Exhibit A
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
XXXXXXXXXX OPPORTUNITIES FUND V, LLC
a Delaware Limited Liability Company
Dated as of January 31, 2007
TABLE OF CONTENTS
Page
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SECTION 1. DEFINED TERMS.......................................................1
SECTION 2. LIMITED LIABILITY COMPANY FORMATION AND IDENTIFICATION..............7
2.1 Formation...........................................................7
2.2 Name and Place of Business..........................................7
2.3 Records of Members..................................................7
2.4 Limited Liability Company...........................................7
SECTION 3. PURPOSE, NATURE OF BUSINESS AND POWERS..............................8
SECTION 4. TERM 8
SECTION 5. SHARES OF MEMBERSHIP INTEREST.......................................8
5.1 Beneficial Interest.................................................8
5.2 Classes and Series..................................................8
5.3 Issuance of Shares..................................................9
5.4 Rights of Members...................................................9
SECTION 6. REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS.................10
SECTION 7. CAPITAL CONTRIBUTIONS..............................................10
7.1 Capital Contributions of Members...................................10
7.2 Contribution of SVOF/MM LLC or Another Affiliate of the
Investment Manager.................................................14
7.3 Withdrawal of Capital..............................................14
SECTION 8. DISTRIBUTIONS......................................................14
8.1 Distributions......................................................14
SECTION 9. MANAGEMENT AND BOARD OF DIRECTORS..................................16
9.1 Management Generally...............................................16
9.2 Board of Directors.................................................17
9.3 Expenses of the Company............................................19
9.4 Members' Consent...................................................21
9.5 Exculpation........................................................21
9.6 Indemnification; No Duty of Investigation; Reliance on Experts.....21
9.7 Director Limited Liability.........................................23
9.8 Certain Other Activities...........................................23
SECTION 10. MEMBERS...........................................................24
10.1 Identity, Contributions and Common Share Commitments...............24
10.2 No Management Power or Liability...................................24
10.3 Amendments.........................................................24
10.4 Merger, Consolidation, Liquidation.................................26
10.5 List of Members....................................................27
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10.6 Limitations........................................................27
10.7 Meetings...........................................................27
10.8 Action Without a Meeting...........................................28
10.9 Procedures.........................................................28
10.10 Voting.............................................................28
10.11 Key Man Approvals..................................................30
SECTION 11. ADMISSION OF ADDITIONAL MEMBERS; ASSIGNMENTS OR TRANSFERS OF
SHARES............................................................30
11.1 Admission of Additional Members....................................30
11.2 Assignments or Transfers of Shares.................................31
SECTION 12. POWER OF ATTORNEY.................................................33
12.1 Appointment of Investment Manager..................................33
12.2 Nature of Special Power............................................33
SECTION 13. BOOKS, RECORDS AND REPORTS........................................34
13.1 Books..............................................................34
13.2 Reports............................................................35
SECTION 14. VALUATION OF INTERESTS............................................36
SECTION 15. BANK ACCOUNTS; CUSTODIAN..........................................36
15.1 Bank Accounts Generally............................................36
15.2 Custodian..........................................................36
SECTION 16. DISSOLUTION AND TERMINATION OF THE COMPANY........................37
16.1 Dissolution Generally..............................................37
16.2 Continuation of Company............................................37
16.3 Events Causing Dissolution.........................................37
16.4 Distribution of Assets on Liquidation..............................37
16.5 Liquidation Statement..............................................38
16.6 Director's Liability Upon Dissolution or Removal...................38
16.7 Restriction on Liquidation.........................................38
SECTION 17. GENERAL PROVISIONS................................................39
17.1 Notices and Distributions..........................................39
17.2 Survival of Rights.................................................39
17.3 Construction.......................................................39
17.4 Section Headings...................................................39
17.5 Agreement in Counterparts..........................................40
17.6 Governing Law......................................................40
17.7 Additional Documents...............................................40
17.8 Severability.......................................................40
17.9 Pronouns...........................................................40
17.10 Entire Agreement...................................................40
17.11 Arbitration........................................................41
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17.12 Waiver of Partition................................................41
17.13 Non-Petition Covenant..............................................41
17.14 Filing.............................................................41
Appendix A Statement of Preferences of Series S Preferred Share..........A-1
Appendix B Statement of Preferences of Series Z Preferred Shares.........B-1
Appendix C Form of Notice of Transfer....................................C-1
Appendix D Subscription Agreement........................................D-1
Appendix E Schedule of Members...........................................E-1
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AMENDED AND RESTATED
OPERATING AGREEMENT
OF
XXXXXXXXXX OPPORTUNITIES FUND V, LLC
This Amended and Restated Operating Agreement of Xxxxxxxxxx
Opportunities Fund V, LLC, a Delaware Limited Liability Company, dated as of
January __, 2007 (this "Agreement"), shall be the Operating Agreement of the
Company.
WHEREAS, the Members entered into an Operating Agreement, dated as of
October 10, 2006 (the "Original Agreement");
WHEREAS, the Board of Directors desires to modify Sections 7.1(b),
8.1(j) and 10.7(a) of the Original Agreement pursuant to Section 10.3(b) of such
Original Agreement;
NOW, THEREFORE, the parties to this Agreement hereby agree that the
Original Agreement is hereby amended and restated in its entirety as follows:
SECTION 1.
DEFINED TERMS
The terms set forth below shall have the indicated meanings.
"Advisers Act" means the Investment Advisers Act of 1940 and the rules
and regulations promulgated thereunder and applicable exemptions granted
therefrom, as amended from time to time.
"Advisory Agreement" means the Investment Management Agreement between
the Company and the Investment Manager, dated on or about the Initial Drawdown
Date, as such agreement may be amended, modified, revised or restated, from time
to time, in accordance with the terms hereof and thereof, and any substantially
similar agreement with a successor Investment Manager permitted by the terms
hereof and thereof.
"Advisory Fee" means the fee payable to the Investment Manager under
the Advisory Agreement.
"Affiliated Person" has the meaning set forth in the Investment Company
Act.
"Aggregate Capital Contributions" means, with respect to any Member as
of any date, the aggregate amount of all Capital Contributions made by such
Member on or prior to such date.
"Agreement" or "Operating Agreement" means this Operating Agreement, as
originally executed and as amended from time to time.
"Assets" means all cash, Cash Equivalents, securities, investments and
other property and assets of any type of the Company.
"Base Rate" means, on any date, a variable rate per annum equal to the
rate of interest published from time to time by The Wall Street Journal as the
"prime rate" at large U.S. money center banks.
"Board of Directors" means the board of directors of the Company.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banks in New York, New York or Los Angeles, California are required
by law to be closed. All references to Business Day herein shall be based on the
time in New York, New York.
"By-Laws" has the meaning set forth in Section 9.2(g).
"Capital Contribution" means a contribution to the Company in cash by a
Member or by any predecessor holder of the Shares held by such Member.
"Cash Equivalents" has the meaning assigned to such term in the Credit
Agreement; provided that if the Credit Agreement is terminated without
replacement, such term shall have the meaning assigned to it in the relevant
Statement of Preferences (or if the Statement of Preferences has been
terminated, those provisions in effect on the date of such termination).
"Certificate" means the Certificate of Formation of the Company, filed
with the Secretary of State on September 27, 2006, and any and all amendments
thereto and restatements thereof filed with the Secretary of State.
"Co-Advisory Agreement" means the Co-Management Agreement among the
Company, the Co-Manager and the Investment Manager, dated on or about the
Initial Drawdown Date, as such agreement may be amended, modified, revised or
restated, from time to time, in accordance with the terms hereof and thereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
"Co-Manager" means Babson Capital Management LLC, in its capacity as
co-investment manager to the Company, and any successor thereto selected in
accordance with the Co-Advisory Agreement and the Investment Company Act.
"Common Member" means a Member holding Common Shares of the Company.
"Common Share Commitment" means, when referring to a dollar amount, an
amount committed by a Common Member or prospective Common Member for investment
in the Common Shares of the Company pursuant to (a) a Subscription Agreement and
(b) an assumption by such Member of any Common Share Commitment of a Defaulting
Member pursuant to Section 7.1(d) or of a transferring Member.
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"Common Shares" means the common Shares of membership interests of the
Company having the rights and other terms set forth in this Agreement.
"Company" means Xxxxxxxxxx Opportunities Fund V, LLC, a Delaware
limited liability company, as it may from time to time be constituted.
"Consent Dividend" shall have the meaning assigned to such term in
Section 8.1(g).
"Credit Agreement" means (a) a Credit Agreement, to be entered into by
and among the Company, certain lenders party thereto and the arranger and
administrative agent therefor, as the same may be amended, modified, restated,
supplemented, refinanced, extended, refunded or replaced (in whole or in part)
(including with lenders other than the initial lenders) from time to time and
(b) any related agreements or instruments in respect of any amendment,
modification, restatement, supplement, refinancing, extension, refunding or
replacement of senior indebtedness (including one or more replacement credit
agreements).
"Custodial Account" means one or more segregated trust accounts
maintained pursuant to the requirements of the Investment Company Act and other
applicable law to hold the Assets.
"Custodian" means an entity which maintains the Custodial Account
pursuant to the requirements of the Investment Company Act and other applicable
law.
"Defaulting Member" shall have the meaning assigned to such term in
Section 7.1(d).
"Delaware Act" means the Delaware Limited Liability Company Act (6
Del.C. ss. 18-101, et seq.), as amended from time to time and any successor
thereto.
"Director" means each director of the Company who at the time in
question has been duly elected or appointed and has qualified as a director in
accordance with the provisions hereof and is then in office.
"Disabling Conduct" shall have the meaning set forth in Section 9.5.
"Disinterested Non-Party Directors" shall have the meaning set forth in
Section 9.6(a).
"Distribution Restriction Event" means (i) a violation of the
Over-Collateralization Test (without giving effect to the grace period provided
therein) under the Credit Agreement, or (ii) an Event of Default under the
Credit Agreement, or (iii) Company Equity (including any outstanding Affiliate
Equity Security) being less than Adjusted Contributed Company Capital under the
Credit Agreement. Terms used in this definition and not defined herein shall
have the meanings given to such terms in the Credit Agreement.
"Drawdown Date" means each date that the Company draws down Common
Share Commitments.
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"Enhanced Preferred Shares," if any, means any Preferred Shares that
benefit from an insurance policy or other credit enhancement.
"Fiscal Quarter" means a three calendar month period ending March 31,
June 30, September 30 or December 31 of a Fiscal Year.
"Fiscal Year" means the Company's fiscal year, which shall end on each
December 31 unless otherwise determined by the Board of Directors.
"Incapacity" or "Incapacitated" means, as to any Person, the
bankruptcy, insolvency, death, disability, adjudication of incompetence or
insanity, dissolution or termination, as the case may be, of such Person.
"Indemnified Person" shall have the meaning assigned to such term in
Section 9.5.
"Independent Director" means a Director that is not an Interested
Person.
"Initial Drawdown Date" means the date on which the first Capital
Contributions in respect of the Common Share Commitments are made with respect
to the Common Shares.
"Initial Member" means Xxxxxx Xxxxxxxxx, in his capacity as Initial
Member of the Company.
"Interested Person" has the meaning given to such term in the
Investment Company Act.
"Investment Committee" shall have the meaning set forth in Section
10.11.
"Investment Company Act" means the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder and applicable exemptions
granted therefrom, as amended from time to time.
"Investment Manager" means Xxxxxxxxxx Capital Partners, LLC, a Delaware
limited liability company, in its capacity as investment manager to the Company,
and any successor thereto selected in accordance with the Advisory Agreement and
the Investment Company Act.
"Investment Period" means the period commencing on the Initial Drawdown
Date and ending on October 10, 2016.
"Manager Affiliate" shall have the meaning set forth in Section 9.8.
"Member" means any Person that is admitted as a Common Member or
Preferred Member of the Company in accordance with the terms of this Agreement
at the time of reference thereto.
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"Net Asset Value" means the value of the Assets less the liabilities of
the Company, calculated pursuant to Section 14 in accordance with generally
accepted accounting principles and in compliance with the Investment Company
Act.
"Offering Memorandum" means the Confidential Private Placement
Memorandum, dated August 2006, relating to the Common Shares, as amended or
supplemented from time to time.
"Other Accounts" shall have the meaning set forth in Section 9.8.
"Person" means any human being, partnership, limited liability company,
corporation, trust or other entity.
"Placement Agents" means, collectively, Citigroup Global Markets Inc.
and Wachovia Capital Markets, LLC and such other placement agents as may be
designated by the Investment Manager and approved by the Board of Directors.
"Portfolio Company" means any Person that has issued any securities or
incurred any obligations that are then owned, or that previously were owned, by
the Company.
"Portfolio Partnership" means Xxxxxxxxxx Opportunities Partners V, LP,
a Delaware limited partnership, as it may from time to time be constituted.
"Preferred Member" means a Member holding Preferred Shares of the
Company.
"Preferred Shares" means the preferred Shares of membership interests
of the Company having the rights and other terms set forth in the Statement of
Preferences for the applicable series thereof, including without limitation any
Series A Preferred Shares, any Series S Preferred Shares and any Series Z
Preferred Shares.
"Replacement Principal" shall have the meaning set forth in Section
10.11.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Securities Act" means the Securities Act of 1933 and the
rules and regulations promulgated thereunder and applicable exemptions granted
therefrom, as amended from time to time.
