such Shareholder has
consented in writing to such amendment.
(e) An amendment duly adopted by the requisite vote of the Board of
Trustees and, if required, Shareholders as aforesaid, shall become effective at
the time of such adoption or at such other time as may be designated by the
Board of Trustees or Shareholders, as the case may be. A certification signed
by a majority of the Trustees or the Secretary setting forth an amendment and
reciting that it was duly adopted by the Trustees and, if required,
Shareholders as aforesaid, or a copy of the Agreement, as amended, and executed
by a majority of the Trustees or the Secretary, shall be conclusive evidence of
such amendment when lodged among the records of the Company or at such other
time designated by the Trustees.
(f) Notwithstanding any other provision hereof, until such time as
Shares are issued and outstanding, this Agreement may be terminated or amended
in any respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees then in office.
(g) Notwithstanding anything to the contrary contained herein, no
holder of Shares of any class or series, other than to the extent expressly
determined by the Trustees with respect to Shares qualifying as preferred stock
pursuant to Section 18(a) of the Investment Company Act, shall have any right
under this Agreement by reason of holding such Shares, to require the Company
or any person controlled by the Company to purchase any of such holder's
Shares. Notwithstanding the foregoing, the Company may through tender offers,
repurchase programs or otherwise, agree from time to time to repurchase Shares
of the Company.
10.4 Merger, Consolidation, Liquidation
Subject to the provisions of applicable law, the Company may merge or
consolidate with any other entity, or sell, lease or exchange all or
substantially all of the Assets upon approval by two-thirds of the Trustees
then in office and the affirmative vote of not less than two-thirds of the
outstanding Shares.
10.5 Limitations
No Shareholder shall have the right or power to (i) bring an action
for partition against the Company; (ii) cause the termination or dissolution of
the Company, except as set forth in this Agreement; or (iii) demand property
other than cash with respect to any distribution and then only in accordance
with the terms of this Agreement. Except to the extent required for a Delaware
business corporation, the Shareholders shall have no power to vote as to
whether or not a court action, legal proceeding or claim should or should not
be brought or maintained derivatively or as a class action on behalf of the
Company or the Shareholders.
10.6 Meetings
(a) The Company may, but shall not be required to, hold annual
meetings of the holders of any class or series of Shares. A meeting of
Shareholders may be called at any time by the Trustees. Any meeting of
Shareholders shall be held within or without the state of Delaware on such day
and at such time as the Trustees shall designate.
(b) Notice of all meetings of Shareholders, stating the time, place
and purposes of the meeting, shall be given by the Trustees by mail to each
Shareholder of record entitled to vote thereat at its registered address,
mailed at least 10 days before the meeting or otherwise in compliance with
applicable law. Only the business stated in the notice of the meeting shall be
considered at such meeting. Any adjourned meeting may be held as adjourned one
or more times without further notice not later than 130 days after the record
date. For the purposes of determining the Shareholders who are entitled to
notice of and to vote at any meeting the Trustees may, without closing the
transfer books, fix a date not more than 100 days prior to the date of initial
convening of such meeting of Shareholders as a record date for the
determination of the Persons to be treated as Shareholders of record for such
purposes.
10.7 Action Without a Meeting
So long as the Company has not made a public offering of or registered
on a securities exchange, any class of its Shares, any action that may be taken
at a meeting of the Shareholders may be taken without a meeting if a consent in
writing setting forth the action to be taken is signed by Shareholders owning
not less than the minimum percentage of the Shares of the Shareholders that
would be necessary to authorize or take such action at a meeting at which all
the Shareholders were present and voted, and notice of the action taken is
provided to each Shareholder. Any such written consent must be filed with the
records of the meetings of the Shareholders. After the Company has made any
such public offering or registration, no action may be taken by the
Shareholders or any class or series of Shares without a majority thereof.
10.8 Procedures
A Shareholder shall be entitled to cast votes at a meeting, in person,
or by written proxy or other writing authenticated by such Shareholder in a
manner acceptable to the Company directing the manner in which its vote is to
be cast, which writing must be received by the Company at or prior to the
taking of the vote. Except as otherwise herein specifically provided, all
procedural matters relating to the holding of meetings of Shareholders or
taking action by written consent, whether noticed or solicited by the Company
or others, including, without limitation, matters relating to the date for the
meeting, the time period during which written consents may be solicited,
minimum or maximum notice periods, record dates, proxy requirements and rules
relating to the conduct of meetings or the tabulation of votes, shall be as
reasonably established by the Trustees. To the extent not otherwise provided by
the Board of Trustees, the laws of the State of Delaware pertaining to the
validity and use of proxies regarding the shares of business corporations shall
govern the validity and use of proxies given by Shareholders.
