BlackRock Core Alternatives FB Portfolio LLC Limited Liability Company Agreement November 20, 2009
November
20, 2009
TABLE
OF CONTENTS
Page
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ARTICLE
I
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DEFINITIONS
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ARTICLE
II
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ORGANIZATION;
ADMISSION OF MEMBERS
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Section
2.1.
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FORMATION
OF LIMITED LIABILITY COMPANY
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6
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Section
2.2.
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NAME
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6
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Section
2.3.
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PRINCIPAL
AND REGISTERED OFFICE
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7
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Section
2.4.
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DURATION
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7
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Section
2.5.
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PURPOSE,
NATURE OF BUSINESS AND POWERS
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7
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Section
2.6.
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BOARD
OF DIRECTORS
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7
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Section
2.7.
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MEMBERS
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8
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Section
2.8.
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BOTH
DIRECTORS AND MEMBERS
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9
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Section
2.9.
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LIMITED
LIABILITY
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9
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Section
2.10.
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AUTHORITY
TO DO BUSINESS
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9
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ARTICLE
III
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MANAGEMENT
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Section
3.1.
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MANAGEMENT
AND CONTROL
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9
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Section
3.2.
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ACTIONS
BY THE BOARD OF DIRECTORS
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13
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Section
3.3.
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MEETINGS
OF MEMBERS
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14
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Section
3.4.
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CUSTODY
OF ASSETS OF THE COMPANY
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16
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Section
3.5.
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OTHER
ACTIVITIES OF MEMBERS AND DIRECTORS
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16
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Section
3.6.
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DUTY
OF CARE
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16
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Section
3.7.
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INDEMNIFICATION
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17
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Section
3.8.
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NO
BOND REQUIRED OF DIRECTORS
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18
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Section
3.9.
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NO
DUTY OF INVESTIGATION; NO NOTICE IN COMPANY INSTRUMENTS,
ETC.
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18
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Section
3.10.
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RELIANCE
ON EXPERTS, ETC.
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19
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Section
3.11.
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FEES,
EXPENSES AND REIMBURSEMENT
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19
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ARTICLE
IV
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TRANSFERS
AND REPURCHASES
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Section
4.1.
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TRANSFER
OF INTERESTS
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20
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Section
4.2.
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REPURCHASE
OF INTERESTS
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21
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i
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ARTICLE
V
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CAPITAL
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Section
5.1.
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CONTRIBUTIONS
TO CAPITAL
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25
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Section
5.2.
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RIGHTS
OF MEMBERS TO CAPITAL
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26
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Section
5.3.
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CAPITAL
ACCOUNTS
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26
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Section
5.4.
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ALLOCATION
OF NET PROFIT AND NET LOSS
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27
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Section
5.5.
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ALLOCATION
OF CERTAIN EXPENDITURES
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27
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Section
5.6.
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RESERVES
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27
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Section
5.7.
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TAX
ALLOCATIONS
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28
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Section
5.8.
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TRANSFER
OF OR CHANGE IN INTERESTS.
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31
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Section
5.9.
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REGULATORY
AND RELATED ALLOCATIONS.
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31
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Section
5.10.
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CURATIVE
ALLOCATIONS.
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31
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Section
5.11.
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FEDERAL
INCOME TAX.
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32
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Section
5.12.
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DEEMED
SALE OF ASSETS.
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32
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Section
5.13.
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CERTAIN
DETERMINATIONS BY TAX MATTERS PARTNER.
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32
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Section
5.14.
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DISTRIBUTIONS
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32
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Section
5.15.
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WITHHOLDING
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33
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Section
5.16.
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ALLOCATION
OF ORGANIZATIONAL EXPENSES
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33
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ARTICLE
VI
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DISSOLUTION
AND LIQUIDATION
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Section
6.1.
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DISSOLUTION
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34
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Section
6.2.
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WINDING
UP
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34
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ARTICLE
VII
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ACCOUNTING,
VALUATIONS AND BOOKS AND RECORDS
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Section
7.1.
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ACCOUNTING
AND REPORTS
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35
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Section
7.2.
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VALUATION
OF NET ASSETS
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35
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ARTICLE
VIII
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MISCELLANEOUS
PROVISIONS
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Section
8.1.
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AMENDMENT
OF LIMITED LIABILITY COMPANY AGREEMENT
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36
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Section
8.2.
