AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXX XXX FLOATING RATE LIMITED LIABILITY COMPANY
EFFECTIVE AS OF NOVEMBER 3, 1998
TABLE OF CONTENTS
Page
ARTICLE I GENERAL PROVISIONS................................1
Section 1.1 Business Purpose..................................1
Section 1.2 Operation.........................................1
Section 1.3 Definitions.......................................1
Section 1.4 Name..............................................3
Section 1.5 Registered Offices; Registered Agents.............3
Section 1.6 Principal Place of Business.......................3
Section 1.7 Investment Objective..............................3
Section 1.8 Plurals and Gender................................3
Section 1.9 Headings..........................................4
ARTICLE II TERM OF THE FUND..................................4
ARTICLE III SHARES............................................4
ARTICLE IV INVESTMENT IN THE FUND............................5
Section 4.1 Purchase of Shares................................5
Section 4.2 No Preemptive Rights..............................5
Section 4.3 Nonassessability of Shares........................5
Section 4.4 Net Asset Value of the Fund; Net Asset Value
Per Share.........................................5
Section 4.5 Valuation.........................................6
ARTICLE V CAPITAL ACCOUNTS, TAX ACCOUNTS AND ALLOCATIONS....6
ARTICLE VI ADVISORY SERVICES AND DISTRIBUTION................6
Section 6.1 Investment Advisory and Distribution Agreements...6
Section 6.2 Payment of Expenses by the Fund...................7
ARTICLE VII THE MANAGERS......................................7
Section 7.1 Election of Managers..............................7
Section 7.2 Resignation of Manager............................7
Section 7.3 Removal of Manager................................7
Section 7.4 Effect of Death, Resignation, Etc. of a Manager...7
ARTICLE VIII RIGHTS, DUTIES AND OBLIGATIONS OF THE MANAGERS....8
Section 8.2 Management of Fund Business.......................8
Section 8.3 Independent Activities of the Managers............9
Section 8.4 Prospective Investors............................10
Section 8.5 Federal and State Income Taxes...................10
Section 8.6 Restrictions on Transfers and Repurchases........10
ARTICLE IX COMPENSATION AND LIMITATION OF LIABILITY OF
MANAGERS.........................................10
Section 9.1 Compensation.....................................10
Section 9.2 Limitation of Liability..........................10
ARTICLE X RIGHTS AND OBLIGATIONS OF THE SHAREHOLDERS.......11
Section 10.1 Limited Liability................................11
Section 10.2 Repurchase of Shares.............................11
Section 10.3 Repurchase Offer Procedures......................11
Section 10.4 Repurchase Amounts...............................12
Section 10.5 Liquidity Requirements...........................12
ARTICLE XI VOTING POWERS AND MEETINGS.......................12
Section 11.1 Voting Powers....................................12
Section 11.2 Meetings of Shareholders.........................13
Section 11.3 Quorum and Required Vote.........................13
Section 11.4 Action by Written Consent........................13
ARTICLE XII CUSTODY OF ASSETS; DEPOSITORIES..................14
ARTICLE XIII DISTRIBUTIONS....................................14
ARTICLE XIV INDEMNIFICATION..................................14
Section 14.1 Managers, Officers, etc..........................14
Section 14.2 Compromise Payment...............................15
Section 14.3 Indemnification Not Exclusive....................15
ARTICLE XV MISCELLANEOUS....................................16
Section 15.1 Governing Law....................................16
Section 15.2 Entire Agreement.................................16
Section 15.3 Amendments.......................................16
Section 15.4 Managers, Shareholders, etc. Not Personally
Liable; Notice...................................16
Section 15.5 Manager's Good Faith Action, Expert Advice,
No Bond or Surety................................16
Section 15.6 Merger, Consolidation and Sale of Assets.........17
Section 15.7 Conversion.......................................17
Section 15.8 Severability.....................................17
Section 15.9 Benefit..........................................17
Section 15.10 Tax Matters Member...............................18
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXX XXX FLOATING RATE LIMITED LIABILITY COMPANY
This Amended and Restated Limited Liability Company Agreement
of Xxxxx Xxx Floating Rate Limited Liability Company (the "Fund")
is entered into as of November 3, 1998, by and among the Board of
Managers of the Fund (the "Managers"), and each Feeder Fund
(defined below) who shall execute a counterpart of this Limited
Liability Company Agreement as a member.
ARTICLE I
GENERAL PROVISIONS
Section 1.1 Business Purpose. The purpose of the Fund is to
provide investors a managed investment primarily in securities,
debt instruments and other instruments and rights of a financial
character.
Section 1.2 Operation. The Feeder Funds agree to the
operation of the Fund in accordance with the terms of this
Agreement. The Feeder Funds further agree that the Fund shall be
operated as a limited liability company pursuant to the provisions
of the Act (defined below), and, except as herein otherwise
expressly provided, the rights and liabilities of the Feeder Funds
shall be as provided in the Act.
Section 1.3 Definitions. For purposes of this Agreement:
(a) "Act" means the Delaware Limited Liability
Company Act, 6 Del. C. Sec. 18-101, et seq., as amended from time to
time.
(b) "Agreement" means this Limited Liability Company
Agreement, as amended, modified, supplemented or restated from
time to time.
(c) "Bankruptcy" has the meaning given it in Section
18-101 of the Act.
(d) "Board" means the Board of Managers of the Fund.
(e) "By-laws" means the Amended and Restated By-laws
of the Fund adopted by the Board as of November 3, 1998, as
amended from time to time.
(f) "Capital Account Establishment and Maintenance
Policies of the Fund" means the policies set forth on Exhibit A
hereto and incorporated herein by reference.
(g) "Certificate" means the Certificate of Formation
of the Fund filed with the Delaware Secretary of State on August
14, 1998, pursuant to which the Fund was formed, and any
amendments to such certificate or restatements of such
certificate.
(h) "Code" means the Internal Revenue Code of 1986
(or any successor law), as amended.
(i) "Continuing Manager" means any Manager (i) who is
not a "person" or an "affiliated person" of a "person" (as such
term is defined in Section 1.3(y) of this Agreement) who enters or
proposes to enter into any transaction with the Fund described
herein (an "interested party") and (ii) who has been a Manager for
a period of at least twelve months (or since the commencement of
the Fund's operations if that period is less than twelve months),
or is a successor to a Continuing Manager who is not an interested
party and is recommended to succeed a Continuing Manager by a
majority of the then Continuing Managers.
(j) "Custodian" means State Street Bank and Trust
Company, or such other person appointed as the Fund's custodian by
the Managers.
(k) "Disinterested Manager" means a Manager who is
not an interested person (as such term is defined in Section
1.3(y) of this Agreement of the Fund or the Investment Adviser.
(l) "Feeder Funds" means Xxxxx Xxx Floating Rate
Income Fund, Xxxxx Xxx Institutional Floating Rate Income Fund and
any other feeder fund that may be established in the future, and
is admitted as a Feeder Fund in accordance with Section 4.1 of
this Agreement. Each Feeder Fund shall be a "member" as that term
is defined in the Act.
(m) "Fund" means the limited liability company formed
by the filing of the Certificate and operated under the Act
pursuant to this Agreement.
(n) "Investment Adviser" means Xxxxx Xxx & Xxxxxxx
Incorporated, a Delaware corporation, or any other person or
entity selected as the Fund's investment adviser by the Managers.
(o) "Manager" refers to a Manager of the Fund named
herein or any other person elected as Manager pursuant to Section
7.1 of this Agreement.
(p) "Net Asset Value of the Fund" has the meaning set
forth in Section 4.4 of this Agreement.
(q) "Net Asset Value per Share" has the meaning set
forth in Section 4.4 of this Agreement.
(r) "Prospectus" means the prospectus of the Xxxxx
Xxx Floating Rate Income Fund filed with the Securities and
Exchange Commission as Part A of the Fund's Registration Statement
on Form N-2, as it may be amended from time to time (Investment
Company Act File No. 811-08953) and the prospectus of the Xxxxx
Xxx Institutional Floating Rate Income Fund filed with the
Securities and Exchange Commission as Part A of the Fund's
Registration Statement on Form N-2, as it may be amended from time
to time (Investment Company Act File No. 811-08955)
(s) "Repurchase Date" means the Repurchase Pricing
Date immediately following the expiration of the three to six week
period after the Fund notifies Feeder Funds in writing of a Tender
Offer.
(t) "Regulations" means regulations promulgated under
the Code, as such Regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
(u) "Share" means a "limited liability company
interest" in the Fund as that latter term is used in the Act,
together with all of the rights, preferences, powers and
privileges as may be provided under this Agreement.