10.9 Voting
(a) Shareholders shall have no power to vote on any matter except
matters on which a vote of Shares is required by or pursuant to a Statement of
Preferences, this Agreement, the By-Laws or any resolution of the Trustees. Any
matter required to be submitted for approval of any of the Shares and affecting
one or more classes or series shall require approval by the required vote of
Shares of the affected class or classes and series voting together as a single
class and, if such matter affects one or more classes or series thereof
differently from one or more other classes or series thereof or from one or
more series of the same class, approval by the required vote of Shares of such
other class or classes or series or series voting as a separate class shall be
required in order to be approved with respect to such other class or classes or
series or series; provided, however, that except to the extent required by any
Statement of Preferences, there shall be no separate class votes on the
election or removal of Trustees or the selection of auditors for the Company.
Shareholders of a particular class or series thereof shall not be entitled to
vote on any matter that affects the rights or interests of only one or more
other classes or series of such other class or classes or only one or more
other series of the same class. There shall be no cumulative voting in the
election or removal of Trustees.
(b) The holders of one-third of the outstanding Shares of the Company
on the record date present in person or by proxy shall constitute a quorum at
any meeting of the holders for purposes of conducting business on which a vote
of all Shareholders of the Company is being taken. The holders of one-third of
the outstanding Shares of a class or classes on the record date present in
person or by proxy shall constitute a quorum at any meeting of the holders of
such class or classes for purposes of conducting business on which a vote of
holders of such class or classes is being taken. The holders of one-third of
the outstanding Shares of a series or series on the record date present in
person or by proxy shall constitute a quorum at any meeting of the holders of
such series or series for purposes of conducting business on which a vote of
holders of such series or series is being taken. Shares underlying a proxy as
to which a broker or other intermediary states its absence of authority to vote
with respect to one or more matters shall be treated as present for purposes of
establishing a quorum for taking action on any such matter only to the extent
so determined by the Trustees at or prior to the meeting of holders of Shares
at which such matter is to be considered and shall not be treated as present
for purposes of voting or any other purpose except as determined by the
Trustees.
(c) Subject to any provision of any Statement of Preferences or this
Agreement specifying or requiring a greater or lesser vote requirement for the
transaction of any matter of business at any meeting of Shareholders or, in the
absence of any such provision of any Statement of Preferences or this
Agreement, subject to any provision of the By-Laws or resolution of the
Trustees specifying or requiring a greater or lesser vote requirement, (i) the
affirmative vote of a plurality (or, if provided by the By-Laws, a majority) of
the Shares present in person or represented by proxy and entitled to vote for
the election of any Trustee or Trustees shall be the act of such Shareholders
with respect to the election of such Trustee or Trustees, (ii) the affirmative
vote of a majority of the Shares present in person or represented by proxy and
entitled or requested by the Trustees to vote on any other matter who vote on
such matter shall be the act of the Shareholders with respect to such matter,
and (iii) where a separate vote of one or more classes or series is required on
any matter, the affirmative vote of a majority of the Shares of such class or
classes or series or series present in person or represented by proxy and
entitled or requested by the Trustees to vote on such matter who vote on such
matter shall be the act of the Shareholders of such class or classes or series
or series with respect to such matter.
(d) At any meeting of Shareholders, any holder of Shares entitled to
vote thereat may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the Secretary, or with
such other officer or agent of the Company as the Secretary may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of a majority of the Trustees, proxies may be solicited in the name
of one or more Trustees or one or more of the officers or employees of the
Company. Only Shareholders of record shall be entitled to vote. Each full Share
shall be entitled to one vote and each fractional Share shall be entitled to a
vote equal to its fraction of a full Share. When any Share is held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Share, but if more than one of them shall be present at such
meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be given by or on behalf of a
Shareholder of record on the record date for a meeting shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
he may vote by his guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy. The Trustees shall
have the authority to make and modify from time to time regulations regarding
the validity of proxies. In addition to signed proxies, such regulations may
authorize facsimile, telephonic, Internet and other methods of appointing a
proxy that are subject to such supervision by or under the direction of the
Trustees as the Trustees shall determine.
