EXHIBIT A
AGREEMENT OF LIMITED LIABILITY COMPANY
OF
XXXXX'X DOCK, L.L.C.
TABLE OF CONTENTS
Page
ARTICLE I
GENERAL PROVISIONS; CAPITAL
CONTRIBUTIONS;DEFINITIONS......................................................................... 1
Section 1.1 Formation............................................................................ 1
Section 1.2 Name................................................................................. 1
Section 1.3 Purpose.............................................................................. 1
Section 1.4 Place of Business; Registered Office and Agent....................................... 1
Section 1.5 Capital Contributions................................................................ 2
Section 1.6 Definitions.......................................................................... 2
ARTICLE II
CAPITAL ACCOUNTS.................................................................................. 4
Section 2.1 Capital Accounts..................................................................... 4
Section 2.2 Distribution in Kind................................................................. 5
ARTICLE III
DISTRIBUTIONS..................................................................................... 6
Section 3.1 Distributions........................................................................ 6
ARTICLE IV
MANAGEMENT........................................................................................ 6
Section 4.1 Management Authority................................................................. 6
Section 4.2 Delegation of Authority.............................................................. 7
Section 4.3 Company Acts......................................................................... 7
Section 4.4 No Liability to Members, Terminated Members or the Company........................... 7
Section 4.5 Indemnification...................................................................... 7
ARTICLE V
MEMBERS........................................................................................... 8
Section 5.1 Limited Liability.................................................................... 8
Section 5.2 No Liability to the Members or the Company........................................... 8
Section 5.3 Indemnification of the Members....................................................... 8
Section 5.4 No Transfer of Interest; No Withdrawal of Funds or Loans............................. 8
Section 5.5 Admission of New Members............................................................. 9
Section 5.6 Withdrawal, Expulsion or Other Termination of Members................................ 9
ARTICLE VI
DURATION; TERMINATION............................................................................. 9
Section 6.1 Duration............................................................................. 9
Section 6.2 Liquidation of Company Interests..................................................... 10
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ARTICLE VII
VALUATION......................................................................................... 10
Section 7.1 Normal Valuation..................................................................... 10
Section 7.2 Restrictions on Transfer or Blockage................................................. 10
ARTICLE VIII
BOOKS OF ACCOUNT.................................................................................. 11
Section 8.1 Books................................................................................ 11
Section 8.2 Fiscal Year.......................................................................... 11
Section 8.3 Tax-Allocation....................................................................... 11
ARTICLE IX
POWER OF ATTORNEY................................................................................. 12
ARTICLE X
MISCELLANEOUS..................................................................................... 12
Section 10.1 Indemnification and Reimbursement for Payments on Behalf of a Member
or Terminated Member....................................................................... 12
Section 10.2 Deadlock; Arbitration................................................................ 13
Section 10.3 Amendments........................................................................... 13
Section 10.4 Successors........................................................................... 13
Section 10.5 Governing Law; Severability.......................................................... 13
Section 10.6 Notices.............................................................................. 13
Section 10.7 Singular; Plural; Gender............................................................. 13
Section 10.8 Complete Agreement; Headings; Counterparts........................................... 13
Schedule 1 - Capital Commitments
Schedule 2 - Carried Interest Percentage
Schedule 3 - Notices
Schedule 4 - Affiliated Members
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AGREEMENT OF LIMITED LIABILITY COMPANY
OF
XXXXX'X DOCK, L.L.C.
Agreement of Limited Liability Company (the "Agreement") of Xxxxx'x
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Dock, L.L.C. (the "Company"), dated as of August 31, 1998, by and among
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Inverness Management Fund I LLC, a Delaware limited liability company
("Inverness"), Phoenix Home Life Mutual Insurance Company ("Phoenix") and
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Phoenix Investment Partners, Ltd. ("PXP"). Certain capitalized terms used
herein are defined in Section 1.6.
The parties hereto now agree as follows:
ARTICLE I
GENERAL PROVISIONS; CAPITAL
CONTRIBUTIONS; DEFINITIONS
Section 1.1 Formation. The Company was formed as of August 31, 1998
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by the execution and filing of a certificate of formation of the Company with
the Secretary of State of the State of Delaware setting forth the information
required by the Act (the "Certificate"). The Company shall continue until
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dissolution and termination of the Company in accordance with the provisions of
Article VI hereof.