(v) "Share Percentage" of a Feeder Fund as of a
Valuation Date means the product expressed as a percentage of (i)
100 multiplied by (ii) the fraction (x) the nominator of which is
the number of such Feeder Fund's Shares and (y) the denominator of
which is the number of outstanding Shares of the Fund, in each
case as of the Valuation Date. The sum of the Share Percentages
of all Feeder Funds shall be 100%.
(w) "Tender Offer" means an offer by the Fund to
Feeder Funds to repurchase between 5% and 25% of its outstanding
Shares on at least a quarterly basis at Net Asset Value in
accordance with Section 11.2 of this Agreement.
(x) The "1940 Act" refers to the Investment Company
Act of 1940 and the rules and regulations thereunder, all as
amended from time to time.
(y) The terms "affiliated person," "assignment,"
"closed-end company," "commission," "interested person," "majority
of the outstanding shares," "open-end company," "person" and
"principal underwriter" shall have the meanings given them in the
1940 Act.
(z) "Valuation Date" means the last business day of
each quarter or such other date as may be designated by the
Manager.
Section 1.4 Name. The name of the Fund shall be Xxxxx Xxx
Floating Rate Limited Liability Company and all transactions of
the Fund shall be carried on and completed in such name.
Section 1.5 Registered Offices; Registered Agents. The
Fund's registered agent and office in Delaware shall be The
Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000. At any time, the Managers may designate another
registered agent and/or registered office.
Section 1.6 Principal Place of Business. The principal
place of business of the Fund shall be Xxx Xxxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000, or at such other place or places as the
Managers may from time to time designate.
Section 1.7 Investment Objective. The Fund's investment
objective is to provide a high level of current income, consistent
with the preservation of capital. The Fund shall have the power
to engage in all activities that are necessary, suitable,
desirable, convenient or incidental to the accomplishment of the
foregoing business purpose and investment objective. The Fund
shall do so under the direction of the Managers.
Section 1.8 Plurals and Gender. Where appearing in this
Agreement the singular shall include the plural and the masculine
shall include the feminine, and vice versa, unless the context
clearly indicates a different meaning.
Section 1.9 Headings. The headings and subheadings in this
Agreement are inserted for convenience of reference only and are
to be ignored in any construction of the provisions hereof.
ARTICLE II
TERM OF THE FUND
Unless dissolved as provided herein, the Fund shall continue
without limitation of time. Subject to the voting powers of the
Feeder Funds, the Fund may be dissolved at any time (a) by the
vote of Feeder Funds holding at least three-fourths of the
outstanding Shares of the Fund entitled to vote (except if such
dissolution is recommended by at least three-fourths of the total
number of Managers then in office and by at least three-fourths of
the total number of Continuing Managers then in office, the vote
of a majority of the outstanding Shares of the Fund shall be
sufficient authorization); or (b) by the Managers by written
notice to the Feeder Funds, provided that at least three-fourths
of the total number of Managers then in office and at least three-
fourths of the total number of Continuing Managers then in office
have approved such action. Upon dissolution of the Fund, after
paying or otherwise providing for all charges, taxes, expenses and
liabilities, whether due or accrued or anticipated, of the Fund as
may be determined by the Managers and in accordance with the Act
and this Agreement, the Fund shall, in accordance with such
procedures as the Managers consider appropriate, reduce the
remaining assets of the Fund to distributable form in cash or
Shares or other property, or any combination thereof, and
distribute the proceeds to the Feeder Funds in accordance with The
Capital Account Establishment and Maintenance Policies of the
Fund. Upon dissolution of the Fund, following completion of the
winding up of its business, the Managers shall cause a certificate
of cancellation of the Certificate to be filed in accordance with
the Act, which certificate of cancellation may be executed and
filed by any one of the Managers.
ARTICLE III
SHARES
Limited liability company interests in the Fund shall be
represented by Shares, all without par value, and the holders
thereof shall be designated Feeder Funds. The Fund shall have
authority to issue an unlimited number of Shares (including
fractional Shares).
Each Share shall be identical in all respects with every
other Share and shall represent an undivided interest in the
assets of the Fund; provided, however, that a fractional Share
shall carry proportionately all the rights and obligations of a
non-fractional Share, including rights and obligations with
respect to receipt of distributions, repurchase of Shares and
liquidation of the Fund. The Fund may from time to time divide
the Shares into a greater number of Shares of lesser value or
decrease the number of Shares into a lesser number of Shares of
greater value, provided that the proportionate interest of each
Feeder Fund shall not thereby be changed.
The ownership of Shares shall be recorded on the books of the
Fund or a transfer or similar agent. No certificates evidencing
the ownership of Shares shall be issued except as the Managers may
otherwise determine from time to time. The Managers may make such
rules as they consider appropriate for the issuance of Share
certificates, the transfer of Shares and similar matters. The
record books of the Fund as kept by the Fund or any transfer or
similar agent, as the case may be, shall be conclusive as to who
are the Feeder Funds of the Fund and as to the number of Shares of
the Fund held from time to time by each Feeder Fund.
The Shares shall be divided into transferable Shares of the
Fund as may be established from time to time by the Managers. The
Managers shall have full power and authority, in their sole
discretion and without obtaining the approval of the Feeder Funds,
to establish and to change in any manner Shares with such
preferences, terms of conversion, voting powers, rights and
privileges as the Managers may determine (but the Managers may not
change outstanding Shares in a manner materially adverse to the
Feeder Funds); to divide or combine the Shares into a greater or
lesser number; to issue Shares to acquire other assets (including
assets subject to, and in connection with, the assumption of
liabilities) and businesses; and to take such other action with
respect to the Shares as the Managers may deem desirable.
ARTICLE IV
INVESTMENT IN THE FUND
Section 4.1 Purchase of Shares. The Managers shall accept
investments in the Fund from such persons and admit each such
person as a Feeder Fund on such terms and for such consideration
as they may from time to time authorize. At the Managers'
discretion, such investments, subject to applicable law, may be in
the form of cash or securities valued as the Managers or this
Agreement may from time to time authorize. Investments in the
Fund shall be credited to the account of each Feeder Fund in the
form of full Shares at the Net Asset Value per Share next
determined after the investment is received or accepted as
described in the Prospectus under the heading "Net Asset Value";
provided, however, that the Managers may, in their sole
discretion, (a) impose a sales charge upon investments in the
Fund, (b) issue fractional Shares, (c) determine the Net Asset
Value per Share of the initial capital contribution or (d)
authorize the issuance of Shares at a price other than Net Asset
Value to the extent permitted by the 1940 Act. The Managers shall
have the right to refuse to accept investments at any time without
any cause or reason therefor whatsoever.
Section 4.2 No Preemptive Rights. Feeder Funds shall have no
preemptive or other right to subscribe to any additional Shares or
other securities issued by the Fund.
Section 4.3 Nonassessability of Shares. Upon receipt of the
consideration to purchase Shares, all such Shares so purchased
shall be fully paid and nonassessable.
Section 4.4 Net Asset Value of the Fund; Net Asset Value Per
Share. The Net Asset Value of the Fund and the Net Asset Value
per Share shall be determined as of the close of regular session
trading on the New York Stock Exchange on each day for all or part
of which such Exchange is open for unrestricted trading.
The Net Asset Value of the Fund means total assets of the
Fund (including accrued interest) less total Fund liabilities
determined in accordance with generally accepted accounting
principles, consistently applied. The Net Asset Value per Share
of the Fund equals the Net Asset Value of the Fund divided by the
number of outstanding Shares of the Fund.
Section 4.5 Valuation. For purposes of this Agreement, the
value of any portfolio security for which market quotations are
not available will be determined in accordance with the portfolio
valuation procedures adopted by the Managers, as such procedures
may be amended from time to time.
ARTICLE V
CAPITAL ACCOUNTS, TAX ACCOUNTS AND ALLOCATIONS
The provisions for establishing capital and tax accounts and
determining the allocations and adjustments to those accounts for
income tax accounting purposes are set forth in The Capital
Account Establishment and Maintenance Policies of the Fund. Those
policies are attached hereto as Exhibit A and are incorporated
herein by reference.
ARTICLE VI
ADVISORY SERVICES AND DISTRIBUTION
Section 6.1 Investment Advisory and Distribution Agreements.
Subject to a favorable vote of a majority of the outstanding
Shares of the Fund affected thereby, the Managers may, at any time
and from time to time, contract for exclusive or nonexclusive
advisory and/or management services relating to the Fund with any
corporation, trust, association or other organization (the
"Service Provider"), every such contract to comply with such
requirements and restrictions as may be set forth in the
Agreement; and any such contract may contain such other terms
interpretive of or in addition to said requirements and
restrictions as the Managers may determine, including, without
limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Fund shall be held
uninvested and to make changes in the Fund's investments. The
Managers may also, at any time and from time to time, contract
with Service Provider, appointing it exclusive or nonexclusive
distributor or principal underwriter for the Shares, every such
contract to comply with such requirements and restrictions as may
be set forth in the Agreement; and any such contract may contain
such other terms interpretive of or in addition to said
requirements and restrictions as the Managers may determine.