10.10 Redemption; Conversion.
No holder of Shares of any class or series, other than in accordance
with the provisions of Section 23(c) (excluding Rule 23c-3 thereunder except to
the extent the Trustees determine to adhere to Rule 23c-3) of the 1940 Act and
other than to the extent expressly determined by the Trustees with respect to
Shares qualifying as preferred stock pursuant to Section 18(a) of the 1940 Act,
shall have any right hereunder to require the Company or any person controlled
by the Company to purchase any of such holder's Shares. The Company may be
converted at any time from a "closed-end investment company" to an "open-end
investment company" as those terms are defined by the 1940 Act or, upon the
approval of such a proposal, together with the necessary amendments to this
Agreement to permit such a conversion, by two-thirds of the Trustees then in
office and by the holders of not less than 75% of the Company's outstanding
Shares entitled to vote thereon and by such vote or votes of the holders of any
class or classes or series of Shares as may be required by the 1940 Act. The
Company may be converted at any time to a company obligated to repurchase
shares under Rule 23c-3 of the 1940 Act (an "interval company"), upon the
approval of such a proposal, together with any necessary amendments to this
Agreement, by two-thirds of the Trustees then in office and by such vote or
votes of the holders of any class or series of Shares as may be required by the
1940 Act.
10.11 Certain Transactions
(a) Subject to the exceptions provided in paragraph (d) of this
Section, the types of transactions described in paragraph (c) of this Section
shall, following the completion of the initial public offering of the Common
Shares, require the affirmative vote or consent of the holders of 80% of the
Shares of each class outstanding and entitled to vote, voting as a separate
class, when a Principal Shareholder (as defined in paragraph (b) of this
Section) is a party to the transaction. Such affirmative vote or consent shall
be in addition to the vote or consent of the holders of Shares otherwise
required by or pursuant to the 1940 Act, this Declaration of Trust, the Bylaws
or resolution of the Board of Trustees.
(b) The term "Principal Shareholder" shall mean any Person which is
the beneficial owner, directly or indirectly, of five percent (5%) or more of
the outstanding Shares and shall include any affiliate or associate, as such
terms are defined in clause (ii) below, of such Person. For the purposes of
this Section, in addition to the Shares which a Person beneficially owns
directly, (a) any Person shall be deemed to be the beneficial owner of any
Shares (i) which it has the right to acquire pursuant to any agreement or upon
exercise of conversion rights or warrants, or otherwise (but excluding share
options granted by the Trust) or (ii) which are beneficially owned, directly or
indirectly (including Shares deemed owned through application of clause (i)
above), by any other Person with which its "affiliate" or "associate" (as
defined below) has any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of Shares, or which is its
"affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934 as in
effect on the date of initial adoption of this Declaration of Trust, and (b)
the outstanding Shares shall include Shares deemed owned through application of
clauses (i) and (ii) above but shall not include any other Shares which may be
issuable pursuant to any agreement, or upon exercise of conversion rights or
warrants, or otherwise.
(c) This Section shall apply to the following transactions:
(i) The merger or consolidation of the Company or any subsidiary
of the Company with or into any Principal Shareholder.
(ii) The issuance of any securities of the Company to any
Principal Shareholder for cash (other than pursuant to any automatic
dividend reinvestment plan or pursuant to any offering in which such
Principal Shareholder acquires securities that represent no greater a
percentage of any class or series of securities being offered than the
percentage of the same class or series of securities beneficially owned by
such Principal Shareholder immediately prior to such offering or, in the
case of a class or series not then owned beneficially by such Principal
Shareholder, the percentage of Common Shares beneficially owned by such
Principal Shareholder immediately prior to such offering).
(iii) The sale, lease or exchange of all or any substantial part
of the assets of the Company to any Principal Shareholder (except assets
having an aggregate fair market value of less than $5,000,000, aggregating
for the purpose of such computation all assets sold, leased or exchanged
in any series of similar transactions within a twelve-month period.)
(iv) The sale, lease or exchange to the Company or any
subsidiary thereof, in exchange for securities of the Company of any
assets of any Principal Shareholder (except assets having an aggregate
fair market value of less than $5,000,000, aggregating for the purposes of
such computation all assets sold, leased or exchanged in any series of
similar transactions within a twelve-month period).
(v) The purchase by the Company or any Person controlled by the
Company of any Common Shares of the Company from such Principal
Shareholder or any person to whom such Principal Shareholder shall have
knowingly transferred such Common Shares other than pursuant to a tender
offer available to all Shareholders of the same class or series in which
such Principal Shareholder or transferee tenders no greater percentage of
the Shares of such class or series than are tendered by all other
Shareholders of such class or series in the aggregate.
