EXHIBIT 10.3
EXECUTION COPY
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXXX XXXXX GLOBAL RELATIVE VALUE, LLC
DATED AS OF JANUARY 1, 2006
TABLE OF CONTENTS
Page
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ARTICLE I General Provisions. ............................................1
Section 1.01 Company Name and Address. .................................1
Section 1.02 Fiscal Year. ..............................................1
Section 1.03 Liability of Members. .....................................1
Section 1.04 Purposes of the Company. ..................................2
Section 1.05 Assignability of Units; Assignment by Managing Member. ....3
Section 1.06 Registered Office and Agent for Service of Process. .......3
ARTICLE II Management of the Company. ....................................3
Section 2.01 Management Generally. .....................................3
Section 2.02 Delegation by Managing Member. ............................3
Section 2.03 Authority of the Managing Member. .........................3
Section 2.04 Reliance by Third Parties. ................................5
Section 2.05 Activity of the Managing Member. ..........................5
Section 2.06 Standard of Care; Indemnification. ........................6
Section 2.07 Management Fee; Payment of Costs and Expenses. ............8
Section 2.08 Principal Transactions and Other Related Party
Transactions. .............................................9
ARTICLE III Series of Units; Admission of New Members. ...................9
Section 3.01 Classes and Series of Units. ..............................9
Section 3.02 Conversion of Series. ....................................10
Section 3.03 New Members. .............................................10
Section 3.04 Adjustment to Number of Units Issued. ....................10
Section 3.05 Additional Classes of Units. .............................10
ARTICLE IV Capital Accounts of Members and Operation Thereof. ...........11
Section 4.01 Definitions. .............................................11
Section 4.02 Capital Contributions. ...................................11
Section 4.03 Capital Accounts. ........................................12
Section 4.04 Membership Percentages. ..................................12
Section 4.05 Allocation of Net Capital Appreciation or Net Capital
Depreciation. ............................................13
Section 4.06 Amendment of Incentive Allocation. .......................14
Section 4.07 Determination of Net Assets. .............................14
Section 4.08 Determination of Net Asset Value. ........................15
Section 4.09 Allocation for Tax Purposes. .............................16
Section 4.10 Determination by Managing Member of Certain Matters;
Managing Member's Discretion. ............................16
Section 4.11 Adjustments to Take Account of Interim Year Events. ......17
Section 4.12 Tax Withholding. .........................................17
ARTICLE V Redemptions and Distributions. ................................17
Section 5.01 Redemptions and Distributions in General. ................17
Section 5.02 Redemptions. .............................................17
Section 5.03 Limitation on Redemptions. ...............................19
Section 5.04 Distributions. ...........................................20
ARTICLE VI Withdrawal, Death, Disability. ...............................20
Section 6.01 Withdrawal, Death, etc. of Members. ......................20
Section 6.02 Required Withdrawals. ....................................21
ARTICLE VII Duration and Dissolution of the Company. ....................21
Section 7.01 Duration. ................................................21
Section 7.02 Dissolution. .............................................23
ARTICLE VIII Tax Returns; Reports to Members. ...........................23
Section 8.01 Independent Auditors. ....................................23
Section 8.02 Filing of Tax Returns. ...................................23
Section 8.03 Tax Matters Partner. .....................................23
Section 8.04 Financial Reports to Current Members. ....................24
Section 8.05 Tax Reports to Members and Former Members. ...............24
ARTICLE IX Miscellaneous. ...............................................24
Section 9.01 General. .................................................24
Section 9.02 Power of Attorney. .......................................24
Section 9.03 Amendments to Limited Liability Company Agreement. .......25
Section 9.04 Instruments. .............................................26
Section 9.05 No Personal Liability For Return of Capital. .............26
Section 9.06 Choice of Law. ...........................................26
Section 9.07 Venue; Inconvenient Forum. ...............................26
Section 9.08 No Third Party Rights. ...................................26
Section 9.09 Notices. .................................................27
Section 9.10 Grantors of Revocable Trusts. ............................27
Section 9.11 Goodwill. ................................................27
Section 9.12 Headings. ................................................27
Section 9.13 Pronouns. ................................................27
Section 9.14 Confidentiality. .........................................27
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
XXXXXXX SACHS GLOBAL RELATIVE VALUE, LLC
Dated as of January 1, 2006
The undersigned (herein called the "Members," which term shall
include any Persons (as defined below) hereafter admitted to the Company
(as defined below) pursuant to Article III of this Agreement (as defined
below) and shall exclude any Persons who cease to be Members pursuant to
Article V or Article VI of this Agreement) hereby agree to form and hereby
form, as of the date and year first above written, a limited liability
company (herein called the "Company"), pursuant to the provisions of the
Limited Liability Company Act of the State of Delaware (6 Del. Code ss.
18-101, et seq.) (the "Act"), which shall be governed by, and operated
pursuant to, the terms and provisions of this Amended and Restated Limited
Liability Company Agreement (herein called this "Agreement").
ARTICLE I
General Provisions
Section 1.01 Company Name and Address. The name of the Company is
Xxxxxxx Xxxxx Global Relative Value, LLC. Its principal office is located
at 000 Xxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, or at such other
location as the Managing Member (as defined in Section 1.03) in the future
may designate. The Managing Member shall promptly notify the Non-Managing
Members (as defined in Section 1.03) of any change in the Company's
address.
Section 1.02 Fiscal Year. The fiscal year of the Company (herein
called the "fiscal year") shall end on December 31 of each calendar year;
provided, however, that the Managing Member may change the Company's fiscal
year-end, without the consent of the Non-Managing Members, as deemed
appropriate by the Managing Member, in its sole discretion.
Section 1.03 Liability of Members. The names of all of the
Members and the amounts of their respective contributions to the Company
(herein called the "Capital Contributions") are set forth in a schedule
(herein called the "Schedule"), which shall be filed with the records of
the Company at the Company's principal office (as set forth in Section
1.01) and is hereby incorporated by reference and made a part of this
Agreement.
The Member designated in Part I of the Schedule as the Managing
Member (herein called the "Managing Member") shall manage the operations of
the Company. The Members designated in Part II of the Schedule are referred
to herein as the "Non-Managing Members." The Managing Member, the
Non-Managing Members and the former Non-Managing Members shall be liable to
the extent provided herein for the repayment and discharge of all debts and
obligations of the Company attributable to any fiscal year (or relevant
portion thereof) during which they are or were Members of the Company to
the extent of their respective limited liability company interests (the
"Units") in the Company in the fiscal year (or relevant portion thereof) to
which any such debts and obligations are attributable.
The Members and all former Members shall share all losses,
liabilities or expenses suffered or incurred by virtue of the operation of
the preceding paragraph of this Section 1.03 in the proportions of their
respective Capital Accounts (determined as provided in Section 4.03) for
the fiscal year (or relevant portion thereof) to which any debts or
obligations of the Company are attributable. A Member's or former Member's
share of all losses, liabilities or expenses shall not be greater than its
respective interest in the Company for such fiscal year (or relevant
portion thereof).
As used in this Agreement, the terms "interests in the Company"
and "interest in the Company" shall mean with respect to any fiscal year
(or relevant portion thereof) and with respect to each Member (or former
Member), the Capital Account (or, in the case of a Member with more than
one series of Units (as defined below), the Capital Accounts) that such
Member (or former Member) would have received (or in fact did receive)
pursuant to the terms and provisions of Article VI upon withdrawal from the
Company as of the end of such fiscal year (or relevant portion thereof).
Notwithstanding any other provision of this Agreement to the
contrary, in no event shall any Member (or former Member) be obligated to
make any additional contribution or payment whatsoever to the Company, or
have any liability for the repayment and discharge of the debts and
obligations of the Company (apart from its interest in the Company), except
that a Non-Managing Member (or former Non-Managing Member) shall, in the
discretion of the Managing Member, be required, for purposes of meeting
such Member's (or former Member's) obligations under this Section 1.03, to
make additional contributions or payments, respectively, up to, but in no
event in excess of, the aggregate amount of returns of capital and other
amounts actually received by it from the Company during or after the fiscal
year to which any debt or obligation is attributable.
As used in this Agreement, the terms "former Non-Managing Member"
and "former Member" refer to such Persons as hereafter from time to time
cease to be a Non-Managing Member or Member, respectively, pursuant to the
terms and provisions of this Agreement.
Section 1.04 Purposes of the Company. The Company is organized
for the purposes of allocating its assets directly or indirectly to a group
of investment managers (the "Advisors") (that may or may not be Affiliates
(as defined in Section 2.05) of the Managing Member) that employ strategies
within the relative value hedge fund sector, engaging in any other lawful
act or activity for which limited liability companies may be organized
under the Act, and engaging in any and all activities and transactions as
the Managing Member may deem necessary or advisable in connection
therewith.
Section 1.05 Assignability of Units; Assignment by Managing Member.
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(a) Except as provided in paragraph (b) below, without the prior
written consent of the Managing Member, which may be withheld in its sole
and absolute discretion, with or without cause, a Member may not pledge,
transfer or assign its Units in the Company in whole or in part to any
Person except by operation of law, nor substitute any other Person as a
Member. Any attempted pledge, transfer, assignment or substitution not made
in accordance with this Section 1.05 shall be void.