"Shares" means the units of beneficial interest into which the
membership interests of the Company shall be divided from time to time and
includes fractions of Shares as well as whole Shares.
"Statement of Preferences" means any statement of preferences setting
forth the rights and other terms of any Preferred Shares issued by the Company.
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"Subscription Agreement" means each subscription agreement and any
related supplemental subscription agreement executed by any existing or
prospective Member relating to such Member's investment in the Company.
"Subscription Period" means the period commencing on the Initial
Drawdown Date and ending on or prior to April 10, 2009.
"Subsequent Drawdown Date" has the meaning assigned to such term in
Section 7.1(b).
"Substituted Member" means any Person admitted as a Member pursuant to
Section 11.2(b).
"Transaction Documents" has the meaning assigned to such term in the
Credit Agreement.
"Transfer" or "Transferred" means, with respect to any legal or
beneficial interest in the Company, a direct or indirect sale, transfer,
assignment, gift, pledge, hypothecation or other disposition or encumbrance of
any nature of or on such interest, whether by operation of law or otherwise
(including a transfer as a result of a merger or consolidation involving a
Member or a sale of all or substantially all of a Member's assets).
"Transferee" means, with respect to any legal or beneficial interest in
the Company, the Person to whom the Transferor of such interest desires to
Transfer or has Transferred such interest.
"Transferor" means, with respect to any legal or beneficial interest in
the Company, the Member or other Person desiring to Transfer such interest.
"Treasury Regulations" means the United States Treasury regulations
promulgated under the Code.
"Unfunded Commitment" means, with respect to any Common Member as of
any date, the amount of such Common Member's Common Share Commitment minus such
Common Member's Aggregate Capital Contributions previously made.
"Valuation Date" means (i) the last Business Day of each Fiscal
Quarter, (ii) a date selected by the Company within 48 hours prior to each
capital call or other issuance (exclusive of Sundays and holidays) of Common
Shares by the Company, (iii) each distribution declaration date (after giving
effect to the relevant declaration), (iv) the date on which the Company
terminates, and (v) such other dates as determined by the Board of Directors, in
accordance with the valuation policies and guidelines approved from time to time
by the Board of Directors.
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SECTION 2.
LIMITED LIABILITY COMPANY FORMATION AND IDENTIFICATION
2.1 Formation
The Company has been formed as a limited liability company pursuant
to the Delaware Act by the filing of the Certificate with the Secretary of
State, Division of Corporations, in accordance with the Delaware Act on
September 27, 2006. The Company is hereby continued under, and its business and
affairs shall be conducted in accordance with, the Delaware Act, and this
Agreement shall be governed by the laws of the State of Delaware. Common Members
shall be admitted as Members of the Company upon the Investment Manager's
execution of this Agreement as the attorney-in-fact for such Common Members.
Preferred Members shall be admitted as Members of the Company pursuant to the
provisions of the applicable Statement of Preferences. In addition, any Member
will be admitted as a Member of the Company upon the execution of a counterpart
of this Agreement by such Member.
2.2 Name and Place of Business
The name of the Company shall be "Xxxxxxxxxx Opportunities Fund V,
LLC" or such other name or names as may be selected by the Investment Manager
from time to time with written notice given to the Members of such change. The
principal office of the Company shall be at the principal place of business of
the Investment Manager at 0000 00xx Xxxxxx, Xxxxx 0000, Xxxxx Xxxxxx, Xxxxxxxxxx
00000, or other or additional places of business as may be selected from time to
time by the Company.
2.3 Records of Members
The addresses and schedules of capital accounts and other matters
related to the Members shall be those set forth in the Company records. A Member
may change its address by written notice to the Company, in care of the
Investment Manager, at the address set forth in Section 2.2.
2.4 Limited Liability Company
The Company has been formed as a limited liability company under
and pursuant to the Delaware Act. The Board of Directors and the Members
specifically intend and agree that the Company shall, for purposes of the Code
and state tax laws, be classified as a regulated investment company and none of
them shall make any election or take any other action that would cause their
relationship under this Agreement to be excluded from the application of all or
any part of Subchapter M of the Code (or any successor provisions). The Members
specifically intend and agree that the Company shall not be a partnership
(including, but not necessarily limited to, a limited partnership) or any other
venture, but a limited liability company under and pursuant to the Delaware Act.
No Member shall be construed to be a partner in the Company or a partner of any
Member or other Person in the Company, and the Certificate, this Agreement and
the relationships created thereby and arising therefrom shall not be construed
to suggest otherwise. The Members hereby acknowledge and agree that the
Investment Manager
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and any persons that may be appointed as such by the Board of Directors or the
Investment Manager are "authorized persons" within the meaning of Section 18-204
of the Delaware Act.
SECTION 3.
PURPOSE, NATURE OF BUSINESS AND POWERS
(a) The purposes of the Company and the business to be carried on by
it, subject to the limitations contained elsewhere in this Agreement, are to
engage in any business lawful for a corporation or partnership formed under the
laws of the State of Delaware, including to act as an investment company.
(b) The Company shall have the power to do any and all acts necessary,
appropriate, proper, advisable, incidental or convenient to or for the
furtherance of the purposes and business described herein and for the protection
and benefit of the Company, and shall have, without limitation, any and all of
the powers of a business corporation or partnership organized under the laws of
the State of Delaware.
(c) All property owned by the Company, real or personal, tangible or
intangible, shall be deemed to be owned by the Company as an entity, and no
Member or Director, individually, shall have any ownership of such property.
SECTION 4.
TERM
The existence of the Company commenced on the date the Certificate
was filed in the Office of the Secretary of State and shall continue in full
force and effect until the end of the Investment Period, plus up to two one-year
extensions if requested by the Investment Manager and approved by a majority of
the outstanding Shares.
SECTION 5.
SHARES OF MEMBERSHIP INTEREST
5.1 Beneficial Interest
The interest of the Members in the Company hereunder shall be
divided into an unlimited number of shares of membership interest, par value
$.001 per share. All Shares issued in accordance with the terms hereof,
including, without limitation, Shares issued in connection with a dividend in
Shares or a split of Shares, shall be fully paid and nonassessable when the
consideration determined by the Company (if any) therefor shall have been
received by the Company.
5.2 Classes and Series
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The Directors shall have the authority, without the approval of any
Members of the Company, to classify and reclassify both issued and outstanding
and authorized but unissued Shares into one or more classes and one or more
series of any or all of such classes, each of which classes and series thereof
shall have such designations, powers, preferences, voting, conversion and other
rights, limitations, qualifications and terms and conditions as the Directors
shall determine from time to time with respect to each such class or series by
amendment to this Agreement without the approval of any Members of the Company;
provided, however, that no reclassification of any issued and outstanding Shares
and no modifications of any of the designations, powers, preferences, voting,
conversion or other rights, limitations, qualifications and terms and conditions
of any issued and outstanding Shares may be made by the Directors without the
affirmative vote of the Shares specified in Section 10.3 to the extent required
thereby and the satisfaction of any conditions to such reclassification as set
forth in the applicable Statement of Preferences.
5.3 Issuance of Shares
The Directors, in their discretion, may from time to time without
vote of the Members issue Shares of any class or any series of any such class to
such Person or Persons and for such amount and type of consideration, including
cash or property, at such time or times, and on such terms as the Directors may
determine, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection with the assumption of,
liabilities) and businesses. The Directors may from time to time divide or
combine the Shares of any class or any series of any such class into a greater
or lesser number without thereby changing the proportionate beneficial interest
in such Shares. Issuances and repurchases of Shares may be made in whole Shares
and/or fractions as the Directors may determine.
5.4 Rights of Members
The Shares shall be personal property giving only the rights in
this Agreement specifically set forth. The ownership of the Assets of every
description is vested in the Company. The right to conduct and supervise the
conduct of the business of the Company is vested exclusively in the Directors
(subject to the right of the Board of Directors to delegate all or any part of
their authority to any person or group of persons, including, without
limitation, the Investment Manager), and the Members shall have no interest
therein other than the beneficial interest conferred by their Shares, and they
shall have no right to call for any partition or division of any property,
profits, rights or interests of the Company nor can they be called upon to share
or assume any losses of the Company or suffer an assessment of any kind by
virtue of their ownership of Shares. No Shares of any class or series shall
entitle the holder to preference, preemptive, appraisal, conversion or exchange
rights (except as otherwise specified in this Agreement or as specified by the
Directors in the designation or redesignation of any such class or series).
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SECTION 6.
REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS
The Corporation Trust Company is hereby designated, subject to
change by the Investment Manager, as the registered office of the Company and as
the agent upon whom process issued by authority of or under any law of the State
of Delaware may be served.
SECTION 7.
CAPITAL CONTRIBUTIONS
7.1 Capital Contributions of Members
(a) Each prospective subscribing Common Member, to be admitted as a
Member of the Company at the Initial Drawdown Date, must deliver to the
Investment Manager a completed, executed Subscription Agreement, which must be
satisfactory to the Investment Manager, and in which, among other things, such
prospective Common Member represents that it is an "accredited investor" as
defined in Rule 501(a) under the Securities Act and a "qualified client" within
the meaning of Rule 205-3 of the Advisers Act. The minimum Common Share
Commitment to which a Common Member may subscribe shall be $10,000,000;
provided, however, that the Investment Manager may, in its sole discretion,
waive this requirement. On the Initial Drawdown Date, each prospective Common
Member whose subscription has been accepted on or prior to such date shall
contribute to the Company 20% of its Common Share Commitment or such other
proportion as the Investment Manager shall have determined. The Company may
accept additional Common Share Commitments (each an "Additional Common Share
Commitment") from existing and additional prospective Common Members who satisfy
the requirements set forth in the first two sentences of this Section 7.1(a)
until the third Drawdown Date. On the date of original issuance of each series
of Preferred Shares, each Person who is admitted as a Member holding Preferred
Shares of such series in accordance with the applicable Statement of Preferences
shall, in connection therewith, contribute to the Company an amount in cash
equal to the purchase price for such Preferred Shares.
(b) Subsequent to the Initial Drawdown Date, the Company will draw down
Common Share Commitments on multiple Drawdown Dates (each, a "Subsequent
Drawdown Date"). On each Drawdown Date, the Company will issue Common Shares at
Net Asset Value per Common Share as calculated within 48 hours prior to issuance
(exclusive of Sundays and holidays) in an aggregate amount equal to the
percentage of the Common Share Commitments drawn down; provided, however, that
in order to ensure that the appropriate portion of the Company's organizational,
offering and operational expenses (excluding interest and preferred dividends)
through the relevant Subsequent Drawdown Date are borne by the subscribers for
Additional Common Share Commitments, the price per Common Share for the initial
drawdown in respect of any Additional Common Share Commitment shall be adjusted
to be the Net Asset Value per Common Share as so calculated plus an additional
amount not less than the quotient obtained by dividing (i) the sum of (A) the
product obtained by multiplying (I) 20% of the aggregate amount of such
Additional Common Share Commitment times (II) the quotient obtained by dividing
(x) the aggregate amount of the organizational and offering expenses, and
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an allocable portion of operational expenses (excluding interest and preferred
dividends), of the Company in respect of the Common Shares incurred for
accounting purposes through the related pricing date by (y) 20% of the aggregate
amount of the Common Share Commitments (including such Additional Common Share
Commitments) accepted through such pricing date plus (B) the product obtained by
multiplying (I) the aggregate amount of such Additional Common Share Commitment
times (II) the quotient obtained by dividing (x) the aggregate amount of sales
commissions payable by the Company in respect of all such Additional Common
Share Commitments by (y) the aggregate amount of all Common Share Commitments by
(ii) the number of Common Shares being purchased at such initial drawdown in
respect of the portion of such Additional Common Share Commitment being drawn at
such time (which number shall be calculated by dividing such initial drawdown
amount of such Additional Common Share Commitment by the Net Asset Value per
Common Share as calculated pursuant to the initial clause of this sentence
without regard to this proviso). For the avoidance doubt, the phrase "such
additional Common Share Commitment" (or the plural thereof) refers only to
Additional Common Share Commitments with respect to which such Subsequent
Drawdown Date is the date of the initial drawdown. On the first Subsequent
Drawdown Date after which any particular Additional Common Share Commitment has
been accepted by the Company, the drawdown in respect of such Additional Common
Share Commitment shall equal the percentage of the initial Common Share
Commitments drawn through such date.
(c) Unfunded Commitments may be called by the Company at any time
during the Subscription Period in any amount on not less than 15 days prior
written notice to the Common Members; provided, however, that (i) except as set
forth in the proviso to Section 7.1(b), all Capital Contributions for Common
Shares shall be on a pro rata basis in proportion to each Common Member's
respective Unfunded Commitment, (ii) the aggregate amount of Capital
Contributions required on each Subsequent Drawdown Date shall be at least 10% of
the aggregate Common Share Commitments (or, with respect to the last Subsequent
Drawdown Date, any amount left undrawn), and (iii) all calls for Capital
Contributions shall be made so that they are required to be funded on or prior
to the end of the Subscription Period.
(d) If any Common Member fails to make full payment of any portion of
its Common Share Commitment or any other payment required hereunder when due (a
"Defaulting Member"), the Company shall give such Defaulting Member written
notice of its default in payment and in the event such default shall continue
beyond the tenth calendar day following such notice, the Company may, in its
sole discretion, take any one or more of the following actions:
(i) The Company may assist the Defaulting Member in finding a
buyer for the Defaulting Member's Common Shares which buyer will assume the
Defaulting Member's obligations hereunder, subject to the restrictions on
transfer contained in Section 11.2 (in which case such Person shall, as a
condition of purchasing such Common Shares, become a party to this
Agreement and assume such Defaulting Member's obligation to make both
defaulted and future Capital Contributions).