(d) The provisions of this Section shall not be applicable to (i) any
of the transactions described in paragraph (c) of this Section if two-thirds of
the Board of Trustees then in office shall by resolution have approved a
memorandum of understanding or agreement with such Principal Shareholder with
respect to and substantially consistent with such transaction prior to the time
such Person shall have become a Principal Shareholder, or (ii) any such
transaction with any corporation of which a majority of the outstanding shares
of all classes of a stock normally entitled to vote in elections of directors
is owned of record or beneficially by the Company and its subsidiaries and of
which such Person is not a Principal Shareholder.
(e) The Board of Trustees shall have the power and duty to determine
for the purposes of this Section on the basis of information known to the
Company whether (i) a Person beneficially owns five percent (5%) or more of the
outstanding Shares, (ii) a Person is an "affiliate" or "associate" (as defined
above) of another, (iii) the assets being acquired or leased to or by the
Company or any subsidiary thereof constitute a substantial part of the assets
of the Company and have an aggregate fair market value of less than $5,000,000,
and (iv) the memorandum of understanding or agreement referred to in paragraph
(d) hereof is substantially consistent with the transaction covered thereby.
Any such determination shall be conclusive and binding for all purposes of this
Section.
SECTION 11.
ASSIGNMENTS OR TRANSFERS OF SHARES
11.1 Assignments or Transfers of Shares
(a) In no event shall all or any part of a Shareholder's Preferred
Shares be Transferred, and any such purported Transfer shall be void and shall
not be recognized by the Company, unless all of the conditions set forth in the
applicable Statement of Preferences with respect thereto have been satisfied.
In no event shall all or any part of a Shareholder's Common Shares be
Transferred, and any such purported Transfer shall be void and shall not be
recognized by the Company or the Shareholders, unless all of the following
conditions are satisfied with respect to Shares that are not freely
transferable by the holder thereof under the federal securities laws or, in the
case of Shares that are freely transferable by the holder under the federal
securities laws, each of conditions (ii), (iii) and (iv) below are satisfied:
(i) The Transferor, if requested by the Company in its sole
discretion, has delivered to the Company an opinion of counsel reasonably
acceptable to the Company that such Transfer (A) would not violate the
Securities Act or any state blue sky laws (including any investor
suitability standards) and, (B) would not result in the breach of any
agreement to which the Company is a party or by which it or any of the
Assets is bound;
(ii) The Transferor has demonstrated to the reasonable
satisfaction of the Company that the Transferee is an "accredited
investor" as defined in Rule 501(a) under the Securities Act, unless such
requirement has been waived by the Investment Manager, in its sole
discretion;
(iii) The Transferor has demonstrated to the reasonable
satisfaction of the Company that the Transferee is a "qualified client"
within the meaning of Rule 205-3 of the Advisers Act, unless such
requirement has been waived by the Investment Manager, in its sole
discretion;
(iv) The Company has received a notice of Transfer signed by
both the Transferor and Transferee, such notice to be substantially in the
form of Appendix C attached hereto as the same may be modified from time
to time by the Trustees (or such other document specified in the
applicable Statement of Preferences); and
(v) the Company consents in writing to such Transfer (which
consent may be withheld in the Company's reasonable discretion), unless
paragraphs (i) - (iv) above have been waived.
The Company may impose on certificates or other evidences of ownership
of Shares, any stop transfer legend consistent with the foregoing requirements.
(b) A Transferee, legal representative or successor in interest of a
Shareholder shall be subject to all of the restrictions upon a Shareholder
provided in this Agreement.
(c) Upon the Incapacity of an individual Shareholder, such
Shareholder's personal representative or other successor in interest shall have
such rights as the Incapacitated Shareholder possessed to constitute a
successor as a Transferee of its Shares or Common Share Commitment and to join
with such Transferee in making application to substitute such Transferee as a
Shareholder, all as provided in Section 11.1(a).
(d) Upon the Incapacity of a Shareholder other than an individual, the
authorized representative of such entity shall have such rights as such entity
possessed to constitute a successor as a Transferee of its Shares or Common
Share Commitment and to join with such Transferee in making application to
substitute such Transferee as a Shareholder, all as provided in Section
11.1(a).
SECTION 12.