(b) Without the consent of the Non-Managing Members, the Managing
Member may assign or otherwise transfer its Managing Member interest in the
Company to any corporation, partnership, limited liability company or other
entity controlling, controlled by or under common control with the Managing
Member, as long as such transfer does not, as determined by the Managing
Member in its sole discretion, cause the Company to be taxable as a
corporation.
Section 1.06 Registered Office and Agent for Service of Process.
The registered office of the Company shall be: Corporation Trust Center,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and the registered agent
for service of process at such office shall be The Corporation Trust
Company. The Company may from time to time have such other place or places
of business within or without the State of Delaware as may be designated by
the Managing Member.
ARTICLE II
Management of the Company
Section 2.01 Management Generally. The management of the Company
shall be vested exclusively in the Managing Member. Except as authorized by
the Managing Member, or as expressly set forth in this Agreement, the
Non-Managing Members 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. The Managing Member, and any Affiliate of the
Managing Member, may engage in any other business venture, whether or not
such business is similar to the business of the Company, and neither the
Company nor any Non-Managing Member shall have any rights in or to such
ventures or the income or profits derived therefrom.
Section 2.02 Delegation by Managing Member. The Managing Member
shall have the power and authority to delegate to one or more Persons (as
defined in Section 2.03(d)), including, without limitation, any officer,
employee or agent of the Company or the Managing Member, the Managing
Member's rights and powers to manage and control the business and affairs
of the Company. The Managing Member may, by written instrument, authorize
any Person to enter into and perform under any document on behalf of the
Company.
Section 2.03 Authority of the Managing Member. The Managing
Member shall have the power on behalf of and in the name of the Company to
carry out any and all of the objects and purposes of the Company set forth
in Section 1.04 and Section 2.01, and to perform all acts and enter into
and perform all contracts and other undertakings, other than any actions to
be taken in connection with investment of the Company's investable assets,
which it may deem necessary or advisable or incidental thereto, including,
without limitation, the power to:
(a) open, maintain and close accounts, including custodial
accounts, with banks, including banks located inside and outside the United
States, and draw checks or other orders for the payment of monies;
(b) lend, either with or without security, funds or other
properties of the Company, borrow or raise funds (including borrowing from
the Managing Member or its Affiliates), and secure the obligations of the
Company by pledges or hypothecation of all or any part of the property of
the Company;
(c) do any and all acts on behalf of the Company, and exercise
all rights, powers, privileges and other incidents of ownership or
possession with respect to the Company's assets (including any interest
therein) and other property and funds held or owned by the Company,
including, without limitation, participation in arrangements with
creditors, the institution and settlement or compromise of suits and
administrative proceedings and all other like or similar matters;
(d) engage any person, general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business
trust, cooperative, association or other entity (each, a "Person" and
collectively, "Persons") (including the Managing Member and any of its
Affiliates) pursuant to an administration agreement to provide certain
administrative services (any such Person providing such services being
referred to herein as the "Administrator"), including, without limitation,
calculating the net asset value (the "NAV") of each series of Units and
Members' Capital Accounts, valuing the Company's assets, assisting with the
valuation of securities which are not readily marketable, assisting in the
preparation of the Company's financial statements, assisting in the
preparation and distribution of reports to each Member, maintaining a
registry for the ownership of each series of Units and providing other
administrative services to the Company;
(e) consent on behalf of the Company to any changes in the
members, directors or officers of the Managing Member, if such consent is
required by applicable law;
(f) engage any personnel, whether part time or full time,
attorneys, financial advisers, underwriters, accountants, consultants,
appraisers, custodians of the assets of the Company or other Persons as the
Managing Member may deem necessary or desirable, whether or not any such
Person may be an Affiliate of the Managing Member or may also be employed
by any Affiliate of the Managing Member;
(g) allocate the Company's assets, directly or indirectly, to
Advisors and limited liability companies or other entities managed by the
Managing Member through which the Company accesses Advisors ("Portfolio
Companies") and investment funds in the manner set forth in the Company's
Confidential Private Placement Memorandum (as amended or supplemented from
time to time, the "Memorandum"), oversee such allocations and, from time to
time, in the sole discretion of the Managing Member, reallocate the
Company's assets among existing or new Advisors, Portfolio Companies or
investment funds;
(h) invest any of the Company's cash balances which it determines
at any time, in its sole discretion, not to allocate to the Advisors,
Portfolio Companies or investment funds, in any instruments it deems
appropriate in its sole discretion, including, without limitation, money
market funds sponsored by Xxxxxxx, Xxxxx & Co. or its Affiliates;
(i) redeem the Company's interests in any investment fund or
Portfolio Company in order to obtain cash necessary to meet the redemption
requests of the Members, or for any other reason in its sole discretion;
(j) bring and defend actions and proceedings at law or equity and
before any governmental, administrative or other regulatory agency, body or
commission;
(k) make distributions to Members in cash or (to the extent
permitted hereunder) otherwise;
(l) prepare and file all necessary returns and statements, pay
all taxes, assessments and other impositions applicable to the assets of
the Company and withhold amounts with respect thereto from funds otherwise
distributable to any Member;
(m) determine the accounting methods and conventions to be used
in the preparation of any accounting or financial records of the Company;
(n) make any and all tax elections permitted to be made under the
Internal Revenue Code of 1986, as amended (the "Code"), and any applicable
state, local or foreign tax law;
(o) determine the tax treatment of any Company transaction or
item for purposes of completing the Company's federal, state, local or
foreign tax returns; and
(p) take all actions, and authorize any member, employee,
officer, director or other agent of the Managing Member or agent or
employee of the Company, to act for and on behalf of the Company, in all
matters necessary to, in connection with, or incidental to, any of the
foregoing.
Section 2.04 Reliance by Third Parties. Persons dealing with the
Company are entitled to rely conclusively upon the certification of the
Managing Member, to the effect that it is then acting as the Managing
Member and upon the power and authority of the Managing Member as herein
set forth.
Section 2.05 Activity of the Managing Member. The Managing Member
and Persons controlling, controlled by or under common control with the
Managing Member and any of such Person's directors, members, stockholders,
partners, officers, employees and controlling persons (each, an "Affiliate"
and collectively, "Affiliates"), shall devote so much of their time to the
affairs of the Company as in the judgment of the Managing Member the
conduct of its business shall reasonably require, and none of the Managing
Member or its Affiliates shall be obligated to do or perform any act or
thing in connection with the business of the Company not expressly set
forth herein. Nothing contained in this Section 2.05 shall be deemed to
preclude the Managing Member or its Affiliates from exercising investment
responsibility, from engaging directly or indirectly in any other business
or from directly or indirectly purchasing, selling or holding securities,
options, separate accounts, investment contracts, currency, currency units
or any other asset and any interest therein for the account of any such
other business, for their own accounts, for any of their family members or
for other clients.
Section 2.06 Standard of Care; Indemnification.
---------------------------------
(a) None of the Managing Member or its Affiliates (each, an
"Indemnified Person" and collectively the "Indemnified Persons") shall be
liable to the Company or to the Members for (i) any act or omission
performed or failed to be performed by such person (other than any criminal
wrongdoing), or for any losses, claims, costs, damages, or liabilities
arising therefrom, in the absence of any criminal wrongdoing, willful
misfeasance or gross negligence on the part of such person, (ii) any tax
liability imposed on the Company or any Member or (iii) any losses due to
the actions or omissions of the Advisors, any brokers or other agents of
the Company.
In the event that any Indemnified Person becomes involved in any
capacity in any action, proceeding or investigation brought by or against
any Person (including any Non-Managing Member) in connection with any
matter arising out of or in connection with the Company's business or
affairs (including a breach of this Agreement by any Member), the Company
will periodically reimburse such Indemnified Person for its legal and other
expenses (including the costs of any investigation and preparation)
incurred in connection therewith, provided that such Indemnified Person
shall promptly repay to the Company the amount of any such reimbursed
expenses paid to it if it shall ultimately be determined by a court having
appropriate jurisdiction in a decision that is not subject to appeal, that
such Indemnified Person is not entitled to be indemnified by the Company in
connection with such action, proceeding or investigation as provided in the
exception contained in the next succeeding sentence.
To the fullest extent permitted by applicable law, the Company
shall also indemnify any Indemnified Person, jointly and severally, against
any losses, claims, costs, damages or liabilities to which such Indemnified
Person may become subject in connection with any matter arising out of or
in connection with the Company's business or affairs, except to the extent
that any such loss, claim, cost, damage, or liability results solely from
the willful misfeasance, bad faith or gross negligence of, or any criminal
wrongdoing by, such Indemnified Person. If for any reason (other than the
willful misfeasance, bad faith or gross negligence of, or any criminal
wrongdoing by, such Indemnified Person) the foregoing indemnification is
unavailable to such Indemnified Person, or is insufficient to hold it
harmless, then the Company shall contribute to the amount paid or payable
to the Indemnified Person as a result of such loss, claim, cost, damage, or
liability in such proportion as is appropriate to reflect not only the
relative benefits received by the Company on the one hand and such
Indemnified Person on the other hand but also the relative fault of the
Company and such Indemnified Person, as well as any relevant equitable
considerations.