(ii) The Company may pursue and enforce all rights and remedies
the Company may have against the Defaulting Member, including a lawsuit to
collect the overdue amount, with interest calculated thereon at a rate
equal to the Base Rate plus six
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percent (6%) per annum or, if greater, the annualized rate of total return
per Common Share over the prior four fiscal quarters (or since commencement
of operations if less than four fiscal quarters) (but not in excess of the
highest rate per annum permitted by applicable law).
(iii) The Company may offer a Defaulting Member's Common Shares
to the Common Members (other than any Defaulting Member), which offer shall
be made pro rata in accordance with the non-defaulting Members' respective
Common Share Commitments, at a discount to the Net Asset Value of such
Common Shares. The purchase price for such Common Shares will be determined
in the sole discretion of a majority of the Independent Directors;
provided, however, that such Defaulting Member shall receive not less than
66% of the most recently determined Net Asset Value of such Common Shares.
If a non-defaulting Member elects not to purchase all of the Common Shares
offered to it, such unpurchased Common Shares shall be reoffered pro rata
to the non-defaulting Members who have purchased all of the Common Shares
offered to them until either all of such Common Shares are acquired or no
non-defaulting Member wishes to make a further investment. At the closing
of such purchase (on a date and at a place designated by the Company), each
purchasing Member shall, as payment in full for the Defaulting Member's
Common Shares being purchased, (A) deliver a non-interest bearing,
non-recourse promissory note (in a form approved by the Company) payable
upon the earlier to occur of ten years after delivery of the note or
liquidation of the Company, secured only by the Defaulting Member's Common
Shares being purchased by such Member (excluding the portion of such Common
Shares represented by contributions made by such purchaser with respect to
such Common Shares), payable to the Defaulting Member in an amount equal to
the purchase price of the portion of the Defaulting Member's Common Shares
being purchased by such Member, and (B) assume the portion of the
Defaulting Member's obligation to make both defaulted and future Capital
Contributions and other payments pursuant to its Common Share Commitment
and this Agreement which are commensurate with the portion of the
Defaulting Member's Common Shares being purchased by such Member. Upon the
closing of such purchase, each purchasing Member shall make a Capital
Contribution in an aggregate amount equal to that portion of the assumed
Common Share Commitment representing the defaulted Common Share Commitment
of the Defaulting Member, and the balance of the assumed Common Share
Commitment shall be added to such purchasing Member's Common Share
Commitment for all purposes under this Agreement. The Company shall specify
the procedures for making and accepting the offers contemplated by this
subparagraph and shall, in its discretion, set time limits for acceptance.
All Capital Contributions made by the purchasing Members shall be "Capital
Contributions" made under this Agreement and Common Shares shall be issued
to such Members accordingly. If all of the Defaulting Member's Common
Shares are not purchased pursuant to the immediately preceding provisions,
the Company may offer any remaining Common Shares to any other Person on
the same terms as originally offered to the Members pursuant to such
provisions, subject to the restrictions on transfer contained in Section
11.2 (in which case such Person shall, as a condition of purchasing such
Common Shares, become a Member party to this Agreement and assume such
Defaulting Member's obligation to make both defaulted and future Capital
Contributions).
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(iv) The Company may repurchase, retire and cancel such
Defaulting Member's Common Shares at a discount to the Net Asset Value of
such Common Shares. The consideration to be paid to such Defaulting Member
upon any repurchase, retirement or cancellation of such Common Shares will
be determined in the sole discretion of a majority of the Independent
Directors; provided, however, that such Defaulting Member shall receive not
less than 66% of the Net Asset Value of such Common Shares.
(v) The Company may offer to the Common Members (other than such
Defaulting Member) for assumption by the non-defaulting Members such
Defaulting Member's Common Share Commitment to make its Capital
Contribution which was not made ("Defaulted Commitment"), which offer shall
be made pro rata in accordance with the non-defaulting Members' respective
Common Shares. If a non-defaulting Member elects not to assume the entire
portion of the Defaulted Commitment offered to it, such unassumed Defaulted
Commitment shall be reoffered pro rata to the non-defaulting Members who
have elected to assume the entire portion of the Defaulted Commitment
offered to them until either all of such Defaulted Commitment is assumed or
no non-defaulting Member wishes to make a further assumption of the
Defaulted Commitment. At the closing of such offer (on a date and at a
place designated by the Company), each assuming Member shall make a Capital
Contribution in an amount equal to that portion of the Defaulted Commitment
assumed by it in accordance with the provisions of this subparagraph which
is then due or past due. The Investment Manager shall specify the
procedures for making and accepting the offers contemplated by this
subparagraph and shall, in its discretion, set time limits for acceptance.
If the entire Defaulted Commitment is not assumed pursuant to the preceding
provisions, the Company may offer to any other Person for assumption any
remaining portion of the Defaulted Commitment, subject to the restrictions
on transfer contained in Section 11.2 (in which case such third party or
parties shall become a party to this Agreement). All Capital Contributions
made by the non-defaulting Members and other Persons pursuant to this
subparagraph (v) shall be "Capital Contributions" made under this
Agreement, and the Common Shares of each of such Members and other Persons
shall be adjusted accordingly. Such Defaulting Member's Common Share
Commitment shall be reduced by the aggregate amount of Defaulted Commitment
assumed by the non-defaulting Members and such other Persons and for which
payments have been actually received by the Company.
(vi) The Company may reduce (effective on the date of the
default) the Defaulting Member's Common Share Commitment (to the extent it
has not been assumed by another Member or Person) to the amount of Capital
Contributions actually made by such Defaulting Member (net of distributions
pursuant to Section 8.1), and the aggregate Common Share Commitment of such
Defaulting Member shall be commensurately reduced; provided, however, that
the Common Share Commitments of the non-defaulting Members shall not be
reduced.
(vii) If the Defaulting Member is an entity formed for the
purpose of investing in the Company and such Defaulting Member's failure to
make any portion of a Capital Contribution when required is caused by the
failure of one or more of such Defaulting Member's investors to either (i)
make an equity contribution or (ii) deliver
13
payment in exchange for any notes issued to such investor, to such
Defaulting Member, the Company may, in its sole discretion, apply the
provisions of this Section 7.1(d) to such Defaulting Member's Common Shares
and/or Common Share Commitments on a pro rata basis to appropriately
reflect the effect of the failure of such Defaulting Member's defaulting
equity investors in a manner which is equitable to such Defaulting Member's
non-defaulting equity investors.
(e) No consent of any Member shall be required as a condition precedent
to any transfer, assignment, assumption or other disposition of a Defaulting
Member's Common Shares or Common Share Commitment, as the case may be, pursuant
to Section 7.1(d). If all of the Defaulting Member's Common Shares and its
Common Share Commitments are purchased in the manner set forth in Section
7.1(d), such Defaulting Member shall cease to be a Common Member in the Company
and shall cease to have the power to exercise any rights or powers of a Common
Member.
7.2 Contribution of SVOF/MM LLC or Another Affiliate of the Investment
Manager
If the Board of Directors approves the issuance of the Series S
Preferred Share, SVOF/MM LLC or another affiliate of the Investment Manager
shall receive one Series S Preferred Share in exchange for its contribution of
$1,000.00 on the Initial Drawdown Date or such other date as the Board of
Directors shall approve. The Series S Preferred Share shall have the
designations, powers, preferences, voting and other rights, limitations,
qualifications and terms and conditions set forth in the Statement of
Preferences therefor attached hereto as Appendix A.
7.3 Withdrawal of Capital
No Member shall have any right to withdraw from the Company except
in connection with the admission of one or more Transferees of all of such
Member's Shares in the Company. No Member shall have any right to require the
Company to repurchase or redeem all or any portion of its Shares except as
provided in or pursuant to any Statement of Preferences. Further, no Common
Member shall have any right to withdraw its Common Share Commitment.
SECTION 8.
DISTRIBUTIONS
8.1 Distributions
(a) The Company shall from time to time distribute among the Shares (or
one or more classes or series thereof) such portion of the net profits, surplus
(including paid-in surplus), capital, or assets held by the Company as the
Directors or, if approved by the Board of Directors, the Investment Manager may
deem proper or as may otherwise be determined pursuant to this Agreement or the
Statement of Preferences therefor, which need not be ratable with respect to
distributions in respect of Shares of any other class or series thereof of the
Company, but must be ratable within each class or series of Shares. The
Preferred Shares shall
14
not be entitled to receive, and the Directors shall be prohibited from declaring
or distributing in respect of any of the Preferred Shares, any amount in excess
of the distributions specified for such Preferred Shares in the applicable
Statement of Preferences therefor. Such distributions may be made in cash or
property (including without limitation any type of obligations of the Company or
any assets thereof) or any combination thereof.
(b) Distributions may be made to the holders of record of the Shares
entitled to such distribution at the time such distribution is declared or at
such later date as shall be determined by the Company prior to the date of
payment.
(c) The Directors may always retain from any source such amount as they
may deem necessary to pay the debts or expenses of the Company or to meet
obligations of the Company, or as they otherwise may deem desirable to use in
the conduct of its affairs or to retain for future requirements or extensions of
the business of the Company.
(d) Any distribution by the Company pursuant to the terms of this
Section 8.1 or Section 16 to the Person shown on the Company's records as a
Member or to its legal representatives, or to the assignee of the right to
receive such distributions as provided herein, shall relieve the Company, the
Directors and the Investment Manager of all liability to any other Person who
may be interested in such distribution by reason of any Transfer of any interest
in any of such Member's Shares (including a Transfer thereof by operation of law
or by reason of death, incompetence, bankruptcy or liquidation of such Member,
as the case may be).
(e) Notwithstanding any provision to the contrary contained in this
Agreement, neither the Company, the Directors nor the Investment Manager on
behalf of the Company shall make any distribution to a Member on account of its
Shares if such distribution would violate Section 18-607 of the Delaware Act or
other applicable law.
(f) Notwithstanding any other provision of this Agreement, the Company
may set aside reasonable reserves for anticipated liabilities, obligations or
commitments of the Company which it determines to be reasonably necessary or
desirable, in its sole judgment.
(g) Each Common Member agrees, within ten (10) calendar days following
the receipt of each written request from the Company, in the event a
Distribution Restriction Event shall have occurred and is continuing so that the
Company is prevented from making distributions to the Common Members such that
its deduction for dividends paid during the taxable year does not equal at least
ninety-eight percent (98%) of each of (i) the Company's investment company
taxable income (as determined for purposes of Section 852 of the Code) and (ii)
the amount described in Section 852(a)(1)(B) of the Code, to execute and deliver
to the Company, or an agent of the Company specified by the Company, with
respect to any such taxable year, a consent in accordance with Section 565 of
the Code and the Treasury Regulations promulgated thereunder, and any successor
provision, in the manner specified by the Company, to treat the amount specified
by the Company in such request as a dividend (the "Consent Dividend") for United
States federal income tax purposes for the taxable year indicated by the
Company.
15
(h) In the case that a Common Member reasonably believes that there may
be a withholding tax imposed on a Consent Dividend under the laws of the United
States or any political subdivision thereof, upon the written request of such
Common Member given to the Company within five (5) Business Days of the written
request by the Company for the Consent Dividend forms and documentation
described in Section 8.1(g) hereof, such Common Member shall not be required to
execute or deliver such Consent Dividend forms unless the Company has delivered
to such Common Member a certificate signed by an authorized officer of the
Company stating that the Company has sufficient funds available to make the
payments required and shall make such payments; provided that such Common Member
shall execute and deliver to the Company such Consent Dividend forms and
documentation within five (5) Business Days of the receipt of such certificate.
(i) If it is determined by the Board of Directors that the requisite
consents for a Consent Dividend have not been obtained from the Common Members,
after taking such actions, if any, as the Board of Directors deems appropriate
to enforce the provisions of Section 8.1(g) hereof, but a dividend payment or
distribution would otherwise be required to be made on the Common Shares in
order to preserve the U.S. federal income tax status of the Company as a
regulated investment company or to avoid the imposition of the excise tax under
Section 4982 of the Code, such payment or distribution shall be distributed for
the benefit of the Common Members and deposited into one or more escrow
accounts. If any amounts deposited in the escrow accounts are paid over to the
senior secured creditors of the Company, the Common Members will have an
unsecured, recourse claim against the Company for any such amounts paid to such
senior secured creditors. For United States federal, state and local tax
purposes, each Common Member agrees to treat its share of any amount so
deposited as a dividend received by such Common Member at the time of such
deposit.
(j) After the determination of Net Asset Value per Common Share in
respect of any Subsequent Drawdown Date and immediately prior to the issuance of
additional Common Shares on such Subsequent Drawdown Date, the Company shall
declare a distribution to the holders of Common Shares at the time of such
declaration in an amount per share equal to the quotient obtained by dividing
(i) the aggregate of the products determined in respect of such Subsequent
Drawdown Date pursuant to clause (i)(A) and (B) of the proviso to Section 7(b),
by (ii) by the number of Common Shares outstanding at the time of such
declaration.
SECTION 9.
