MAN IP 220, LLC
(A Delaware Limited Liability Company)
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of April 28, 2003
000 Xxxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
(000) 000-0000
TABLE OF CONTENTS
ARTICLE I: DEFINITIONS.........................................................3
ARTICLE II: ORGANIZATION; ADMISSION OF MEMBERS.................................4
2.1 Formation of Limited Liability Company.................................4
2.2 Name...................................................................5
2.3 Principal and Registered Office........................................5
2.4 Duration...............................................................5
2.5 Business of the Fund...................................................5
2.6 Board of Managers......................................................6
2.7 Members................................................................7
2.8 Initial Contribution...................................................7
2.9 Both Managers and Members..............................................8
2.10 Limited Liability.....................................................8
ARTICLE III: MANAGEMENT........................................................8
3.1 Management and Control.................................................8
3.2 Actions by the Board of Managers.......................................9
3.3 Meetings of Members....................................................9
3.4 Custody of the Fund's Assets..........................................10
3.5 Other Activities of Members and Managers..............................10
3.6 Duty of Care..........................................................10
3.7 Indemnification.......................................................11
3.8 Fees, Expenses and Reimbursement......................................13
ARTICLE IV: TERMINATION OF STATUS OF ADVISER AND MANAGERS,
TRANSFERS AND REPURCHASES.........................................14
4.1 Termination of Status of a Manager....................................14
4.2 Removal of the Managers...............................................14
4.3 Transfer of Units of Members..........................................14
4.4 Repurchase of Units...................................................15
ARTICLE V: CAPITAL............................................................17
5.1 Contributions to Capital..............................................17
5.2 Rights of Members to Capital..........................................18
5.3 Capital Accounts......................................................18
5.4 Allocation of Net Profit and Net Loss;
Allocation of Offering Costs..........................................18
5.5 Reserves..............................................................18
5.6 Tax Allocations.......................................................19
5.7 Distributions.........................................................19
5.8 Withholding...........................................................19
ARTICLE VI: DISSOLUTION AND LIQUIDATION.......................................20
6.1 Dissolution...........................................................20
6.2 Liquidation of Assets.................................................20
ARTICLE VII: ACCOUNTING, VALUATIONS, AND BOOKS AND RECORDS....................21
7.1 Accounting and Reports................................................21
7.2 Determinations by the Board of Managers...............................21
7.3 Valuation of Assets...................................................22
ARTICLE VIII: MISCELLANEOUS PROVISIONS........................................22
8.1 Amendment of Limited Liability Company Agreement......................22
8.2 Special Power of Attorney.............................................23
8.3 Notices...............................................................24
8.4 Agreement Binding Upon Successors and Assigns.........................24
8.5 Applicability of 1940 Act and Form N-2................................25
8.6 Choice of Law.........................................................25
8.7 Not for Benefit of Creditors..........................................25
8.8 Consents..............................................................25
8.9 Merger and Consolidation..............................................25
8.10 Pronouns.............................................................26
8.11 Confidentiality......................................................26
8.12 Certification of Non-Foreign Status..................................26
8.13 Severability.........................................................26
8.14 Filing of Returns....................................................27
8.15 Tax Matters Partner..................................................27
8.16 Section 754 Election.................................................28
8.17 Use of Names "Man," "Glenwood,"
"Man-Glenwood" and "IP 220"..........................................28
MAN IP 220, LLC
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT of Man IP 220, LLC (the "Fund") is
dated as of April 28, 2003 by and among Xxxxx X. Xxxxx and Xxxx Xxxxx as the
Managers, Glenwood Capital Investments, L.L.C., as the initial Member, and those
persons hereinafter admitted as Members.
WHEREAS, the Fund has heretofore been formed as a limited liability company
under the Delaware Limited Liability Company Act pursuant to an initial
Certificate of Formation (the "Certificate") dated and filed with the Secretary
of State of Delaware on , 2003;
NOW, THEREFORE, for and in consideration of the foregoing and the mutual
covenants hereinafter set forth, it is hereby agreed as follows:
ARTICLE I: DEFINITIONS
For purposes of this Agreement:
"ADVISERS ACT" - The Investment Advisers Act of 1940 and the rules, regulations,
and orders thereunder, as amended from time to time, or any successor law.
"AFFILIATE" - An affiliated person of a person as such term is defined in the
1940 Act.
"AGREEMENT" - This Limited Liability Company Agreement, as amended from time to
time.
"BOARD" - The Board of Managers established pursuant to Section 2.6.
"CAPITAL ACCOUNT" - With respect to each Member, the capital account established
and maintained on behalf of each Member pursuant to Section 5.3.
"CERTIFICATE" - The Certificate of Formation of the Fund and any amendments
thereto as filed with the office of the Secretary of State of the State of
Delaware.
"CLOSING DATE" - The first date on or as of which a person other than Glenwood
is admitted to the Fund as a Member.
"CODE" - The United States Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time, or any successor law.
"COUNTERPARTY" -- A person providing the Fund with Principal Protection and/or
entering into the Swap with the Fund.
"DELAWARE ACT" - The Delaware Limited Liability Company Act as in effect on the
date hereof and as amended from time to time, or any successor law.
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"DISTRIBUTOR" - Man Investments Inc., a New York corporation, or any person who
may hereafter serve as the distributor of Units pursuant to a general
distributor's agreement with the Fund.
"FISCAL PERIOD" - The period commencing on the Closing Date, and thereafter each
period commencing on the day immediately following the last day of the preceding
Fiscal Period, and ending at the close of business on the first to occur of the
following dates:
(1) the last day of a Fiscal Year;
(2) the last day of a Taxable Year;
(3) any day on which the Fund repurchases any Units of any Member; or
(4) any day (other than one specified in clause (2) above) as of which
this Agreement provides for any amount to be credited to or debited
against the Capital Account of any Member, other than an amount to be
credited to or debited against the Capital Accounts of all Members in
accordance with their respective ownership of Units.
"FISCAL YEAR" - The period commencing on the Closing Date and ending on March
31, 2004, and thereafter each period commencing on April 1 of each year and
ending on March 31 of each year (or on the date of a final distribution pursuant
to Section 6.2 hereof), unless and until the Board shall elect another fiscal
year for the Fund.
"FORM N-2" - The Fund's Registration Statement on Form N-2 filed with the
Securities and Exchange Commission, as amended from time to time.
"FUND" - The limited liability company governed hereby, as such limited
liability company may from time to time be constituted.
"GLENWOOD" - Glenwood Capital Investments, L.L.C., a limited liability company
organized under Delaware law.
"GOVERNMENT SECURITIES" - The government securities purchased by the Fund .
"INDEPENDENT MANAGERS" - Those Managers who are not "interested persons" of the
Fund as such term is defined by the 1940 Act.
"INITIAL MANAGER" - Xxxxx X. Xxxxx, the person who directed the formation of the
Fund and serves as an initial Manager.
"IP 220 BENCHMARK" the value of an investment program comprised of (a) a
diversified leveraged managed futures program implementing systematic trading
strategies across a diversified range of markets (the "Man-AHL Program") and (b)
a leveraged portfolio of hedge funds implementing a multi-strategy investment
program (the "Man-Glenwood Portfolio"). Due to leverage embedded in the
Benchmark, the Fund's initial notional exposure will equal (a) a notional
exposure of approximately 100% of the proceeds of the Fund's offering to the
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diversified leveraged managed futures trading program and (b) a notional
exposure of approximately 60% to the fund of hedge funds portfolio - a total
notional exposure of up to 160% of the offering proceeds. .
"MANAGER" - An individual designated as a manager of the Fund pursuant to the
provisions of Section 2.6 of the Agreement and who serves on the Board of the
Fund.
"MEMBER" - Any person who shall have been admitted to the Fund as a member
(including any Manager in such person's capacity as a member of the Fund but
excluding any Manager in such person's capacity as a Manager of the Fund) until
the Fund repurchases all the Units of such person pursuant to Section 4.4 hereof
or a substituted member or members are admitted with respect to any such
person's Units as a member pursuant to Section 4.3 hereof; such term includes
Glenwood or an Affiliate of Glenwood to the extent Glenwood (or such Affiliate)
makes a capital contribution to the Fund and shall have been admitted to the
Fund as a member.
"NET ASSETS" -The Net Asset Value of the Fund will be computed as of the close
of business on the last day of each Fiscal Period. The Fund's Net Asset Value is
the value of the Fund's assets less its liabilities. In computing Net Asset
Value, the Fund will (1) add the value of (a) the then-current liquidation value
of the Government Securities, and (b) the fair value of the Swap, which in turn
will reflect the performance of the Benchmark, and (2) subtract the Fund's fees
and expenses. Other securities and assets of the Fund, if any, will be valued at
market value, if market quotations are readily available, or will be valued at
fair value as determined in good faith by the Board or in accordance with
procedures adopted by the Board. Expenses of the Fund and its liabilities
(including the amount of any borrowings) are taken into account for purposes of
computing Net Asset Value.