Section 1.2 Name. The name of the Company shall be "Xxxxx'x Dock,
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L.L.C." or such other name or names as may from time to time hereafter be
designated by the Managers.
Section 1.3 Purpose. The Company is organized for the object and
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purpose of (i) acquiring, holding and disposing of shares of PennCorp Financial
Group, Inc.'s $3.375 Convertible Preferred Stock (the "Stock") in open market
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purchases, and (ii) engaging in such activities incidental or ancillary thereto
as approved by the Managers.
Section 1.4 Place of Business; Registered Office and Agent.
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(a) The Company shall maintain an office in Hartford, CT or at such
other place or places as may from time to time be designated by the Managers.
(b) The registered office of the Company in the State of Delaware is
located at 0 Xxxx Xxxxxxxxxx, Xxxxx, Xxxx Xxxxxx, Xxxxxxxx 00000. The
registered agent of the Company for service of process at such address is
National Registered Agents, Inc.
Section 1.5 Capital Contributions.
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(a) Each Member shall make cash contributions or contributions of
Stock to the capital of the Company in the aggregate amount equal to the amount
set forth opposite such Member's name on Schedule I attached hereto. Each
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Capital Contribution to the Company shall be made by means of a check or by wire
transfer of funds to an account designated by the Managers.
(b) To the extent a Member is required by law to pay a Company
liability, the amount so paid shall be treated (i) as a capital contribution to
the Company and (ii) as a payment by the Company of such liability.
Section 1.6 Definitions. For purposes of this Agreement:
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"Act" means the Delaware Limited Liability Company Act, 6 Del. C. (S)
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18-101 et seq., as amended.
"Agreement" has the meaning set forth in the preamble.
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"Allocated Preferred Return" with respect to each Member means the
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lesser of (i) the excess, if any, of (A) the aggregate amount of all Net
Profits previously allocated to such Member pursuant to Section 2.1(b) over (B)
the aggregate amount of all Net Losses previously allocated to such Member
pursuant to Section 2.1(c) and (ii) such Member's Preferred Return.
"Basis" with respect to any security means the Cost Basis thereof,
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reduced by any write-down amount pursuant to clause (iii) of the definition of
"Realized Investment Loss."
"Capital Account" has the meaning set forth in Section 2.1.
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"Capital Contribution" with respect to each Member means any amount
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contributed by such Member to the Company.
"Certificate" has the meaning set forth in Section 1.1.
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"Code" means the Internal Revenue Code of 1986, as amended from time
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to time.
"Company" has the meaning set forth in the preamble.
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"Cost Basis" with respect to any security means the basis thereof as
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determined in accordance with the Code.
"Dispute" has the meaning set forth in Section 10.2.
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"Indemnifying Member" has the meaning set forth in Section 10.1.
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"Inverness" has the meaning set forth in the preamble.
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"Managers" means collectively Phoenix and Inverness, or any successor
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managers as determined pursuant to Section 4.6.
"Member" means the Persons listed on the signature pages hereto as
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Members and any other Person who is admitted to the Company pursuant to Section
5.5 (so long as such Person continues to be a Member hereunder).
"Net Loss" for any period means the excess of all the Company's
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Realized Investment Losses for such period over all of the Company's Realized
Investment Gains for such period.
"Net Profit" for any period means the excess of all the Company's
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Realized Investment Gains for such period over all of the Company's Realized
Investment Losses for such period.
"Person" means an individual, a partnership, a corporation, a limited
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liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Phoenix" has the meaning set forth in the preamble.
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"Preferred Return" with respect to each Member means the excess, if
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any, of (i) the greater of (A) the aggregate amount of distributions required to
cause the internal rate of return from August 28, 1998 through the date of
determination on the aggregate Capital Contributions made to fund Realized
Investments on or prior to the date of determination, and taking into account
all prior distributions on Realized Investments, to equal 20% per annum, or (B)
120% of the Basis of the Realized Investments, over (ii) the aggregate Capital
Contributions made on or prior to the date of determination to fund Realized
Investments.
"PXP" has the meaning set forth in the preamble.