MANAGEMENT AND BOARD OF DIRECTORS
9.1 Management Generally
(a) Subject to the voting rights of the Shares, the management of the
Company shall be vested exclusively in the Board of Directors, which shall have
all of the power and authority of a "manager" of the Company within the meaning
of the Delaware Act, including the authority to appoint officers and to
authorize persons to act on behalf of the Company and engage third parties to
provide services to the Company and to perform any permissible activity and is
further authorized to delegate such power and authority to such officers or
authorized Persons as it determines to be appropriate, subject to the
requirements of the Investment
16
Company Act. The Board of Directors may designate one or more committees each of
which shall have all or such lesser portion of the power and authority of the
entire Board of Directors as the Directors shall determine from time to time,
except to the extent that action by the entire Board of Directors or particular
Directors is required by the Investment Company Act.
(b) Except as expressly set forth herein, the Members, in their
capacity as such, shall have no part in the management of the Company, and shall
have no authority or right to act on behalf of the Company in connection with
any matter. Employees, officers, authorized Persons and agents of the Company
shall have authority to act on behalf and in the name of the Company to the
extent authorized by the Board of Directors or pursuant to authority granted by
it. It is contemplated that the Board of Directors will delegate substantially
all of its power and authority with respect to the operations of the Company to
the Investment Manager and other authorized Persons.
9.2 Board of Directors
(a) Subject to the terms of each Statement of Preferences, the number
of Directors shall be such number, not less than three, as shall be approved
from time to time by a majority of Directors then in office. No reduction in the
number of Directors shall have the effect of removing any Director from office
prior to the expiration of his or her term. An individual nominated as a
Director shall be at least 21 years of age and not older than such age as shall
be approved from time to time by not less than two-thirds of the Directors then
in office and shall not be under legal disability. Directors need not own Shares
and may succeed themselves in office. The names and addresses of the Directors
shall be set forth in the records of the Company.
(b) Any Director may resign as a Director (without need for prior or
subsequent accounting) by an instrument in writing signed by him and delivered
or mailed to the Chairman, if any, the President or the Secretary and such
resignation shall be effective upon such delivery, or at a later date provided
in such instrument. Subject to the rights of the Preferred Shares with respect
to Directors elected solely by the Preferred Shares pursuant to the Investment
Company Act, any Director may be removed (provided that the aggregate number of
Directors after such removal shall not be less than the minimum number specified
in Section 9.2(a) hereof) for cause at any time by the act of a majority of the
remaining Directors, specifying the date when such removal shall become
effective. Subject to the rights of the Preferred Shares with respect to
Directors elected solely by the Preferred Shares pursuant to the Investment
Company Act, any Independent Director may be removed (provided that the
aggregate number of Directors after such removal shall not be less than the
minimum number Section 9.2(a) hereof) without cause at any time by the act of
two-thirds of the remaining Directors, and any Director can be removed without
cause by vote of not less than two-thirds of the aggregate number of Shares
entitled to vote in the election of such Director, specifying the date when such
removal shall become effective.
(c) The term of office of a Director shall terminate and a vacancy
shall occur in the event of the removal, resignation, incompetence or other
incapacity to perform the duties of the office, or death, of a Director. Subject
to the rights of the Preferred Shares with respect to Directors elected solely
by the Preferred Shares pursuant to the Investment Company Act and
17
pursuant to any Statement of Preferences, whenever a vacancy in the Board of
Directors shall occur, the remaining Directors may fill such vacancy by
appointing an individual having the qualifications described in this Agreement
by a written instrument signed or adopted by a majority of the Directors then in
office or by election of the holders of Shares, or may leave such vacancy
unfilled, or may reduce the number of Directors (provided that the aggregate
number of Directors after such removal shall not be less than the minimum number
specified in Section 9.2(a) hereof). Any vacancy created by an increase in
Directors may be filled by the appointment of an individual having the
qualifications described in this Agreement by a majority of the Directors then
in office or by election of the holders of Shares. No vacancy shall operate to
annul this Agreement or to revoke any existing agency created pursuant to the
terms of this Agreement. Whenever a vacancy in the number of Directors shall
occur, until such vacancy is filled as provided herein, the Directors in office,
regardless of their number, shall have all the powers granted to the Directors
and shall discharge all the duties imposed upon the Directors by this Agreement.
(d) Meetings of the Directors shall be held from time to time upon the
call of the Chairman, if any, the President, the Secretary or any two Directors.
Regular meetings of the Directors may be held without call or notice at a time
and place fixed by resolution of the Directors. Notice of any other meeting
shall be mailed via overnight courier not less than 48 hours before the meeting
or otherwise actually delivered orally or in writing not less than 24 hours
before the meeting, but may be waived in writing by any Director either before
or after such meeting. The attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting except where a Director attends a
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting has not been lawfully called or convened. The
Directors may act with or without a meeting. A quorum for all meetings of the
Directors shall be one-third of the Directors then in office. Unless provided
otherwise in this Agreement, any action of the Directors may be taken at a
meeting by vote of a majority of the Directors present (a quorum being present)
or without a meeting by written consent of a majority of the Directors or such
other proportion as shall be specified herein for action at a meeting at which
all Directors then in office are present.
(i) Any committee of the Directors may act with or without a
meeting. A quorum for all meetings of any such committee shall be one third
of the members thereof. Unless provided otherwise in this Agreement, any
action of any such committee may be taken at a meeting by vote of a
majority of the members of such committee present (a quorum being present)
or without a meeting by written consent of a majority of the members of
such committee or such other proportion as shall be specified herein for
action at a meeting at which all committee members are present.
(ii) With respect to actions of the Directors and any committee
of the Directors, Directors who are Interested Persons in any action to be
taken may be counted for quorum purposes under this Section and shall be
entitled to vote to the extent not prohibited by the Investment Company
Act.
(iii) All or any one or more Directors may participate in a
meeting of the Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting
18
can hear each other; participation in a meeting pursuant to any such
communications system shall constitute presence in person at such meeting
except as otherwise provided by the Investment Company Act.
(iv) The Directors may, but shall not be required to, elect a
Chairman of the Board of Directors, who shall not, in his or her capacity
as such, be an officer of the Company and who shall serve at the pleasure
of the Board of Directors. Any Chairman of the Board of Directors elected
by the Directors need not be an Independent Director, unless otherwise
required by applicable law.
(e) The Directors shall elect a Chief Executive Officer, a Secretary, a
Chief Financial Officer and any other authorized Persons the Directors consider
appropriate, each of whom shall serve at the pleasure of the Board of Directors
or until their successors are elected. The Directors may elect or appoint or may
authorize the Chairman, if any, or Chief Executive Officer to appoint such other
officers or agents or other authorized Persons with such other titles and powers
as the Board of Directors may deem to be advisable. Any Chairman shall, and the
Chief Executive Officer, Secretary and Chief Financial Officer may, but need
not, be a Director.
(f) The Directors and officers shall owe to the Company and the holders
of Shares the same fiduciary duties as owed by directors and officers of
corporations to such corporations and their stockholders under the general
corporation law of the State of Delaware. Directors elected by the holders of
Preferred Shares shall have no special duties to the holders of Preferred
Shares. The Directors shall have exclusive and absolute control over the Assets
and over the business of the Company to the same extent as if the Directors were
the sole owners of the property and business in their own right, but with such
powers of delegation as may be permitted by this Agreement. The Directors shall
have power to engage in any activity not prohibited by Delaware law. The
enumeration of any specific power herein shall not be construed as limiting the
aforesaid power. The Directors may perform such acts as in their sole discretion
are proper for conducting the business of the Company. The powers of the
Directors may be exercised without order of or resort to any court. No Director
shall be obligated to give any bond or other security for the performance of any
of his duties or powers hereunder.
(g) The Board of Directors may adopt and from time to time amend or
repeal By-Laws ("By-Laws") for the conduct of the business of the Company. Such
By-Laws shall be binding on the Company and the Members unless inconsistent with
the provisions of this Agreement. The Members shall not have authority to adopt,
amend or repeal By-Laws.
(h) Any determination as to what is in the interests of the Company
made by the Directors in good faith shall be conclusive. In construing the
provisions of this Agreement, the presumption shall be in favor of a grant of
power to the Directors.
9.3 Expenses of the Company
(a) The Company shall have power to incur and pay out of the Assets or
income of the Company any expenses necessary or appropriate to carry out any of
the purposes of this Agreement, and the business of the Company. The Directors
may pay themselves such
19
compensation as they in good faith may deem reasonable and may be reimbursed for
expenses reasonably incurred by themselves on behalf of the Company.
(b) The Company shall pay all, and shall reimburse the Investment
Manager, the Co-Manager and each of their respective Affiliates for, any costs
and expenses that, in the good faith judgment of the Board of Directors, are
incurred in the formation, financing or operation of the Company, including,
without limitation, the Advisory Fees and other costs and expenses specified
herein or in the Advisory Agreement or the Co-Advisory Agreement to be paid by
the Company; fees and expenses of offering Shares or debt instruments and
enhancing or assuring the credit quality thereof; fees and expenses relating to
short-term investments of cash and investments in Portfolio Companies including
the structuring, negotiation, acquisition,, syndication, holding, restructuring,
recapitalization and disposition thereof or relating to proposed portfolio
investments which are not consummated; reasonable premiums for insurance
protecting the Company, the Investment Manager, the Co-Manager, any of their
respective Affiliates and any of their respective employees and agents; legal,
compliance, administrative, custodial and accounting expenses; auditing
expenses; appraisal expenses; expenses relating to organizing companies through
or in which investments in Portfolio Companies will be made; expenses incurred
in maintaining the places of business of the Company; costs and expenses of
preparing and maintaining the books and records of the Company and entities
through which it invests; costs and expenses that are classified as
extraordinary expenses under generally accepted accounting principles; taxes or
other governmental charges payable by the Company; costs and expenses incurred
in connection with any actual or threatened litigation, and any judgments or
settlements paid in connection with litigation, involving the Company, a
Portfolio Company or a Person entitled to indemnification from the Company;
expenses (including legal fees and expenses) incurred in connection with the
bankruptcy or reorganization of any Portfolio Company; costs of reporting to the
Members, creditors and regulatory authorities; costs of responding to regulatory
inquiries; costs of Member meetings and the solicitation of Member consents;
costs incurred in valuing assets; costs of winding up and liquidating the
Company; expenses incurred in connection with a Member that defaults in respect
of a Capital Contribution or any payment due to the Company; and interest,
distributions and fees under the Credit Agreement, other indebtedness incurred
by the Company and the Shares.
(c) The Company shall pay, and shall reimburse the Investment Manager,
the Co-Manager and each of their Affiliates for, all legal, tax, accounting and
other expenses (including organizational expenses) incurred in connection with
the Credit Agreement, the Preferred Shares and the formation of the Company and
related entities, and all fees payable to the Placement Agents in connection
with subscriptions for the Shares and to any other agents, lenders, arrangers or
other Persons in connection with the Credit Agreement and the placement and sale
of the Preferred Shares.
(d) The Company shall pay, and shall reimburse the Co-Manager for, any
reasonable transportation and other travel costs and expenses incurred by the
Co-Manager in connection with making any representative on any investment
committee available for meetings with the other members of such investment
committee.
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9.4 Members' Consent
To the fullest extent permitted by law, each Member hereby consents
to the exercise by the Board of Directors and the Investment Manager of the
powers conferred on them by this Agreement.
9.5 Exculpation
No Member shall be subject in such capacity to any personal
liability whatsoever to any Person in connection with the Assets or the acts,
obligations or affairs of the Company. Members shall have the same limitation of
personal liability as is extended to stockholders of a private corporation for
profit incorporated under the general corporation law of the State of Delaware.
Except as otherwise required by law, the Directors, the Investment Manager, the
Co-Manager, and their respective Affiliated Persons, or any officer, director,
member, manager, employee, stockholder, assign, representative or agent
(including the Placement Agents) of any such Person (each an "Indemnified
Person", and collectively, the "Indemnified Persons") shall not be liable,
responsible or accountable in damages or otherwise to the Company, any Member or
any other Person for any loss, liability, damage, settlement cost, or other
expense (including reasonable attorneys' fees) incurred by reason of any act or
omission or any alleged act or omission performed or omitted by such Indemnified
Person (other than solely in such Indemnified Person's capacity as a Member, if
applicable) in connection with the establishment, management or operations of
the Company or the management of the Assets (including in connection with
serving on any creditors' committee or board of directors for any Portfolio
Company ), except that an Indemnified Person shall be liable to the Company or
any Member, as the case may be, if such act or failure to act arises out of the
bad faith, willful misfeasance, gross negligence or reckless disregard of such
Person's duty to the Company or such Member, as the case may be (such conduct,
"Disabling Conduct"). Subject to the foregoing, all such Persons shall look
solely to the Assets (including, without limitation, the Unfunded Commitments)
for satisfaction of claims of any nature arising in connection with the affairs
of the Company. If any Indemnified Person is made a party to any suit or
proceeding to enforce any such liability, subject to the foregoing exception,
such Indemnified Person shall not, on account thereof, be held to any personal
liability.