"NET ASSET VALUE" - Net Assets divided by the number of Units outstanding at the
applicable date. The initial Net Asset Value of a Unit, as of the closing of the
initial sale of Units, shall be $100.
"NET PROFIT OR NET LOSS" - The amount by which the Net Assets as of the close of
business on the last day of a Fiscal Period exceed (in the case of Net Profit)
or are less than (in the case of Net Loss) the Net Assets as of the commencement
of the same Fiscal Period (or, with respect to the initial Fiscal Period of the
Fund, as of the close of business on the Closing Date).
"1940 ACT" - The Investment Company Act of 1940 and the rules, regulations and
orders thereunder, as amended from time to time, or any successor law.
"PRINCIPAL PROTECTION" means the Counterparty's commitment to pay an amount
which, when added to the value of the assets held by the Fund at maturity, will
allow the Fund to distribute to the Members who continue to hold Units at
maturity a liquidating distribution equal to the aggregate capital contributions
of such Members to the Fund.
"SECURITIES" - Securities (including, without limitation, equities, debt
obligations, options, and other "securities" as that term is defined in Section
2(a)(36) of the 0000 Xxx) and any contracts for forward or future delivery of
any security, debt obligation or currency, or commodity, all types of derivative
instruments and financial instruments and any contracts based on any index or
group of securities, debt obligations or currencies, or commodities, and any
options thereon.
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"SWAP" means a contract between the Fund and the Counterparty under which the
Counterparty has a contractual obligation to replicate to the Fund a total
return, based on a portion of the aggregate capital contributions of Members to
the Fund (net of the applicable portion of the Fund's fees and expenses),
equivalent to the notional performance of the IP 220 Benchmark.
"TAXABLE YEAR" - The period commencing on the Closing Date and ending on
December 31, 2003, and thereafter each period commencing on January 1 of each
year and ending on December 31 of each year, unless and until the Board shall
elect another taxable year for the Fund.
"TRANSFER" - The assignment, transfer, sale, encumbrance, pledge, or other
disposition of any Units, including any right to receive any allocations and
distributions attributable to a Unit.
"UNITS" - The units of limited liability company interest, each representing an
ownership interest in the Fund at any particular time of a Member or other
person to whom Units of a Member have been transferred pursuant to Section 4.3
hereof, including the rights and obligations of such Member or other person
under this Agreement and the Delaware Act. Upon the closing of the initial
issuance of Units, one Unit shall be issued with respect to each $100
contributed to the capital of the Fund by a Member.
"VALUATION DATE" - The date as of which the Fund values Units for purposes of
determining the price at which Units are to be purchased by the Fund pursuant to
an offer made by the Fund pursuant to Section 4.4 hereof.
ARTICLE II: ORGANIZATION; ADMISSION OF MEMBERS
2.1 FORMATION OF LIMITED LIABILITY COMPANY
The Fund has been formed as a limited liability company at the direction of the
Initial Manager who authorized the filing of the Certificate, which actions are
hereby ratified by the execution of this Agreement. The Board shall execute and
file in accordance with the Delaware Act any amendment to the Certificate and
shall execute and file with applicable governmental authorities any other
instruments, documents, and certificates that, in the opinion of the Fund's
legal counsel, may from time to time be required by the laws of the United
States of America, the State of Delaware, or any other jurisdiction in which the
Fund shall determine to do business, or any political subdivision or agency
thereof, or that such legal counsel may deem necessary or appropriate to
effectuate, implement, and continue the valid existence and business of the
Fund.
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2.2 NAME
The Fund's name shall be "Man IP 220, LLC" or such other name as the Board may
hereafter adopt upon (i) causing an appropriate amendment to the Certificate to
be filed in accordance with the Delaware Act and (ii) taking such other actions
as may be required by law.
2.3 PRINCIPAL AND REGISTERED OFFICE
The Fund shall have its principal office at 000 X. Xxxxxx Xxxxx, 00xx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, or at such other place designated from time to time by
the Board.
The Fund shall have its registered office in Delaware at 0000 Xxxxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000, and shall have Corporation Service
Company as its registered agent for service of process in Delaware, unless a
different registered office or agent is designated from time to time by the
Board.
2.4 DURATION
The term of the Fund commenced on the filing of the Certificate with the
Secretary of State of Delaware and shall continue until the Fund is dissolved
pursuant to Section 6.1 hereof.
2.5 BUSINESS OF THE FUND
(a) The business of the Fund is to enter into the Swap, to invest in Government
Securities and to purchase, sell (including short sales), invest, and trade in
Securities, on margin or otherwise and to engage in any financial or derivative
transactions relating thereto or otherwise. The Fund may execute, deliver, and
perform all contracts, agreements, subscription documents, and other
undertakings and engage in all activities and transactions as may in the opinion
of the Board be necessary or advisable to carry out its objective or business.
(b) The Fund shall operate as a closed-end, non-diversified, management
investment company in accordance with the 1940 Act and subject to any
fundamental policies and investment restrictions as may be adopted by the Board.
The Fund shall register its Units under the Securities Act of 1933.
(c) In furtherance of its business, the Board shall have the authority to take
the following actions, and to delegate such portion or all of such authority to
such officers of the Fund as the Board may elect:
(i) To acquire or buy, and invest the Fund's property in, own, hold for
investment or otherwise, and to sell or otherwise dispose of, all types
and kinds of securities and investments of any kind; to deposit any assets
of the Fund in any bank, trust company or banking institution or retain
any such assets in domestic or foreign cash or currency; and to change the
investments of the Fund.
(ii) To acquire (by purchase, subscription or otherwise), to hold, to
trade in and deal in, to acquire any rights or options to purchase or
sell, to sell or otherwise dispose of, to lend and to pledge any the Fund
5
property or any of the foregoing securities, instruments or investments.
(iii) To exercise all rights, powers and privileges of ownership or
interest in all securities and other assets included in the Fund property,
including without limitation the right to vote thereon and otherwise act
with respect thereto; and to do all acts and things for the preservation,
protection, improvement and enhancement in value of all such securities
and assets.
(iv) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, lease, develop and dispose of (by sale or otherwise) any type or
kind of property, real or personal, including domestic or foreign
currency, and any right or interest therein.
(v) To borrow money and in this connection issue notes, commercial paper
or other evidence of indebtedness; to secure borrowings by mortgaging,
pledging or otherwise subjecting as security all or any part of the Fund
property; to endorse, guarantee, or undertake the performance of any
obligation or engagement of any other Person; to lend all or any part of
the Fund's property to other Persons; and to issue general unsecured or
other obligations of the Fund, and enter into indentures or agreements
relating thereto.
(vi) To aid, support or assist by further investment or other action any
Person, any obligation of or interest which is included in the Fund's
property or in the affairs of which the Fund has any direct or indirect
interest; to do all acts and things designed to protect, preserve, improve
or enhance the value of such obligation or interest; and to guarantee or
become surety on any or all of the contracts, securities and other
obligations of any such Person.
(vii) To join other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit
any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority
with relation to any security (whether or not so deposited or transferred)
as the Board shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee, depositary or
trustee as the Board shall deem proper.
(viii) To carry on any other business in connection with or incidental to
any of the foregoing powers referred to in this Agreement, to do
everything necessary, appropriate or desirable for the accomplishment of
any purpose or the attainment of any object or the furtherance of any
power referred to in this Agreement, either alone or in association with
others, and to do every other act or thing incidental or appurtenant to or
arising out of or connected with such business or purposes, objects or
powers.
2.6 BOARD OF MANAGERS
(a) Prior to the Closing Date, the initial Member or Members may designate such
persons who shall agree to be bound by all of the terms of this Agreement to
serve as Managers on the Board of Managers. By signing this Agreement or signing
an investor application or certification in connection with the purchase of
Units, a Member admitted on the Closing Date shall be deemed to have voted for
the election of each of the Managers so designated. After the Closing Date, the
6
Board may, subject to the provisions of paragraphs (a) and (b) of this Section
2.6 with respect to the number of and vacancies in the position of Manager and
the provisions of Section 3.3 hereof with respect to the election of Managers to
the Board by Members, designate any person who shall agree to be bound by all of
the terms of this Agreement as a Manager. The names and mailing addresses of the
Managers shall be set forth in the books and records of the Fund. The number of
Managers shall be fixed from time to time by the Board.