BOOKS, RECORDS AND REPORTS
12.1 Books
(a) The Company shall maintain books and records required by law for
the Company at its principal office, which shall be in the United States, and
each Shareholder shall have the right to inspect, examine and copy such books
and records for any proper business purpose relevant to its status as a
Shareholder at reasonable times and upon reasonable notice as authorized by the
Trustees or their delegate. Notwithstanding the foregoing inspection rights or
any other provision of this Section 12, the Company shall be entitled to keep
confidential from the Shareholders certain information as and to the extent
permitted by applicable law.
(b) A register shall be kept at the Company or any transfer agent duly
appointed by or under the direction of the Trustees which shall contain the
names and addresses of the Shareholders and the number of Shares held by them
respectively and a record of all transfers thereof. Separate registers shall be
established and maintained for each class and each series of each class. Each
such register shall be conclusive as to who are the holders of the Shares of
the applicable class and series and who shall be entitled to receive dividends
or distributions or otherwise to exercise or enjoy the rights of Shareholders.
No Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein provided, until he has
given his address to a transfer agent or such other officer or agent of the
Trustees as shall keep the register for entry thereon. Except as otherwise
provided in any Statement of Preferences, it is not contemplated that
certificates will be issued for the Shares; however, the Company may authorize
the issuance of share certificates and promulgate appropriate fees therefore
and rules and regulations as to their use.
(c) The Company shall have power to employ a transfer agent or
transfer agents, and a registrar or registrars, with respect to the Shares. The
transfer agent or transfer agents may keep the applicable register and record
therein, the original issues and transfers, if any, of the said Shares.
(d) Shares shall be transferable on the records of the Company only by
the record holder thereof or by its agent thereto duly authorized in writing,
upon compliance with the provisions herein and upon delivery to the Company or
a transfer agent of the Company of a duly executed instrument of transfer,
together with such evidence of the genuineness of each such execution and
authorization and of other matters as may reasonably be required pursuant to
Section 11.1 or otherwise. Upon such delivery and completion of all other
requirements the transfer shall be recorded on the applicable register of the
Company. Until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereof and neither the
Trustees nor any transfer agent or registrar nor any officer, employee or agent
of the Company shall be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the
death, bankruptcy, or incompetence of any Shareholder, or otherwise by
operation of law, shall be recorded on the applicable register of Shares as the
holder of such Shares upon production of the proper evidence thereof to the
Trustees or a transfer agent of the Company, but until such record is made, the
Shareholder of record shall be deemed to be the holder of such for all purposes
hereof, and neither the Trustees nor any transfer agent or registrar nor any
officer or agent of the Company shall be affected by any notice of such death,
bankruptcy or incompetence, or other operation of law.
12.2 Reports
(a) The Company shall prepare and send to Shareholders to the extent
and in the form required by applicable law or any exchange on which Shares are
listed a report of operations containing financial statements of the Company
prepared in conformity with generally accepted accounting principles and
applicable law and a schedule setting forth the investments of the Company.
Common Shareholders shall receive quarterly reports of operations.
(b) Within 60 days (or such other timeframe as may be required by law)
after the end of each Fiscal Year, the Company shall communicate in writing to
each Shareholder (i) such information as is necessary to complete such
Shareholder's United States federal and state income tax or information returns
and (ii) annual financial statements audited by an accounting firm of national
reputation.
(c) Further, the Trustees may, in their sole and absolute discretion,
cause to be prepared (i) such reports or other information as may be necessary
with respect to any Shareholder's qualification for the benefit of any income
tax treaty or provision of law reducing or eliminating any withholding or other
tax or governmental charge with respect to any Assets and (ii) such other
reports and financial statements of the Company as the Trustees deem
appropriate for informing the Shareholders about the operations of the Company.
(d) To the extent that the Company has access thereto and in
recognition of the various Shareholders' obligations to comply with certain
regulatory requirements, the Company will also provide to each Shareholder,
with reasonable promptness, such other data and information concerning the
Company or Company activities in response to a request by any applicable
governmental or regulatory agency as from time to time a Shareholder may
reasonably request. If the Company is bound by confidentiality obligations with
respect to any information so requested, then the Company shall not be
obligated to provide such information. A Shareholder shall, at the request of
the Company, enter into a confidentiality agreement relating to such
information.
SECTION 13.
VALUATION OF INTERESTS
The net asset value of the Company will be calculated as of the last
business day of each month, in connection with each issuance of Common Shares
by the Company, as of each distribution declaration date (after giving effect
to the relevant declaration), and on such other dates as determined by the
Investment Manager or the Board of Trustees, in accordance with the valuation
policies and guidelines approved from time to time by the Board of Trustees
(each, a "Valuation Date").