The reimbursement, indemnity and contribution obligations of the
Company under this Section 2.06 shall be in addition to any liability which
the Company may otherwise have and shall be binding upon and inure to the
benefit of any successors, assigns, heirs, and personal representatives of
the Company, the Managing Member and any other Indemnified Person. The
foregoing provisions shall survive any termination of this Agreement.
(b) The reimbursement, indemnification and contribution rights
provided by this Section 2.06 shall not be deemed to be exclusive of any
other rights to which the Indemnified Person may be entitled under any
agreement or as a matter of law, or otherwise, both as to action in an
Indemnified Person's official capacity and to action in any other capacity,
and shall continue as to an Indemnified Person who has ceased to have an
official capacity for acts or omissions during such official capacity or
otherwise when acting at the request of the Managing Member and shall inure
to the benefit of the successors, assigns, heirs and personal
representatives of such Indemnified Person.
(c) Notwithstanding any of the foregoing to the contrary, the
provisions of this Section 2.06 shall not be construed as to relieve (or
attempt to relieve) from liability or to provide for the indemnification of
any Indemnified Person for any liability (including liability under federal
securities law which, under certain circumstances, impose liability even on
persons that act in good faith), to the extent (but only to the extent)
that such liability may not be waived, modified or limited under applicable
law or such indemnification would be in violation of applicable law, but
shall be construed so as to effectuate the provisions of this Section 2.06
to the fullest extent permitted by law.
(d) The Managing Member shall have power to purchase and maintain
insurance on behalf of the Managing Member and the Indemnified Persons at
the expense of the Company against any liability asserted against or
incurred by them in any such capacity or arising out of the Managing
Member's status as such, whether or not the Company would have the power to
indemnify the Indemnified Persons against such liability under the
provisions of this Agreement.
(e) An Indemnified Person may rely upon and shall be protected in
acting or refraining from action upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
bond debenture, or other document believed by it to be genuine and to have
been signed or presented by the proper party or parties.
(f) An Indemnified Person may consult with counsel, accountants
and other experts reasonably selected by it, and any opinion of an
independent counsel, accountant or expert retained with reasonable care
shall be full and complete protection in respect of any action taken or
suffered or omitted by the Indemnified Person hereunder in good faith and
in accordance with such opinion.
(g) The Managing Member may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, and the Managing Member shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with reasonable care by it hereunder.
Section 2.07 Management Fee; Payment of Costs and Expenses. The
Company shall pay to the Managing Member a management fee (the "Management
Fee") in respect of each series of Units, payable in arrears, for
investment management and other management services accruing daily and
calculated and paid on a monthly basis of one-twelfth of 1.25% of the Net
Assets (as defined in Section 4.01(d)) of the Company in respect of each
such series of Units as of the end of each month, appropriately adjusted to
reflect capital appreciation or depreciation and any contributions,
redemptions or distributions. For purposes of determining the Management
Fee for any month, Net Assets shall not be reduced to reflect any
Management Fee for such month and any accrued Incentive Allocation (as
defined in Section 4.05(b)), including any Incentive Allocation that is
allocated to the Managing Member's Incentive Allocation Account as of such
date, provided that Net Assets shall be reduced for any amounts which have
been previously allocated to the Managing Member's Incentive Allocation
Account. The Management Fee will reduce the Capital Account of the series
of Units to which it relates, as described in Section 4.03.
If a Member is admitted to, withdraws from (including any partial
withdrawal), or acquires additional Units of, the Company as of a date
other than the first day of a calendar month, the portion of the Management
Fee determined with respect to such Member's Capital Account shall be
appropriately pro-rated to take into account the number of days in such
month during which such Member was a Member or during which such Units were
outstanding, as applicable.
The Managing Member has the right, in its sole discretion, to
waive fees or impose different fees on any Member, as may be agreed to by
the Managing Member and the Member.
The Company bears all of its operating expenses, including, but
not limited to, legal expenses; professional fees (including, without
limitation, fees and expenses of consultants and experts) relating to
investments; costs and expenses relating to any amendment of this Agreement
or the Company's other organizational documents or subscription agreement
or any modification or supplement to the Memorandum, and any distribution
of such documentation to the Members; accounting, auditing and tax
preparation expenses; fees and expenses of other agents of the Company
(including, without limitation, fees which may be payable to and expenses
of an Administrator or sub-administrator of the Company); taxes and
governmental fees; printing and mailing expenses; expenses relating to
transfers and redemptions of Units; fees and out-of-pocket expenses of any
service company retained to provide accounting and bookkeeping services to
the Company; quotation or valuation expenses; expenses relating to the
acquisition, holding and disposition of investments (e.g., expenses which
the Managing Member determines to be related to the investment of the
assets of the Company, including, among others, research expenses, such as
fees to the Advisors, brokerage fees and commissions, expenses relating to
short sales, clearing and settlement charges, custodial fees and expenses,
costs and charges for equipment or services used in communicating
information regarding the Company's transactions between the Managing
Member and other agents, bank service fees, interest expenses, borrowing
costs and extraordinary expenses); insurance premiums; costs incurred in
connection with any claim, litigation, arbitration, mediation, government
investigation or dispute in connection with the business of the Company and
the amount of any judgment or settlement paid in connection therewith, or
the enforcement of the Company's rights against any Person; costs and
expenses for indemnification or contribution payable by the Company to any
Person (including, without limitation, pursuant to the indemnification
obligations described herein under Section 2.06); and all costs and
expenses incurred as a result of dissolution, winding-up and termination of
the Company.
In addition, the Company will bear the expenses incurred in
connection with the offer and sale of Units, including printing costs and
legal fees and expenses of the Company, the Managing Member and any
placement agent and other expenses of the offering of Units. In addition,
the Company will bear, indirectly through its investment in each Portfolio
Company or investment fund in which it invests, its pro rata portion of the
offering, organizational and operating expenses of each Portfolio Company
or investment fund, including, without limitation, the expenses of the type
described in this and the preceding paragraph.
To the extent that expenses to be borne by the Company are paid
by the Managing Member, the Company shall reimburse the Managing Member for
the payment of any such expenses. The Managing Member may elect, from time
to time, to bear certain of the Company's expenses described above. The
Managing Member shall bear its own overhead costs and expenes.
Section 2.08 Principal Transactions and Other Related Party
Transactions. Each Non-Managing Member hereby authorizes the Managing
Member, on behalf of such Non-Managing Member, to select one or more
Persons, who shall not be affiliated with the Managing Member, to serve on
a committee, the purpose of which will be to consider and, on behalf of the
Non-Managing Members, approve or disapprove, to the extent required by
applicable law, of principal transactions and certain other related party
transactions. In no event shall any such transaction be entered into unless
it complies with applicable law.
ARTICLE III
Series of Units; Admission of New Members
Section 3.01 Classes and Series of Units.
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(a) Units may be divided into different classes of Units, and
each class may be further divided into different series of Units (each such
series being referred to in this Agreement as a "series," provided always
that in the case of a class which has not been divided into two or more
series, the expression "series" shall, where the context so requires, mean,
for the purposes of this Agreement, the Units of such class), in the
discretion of the Managing Member. In this Agreement, except when referred
to under their separate classes or series or where the context otherwise
requires, the term "Units" shall mean all classes and all series of each
class of Units.
(b) An initial series of Units of a class (the "Initial Series")
will be issued on the initial closing date of each class. The initial
purchase price per Unit for the Initial Series of Units of a class shall be
$100. The Managing Member may, at any time and from time to time, in its
sole discretion, elect to raise additional capital for the Company from
Members and from new subscribers on such terms and conditions as may be
determined by the Managing Member in its sole discretion. Generally, a new
series of Units will be issued on each date an existing Member makes an
additional Capital Contribution in accordance with Section 4.02 and on each
date a new Member is admitted to the Company in accordance with Section
3.03, except that the Managing Member may issue additional Units of an
existing series provided that such issuance does not have an adverse effect
on the NAV or Prior High NAV (as defined in Section 4.05(b)(i)) of the
Units of any Member. Each Unit will carry equal rights and privileges with
each other Unit of the same series. Units of a class issued at the
beginning of any fiscal year will be offered at the then current NAV per
Unit of the Initial Series of such class if such Initial Series is at or
above its Prior High NAV per Unit. If the Initial Series of such class is
not at or above its Prior High NAV per Unit, Units will be issued in the
next offered series of such class that is at or above its Prior High NAV.
If no series of Units of such class is at or above its Prior High NAV at
such time, such additional Units will be issued as a separate series at a
price per Unit determined by the Managing Member, in its sole discretion.
Fractions of Units may be issued to one ten-thousandth of a Unit.
Section 3.02 Conversion of Series. Following the end of each
fiscal year, any issued and outstanding series of Units of a class (other
than the Initial Series of such class) that is at or above its Prior High
NAV shall be exchanged (after reduction for the Management Fee and any
Incentive Allocation) into Units of the Initial Series of such class (or if
such Initial Series is not at or above its Prior High NAV per Unit, the
next offered series of such class that is at or above its Prior High NAV)
at the prevailing NAV per Unit of the Initial Series or such other series
of Units (as applicable).