(b) Each Manager shall serve on the Board for the duration of the term of the
Fund, unless his or her status as a Manager shall be sooner terminated pursuant
to Section 4.1 or Section 4.2 hereof. In the event of any vacancy in the
position of Manager, the remaining Managers may appoint an individual to serve
in such capacity, so long as immediately after such appointment at least
two-thirds (2/3) of the Managers then serving would have been elected by the
Members. The Board may call a meeting of Members to fill any vacancy in the
position of Manager, and shall do so within 60 days after any date on which
Managers who were elected by the Members cease to constitute a majority of the
Managers then serving on the Board.
(c) In the event that no Manager remains to continue the business of the Fund,
Glenwood shall promptly call a meeting of the Members, to be held within 60 days
after the date on which the last Manager ceased to act in that capacity, for the
purpose of determining whether to continue the business of the Fund and, if the
business shall be continued, of electing the required number of Managers to the
Board. If the Members shall determine at such meeting not to continue the
business of the Fund or if the required number of Managers is not elected within
60 days after the date on which the last Manager ceased to act in that capacity,
then the Fund shall be dissolved pursuant to Section 6.1 hereof and the assets
of the Fund shall be liquidated and distributed pursuant to Section 6.2 hereof.
2.7 MEMBERS
The Fund may offer Units for purchase by investors in such manner and at such
times as may be determined by the Board. All subscriptions for Units are subject
to the receipt by the Fund or its custodian of cleared funds on or before the
acceptance date for such subscriptions in the full amount of the subscription.
Subject to the foregoing, a person may be admitted to the Fund as a Member
subject to the condition that such person shall execute an appropriate signature
page of this Agreement or an investor application or certification form pursuant
to which such Member agrees to be bound by all the terms and provisions of this
Agreement. The Board may in its sole discretion reject any subscription for
Units. The Board may, in its sole discretion, suspend the offering of the Units
at any time. The admission of any person as a Member shall be effective upon the
revision of the books and records of the Fund to reflect the name and the
contribution to the capital of the Fund of such additional Member.
2.8 INITIAL CONTRIBUTION
The initial contribution of capital to the Fund by Glenwood shall be represented
by Units, which Units shall have the same rights as other Units held by Members.
7
2.9 BOTH MANAGERS AND MEMBERS
A Member may also be a Manager, in which event such Member's rights and
obligations in each capacity shall be determined separately in accordance with
the terms and provisions of this Agreement or as provided in the Delaware Act.
2.10 LIMITED LIABILITY
Except as provided under the Delaware Act or the 1940 Act, a Member shall not be
liable for the Fund's debts, obligations, and liabilities in any amount in
excess of the capital account balance of such Member, plus such Member's share
of undistributed profits and assets. Except as provided under the Delaware Act
or the 1940 Act, a Manager shall not be liable for the Fund's debts,
obligations, and liabilities.
ARTICLE III: MANAGEMENT
3.1 MANAGEMENT AND CONTROL
(a) Management and control of the business of the Fund shall be vested in the
Board, which shall have the right, power, and authority, on behalf of the Fund
and in its name, to exercise all rights, powers, and authority of Managers under
the Delaware Act and to do all things necessary and proper to carry out the
objective and business of the Fund and their duties hereunder. No Manager shall
have the authority individually to act on behalf of or to bind the Fund except
within the scope of such Manager's authority as delegated by the Board. The
parties hereto intend that, except to the extent otherwise expressly provided
herein, (i) each Manager shall be vested with the same powers, authority, and
responsibilities on behalf of the Fund as are customarily vested in each
director of a Delaware corporation and (ii) each Independent Manager shall be
vested with the same powers, authority and responsibilities on behalf of the
Fund as are customarily vested in each director of a closed-end management
investment company registered under the 1940 Act that is organized as a Delaware
corporation who is not an "interested person" of such company, as such term is
defined by the 1940 Act. During any period in which the Fund shall have no
Managers, Glenwood, as the initial Member, shall have the authority to manage
the business and affairs of the Fund.
(b) Members shall have no right to participate in and shall take no part in the
management or control of the Fund's business and shall have no right, power or
authority to act for or bind the Fund. Members shall have the right to vote on
any matters only as provided in this Agreement or on any matters that require
the approval of the holders of voting securities under the 1940 Act or as
otherwise required in the Delaware Act.
(c) The Board may delegate to any other person any rights, power and authority
vested by this Agreement in the Board to the extent permissible under applicable
law, and may appoint persons to serve as officers of the Fund, with such titles
and authority as may be determined by the Board consistent with applicable law.
(d) The Board shall have full power and authority to adopt By-Laws providing for
the conduct of the business of the Fund and containing such other provisions as
they deem necessary, appropriate or desirable, and, subject to the voting powers
8
of one or more Classes, to amend and repeal such By-Laws. Unless the By-Laws
specifically require that Members authorize or approve the amendment or repeal
of a particular provision of the By-Laws, any provision of the By-Laws may be
amended or repealed by the Board without Member authorization or approval.
3.2 ACTIONS BY THE BOARD OF MANAGERS
(a) Unless provided otherwise in this Agreement, the Board shall act only: (i)
by the affirmative vote of a majority of the Managers (including the vote of a
majority of the Independent Managers if required by the 0000 Xxx) present at a
meeting duly called at which a quorum of the Managers shall be present (in
person or, if in-person attendance is not required by the 1940 Act, by
telephone) or (ii) by unanimous written consent of all of the Managers without a
meeting, if permissible under the 1940 Act.
(b) The Board may designate from time to time a Principal Manager who shall
preside at all meetings of the Board. Meetings of the Board may be called by the
Principal Manager or by any two Managers, and may be held on such date and at
such time and place as the Board shall determine. Each Manager shall be entitled
to receive written notice of the date, time and place of such meeting within a
reasonable time in advance of the meeting. Except as otherwise required by the
1940 Act, notice need not be given to any Manager who shall attend a meeting
without objecting to the lack of notice or who shall execute a written waiver of
notice with respect to the meeting. Managers may attend and participate in any
meeting by telephone except where in-person attendance at a meeting is required
by the 1940 Act. A majority of the Managers shall constitute a quorum at any
meeting.
3.3 MEETINGS OF MEMBERS
(a) Actions requiring the vote of the Members may be taken at any duly
constituted meeting of the Members at which a quorum is present. Meetings of the
Members may be called by the Board or by Members holding 25% or more of the
total number of votes eligible to be cast by all Members, and may be held at
such time, date and place as the Board shall determine. The Board shall arrange
to provide written notice of the meeting, stating the date, time, and place of
the meeting and the record date therefor, to each Member entitled to vote at the
meeting within a reasonable time prior thereto. Failure to receive notice of a
meeting on the part of any Member shall not affect the validity of any act or
proceeding of the meeting, so long as a quorum shall be present at the meeting,
except as otherwise required by applicable law. Only matters set forth in the
notice of a meeting may be voted on by the Members at a meeting. The presence in
person or by proxy of Members holding a majority of the total number of votes
eligible to be cast by all Members as of the record date shall constitute a
quorum at any meeting. In the absence of a quorum, a meeting of the Members may
be adjourned by action of a majority of the Members present in person or by
proxy without additional notice to the Members. Except as otherwise required by
any provision of this Agreement or of the 1940 Act, (i) those candidates
receiving a plurality of the votes cast at any meeting of Members shall be
elected as Managers and (ii) all other actions of the Members taken at a meeting
shall require the affirmative vote of Members holding a majority of the total
number of votes eligible to be cast by those Members who are present in person
or by proxy at such meeting.
9
(b) Each Member shall be entitled to cast at any meeting of Members a number of
votes equivalent to such Member's Unit ownership as of the record date for such
meeting. The Board shall establish a record date not less than 10 days nor more
than 60 days prior to the date of any meeting of Members to determine
eligibility to vote at such meeting and the number of votes that each Member
will be entitled to cast at the meeting, and shall maintain for each such record
date a list setting forth the name of each Member and the number of votes that
each Member will be entitled to cast at the meeting.
(c) A Member may vote at any meeting of Members by a proxy, provided that such
proxy to act is authorized to act by (i) a written instrument properly executed
by the Member and filed with the Fund before or at the time of the meeting or
(ii) such electronic, telephonic, computerized or other alternative means as may
be approved by a resolution adopted by the Board. A proxy may be suspended or
revoked, as the case may be, by the Member executing the proxy by a later
writing delivered to the Fund at any time prior to exercise of the proxy or if
the Member executing the proxy shall be present at the meeting and decide to
vote in person. Any action of the Members that is permitted to be taken at a
meeting of the Members may be taken without a meeting if consents in writing,
setting forth the action taken, are signed by Members holding a majority of the
total number of votes eligible to be cast or such greater percentage as may be
required in order to approve such action.