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"Realized Investment Gain" means (i) the excess, if any, of the net
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proceeds from the sale of the Stock over the Basis of the Stock, (ii) the
excess, if any, of the value (as determined pursuant to Article X) of any Stock
distributed to the Members over the Basis of such Stock and (iii) all other
items of gain that are not included in the foregoing clauses (i) and (ii).
"Realized Investment Loss" means (i) the deficiency, if any, of the
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net proceeds from the sale of Stock as compared to the Basis of such Stock, (ii)
the deficiency, if any, of the value (as determined pursuant to Section 7.1) of
any Stock distributed to the Members as compared to the Basis of such Stock,
(iii) the amount (the "write-down amount"), as determined by the Managers, by
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which the Stock has permanently declined in value as compared to the Cost Basis
of such Stock
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as provided in Article VII and (iv) all other items of deduction and loss that
are not included in the foregoing clauses (i) and (ii).
"Realized Investments" means the portion of the Stock which has been
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disposed of or written-down by the Company.
"Stock has the meaning set forth in Section 1.3.
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"Unallocated Preferred Return" with respect to each Member means the
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excess, if any, of (i) such Member's Preferred Return over (ii) such Member's
Allocated Preferred Return.
ARTICLE II
CAPITAL ACCOUNTS
Section 2.1 Capital Accounts. A "Capital Account" shall be
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established for each Member on the books of the Company and shall be adjusted as
follows:
(a) Capital Contributions. A Member's Capital Contribution shall be
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credited to such Member's Capital Account when and as received by the Company.
(b) Net Profit. For any period in which the Company has a Net
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Profit, such Net Profit shall be credited to the Members' Capital Accounts in
the following priority:
(i) First, 100% of such Net Profit shall be allocated to the
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Capital Accounts of the Members to the extent of their Unallocated
Preferred Return (taking into account amounts then and previously credited
pursuant to this Section 2.1(b)(i) (and not reversed pursuant to Section
2.1(c)(iii)).
(ii) Second, after the required allocations of such Net Profit is
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made pursuant to subparagraph (b)(i) above, such Net Profit shall be
credited 75% to the Capital Account of Inverness and 25% to the Capital
Account of PXP, but only to the extent necessary to cause the aggregate
amount of Net Profit allocated to the Capital Account of Inverness under
this subparagraph (b)(ii) at the time of such allocation to equal 18.75% of
the Net Profit previously allocated to the Members' Capital Accounts
pursuant to subparagraph (b)(i) above (and not reversed pursuant to Section
2.1(c)(ii)).
(iii) Third, after the required amount of an allocation of such Net
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Profit is made pursuant to subparagraphs (b)(i) and (b)(ii) above, the
remainder of such Net Profit shall be credited (A) 80% to the Capital
Accounts of the Members, pro rata according to the Capital Contributions,
(B) 15% to the Capital Account of Inverness and 5% to the Capital Account
of PXP.
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(c) Net Loss. For any period in which the Company has a Net Loss,
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such Net Loss shall be debited against the Capital Accounts of the Members in
the following order of priority:
(i) First, 100% of such Net Loss shall be debited (A) 80% to the
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Capital Account of the Members, pro rata according to the Capital
Contributions, (B) 15% to the Capital Account of Inverness and (c) 5% to
the Capital Account of PXP, but only to the extent that Net Profit has
previously been allocated pursuant to subparagraph (b)(iii) above and not
previously offset by Net Losses pursuant to this subparagraph (c)(i).
(ii) Second, after the required amount of such Net Loss has been
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allocated pursuant to subparagraph (c)(i) above, thereafter, such Net Loss
shall be debited (A) 75% to the Capital Account of Inverness and (B) 25% to
the Capital Account of PXP, but only to the extent that Net Profit has
previously been allocated pursuant to subparagraph (b)(ii) above and not
previously offset by Net Losses pursuant to this subparagraph (c)(ii).
(iii) Third, after the required amount of such Net Loss has been
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allocated pursuant to subparagraphs (c)(i) and (c)(ii) above, thereafter,
100% of such Net Loss shall be debited against the Capital Account of the
Members, but only to the extent that Net Profit has previously been
allocated pursuant to subparagraph (b)(i) and not previously offset by Net
Losses pursuant to this subparagraph (c)(iii).