The fact that:
(i) any of the Feeder Funds, Managers or officers of the Fund
is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter or
distributor or agent of or for any Service Provider with
which an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer,
shareholder servicing or other agency contract may have
been or may hereafter be made, or that any such
organization, or any parent or affiliate thereof, is a
shareholder or has an interest in the Fund, or that
(ii) any Service Provider with which an advisory or management
contract or principal underwriter's or distributor's
contract, or transfer, shareholder servicing or other
agency contract may have been or may hereafter be made
also has an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer,
shareholder servicing or other agency contract with one
or more other corporations, trusts, associations, or
other organizations, or has other business or interests
shall not affect the validity of any such contract or
disqualify any Feeder Fund, Manager or officer of the
Fund from voting upon or executing the same or create any
liability or accountability to the Fund or its Feeder
Funds.
Section 6.2 Payment of Expenses by the Fund. Subject to the
provisions of Section 3.3 of this Agreement, the Managers are
authorized to pay, or to cause to be paid out of the assets of the
Fund all expenses, fees, charges, taxes and liabilities incurred
or arising in connection with the Fund, or in connection with the
management thereof, including, but not limited to, the
compensation of the Managers and such expenses and charges for the
services of the Fund's officers, employees, investment adviser,
principal underwriter, auditor, counsel, custodian, transfer
agent, shareholder servicing agent, and such other agents or
independent contractors and such other expenses and charges as the
Managers may deem necessary or proper to incur.
ARTICLE VII
BOARD OF MANAGERS
Section 7.1 Election of Managers. A Manager may be elected
in the manner set forth in the By-laws. Each Manager elected by
the Managers or the Feeder Funds shall serve until he retires,
resigns, is removed or dies or until the next meeting of Feeder
Funds called for the purpose of electing Managers and until the
election and qualification of his successor. The initial Manager,
who shall serve until the first meeting of Feeder Funds at which
Managers are elected, and until his successor is elected and
qualified, or until he sooner dies, resigns or is removed, shall
be Xxxxxxx X. Xxxxxx III.
Section 7.2 Resignation of Manager. A Manager may resign as
Manager upon written notice to the other Managers.
Section 7.3 Removal of Manager. At any meeting called for
the purpose, a Manager may be removed by vote of the holders of
two-thirds of the outstanding Shares.
Section 7.4 Effect of Death, Resignation, Etc. of a Manager.
The death, declination, resignation, retirement, removal or
incapacity of Manager, or any one of them, shall not operate to
annul the Fund or to revoke any existing agency created pursuant
to the terms of this Agreement.
ARTICLE VIII
RIGHTS, DUTIES AND OBLIGATIONS OF THE MANAGERS
Section 8.1 Management of Fund Business. Subject to the
provisions of this Agreement and the By-laws, the business of the
Fund shall be managed by the Managers, and they shall have all
powers necessary or convenient to carry out that responsibility.
The Managers may elect and remove such officers and appoint and
terminate such agents as they consider appropriate; they may
employ one or more custodians of the assets of the Fund and may
authorize such custodians to employ subcustodians and to deposit
all or any part of such assets in a system or systems for the
central handling of securities, retain a transfer agent or a
shareholder servicing agent, or both, provide for the distribution
of Shares by the Fund, through one or more principal underwriters
or otherwise, set record dates for the determination of
shareholders with respect to various matters, and in general
delegate such authority as they consider desirable to any officer
of the Fund, and to any agent or employee of the Fund or to any
such custodian or underwriter.
Without limiting the foregoing, the Managers shall have power
and authority:
(a) To invest and reinvest cash, and to hold cash
uninvested;
(b) To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the
assets of the Fund except as otherwise provided in the
Agreement
(c) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or
property; and to execute and deliver proxies or powers of
attorney to such person or persons as the Managers shall
deem proper, granting to such person or persons such
power and discretion with relation to securities or
property as the Managers shall deem proper;
(d) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities;
(e) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Managers or
of the Fund or in the name of a custodian, subcustodian
or other depositary or a nominee or nominees or
otherwise;
(f) To consent to or participate in any plan for the
reorganization, consolidation or merger of any
corporation or issuer, any security of which is or was
held in the Fund; to consent to any contract, lease,
mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions
with respect to any security held in the Fund;
(g) To join other security holders in acting through a
committee, depositary, voting trustee or otherwise, and
in that connection to deposit any security with, or
transfer any security to, any such committee, depositary
or trustee, and to delegate to them such power and
authority with relation to any security (whether or not
so deposited or transferred) as the Managers shall deem
proper, and to agree to pay, and to pay, such portion of
the expenses and compensation of such committee,
depositary or trustee as the Managers shall deem proper;
(h) To compromise, arbitrate or otherwise adjust claims
in favor of or against the Fund or any matter in
controversy, including but not limited to claims for
taxes;
(i) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) To borrow funds;
(k) To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge Fund property
or any part thereof to secure any or all of such
obligations;
(l) To purchase and pay for entirely out of Fund property
such insurance as they may deem necessary or appropriate
for the conduct of the business of the Fund, including,
without limitation, insurance policies insuring the
assets of the Fund and payment of distributions and
principal on its portfolio investments, and insurance
policies insuring the Feeder Funds, Managers, officers,
employees, agents, investment advisers or managers,
principal underwriters, or independent contractors of the
Fund individually against all claims and liabilities of
every nature arising by reason of holding, being or
having held any such office or position, or by reason of
any action alleged to have been taken or omitted by any
such person as Feeder Fund, Manager, officer, employee,
agent, investment adviser or manager, principal
underwriter, or independent contractor, including any
action taken or omitted that may be determined to
constitute negligence, whether or not the Fund would have
the power to indemnify such person against such
liability;
(m) To pay pensions for faithful service, as deemed
appropriate by the Managers, and to adopt, establish and
carry out pension, profit-sharing, share bonus, share
purchase, savings, thrift and other retirement, incentive
and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a
means of providing such retirement and other benefits,
for any or all of the Managers, officers, employees and
agents of the Fund; and
(n) To purchase or otherwise acquire Shares.
The Board may take such other actions on behalf of the Fund
as the Board deems necessary or desirable to manage the business
of the Fund.
Section 8.2 Independent Activities of the Managers. The
Managers shall not be required to manage the Fund as their sole
and exclusive function and may have other business interests and
may engage in other activities in addition to those relating to
the Fund. No Manager shall be required to devote his full time or
business attention to the affairs of the Fund. The Managers shall
devote such time and services to the business of the Fund as may
reasonably be required. Neither the Fund nor any Feeder Fund
shall, by virtue of this Agreement or the relationship created
hereby, have any right in or to such other business interests or
activities or to the income, proceeds or profits derived therefrom
and the pursuit of such other business interests or activities,
even if competitive with the business of the Fund, shall not be
deemed wrongful or improper.
Section 8.3 Prospective Investors. The Managers shall have
full and sole discretion, power and authority to admit or refuse
to admit persons to the Fund as Feeder Funds.
Section 8.4 Federal and State Income Taxes. The Board, at
the expense of the Fund, shall arrange for the preparation and
timely filing of all tax returns of the Fund showing all income,
gains, deductions, and losses necessary for federal and state
income tax purposes, and shall furnish to the Feeder Funds within
60 days of the close of the taxable year the tax information
reasonably required for federal and state income tax reporting
purposes. The Board, in its sole discretion, shall have the
authority to cause the Fund to make or revoke any elections
(except an election to be treated as a corporation) permitted
under the Code, Regulations, or any state or local tax law,
including without limitation the election referred to in Section
754 of the Code.
Section 8.5 Restrictions on Transfers and Repurchases.
Anything else contained herein to the contrary notwithstanding,
the Managers may impose restrictions and limitations on the
transfer or redemption of Shares to the extent permitted by law
which may be necessary to prevent the Fund from becoming a
"publicly traded partnership" as defined in Section 7704 of the
Code, or in order to comply with any other applicable law. To the
extent possible, such restrictions and limitations shall be
applied uniformly to all Feeder Funds.
ARTICLE IX
COMPENSATION AND LIMITATION OF
LIABILITY OF MANAGERS
Section 9.1 Compensation. The Managers, as such, shall be
entitled to reasonable compensation from the Fund; they may fix
the amount of their compensation. Nothing herein shall in any way
prevent the employment of any Manager for advisory, management,
legal, accounting, investment banking or other services and
payment for the same by the Fund.