3.4 CUSTODY OF THE FUND'S ASSETS
The physical possession of all funds, Securities, or other properties of the
Fund shall at all times, be held, controlled and administered by one or more
custodians retained by the Fund in accordance with the requirements of the 1940
Act and the rules thereunder.
3.5 OTHER ACTIVITIES OF MEMBERS AND MANAGERS
(a) The Managers shall not be required to devote all of their time to the
affairs of the Fund, but shall devote such time as may reasonably be required to
perform their obligations under this Agreement.
(b) Any Member or Manager, and any Affiliate of any Member or Manager, may
engage in or possess an interest in other business ventures or commercial
dealings of every kind and description, independently or with others, including,
but not limited to, acquisition and disposition of Securities, provision of
investment advisory or brokerage services, serving as directors, officers,
employees, advisors, or agents of other companies, partners of any partnership,
members of any limited liability company, or trustees of any trust, or entering
into any other commercial arrangements. No Member or Manager shall have any
rights in or to such activities of any other Member or Manager, or any profits
derived therefrom.
3.6 DUTY OF CARE
(a) No Manager shall be liable to the Fund or to any of its Members for any loss
or damage occasioned by any act or omission in the performance of its services
pursuant to any agreement, including this Agreement, between a Manager and the
10
Fund for the provision of services to the Fund unless it shall be determined by
final judicial decision on the merits from which there is no further right to
appeal that such loss is due to an act or omission of the Manager constituting
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the performance of its services to the Fund.
(b) Members not in breach of any obligation hereunder or under any agreement
pursuant to which the Member subscribed for Units shall be liable to the Fund,
any Member, or third parties only as provided under the Delaware Act.
3.7 INDEMNIFICATION
(a) To the fullest extent permitted by law, the Fund shall, subject to Section
3.7(b) hereof, indemnify each Manager (including for this purpose his or her
respective executors, heirs, assigns, successors, or other legal
representatives), against all losses, claims, damages, liabilities, costs, and
expenses, including, but not limited to, amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties, and reasonable counsel fees,
incurred in connection with the defense or disposition of any action, suit,
investigation, or other proceeding, whether civil or criminal, before any
judicial, arbitral, administrative, or legislative body, in which such
indemnitee may be or may have been involved as a party or otherwise, or with
which such indemnitee may be or may have been threatened, while in office or
thereafter, by reason of being or having been a Manager of the Fund or the past
or present performance of services to the Fund by such indemnitee, except to the
extent such loss, claim, damage, liability, cost, or expense shall have been
finally determined in a decision on the merits in any such action, suit,
investigation, or other proceeding to have been incurred or suffered by such
indemnitee by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of such indemnitee's
office. The rights of indemnification provided under this Section 3.7 shall not
be construed so as to provide for indemnification of a Manager for any liability
(including liability under federal securities laws which, under certain
circumstances, impose liability even on persons that act in good faith) to the
extent (but only to the extent) that such indemnification would be in violation
of applicable law, but shall be construed so as to effectuate the applicable
provisions of this Section 3.7 to the fullest extent permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred by any such
indemnitee (but excluding amounts paid in satisfaction of judgments, in
compromise, or as fines or penalties), may be paid from time to time by the Fund
in advance of the final disposition of any such action, suit, investigation, or
proceeding upon receipt of an undertaking by or on behalf of such indemnitee to
repay to the Fund amounts so paid if it shall ultimately be determined that
indemnification of such expenses is not authorized under Section 3.7(a) hereof;
provided, however, that (i) such indemnitee shall provide security for such
undertaking, (ii) the Fund shall be insured by or on behalf of such indemnitee
against losses arising by reason of such indemnitee's failure to fulfill such
undertaking, or (iii) a majority of the Managers (excluding any Manager who is
either seeking advancement of expenses hereunder or is or has been a party to
any other action, suit, investigation, or proceeding involving claims similar to
those involved in the action, suit, investigation, or proceeding giving rise to
11
a claim for advancement of expenses hereunder) or independent legal counsel in a
written opinion shall determine based on a review of readily available facts (as
opposed to a full trial-type inquiry) that there is reason to believe such
indemnitee ultimately will be entitled to indemnification.
(c) As to the disposition of any action, suit, investigation, or proceeding
(whether by a compromise payment, pursuant to a consent decree or otherwise)
without an adjudication or a decision on the merits by a court, or by any other
body before which the proceeding shall have been brought, that an indemnitee is
liable to the Fund or its Members by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
such indemnitee's office, indemnification shall be provided pursuant to Section
3.7(a) hereof if (i) approved as in the best interests of the Fund by a majority
of the Managers (excluding any Manager who is either seeking indemnification
hereunder or is or has been a party to any other action, suit, investigation, or
proceeding involving claims similar to those involved in the action, suit,
investigation, or proceeding giving rise to a claim for indemnification
hereunder) upon a determination based upon a review of readily available facts
(as opposed to a full trial-type inquiry) that such indemnitee acted in good
faith and in the reasonable belief that such actions were in the best interests
of the Fund and that such indemnitee is not liable to the Fund or its Members by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of such indemnitee's office, or
(ii) the Board secures a written opinion of independent legal counsel based upon
a review of readily available facts (as opposed to a full trial-type inquiry) to
the effect that such indemnification would not protect such indemnitee against
any liability to the Fund or its Members to which such indemnitee would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of such
indemnitee's office.
(d) Any indemnification or advancement of expenses made pursuant to this Section
3.7 shall not prevent the recovery from any indemnitee of any such amount if
such indemnitee subsequently shall be determined in a decision on the merits in
any action, suit, investigation or proceeding involving the liability or expense
that gave rise to such indemnification or advancement of expenses to be liable
to the Fund or its Members by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of such
indemnitee's office. In (i) any suit brought by a Manager (or other person
entitled to indemnification hereunder) to enforce a right to indemnification
under this Section 3.7 it shall be a defense that, and (ii) in any suit in the
name of the Fund to recover any indemnification or advancement of expenses made
pursuant to this Section 3.7 the Fund shall be entitled to recover such expenses
upon a final adjudication that, the Manager or other person claiming a right to
indemnification under this Section 3.7 has not met the applicable standard of
conduct set forth in this Section 3.7. In any such suit brought to enforce a
right to indemnification or to recover any indemnification or advancement of
expenses made pursuant to this Section 3.7, the burden of proving that the
Manager or other person claiming a right to indemnification is not entitled to
be indemnified, or to any indemnification or advancement of expenses, under this
Section 3.7 shall be on the Fund (or any Member acting derivatively or otherwise
on behalf of the Fund or its Members).
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(e) An indemnitee may not satisfy any right of indemnification or advancement of
expenses granted in this Section 3.7 or to which such indemnitee may otherwise
be entitled except out of the assets of the Fund, and no Member shall be
personally liable with respect to any such claim for indemnification or
advancement of expenses.
(f) The rights of indemnification provided hereunder shall not be exclusive of
or affect any other rights to which any person may be entitled by contract or
otherwise under law. Nothing contained in this Section 3.7 shall affect the
power of the Fund to purchase and maintain liability insurance on behalf of any
Manager or other person.
3.8 FEES, EXPENSES AND REIMBURSEMENT
(a) The Board may cause the Fund to compensate each Manager who is not an
"interested person" of the Fund (as defined in the 1940 Act), and such Manager
shall be reimbursed by the Fund for reasonable travel and out-of-pocket expenses
incurred by him in performing his duties under this Agreement.
(b) The Fund shall bear all costs and expenses incurred in its business and
operations. Costs and expenses to be borne by the Fund include, but are not
limited to, the following:
(1) all costs and expenses directly related to investment transactions and
positions for the Fund's account, including, but not limited to, brokerage
commissions, research fees, interest and commitment fees on loans and debit
balances, borrowing charges on securities sold short, dividends on securities
sold but not yet purchased, custodial fees, margin fees, transfer taxes and
premiums, taxes withheld on foreign dividends, and indirect expenses from
investments;
(2) all costs and expenses associated with the operation and registration of the
Fund, offering costs and the costs of compliance with applicable Federal and
state laws; (3) all costs and expenses associated with the negotiation and
performance of any of its obligations with respect to the Swap and the Principal
Protection;
(4) the costs and expenses of holding meetings of the Board and any meetings of
Members, including costs associated with the preparation and dissemination of
proxy materials;
(6) the fees and disbursements of the Fund's counsel, legal counsel to the
Independent Managers, independent accountants for the Fund, and other
consultants and professionals engaged on behalf of the Fund;
(7) the fees payable to custodians and other persons providing administrative
services to the Fund;
(8) the costs of a fidelity bond and any liability insurance obtained on behalf
of the Fund or the Board;
13
(9) all costs and expenses of preparing, setting in type, printing, and
distributing reports and other communications to Members; and
(10) such other types of expenses as may be approved from time to time by the
Board.