9.6 Indemnification; No Duty of Investigation; Reliance on Experts
(a) To the fullest extent permitted by applicable law, each of the
Indemnified Persons shall be held harmless and indemnified by the Company (out
of the Assets (including, without limitation, the Unfunded Commitments) and not
out of the separate assets of any Member) against any liabilities and expenses,
including amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and reasonable counsel fees reasonably incurred by such
Indemnified Person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which such Indemnified Person may be or
may have been involved as a party or otherwise (other than as authorized by the
Directors, as the plaintiff or complainant) or with which such Indemnified
Person may be or may have been threatened, while acting in such Person's
capacity as an Indemnified Person, except with respect to any matter as to which
such Indemnified Person shall not have acted in good faith in the reasonable
belief that such Person's
21
action was in the best interest of the Company or, in the case of any criminal
proceeding, as to which such Indemnified Person shall have had reasonable cause
to believe that the conduct was unlawful, provided, however, that an Indemnified
Person shall only be indemnified hereunder if (i) such Indemnified Person's
activities do not constitute Disabling Conduct and (ii) there has been a
determination (a) by a final decision on the merits by a court or other body of
competent jurisdiction before whom the issue of entitlement to indemnification
was brought that such Indemnified Person is entitled to indemnification or, (b)
in the absence of such a decision, by (1) a majority vote of a quorum of those
Directors who are neither "interested persons" of the Company (as defined in
Section 2(a)(19) of the Investment Company Act) nor parties to the proceeding,
that the Indemnified Person is entitled to indemnification (the "Disinterested
Non-Party Directors"), or (2) if such quorum is not obtainable or even if
obtainable, if such majority so directs, independent legal counsel in a written
opinion that concludes that the Indemnified Person should be entitled to
indemnification. Notwithstanding the foregoing, with respect to any action, suit
or other proceeding voluntarily prosecuted by any Indemnified Person as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such Indemnified Person was authorized by a
majority of the Directors. All determinations to make advance payments in
connection with the expense of defending any proceeding shall be authorized and
made in accordance with the immediately succeeding paragraph (b) below.
(b) The Company shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Company receives a written affirmation by the
Indemnified Person of the Indemnified Person's good faith belief that the
standards of conduct necessary for indemnification have been met and a written
undertaking to reimburse the Company unless it is subsequently determined that
he is entitled to such indemnification and if a majority of the Directors
determine that the applicable standards of conduct necessary for indemnification
appear to have been met. In addition, at least one of the following conditions
must be met: (1) the Indemnified Person shall provide adequate security for his
undertaking, (2) the Company shall be insured against losses arising by reason
of any lawful advances, or (3) a majority of a quorum of the Disinterested
Non-Party Directors, or if a majority vote of such quorum so direct, independent
legal counsel in a written opinion, shall conclude, based on a review of readily
available facts (as opposed to a full trial-type inquiry), that there is
substantial reason to believe that the Indemnified Person ultimately will be
found entitled to indemnification. (c) The rights accruing to any Indemnified
Person under these provisions shall not exclude any other right to which he may
be lawfully entitled.
(d) Notwithstanding the foregoing, subject to any limitations provided
by the Investment Company Act and this Agreement, the Company shall have the
power and authority to indemnify Persons providing services to the Company to
the full extent provided by law as if the Company were a corporation organized
under the Delaware General Corporation Law provided that such indemnification
has been approved by a majority of the Directors or, with respect to agreements
to which the Investment Manager is not a party, by the Investment Manager.
22
(e) No purchaser, lender, transfer agent or other person dealing with
the Directors or with any officer, employee or agent of the Company shall be
bound to make any inquiry concerning the validity of any transaction purporting
to be made by the Directors or by said officer, employee or agent or be liable
for the application of money or property paid, loaned, or delivered to or on the
order of the Directors or of said officer, employee or agent. Every obligation,
contract, undertaking, instrument, certificate, Share and other security of the
Company, and every other act or thing whatsoever executed in connection with the
Company shall be conclusively taken to have been executed or done by the
executors thereof only in their capacity as Directors under this Agreement or in
their capacity as officers, employees or agents of the Company. The Company may
maintain insurance for the protection of the Assets, its Members, Directors,
officers, employees or agents in such amounts as the Directors shall deem
adequate to cover possible liability, and such other insurance as the Directors
in their sole judgment shall deem advisable or is required by the Investment
Company Act.
(f) Each Indemnified Person shall, in the performance of its duties, be
fully and completely justified and protected with regard to any act or any
failure to act resulting from reliance in good faith upon the books of account
or other records of the Company, upon an opinion of counsel, or upon reports
made to the Company by any of the Company's officers or employees or by any
advisor, administrator, manager, distributor, selected dealer, accountant,
appraiser or other expert or consultant selected with reasonable care by the
Directors, officers or employees of the Company, regardless of whether such
counsel or other person may also be a Director.
9.7 Director Limited Liability
Except as otherwise provided by law, the Directors shall not be
obligated personally for any debt, obligation or liability of the Company solely
by reason of being the manager of the Company, and the debt, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company.
9.8 Certain Other Activities
The Investment Manager, the Co-Manager and their respective
Affiliated Persons, employees and associates (collectively, the "Manager
Affiliates") may manage funds and accounts other than the Assets ("Other
Accounts") that invest in assets eligible for purchase by the Company. Subject
to the requirements of the Investment Company Act and the Advisers Act, the
Manager Affiliates are in no way prohibited from spending, and may spend,
substantial business time in connection with other businesses or activities,
including, but not limited to, managing Other Accounts, managing investments,
advising or managing entities whose investment objectives are the same as or
overlap with those of the Company, participating in actual or potential
investments of the Company or any Member, providing consulting, merger and
acquisition, structuring or financial advisory services, including with respect
to actual, contemplated or potential investments of the Company, or acting as a
director, officer, manager, member or creditors' committee member of, or adviser
to, or participant in, any corporation, company, limited liability company,
trust or other Person. Subject to the requirements of the Investment Company Act
and the Advisers Act, the Manager Affiliates are in no way prohibited
23
from receiving, and may receive, fees or other compensation from third parties
for any of these activities, which fees will be for their own account and not
for the account of the Company. Such fees may relate to actual, contemplated or
potential investments of the Company and may be payable by entities in which the
Company directly or indirectly has invested or contemplates investing. Neither
the Company nor any Member shall, by virtue of this Agreement, have any right,
title or interest in or to the businesses or activities permitted by this
Section 9.8 or in or to any fees or consideration derived therefrom. Allocation
of investments or opportunities among the Company and Other Accounts will be
made as described in the Offering Memorandum or as otherwise approved by the
Board of Directors in accordance with the Investment Company Act, the Advisers
Act and any exemptive order obtained from the U.S. Securities and Exchange
Commission.
SECTION 10.
MEMBERS
10.1 Identity, Contributions and Common Share Commitments
The names and addresses of the Members, the Shares owned by each
Member and the Capital Contributions, Common Share Commitments and Unfunded
Commitments of each will be set forth in the Company's records.
10.2 No Management Power or Liability
Subject to the requirements of the Investment Company Act, except
as otherwise provided herein, the Members as such shall have no right or power
to, and shall not, take part in the management of or transact any business for
the Company, including but not limited to, any acts or decisions relating to
investment activities of the Company, and shall have no power to sign for or
bind the Company. Except as otherwise required by law, no Member, in its
capacity as such, shall be personally liable for any debt, loss, obligation or
liability of the Company in excess of its Unfunded Commitment (if applicable).
Except to the extent expressly provided in the preceding sentence, the Company
shall indemnify and hold harmless each Member (in its capacity as such) in the
event such Member becomes liable for any debt, loss, obligation or liability of
the Company unless such Member has engaged in fraud, willful misconduct, gross
negligence or criminal conduct constituting a felony with respect to such debt,
loss, obligation or liability.
10.3 Amendments
(a) If a vote of the holders of Shares is required by applicable law or
this Agreement to amend this Agreement, or if the Directors determine to submit
an amendment to a vote of the holders of Shares, then, other than with respect
to Sections of this Agreement where a different affirmative vote is specifically
required, this Agreement may be amended, after a majority of the Directors then
in office have approved a resolution therefor, by the affirmative vote set forth
in Section 10.10. Section 10.10 may only be amended, after a majority of
Directors then in office have approved a resolution therefor, by the affirmative
vote of the holders of not less than 75% of the affected Shares then
outstanding. If any Enhanced Preferred
24
Shares are outstanding, Section 16.7 may only be amended, after a majority of
Directors then in office have approved a resolution therefor, by the affirmative
vote of the holders of not less than 100% of the Enhanced Preferred Shares then
outstanding. Notwithstanding the foregoing, without the unanimous approval of
all of the Members affected thereby, no such amendment may:
(i) require any Common Member to make Capital Contributions in
excess of its Common Share Commitment, require any Member that is not a
Common Member to make additional Capital Contributions in excess of its
contractual commitment or otherwise increase the liability of any Member
hereunder; or
(ii) adversely affect such Members' rights to distributions; or
(iii) modify this Section 10.3(a).
(b) Subject to the requirements of the Investment Company Act and other
applicable law, notwithstanding the foregoing provisions of this Section 10.3,
the Board of Directors may amend this Agreement, without the consent of any
Member, (i) to change the name of the Company or any class or series of Shares,
(ii) to make any change that does not adversely affect the relative rights or
preferences of any class or series of Shares in relation to any Member, (iii) to
conform this Agreement to the requirements of the Investment Company Act or any
other applicable law; (iv) in connection with qualifying the Company to permit
limited liability under the laws of any state; (v) to prevent any material and
adverse effect to any Member or the Company arising from the application of
legal restrictions to any Member, the Investment Manager, the Co-Manager or the
Company, subject to the requirement that the Members not be materially and
adversely affected; (vi) to make any change that is necessary or desirable to
cure any ambiguity or inconsistency, subject to the requirement that the Members
not be materially and adversely affected; (vii) to make any other changes
similar to the foregoing, including in connection with the Credit Agreement,
subject to the requirement that the Members not be materially and adversely
affected; or (viii) to make such conforming changes as may be necessary to
reflect the termination of the Portfolio Partnership and the assumption by the
Company of all of the assets and obligations of the Portfolio Partnership to the
extent not prohibited by applicable law, subject to the requirement that the
Members not be materially and adversely affected thereby; provided that the
Board of Directors shall not be liable for failing to do so. Prior to entering
into any amendment pursuant to this Section 10.3(b), the Board of Directors
shall notify the Members in writing of the material terms of such amendment. The
Board of Directors may reflect in its records changes made in the composition of
the Members and their respective Capital Contributions and Shares in accordance
with the provisions of this Agreement without the consent of the Members.
(c) After any amendment to this Agreement becomes effective, the
Company shall send to the Members a copy of such amendment.
(d) Nothing contained in this Agreement shall permit the amendment of
this Agreement to impair the exemption from personal liability of the Members,
Directors, officers, employees and agents of the Company and their respective
Affiliates, to permit assessments upon Members in excess of their Unfunded
Commitments or to permit the Company to be
25
converted at any time from a "closed-end investment company" to an "open-end
investment company" as those terms are defined by the Investment Company Act or
a company obligated to repurchase shares under Rule 23c-3 of the Investment
Company Act.
(e) An amendment duly adopted by the requisite vote of the Board of
Directors and, if required, Members as aforesaid, shall become effective at the
time of such adoption or at such other time as may be designated by the Board of
Directors or Members, as the case may be. A certification signed by a majority
of the Directors or the Secretary setting forth an amendment and reciting that
it was duly adopted by the Directors and, if required, Members as aforesaid, or
a copy of the Agreement, as amended, and executed by a majority of the Directors
or the Secretary, shall be conclusive evidence of such amendment when lodged
among the records of the Company or at such other time designated by the
Directors.
(f) Notwithstanding any other provision hereof, until such time as
Shares are issued and outstanding, this Agreement may be terminated or amended
in any respect by the affirmative vote of a majority of the Directors or by an
instrument signed by a majority of the Directors then in office.
(g) Notwithstanding anything to the contrary contained herein, no
holder of Shares of any class or series, other than to the extent expressly
determined by the Directors with respect to Shares qualifying as preferred stock
pursuant to Section 18(a) of the Investment Company Act, shall have any right to
require the Company or any person controlled by the Company to purchase any of
such holder's Shares.
10.4 Merger, Consolidation, Liquidation
Subject to the provisions of the Investment Company Act and other
applicable law, the Company may merge or consolidate with any other entity, or
sell, lease or exchange all or substantially all of the Assets upon approval by
two-thirds of the Directors then in office and the affirmative vote of not less
than two-thirds of the outstanding Shares. Notwithstanding the foregoing, the
Portfolio Partnership shall automatically be merged into the Company and
terminate its existence at such times as, pursuant to receipt of no-action or
other appropriate relief from the Securities and Exchange Commission or its
staff, the board of directors is able to authorize issuance of the Series S
Preferred Shares to the general partner of the Portfolio Partnership. Each
Member, upon becoming a Member, consents to such merger, including the exchange
by each holder of preferred limited partner interests of the Portfolio
Partnership for an equivalent amount of Preferred Shares having substantially
similar terms and the exchange of the general partner interest of the general
partner of the Portfolio Partnership for the share or shares of Series S
Preferred Shares, to the extent any consent of Members would be required
therefor. Such merger shall occur on the basis of the net asset value of the
Common Shares, the liquidation preference of the Preferred Shares and the amount
of indebtedness outstanding under the Credit Agreement and in accordance with
the requirements of Rule 17a-8 under the Investment Company Act. No Member shall
have any rights of redemption or appraisal in connection with any such merger.
26
10.5 List of Members
A list of the names and addresses of all Members (to the extent
known to the Company) shall be made available to any Member or its
representative for inspection and, at the Member's cost, copying upon written
request and at reasonable times to the extent required by the Investment Company
Act with respect to trusts for any purpose.