Section 3.03 New Members. Subject to the condition that each new
Member shall execute an appropriate counterpart to this Agreement pursuant
to which it agrees to be bound by the terms and provisions hereof, the
Managing Member may admit one or more new Members on the first day of each
calendar quarter or at such other times as the Managing Member may
determine in its sole discretion. Admission of a new Member shall not be a
cause for dissolution or termination of the Company.
Section 3.04 Adjustment to Number of Units Issued. If at any time
the Managing Member determines, in its sole discretion, that an incorrect
number of Units was issued to a Member because the NAV in effect on the
date of issuance was materially incorrect, the Company will adjust such
Member's Units by increasing or decreasing them (by means of issuances of
additional Units or compulsory redemptions of Units, in each case without
additional consideration), as appropriate, to such number of Units as would
have been issued at the correct NAV.
Section 3.05 Additional Classes of Units. The Company may issue
additional classes of Units, including, without limitation, classes of
Units that are subject to different fee arrangements or seek to maximize
total returns in other currencies. The Managing Member may, without the
prior consent of or notice to the Members, make appropriate amendments to
or supplement this Agreement to the extent necessary or desirable to effect
the issuance of Units of any such class, including, without limitation, to
account for different fee arrangements or the separate currency-related
transactions engaged in with respect to such a class.
ARTICLE IV
Capital Accounts of Members
and Operation Thereof
Section 4.01 Definitions. For the purposes of this Agreement,
unless the context otherwise requires:
(a) The term "Accounting Period" shall mean the following
periods: The initial Accounting Period commenced upon the commencement of
operations of the Company. Each subsequent Accounting Period shall commence
immediately after the close of the preceding Accounting Period. Each
Accounting Period hereunder shall close at the close of business on the
first to occur of (i) the last day of each calendar month, (ii) the last
day of each fiscal year of the Company, (iii) the date immediately prior to
the effective date of the admission of a new Member pursuant to Section
3.03, (iv) the date immediately prior to the effective date of an
additional Capital Contribution pursuant to Section 4.02, or (v) the date
immediately prior to the effective date of any redemption or complete
withdrawal pursuant to Article V or Article VI hereof. The final Accounting
Period shall end on the date the Company dissolves.
(b) The term "Beginning Value" shall, with respect to any
Accounting Period, mean the value of the Company's Net Assets (as defined
below) at the beginning of such Accounting Period.
(c) The term "Ending Value" shall, with respect to any Accounting
Period, mean the value of the Company's Net Assets at the end of such
Accounting Period (before giving effect to the Incentive Allocation and the
Management Fee for such Accounting Period, but after giving effect to all
other expenses for such Accounting Period).
(d) The term "Net Assets" shall mean the excess of the Company's
total assets over its total liabilities, determined in accordance with
Section 4.07.
(e) The term "Net Capital Appreciation," with respect to any
Accounting Period, shall mean the excess, if any, of the Ending Value over
the Beginning Value.
(f) The term "Net Capital Depreciation," with respect to any
Accounting Period, shall mean the excess, if any, of the Beginning Value
over the Ending Value.
Section 4.02 Capital Contributions. Each Member has paid or
conveyed by way of contribution to the Company in exchange for the issuance
of Units cash and/or marketable securities having an aggregate value equal
to the amount set forth opposite such Member's name in Part I or II of the
Schedule (herein called the "Initial Capital Contribution"). Additional
Capital Contributions may be made by Members only in accordance with the
provisions of this Section 4.02.
Upon the approval of the Managing Member, any existing or
prospective Member may purchase additional or newly-issued Units by
contributing cash and/or marketable securities to the Company on the first
day of any calendar quarter or at such other times as the Managing Member
may determine in its sole discretion. The Managing Member and any of its
Affiliates may make additional Capital Contributions to the Company in cash
and/or marketable securities at any time and in any amounts.
Whether marketable securities shall be accepted as a contribution
to the Company shall be determined in the sole discretion of the Managing
Member.
Section 4.03 Capital Accounts. (a) A separate capital account
(herein called a "Capital Account") shall be established on the books of
the Company for each series of Units. The Capital Account of each series
shall initially be an amount equal to the Initial Capital Contributions
with respect to such series. The Capital Account of a series shall be (i)
increased to reflect any additional Capital Contributions pursuant to
Section 4.02 in respect of such series; (ii) increased to reflect the Net
Capital Appreciation of such series for each Accounting Period; (iii)
decreased to reflect the redemption of any Units of such series, pursuant
to Section 5.02; (iv) decreased to reflect the amount of any distributions
(other than in redemption of Units pursuant to Section 5.02) pursuant to
Section 5.04 in respect of such series (including any deemed distributions
of taxes paid by the Company pursuant to Section 5.04(c) in respect of such
series); (v) decreased for any Incentive Allocation pursuant to Section
4.05(b) and any Management Fee in respect of such series; and (vi)
decreased to reflect the Net Capital Depreciation of such series for each
Accounting Period.
(b) At the time of the conversion of any series of Units into
Units of the Initial Series or any other series of Units pursuant to
Section 3.02, the Capital Account of the converted series of Units shall be
reduced to zero, and the Capital Account of the series of Units into which
such Units were converted shall be increased by the balance of the Capital
Account of the converted series of Units immediately prior to the
conversion.
(c) A separate Capital Account shall also be established on the
books of the Company for each Member with respect to each series of Units
held by such Member. Each Member's Capital Account with respect to a series
of Units shall equal the Capital Account of such series times the Member's
Membership Percentage (as defined in Section 4.04) with respect to such
series of Units.
(d) The Managing Member shall have a separate Capital Account
(the "Incentive Allocation Account"), which shall initially be equal to
zero, and which shall be (i) increased by any Incentive Allocation at the
time such Incentive Allocation is made, and (ii) decreased to reflect the
amount of any distributions (including any deemed distributions in
connection with the withholding of taxes in respect of such Incentive
Allocation pursuant to Section 5.04(c)) made to, or withdrawals made by,
the Managing Member in respect of such Incentive Allocation Account.
Section 4.04 Membership Percentages. A membership percentage (a
"Membership Percentage") shall be determined for each Member for any given
series of Units for each Accounting Period of the Company by dividing (i)
the number of Units owned by such Member within a given series by (ii) the
aggregate number of outstanding Units of such series as of the beginning of
such Accounting Period, after taking into account, in the case of both
clause (i) and clause (ii), any Units issued or redeemed as of (or the day
immediately after) the beginning of such Accounting Period. The aggregate
Membership Percentages for each series of Units shall equal 100%.
Section 4.05 Allocation of Net Capital Appreciation or Net
Capital Depreciation.
(a) Any Net Capital Appreciation or Net Capital Depreciation, as
the case may be, for an Accounting Period shall be allocated among the
different series of Units pro rata in accordance with the relative Capital
Accounts (determined prior to any year-to-date accrued Incentive
Allocation) of each series at the beginning of such Accounting Period,
after taking into account any contributions, distributions or redemptions
as of the beginning of such Accounting Period.
(b) (i) At the end of each fiscal year of the Company, or at such
other date during a fiscal year as of which the following determination is
required pursuant to this Section 4.05, five percent (5%) of the amount by
which the NAV of a series of Units (determined prior to any applicable
Incentive Allocation accrual with respect to such series of Units and
appropriately adjusted as determined by the Managing Member in its sole
discretion for contributions, distributions and redemptions, but after
giving effect to the allocation, pursuant to Section 4.05(a), of Net
Capital Appreciation and Net Capital Depreciation for the Accounting Period
then ending) exceeds such series' Prior High NAV at such date shall be
reallocated to the Incentive Allocation Account (the "Incentive
Allocation"). The "Prior High NAV" with respect to a series of Units
initially shall mean an amount equal to the NAV of such series as of the
date of its initial issue. The new Prior High NAV with respect to a series
of Units immediately following the end of any period for which an Incentive
Allocation has been made with respect to such series shall be reset to
equal the NAV of such series, unless the series is exchanged pursuant to
Section 3.02 into the Initial Series or another series, in which case the
new Prior High NAV shall be reset to equal the NAV of the Initial Series or
such other series. If the NAV of such series at the end of any fiscal year
of the Company, and such other date during a fiscal year as of which the
determination of the Incentive Allocation is required pursuant to Section
4.05(c) is less than its Prior High NAV, the Prior High NAV of that series
shall not change. The Prior High NAV for each series of Units shall be
appropriately adjusted as determined by the Managing Member in its sole
discretion to account for contributions, distributions and redemptions made
with respect to such series of Units.
(ii) The Incentive Allocation with respect to a series of
Units accrues daily and the Company shall credit the Incentive Allocation
Account as of December 31 of each year for the Incentive Allocation.
(c) In the event that the Company is dissolved other than at the
end of a fiscal year, or the effective date of a Member's redemption of
Units is other than a fiscal year-end, then the Incentive Allocation
described above shall be determined and made as if the date of such
dissolution or redemption was a fiscal year-end (but only in respect of the
Units being redeemed).