Section 9.2 Limitation of Liability. No Manager shall be
responsible or liable in any event for any neglect or wrongdoing
of such Manager or of any officer, agent, employee, or principal
underwriter of the Fund, nor shall any Manager be responsible for
the act or omission of any other Manager, but nothing herein
contained shall protect any Manager against any liability to which
he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his or her office.
Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever executed or
done by or on behalf of the Fund or the Managers or any of them in
connection with the Fund shall be conclusively deemed to have been
executed or done only in or with respect to their or his or her
capacity as Manager, and such Manager shall not be personally
liable thereon.
ARTICLE X
RIGHTS AND OBLIGATIONS OF THE FEEDER FUNDS
Section 10.1 Limited Liability. Shares shall be deemed to
be personal property giving only the rights provided in this
Agreement. Every Feeder Fund by virtue of having become a Feeder
Fund shall be held to have expressly assented and agreed to the
terms of this Agreement and to have become a party hereto. No
Feeder Fund shall be personally liable for the debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise
existing with respect to, the Fund. The death, incapacity,
dissolution, termination or bankruptcy of a Feeder Fund during the
continuance of the Fund shall not operate to dissolve the same nor
entitle the representative of any deceased Feeder Fund to an
accounting or to take any action in court or elsewhere against the
Fund or the Managers, but only to the rights of said Feeder Fund
under this Agreement. Ownership of Shares shall not entitle the
Feeder Fund to any title in or to the whole or any part of the
Fund property or right to call for a partition or division of the
same or for an accounting, nor shall the ownership of Shares
constitute the Feeder Funds partners. Neither the Fund nor the
Managers, nor any officer, employee or agent of the Fund shall
have any power to bind personally any Feeder Fund, nor except as
specifically provided herein to call upon any Feeder Fund for the
payment of any sum of money or assessment whatsoever other than
such as the Feeder Fund may at any time personally agree to pay.
Every written obligation of the Fund may contain a statement to
the effect that such obligation may only be enforced against the
assets of the Fund; however, the omission of such statement shall
not operate to bind or create personal liability for any Feeder
Fund or Manager.
Section 10.2 Repurchase of Shares. In order to provide
liquidity to Feeder Funds, the Managers will permit Feeder Funds
to request, subject to provisions of this Agreement, that the Fund
repurchase between 5% and 25% of the outstanding Shares on at
least a quarterly basis at the Net Asset Value per share of the
Fund as defined in Section 4.4 of this Agreement (a "Tender
Offer").
Section 10.3 Repurchase Offer Procedures. The Tender Offer
will begin upon notification by the Fund to the Feeder Funds. At
the beginning of each Tender Offer, the Feeder Funds will be
notified of the deadline for providing their repurchase requests
to the Fund (the "Repurchase Request Deadline"), which is the date
the Tender Offer ends. The time between the notification of the
Feeder Funds and the Repurchase Request Deadline may vary from no
more than six weeks to no less than three weeks. For each Tender
Offer the Fund will establish the Repurchase Request Deadline
based on factors, such as market conditions, liquidity of the
Fund's assets and other considerations. The repurchase price of
the Shares will be the Net Asset Value per Share on the date
designated by the Managers as the repurchase pricing date (the
"Repurchase Pricing Date"). It is anticipated that normally the
Repurchase Pricing Date will be the same date as the Repurchase
Request Deadline, and if so, the Repurchase Request Deadline will
be set for a time no later than the close of the New York Stock
Exchange on such date provided that, at the discretion of the
Managers, the Repurchase Pricing Date may occur no later than the
fourteenth day after the Repurchase Request Deadline or the next
business day if the fourteenth day is not a business day. Within
such fourteen day period, the Fund may use an earlier Repurchase
Pricing Date as permitted by Rule 23c-3 under the 1940 Act, and
any successor provision.
The Managers may establish other policies for repurchases of
Shares that are consistent with the 1940 Act and other pertinent
laws. Shares tendered by the Feeder Funds by any Repurchase
Request Deadline will be repurchased subject to the aggregate
repurchase amounts established for that Repurchase Request
Deadline. Repurchase proceeds will be paid to the Feeder Funds,
in cash, within seven days after each Repurchase Pricing Date.
The end of the seven days is referred to as the "Repurchase
Payment Deadline."
Section 10.4 Repurchase Amounts. The Managers, in their
sole discretion, will determine the number of Shares that the Fund
will offer to repurchase (the "Tender Offer Amount") for a given
Repurchase Request Deadline. However, the Tender Offer Amount
will be at least 5% and no more than 25% of the total number of
Shares outstanding on the Repurchase Request Deadline. Prior to
the notification of the Repurchase Request Deadline, the Managers
will determine in their sole discretion the percentage at which
the Tender Offer Amount will be set.
If the Feeder Funds tender more than the Tender Offer Amount
for a given Tender Offer, the Fund may repurchase an additional
amount of Shares up to 2% of the Shares outstanding on the
Repurchase Request Deadline. If the Fund determines not to
repurchase more than the Tender Offer Amount, or if the Fund
determines to repurchase the additional 2% of the Shares
outstanding, but the Feeder Funds tender Shares in an amount
exceeding the Repurchase Offer Amount plus 2% of the Shares
outstanding on the Repurchase Request Deadline, the Fund will
repurchase the Shares on a pro rata basis. The Managers may, in
their sole discretion, suspend, postpone or delay a Tender Offer,
provided, however, that the Managers (i) may not suspend or
postpone a Tender Offer without the approval of a majority of the
Disinterested Managers; and (ii) may not delay a Tender Offer
except as expressly permitted by Rule 23c-3 under the 1940 Act,
and any successor provision.
Section 10.5 Liquidity Requirements. The Fund must maintain
liquid assets in an amount reasonably likely to be sufficient to
repurchase the Tender Offer Amount during the three to six week
period following notification to the Feeder Funds of the Tender
Offer. The Managers will ensure that a percentage of the Fund's
net assets equal to at least a percentage reasonably comparable to
the Tender Offer Amount consists of (a) assets that can be sold or
disposed of in the ordinary course of business at approximately
the price at which the Managers have valued such assets, between
the time a Feeder Fund submits a repurchase request and the
payment deadline (seven days following receipt by the Manager of
the repurchase request) or (b) assets that mature by the time the
repurchase amount must be paid. The Managers must adopt policies
to ensure that the Fund's assets are sufficiently liquid so that
the Fund is able to repurchase shares in the manner described
above, and in their sole discretion, may liquidate other assets as
may be necessary to satisfy the liquidity requirements discussed
above.
ARTICLE XI
VOTING POWERS AND MEETINGS
Section 11.1 Voting Powers. Subject to the voting powers of
the Feeder Funds as set forth in this Agreement, the Feeder Funds
shall have power to vote only (i) for the election of Managers as
provided in Section 7.1, (ii) for the removal of Managers as
provided in Section 7.3, (iii) with respect to any termination of
the Fund to the extent and as provided in Section 2.1, (i) with
respect to any merger, consolidation or sale of assets of the Fund
to the extent and as provided in Section 15.6, (v) with respect to
any conversion of the Fund to the extent and as provided in
Section 15.7 (vi) with respect to any amendment of this Agreement
to the extent and as provided in Section 15.3, and (vii) with
respect to such additional matters relating to the Fund as may be
required by this Agreement, or any registration of the Fund with
the Securities and Exchange Commission (or any successor agency)
or any state, or as the Managers may consider necessary or
desirable. Each whole Share shall be entitled to one vote as to
any matter on which it is entitled to vote and each fractional
Share shall be entitled to a proportionate fractional vote. On
any matter submitted to a vote of all Feeder Funds, all Shares of
the Fund then entitled to vote shall, except as otherwise provided
in the Agreement, be voted in the aggregate as a single class.
There shall be no cumulative voting in the election of Managers.
Shares may be voted in person or by proxy. A proxy with respect to
Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the
proxy the Fund receives a specific written notice to the contrary
from any one of them. A proxy purporting to be executed by or on
behalf of a Feeder Fund shall be deemed valid unless challenged at
or prior to its exercise and the burden of proving invalidity
shall rest on the challenger. Until Shares are issued, the
Managers may exercise all rights of Feeder Funds and may take any
action required by law, this Agreement to be taken by Feeder
Funds.
Section 11.2 Meetings of Feeder Funds. Meetings of Feeder
Funds may be called by the Managers from time to time for the
purpose of taking action upon any matter requiring the vote or
authority of the Feeder Funds as herein provided or upon any other
matter deemed by the Managers to be necessary or desirable.