10.6 Limitations
No Member shall have the right or power to (i) bring an action for
partition against the Company; (ii) cause the termination or dissolution of the
Company, except as set forth in this Agreement; or (iii) demand property other
than cash with respect to any distribution and then only in accordance with the
terms of this Agreement. For the avoidance of doubt, Members shall not have the
power provided for in Section 18-801(a)(3) of the Delaware Act, and the Company
may only be dissolved pursuant to the terms of this Agreement. Except to the
extent required for a Delaware business corporation, the Members shall have no
power to vote as to whether or not a court action, legal proceeding or claim
should or should not be brought or maintained derivatively or as a class action
on behalf of the Company or the Members.
10.7 Meetings.
(a) The Company may, but shall not be required to, hold annual meetings
of the holders of any class or series of Shares. An annual or special meeting of
Members may be called at any time only by the Directors or by Members in
accordance with the requirements of the Investment Company Act applicable to
trusts; provided, however, that a meeting of the outstanding voting securities
of the Company may also be called at the written request of the holders of not
less than 10% of the outstanding voting securities of the Company for the
purpose of adding an additional director and if at such meeting (which shall be
held within 30 days after such written request is received by the Company) a
majority of the voting securities entitled to vote thereat vote in favor of such
proposition and one or more qualified persons has been nominated for such
vacancy, the nominee for whom a plurality of the votes are cast shall be elected
to fill such vacancy. Any meeting of Members shall be held within or without the
State of Delaware on such day and at such time as the Directors shall designate.
(b) Notice of all meetings of Members, stating the time, place and
purposes of the meeting, shall be given by the Directors by mail to each Member
of record entitled to vote thereat at its registered address, mailed at least 10
days before the meeting or otherwise in compliance with applicable law. Except
with respect to an annual meeting, at which any business required by the
Investment Company Act may be conducted, only the business stated in the notice
of the meeting shall be considered at such meeting. Any adjourned meeting may be
held as adjourned one or more times without further notice not later than 130
days after the record date. For the purposes of determining the Members who are
entitled to notice of and to vote at any meeting the Directors may, without
closing the transfer books, fix a date not more than 100 days prior to the date
of such meeting of Members as a record date for the determination of the Persons
to be treated as Members of record for such purposes.
27
10.8 Action Without a Meeting
Any action that may be taken at a meeting of the Members may be
taken without a meeting if a consent in writing setting forth the action to be
taken is signed by Members owning not less than the minimum percentage of the
Shares of the Members that would be necessary to authorize or take such action
at a meeting at which all the Members were present and voted, and notice of the
action taken is provided to each Member. Any such written consent must be filed
with the records of the meetings of the Members.
10.9 Procedures
A Member shall be entitled to cast votes: (i) at a meeting, in
person, by written proxy or by a signed writing directing the manner in which
its vote is to be cast, which writing must be received by the Company at or
prior to the commencement of the meeting, or (ii) without a meeting, by a signed
writing directing the manner in which its vote is to be cast, which writing must
be received by the Company at or prior to the time and date on which the votes
are to be counted. Except as otherwise herein specifically provided, all
procedural matters relating to the holding of meetings of Members or taking
action by written consent, whether noticed or solicited by the Company or
others, including, without limitation, matters relating to the date for the
meeting or the counting of votes by written consent, the time period during
which written consents may be solicited, minimum or maximum notice periods,
record dates, proxy requirements and rules relating to the conduct of meetings
or the tabulation of votes, shall be as reasonably established by the Directors.
To the extent not otherwise provided by the Board of Directors pursuant to
Section 10.10 or otherwise, the laws of the State of Delaware pertaining to the
validity and use of proxies regarding the shares of business corporations shall
govern the validity and use of proxies given by Members.
10.10 Voting
(a) Members shall have no power to vote on any matter except matters on
which a vote of Shares is required by or pursuant to the Investment Company Act,
a Statement of Preferences, this Agreement, the By-Laws or any resolution of the
Directors. Any matter required to be submitted for approval of any of the Shares
and affecting one or more classes or series shall require approval by the
required vote of Shares of the affected class or classes and series voting
together as a single class and, if such matter affects one or more classes or
series thereof differently from one or more other classes or series thereof or
from one or more series of the same class, approval by the required vote of
Shares of such other class or classes or series or series voting as a separate
class shall be required in order to be approved with respect to such other class
or classes or series or series; provided, however, that except to the extent
required by the Investment Company Act and any Statement of Preferences, there
shall be no separate class votes on the election or removal of Directors or the
selection of auditors for the Company. Members of a particular class or series
thereof shall not be entitled to vote on any matter that affects the rights or
interests of only one or more other classes or series of such other class or
classes or only one or more other series of the same class. There shall be no
cumulative voting in the election or removal of Directors. The Company will
submit to a vote by its Members any matter submitted by the Portfolio
Partnership to a vote of its partners and will vote all of its
28
interests in the Portfolio Partnership on any such matter in the same
proportions as the votes cast by the Members.
(b) The holders of one-third of the outstanding Shares of the Company
on the record date present in person or by proxy shall constitute a quorum at
any meeting of the holders for purposes of conducting business on which a vote
of all Members of the Company is being taken. The holders of one-third of the
outstanding Shares of a class or classes on the record date present in person or
by proxy shall constitute a quorum at any meeting of the holders of such class
or classes for purposes of conducting business on which a vote of holders of
such class or classes is being taken. The holders of one-third of the
outstanding Shares of a series or series on the record date present in person or
by proxy shall constitute a quorum at any meeting of the holders of such series
or series for purposes of conducting business on which a vote of holders of such
series or series is being taken. Shares underlying a proxy as to which a broker
or other intermediary states its absence of authority to vote with respect to
one or more matters shall be treated as present for purposes of establishing a
quorum for taking action on any such matter only to the extent so determined by
the Directors at or prior to the meeting of holders of Shares at which such
matter is to be considered and shall not be treated as present for purposes of
voting or any other purpose except as determined by the Directors.
(c) Subject to any provision of the Investment Company Act, any
Statement of Preferences or this Agreement specifying or requiring a greater or
lesser vote requirement for the transaction of any matter of business at any
meeting of Members or, in the absence of any such provision of the Investment
Company Act, any Statement of Preferences or this Agreement, subject to any
provision of the By-Laws or resolution of the Directors specifying or requiring
a greater or lesser vote requirement, (i) the affirmative vote of a plurality
(or, if provided by the By-Laws, a majority) of the Shares present in person or
represented by proxy and entitled to vote for the election of any Director or
Directors shall be the act of such Members with respect to the election of such
Director or Directors, (ii) the affirmative vote of a majority of the Shares
present in person or represented by proxy and entitled to vote on any other
matter who vote on such matter shall be the act of the Members with respect to
such matter, and (iii) where a separate vote of one or more classes or series is
required on any matter, the affirmative vote of a majority of the Shares of such
class or classes or series or series present in person or represented by proxy
and entitled to vote on such matter who vote on such matter shall be the act of
the Members of such class or classes or series or series with respect to such
matter.
(d) At any meeting of Members, any holder of Shares entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Secretary, or with such other
officer or agent of the Company as the Secretary may direct, for verification
prior to the time at which such vote shall be taken. Pursuant to a resolution of
a majority of the Directors, proxies may be solicited in the name of one or more
Directors or one or more of the officers or employees of the Company. Only
Members of record shall be entitled to vote. Each full Share shall be entitled
to one vote and each fractional Share shall be entitled to a vote equal to its
fraction of a full Share. When any Share is held jointly by several persons, any
one of them may vote at any meeting in person or by proxy in respect of such
Share, but if more than one of them shall be present at such meeting in person
or by proxy, and such joint owners or their proxies so present disagree as to
any vote to be cast, such vote shall not be received in respect of such Share. A
proxy purporting to be given
29
by or on behalf of a Shareholder of record on the record date for a meeting
shall be deemed valid unless challenged at or prior to its exercise, and the
burden of proving invalidity shall rest on the challenger. If the holder of any
such Share is a minor or a person of unsound mind, and subject to guardianship
or to the legal control of any other person as regards the charge or management
of such Share, he may vote by his guardian or such other person appointed or
having such control, and such vote may be given in person or by proxy. The
Directors shall have the authority to make and modify from time to time
regulations regarding the validity of proxies. In addition to signed proxies,
such regulations may authorize facsimile, telephonic, Internet and other methods
of appointing a proxy that are subject to such supervision by or under the
direction of the Directors as the Directors shall determine.
10.11 Key Man Approvals
If any two of Xxxxxxx X. Xxxxxxxxxx, Xxxx Xxxxxxxxxx and Xxxxxx
Xxxxxxxxx die, become incapacitated or depart from the Investment Manager or
cease to be actively involved in the management or operations of the Investment
Manager or the Company, (i) if such event occurs during the Subscription Period,
the Investment Manager will promptly notify the Co-Manager, the credit agent for
the Company's senior credit facility, the credit enhancer, if any, and the
Members of such event and the Members may determine at any time during the six
months following such notice, by vote of 75% or more of the Common Shares, to
terminate the Subscription Period or, voting together with the Preferred Shares
as a single class, to liquidate the Company, and (ii) if such event occurs after
the Subscription Period, the Investment Manager will promptly notify the
Co-Manager, the credit agent for the Company's senior credit facility, the
credit enhancer, if any, and the Members of such event, will increase the number
of voting Co-Manager representatives on the investment committee established by
the Investment Manager (the "Investment Committee") to a number that is
equivalent at all times to the number of voting Investment Manager
representatives on such committee and will promptly replace one or both of such
individuals with another individual with skills reasonably comparable to those
which such individual or individuals employed on behalf of the Investment
Manager for the benefit of the Company (a person having such skills being a
"Replacement Principal"), as determined by the approval of a majority of the
Common Shares and Preferred Shares voting as a single class within sixty days
after the date notice of such replacement is given. Upon the approval of a
Replacement Principal, the number of Co-Manager representatives on the
Investment Committee shall be reduced to one and such Replacement Principal's
name shall be substituted for purposes of the first sentence of this Section
10.11 for the name of the individual for whom he or she is a Replacement
Principal.
SECTION 11.
ADMISSION OF ADDITIONAL MEMBERS;
ASSIGNMENTS OR TRANSFERS OF SHARES
11.1 Admission of Additional Members
No additional Members will be admitted after the Initial Drawdown
Date, except as provided in Sections 7.1 and 11.2.
30
11.2 Assignments or Transfers of Shares
(a) In no event shall all or any part of a Member's Preferred Shares be
Transferred, and any such purported Transfer shall be void and shall not be
recognized by the Company, unless all of the conditions set forth in the
applicable Statement of Preferences with respect thereto have been satisfied. In
no event shall all or any part of a Member's Common Shares or Common Share
Commitments be Transferred, and any such purported Transfer shall be void and
shall not be recognized by the Company or the Members, unless all of the
following conditions are satisfied:
(i) The Transferor, if requested by the Company in its sole
discretion, has delivered to the Company an opinion of counsel reasonably
acceptable to the Company that such Transfer (A) would not violate the
Securities Act or any state blue sky laws (including any investor
suitability standards) and, (B) would not result in the breach of any
agreement to which the Company is a party or by which it or any of the
Assets is bound;
(ii) The Transferor has demonstrated to the reasonable
satisfaction of the Company that the Transferee is both an "accredited
investor" as defined in Rule 501(a) under the Securities Act and a
"qualified client" within the meaning of Rule 205-3 of the Advisers Act;
(iii) The Company has received a notice of Transfer signed by
both the Transferor and Transferee, such notice to be substantially in the
form of Appendix C attached hereto (or such other document specified in the
applicable Statement of Preferences); and
(iv) the Company consents in writing to such Transfer (which
consent may be withheld in the Company's reasonable discretion).
(b) Provided the foregoing conditions are met, the Transferee may
become a Substituted Member if and only if, with respect to Preferred Shares,
any requirements set forth in the relevant Statement of Preferences are
satisfied and, with respect to Common Shares, each of the following conditions
is satisfied:
(i) The Company has consented in writing to the substitution
(which consent may be withheld in the Company's reasonable discretion with
respect to Transfers of Common Share Commitments and may be withheld in the
Company's reasonable discretion with respect to Transfers of Common Shares
only if the transfer conditions described above have not been met or have
not been waived);
(ii) The Transferor and Transferee execute, acknowledge and
deliver such instruments as the Company deems necessary, appropriate or
desirable to effect such substitution, including the written acceptance and
adoption by the Transferee of this Agreement and the execution,
acknowledgment and delivery to the Company of a power of attorney, the
substance of which shall be consistent with Section 13; and
31
(iii) The Transferee agrees to bear all of the Company's expenses
and costs incurred in connection with the Transfer and substitution,
including legal fees and filing fees.
Upon the satisfaction of the conditions set forth in this Section
11.2(b), the Company shall record on the books and records of the Company the
Substituted Member as a Member of the Company.
(c) A Transferee, legal representative or successor in interest of a
Member shall be subject to all of the restrictions upon a Member provided in
this Agreement.
(d) A Transferee of Shares or Common Share Commitments who desires to
make a further Transfer shall be subject to all of the provisions of this
Section 11 to the same extent and in the same manner as a Member making the
initial Transfer.
(e) Notwithstanding anything to the contrary in this Agreement, the
Company may elect (in the Company's sole discretion) to treat a Transferee who
has not become a Substituted Member as a Member in the place of the Transferor
should it determine such treatment to be in the best interests of the Company.