(iv) Fourth, after the required amount of an allocation of such Net
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Loss is made pursuant to subparagraphs (c)(i), (c)(ii) and (c)(iii) above,
thereafter, such Net Loss shall be debited 100% against the Capital
Accounts of all Members, pro rata according to their Capital Contributions.
(d) Distributions. Any amounts distributed to a Member shall be
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debited against such Member's Capital Account.
The Members' Capital Accounts normally shall be adjusted periodically, monthly
or quarterly as set forth above, but the Capital Accounts may be adjusted more
often if a New Member is admitted to the Company or if circumstances otherwise
make it advisable (as determined in the discretion of the Managers). Where
allocations are made more often than annually, the relevant item of income,
expense, etc. being allocated shall be estimated and if subsequent year-end or
other adjustments affect allocations previously made, such adjustments shall be
recorded when determined.
If any income required by this Section 2.1 to be credited to the Members'
Capital Accounts is a negative amount (i.e., a loss), the absolute value of such
negative amount shall be debited against the Members' Capital Accounts.
Similarly, if any expense required to be debited against the Members' Capital
Accounts is a negative amount, the absolute value of such negative amount shall
be credited to the Members' Capital Accounts.
Section 2.2 Distribution in Kind. If securities are to be
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distributed in kind to the Members, they shall first be written up or down to
their value (as determined pursuant to Section 7.1
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as of the date of such distribution), thus creating gain or loss for the
Company, and the value of the securities received by each Member as so
determined shall be debited against such Member's Capital Account at the time of
distribution.
ARTICLE III
DISTRIBUTIONS
Section 3.1 Distributions.
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(a) Distributions of cash and/or securities received by the Company
shall be made to all Members from time to time as determined by the Managers;
provided that each Member shall be entitled to receive annual distributions
pursuant to Section 3.1(b) as soon as is reasonably feasible, but in no event
later than 90 days after each calendar year, equal to the anticipated taxes on
the share of taxable income allocated to such Member for the fiscal quarter to
which such date relates, assuming the highest applicable marginal federal and
state rates (taking into account the type of income distributed) for all Member,
subject to the availability of cash after setting aside appropriate reserves for
anticipated or contingent obligations, losses and commitments of the Company.
(b) Distributions out of Net Profit shall be made to all Members in
the same proportions as such Net Profit was credited to their respective Capital
Accounts.
(c) To the extent distributions represent a return of capital to the
Members (i.e., distributions other than out of Net Profit), such distributions
shall be made pro rata among the Members on the basis of the amount of each
Member's net Capital Contributions (i.e., each Member's or Terminated Member's
aggregate Capital Contribution with respect to its Capital Commitment, reduced
by the amount of each distribution received by such Member which constitutes a
return of capital).
(d) It is presently anticipated that distributions of Net Profit
shall be made within a reasonable period of time after receipt thereof by the
Company, subject in each case to the avail ability of cash after setting aside
appropriate reserves for anticipated or contingent obligations, losses and
commitments of the Company.
(e) Notwithstanding the above, no Member shall receive a distribution
which reduces such Member's Capital Account below zero.
ARTICLE IV
MANAGEMENT
Section 4.1 Management Authority. Except as otherwise expressly
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provided in this Agreement, all material Company decisions and determinations
will be made by unanimous decision of the Managers in their sole discretion,
including all Company decisions and
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determinations relating to (a) the acquisition of Stock, (b) distributions of
Company cash and securities, and (c) the incurring of expenses on behalf of the
Company; provided that the decision to dispose of Stock shall be made solely by
the Manager with the largest Capital Account.
Section 4.2 Delegation of Authority. The Company may (i) appoint
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such officers or employ such Persons to such terms and to perform such functions
as the Managers shall determine, (ii) appoint or otherwise contract with such
other Persons for the transaction of the business of the Company or the
performance of services for or on behalf of the Company as the Managers shall
determine and (iii) delegate to any such officer or Person such authority to act
on behalf of the Company as the Manager may from time to time deem appropriate.