Written notice of any meeting of Feeder Funds shall be given or
caused to be given by the Managers by mailing such notice at least
seven days before such meeting, postage prepaid, stating the time,
place and purpose of the meeting, to each Feeder Fund entitled to
vote at such meeting at the Feeder Fund's address as it appears on
the records of the Fund. If the Managers shall fail to call or
give notice of any meeting of Feeder Funds for a period of 30 days
after written application by Feeder Funds holding at least 25% of
the then outstanding Shares entitled to vote at such meeting
requesting a meeting to be called for a purpose requiring action
by the Feeder Funds as provided herein or in the Agreement, then
Feeder Funds holding at least 25% of the then outstanding Shares
entitled to vote at such meeting may call and give notice of such
meeting, and thereupon the meeting shall be held in the manner
provided for herein in case of call thereof by the Managers.
Notice of a meeting need not be given to any Feeder Fund if a
written waiver of notice, executed by such Feeder Fund before or
after the meeting, is filed with the records of the meeting, or to
any Feeder Fund who attends the meeting without protesting prior
thereto or at its commencement the lack of notice to such Feeder
Fund.
Section 11.3 Quorum and Required Vote. A majority of the
outstanding Shares entitled to vote on a particular matter shall
be a quorum for the transaction of business on that matter at a
Feeder Funds' meeting. Any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original
meeting, without the necessity of further notice. Except when a
different vote is required by any provision of this Agreement, a
majority of the Shares voted shall decide any questions and a
plurality shall elect a Manager.
Section 11.4 Action by Written Consent. Any action taken
by Feeder Funds may be taken without a meeting if a majority of
Shares entitled to vote on the matter (or such different
proportion thereof as shall be required by any express provision
of this Agreement) consent to the action in writing and such
written consents are filed with the records of the meetings of
Feeder Funds. Such consent shall be treated for all purposes as a
vote taken at a meeting of Feeder Funds.
ARTICLE XII
CUSTODY OF ASSETS; DEPOSITORIES
All assets of the Fund shall be held by the Custodian for the
benefit of the Fund. Cash or other property received from
subscribers pending admission as Feeder Funds shall be held by the
Custodian for the benefit of the Feeder Funds.
The Custodian may deposit funds of the Fund in such banks as
it deems advisable, under the supervision of the Managers. All
withdrawals therefrom shall be made by the Custodian at the
direction of the Managers or the Manager's authorized
representative. The Fund's account shall be segregated from any
other accounts maintained by the Custodian for other persons. All
Fund accounts shall be in the Fund's name or in the Custodian's
name for the benefit of the Fund.
ARTICLE XIII
DISTRIBUTIONS
Subject to the terms of this Agreement and the requirements
of the Act, the Managers may each year, or more frequently if they
so determine, distribute to the Feeder Funds such amounts as the
Managers may determine. Any such distribution to the Feeder Funds
shall be made to said Feeder Funds pro rata in proportion to the
number of Shares held by each of them. Such distributions shall
be made in cash or Shares or other property or a combination
thereof as determined by the Managers.
ARTICLE XIV
INDEMNIFICATION
Section 14.1 Managers, Officers, etc. The Fund shall
indemnify each of its Managers and officers (including persons who
serve at the Fund's request as directors, officers or Managers of
another organization in which the Fund has any interest as a
shareholder, creditor or otherwise) (hereinafter referred to as a
"Covered Person") against all liabilities and expenses, including,
but not limited to, amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees reasonably
incurred by any Covered 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 legislative
body, in which such Covered Person may be or may have been
involved as a party or otherwise or with which such Covered Person
may be or may have been threatened, while in office or thereafter,
by reason of being or having been such a Covered Person except
with respect to any matter as to which such Covered Person shall
have been finally adjudicated in any such action, suit or other
proceeding (a) not to have acted in good faith in the reasonable
belief that such Covered Person's action was in the best interests
of the Fund or (b) to be liable to the Fund or its Feeder Funds by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such
Covered Person's office. Expenses, including counsel fees so
incurred by any such Covered Person (but excluding amounts paid in
satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Fund in advance
of the final disposition of any such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Covered
Person to repay amounts so paid to the Fund if it is ultimately
determined that indemnification of such expenses is not authorized
under this Article; provided, however, that either (a) such
Covered Person shall have provided appropriate security for such
undertaking, (b) the Fund shall be insured against losses arising
from any such advance payments or (c) either a majority of the
Disinterested Managers acting on the matter (provided that a
majority of the Disinterested Managers then in office acts on the
matter), or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts
(as opposed to a full trial type inquiry), that there is reason to
believe that such Covered Person will be found entitled to
indemnification under this Article.
Section 14.2 Compromise Payment. As to any matter disposed
of (whether by a compromise payment, pursuant to a consent decree
or otherwise) without an adjudication by a court, or by any other
body before which the proceeding was brought, that such Covered
Person either (a) did not act in good faith in the reasonable
belief that his or her action was in the best interests of the
Fund or (b) is liable to the Fund or its Feeder Funds by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her
office, indemnification shall be provided if (a) approved as in
the best interests of the Fund, after notice that it involves such
indemnification, by at least a majority of the Disinterested
Managers acting on the matter (provided that a majority of the
Disinterested Managers then in office acts on the matter) upon a
determination, based upon a review of readily available facts (as
opposed to a full trial type inquiry), that such Covered Person
acted in good faith in the reasonable belief that his or her
action was in the best interests of the Fund and is not liable to
the Fund or its Feeder Funds by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office, or (b) there has
been obtained an opinion in writing of independent legal counsel,
based upon a review of readily available facts (as opposed to a
full trial type inquiry), to the effect that such Covered Person
appears to have acted in good faith in the reasonable belief that
his or her action was in the best interests of the Fund and that
such indemnification would not protect such Covered Person against
any liability to the Fund to which he or she would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his or her office. Any approval pursuant to this
Section 15.2 shall not prevent the recovery from any Covered
Person of any amount paid to such Covered Person in accordance
with this Section 15.2 as indemnification if such Covered Person
is subsequently adjudicated by a court of competent jurisdiction
not to have acted in good faith in the reasonable belief that such
Covered Person's action was in the best interests of the Fund or
to have been liable to the Fund or its Feeder Funds by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of such Covered
Person's office.
Section 14.3 Indemnification Not Exclusive. The right of
indemnification hereby provided shall not be exclusive of or
affect any other rights to which such Covered Person may be
entitled. Nothing contained in this Article shall affect any
rights to indemnification to which personnel of the Fund, other
than Managers or officers, and other persons may be entitled by
contract or otherwise under law, nor the power of the Fund to
purchase and maintain liability insurance on behalf of any such
person.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Delaware applicable to contracts made and to be performed
therein.
Section 15.2 Entire Agreement. This document contains the
entire agreement among the parties and supersedes all prior
arrangements or understanding with respect thereto.
Section 15.3 Amendments. Subject to the voting powers of
the Feeder Funds, as set forth in this Agreement, the Agreement
may be amended at any time by an instrument in writing signed by a
majority of the then Managers when authorized to do so by vote of
Feeder Funds holding a majority of the Shares entitled to vote,
except that an amendment amending or affecting the provisions of
Section 1.3(h), 2.1, 11.1, 15.6 or 15.7, or this sentence shall
require the vote of Feeder Funds holding three-fourths of the
Shares entitled to vote if such amendment has not been recommended
by at least three-fourths of the total number of Managers then in
office and by at least three-fourths of the total number of
Continuing Managers then in office. Amendments having the purpose
of changing the name of the Fund or of supplying any omission,
curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not
require authorization by Feeder Fund vote.
Section 15.4 Managers, Feeder Funds, etc. Not Personally
Liable; Notice. All persons extending credit to, contracting with
or having any claim against the Fund shall look only to the assets
of the Fund for payment under such credit, contract or claim, and
neither the Feeder Funds nor the Managers, nor any of the Fund's
officers, employees or agents, whether past, present or future,
shall be personally liable therefor. Nothing in this Agreement
shall protect any Manager against any liability to which such
Manager would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of the office of Manager.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Managers or by any officer or
officers may give notice that the Certificate is on file with the
Secretary of State of Delaware and may recite that the same was
executed or made by or on behalf of the Fund or on its behalf by
the Managers or an officer or officers in that capacity and not
individually, and that the obligations of such instrument are not
binding upon any Manager, officer or Feeder Fund individually but
are binding only upon the assets and property of the Fund, as
applicable, and may contain such further recital as such Manager,
officer or Feeder Fund may deem appropriate, but the omission
thereof shall not operate to bind any Manager, officer or Feeder
Fund individually.