(d) Notwithstanding anything to the contrary herein, to the
extent that the Company invests in "New Issues" (as defined below), and
there are Members who are restricted persons within the meaning of the
National Association of Securities Dealers, Inc. (the "NASD") Conduct Rule
2790 (the "NASD Rule"), investments in New Issues will be made through a
special account and profits and losses attributable to New Issues will not
be allocated to the Capital Accounts of Members who are restricted from
participating in New Issues under the NASD Rule. One or more additional
classes (or sub-classes) of Units may be created and offered only to those
Members who are not restricted persons, and only those Members who are not
restricted persons shall have any beneficial interest in such classes (or
sub-classes). Notwithstanding anything in this Agreement to the contrary,
the Managing Member shall have the right, without the consent of the
Members, to make such amendments to this Agreement, and to take such other
actions, as it deems advisable and appropriate, in its sole discretion, to
implement the purposes of this Section 4.05(d). A "New Issue" is any equity
securities of an initial public offering as described in the NASD Rule, or
otherwise as such term may be interpreted from time to time under the then
current rules of the NASD.
Section 4.06 Amendment of Incentive Allocation. The Managing
Member shall have the right to amend, without the consent of the
Non-Managing Members, Section 4.05 of this Agreement so that the Incentive
Allocation (or other performance-based allocation) therein provided
conforms to any applicable requirements of the Securities and Exchange
Commission and other regulatory authorities; provided, however, that no
such amendment shall increase the Incentive Allocation (or other
performance-based allocation) as so amended to more than the amount payable
in accordance with Section 4.05 of this Agreement (or, in the case of any
other performance-based allocation arrangement, the specific arrangement
set forth in a written agreement between the affected Non-Managing Member
and the Company), without the written consent of the affected Non-Managing
Member. The Managing Member reserves the right, in its sole discretion, to
apply different performance-based percentage allocations and
performance-based compensation arrangements to any Member, as may be agreed
by the Managing Member and such Member.
Section 4.07 Determination of Net Assets.
---------------------------
(a) The Company's Net Assets shall be determined in accordance
with U.S. generally accepted accounting principles ("U.S. GAAP")
consistently applied as a guideline and the following principles:
(i) The value of the Company's investment in an investment
fund shall be equal to the Company's proportionate interest in the NAV of
the investment fund, determined in accordance with the terms and conditions
of the respective governing agreement of each investment fund as reported
by its respective Advisor or other designee to the Company, as it may be
amended, supplemented or otherwise modified from time to time (or based on
such other information deemed relevant by the Managing Member).
(ii) The assets of the Company that are invested pursuant to
investment management agreements shall be valued at fair value in a
commercially reasonable manner.
(iii) All other assets or liabilities of the Company shall
be assigned such value as the Managing Member may reasonably determine.
(iv) The amount of the Company's assets and liabilities
(including, without limitation, indebtedness for money borrowed and the
Management Fee) shall be determined in accordance with U.S. GAAP and
guidelines, applied on a consistent basis, provided that the Managing
Member in its discretion may provide reserves for estimated accrued
expenses, liabilities and contingencies, even if such reserves are not
required by U.S. GAAP.
(v) The amount payable to a Member or former Member in
redemption of part or all of such Member's or former Member's Units
pursuant to Section 5.02 shall be treated as a liability of the Company,
until paid, from (but not prior to) the beginning of the Accounting Period
that begins immediately after the close of business on the day immediately
prior to the Redemption Date (as defined in Section 5.02(a)) for such
Units.
(vi) The amount to be received by the Company on account of
any Capital Contributions pursuant to Section 4.02 shall be treated as an
asset of the Company from (but not before) the beginning of the Accounting
Period that begins immediately after the close of business on the day
immediately prior to the effective date of such Capital Contributions.
(vii) Distributions made pursuant to Section 5.04 (including
deemed tax distributions pursuant to Section 5.04(c)) other than as of the
beginning of an Accounting Period shall be treated as an advance and as an
asset of the Company, until the beginning of the Accounting Period
following the date of distribution.
(viii) The Incentive Allocation, if any, credited to the
Incentive Allocation Account shall be treated as a liability, until
distributed, from the beginning of the Accounting Period immediately
following the Accounting Period in which the Incentive Allocation was
credited to such Incentive Allocation Account.
(b) The Company may suspend the valuation of its assets and
liabilities, and any distributions or redemptions of any amounts from
Capital Accounts, for any period during which a Portfolio Company or other
investment fund with which the Company has made an investment has suspended
the valuation of its assets and liabilities. The Managing Member shall
promptly notify Members of any such suspension, and the termination of any
such suspension, by means of a written notice.
(c) All values assigned to securities and other assets by the
Managing Member or the Administrator pursuant to this Section 4.07 shall be
final and conclusive as to all of the Members. The Managing Member may
consult with and rely upon valuations of the Company's securities and other
assets provided by the Administrator.
Section 4.08 Determination of Net Asset Value. The NAV of a
series of Units shall be equal to the balance of the Capital Account with
respect to such series of Units. The NAV per Unit of a series shall be
equal to the NAV of such series divided by the number of outstanding Units
of such series.
Section 4.09 Allocation for Tax Purposes. For each taxable year,
items of income, deduction, gain, loss or credit actually recognized by the
Company for federal income tax purposes shall be allocated for federal
income tax purposes among the Members in such manner as to equitably
reflect the amounts credited or debited to each Member's Capital Account
for the current and prior taxable years (or relevant portions thereof).
Allocations under this Section 4.09 shall be made by the Managing Member in
accordance with the principles of Sections 704(b) and 704(c) of the Code
and in conformity with applicable Treasury Regulations promulgated
thereunder (including, without limitation, Treasury Regulations Sections
1.704-1(b)(2)(iv)(f)(4), 1.704-1(b)(4)(i) and 1.704-3(e)). Notwithstanding
the foregoing, the Managing Member in its sole discretion may adjust the
allocation of items of Company taxable income, gain, loss and deduction
among the Members as it shall deem to be equitable, and necessary or
desirable.
If, during or immediately following the end of a taxable year,
any Member redeems all of its Units in the Company or the Managing Member
withdraws any amount from its Incentive Allocation Account, and the Member
would (absent this sentence) recognize gain or loss under Section 731 of
the Code as a result of such redemption or withdrawal, the Managing Member
may, in its sole discretion, elect to specially allocate to such Member,
for U.S. federal income tax purposes, any income and gain or loss and
deduction (including short-term capital gain or loss) recognized by the
Company during such taxable year, through and including the date of
redemption or withdrawal, in an amount up to that amount of income and gain
or loss and deduction which if so allocated would avoid the Member
recognizing gain or loss on the redemption or withdrawal under Section 731
of the Code (ignoring for this purpose, in the sole discretion of the
Managing Member, any adjustments that have been made to the tax basis of
the redeeming Member's Units resulting from any transfers or assignment of
the Units (other than the original issue of the Units), including by reason
of death). Any such election by the Managing Member shall, to the extent
reasonably practicable as determined by the Managing Member in its sole
discretion, be applied on an equitable basis to all Members that redeem all
of their Units during or immediately following the end of such taxable
year.
Section 4.10 Determination by Managing Member of Certain Matters;
Managing Member's Discretion.
(a) All matters concerning the valuation of securities and other
assets and liabilities of the Company, the allocation of profits, gains and
losses among the Members (including for tax purposes) and accounting
procedures not expressly provided for by the terms of this Agreement
(including, without limitation, allocation and accounting procedures in the
event a Member that has an account managed by the Managing Member in a
manner similar to the investment program utilized by the Company which
causes the assets and liabilities in such account to be transferred to the
Company) shall be determined by the Managing Member (or such Person as the
Managing Member may authorize to make such determination), whose
determination shall be final, binding and conclusive as to all of the
Members.
(b) Whenever in this Agreement the Managing Member is permitted
or required to make a decision (i) in its "sole discretion" or
"discretion," or under a similar grant of authority or latitude, the
Managing Member shall be entitled to consider only such interests and
factors as it desires and may consider its own interests and the interests
of its Affiliates and its determination shall be final, binding and
conclusive as to all of the Members, or (ii) in its "good faith" the
Managing Member shall act under such express standards and shall not be
subject to any other or different standards imposed by this Agreement or by
law or any other agreement contemplated herein.
Section 4.11 Adjustments to Take Account of Interim Year Events.
If the Code or regulations promulgated thereunder require an adjustment to
the Capital Account of a Member or some other interim year event occurs
necessitating in the Managing Member's judgment an equitable adjustment,
the Managing Member shall make such adjustments in the determination and
allocation among the Members of Net Capital Appreciation, Net Capital
Depreciation, Capital Accounts, Membership Percentages, Incentive
Allocation, the Management Fee, Company expenses, items of income,
deduction, gain, loss, credit or withholding for tax purposes, accounting
procedures or such other financial or tax items as shall equitably take
into account such interim year event and applicable provisions of law, and
the determination thereof by the Managing Member shall be final, binding
and conclusive as to all of the Members.
Section 4.12 Tax Withholding. If the Company is required to
withhold taxes on any distribution to, or to pay or incur any tax with
respect to any income allocable to or otherwise on account of, any Member
or series of Units, the Company may withhold such amounts and make such
payments to such taxing authorities as are necessary to ensure compliance
with such tax laws.