(c) Subject to procuring any required regulatory approvals, from time to time
the Fund may, alone or in conjunction with other registered or unregistered
investment funds or other accounts for which Glenwood, or any Affiliate of
Glenwood, acts as general partner or investment adviser, purchase insurance in
such amounts, from such insurers and on such terms as the Board shall determine.
ARTICLE IV: TERMINATION OF STATUS OF ADVISER AND MANAGERS,
TRANSFERS AND REPURCHASES
4.1 TERMINATION OF STATUS OF A MANAGER
The status of a Manager shall terminate if the Manager (i) shall die; (ii) shall
be adjudicated incompetent; (iii) shall voluntarily withdraw as a Manager (upon
not less than 90 days' prior written notice to the other Managers); (iv) shall
be removed; (v) shall be certified by a physician to be mentally or physically
unable to perform his or her duties hereunder; (vi) shall be declared bankrupt
by a court with appropriate jurisdiction, file a petition commencing a voluntary
case under any bankruptcy law or make an assignment for the benefit of
creditors; (vii) shall have a receiver appointed to administer the property or
affairs of such Manager; or (viii) shall otherwise cease to be a Manager of the
Fund under the Delaware Act. Managers shall be required to retire as of December
31 of the year in which they reach 75 years of age.
4.2 REMOVAL OF THE MANAGERS
Any Manager may be removed either by (a) the vote or written consent of at least
two-thirds (2/3) of the Managers not subject to the removal vote or (b) the vote
or written consent of Members holding not less than two-thirds (2/3) of the
total number of votes eligible to be cast by all Members.
4.3 TRANSFER OF UNITS OF MEMBERS
(a) Units of a Member may be Transferred only (i) by operation of law pursuant
to the death, divorce, bankruptcy, insolvency, dissolution, or incompetency of
such Member or (ii) with the written consent of the Board (which may be withheld
in its sole discretion); provided, however, that the Board may not consent to
any Transfer other than a Transfer (i) in which the tax basis of the Units in
the hands of the transferee is determined, in whole or in part, by reference to
its tax basis in the hands of the transferor (e.g., certain Transfers to
affiliates, gifts, and contributions to family partnerships), (ii) to members of
the Member's immediate family (brothers, sisters, spouse, parents, and
children), (iii) as a distribution from a qualified retirement plan or an
individual retirement account, or (iv) a Transfer to which the Board may consent
pursuant to the following sentence. The Board may consent to other pledges,
transfers, or assignments under such other circumstances and conditions as it,
in its sole discretion, deems appropriate; provided, however, that prior to any
such pledge, transfer, or assignment, the Board shall consult with counsel to
14
the Fund to ensure that such pledge, transfer, or assignment will not cause the
Fund to be treated as a "publicly traded partnership" taxable as a corporation.
In no event, however, will any transferee or assignee be admitted as a Member
without the consent of the Board which may be withheld in its sole discretion.
Any pledge, transfer, or assignment not made in accordance with this Section 4.4
shall be void.
(b) The Board may not consent to a Transfer of Units of a Member unless: (i) the
person to whom the Units are Transferred (or each of the person's beneficial
owners if such a person is a "private investment company" as defined in
paragraph (d)(3) of Rule 205-3 under the Advisers Act) is a person whom the
Board believes is a "Qualified Investor" as described in Form N-2; and (ii) all
the Units of the Member are Transferred to a single transferee or, after the
Transfer of less than all the Member's Units, the balance of the Capital Account
of each of the transferee and transferor is not less than $10,000. Any
transferee that acquires Units by operation of law as the result of the death,
divorce, bankruptcy, insolvency, dissolution, or incompetency of a Member or
otherwise, shall be entitled to the allocations and distributions allocable to
the Units so acquired and to Transfer such Units in accordance with the terms of
this Agreement, but shall not be entitled to the other rights of a Member unless
and until such transferee becomes a substituted Member. If a Member transfers
Units with the approval of the Board, the Board shall promptly take all
necessary actions so that the transferee to whom such Units are transferred is
admitted to the Fund as a Member. Each Member effecting a Transfer and its
transferee agree to pay all expenses, including attorneys' and accountants'
fees, incurred by the Fund in connection with such Transfer.
(c) Each Member shall indemnify and hold harmless the Fund, the Managers, each
other Member and any Affiliate of the foregoing against all losses, claims,
damages, liabilities, costs, and expenses (including legal or other expenses
incurred in investigating or defending against any such losses, claims, damages,
liabilities, costs, and expenses or any judgments, fines, and amounts paid in
settlement), joint or several, to which such persons may become subject by
reason of or arising from (i) any Transfer made by such Member in violation of
this Section 4.4 and (ii) any misrepresentation by such Member in connection
with any such Transfer.
4.4 REPURCHASE OF UNITS
(a) Except as otherwise provided in this Agreement, no Member or other person
holding Units shall have the right to withdraw or tender to the Fund for
repurchase of those Units. The Board from time to time, in its sole discretion
and on such terms and conditions as it may determine, may cause the Fund to
repurchase Units pursuant to written tenders. However, the Fund shall not offer
to repurchase Units on more than four occasions during any one Fiscal Year
unless it has received an opinion of counsel to the effect that such more
frequent offers would not cause any adverse tax consequences to the Fund or the
Members. In determining whether to cause the Fund to repurchase Units pursuant
to written tenders, the Board shall consider the following factors, among
others:
(1) whether any Members have requested to tender Units to the Fund;
15
(2) the liquidity of the Fund's assets;
(3) the investment plans and working capital requirements of the Fund;
(4) the relative economies of scale with respect to the size of the Fund;
(5) the history of the Fund in repurchasing Units;
(6) the economic condition of the securities markets; and
(7) the anticipated tax consequences of any proposed repurchases of Units.
The Board shall cause the Fund to repurchase Units pursuant to written tenders
only on terms determined by the Board to be fair to the Fund and to all Members
(including persons holding Units acquired from Members), as applicable.
(b) A Member who tenders for repurchase only a portion of the Member's Units
will be required to maintain a capital account balance at least equal to
$10,000. If a Member tenders an amount that would cause the Member's capital
account balance to fall below the required minimum, the Fund reserves the right
to reduce the amount to be purchased from the Member so that the required
minimum balance is maintained or to repurchase all of the tendering Member's
Units.
(c) The Board may cause the Fund to repurchase Units of a Member or any person
acquiring Units from or through a Member in the event that the Board determines
or has reason to believe that:
(1) such Units have been transferred in violation of Section 4.4 hereof, or such
Units have vested in any person by operation of law as the result of the death,
divorce, bankruptcy, insolvency, dissolution, or incompetency of a Member;
(2) ownership of such Units by a Member or other person will cause the Fund to
be in violation of, or subject the Fund to additional registration or regulation
under, the securities laws of the United States or any other relevant
jurisdiction;
(3) continued ownership of such Units may be harmful or injurious to the
business or reputation of the Fund, the Managers, or Glenwood, or may subject
the Fund or any of the Members to an undue risk of adverse tax or other fiscal
consequences;
(4) such Member's continued participation in the Fund may cause the Fund to be
classified as a "publicly traded partnership" within the meaning of Section 7704
of the Code and the Treasury Regulations thereunder;
(5) any of the representations and warranties made by a Member in connection
with the acquisition of Units was not true when made or has ceased to be true;
or
(6) it would be in the best interests of the Fund, as determined by the Board in
its sole discretion, for the Fund to repurchase such Units.
16
(d) Provided that the Board shall have made a determination to repurchase Units,
Units will be valued for purposes of determining their repurchase price as of
the end of each fiscal quarter (a "Valuation Date"). Units to be repurchased
pursuant to subsection 4.4(c) shall be tendered by the affected Members, and
payment for such Units shall be made by the Fund, at such times as the Fund
shall set forth in its notice to the affected Members. Units being tendered by
Members pursuant to subsection 4.4(a) shall be tendered by Members at least
thirty (30) days prior to the applicable Valuation Date. The Fund shall pay the
repurchase price for tendered Units approximately, but no earlier than, thirty
(30) days after the applicable Valuation Date. The voting rights of Members as
provided in this Agreement with respect to the tendered Units shall continue
until such time as the Initial Payment (as defined below) of the repurchase
price is paid under this subsection 4.4(d). The amount paid on the repurchase of
the Member's Units will be the value of those Units determined on the Valuation
Date based on the Net Asset Value of the Fund's assets as of that date.