Section 15.5 Manager's Good Faith Action, Expert Advice, No
Bond or Surety. The exercise by the Managers of their powers and
discretion hereunder shall be binding upon everyone interested. A
Manager shall be liable for his or her own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Manager, and for nothing
else. The Managers may take advice of counsel or other experts
with respect to the meaning and operation of this Agreement, and
shall be under no liability for any act or omission in accordance
with such advice. No Manager shall be liable for any failure to
follow the advice of counsel or other experts unless the failure
to follow such advice constitutes willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of the office of Manager. With the exception of the
security required in Section 14.1 herein, the Managers shall not
be required to give any bond as such, nor any surety if a bond is
required.
Section 15.6 Merger, Consolidation and Sale of Assets.
Subject to applicable law, the Fund may merge or consolidate with
any other corporation, association, partnership (limited or
general), trust or other entity or organization or may sell, lease
or exchange all or substantially all of its assets, including its
good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Feeder
Funds called for the purpose, or may liquidate or dissolve when
and as authorized, by the affirmative vote of the holders of not
less than three-fourths of the Shares entitled to vote; provided,
however, that if such merger, consolidation, sale, lease,
exchange, liquidation or dissolution is recommended by at least
three-fourths of the total number of Managers then in office and
by at least three-fourths of the total number of Continuing
Managers then in office, the vote of a majority of the outstanding
Shares shall be sufficient authorization. Nothing contained
herein shall be construed as requiring approval of the Feeder
Funds for any sale of assets in the ordinary course of business of
the Fund. The provisions of this Section shall be subject to the
voting powers of the Feeder Funds as set forth in this Agreement.
Section 15.7 Conversion. Subject to the voting powers of
the Feeder Funds as set forth in this Agreement, the Fund may be
converted at any time from a "closed-end company" to an "open-end
company" upon the approval of such a proposal, together with any
necessary amendments to this Agreement to permit such a
conversion, by the holders of three-fourths of the Shares entitled
to vote; provided, however, that if such proposal is recommended
by at least three-fourths of the total number of Managers then in
office and by at least three-fourths of the total number of
Continuing Managers then in office, such proposal may be adopted
the vote of a majority of the outstanding Shares. Upon the
adoption of such proposal and related amendments by the Fund's
Feeder Funds as provided above, the Fund shall, upon complying
with any requirements of the 1940 Act and state law, become an
"open-end" company. Such affirmative vote or consent shall be in
addition to the vote or consent of the holders of the Shares
otherwise required by law, the Agreement or any agreement between
the Fund and any national securities exchange. If the Feeder
Funds are converted from closed-end to open-end companies, the
Fund shall also be so converted.
Section 15.8 Severability. If it is determined by a court
of competent jurisdiction that any provision of this Agreement is
invalid under applicable law, such provision will be ineffective
only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
Section 15.9 Benefit. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, administrators,
executors, successors, assigns and legal representatives. For
purposes of determining the rights of any Feeder Fund or assignee
hereunder, the Fund and the Managers may rely upon Fund records as
to who are Feeder Funds and assignees, and all Feeder Funds and
assignees agree that their rights shall be determined and they
shall be bound thereby.
Section 15.10 Tax Matters Member. Xxxxx Xxx Floating Rate
Income Fund is hereby designated as the tax matters member of the
Fund for purposes of Section 6231(a)(7) of the Code (the "Tax
Matters Member"). The Tax Matters Member shall have the power to
manage and control, on behalf of the Fund, any administrative
proceeding involving the Fund with the Internal Revenue Service
relating to the determination of any item of Fund income, gain,
loss, deduction or credit for federal income tax purposes. The
Tax Matters Member shall, within ten days of the receipt of any
notice from the Internal Revenue Service in any administrative
proceeding involving the Fund relating to the determination of any
Fund item of income, gain, loss, deduction or credit, mail a copy
of such notice to each member of the Board.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the day and year first above written.
XXXXX XXX FLOATING RATE INCOME FUND
By: __________________________________
Name: Xxxxxx X. Xxxxx
Title: President
XXXXX XXX INSTITUTIONAL FLOATING
RATE INCOME FUND
By: __________________________________
Name: Xxxxxx X. Xxxxx
Title: President
Agreed and Accepted as of the date first above written.
_____________________________ __________________________________
Xxxx X. Xxxxx, Xx. Xxxxxxx X. Xxxxxx
_____________________________ __________________________________
Xxxxxxx X. Xxxx Xxxxx Xxxxxxxx Xxxxx
_____________________________ __________________________________
Xxxxxx X. Xxxxx Xxxxxxx X. Xxxxxx
_____________________________ __________________________________
Xxxxxxx Xxxx Xxxxxx X. Xxxxxxxx
EXHIBIT A
AMENDED AND RESTATED CAPITAL ACCOUNT
ESTABLISHMENT AND MAINTENANCE
POLICIES OF
XXXXX XXX FLOATING RATE LIMITED LIABILITY COMPANY
(adopted as of November 3, 1998)
TABLE OF CONTENTS
Page
ARTICLE I --Definitions....................................1
ARTICLE II--Capital and Related Accounts...................4
2.1. Establishment and Maintenance of Accounts........4
2.2. Book Capital Accounts............................4
2.3. Tax Capital Accounts.............................5
2.4. Revaluation Accounts.............................5
ARTICLE III--Distributions.................................5
3.1. Distributions of Distributable Cash..............5
3.2. Division among Members...........................6
3.3. Distributions on Liquidation of the Fund.........6
3.4. Amounts Withheld.................................6
ARTICLE IV--Allocations....................................6
4.1. Allocations to Book Capital Accounts.............6
4.2. Allocations to Tax Capital Accounts..............6
4.3. Allocations to Revaluation Accounts..............7
4.4. Redemptions During the Fiscal Year...............8
ARTICLE V--Withdrawals and Redemptions.....................8
5.1. Withdrawals and Redemptions......................8
5.2. Payments.........................................8
5.3. Distributions in Kind............................8
ARTICLE VI--Liquidation....................................9
6.1. Liquidation Procedure............................9
6.2. Alternative Liquidation Procedure................9
6.3. Cash Distribution on Liquidation.................9
6.4. Treatment of Negative Book Capital Account
Balance..........................................9
AMENDED AND RESTATED CAPITAL ACCOUNT
ESTABLISHMENT AND MAINTENANCE POLICIES
OF
XXXXX XXX FLOATING RATE LIMITED LIABILITY COMPANY
(adopted as of November 3, 1998)
ARTICLE I
Definitions
As used herein, the following terms shall have the respective
meanings set forth below:
"Act" means the Delaware Limited Liability Company Act, 6
Del. C. Sec. 18-101, et seq., as amended from time to time.
"Agreement" shall mean the Limited Liability Company
Agreement of Xxxxx Xxx Floating Rate Limited Liability Company
(the "Fund"), as amended from time to time.
"Book Capital Account" shall mean, for any Member, its
capital account maintained in accordance with Section 2.2 hereof.
"Book Income" and "Book Loss" for each day, Fiscal Year, or
other relevant period shall mean the amount of net income or loss,
respectively (including (1) Tax-Exempt Income, (2) income, gain,
loss, and deduction described in Treas. Reg. Section 1.704-1 (b)
(2) (iv) (g), and (3) any increase or decrease in Net Unrealized
Gain or Net Unrealized Loss, but excluding (4) income, gain, loss,
and deduction described in Treas. Reg. Section 1.704-1 (b) (4)
(i) and (5) any Recognized Gain and Recognized Loss), for such
period, determined under generally accepted accounting principles
consistently applied.
"Business Day" shall mean any day on which the New York Stock
Exchange is open for business and any other day on which the
Managers, in their sole discretion, decide that the net asset
value of the Fund should be determined.
"Capital Contribution" shall mean, with respect to any
Member's Share, the amount of money and the Fair Market Value of
any property (determined in accordance with Treas. Reg. Section
1.704-1 (b) (2) (iv) (d) ) contributed by the Member to the Fund's
capital from time to time (net of liabilities secured by such
property that the Fund is considered to assume or to take subject
to under Section 752 of the Code).
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, or any successor law.
"Distributable Cash" for any Fiscal Year shall mean the net
cash proceeds from the Fund's activities, less the portion thereof
used to pay or establish Reserves for the Fund, plus such portion
of the Reserves as the Managers, in their sole discretion, no
longer deem necessary to be held as Reserves. Distributable Cash
shall not be reduced by amortization or similar deductions or
allowances.
"Fair Market Value" of an asset shall mean a fair value of
the asset as determined in good faith by or on behalf of the
Managers, subject, in the case of property contributed to the
Fund's capital, to Treas. Reg. Section 1.704-1 (b) (2) (iv) (d).
"Member" shall mean a person or entity admitted as a member
of the Fund under the Agreement.
"Investments" shall mean all of the securities, instruments,
and other assets of whatever nature of the Fund, including all
equity and debt securities, options, futures contracts, forward
contracts, derivative securities, and other property obtained by
virtue of holding such assets.