(f) Upon the Incapacity of an individual Member, such Member's personal
representative or other successor in interest shall have such rights as the
Incapacitated Member possessed to constitute a successor as a Transferee of its
Shares or Common Share Commitment and to join with such Transferee in making
application to substitute such Transferee as a Member, all as provided in
Sections 11.2(a) and (b).
(g) Upon the Incapacity of a Member other than an individual, the
authorized representative of such entity shall have such rights as such entity
possessed to constitute a successor as a Transferee of its Shares or Common
Share Commitment and to join with such Transferee in making application to
substitute such Transferee as a Member, all as provided in Sections 11.2(a) and
(b).
(h) A Person who acquires Shares or an interest therein but is not
admitted to the Company as a Substituted Member pursuant to Section 11.2(b)
shall (i) in the case of a Person acquiring Common Shares or an interest therein
who does not satisfy Section 11.2(a)(ii), obtain no rights whatsoever in the
Company, such Transfer shall be void as between such Person and the Company and
the Company shall have the absolute right in its sole discretion to Transfer
such Common Shares to any Person who does satisfy Section 11.2(a)(ii) for such
consideration as the Company deems sufficient in the circumstances and to remit
to such Person who acquired such Common Shares in violation of this Agreement
such portion of such consideration not in excess of 75% thereof as the Company
receives in complete satisfaction of such Person's interest in the Company and
(ii) in the case of a Person acquiring Preferred Shares or an interest therein,
be entitled only to the allocations and distributions with respect to such
Shares in accordance with this Agreement or relevant Statement of Preferences
but shall have no right to any information or accounting of the affairs of the
Company and shall not have any voting or other rights of a Member under this
Agreement or relevant Statement of Preferences; provided, however, that such
Person described in this clause (ii) shall be entitled to receive such
32
information and accountings as shall be consented to by the Company, which
consent shall not be unreasonably withheld. A Substituted Member who qualifies
pursuant to the provisions hereof shall succeed to all the rights and be subject
to all the obligations of the Transferor Member in respect of the Shares or
other interest as to which it was substituted.
SECTION 12.
POWER OF ATTORNEY
12.1 Appointment of Investment Manager
Each Member, by becoming a Member, makes, constitutes and appoints
the Investment Manager as its true and lawful attorney-in-fact, in its name,
place and stead, with full power to do any of the following:
(a) Execute on its behalf, file and record this Agreement and all
amendments to this Agreement made and otherwise approved in accordance with
Section 10.3 or otherwise made in accordance with the terms of this Agreement;
(b) Prepare, execute on its behalf, verify, file and record amendments
to this Agreement made in accordance with the terms of this Agreement or to the
books and records of the Company reflecting (i) a change of the name or location
of the principal place of business of the Company, (ii) a change of the name or
address of any Member, (iii) the addition of Members, (iv) the disposal by a
Member of its Shares or Common Share Commitment in any manner, (v) a Person
becoming or ceasing to be a Member of the Company, (vi) the exercise by any
Person of any right or rights hereunder, (vii) the correction of typographical
or similar errors, (viii) any amendments made in accordance with Section 10.3,
and (ix) any amendment and restatement of this Agreement reflecting such
amendments;
(c) Prepare, execute on its behalf and record any amendments to the
Certificate that the Investment Manager may deem advisable or necessary;
(d) Prepare, execute on its behalf, file and record any other
agreements, certificates, instruments and other documents required to continue
the Company, to admit Substituted Members, to liquidate and dissolve the Company
in accordance with Section 16, to comply with applicable law, and to carry out
the purposes of clauses (a) and (b) above, to the extent consistent with this
Agreement; and
(e) Take any further action that the Investment Manager shall consider
advisable in connection with the exercise of the authority granted in this
Section 12.1.
12.2 Nature of Special Power
The power of attorney granted under this Section 12 is a special
power of attorney coupled with an interest, is irrevocable and may be exercised
by the Investment Manager by listing all of the Members executing any agreement,
certificate, instrument or document with a single signature of such
attorney-in-fact acting as attorney-in-fact for all of
33
them. The power of attorney shall survive and not be affected by the Incapacity
of a Member and shall survive and not be affected by the Transfer by a Member of
the whole or a portion of its Shares or Common Share Commitment, as the case may
be, except where the Transfer is of all of the Shares or Common Share Commitment
and the Transferee thereof with the consent of the Company is admitted as a
Substituted Member; provided, however, that this power of attorney shall survive
such Transfer for the sole purpose of enabling any such attorney-in-fact to
effect such substitution. This power of attorney does not supersede any part of
this Agreement, nor is it to be used to deprive any Member of its rights
hereunder. It is intended only to facilitate the execution of documents and the
carrying out of other procedural or ministerial functions.
SECTION 13.
BOOKS, RECORDS AND REPORTS
13.1 Books
(a) The Company shall maintain books and records required by law for
the Company at its principal office, which shall be in the United States, and
each Member shall have the right to inspect, examine and copy such books and
records at reasonable times and upon reasonable notice for the purposes required
by the Investment Company Act relating to trusts or as authorized by the
Directors or their delegate. All such books and records may be in electronic
format, including the register of Members and all capital account and accounting
records. Upon the request of a Member, the Company shall promptly deliver to the
requesting Member, at the expense of the Company, a copy of any information
which the Company is required by law to so provide in paper or electronic
format. Notwithstanding the foregoing inspection rights or any other provision
of this Section 13, the Company shall be entitled to keep confidential from the
Members certain information as and to the extent permitted by Section 18-305(c)
of the Delaware Act and the Investment Company Act.
(b) A register shall be kept at the Company or any transfer agent duly
appointed by or under the direction of the Directors which shall contain the
names and addresses of the Members and the number of Shares held by them
respectively and a record of all transfers thereof. Separate registers shall be
established and maintained for each class and each series of each class. Each
such register shall be conclusive as to who are the holders of the Shares of the
applicable class and series and who shall be entitled to receive dividends or
distributions or otherwise to exercise or enjoy the rights of Members. No Member
shall be entitled to receive payment of any dividend or distribution, nor to
have notice given to him as herein provided, until he has given his address to a
transfer agent or such other officer or agent of the Directors as shall keep the
register for entry thereon. Except as otherwise provided in any Statement of
Preferences, it is not contemplated that certificates will be issued for the
Shares; however, the Company may authorize the issuance of share certificates
and promulgate appropriate fees therefore and rules and regulations as to their
use.
(c) The Company shall have power to employ a transfer agent or transfer
agents, and a registrar or registrars, with respect to the Shares. The transfer
agent or transfer agents may keep the applicable register and record therein,
the original issues and transfers, if any, of the said Shares.
34
(d) Shares shall be transferable on the records of the Company only by
the record holder thereof or by its agent thereto duly authorized in writing,
upon delivery to the Company or a transfer agent of the Company of a duly
executed instrument of transfer, together with such evidence of the genuineness
of each such execution and authorization and of other matters as may reasonably
be required. Upon such delivery the transfer shall be recorded on the applicable
register of the Company. Until such record is made, the Member of record shall
be deemed to be the holder of such Shares for all purposes hereof and neither
the Directors nor any transfer agent or registrar nor any officer, employee or
agent of the Company shall be affected by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the
death, bankruptcy, or incompetence of any Member, or otherwise by operation of
law, shall be recorded on the applicable register of Shares as the holder of
such Shares upon production of the proper evidence thereof to the Directors or a
transfer agent of the Company, but until such record is made, the Member of
record shall be deemed to be the holder of such for all purposes hereof, and
neither the Directors nor any transfer agent or registrar nor any officer or
agent of the Company shall be affected by any notice of such death, bankruptcy
or incompetence, or other operation of law.
13.2 Reports
(a) The Company shall prepare and send to Members to the extent and in
the form required by the Investment Company Act and other applicable law or any
exchange on which Shares are listed a report of operations containing financial
statements of the Company prepared in conformity with generally accepted
accounting principles and applicable law and a schedule setting forth the
investments of the Company. Common Members shall receive quarterly reports of
operations.
(b) Within 60 days after the end of each Fiscal Year, the Company shall
communicate in writing to each Member (i) such information as is necessary to
complete such Member's United States federal and state income tax or information
returns and (ii) annual financial statements audited by an accounting firm of
national reputation.
(c) Further, the Directors may, in their sole and absolute discretion,
cause to be prepared (i) such reports or other information as may be necessary
with respect to any Member's qualification for the benefit of any income tax
treaty or provision of law reducing or eliminating any withholding or other tax
or governmental charge with respect to any Assets and (ii) such other reports
and financial statements of the Company as the Directors deem appropriate for
informing the Members about the operations of the Company.
The Company shall promptly distribute to the Members notice of the
occurrence of any Default or Event of Default (as defined in the Credit
Agreement) under the Credit Agreement.
(d) To the extent that the Company has access thereto and in
recognition of the various Members' obligations to comply with certain
regulatory requirements, the Company will also provide to each Member, with
reasonable promptness, such other data and information
35
concerning the Company or Company activities in response to a request by any
applicable governmental or regulatory agency as from time to time a Member may
reasonably request. If the Company is bound by confidentiality obligations with
respect to any information so requested, then the Company shall not be obligated
to provide such information. A Member shall, at the request of the Company,
enter into a confidentiality agreement relating to such information.
SECTION 14.
VALUATION OF INTERESTS.
The value of the Assets of the Company, the amount of liabilities
of the Company, the Net Asset Value, and the Net Asset Value of each outstanding
Common Share of the Company shall be determined on each Valuation Date in
accordance with generally accepted accounting principles and the Investment
Company Act. The method of determination of Net Asset Value shall be determined
by or under the supervision of the Board of Directors. The making of Net Asset
Value determinations and calculations may be delegated by the Board of
Directors.
SECTION 15.
BANK ACCOUNTS; CUSTODIAN
15.1 Bank Accounts Generally
Subject to the requirements of the Investment Company Act, all
funds received by the Company may be deposited in one or more Custodial Accounts
in the name of the Company at the Custodian. Subject to Section 15.2,
disbursements therefrom may be made by the Company in conformity with the
purposes of this Agreement and the requirements of the Investment Company Act.
The Company may designate from time to time those Persons authorized to execute
checks and other items on the Company bank accounts. The funds of the Company
shall not be commingled with the funds of any other Person.
15.2 Custodian
(a) The Company shall appoint one or more Custodians to hold the Assets
of the Company in one or more separately identified Custodial Accounts or
multiparty arrangements in accordance with the Advisory Agreement, the
Co-Advisory Agreement, the Credit Agreement, any Statement of Preferences, the
Custodial Agreement and the Pledge and Intercreditor Agreement (each as defined
in the Credit Agreement to the extent not defined herein) and in compliance with
the requirements of the Investment Company Act and other applicable law. The
Custodian shall at all times be responsible for the physical custody of the
Assets of the Company and for the collection of interest, dividends and other
income attributable to the Assets of the Company. The Company will direct the
Custodian to accept settlement instructions issued by the Investment Manager and
authorized Persons.
36
(b) Nothing contained in this Agreement shall be construed to authorize
or require the Board of Directors or the Investment Manager to take or receive
physical possession of any Asset of the Company or to take any action in
violation of law, it being understood that the Custodian shall solely be
responsible for the safekeeping of the Assets and the consummation of all such
purchases, sales and deliveries of the Assets in accordance with this Agreement
and the Advisory Agreement, the Co-Advisory Agreement, the Credit Agreement, any
Statement of Preferences, the Custodial Agreement and the Pledge and
Intercreditor Agreement and in compliance with the requirements of the
Investment Company Act and other applicable law.
SECTION 16.
DISSOLUTION AND TERMINATION OF THE COMPANY
16.1 Dissolution Generally
Except as provided in this Agreement, no Member shall have the
right to cause any dissolution of the Company before expiration of its term.
16.2 Continuation of Company
The Company shall not be dissolved or terminated by the Incapacity
of any Member as such, the Transfer by any Member of its Shares or Common Share
Commitment or the admission of a new or substituted Director or Member, and the
existence and business of the Company shall be continued notwithstanding the
occurrence of any such event.
16.3 Events Causing Dissolution
Subject to the restriction on liquidation set forth in Section
16.7, the Company may be dissolved prior to the time set forth in Article 4
after two-thirds of the Directors then in office have approved a resolution
therefor, upon approval by Shares having at least 75% of the votes of all of the
Shares outstanding on the record date for such meeting, voting as a single class
except to the extent required by the Investment Company Act.
16.4 Distribution of Assets on Liquidation
(a) In liquidating the Company, the Company will make distributions in
cash, in kind, or partly in cash and partly in kind as the Investment Manager,
under the supervision of the Board of Directors, may, in its sole discretion,
determine; provided, however, that any distribution made partly in cash and
partly in kind shall be pro rata among the Members in proportion to their
interests to the extent reasonably practicable and if not reasonably
practicable, in such non-pro rata manner as is determined by the Investment
Manager, under the supervision of the Board of Directors, to be fair and
equitable; provided, further, that the Investment Manager will use reasonable
efforts to make all distributions in kind, if any, in the form of freely
tradable securities. The Investment Manager need not distribute all of the
Assets at once, but may make partial distributions and shall not be required to
redeem the Preferred Shares prior to making any liquidating distribution in
respect of the Common Shares so long as the Company
37
has set aside liquid assets in excess of liabilities sufficient to pay the
liquidation preference and all accumulated and unpaid distributions of the
Preferred Shares.