ARTICLE V
Redemptions and Distributions
Section 5.01 Redemptions and Distributions in General. No Member
shall be entitled (i) to receive distributions from the Company, except as
provided in Section 5.04 and Section 7.02; or (ii) to redeem any of its
Units (other than upon such Member's withdrawal from the Company), except
as provided in Sections 5.02 and 6.01 or upon the consent of, or as may be
required by, and upon such terms as may be determined by, the Managing
Member in its sole discretion. In no event shall a Member be entitled to
demand to receive property other than cash.
Section 5.02 Redemptions.
-----------
(a) Subject to this Section 5.02 (a) and Sections 5.02(c) and
5.03, each Member shall have the right to redeem some or all of its Units
as of the time immediately prior to the opening of business on each January
1, April 1, July 1 and October 1 (each, a "Redemption Date"), upon written
notice received by the Managing Member at least 91 days prior to the
Valuation Date (as defined below) in respect of the redemption (unless such
notice is waived by the Managing Member in its sole discretion). No partial
redemption shall be permitted if thereafter the aggregate NAV of the
remaining Units held by the redeeming Member would be less than $500,000,
unless such limitation is waived by the Managing Member in its sole
discretion.
If outstanding redemption requests from all Members with respect
to any Redemption Date (an "Initial Holdover Redemption Date") (including,
without limitation, any Held Over Units (as defined below)) would result in
redemption proceeds in excess of the Maximum Redemption Amount (as defined
below), the Managing Member shall be entitled in its sole discretion to
refuse to redeem Units requested for redemption that would have resulted in
redemption proceeds in an amount equal to or less than such excess. The
"Maximum Redemption Amount," with respect to any Redemption Date, means 25%
of the aggregate NAV, determined as of time immediately prior to such
Redemption Date, of all of the Units outstanding immediately prior to such
Redemption Date. If the Managing Member refuses to redeem Units as set
forth above, the requests for redemption on such Initial Holdover
Redemption Date by Members shall be reduced ratably, and the requested
Units not so redeemed (the "Held Over Units") shall be redeemed on
subsequent Redemption Dates subject to the Maximum Redemption Amount
calculation for such subsequent Redemption Date and the Managing Member's
rights to refuse redemptions in connection therewith, provided that Held
Over Units shall be redeemed in priority to any subsequently received
redemption requests.
Units of a particular series will be redeemed at a per Unit price
(the "Redemption Price") based upon the NAV of such series as of the close
of business on the day (a "Valuation Date") immediately preceding the
applicable Redemption Date (taking into account the allocation of any Net
Capital Appreciation or Net Capital Depreciation under Section 4.05, and
any distributions under Section 5.04 for the Accounting Period then
ending), after reduction for any Management Fee and Incentive Allocation
(calculated as if the applicable Valuation Date was the last day of the
fiscal year) and other liabilities of the Company to the extent accrued or
otherwise attributable to the Units being redeemed, and the amount of any
such reduction for the Management Fee shall be paid to the Managing Member,
and the amount of any such reduction for any Incentive Allocation shall be
allocated to the Capital Account of the Managing Member. If a redeeming
Member owns Units of more than one series, unless otherwise specified by
such Member in writing, Units shall be redeemed on a "first in-first out"
basis for purposes of determining the Redemption Price. The Company will
endeavor to pay the redemption proceeds within 45 days following the
applicable Redemption Date, without interest. The Managing Member may
permit redemptions at other times and in other amounts, subject to any
conditions that it may impose in its sole discretion.
(b) The Managing Member shall have the right, in its sole
discretion, as of any date that it determines (including during a fiscal
year) and for any reason (including, without limitation, pursuant to
Article VI, for regulatory or tax reasons, or for any other reason), to
redeem any or all of a Member's Units. Any redemptions made pursuant to
this Section 5.02(b) shall be paid out in accordance with Section 5.02(a).
(c) The Managing Member, and any Affiliate of the Managing
Member, shall have the right at any time (including during a fiscal year or
other period) to redeem any and all of its interest or withdraw all or a
portion of the assets in its Capital Account without notice to the Members.
(d) If at any time after a redemption of Units (including in
connection with any withdrawal of a Member from the Company pursuant to
Article VI) the Managing Member determines, in its sole discretion, that
the amount paid to such Member or former Member pursuant to such redemption
was materially incorrect (including because the NAV at which the Member or
former Member purchased such Units was incorrect), the Company will pay to
such Member or former Member any additional amount that it determines such
Member or former Member would have been entitled to receive had the
redemption been effected at the correct NAV, or, in its sole discretion,
seek payment from such Member or former Member of (and such Member or
former Member shall be required to pay) the amount of any excess payment
that the Managing Member determines such Member or former Member received
(including, without limitation, by compulsorily redeeming without
consideration a number of Units held by such Member having a NAV equal to
the amount of such excess payment), in each case without interest.
Section 5.03 Limitation on Redemptions.
-------------------------
(a) The right of any Member to redeem some or all of its Units
pursuant to the provisions of Section 5.02 is subject to the provision by
the Managing Member for all Company liabilities in accordance with the Act,
and for reserves for estimated accrued expenses, liabilities and
contingencies in accordance with Section 4.07.
(b) The Managing Member may suspend redemptions, at any time
prior to the effective date of the redemption, and notwithstanding the fact
that a timely redemption request has previously been made, for the whole,
or any part, of any of the following periods: (i) during the closure of the
principal stock exchanges or other markets on which any substantial portion
of the Company's direct or indirect investments, in the opinion of the
Managing Member, is quoted or dealt in other than for ordinary holidays, or
the restriction of suspension of dealings therein; (ii) during the
existence of any state of affairs which, in the opinion of the Managing
Member, constitutes an emergency as a result of which the determination of
the price, value or disposition of the Company's direct or indirect
investments would be impractical or prejudicial to Members; (iii) during
which redemptions would, in the opinion of the Managing Member, result in a
violation of applicable law; (iv) during any breakdown in the means of
communication or computation normally employed in determining the price or
value of any of the investments of the Company or the current price or
values on any stock exchange in respect of assets of the Company; (v)
during the occurrence of any period when the Company is unable to withdraw
sufficient funds from Portfolio Companies or otherwise to meet redemption
requests or in circumstances when the disposal of part or all of the
Company's assets to meet such redemption requests would be prejudicial to
Members; (vi) during which any transfer of funds involved in the
realization or acquisition of investments or payments due on redemption of
Units cannot, in the opinion of the Managing Member, be effected at
advantageous rates of exchange; and (vii) during any period in which any
investment fund or Portfolio Company in which the Company has invested has
suspended redemptions or the calculation of its net asset value. Postponed
redemptions shall be effected on the first day of the month immediately
following the termination of the suspension. Any part of a redemption
request that is postponed shall take precedence over later-received
redemption requests until the postponed request or requests have been
satisfied in full. Members shall be given notice in writing of the
suspension of redemptions and the termination of any such suspension. Units
shall be held by the Member during the suspension period as if no
redemption request had been made.
Section 5.04 Distributions.
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(a) The Managing Member may, in its discretion, make
distributions in cash or in-kind (i) in connection with redemptions from
the Company by a Member or in connection with a Member's complete
withdrawal from the Company pursuant to Article VI, (ii) at any time to the
Managing Member in an amount not in excess of the then positive balance in
the Incentive Allocation Account and (iii) at any time to all of the
Members on a pro rata basis in accordance with the Members' Capital
Accounts.
(b) If a distribution is made in-kind, immediately prior to such
distribution, the Managing Member shall determine the fair market value of
the property distributed and adjust the Capital Accounts of all Members
upwards or downwards to reflect the difference between the book value and
the fair market value thereof, as if such gain or loss had been recognized
upon an actual sale of such property and allocated pursuant to Section
4.05. Each such distribution shall reduce the Capital Account of the Member
to which the distribution was made by the fair market value thereof.
(c) Any taxes paid over to a governmental authority by the
Company pursuant to Section 4.12 with respect to any Member (other than on
account of all Members equally) shall be deemed to be a distribution to
such Member. If a Member who receives a deemed distribution of taxes under
this Section owns more than one series of Units, the Managing Member in its
sole discretion may allocate such deemed distribution among such Member's
different series of Units. Notwithstanding the foregoing, the Managing
Member in its sole discretion may elect to treat any deemed distribution to
a Member under this Section 5.04(c), not as a distribution, but as an
advance to the Member and a partial redemption of such Member's Units as of
the next Redemption Date following the deemed distribution, and such
Member's Units shall be reduced thereby as appropriately determined by the
Managing Member.
ARTICLE VI
Withdrawal, Death, Disability
Section 6.01 Withdrawal, Death, etc. of Members.
----------------------------------
(a) The withdrawal, death, disability, incapacity, adjudication
of incompetency, termination, bankruptcy, insolvency or dissolution of a
Member shall not dissolve the Company. Subject to the restrictions set
forth in Section 1.05(a), the legal representatives or successors of such
Member shall succeed as assignee to the Member's interest in the Company
upon the death, disability, incapacity, adjudication of incompetency,
termination, bankruptcy, insolvency or dissolution of such Member, but
shall not be admitted as a substituted member without the consent of the
Managing Member.