Section 4.3 Company Acts. When the taking of Company action has
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been authorized pursuant to Section 4.1 or as otherwise provided in this
Agreement, any Person specifically thereby authorized in writing may execute any
contract or other agreement or document on behalf of the Company and may execute
and file on behalf of the Company with the Secretary of State of the State of
Delaware any certificates of amendment to the Company's certificate of
formation, one or more restated certificates of formation and certificates of
merger or consolidation and, upon the dissolution and completion of winding up
of the Company, at any time when there are fewer than two Members, or as
otherwise provided in the Act, a certificate of cancellation canceling the
Company's certificate of formation.
Section 4.4 No Liability to Members, Terminated Members or the
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Company. Except as otherwise required by law or the provisions of this
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Agreement, no present or former Manager shall be personally liable to any other
Manager, Member or to the Company for any action taken or omitted to be taken as
a Manager with respect to the Company which is not in violation of the
provisions of this Agreement or for any action taken or omitted to be taken by
any officer, director, employee or agent of the Company, except in the case of
such Manager's own gross negligence or willful malfeasance.
Section 4.5 Indemnification. Except as otherwise required by law
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or the provisions of this Agreement, the Company shall indemnify its present or
former Managers, officers, employees and agents against any losses, liabilities,
damages or expenses (including amounts paid for attorneys' fees, judgments and
settlements in connection with any threatened, pending or completed action, suit
or proceeding) to which any of such Persons may directly or indirectly become
subject for action taken or omitted to be taken on behalf of the Company or in
connection with any involvement with the Company, but only to the extent that
such Person (a) acted in good faith, (b) acted in a manner reasonably believed
to be authorized or conferred upon such Person by this Agreement, (c) acted in a
manner reasonably believed to be in the best interests of the Company and (d)
was neither grossly negligent nor engaged in willful malfeasance.
Section 4.6 Successor Manager. The Members may remove the Managers
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and appoint successor Manager(s) by the unanimous vote of the Members. Upon
such appointment the successor Manager shall become a Manager of the Company and
shall inure to all of the rights and obligations of a Manager pursuant to this
Agreement.
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ARTICLE V
MEMBERS
Section 5.1 Limited Liability. The Members shall not be personally
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liable for any obligations of the Company and shall have no obligation to make
contributions to the Company in excess of their respective Capital Contributions
as specified in Schedule 1 attached hereto, except to the extent set forth in
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the Act or otherwise expressly provided in this Agreement. The failure of the
Company to observe any formalities or requirements relating to the exercise of
its powers or management of its business or affairs under this Agreement or the
Act shall not be grounds for imposing personal liability on the Members or
Managers of the Company.
Section 5.2 No Liability to the Members or the Company. Except as
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otherwise required by law or the provisions of this Agreement, no Member or any
of their respective owners, directors, officers or agents, if any, shall be
personally liable to the Company or to any other Member for any action taken or
omitted to be taken as a Member with respect to the Company which is not in
violation of the provisions of this Agreement, or for any action taken or
omitted to be taken by any employee or agent of the Company, except in the case
of such Person's own gross negligence or willful malfeasance.
Section 5.3 Indemnification of the Members. Except as otherwise
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required by law or the provisions of this Agreement, the Company shall indemnify
the Members against any losses, liabilities, damages or expenses (including
amounts paid for attorneys' fees, judgments and settlements in connection with
any threatened, pending or completed action, suit or proceeding) to which any of
such Persons may directly or indirectly become subject for action taken or
omitted to be taken as a Member or in connection with any involvement with the
Company, but only to the extent that such Person (a) acted in good faith, (b)
acted in a manner reasonably believed to be authorized or conferred upon such
Person by this Agreement, (c) acted in a manner reasonably believed to be in the
best interests of the Company, and (d) was neither grossly negligent nor
willfully malfeasant.
Section 5.4 No Transfer of Interest; No Withdrawal of Funds or
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Loans.
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(a) A Member may not sell, assign, transfer or otherwise dispose of
all or any part of such Member's interest in the Company unless all of the
Members have consented to such transfer or assignment in writing, except for a
transfer of all or a part of such Member's interest (A) to such Member's estate,
heirs or beneficiaries upon such Member's death and (B) to any trust established
for the benefit of such Member's heirs or beneficiaries or to any guardian or
conservator appointed for such Member's estate upon such Member's Disability
(and in each such case, the transferor, unless otherwise determined by the
Manager, shall remain liable for all liabilities and obligations relating to the
transferred interest and the transferee shall become an assignee of only a
beneficial interest in Company profits, losses and distributions).