(b) In connection with the liquidation of the Company, the Assets
(after paying or otherwise providing for the claims of creditors of the Company,
the Advisory Fees, claims by the Board of Directors, the Investment Manager, the
Co-Manager or their respective Affiliated Persons for expenses of the Company
paid by any of them, any other liabilities of the Company and reasonable
reserves for any anticipated or contingent liabilities or obligations and all
accumulated and unpaid distributions on Preferred Shares) shall be distributed
to the Members in accordance with Section 8.1; provided, however, that the
$1,000 contribution for the Series S Preferred Share shall be returned to the
holder thereof without interest.
16.5 Liquidation Statement
(a) Upon compliance by the Company with all applicable requirements for
dissolution, the Members shall cease to be such and the Company shall execute,
acknowledge and cause to be filed a Certificate of Cancellation of the Company
or other appropriate documents evidencing its dissolution and winding up.
(b) Notwithstanding anything to the contrary contained herein, if the
Board of Directors has been removed and the Company has been dissolved, any
Member or other Person appointed by the Members may act as liquidating trustee
for the Company during the winding up period, and receive reasonable
compensation for such activity, all as approved by the Members holding Shares
that represent a majority of the outstanding Shares (which in this case shall
exclude any Shares held by the Investment Manager).
16.6 Director's Liability Upon Dissolution or Removal
None of the Directors shall be personally liable for the return of
all or any part of the contributions of the Members to the Company or for any
other distributions to be made by the Company. Any such return or distributions
shall be made solely from the Assets.
16.7 Restriction on Liquidation
Notwithstanding anything to the contrary contained herein, for so
long as any Enhanced Preferred Shares are outstanding, the Company shall not
liquidate prior to [October , 2016], without first redeeming in full (or
setting aside payment therefor) all outstanding shares of Enhanced Preferred
Shares.
38
SECTION 17.
GENERAL PROVISIONS
17.1 Notices and Distributions
Except as otherwise provided herein, any notice, distribution,
offer or other communication which may be given to any Member in connection with
the Company or this Agreement shall be duly given if reduced to writing and:
(a) if to any Member, when personally delivered, or if sent by mail,
postage prepaid, overnight courier or facsimile transmission, when actually
received at the last address furnished by such Member pursuant to Section 2.3
for notice purposes at the time of such mailing, overnight courier or facsimile
transmission; and
(b) if to the Company or the Board of Directors, sent to 0000 00xx
Xxxxxx, Xxxxx 0000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X.
Xxxxxxxxx with a copy to the Investment Manager, 0000 00xx Xxxxxx, Xxxxx 0000,
Xxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx, personally
delivered or if sent by mail, overnight courier or facsimile transmission when
actually received at the address of the Company or the Board of Directors,
respectively, set forth above or at such other address as the Company or the
Board of Directors, respectively, may then have specified pursuant to the terms
of this Agreement.
All distributions to the Members shall be made by wire transfer to
the accounts specified by the Members, which accounts may be changed from time
to time by written notice to the Company.
17.2 Survival of Rights
This Agreement shall be binding upon and, as to permitted or
accepted successors, Transferees and assigns, inure to the benefit of the
Members and the Company and their respective heirs, legatees, legal
representatives, successors, Transferees and permitted assigns, in all cases
whether by the laws of descent and distribution, merger, consolidation, sale of
assets, operation of law, or otherwise.
17.3 Construction
The language in all parts of this Agreement shall be in all cases
construed simply according to its fair meaning and not strictly for or against
any Person.
17.4 Section Headings
The captions of the sections in this Agreement are for convenience
only and shall not be used in construing or interpreting this Agreement.
39
17.5 Agreement in Counterparts
This Agreement and any amendments hereto may be executed and
delivered by facsimile and in multiple counterparts, each of which shall be
deemed an original agreement and all of which shall constitute one and the same
agreement, notwithstanding the fact that all Members are not signatories to the
original or the same counterpart.
17.6 Governing Law
This Agreement has been executed by or on authority of a majority
of the Directors and the rights of all parties and the validity and construction
of every provision hereof shall be subject to and construed according to the
internal laws, and not the laws pertaining to choice or conflict of laws, of the
State of Delaware, and reference shall be specifically made to the general
corporation law of the State of Delaware as to the construction of matters not
specifically covered herein or as to which an ambiguity exists, although such
law shall not be viewed as limiting the powers otherwise granted to the
Directors hereunder and any ambiguity shall be viewed in favor of such powers.
17.7 Additional Documents
Each Member, upon the request of the Company, agrees to perform all
further acts and execute, acknowledge and deliver all further documents which
may be reasonably necessary, appropriate or desirable to carry out the
provisions of this Agreement, including but not limited to, acknowledging before
a Notary Public any signature heretofore or hereafter made by a Member.
17.8 Severability
Should any portion or provision of this Agreement be declared
illegal, invalid or unenforceable in any jurisdiction, then such portion or
provision shall be deemed to be severable from this Agreement to the extent
practicable while preserving the economic intention of the parties and, in any
event, such illegality, invalidity or unenforceability shall not affect the
remainder hereof.
17.9 Pronouns
All pronouns and defined terms and any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the Persons referred to may require.
17.10 Entire Agreement
This Agreement, the Statement of Preferences adopted pursuant
hereto and the Subscription Agreements executed and delivered by the Members (i)
constitute the entire Agreement of the Members with respect to the Company and
(ii) supersede all prior or contemporaneous written or oral agreements,
understandings or negotiations with respect to the Company. The parties hereto
acknowledge that the ability of the Members and of the Company
40
to take certain of the actions contemplated hereby may be limited by the terms
of the Credit Agreement and the Statement of Preferences to the extent provided
therein.
17.11 Arbitration
To the extent permitted by law, any dispute relating to this
Agreement or the Company which cannot be amicably resolved among the parties to
such dispute shall be resolved by binding arbitration conducted in Santa Monica,
California or Los Angeles, California in accordance with the rules of the
American Arbitration Association then prevailing, and the decisions of the
arbitrators shall be final and binding on all the parties. The costs of the
arbitration (other than fees and expenses of counsel, which shall be the
responsibility of the parties retaining such counsel) shall be allocated among
the parties as determined by the arbitrator.
17.12 Waiver of Partition
Each Member hereby irrevocably waives and forfeits any and all
rights that it may have, whether arising under contract or statute or by
operation of law, to maintain an action for partition of the Company or any of
the Assets.
17.13 Non-Petition Covenant
Each Member hereby agrees not to cause the filing of a petition in
bankruptcy against the Company for any reason until at least 367 days (or, if
longer, the preference period then in effect under applicable federal and state
law) after the termination of the Credit Agreement (without any replacement
thereof).
17.14 Filing
This Agreement and any amendment (including any supplement) hereto
shall be filed in such places as may be required or as the Company deem
appropriate. Each amendment shall be accompanied by a certificate signed and
acknowledged by an authorized Person stating that such action was duly taken in
a manner provided herein, and shall, upon insertion in the Company's minute
book, be conclusive evidence of all amendments contained therein. A restated
Agreement, containing the original Agreement as amended by all amendments
theretofore made, may be executed from time to time by an authorized Person and
shall, upon insertion in the Company's minute book, be conclusive evidence of
all amendments contained therein and may thereafter be referred to in lieu of
the original Agreement and the various amendments thereto.
41
IN WITNESS WHEREOF, the Secretary of the Company has hereunto set
his hands as of the date first written above.
SECRETARY:
-----------------------------------
S-1
COMMON MEMBERS:
Those Persons subscribing for Common
Shares and admitted as Members by
the Investment Manager:
By: Xxxxxxxxxx Capital Partners, LLC
By:
--------------------------------
Name:
Title:
PREFERRED MEMBERS
Those Persons subscribing for
Preferred Shares and admitted as
Members by the Investment Manager:
By: Xxxxxxxxxx Capital Partners, LLC
By:
--------------------------------
Name:
Title:
S-2
APPENDIX A
Statement of Preferences of Series S Preferred Share
A-1
APPENDIX B
Statement of Preferences of Series Z Preferred Shares
B-1
APPENDIX C
Form of Notice of Transfer
[Date]
Tennenbaum Opportunities Fund V, LLC
c/o Tennenbaum Capital Partners, LLC
0000 00xx Xx. Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
Tel: (000) 000-0000
Ladies and Gentlemen:
This is to advise you that [_______________] (the "Purchaser") will purchase
(contingent only upon the approval of such purchase by Xxxxxxxxxx Opportunities
Fund V, LLC, a Delaware limited liability company (the "Company")) in a private
resale (the "Purchase") from [___________________] (the "Seller") [insert number
or amount] of [Common Shares (the "Shares") or Seller's Common Share Commitment
(the "Commitment")] issued pursuant to the Operating Agreement of the Company
dated as of [ ] (as amended, modified or supplemented from time to time, the
"Operating Agreement"). Capitalized terms used herein and not defined have the
respective meanings assigned to them in the Operating Agreement, a copy of which
has been provided to the undersigned by the Seller. Seller has also provided to
the Purchaser the Confidential Private Placement Memorandum, dated [ ], relating
to the Common Shares of the Company, together with any supplements thereto (the
"Confidential Private Placement Memorandum"); the Subscription Agreement, dated
as of [________], 2006, by and between the Company and the initial purchaser of
the Shares (the "Subscription Agreement"); and any other written materials
furnished or made available to the Seller by or on behalf of the Company and
relating to the purchase of the Shares (collectively, the "Offering Materials").
The undersigned hereby irrevocably agrees, represents and warrants on behalf of
the Purchaser that:
1. The Purchaser has been provided with and has truthfully and accurately
completed and returned to the Investment Manager a subscription agreement,
which is attached hereto, and the representations and warranties made by
the Purchaser in such subscription agreement, including, without
limitation, the representations and warranties relating to the Purchaser's
status as an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act and as a "qualified client" within the
meaning of Rule 205-3 under the Investment Advisers Act of 1940, accurately
describe the status of the Purchaser. The Purchaser understands that the
Company and the Investment Manager will rely on the representations and
warranties made by the Purchaser in the subscription agreement in
determining the eligibility of the Purchaser to purchase the Shares.
C-1
2. If the Purchaser resells or transfers all or any portion of the Shares, the
Purchaser will obtain from each purchaser or transferee a letter containing
the same representations and agreements as set forth herein and will have
such purchaser or transferee complete a subscription agreement.
3. The Purchaser (i) hereby agrees that this Transfer Certificate may be
attached to the Operating Agreement and (ii) by executing and delivering
this Transfer Certificate, with the consent of the Company, hereby becomes
a Substituted Member under the Operating Agreement and agrees to be bound
by all the terms thereof.
4. The Purchaser hereby constitutes and appoints the Investment Manager its
true and lawful attorney-in-fact and agent with full power of substitution
and resubstitution for the Purchaser and in its name, place and stead, in
any and all capacities, to take any and all actions as are authorized by
the power of attorney contained in the Operating Agreement.
The power of attorney granted hereby shall be deemed an irrevocable special
power of attorney, coupled with an interest, which the Investment Manager
may exercise for the Purchaser by the signature of the Company or by
listing the Purchaser as a Member, and executing any instrument with the
signature of the Company as attorney-in-fact for the Purchaser. This grant
of authority shall survive the assignment by the Purchaser of all or any
portion of its Shares or Common Share Commitment, except where the
assignment is of the Purchaser's entire interest in the Company and the
assignee thereof with the consent of the Board of Directors is admitted as
a Substituted Member; provided, however, that this power of attorney shall
survive the delivery of such assignment for the sole purpose of enabling
the Board of Directors to effect such substitution.
5. The Purchaser agrees to bear all of the Company's expenses and costs
incurred in connection with the Transfer and substitution, including all
legal fees and filing fees.
6. If the Purchaser acquires the obligations of the Transferor under the
Transferor's Common Share Commitment with respect to all or any portion of
such Common Share Commitment, the Purchaser hereby agrees to assume and
timely and faithfully complete all of the Transferor's obligations with
respect to such common Share Commitment.
Very truly yours,
[Name of Purchaser]
Address:
By:
------------------------------------ ------------------------------------
Name:
Title:
------------------------------------
C-2
This Transfer Certificate shall constitute (i) the notice of Transfer required
under subsection 11.2(a)(iii) of the Operating Agreement and (ii) the instrument
of transfer required under subsection 13.1(d) of the Operating Agreement.
[Name of Seller]
Address:
By:
------------------------------------ ------------------------------------
Name:
Title:
------------------------------------
C-3
The undersigned, on behalf of the Company, hereby acknowledges receipt of this
Transfer Certificate and acknowledges and agrees that this Transfer Certificate
shall constitute the notice of Transfer required under subsection 11.2(a)(iii)
of the Operating Agreement and the instrument of transfer required under
subsection 13.1(d) of the Operating Agreement. The undersigned, on behalf of the
Company, hereby consents to the Transfer which is the subject of this notice of
Transfer pursuant to subsections 11.2(a)(iv) and 11.2(b)(i) of the Operating
Agreement and hereby acknowledges and agrees that the Purchaser shall become a
Substituted Member under the Operating Agreement pursuant to subsection 11.2(b)
of the Operating Agreement. The proper authorized Person -of the Company will
record on the books and records of the Company the Purchaser as a Member of the
Company.
By: Xxxxxxxxxx Capital Partners, LLC,
Investment Manager of Tennenbaum
Opportunities Fund V, LLC
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
C-4
Appendix D
Subscription Agreement
D-1
Appendix E
Schedule of Members
E-1