(b) In the event of the death, disability, incapacity,
adjudication of incompetency, termination, bankruptcy, insolvency or
dissolution of a Member, the interest of such Member shall continue at the
risk of the Company's business until the last day of the calendar month
following the calendar month in which the Managing Member received written
notice of such event. At the end of such period, the Managing Member shall,
in its sole discretion, either (i) substitute the legal representatives or
successors of the former Members as Members of the Company, provided that
the Managing Member determines in its sole discretion that such legal
representatives or successors are qualified to become Members of the
Company, or (ii) redeem such former Member's interest in the Company in
accordance with the redemption provisions set forth in this Article VI.
Section 6.02 Required Withdrawals. The Managing Member may at any
time and for any reason, in its discretion, terminate the interest of any
Member in the Company or require a Member to withdraw any part of its
Capital Account. A Member required to withdraw under this Section 6.02
shall be treated for all purposes of distribution of redemption proceeds as
a Member who has given notice of redemption of all its capital under
Article V.
ARTICLE VII
Duration and Dissolution of the Company
Section 7.01 Duration.
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(a) The Company shall continue until the earlier of (i) a
determination by the Managing Member that the Company should be dissolved
and wound-up; (ii) the termination, bankruptcy, insolvency, dissolution or
withdrawal by the Managing Member other than by assignment of the Managing
Member's interest as provided in Section 1.05(b); or (iii) a vote of a
majority of the Members pursuant to Section 7.01(b). Upon a determination
to dissolve the Company, redemptions, and distributions in respect thereof,
may not be made.
(b) Dissolution of the Company by the Members:
(i) For purposes of this Agreement:
(A) The term "Meeting Request" shall mean a written
request from Members holding (as of the date of such request) at least 20%
of the voting power, based on NAV, of the outstanding Units (excluding for
purposes of calculating such percentage any Units held by the Managing
Member and any affiliate or employee of the Managing Member or Xxxxxxx,
Xxxxx & Co. (collectively, the "Managing Member Units")) to the Managing
Member requesting that the Managing Member call a meeting for the purpose
of dissolving the Company.
(B) The term "Dissolution Record Date" shall mean with
respect to a meeting at which the dissolution of the Company is to be
considered, a date selected by the Managing Member, which is no later than
15 days following the date on which the Managing Member receives a Meeting
Request.
(ii) Upon the written request of one or more Members holding
at least 1% of the voting power, based on NAV, of the outstanding Units
(excluding for purposes of calculating such percentage the Managing Member
Units), solely for purposes of soliciting other Members in connection with
making a Meeting Request, the Managing Member shall use commercially
reasonable efforts to send to all other Members a solicitation to make a
Meeting Request, subject to the Managing Member's right to impose
reasonable conditions upon any such solicitation.
(iii) Upon receipt by the Managing Member of a Meeting
Request, the Managing Member shall set a Dissolution Record Date and shall
schedule a meeting of the Members for no later than 60 days after the
Dissolution Record Date for the purpose of voting on the dissolution of the
Company (such meeting, the "Dissolution Meeting"). The quorum for such
meeting shall require attendance, in person or by proxy, of Members holding
at least a majority of the voting power, based on NAV, of the outstanding
Units (excluding for purposes of calculating such percentage the Managing
Member Units) as of the Dissolution Record Date. If a quorum is not
achieved for the meeting, the meeting shall be cancelled and no vote shall
be held. The dissolution of the Company by the Members may only be voted
upon at a meeting properly called in accordance with this Section 7.01(b)
and will be approved only upon the affirmative vote of Members holding at
least a majority of the voting power, based on NAV, of the outstanding
Units (excluding for purposes of calculating such percentage the Managing
Member Units).
(iv) In the event of an affirmative vote in favor of
dissolution of the Company, (A) the Managing Member shall seek to liquidate
the Company as soon as reasonably practicable (including by submitting
redemption requests to Portfolio Funds and Portfolio Companies within 30
days of such vote), and (B) the Company shall be dissolved and terminated
in accordance with the provisions of Section 7.02.
(v) On or prior to August 25, 2006, the Managing Member may,
in its sole discretion, amend, delete or waive any of the provisions
relating to the dissolution of the Company by the Members described in this
Section 7.01(b); provided that, if the Managing Member has received a
written request from one or more Members representing at least 1% of the
voting power, based on NAV, of the outstanding Units (excluding for
purposes of calculating such percentage the Managing Member Units) to
facilitate the solicitation of other Members in connection with making a
Meeting Request or has received a Meeting Request in accordance with
paragraphs (ii) or (iii) above, any such amendment, deletion or waiver
shall not become effective until the earliest of the date on which (A) the
solicitations to make such Meeting Request have been terminated or have
expired in accordance with such conditions as have been attached by the
Managing Member to the said solicitations pursuant to paragraph (ii) above,
or (B) the Dissolution Meeting referred to in such Meeting Request has been
held and there were insufficient votes to dissolve the Company or cancelled
for lack of a quorum pursuant to paragraph (iii) above. Notwithstanding
anything in the foregoing to the contrary, the Managing Member may amend or
waive any of the provisions relating to the dissolution of the Company
described in this Section 7.01(b) at any time in its sole discretion, so
long as such amendment or waiver does not adversely affect the right of the
Members to dissolve the Company. If the Managing Member makes any permitted
amendment, deletion or waiver, it will give written notice thereof to the
Members following such amendment, deletion or waiver.
Section 7.02 Dissolution.
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(a) On dissolution of the Company, the Managing Member shall,
within no more than 30 days after completion of a final audit of the
Company's financial statements, make distributions out of Company assets,
in the following manner and order:
(i) to creditors, including Members who are creditors, to
the extent otherwise permitted by law, in satisfaction of liabilities of
the Company (whether by payment or by establishment of reserves); and
(ii) to the Members in the proportion of their respective
Capital Accounts.
(b) The Managing Member, in its discretion, at any time and from
time to time, may designate one or more liquidators, including, without
limitation, one or more partners, members or officers of the Managing
Member, who shall have full authority to wind up and liquidate the business
of the Company and to make final distributions as provided in this Section
7.02. The appointment of any liquidator may be revoked or a successor or
additional liquidator or liquidators may be appointed at any time by an
instrument in writing signed by the Managing Member. Any such liquidator
may receive compensation as shall be fixed, from time to time, by the
Managing Member.
(c) In the event that the Company is dissolved on a date other
than the last day of a fiscal year, the date of such dissolution shall be
deemed to be the last day of a fiscal year for purposes of adjusting the
Capital Accounts of the Members pursuant to Section 4.03. For purposes of
distributing the assets of the Company upon dissolution, the Managing
Member shall be entitled to a return, on a pari passu basis with the
Non-Managing Members, of the amount standing to its credit in its Capital
Account and, with respect to its share of profits, based upon its
Membership Percentage.
ARTICLE VIII
Tax Returns; Reports to Members
Section 8.01 Independent Auditors. The financial statements of
the Company shall be audited by Ernst & Young LLP, or such other certified
public accountants of similar standing selected by the Managing Member, as
of the end of each fiscal year of the Company.
Section 8.02 Filing of Tax Returns. The Managing Member shall
prepare and file, or cause the accountants of the Company to prepare and
file, a federal information tax return in compliance with Section 6031 of
the Code, and any required state and local income tax and information
returns for each tax year of the Company.
Section 8.03 Tax Matters Partner. The Managing Member shall be
designated on the Company's annual federal information tax return, and have
full powers and responsibilities, as the "Tax Matters Partner" of the
Company for purposes of Section 6231(a)(7) of the Code. In the event the
Company shall be the subject of an income tax audit by any federal, state
or local authority, to the extent the Company is treated as an entity for
purposes of such audit, including administrative settlement and judicial
review, the Tax Matters Partner shall be authorized to act for, and its
decision shall be final and binding upon, the Company and each Member
thereof. All expenses incurred in connection with any such audit,
investigation, settlement or review shall be borne by the Company.
Section 8.04 Financial Reports to Current Members. The Company
shall prepare and mail to each Non-Managing Member (i) annual audited
financial statements after the end of the Company's fiscal year and (ii)
information necessary for such Member to complete its U.S. federal, state
and local income tax returns (including such information that such Member
may reasonably require annually to complete its tax filing obligations,
provided that the Managing Member may provide the same without undue effort
or expense).
Section 8.05 Tax Reports to Members and Former Members. The
Company shall use reasonable efforts to prepare and mail, or cause its
accountants to prepare and mail, to each Member and, to the extent
necessary, to each former Member (or its legal representatives), as soon as
possible after the close of each taxable year of the Company, a report
setting forth in sufficient detail such information as shall enable such
Member or former Member (or such Member's legal representatives) to prepare
their respective federal income tax returns and/or extensions in accordance
with the laws, rules and regulations then prevailing.