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(b) Notwithstanding anything to the contrary contained in this
Section 5.4, a transferee of a Company interest shall not become a substitute
Member without the consent of the Manager and without executing a copy of this
Agreement (and any Agreement contemplated hereby) or an amendment hereto (or
thereto) in form and substance satisfactory to the Manager. Any substitute
Member admitted to the Company as set forth in the preceding sentence shall
succeed to all rights and be subject to all obligations of the transferring or
assigning Member with respect to the interest to which such Member was
substituted.
(c) The transferor and transferee of any Member's interest shall be
jointly and severally obligated to reimburse the Manager and the Company for all
reasonable expenses (including attorneys' fees and expenses) of any transfer or
proposed transfer of a Member's interest, whether or not consummated.
(d) The transferee of any Member's interest shall be treated, for
purposes of this Agreement, as having made all of the Capital Contributions made
by, and received all of the distributions received by, the transferor of such
interest.
(e) Except as specifically provided in this Agreement, no Member is
entitled to borrow or withdraw any amount from the Company.
(f) Any sale, assignment, transfer, pledge, mortgage or other
disposition which violates this Section 5.4 shall be void and the purported
buyer, assignee, transferee, pledgee, mortgagee or other recipient shall have no
interest in or rights to Company assets, profits, losses or distributions and
neither the Members nor the Company shall be required to recognize any such
interest or rights.
Section 5.5 Admission of New Members. Additional members ("New
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Members") may be admitted to the Company only upon (i) approval by all of the
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Members and (ii) the execution and delivery of an appropriate amendment to this
Agreement and any other documents requested by the Manager in order to make such
New Member a party hereto and thereto.
Section 5.6 Withdrawal, Expulsion or Other Termination of Members.
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No Member shall withdraw or be terminated from the Company.
ARTICLE VI
DURATION; TERMINATION
Section 6.1 Duration. The Company shall terminate approximately
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120 days (as determined by the Managers and specified in a written notice to all
Members) after the disposition of all of the Stock; provided that if in the
opinion of the Managers there is some risk that the Company may have obligations
or liabilities (contingent or otherwise), the term of the Company may be
extended by the Managers until such risk no longer merits continuing the Company
in the opinion of the Managers.
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Section 6.2 Liquidation of Company Interests.
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(a) Upon termination, the Company shall be liquidated in an orderly
manner. The Managers shall be the liquidator(s) to wind up the affairs of the
Company pursuant to this Agreement.
(b) Upon termination of the Company, a final allocation of all items
of income, loss and expense shall be made in accordance with Article II hereof
and all other relevant provisions hereof and the Company's liabilities and
obligations to its creditors shall be paid or adequately provided for prior to
any distributions to the Members. After payment or provision for payment of all
debts of the Company, the remaining assets, if any, shall be distributed among
the Members in accordance with their respective Capital Accounts.
ARTICLE VII
VALUATION
Section 7.1 Normal Valuation. For purposes of this Agreement, the
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value of any security as of any date (or in the event such date is a holiday or
other day which is not a business day, as of the immediately preceding business
day) shall be determined as follows:
(a) a security which is listed on a recognized securities exchange or
The NASDAQ National Market ("NASDAQ") shall be valued at the average of its last
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"bid" price on each trading day during the five trading day periods ending
immediately prior to the date of determination, or if no sales occurred on any
such day, the mean between the closing "bid" and "asked" prices on such day;
(b) a security which is traded over-the-counter (other than on
NASDAQ) shall be valued at the average of its last "bid" price on each trading
day during the five trading day periods ending immediately prior to the date of
determination, or if no sales occurred on any such day, the mean between the
closing "bid" and "asked" prices on such day; and
(c) all other securities shall be valued on such date at fair market
value in such manner as the Managers determine proper.
Section 7.2 Restrictions on Transfer or Blockage. Subject to the
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proviso in Section 7.1, any security which is held under a representation that
it has been acquired for investment and not with a view to public sale or
distribution, or which is held subject to any other restriction on transfer, or
where the size of the Company's holdings compared to the trading volume would
affect its marketability, shall be valued at such discount from the value
determined under Section 7.1 above as determined by the Managers to properly
reflect the marketability of such security.