Notwithstanding anything in the foregoing to the contrary, the Board, in its
discretion, may pay any portion of the repurchase price in marketable Securities
(or any combination of marketable Securities and cash) having a value,
determined as of the Valuation Date relating to such Units, equal to the amount
to be repurchased.
ARTICLE V: CAPITAL
5.1 CONTRIBUTIONS TO CAPITAL
(a) The minimum initial contribution of each Member to the capital of the Fund
shall be such amount as the Board, in its discretion, may determine from time to
time. The amount of the initial contribution of each Member shall be recorded on
the books and records of the Fund upon acceptance as a contribution to the
capital of the Fund. The Managers shall not be entitled to make contributions of
capital to the Fund as Managers of the Fund, but may make contributions to the
capital of the Fund as Members.
(b) No Member shall be obligated to make any additional contribution to the
capital of the Fund. The minimum initial capital contribution of a Member to the
capital of the Fund shall be such amount as the Board, in its sole discretion,
may determine from time to time.
(c) Contributions to the capital of the Fund by any Member shall be payable in
cash, payable in readily available funds at the date of the proposed acceptance
of the contribution.
5.2 RIGHTS OF MEMBERS TO CAPITAL
No Member shall be entitled to interest on any contribution to the capital of
the Fund, nor shall any Member be entitled to the return of any capital of the
Fund except (i) upon the repurchase by the Fund of a part or all of such
Member's Units pursuant to Section 4.4 hereof, (ii) pursuant to the provisions
of Section 5.7 hereof or (iii) upon the liquidation of the Fund's assets
pursuant to Section 6.2 hereof. No Member shall be liable for the return of any
such amounts. No Member shall have the right to require partition of the Fund's
property or to compel any sale or appraisal of the Fund's assets.
17
5.3 CAPITAL ACCOUNTS
(a) The Fund shall maintain a separate Capital Account for each Member. The
aggregate Net Asset Value of each Member's Units shall reflect the value of such
Member's Capital Account.
(b) Each Member's Capital Account shall have an initial balance equal to the
amount of cash constituting such Member's initial contribution to the capital of
the Fund.
(c) Each Member's Capital Account shall be increased by the sum of all amounts
credited to such Member's Capital Account pursuant to Sections 5.4 and 5.5
hereof.
(d) Each Member's Capital Account shall be reduced by the sum of (i) the amount
of any repurchase of the Units of such Member or distributions to such Member
pursuant to Sections 4.4, 5.7 or 6.2 hereof which are not reinvested (net of any
liabilities secured by any asset distributed that such Member is deemed to
assume or take subject to under Section 752 of the Code), plus (ii) any amounts
debited against such Capital Account pursuant to Sections 5.4 and 5.5 hereof.
5.4 ALLOCATION OF NET PROFIT AND NET LOSS; ALLOCATION OF OFFERING COSTS
As of the last day of each Fiscal Period, any Net Profit or Net Loss for the
Fiscal Period, and any offering costs required by applicable accounting
principles to be charged to capital that are paid or accrued during the Fiscal
Period shall be allocated among and credited to or debited against the Capital
Accounts of the Members in accordance with their respective Unit ownership for
such Fiscal Period.
5.5 RESERVES
Appropriate reserves may be created, accrued, and charged against Net Assets for
contingent liabilities, if any, as of the date any such contingent liability
becomes known to the Board, such reserves to be in the amounts that the Board,
in its sole discretion, deems necessary or appropriate. The Board may increase
or reduce any such reserves from time to time by such amounts as the Board, in
its sole discretion, deems necessary or appropriate.
5.6 TAX ALLOCATIONS
For each fiscal year, items of income, deduction, gain, loss, or credit shall be
allocated for income tax purposes among the Members in such manner as to reflect
equitably amounts credited or debited to each Member's Capital Account for the
current and prior fiscal years (or relevant portions thereof). Allocations under
this Section 5.6 shall be made pursuant to the principles of Sections 704(b) and
704(c) of the Code, and in conformity with Regulations Sections
1.704-1(b)(2)(iv)(f) and (g), 1.704-1(b)(4)(i) and 1.704-3(e) promulgated
thereunder, as applicable, or the successor provisions to such Sections and
Regulations. Notwithstanding anything to the contrary in this Agreement, there
shall be allocated to the Members such gains or income as shall be necessary to
satisfy the "qualified income offset" requirement of Treasury Regulation Section
1.704-1(b)(2)(ii)(d).
18
Notwithstanding the preceding paragraph, in the event that the Fund repurchases
a Member's Units, the Board may, in its sole discretion, specially allocate
items of Fund income and gain to that Member for tax purposes to reduce the
amount, if any, by which that Member's repurchase price exceeds that Member's
tax basis for its Fund Units.
5.7 DISTRIBUTIONS
The Board, in its sole discretion, may authorize the Fund to make distributions
in cash or in kind at any time to all of the Members on a pro rata basis in
accordance with the Members' Unit ownership.
5.8 WITHHOLDING
(a) The Board may withhold and pay over to the Internal Revenue Service (or any
other relevant taxing authority) taxes from any distribution to any Member to
the extent required by the Code or any other applicable law.
(b) For purposes of this Agreement, any taxes so withheld by the Fund with
respect to any amount distributed by the Fund to any Member shall be deemed to
be a distribution or payment to such Member, reducing the amount otherwise
distributable to such Member pursuant to this Agreement and reducing the Capital
Account of such Member. If the amount of such taxes is greater than any such
distributable amounts, then such Member and any successor to such Member's Units
shall pay to the Fund as a contribution to the capital of the Fund, upon demand
of the Board, the amount of such excess.
(c) The Board shall not be obligated to apply for or obtain a reduction of or
exemption from withholding tax on behalf of any Member that may be eligible for
such reduction or exemption. To the extent that a Member claims to be entitled
to a reduced rate of, or exemption from, a withholding tax pursuant to an
applicable income tax treaty, or otherwise, the Member shall furnish the Board
with such information and forms as such Member may be required to complete where
necessary to comply with any and all laws and regulations governing the
obligations of withholding tax agents. Each Member represents and warrants that
any such information and forms furnished by such Member shall be true and
accurate and agrees to indemnify the Fund and each of the Members from any and
all damages, costs and expenses resulting from the filing of inaccurate or
incomplete information or forms relating to such withholding taxes.
ARTICLE VI: DISSOLUTION AND LIQUIDATION
6.1 DISSOLUTION
The Fund shall be dissolved:
(1) upon the affirmative vote to dissolve the Fund by the Board;
19
(2) upon the failure of Members to elect a successor Manager at a meeting called
by Glenwood in accordance with Section 2.6(c) hereof when no Manager remains to
continue the business of the Fund; or
(3) as required by operation of law.
Dissolution of the Fund shall be effective on the later of the day on which the
event giving rise to the dissolution shall occur or the conclusion of any
applicable 60-day period during which the Board and Members may elect to
continue the business of the Fund as provided above, but the Fund shall not
terminate until the assets of the Fund have been liquidated in accordance with
Section 6.2 hereof and the Certificate has been canceled.
6.2 LIQUIDATION OF ASSETS
(a) Upon the dissolution of the Fund as provided in Section 6.1 hereof, the
Board shall promptly appoint Glenwood as the liquidator and Glenwood shall
liquidate the business and administrative affairs of the Fund, except that if
the Board does not appoint Glenwood as the liquidator or Glenwood is unable to
perform this function, a liquidator elected by Members holding a majority of the
total number of votes eligible to be cast by all Members shall promptly
liquidate the business and administrative affairs of the Fund. Net Profit and
Net Loss during the period of liquidation shall be allocated pursuant to Section
5.4 hereof. The proceeds from liquidation (after establishment of appropriate
reserves for contingencies in such amount as the Board or liquidator shall deem
appropriate in its sole discretion as applicable) shall be distributed in the
following manner:
(1) the debts of the Fund, other than debts, liabilities or obligations to
Members, and the expenses of liquidation (including legal and accounting
expenses incurred in connection therewith), up to and including the date that
distribution of the Fund's assets to the Members has been completed, shall first
be paid on a pro rata basis;
(2) such debts, liabilities, or obligations as are owing to the Members shall
next be paid in their order of seniority and on a pro rata basis; and
(3) the Members shall next be paid on a pro rata basis the positive balances of
their respective Capital Accounts after giving effect to all allocations to be
made to such Members' Capital Accounts for the Fiscal Period ending on the date
of the distributions under this Section 6.2(a)(3).