"Manager" shall mean each individual who has been duly
elected or appointed and has qualified as a Manager of the Fund in
accordance with the terms of the Agreement and who is then in
office.
"Matched Income or Loss" shall mean items of Taxable Income,
Tax-Exempt Income, or Tax Loss comprising interest income and
expense, original issue and market discounts, bond premium,
dividends, and all other types of income or loss to the extent
same is recognized for federal income tax purposes at the same
time and in the same amount as it is accrued for purposes of
determining Book Income or Book Loss.
"Net Unrealized Gain" shall mean the excess, if any, of the
aggregate Fair Market Value of all Investments over their
aggregate adjusted basis for federal income tax purposes.
"Net Unrealized Loss" shall mean the excess, if any, of the
aggregate adjusted basis for federal income tax purposes of all
Investments over their aggregate Fair Market Value.
"Policies" shall mean these Capital Account Establishment and
Maintenance Policies, as they may be amended from time to time.
"Precontribution Gain" and "Precontribution Loss" shall mean,
respectively, the built-in gain or loss (as defined in Treas. Reg.
Section 1.704-3 (a) (3) (ii) ) on any Section 704 (c) Property at
the time of the contribution thereof to the capital of the Fund
(i.e., the difference, at such time, between such property's book
value and the contributing Member's adjusted tax basis thereof for
federal income tax purposes).
"Recognized Gain" and "Recognized Loss" shall mean,
respectively, the amount of gain or loss, whether constituting
ordinary income or losses or capital gain or loss, realized on the
sale or other disposition of any Investment, to the extent same is
recognized for federal income tax purposes.
"Redemption" shall mean the complete withdrawal of a Member's
Shares resulting in the reduction of such Member's Book Capital
Account balance to zero, and "Redeem" shall mean to effect a
Redemption.
"Reserves" shall mean, with respect to any Fiscal Year, funds
set aside or amounts allocated during such year to reserves that
shall be maintained in amounts deemed sufficient by the Managers
for working capital and to pay taxes, insurance, debt service,
renewals, or other expenses incident to ownership of the
Investments or the operations of the Fund.
"Revaluation Account" shall mean, for any Member, its account
on the books of the Fund maintained in accordance with Section 2.4
hereof.
"Section 704 (c) Property" shall mean any property
contributed by a Member to the capital of the Fund, at the time of
contribution, has a book value -- determined as contemplated by
Treas. Reg. Section 1.704-1 (b) (i.e., initially, the Fair Market
Value thereof and appropriately adjusted thereafter) -- that
differs from the contributing Member's adjusted tax basis for
federal income tax purposes.
"Share" means a "limited liability company interest" in the
Fund as that latter term is used in the Act, together with all of
the rights, preferences, powers and privileges as may be provided
under the Agreement.
"Tax Capital Account" shall mean, for any Member, its capital
account on the books of the Fund with respect to its Shares
maintained in accordance with Section 2.3 hereof.
"Tax-Exempt Income" shall mean income that is excludable from
gross income under Section 103 (a) of the Code.
"Taxable Income" and "Tax Loss" shall mean the taxable income
or tax loss of the Fund, respectively, determined in accordance
with Section 703 (a) of the Code, for each Fiscal Year, together
with each of the items of income, gain, loss, or deduction of the
Fund that is separately stated or otherwise not included in
computing taxable income and tax loss.
"Treasury Regulations" or "Treas. Reg." shall mean the Income
Tax Regulations promulgated under the Code, as they may be amended
from time to time (including corresponding provisions of
succeeding regulations).
Any capitalized term used herein that is not defined above
shall have the meaning ascribed to it in the Investment Company
Act of 1940, the Fund's then currently effective registration
statement as filed with the Securities and Exchange Commission,
and the Agreement, in that order of precedence. The terms
"hereof," "herein," and "hereunder," when used in this document,
shall be deemed to refer to this document in its entirety rather
than the article, section, or paragraph in which they appear.
ARTICLE II
Capital and Related Accounts
2.1. Establishment and Maintenance of Accounts. A Book
Capital Account, a Tax Capital Account, and a Revaluation Account
shall be established and maintained separately for each Member
pursuant to Sections 2.2, 2.3, and 2.4 hereof, respectively. Such
provisions are intended to comply with Sections 704 and 706 of the
Code and Treas. Reg. sections 1.704-1 (b) and - 3 and shall be
interpreted and applied in a manner consistent therewith. The
Managers shall make any appropriate modifications to these
Policies to comply with the Code and such Treasury Regulations,
provided that no such modification shall have a material effect on
the amounts Distributable to any Member on the liquidation of the
Fund pursuant to Article VI hereof. Any election or other decision
relating to the establishment and maintenance of such accounts and
allocations thereto shall be made by the Managers in any manner
that reasonably reflects the purpose and intention of these
Policies.
2.2. Book Capital Accounts. The balance of a Member's Book
Capital Account at any time in any Fiscal Year shall be the
balance thereof on the first day of the Fiscal Year (or, if later,
the date such Member acquired its Shares):
(a) increased by any Capital Contribution made by such
Member;
(b) increased by the amount of Book Income allocated to
such Member pursuant to Section 4.1 hereof;
(c) decreased by the amount of money and the Fair
Market Value of any property distributed to such Member by
the Fund (net of liabilities secured by such property that
such Member is considered to assume or to take subject to
under Section 752 of the Code), including any distribution to
effect a withdrawal or Redemption;
(d) decreased by expenditures of the Fund described in
Section 705 (a) (2) (B) of the Code allocated to such Member;
and
(e) decreased by the amount of Book Loss allocated to
such Member pursuant to Section 4.1 hereof.
2.3. Tax Capital Accounts. The balance of a Member's Tax
Capital Account at any time in any Fiscal Year shall be the
balance thereof on the first day of the Fiscal Year (or, if later,
the date such Member acquired its Shares):
(a) increased by the amount of money and the adjusted
basis, for federal income tax purposes, of any property
contributed by such Member to the capital of the Fund (net of
liabilities secured by such property that the Fund is
considered to assume or to take subject to under Section 752
of the Code) with respect to such Member's Shares;
(b) increased by the amount of Taxable Income
(including Recognized Gain) and Tax-Exempt Income allocated
to such Member pursuant to Section 4.2 hereof;
(c) decreased by the amount of money and the adjusted
basis, for federal income tax purposes, of any property
distributed to such Member by the Fund (net of liabilities
secured by such property that such Member is considered to
assume or to take subject to under Section 752 of the Code),
including any distribution to effect a withdrawal (determined
under Section 732(a) of the Code) or Redemption (determined
under Section 732 (b) of the Code); and
(d) decreased by the amount of Tax Loss (including
Recognized Loss) allocated to such Member pursuant to Section
4.2 hereof.
2.4. Revaluation Accounts. The balance of a Member's
Revaluation Account at any time in any Fiscal Year shall be the
balance thereof on the first day of the Fiscal Year (or, if later,
the date such Member acquired its Shares):
(a) increased each day by the amount of the increase in
Net Unrealized Gain or decrease in Net Unrealized Loss, and
decreased each day by the amount of the decrease in Net
Unrealized Gain or increase in Net Unrealized Loss, allocated
to such Member pursuant to Section 4.3 hereof; and
(b) decreased by the amount of any Recognized Gain, and
increased by the amount of any Recognized Loss, allocated to
such Member's Tax Capital Account on the disposition of any
Investment.
ARTICLE III
Distributions
3.1. Distributions of Distributable Cash. Except as
otherwise provided in Article VI hereof, and subject to the
provisions of Article XIII of the Agreement, Distributable Cash
for any Fiscal Year may be distributed to the Members at such
times and in such amounts as the Managers shall determine in their
sole discretion; provided that, the Managers shall distribute a
sufficient amount of Distributable Cash so that Members that are
regulated investment companies can comply with the distribution
requirement in Section 852 of the Code and can avoid any liability
for the excise tax imposed by Section 4982 of the Code.
3.2. Division among Members. All distributions pursuant to
Section 3.1 hereof with respect to any fiscal Year or shorter
period shall be made to the Members (a) in proportion to the
allocations to them of Taxable Income, Tax-Exempt Income, or Tax
Loss with respect to such Fiscal Year or shorter period or (b)
pursuant to such other reasonable and equitable method selected by
the Managers in their sole discretion.
3.3. Distributions on Liquidation of the Fund. On
liquidation of the Fund, the proceeds will be distributed to the
Members as provided in Article VI hereof.
3.4. Amounts Withheld. All amounts withheld pursuant to the
Code or any provision of any state or local tax law with respect
to any payment or distribution to the Members shall be treated as
amounts distributed to the Members pursuant to this Article for
all purposes of these Policies.