SECTION 14.
BANK ACCOUNTS; CUSTODIAN
14.1 Bank Accounts Generally
All funds received by the Company may be deposited in one or more
Custodial Accounts in the name of the Company at any Custodian or subcustodian
appointed thereby. Subject to Section 14.2, disbursements therefrom may be made
by the Company in conformity with the purposes of this Agreement. The Company
may designate from time to time those Persons authorized to execute checks and
other items on the Company bank accounts. The funds of the Company shall not be
commingled with the funds of any other Person except as permitted by law.
14.2 Custodian
(a) The Company shall appoint one or more Custodians to hold the
Assets of the Company in one or more separately identified Custodial Accounts
or multiparty arrangements in accordance with the Investment Management
Agreement, any Statement of Preferences and in compliance with the requirements
of applicable law. The Custodians shall at all times be responsible for the
physical custody of the Assets of the Company and for the collection of
interest, dividends and other income attributable to the Assets of the Company.
The Company will direct the Custodians to accept settlement instructions issued
by the Investment Manager and authorized Persons.
(b) Nothing contained in this Agreement shall be construed to
authorize or require the Board of Trustees or the Investment Manager to take or
receive physical possession of any Asset of the Company or to take any action
in violation of law, it being understood that the Custodians shall solely be
responsible for the safekeeping of the Assets and the consummation of all such
purchases, sales and deliveries of the Assets in accordance with this Agreement
and the Investment Management Agreement, any Statement of Preferences and in
compliance with the requirements of applicable law.
SECTION 15.
DISSOLUTION AND TERMINATION OF THE COMPANY
15.1 Dissolution Generally
Except as provided in this Agreement, no Shareholder shall have the
right to cause any dissolution of the Company before expiration of its term.
15.2 Continuation of Company
The Company shall not be dissolved or terminated by the Incapacity of
any Shareholder as such, the Transfer by any Shareholder of any of its Shares
or the admission of a new or substituted Trustee or Shareholder, and the
existence and business of the Company shall be continued notwithstanding the
occurrence of any such event.
15.3 Events Causing Dissolution
The Company may be dissolved at any time after two-thirds of the
Trustees then in office have approved a resolution therefor, upon approval by
Shares having at least 75% of the votes of all of the Shares outstanding on the
record date for such action or meeting, voting as a single class.
15.4 Distribution of Assets on Liquidation
(a) In liquidating the Company, the Company will make distributions in
cash, in kind, or partly in cash and partly in kind as the Investment Manager,
under the supervision of the Board of Trustees, may, in its sole discretion,
determine; provided, however, that any distribution made partly in cash and
partly in kind shall be pro rata among the Shareholders in proportion to their
interests to the extent reasonably practicable and if not reasonably
practicable, in such non-pro rata manner as is determined by the Investment
Manager, under the supervision of the Board of Trustees, to be fair and
equitable; provided, further, that the Investment Manager will use reasonable
efforts to make all distributions in kind, if any, in the form of freely
tradable securities. The Investment Manager need not distribute all of the
Assets at once, but may make partial distributions and shall not be required to
redeem the Preferred Shares prior to making any liquidating distribution in
respect of the Common Shares so long as the Company has set aside liquid assets
in excess of liabilities sufficient to pay the liquidation preference and all
accumulated and unpaid distributions of the Preferred Shares.
(b) In connection with the liquidation of the Company, the Assets
(after paying or otherwise providing for the claims of creditors of the
Company, claims by the Investment Manager or its respective Affiliated Persons
for expenses of the Company paid by any of them, any other liabilities of the
Company and reasonable reserves for any anticipated or contingent liabilities
or obligations and all accumulated and unpaid distributions on Preferred
Shares) shall be distributed to the Shareholders in accordance with Section
8.1; provided, however, that if the Special Share is outstanding the Special
Shareholder's original $1,000 contribution shall be returned to it, without
interest.
15.5 Liquidation Statement
(a) Upon compliance by the Company with all applicable requirements
for dissolution, the Shareholders shall cease to be such and the Company shall
execute, acknowledge and cause to be filed a Certificate of Cancellation of the
Company or other appropriate documents evidencing its dissolution and winding
up.