(b) Anything in this Section 6.2 to the contrary notwithstanding, upon
dissolution of the Fund, the Board or other liquidator may distribute ratably in
kind any assets of the Fund; provided, however, that if any in-kind distribution
is to be made (I) the assets distributed in kind shall be valued pursuant to
Section 7.3 hereof as of the actual date of their distribution and charged as so
valued and distributed against amounts to be paid under Section 6.2(a) above,
and (ii) any profit or loss attributable to property distributed in-kind shall
be included in the Net Profit or Net Loss for the Fiscal Period ending on the
date of such distribution.
20
ARTICLE VII: ACCOUNTING, VALUATIONS, AND BOOKS AND RECORDS
7.1 ACCOUNTING AND REPORTS
(a) The Fund shall adopt for tax accounting purposes any accounting method that
the Board shall decide in its sole discretion is in the best interests of the
Fund. The Fund's accounts shall be maintained in U.S. currency.
(b) After the end of each taxable year, the Fund shall furnish to each Member
such information regarding the operation of the Fund and such Member's Units as
is necessary for Members to complete federal, state, and local income tax or
information returns and any other tax information required by federal, state, or
local law.
(c) Except as otherwise required by the 1940 Act, or as may otherwise be
permitted by rule, regulation, or order, within 60 days after the close of the
period for which a report required under this Section 7.1(c) is being made, the
Fund shall furnish to each Member a semi-annual report and an annual report
containing the information required by such Act. The Fund shall cause financial
statements contained in each annual report furnished hereunder to be accompanied
by a certificate of independent public accountants based upon an audit performed
in accordance with generally accepted accounting principles. The Fund may
furnish to each Member such other periodic reports as it deems necessary or
appropriate in its discretion.
7.2 DETERMINATIONS BY THE BOARD OF MANAGERS
(a) All matters concerning the determination and allocation among the Members of
the amounts to be determined and allocated pursuant to Article V hereof,
including any taxes thereon and accounting procedures applicable thereto, shall
be determined by the Board unless specifically and expressly otherwise provided
for by the provisions of this Agreement or required by law, and such
determinations and allocations shall be final and binding on all the Members.
(b) The Board may make such adjustments to the computation of Net Profit or Net
Loss or any components comprising any of the foregoing as it considers
appropriate to reflect fairly and accurately the financial results of the Fund
and the intended allocation thereof among the Members.
7.3 VALUATION OF ASSETS
(a) Except as may be required by the 1940 Act, the Board shall value or have
valued any Securities or other assets and liabilities of the Fund as of the
close of business on the last day of each Fiscal Period in accordance with such
valuation procedures as shall be established from time to time by the Board and
which conform to the requirements of the 1940 Act. In determining the value of
the assets of the Fund, no value shall be placed on the goodwill or name of the
Fund, or the office records, files, statistical data, or any similar intangible
assets of the Fund not normally reflected in the Fund's accounting records, but
there shall be taken into consideration any items of income earned but not
received, expenses incurred but not yet paid, liabilities, fixed or contingent,
and any other prepaid expenses to the extent not otherwise reflected in the
21
books of account, and the value of options or commitments to purchase or sell
Securities or commodities pursuant to agreements entered into prior to such
valuation date.
(b) The Fund will value interests in the Swap at its "fair value," as determined
in good faith by the Board, which value ordinarily will be based upon the value
of the Swap as provided to the Fund by the Counterparty which will, in turn,
base its valuation upon the then current value of the IP 220 Benchmark, absent
information indicating that such value does not represent the fair value of the
Swap.
(c) The value of Securities and other assets of the Fund and the net worth of
the Fund as a whole determined pursuant to this Section 7.3 shall be conclusive
and binding on all of the Members and all parties claiming through or under
them.
ARTICLE VIII: MISCELLANEOUS PROVISIONS
8.1 AMENDMENT OF LIMITED LIABILITY COMPANY AGREEMENT
(a) Except as otherwise provided in this Section 8.1, this Agreement may be
amended, in whole or in part, with: (i) the approval of the Board (including the
vote of a majority of the Independent Managers, if required by the 0000 Xxx) and
(ii) if required by the 1940 Act, the approval of the Members by such vote as is
required by the 0000 Xxx.
(b) Any amendment that would:
(1) increase the obligation of a Member to make any contribution to the capital
of the Fund; or
(2) reduce the Capital Account of a Member;
may be made only if (i) the written consent of each Member adversely affected
thereby is obtained prior to the effectiveness thereof or (ii) such amendment
does not become effective until (A) each Member has received written notice of
such amendment and (B) any Member objecting to such amendment has been afforded
a reasonable opportunity (pursuant to such procedures as may be prescribed by
the Board) to tender all of its Units for repurchase by the Fund.
(c) The power of the Board to amend this Agreement at any time without the
consent of the other Members as set forth in paragraph (a) of this Section 8.1
shall specifically include the power to:
(1) restate this Agreement together with any amendments hereto that have been
duly adopted in accordance herewith to incorporate such amendments in a single,
integrated document;
(2) amend this Agreement (other than with respect to the matters set forth in
Section 8.1(a) hereof) to effect compliance with any applicable law or
regulation or to cure any ambiguity or to correct or supplement any provision
22
hereof that may be inconsistent with any other provision hereof; and
(3) amend this Agreement to make such changes as may be necessary or advisable
to ensure that the Fund will not be treated as an association or a publicly
traded partnership taxable as a corporation as defined in Section 7704(b) of the
Code.
(d) The Board shall cause written notice to be given of any amendment to this
Agreement (other than any amendment of the type contemplated by clause (1) of
Section 8.1(c) hereof) to each Member, which notice shall set forth (i) the text
of the amendment or (ii) a summary thereof and a statement that the text thereof
will be furnished to any Member upon request.
8.2 SPECIAL POWER OF ATTORNEY
(a) Each Member hereby irrevocably makes, constitutes and appoints each Manager,
acting severally, and any liquidator of the Fund's assets appointed pursuant to
Section 6.2 hereof with full power of substitution, the true and lawful
representatives and attorneys-in-fact of, and in the name, place and stead of,
such Member, with the power from time to time to make, execute, sign,
acknowledge, swear to, verify, deliver, record, file, and/or publish:
(1) any amendment to this Agreement that complies with the provisions of this
Agreement (including the provisions of Section 8.1 hereof);
(2) any amendment to the Certificate required because this Agreement is amended,
including, without limitation, an amendment to effectuate any change in the
membership of the Fund; and
(3) all such other instruments, documents, and certificates that, in the opinion
of legal counsel to the Fund, may from time to time be required by the laws of
the United States of America, the State of Delaware or any other jurisdiction in
which the Fund shall determine to do business, or any political subdivision or
agency thereof, or that such legal counsel may deem necessary or appropriate to
effectuate, implement, and continue the valid existence and business of the Fund
as a limited liability company under the Delaware Act.
(b) Each Member is aware that the terms of this Agreement permit certain
amendments to this Agreement to be effected and certain other actions to be
taken or omitted by or with respect to the Fund without such Member's consent.
If an amendment to the Certificate or this Agreement or any action by or with
respect to the Fund is taken in the manner contemplated by this Agreement, each
Member agrees that, notwithstanding any objection that such Member may assert
with respect to such action, the attorneys-in-fact appointed hereby are
authorized and empowered, with full power of substitution, to exercise the
authority granted above in any manner that may be necessary or appropriate to
permit such amendment to be made or action lawfully taken or omitted. Each
Member is fully aware that each Member will rely on the effectiveness of this
special power-of-attorney with a view to the orderly administration of the
affairs of the Fund.
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(c) This power-of-attorney is a special power-of-attorney and is coupled with an
interest in favor of each of the Managers and as such:
(1) shall be irrevocable and continue in full force and effect notwithstanding
the subsequent death or incapacity of any party granting this power-of-attorney,
regardless of whether the Fund or Board shall have had notice thereof; and
(2) shall survive the delivery of a Transfer by a Member of such Member's Units,
except that where the transferee thereof has been approved by the Board for
admission to the Fund as a substituted Member, this power-of-attorney given by
the transferor shall survive the delivery of such assignment for the sole
purpose of enabling the Board to execute, acknowledge, and file any instrument
necessary to effect such substitution.
8.3 NOTICES
Except as otherwise set forth in this Agreement, notices that may or are
required to be provided under this Agreement shall be made, if to a Member, by
regular mail, or if to the Fund or the Board, by hand delivery, registered, or
certified mail return receipt requested, commercial courier service, telex, or
telecopier, and shall be addressed to the respective parties hereto at their
addresses as set forth in the books and records of the Fund. Notices shall be
deemed to have been provided when delivered by hand, on the date indicated as
the date of receipt on a return receipt or when received if sent by regular
mail, commercial courier service, telex, or telecopier. A document that is not a
notice and that is required to be provided under this Agreement by any party to
another party may be delivered by any reasonable means.