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ARTICLE VIII
BOOKS OF ACCOUNT
Section 8.1 Books. The Company shall maintain complete and accurate
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books of account of the Company's affairs at the Company's principal office,
which books shall be open to inspection by any Member (or such Member's
authorized representative) at any time during ordinary business hours.
Section 8.2 Fiscal Year. The fiscal year of the Company shall begin
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on January 1 each year and shall end on December 31 of such year, unless
otherwise determined by the Managers.
Section 8.3 Tax-Allocations and Reports.
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(a) The income, gains, losses, deductions and credits of the Company
shall be allocated, for federal, state and local income tax purposes, among the
Members in accordance with the allocation of such income, gains, losses,
deductions and credits among the Members for computing their Capital Accounts;
provided that if any such allocation is not permitted by the Code or other
applicable law, the Company's subsequent income, gains, losses, deductions and
credits shall be allocated among the Members so as to reflect as nearly as
possible the allocation set forth herein in computing their Capital Accounts.
(b) If any Member is treated for income tax purposes as realizing
ordinary income because of receipt of such Member's Company interest (whether
under Code (S)83 or any other applicable law, rule, regulation or doctrine) and
the Company is entitled to any offsetting deduction, the Company's deduction
shall be allocated among the Members in such manner as to, as nearly as
possible, offset such ordinary income realized by such Member.
(c) Notwithstanding any other provision of this Agreement, if any
Member unexpectedly receives an adjustment, allocation or distribution described
in Treasury Regulation (S)1.704-1(b)(2)(ii)(d)(4), (5) or (6) which gives rise
to a negative Capital Account (or which would give rise to a negative Capital
Account when added to expected adjustments, allocations or distributions of the
same type), such Member shall be allocated items of income and gain in an amount
and manner sufficient to eliminate such deficit balance as quickly as possible;
provided that the Company's subsequent income, gains, losses, deductions and
credits shall be allocated among the Members so as to achieve as nearly as
possible the results that would have been achieved if this Section 8.3(c) had
not been in this Agreement; provided further that no such allocation shall be
made which would violate the provisions or purposes of Treasury Regulation
(S)1.704-1(b)(2).
(d) If a Member does not ultimately receive distributions equal to
the amounts allocated to such Member for tax purposes, the Company shall
endeavor to allocate its future income, gains, losses, deductions, and credits
among the Members in a manner which shall result in the tax allocations being as
nearly equal to the distributions as possible.
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(e) The Company shall use its reasonable efforts to, within 75 days
after the end of each fiscal year, furnish each Member with a copy of the
Company's form K-1 for such fiscal year.
(f) The Company may make a Code (S)754 election at the discretion of
the Managers.
ARTICLE IX
POWER OF ATTORNEY
Each of the undersigned does hereby constitute and appoint the
Managers with full power to act without the others, as such Member's true and
lawful representative and attorney-in-fact, in such Member's name, place and
stead, to make, execute, sign, acknowledge and deliver or file (a) the
Certificate, (b) any amendment to, modification to, restatement of or
cancellation of the Certificate, (c) all instruments, documents and certificates
which may from time to time be required by any law to effectuate, implement and
continue the valid and subsisting existence of the Company, and (d) all
instruments, documents and certificates which may be required to effectuate the
dissolution and termination of the Company. The powers of attorney granted
herein shall be deemed to be coupled with an interest, shall be irrevocable and
shall survive the death, incompetency, disability or dissolution of a Member.