(b) Notwithstanding anything to the contrary contained herein, if the
Board of Trustees has been removed and the Company has been dissolved, any
Shareholder or other Person appointed by the Shareholders may act as
liquidating trustee for the Company during the winding up period, and receive
reasonable compensation for such activity, all as approved by the Shareholders
holding Shares that represent a majority of the outstanding Shares.
15.6 Trustee's Liability Upon Dissolution or Removal
None of the Trustees shall be personally liable for the return of all
or any part of the contributions of the Shareholders to the Company or for any
other distributions to be made by the Company. Any such return or distributions
shall be made solely from the Assets.
SECTION 16.
GENERAL PROVISIONS
16.1 Notices and Distributions
Except as otherwise provided herein, any notice, distribution, offer
or other communication which may be given to any Shareholder in connection with
the Company or this Agreement shall be duly given if reduced to writing and:
(a) if to any Shareholder, when personally delivered, or if sent by
mail, postage prepaid, overnight courier or facsimile transmission, when
actually received at the last address furnished by such Shareholder pursuant to
Section 2.3 for notice purposes at the time of such mailing, overnight courier
or facsimile transmission; and
(b) if to the Company or the Board of Trustees, sent to Two Galleria
Tower, 00000 Xxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention: Xxxxx
Xxxxxxxxx with a copy to the Investment Manager, Two Galleria Tower, 00000 Xxxx
Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention: R. Xxxxxx Xxxxxxxxx,
personally delivered or if sent by mail, overnight courier or facsimile
transmission when actually received at the address of the Company or the Board
of Trustees, respectively, set forth above or at such other address as the
Company or the Board of Trustees, respectively, may then have specified
pursuant to the terms of this Agreement.
All distributions to the Shareholders shall be made by wire transfer,
credit or check to the accounts specified by the Shareholders, which accounts
may be changed from time to time by written notice to the Company.
16.2 Survival of Rights
This Agreement shall be binding upon and, as to permitted or accepted
successors, Transferees and assigns, inure to the benefit of the Shareholders
and the Company and their respective heirs, legatees, legal representatives,
successors, Transferees and permitted assigns, in all cases whether by the laws
of descent and distribution, merger, consolidation, sale of assets, operation
of law, or otherwise.
16.3 Construction
The language in all parts of this Agreement shall be in all cases
construed simply according to its fair meaning and not strictly for or against
any Person.
16.4 Section Headings
The captions of the sections in this Agreement are for convenience
only and shall not be used in construing or interpreting this Agreement.
16.5 Agreement in Counterparts
This Agreement and any amendments hereto may be executed and delivered
by facsimile and in multiple counterparts, each of which shall be deemed an
original agreement and all of which shall constitute one and the same
agreement, notwithstanding the fact that all Shareholders are not signatories
to the original or the same counterpart.
16.6 Governing Law
This Agreement has been executed by or on authority of a majority of
the Trustees and the rights of all parties and the validity and construction of
every provision hereof shall be subject to and construed according to the
internal laws, and not the laws pertaining to choice or conflict of laws, of
the State of Delaware, and reference shall be specifically made to the business
corporation law of the State of Delaware as to the construction of matters not
specifically covered herein or as to which an ambiguity exists, although such
law shall not be viewed as limiting the powers otherwise granted to the
Trustees or the Investment Manager hereunder and any ambiguity shall be viewed
in favor of such powers.
16.7 Additional Documents
Each Shareholder, upon the request of the Company, agrees to perform
all further acts and execute, acknowledge and deliver all further documents
which may be reasonably necessary, appropriate or desirable to carry out the
provisions of this Agreement, including but not limited to, acknowledging
before a Notary Public any signature heretofore or hereafter made by a
Shareholder.
16.8 Severability
Should any portion or provision of this Agreement be declared illegal,
invalid or unenforceable in any jurisdiction, then such portion or provision
shall be deemed to be severable from this Agreement to the extent practicable
while preserving the economic intention of the parties and, in any event, such
illegality, invalidity or unenforceability shall not affect the remainder
hereof.
16.9 Pronouns
All pronouns and defined terms and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the Persons referred to may require.
16.10 Entire Agreement
This Agreement, the Statement of Preferences adopted pursuant hereto
and the Subscription Agreements executed and delivered by the Shareholders (i)
constitute the entire Agreement of the Shareholders with respect to the Company
and (ii) supersede all prior or contemporaneous written or oral agreements,
understandings or negotiations with respect to the Company. The parties hereto
acknowledge that the ability of the Shareholders and of the Company to take
certain of the actions contemplated hereby may be limited by the terms of the
Statement of Preferences to the extent provided therein.
16.11 Arbitration
To the extent permitted by law, any dispute relating to this Agreement
or the Company which cannot be amicably resolved among the parties to such
dispute shall be resolved by binding arbitration conducted in Dallas, Texas
before a single arbitrator in accordance with the rules of the American
Arbitration Association then prevailing, and the decisions of the arbitrator
shall be final and binding on all the parties. The costs of the arbitration
(other than fees and expenses of counsel, which shall be the responsibility of
the parties retaining such counsel) shall be allocated among the parties as
determined by the arbitrator.
16.12 Waiver of Partition
Each Shareholder hereby irrevocably waives and forfeits any and all
rights that it may have, whether arising under contract or statute or by
operation of law, to maintain an action for partition of the Company or any of
the Assets.
16.13 Filing
This Agreement and any amendment (including any supplement) hereto
shall be filed in such places as may be required or as the Company deem
appropriate. Each amendment shall be accompanied by a certificate signed and
acknowledged by an authorized Person stating that such action was duly taken in
a manner provided herein, and shall, upon insertion in the Company's minute
book, be conclusive evidence of all amendments contained therein. A restated
Agreement, containing the original Agreement as amended by all amendments
theretofore made, may be executed from time to time by an authorized Person and
shall, upon insertion in the Company's minute book, be conclusive evidence of
all amendments contained therein and may thereafter be referred to in lieu of
the original Agreement and the various amendments thereto.
IN WITNESS WHEREOF, the Trustees of the Company have hereunto set
their hands as of the date first written above.
TRUSTEES:
/s/ R. Xxxxxx Xxxxxxxxx, Trustee
-----------------------------------
R. Xxxxxx Xxxxxxxxx, Trustee
/s/ Xxxxxxx X. Xxx
-----------------------------------
Xxxxxxx X. Xxx,
Trustee
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxxx,
Trustee
/s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx,
Trustee
/s/ Xxxxx X. Xxxx
-----------------------------------
Xxxxx X. Xxxx,
Trustee
APPENDIX A
Statement of Preferences of Series S Preferred Share
APPENDIX B
Statement of Preferences of Series P Preferred Shares
APPENDIX C
Form of Notice of Transfer
[Date]
Highland Corporate Opportunities Fund
Attn: R. Xxxxxx Xxxxxxxxx
Two Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Ladies and Gentlemen:
This is to advise you that [_______________] (the "Purchaser") will purchase
(contingent only upon the approval of such purchase by Highland Corporate
Opportunities Fund, a Delaware statutory trust (the "Company")) in a private
resale (the "Purchase") from [___________________] (the "Seller") [insert
number or amount] of [Common Shares (the "Shares")] issued pursuant to the
Agreement and Declaration of Trust of the Company (as amended, modified or
supplemented from time to time, the "Declaration of Trust"). Capitalized terms
used herein and not defined have the respective meanings assigned to them in
the Declaration of Trust, a copy of which has been provided to the undersigned
by the Seller.
The undersigned hereby irrevocably agrees, represents and warrants on behalf of
the Purchaser that:
1. The Purchaser is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act and as a "qualified
client" within the meaning of Rule 205-3 under the Investment Advisers
Act of 1940.
2. If the Purchaser resells or transfers all or any portion of the
Shares, the Purchaser will obtain from each purchaser or transferee a
letter containing the same representations and agreements as set forth
herein.
3. The Purchaser hereby agrees, by executing and delivering this Transfer
Certificate, to be bound by all the terms of the Declaration of Trust.
Very truly yours,
[Name of Purchaser]
Address:
By:
------------------------------- ------------------------------
Name:
Title: ------------------------------
This Transfer Certificate shall constitute the notice of Transfer required
under subsection 11.1(a)(iv) of the Declaration of Trust.
[Name of Seller]
Address:
By:
------------------------------- ------------------------------
Name:
Title: ------------------------------
The undersigned, on behalf of the Company, hereby acknowledges receipt of this
Transfer Certificate and acknowledges and agrees that this Transfer Certificate
shall constitute the notice of Transfer required under subsection 11.1(a)(iv)
of the Declaration of Trust. The undersigned, on behalf of the Company, hereby
consents to the Transfer which is the subject of this notice of Transfer
pursuant to the Declaration of Trust. The proper authorized Person of the
Company will record on the books and records of the Company the Purchaser as a
Shareholder of the Company.
By:
By:
------------------------------