8.4 AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, successors, assigns, executors, trustees, or
other legal representatives, but the rights and obligations of the parties
hereunder may not be Transferred or delegated except as provided in this
Agreement and any attempted Transfer or delegation thereof that is not made
pursuant to the terms of this Agreement shall be void.
8.5 APPLICABILITY OF 1940 ACT AND FORM N-2
The parties hereto acknowledge that this Agreement is not intended to, and does
not, set forth the substantive provisions contained in the 1940 Act and the Form
N-2 that affect numerous aspects of the conduct of the Fund's business and of
the rights, privileges, and obligations of the Members. Each provision of this
Agreement shall be subject to and interpreted in a manner consistent with the
applicable provisions of the 1940 Act and the Form N-2.
8.6 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, including the
24
Delaware Act without regard to the conflict of law principles of such State.
8.7 NOT FOR BENEFIT OF CREDITORS
The provisions of this Agreement are intended only for the regulation of
relations among past, present and future Members, Managers, and the Fund. This
Agreement is not intended for the benefit of non-Member creditors and no rights
are granted to non-Member creditors under this Agreement.
8.8 CONSENTS
Any and all consents, agreements, or approvals provided for or permitted by this
Agreement shall be in writing and a signed copy thereof shall be filed and kept
with the books of the Fund.
8.9 MERGER AND CONSOLIDATION
(a) The Fund may merge or consolidate with or into one or more limited liability
companies or other business entities pursuant to an agreement of merger or
consolidation that has been approved by the Board in the manner contemplated by
Section 18-209(b) of the Delaware Act or may sell, lease or exchange all or
substantially all of the Fund property, including its good will, upon such terms
and conditions and for such consideration when and as authorized by the Board.
(b) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, an agreement of merger or consolidation approved by the Board in
accordance with Section 18-209(b) of the Delaware Act may, to the extent
permitted by Section 18-209(f) of the Delaware Act, (i) effect any amendment to
this Agreement, (ii) effect the adoption of a new limited liability company
agreement for the Fund if it is the surviving or resulting limited liability
company in the merger or consolidation, or (iii) provide that the limited
liability company agreement of any other constituent limited liability company
to the merger or consolidation (including a limited liability company formed for
the purpose of consummating the merger or consolidation) shall be the limited
liability company agreement of the surviving or resulting limited liability
company.
8.10 PRONOUNS
All pronouns shall be deemed to refer to the masculine, feminine, neuter,
singular, or plural, as the identity of the person or persons, firm, or
corporation may require in the context thereof.
8.11 CONFIDENTIALITY
(a) A Member may obtain from the Fund such information regarding the affairs of
the Fund as is just and reasonable under the Delaware Act, subject to reasonable
standards (including standards governing what information and documents are to
be furnished, at what time and location and at whose expense) established by the
Board.
25
(b) Each Member covenants that, except as required by applicable law or any
regulatory body, it will not divulge, furnish, or make accessible to any other
person the name and/or address (whether business, residence, or mailing) of any
Member (collectively, "Confidential Information") without the prior written
consent of the Board, which consent may be withheld in its sole discretion.
(c) Each Member recognizes that in the event that this Section 8.11 is breached
by any Member or any of its principals, partners, members, directors, officers,
employees, or agents or any of its Affiliates, including any of such Affiliates'
principals, partners, members, directors, officers, employees, or agents,
irreparable injury may result to the non-breaching Members and the Fund.
Accordingly, in addition to any and all other remedies at law or in equity to
which the non-breaching Members and the Fund may be entitled, such Members shall
also have the right to obtain equitable relief, including, without limitation,
injunctive relief, to prevent any disclosure of Confidential Information, plus
reasonable attorneys' fees and other litigation expenses incurred in connection
therewith. In the event that any non-breaching Member or the Fund determines
that any of the other Members or any of its principals, partners, members,
directors, officers, employees, or agents or any of its Affiliates, including
any of such Affiliates' principals, partners, members, directors, officers,
employees, or agents should be enjoined from or required to take any action to
prevent the disclosure of Confidential Information, each of the other
non-breaching Members agrees to pursue in a court of appropriate jurisdiction
such injunctive relief.
8.12 CERTIFICATION OF NON-FOREIGN STATUS
Each Member or transferee of Units from a Member shall certify, upon admission
to the Fund and at such other times thereafter as the Board may request, whether
such Member is a "United States Person" within the meaning of Section
7701(a)(30) of the Code on forms to be provided by the Fund, and shall notify
the Fund within 60 days of any change in such Member's status.
8.13 SEVERABILITY
If any provision of this Agreement is determined by a court of competent
jurisdiction not to be enforceable in the manner set forth in this Agreement,
each Member agrees that it is the intention of the Members that such provision
should be enforceable to the maximum extent possible under applicable law. If
any provisions of this Agreement are held to be invalid or unenforceable, such
invalidation or unenforceability shall not affect the validity or enforceability
of any other provision of this Agreement (or portion thereof).
8.14 FILING OF RETURNS
The Board or its designated agent shall prepare and file, or cause the
accountants of the Fund 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 Fund.
26
8.15 TAX MATTERS PARTNER
(a) A Manager who is a Member shall be designated on the Fund's annual Federal
income tax return, and have full powers and responsibilities, as the Tax Matters
Partner of the Fund for purposes of Section 6231(a)(7) of the Code. Glenwood
shall be the initial Tax Matters Partner of the Fund. In the event that no
Manager is a Member, a Member shall be so designated. Should any Member be
designated as the Tax Matters Partner for the Fund pursuant to Section
6231(a)(7) of the Code, it shall, and each Member hereby does, to the fullest
extent permitted by law, delegate to a Manager selected by the Board all of its
rights, powers, and authority to act as such Tax Matters Partner and hereby
constitutes and appoints such Manager as its true and lawful attorney-in-fact,
with power to act in its name and on its behalf, including the power to act
through such agents or attorneys as it shall elect or appoint, to receive
notices, to make, execute and deliver, swear to, acknowledge, and file any and
all reports, responses, and notices, and to do any and all things required or
advisable, in the Manager's judgment, to be done by such a Tax Matters Partner.
Any Member designated as the Tax Matters Partner for the Fund under Section
6231(a)(7) of the Code shall be indemnified and held harmless by the Fund from
any and all liabilities and obligations that arise from or by reason of such
designation.
(b) Each person (for purposes of this Section 8.15, called a "Pass-Thru Member")
that holds or controls an interest as a Member on behalf of, or for the benefit
of, another person or persons, or which Pass-Thru Member is beneficially owned
(directly or indirectly) by another person or persons, shall, within 30 days
following receipt from the Tax Matters Partner of any notice, demand, request
for information or similar document, convey such notice or other document in
writing to all holders of beneficial interests in the Fund holding such
interests through such Pass-Thru Member. In the event the Fund shall be the
subject of an income tax audit by any Federal, state, or local authority, to the
extent the Fund 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
Fund and each Member thereof. All expenses incurred in connection with any such
audit, investigation, settlement, or review shall be borne by the Fund.
8.16 SECTION 754 ELECTION
In the event of a distribution of the Fund's property to a Member or an
assignment or other transfer (including by reason of death) of Units of a Member
in the Fund, at the request of a Member, the Board, in its discretion, may cause
the Fund to elect, pursuant to Section 754 of the Code, or the corresponding
provision of subsequent law, to adjust the basis of the Fund's property as
provided by Sections 734 and 743 of the Code.
8.17 USE OF NAMES "MAN" AND "IP 220"
Man Investments Inc. ("Man") hereby grants to the Fund a royalty-free,
non-exclusive license to use the names "Man" and "IP 220" respectively, in the
name of the Fund. Such license may be terminated by Man in which event the Fund
shall promptly take whatever action may be necessary to change its name and
discontinue any further use of the name "Man" and "IP 220" as the case may be,
27
in the name of the Fund or otherwise. The names "Man" and "IP 220" may be used
or licensed by Man in connection with any of its activities, or licensed by Man
to any other party.
EACH OF THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY
BEFORE SIGNING, INCLUDING THE CONFIDENTIALITY CLAUSE SET FORTH IN SECTION 8.11.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
MANAGERS:
/s/ Xxxxx X. Xxxxx
----------------------------------
Xxxxx X. Xxxxx
/s/ Xxxx Xxxxx
----------------------------------
Xxxx Xxxxx
INITIAL MEMBER:
GLENWOOD CAPITAL INVESTMENTS, L.L.C.
By:
-------------------------------
Name:
Title:
MEMBERS:
Each person who shall sign an investor application or certification and who
shall be accepted by the Board to the Fund as a Member.
28