ARTICLE IV
Allocations
4.1. Allocations to Book Capital Accounts. The Managers
shall cause the Investments to be valued at the end of each
Business Day; such valuation shall be used in determining the
amount of any increase or decrease for that day in Net Unrealized
Gain and Net Unrealized Loss (components of Book Income and Book
Loss). Book Income and Book Loss for any Business Day shall be
allocated to the Members' Book Capital Accounts at the end of such
day in proportion to their respective Book Capital Account
Balances at the beginning of such day (adjusted for capital
contributions and withdrawals on such day). For purposes of the
foregoing, (a) Book Income and Book Loss for any non-Business Day
shall be treated as arising on the following Business Day, (b) an
Investment that is sold or otherwise disposed of during any
Business Day shall be deemed to be held through the end of such
day, with a Fair Market Value equal to the amount realized on such
disposition (so as to account for Net Unrealized Gain or Net
Unrealized Loss, as the case may be, attributable to such
Investment between the end of the preceding Business day and the
time of such disposition), and (c) the determination of the amount
of any increase or decrease in Net Unrealized Gain or Net
Unrealized Loss for any Business Day and the allocation thereof
among the Members' respective Book Capital Accounts shall be made
in accordance with Treas. Reg. Sections 1.704-1 (b) (2) (iv) (f)
and -3.
4.2. Allocations to Tax Capital Accounts.
(a) Matched Income or Loss. Items of Matched Income or
Loss accruing on any day shall be allocated at the end of
such day to the Members' Tax Capital Accounts in proportion
to, and to the extent of, corresponding allocations of Book
Income or Book Loss to the Members' Book Capital Accounts for
such day.
(b) Precontribution Gain and Precontribution Loss. On
the sale or other disposition of Section 704(c) Property on
which gain or loss is recognized, (i) an amount of Recognized
Gain or Recognized Loss up to but not exceeding the
Precontribution Gain or Precontribution Loss on such property
shall be allocated to the contributing Member's Tax Capital
Account in accordance with Section 704(c) of the Code and
Treas. Reg. Sections 1.704-3, and (ii) to the extent
necessary, the Members shall receive reasonable curative or
remedial allocations permitted by Treas. Reg. Section 1.704-
3(c) and (d). The amount of Recognized Gain or Recognized
Loss on such disposition in excess of such Precontribution
Gain or Precontribution Loss shall be allocated in accordance
with Section 4.2(c) hereof.
(c) Other Taxable Income and Tax Loss. Subject to
Section 4.2 (b) hereof, Taxable Income, Tax-Exempt Income, or Tax
Loss (other than Matched Income or Loss) for any Fiscal Year shall
be allocated at least annually to the Members' Tax Capital
Accounts as follows:
(i) Recognized Gain from the sale or other
disposition of Investments shall be allocated, at the
end of the day such gain is recognized for federal
income tax purposes, as follows: (1) first, to the Tax
Capital Accounts of Members with positive Revaluation
Account balances, an amount of such gain (not exceeding
the sum of such balances, in proportion to such
balances, after allocation of the increase or decrease
in Net Unrealized Gain or Loss for such day (as
determined in Section 4.3), and (2) any such gain
exceeding the sum of such balances, to the Tax Capital
Accounts of all Members in proportion to their
respective Book Capital Account Balances at the
beginning of such day (adjusted for capital
contributions and withdrawals on such day).
(ii) Recognized Loss from the sale or other
disposition of Investments shall be allocated at the
end of the day such loss is recognized for federal
income tax purposes, as follows: (1) first, to the Tax
Capital Accounts of Members with negative Revaluation
Account balances, an amount of such loss (not exceeding
the sum of such balances) in proportion to such
balances after allocation of the increase or decrease
in Net Unrealized Gain or Loss for such day (as
determined in Section 4.3), and (2) any such loss
exceeding the sum of such balances, to the Tax Capital
Accounts of all Members in proportion to their
respective Book Capital Account Balances at the
beginning of such day (adjusted for capital
contributions and withdrawals on such day).
(iii) Any other amounts remaining at the end of the
Fiscal Year shall be allocated to the Members' Tax
Capital Accounts at that time in proportion to their
respective daily average Book Capital Account balances
for such Fiscal Year.
4.3. Allocations to Revaluation Accounts. The increase or
decrease in Net Unrealized Gain or Net Unrealized Loss for any
Business Day (determined in accordance with Section 4.1 hereof)
shall be allocated to the Members' Revaluation Accounts at the end
of such day in proportion to their respective Book Capital Account
balances at the beginning of such day (adjusted for capital
contributions and withdrawals on such day).
4.4. Redemptions During the Fiscal Year. If a Redemption
occurs other than on the last day of a Fiscal Year, the Fund will
treat such Fiscal Year as ended on the date of such Redemption for
the purposes of computing the Redeeming Member's distributive
share of the Fund's items of income, gain, loss, and deduction and
allocation of all such items to such Member will be made as though
each Member were receiving its allocable share of such items at
such time. All items so allocated to such Redeeming Member will be
excluded from the items to be allocated among the other Members at
the actual end of the Fiscal Year. All items allocated among the
Redeeming and non-Redeeming Members will be made subject to the
rules of Sections 702, 704, 706, 708, and 752 of the Code and the
Treasury Regulations promulgated thereunder.
ARTICLE V
Withdrawals and Redemptions
5.1. Withdrawals and Redemptions. A Member shall be entitled
to Redeem its Interest in accordance with Section 10.2 of the
Agreement.
5.2. Payments. Payment for the withdrawal of part of an
Interest or for the Redemption of an Interest shall be made in
cash or, subject to any applicable rules and regulations of the
Securities and Exchange Commission, in whole or in part by a
distribution in kind of portfolio securities. If a Redeeming
Member contributed to the Fund's capital any property (other than
cash) that is held by the Fund at the time the Member requests the
Redemption, then at the Managers' election such property (a) shall
be sold by the Fund prior to effecting such Redemption or (b)
shall be distributed in kind to such Member. Not withstanding
anything herein or in the Agreement to the contrary, on the
Redemption of any Member's entire Interest, payments or other
distributions shall be made in accordance with the Members'
positive Book Capital Account balances, after adjusting Book
Capital Accounts for allocations made pursuant to Article IV
hereof (in accordance with the requirements described in Treas.
Reg. Section 1.704-1 (b) (2) (ii) (b) (2) ).
5.3. Distributions in Kind. If a Redeeming Member receives a
distribution in kind of property of the Fund, then unrealized
income, gain, loss, and deduction inherent in such property (to
the extent any of same has not previously been reflected in the
Members' Book Capital Accounts) shall be allocated among the
Members as if there had been a taxable disposition of such
property for its Fair Market Value on the date of distribution,
consistent with the requirements of Treas. Reg. Section 1.704- 1
(b) (2) (iv) (e).
ARTICLE VI
Liquidation
6.1. Liquidation Procedure. Subject to Section 6.4 hereof
and Article II of the Agreement, on the dissolution of the Fund
the Managers shall liquidate the assets of the Fund and apply and
distribute the proceeds thereof as follows:
(a) first to the payment of all debts and obligations
of the Fund to creditors, including the expenses of
liquidation, and to the setting up of any Reserves for
contingencies that may be necessary; and
(b) then in accordance with the Members' positive Book
Capital Account Balances, after adjusting Book Capital
Accounts for allocations made pursuant to Article IV hereof
(in accordance with the requirements described in Treas. Reg.
Section 1.704-1 (b) (2) (ii) (b) (2)).
6.2. Alternative Liquidation Procedure. Notwithstanding
Section 6.1 hereof, if the Managers determine that an immediate
sale of any or all of the assets of the Fund would cause undue
loss to the Members, then to avoid such loss the Manager may,
after notifying all the Members and the extent not then prohibited
by any applicable law, either (a) defer liquidation of, and
withhold from distribution for a reasonable time, any assets of
the Fund except those necessary to satisfy the debts and
obligations of the Fund or (b) distribute the assets of the Fund
to the Members in liquidation.
6.3. Cash Distribution on Liquidation. Except as provided in
Section 6.2 hereof, amounts distributed on liquidation of the Fund
shall be paid solely in cash.
6.4. Treatment of Negative Book Capital Account Balance. If
a Member has a negative Book Capital Account balance following the
liquidation of its Shares, after taking into account all capital
account adjustments of the Fiscal Year during which the
liquidation occurs, then such Member shall (and is unconditionally
obligated to) restore the amount of such negative balance to the
Fund by the later of the end of such Fiscal Year or 90 days after
the date of such liquidation. Such amount shall, on liquidation of
the Fund, be paid to its creditors or distributed to other Members
in accordance with their positive Book Capital Account balances.