ARTICLE IX
Miscellaneous
Section 9.01 General. This Agreement (i) shall be binding on the
permitted transferees, assigns, executors, administrators, estates, heirs,
and legal successors and representatives of the Members and (ii) may be
executed, through the use of separate signature pages or supplemental
agreements in any number of counterparts with the same effect as if the
parties executing such counterparts had all executed one counterpart;
provided, however, that each such counterpart shall have been executed by
the Managing Member and that the counterparts, in the aggregate, shall have
been signed by, or on behalf of, all of the Members.
Section 9.02 Power of Attorney. Each of the Members hereby
appoints the Managing Member as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute, sign,
acknowledge, swear to and file:
(a) a Certificate of Formation of the Company and any amendments
thereto as may be required under the Act;
(b) any duly adopted amendment to this Agreement;
(c) any and all instruments, certificates, and other documents
that may be deemed necessary or desirable to effect the dissolution and
winding-up of the Company (including, but not limited to, a Certificate of
Cancellation of the Certificate of Formation); and
(d) any business certificate, fictitious name certificate,
amendment thereto, or other instrument or document of any kind whatsoever
necessary, desirable or convenient to accomplish the business, purpose and
objectives of the Company, or required by any applicable federal, state,
local or foreign law.
The power of attorney hereby granted by each of the Non-Managing
Members is coupled with an interest, is irrevocable, and shall survive, and
shall not be affected by, the subsequent death, disability, incapacity,
incompetency, termination, bankruptcy, insolvency or dissolution of such
Non-Managing Member; provided, however, that such power of attorney shall
terminate upon the substitution of another non-managing member for all of
such Non-Managing Member's interest in the Company or upon the complete
withdrawal of such Non-Managing Member from participation in the Company.
Section 9.03 Amendments to Limited Liability Company Agreement.
The terms and provisions of this Agreement may be modified or amended at
any time and from time to time with the written consent of Members having
in excess of 50% of the voting power of the outstanding Units, (or, if an
amendment affects only a particular series of Units, with the written
consent of Members having in excess of 50% of that series of Units), based
on the NAV of such Units, and the affirmative vote of the Managing Member
insofar as is consistent with the laws governing this Agreement; provided,
however, that without the consent of the Non-Managing Members, the Managing
Member may amend this Agreement or the Schedule hereto to (i) reflect
changes validly made in the membership of the Company, the Capital
Contributions, Membership Percentages and changes in the number of Units
held by the Members; (ii) change the provisions relating to the Incentive
Allocation so that such provisions conform to the applicable requirements
of the Securities and Exchange Commission and other regulatory authorities,
so long as such amendment does not increase the Incentive Allocation to
more than the amount that would otherwise be determined absent such
amendment; (iii) reflect a change in the name of the Company; (iv) make a
change that is necessary or, in the opinion of the Managing Member,
advisable to qualify the Company as a limited liability company or other
entity in which the Members have limited liability under the laws of any
state, or ensure that the Company shall not be treated as an association or
a publicly traded partnership taxable as a corporation for federal income
tax purposes; (v) make any change that does not adversely affect the
Members in any material respect; (vi) make a change that is necessary or
desirable to satisfy any requirements, conditions or guidelines contained
in any opinion, directive, order, ruling or regulation of any federal,
state or foreign statute, so long as such change is made in a manner which
minimizes to the extent practicable, as determined by the Managing Member
in its sole discretion, any adverse effect on the Members or that is
required or contemplated by this Agreement; (vii) make a change in any
provision of this Agreement that requires any action to be taken by or on
behalf of the Managing Member or the Company pursuant to the requirements
of applicable Delaware law if the provisions of applicable Delaware law are
amended, modified or revoked so that the taking of such action is no longer
required; (viii) prevent the Company or the Managing Member from in any
manner being deemed an "investment company" subject to the provisions of
the Investment Company Act of 1940, as amended; (ix) correct mistakes or
clarify ambiguities; (x) in the event of adverse changes in the tax law or
interpretations thereof applicable to the Company, amend this Agreement as
determined by the Managing Member if it deems it advisable or necessary to
address such changes; (xi) conform this Agreement to the disclosure
provided in the Memorandum; (xii) correct or supplement any conflicting
provisions and delete or add provisions as may be required by applicable
law or regulations, in each case, as determined by the Managing Member in
its sole discretion; (xiii) make any other amendment provided such
amendment does not become effective until after the affected Members have
been given prior written notice of such change and have had the right
following receipt of such notice to request the redemption of their Units
and any requested redemption shall have become effective; (xiv) amend,
delete or waive the provisions of Section 7.01(b) in accordance with
Section 7.01(b)(v); or (xv) make any other amendments similar to the
foregoing. Each Member, however, must consent to any amendment that would
(a) reduce its Capital Account or rights of redemption or withdrawal; or
(b) amend the provisions of this Agreement relating to amendments.
Section 9.04 Instruments. The parties agree to execute and
deliver any further instruments or perform any acts which are or may become
necessary to carry on the Company created by this Agreement or to
effectuate its purposes.
Section 9.05 No Personal Liability For Return of Capital. The
Managing Member shall not be personally liable for the return or repayment
of all or any portion of Capital Contribution or profits of any Member, it
being expressly agreed that any such return of Capital Contribution or
profits made pursuant to this Agreement shall be made solely from the
assets (which shall not include any right of contribution from the Managing
Member) of the Company.
Section 9.06 Choice of Law. Notwithstanding the place where this
Agreement may be executed by any of the parties hereto, the parties
expressly agree that all the terms and provisions hereof shall be construed
under the laws of the State of Delaware and, without limitation thereof,
that the Act as now adopted or as may be hereafter amended shall govern the
limited liability company aspects of this Agreement. The parties also
expressly agree that all actions and proceedings brought by a party against
a Member or the Company, in connection with the Company's business or
affairs (including a breach of this Agreement by a party hereto) shall be
brought in and be subject to the jurisdiction of a court of the State of
New York or any federal district court in the State of New York.
Section 9.07 Venue; Inconvenient Forum. The parties hereto
irrevocably waive to the fullest extent permitted by law any objection that
they may now or hereafter have to the laying of venue of any such action or
proceeding in the courts of the State of New York located in the City of
New York or of the United States District Court for the Southern District
of New York and any claim that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 9.08 No Third Party Rights. The provisions of this
Agreement, including, without limitation, the provisions of Section 1.03,
are not intended to be for the benefit of any creditor or other Person
(other than the Members in their capacities as such) to whom any debts,
liabilities or obligations are owed by (or who otherwise have a claim
against or dealings with) the Company or any Member, and no such creditor
or other Person shall obtain any rights under any of such provisions
(whether as a third party beneficiary or otherwise) or shall obtain any
rights under any of such provisions (whether as a third party beneficiary
or otherwise) or shall by reason of any such provisions make any claim in
respect to any debt, liability or obligation (or otherwise) including any
debt, liability or obligation pursuant to Section 1.03, against the Company
or any Member.
Section 9.09 Notices. Each notice relating to this Agreement
shall be in writing and delivered in person or by registered or certified
mail. All notices to the Company shall be addressed to its principal office
and place of business. All notices addressed to a Member shall be addressed
to such Member at the address set forth in the Schedule. Any Member may
designate a new address by notice to that effect given to the Company.
Unless otherwise specifically provided in this Agreement, a notice shall be
deemed to have been effectively given when mailed by registered or
certified mail to the proper address or delivered in person.
Section 9.10 Grantors of Revocable Trusts. Each Non-Managing
Member that is a revocable trust agrees that, if the trustee of such
revocable trust and the grantor of such revocable trust are the same
person, the trustee's execution of this Agreement and any other documents
executed in connection with the Company shall bind such Person in his or
her capacity both as trustee and as grantor of such revocable trust.
Section 9.11 Goodwill. No value shall be placed on the name or
goodwill of the Company, which shall belong exclusively to the Managing
Member.
Section 9.12 Headings. The titles of the Articles and the
headings of the Sections of this Agreement are for convenience of reference
only, and are not to be considered in construing the terms and provisions
of this Agreement.
Section 9.13 Pronouns. All pronouns shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the
Person or Persons may require in the context thereof.
Section 9.14 Confidentiality. The Managing Member and the Company
may, in their discretion, keep confidential and not disclose to the
Non-Managing Members any proprietary information concerning the Company,
including, without limitation, investments, valuations, information
regarding potential investments, financial information, trade secrets and
the like which is proprietary in nature and non-public, or any information
about any investment, to the extent that such information is required to be
kept confidential or is otherwise subject to disclosure restrictions
imposed by the issuer of the investment or the Managing Member, in its
reasonable discretion (collectively, "Confidential Information"). Each
Non-Managing Member shall not disclose or cause to be disclosed any
Confidential Information to any other Person, except as otherwise required
by any regulatory authority, law or regulation, or by legal process,
without the prior written consent of the Managing Member.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
as of the date first set forth above.
MANAGING MEMBER:
XXXXXXX XXXXX HEDGE FUND STRATEGIES LLC
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Director
NON-MANAGING MEMBERS:
By: XXXXXXX SACHS HEDGE FUND STRATEGIES LLC,
on behalf of each Member as attorney-in-fact
By: /s/ Xxxxx X. Xxxx
----------------------------------
Name: Xxxxx X. Xxxx
Title: Director