ARTICLE X
MISCELLANEOUS
Section 10.1 Indemnification and Reimbursement for Payments on Behalf
--------------------------------------------------------
of a Member or Terminated Member. If the Company is obligated to pay any amount
--------------------------------
to a governmental agency (or otherwise makes a payment) because of a Member's
status or otherwise specifically attributable to a Member (including, without
limitation, federal withholding taxes with respect to foreign members, state
personal property taxes, state unincorporated business taxes, etc.), then such
Member (the "Indemnifying Member") shall indemnify the Company in full for the
-------------------
entire amount paid (including, without limitation, any interest, penalties and
expenses associated with such payments). The amount to be indemnified shall be
charged against the Capital Account of the Indemnifying Member, and, at the
option of the Indemnifying Member, either:
(a) promptly upon notification of an obligation to indemnify the
Company, the Indemnifying Member shall make a cash payment to the Company equal
to the full amount to be indemnified (and the amount paid shall be added to the
Indemnifying Member's Capital Account but shall not be treated as a Capital
Contribution), or
(b) the Company shall reduce subsequent distributions which would
otherwise be made to the Indemnifying Member, until the Company has recovered
the amount to be
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indemnified (and, notwithstanding Section 2.1(a), the amount withheld shall not
be treated as a Capital Contribution).
Section 10.2 Deadlock; Arbitration. All claims, disputes,
---------------------
controversies or other matters in question arising under or relating to this
Agreement (collectively, "Disputes") shall, if unable to be resolved within 10
--------
days of preliminary negotiation between the parties to such Dispute, be resolved
through binding arbitration in accordance with the commercial arbitration rules
and practices of the American Arbitration Association. The site of such
arbitration shall be in Hartford, CT, or such other place as is mutually
agreeable to the parties. The cost of each arbitration proceeding, including
without limitation the arbitrator's compensation and expenses, hearing room
charges, court reporter transcript charges, reasonable attorney fees and
expenses, etc., shall be allocated among the parties to such Dispute based upon
the percentage which the portion of the contested amount in such Dispute not
awarded to each party bears to the amount actually contested by such party. The
parties hereto agree that the remedies provided under this Section 10.2 shall be
the sole and exclusive remedies for resolving and remedying all Disputes
hereunder.
Section 10.3 Amendments. This Agreement may be amended only by the
----------
unanimous consent of all Members.
Section 10.4 Successors. Except as otherwise provided herein, this
----------
Agreement shall inure to the benefit of and be binding upon the Members and
their respective legal representatives, heirs, successors and assigns.
Section 10.5 Governing Law; Severability. This Agreement shall be
---------------------------
governed by, and construed in accordance with, the laws of the State of
Delaware, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Delaware. If it is determined by a court of competent jurisdiction that any
provision of this Agreement is invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of this Agreement.
Section 10.6 Notices. All notices, demands and other communications
-------
to be given and delivered under or by reason of provisions under this Agreement
shall be in writing and shall be deemed to have been given when personally
delivered, sent by telecopy or sent by reputable overnight courier service
(charges prepaid) to the addresses or telecopy numbers set forth in Schedule 2
----------
attached hereto or to such other addresses or telecopy numbers as have been
supplied in writing to the Company.
Section 10.7 Singular; Plural; Gender. Wherever from the context it
------------------------
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, the feminine or the neuter gender shall include the masculine,
feminine and neuter.
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Section 10.8 Complete Agreement; Headings; Counterparts. This
------------------------------------------
Agreement terminates and supersedes all other agreements previously entered into
among any of the Members relating to the subject matter hereof. Descriptive
headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. This Agreement may be executed
in counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts together shall constitute one agreement.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement of
Limited Liability Company to be signed as of the date first above written.
MEMBERS:
-------
PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY
By /s/ Xxxxxxxxxxx Xxxxxx
-----------------------------
Its Vice-President
-----------------------------
PHOENIX INVESTMENT PARTNERS, LTD.
By /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Its Executive Vice-President
-----------------------------
INVERNESS MANAGEMENT FUND I LLC
By: X.X. Xxxxx LLC, its General Partner
By: /s/ Xxxxx X. Xxxxx III
----------------------------------
Name: Xxxxx X. Xxxxx III
Its: Managing Member
SCHEDULE 1
----------
CAPITAL CONTRIBUTIONS
--------------------------------------------------------
Fund Capital
Member Commitment
------ ----------
--------------------------------------------------------
Phoenix $9,500,000
--------------------------------------------------------
PXP $ 506,250
--------------------------------------------------------
Inverness $ 18,750
--------------------------------------------------------
SCHEDULE 2
----------
NOTICES
-------
Phoenix Home Life Mutual Insurance Company
0 Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Phoenix Investment Partners, Ltd.
00 Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxx
Inverness Management Fund I LLC
c/o Inverness Management LLC
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxx