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SPECIAL
POWER OF ATTORNEY
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37
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Section
8.3.
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NOTICES
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38
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Section
8.4.
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AGREEMENT
BINDING UPON SUCCESSORS AND ASSIGNS
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39
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Section
8.5.
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APPLICABILITY
OF 1940 ACT
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39
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ii
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Section
8.6.
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CONVERSION
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39
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Section
8.7.
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CHOICE
OF LAW; ARBITRATION
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39
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Section
8.8.
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NOT
FOR BENEFIT OF CREDITORS.
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41
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Section
8.9.
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CONSENTS
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41
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Section
8.10.
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MERGER
AND CONSOLIDATION
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41
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Section
8.11.
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CERTAIN
TRANSACTIONS
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41
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Section
8.12.
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PRONOUNS;
USAGE; GENERIC TERMS
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43
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Section
8.13.
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CONFIDENTIALITY
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43
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Section
8.14.
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CERTIFICATION
OF NON-FOREIGN STATUS
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44
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Section
8.15.
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SEVERABILITY
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44
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Section
8.16.
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FILING
OF RETURNS
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45
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Section
8.17.
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TAX
DECISIONS AND TAX MATTERS PARTNER
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45
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Section
8.18.
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COUNTERPARTS
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46
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iii
(A
DELAWARE LIMITED LIABILITY COMPANY)
THIS
LIMITED LIABILITY COMPANY AGREEMENT of BLACKROCK CORE ALTERNATIVES FB PORTFOLIO
LLC, is made as of November 20, 2009 and shall be effective as of this
date.
W
I T N E S S E T H:
WHEREAS,
this Company has been formed to carry on business as set forth more particularly
hereinafter;
WHEREAS,
this Company is authorized to issue an unlimited amount of its limited liability
company interests all in accordance with the provisions hereinafter set
forth;
WHEREAS,
the Directors of the Company have agreed to manage all property coming into
their hands as Directors of a Delaware limited liability company in accordance
with the provisions hereinafter set forth; and
WHEREAS,
the parties hereto intend that the Company created by the filing of the
Certificate (defined below) with the Secretary of State of the State of Delaware
on November 19, 2009 shall constitute a limited liability company
under the Delaware Limited Liability Company Act and that this Agreement shall
constitute the governing instrument of such limited liability
company.
NOW,
THEREFORE, for and in consideration of the foregoing and the mutual covenants
hereinafter set forth and for other good and valuable consideration the receipt
and adequacy of which are hereby acknowledged, it is hereby agreed as
follows:
ARTICLE
I
DEFINITIONS
For
purposes of this Agreement, the following terms shall have the following
meanings:
"Adjusted
Capital Account Deficit" means, with respect to any Member, the deficit balance,
if any, in such Member's Capital Account as of the end of the relevant Fiscal
Year, after giving effect to the following adjustments:
(i)
Credit to such Capital Account any amounts which such Member is obligated to
restore or is deemed to be obligated to restore pursuant to Regulations Section
1.704-1(b)(2)(ii)(c); and
(ii) Debit
to such Capital Account the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4),(5) and (6).
The
foregoing definition of Adjusted Capital Account Deficit is intended to comply
with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
"Advisor"
means a person who at any particular time serves as an investment advisor to the
Company pursuant to an Investment Management Agreement, initially BlackRock
Advisors, LLC.
"Affiliate"
has the meaning given to such term in the 1940 Act.
"Agreement"
means this Limited Liability Company Agreement, as amended or supplemented
from time to time.
"Board
of Directors" means the Board of Directors established pursuant to Section 2.6
of this Agreement.
"Business
Day" means any day other than a Saturday, Sunday or any other day on which banks
in New York, New York are required by law to be closed. All
references to Business Day herein shall be based on the time in New York, New
York.
"Capital
Account" means, with respect to each Member, the capital account(s) established
and maintained on behalf of each Member pursuant to Section 5.3
hereof.
"Certificate"
means the Certificate of Formation of the Company dated November 19, 2009, and
any amendments thereto as filed with the office of the Secretary of State of the
State of Delaware.
"Closing
Date" means the first date on or as of which the first Member, who is not an
Affiliate of the Company or the Advisor, is admitted to the
Company.
"Code"
means the United States Internal Revenue Code of 1986, as amended from time to
time, or any successor law.
"Company"
means BlackRock Core Alternatives FB Portfolio LLC, the Delaware limited
liability company formed pursuant to the filing of the Certificate and operated
pursuant to this Agreement.
"Compulsorily
Repurchased Member" shall have the meaning ascribed in Section 4.2(f)(2)
hereof.
2
"Compulsory
Repurchase Instrument" shall have the meaning ascribed in Section 4.2(f)(3)
hereof.
"Compulsory
Repurchase Valuation Date" shall have the meaning ascribed in Section 4.2(f)(1)
hereof.
"Confidential
Information" shall have the meaning ascribed in Section 8.13(c)
hereof.
"Delaware
Act" means the Delaware Limited Liability Company Act, as in effect on the date
hereof and as amended from time to time, or any successor law.
"Director"
means an individual designated and qualified as a Director of the Company
pursuant to the provisions of Section 2.6 of this Agreement and who serves on
the Board of Directors of the Company.
"Disinterested
Non-Party Director" means a Director that is not an ''interested person" of the
Company (as defined in Section 2(a)(19) of the 0000 Xxx) or a party to any
agreement or proceeding in question.
"ERISA"
means the Employee Retirement Income Security Act of 1974, as
amended.
"Expense
Allocation Date" means the Closing Date and thereafter each day on or before the
12-month anniversary of such date as of which a contribution to the capital of
the Company is made pursuant to Section 5.1 hereof.
"Fiscal
Period" means the period commencing on the Closing Date, and thereafter each
period commencing on the day immediately following the last day of the preceding
Fiscal Period, and in each case ending at the close of business on the first to
occur of the following dates: (1) the last day of a Fiscal Quarter or Fiscal
Year; (2) the last day of a tax year; (3) the day preceding any day on which a
contribution to the capital of the Company is made pursuant to Section 5.1; (4)
the effective date of a repurchase of Interests made pursuant to Section 4.2;
(5) the day on which a substituted Member is admitted; or (6) any day (other
than one specified in clause (2) above) on which this Agreement provides for any
amount to be credited to or debited against the Capital Account of any Member
other than an amount to be credited to or debited against the Capital Accounts
of all Members in accordance with their respective Investment
Percentages.
"Fiscal
Quarter" means each three-month period ending each March 31, June 30, September
30 and December 31 (or on the date of a final distribution pursuant to Section
6.2 hereof), unless the Board of Directors shall elect a Fiscal Year for the
Company ending on a date other than March 31 of each year, in which event the
Company's Fiscal Quarters shall be determined by reference to such other Fiscal
Year. The first Fiscal Quarter of the Company shall commence on the
Closing Date and end as of the first quarterly end date mentioned above to
occur.
"Fiscal
Year" means the period commencing on the Closing Date and ending on March 31,
2011, and thereafter each 12-month period ending on March 31 of each year (or on
the date of a final distribution pursuant to Section 6.2 hereof), unless the
Board of Directors shall elect another Fiscal Year for the Company.
3
"Fundamental
Policies" shall mean the investment policies and restrictions as set forth from
time to time in any Registration Statement of the Company filed with the
Securities and Exchange Commission and designated as fundamental policies
therein, as they may be amended from time to time in accordance with the
requirements of the 1940 Act.
"Independent
Directors" means those Directors who are not "interested persons" of the
Company, as such term is defined in the 1940 Act.
"Initial
Sole Director" means the initial sole Director of the Company who served in such
capacity for the purpose of organizing the Company.
"Interest"
means the limited liability company interests of Members in the
Company.
"Investment
Management Agreement" means a separate written agreement, subject to Section 15
of the 1940 Act, between the Company and an Advisor, pursuant to which the
Advisor provides Management Services to the Company.
"Investment
Percentage" means a percentage established for each Member on the Company's
books as of the first day of each Fiscal Period. The Investment
Percentage of a Member for a Fiscal Period shall be determined by dividing the
balance of the Member's Capital Account as of the commencement of such Fiscal
Period by the sum of the Capital Accounts of all of the Members as of the
commencement of such Fiscal Period. The sum of the Investment Percentages of all
Members for each Fiscal Period shall equal 100%.
"Majority
Vote" means the affirmative vote of Members holding (i) 67% or more of the
voting power (determined in accordance with Section 3.3(i) hereof) present at
any duly called meeting, if the holders of more than 50% of the outstanding
voting power of the Company are present or represented by proxy; or (ii) more
than 50% of the outstanding voting power of the Company, whichever is the less;
or such greater or lesser percentage vote as defined and currently in effect
under the 1940 Act.
"Management
Services" means such investment advisory and other services as the Advisor is
required to provide to the Company pursuant to an Investment Management
Agreement.
"Master
Fund" means BlackRock Core Alternatives Master Fund LLC.
"Member"
means any person admitted to the Company as a member (which may include any
Director in such person's capacity as a member of the Company) until the Company
has repurchased all of the Interest of such person pursuant to Section 4.2
hereof or a substituted Member or Members has been admitted with respect to all
of such person's Interest pursuant to Section 4.2 hereof; such term includes the
Advisor or any of its Affiliates, in their capacity as a member of the Company,
to the extent they make one or more capital contributions to the Company and
shall have been admitted to the Company as a Member. Persons seeking to be
admitted to the Company as Members, or seeking to make additional contributions
to the Company pursuant to Section 5.1 hereof, shall be required to provide such
subscription materials in the form and substance as the Company may require from
time to time.
4
"Net
Assets" means the total value of all assets of the Company, less an amount equal
to all accrued debts, liabilities and obligations of (or allocable to) the
Company excluding any amounts borrowed for investment purposes, calculated
before giving effect to any repurchases of Interests as of the date of
calculation.
"Net
Profit" or "Net Loss" means the amount by which the Net Assets as of the close
of business on the last day of a Fiscal Period exceed (in the case of Net
Profit) or are less than (in the case of Net Loss) the Net Assets as of the
commencement of the same Fiscal Period (or, with respect to the initial Fiscal
Period of the Company, at the close of business on the Closing Date), such
amount to be adjusted to exclude any items to be allocated among the Capital
Accounts of the Members on a basis that is not in accordance with respective
Investment Percentages as of the commencement of such Fiscal Period pursuant to
Sections 5.5 and 5.6 hereof.
"Notice
Date" means the date, as specified in any tender offer made by the Company, by
which Members choosing to tender Interests for repurchase must notify the
Company of their intent.
"1933
Act" means the Securities Act of 1933 and the rules thereunder, as amended from
time to time.
"1940
Act" means the Investment Company Act of 1940 and the rules thereunder,
including any applicable orders thereunder, as amended from time to
time.
"Organizational
Expenses" means the expenses incurred by the Company in connection with its
formation and registration as an investment company under the 1940
Act.
"Pass-Thru
Member" shall have the meaning ascribed in Section 8.17(c) hereof.
"Person"
means a natural person, partnership, corporation, business trust, joint stock
company, trust, unincorporated association, limited liability company, joint
venture, or other entity of whatever nature.
"Portfolio
Funds" means unregistered investment funds and registered investment companies
in which the Company invests directly or indirectly through the Master
Fund.
"Repurchase
Instrument" has the meaning ascribed in Section 4.2(e)(2) hereof.
"Registration
Statement" means the Company's registration statement on Form N-2 filed with the
Securities and Exchange Commission, as amended or supplemented from time to
time.
"Repurchase
Valuation Date" means the date as of which the Interests to be repurchased are
valued by the Company.
"Securities"
means securities (including, without limitation, equities, debt obligations,
options, and other "securities" as that term is defined in section 2(a)(36) of
the 0000 Xxx) and any contracts for forward or future delivery of any security,
debt obligation or currency, or commodity, all types of derivative instruments
and any contracts based on any index or group of
5
securities,
debt obligations or currencies, or commodities, and any options thereon, as well
as investments in Portfolio Funds.
"Special
Laws or Regulations" means regulatory or compliance requirements imposed by laws
other than the 1933 Act, the Securities Exchange Act of 1934 or the 1940 Act,
including without limitation those imposed by the Bank Holding Company Act,
certain Federal Communications Commission regulations, or ERISA.
"Tax
Matters Partner" shall have the meaning ascribed in Section
8.17(a).
"Transfer"
means, directly and indirectly, the assignment, pledge, sale, hypothecation,
exchange, transfer or other disposition of legal or beneficial ownership
(including without limitation through any swap, structured note or any other
derivative transaction) of all or any portion of an Interest, including without
limitation any rights associated with an Interest (such as a right to
distributions).
"Treasury
Regulations" means the regulations promulgated under the Code.
"Valuation
Date" means the last Business Day of each Fiscal Period and any other date,
designated by the Board of Directors, on which the Company determines the value
of its Interests.
ARTICLE
II
ORGANIZATION;
ADMISSION OF MEMBERS
|
|
SECTION
2.1.
|
FORMATION
OF LIMITED LIABILITY COMPANY.
|
Each
member of the Board of Directors, any officer of the Company and any other
person authorized and designated by the Board of Directors shall be considered
an "authorized person" within the meaning of the Delaware Act, and may execute
and file in accordance with the Delaware Act any amendment to the Certificate
and may execute and file with applicable governmental authorities any other
instruments, documents and certificates that, in the opinion of the Company's
legal counsel, may from time to time be required by the laws of the United
States of America, the State of Delaware or any other jurisdiction in which the
Company shall determine to do business, or any political subdivision or agency
thereof, or which such legal counsel may deem necessary or appropriate to
effectuate, implement and continue the valid existence and business of the
Company.
|
|
SECTION
2.2.
|
NAME.
|
The
name of the Company shall be "BLACKROCK CORE ALTERNATIVES FB PORTFOLIO LLC" or
such other name as the Board of Directors may hereafter adopt upon causing an
appropriate amendment to the Certificate to be filed in accordance with the
Delaware Act.
6
|
|
SECTION
2.3.
|
PRINCIPAL
AND REGISTERED OFFICE.
|
The
Company shall have its principal office at 000 Xxxxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, or at such other place designated from time to time by the Board
of Directors.
The
Company shall have its registered office in Delaware at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000 and shall have The Corporation
Trust Company as its registered agent for service of process in Delaware, unless
a different registered office or agent is designated from time to time by the
Board of Directors. Said agent shall act under the direction of the
Advisor, the Board of Directors and the Company's legal counsel in all matters
arising out of or pertaining to said agency.
|
|
SECTION
2.4.
|
DURATION
|
The
term of the Company commenced on the filing of the Certificate with the
Secretary of State of Delaware and shall continue until the Company is dissolved
pursuant to Section 6.1 hereof.
|
|
SECTION
2.5.
|
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 limited liability company 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
limited liability company 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
2.6.
|
BOARD
OF DIRECTORS.
|
(a) Prior
to an offering of Interests there may be an initial sole Director, who may also
serve as the initial sole officer. Thereafter, the number of Directors shall be
determined by a written instrument signed by a majority of the Directors then in
office, provided that the number of Directors shall be no less than two or more
than fifteen. 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 80 years of age at the time of nomination and not under legal
disability. Directors need not own an Interest and may succeed themselves in
office. Each Director shall be a "Manager" of the Company for
purposes of the Delaware Act.
7
(b) The Directors shall be
elected at meetings of the Members called by the Board of Directors from time to
time in their sole discretion for that purpose, except as provided in Section
2.6(d) of this Article, and each Director elected shall hold office until his or
her successor shall have been elected and shall have qualified. The term of
office of a Director shall terminate and a vacancy shall occur in the event of
the death, resignation, removal, bankruptcy, adjudicated incompetence or other
incapacity to perform the duties of the office, or removal, of a
Director.
(c) Any
of the Directors may resign (without need for prior or subsequent accounting) by
an instrument in writing signed by such Director and delivered or mailed to the
Directors or the Chairman, if any, the President or the Secretary and such
resignation shall be effective upon such delivery, or at a later date according
to the terms of the instrument. Any of the Directors may be removed (provided
the aggregate number of Directors after such removal shall not be less than the
minimum number required by Section 2.6(a) hereof) for cause only, and not
without cause, and only by action taken by a majority of the remaining Directors
followed by the vote of Members holding at least seventy-five percent (75%) of
the voting power (determined in accordance with Section 3.3(i) hereof) of the
Company then entitled to vote in an election of such Director. Upon the
resignation or removal of a Director, each such resigning or removed Director
shall execute and deliver such documents as the remaining Directors shall
require for the purpose of effecting such resignation or removal.
(d) 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 Section by a written instrument signed by a majority of the
Directors then in office or may leave such vacancy unfilled or may reduce the
number of Directors; provided the aggregate number of Directors after such
reduction shall not be less than the minimum number required by Section 2.6(a)
hereof; provided, further, that if the Members of any class or series of
Interests are entitled separately to elect one or more Directors, a majority of
the remaining Directors or the sole remaining Director elected by that class or
series may fill any vacancy among the number of Directors elected by that class
or series. Any vacancy created by an increase in Directors may be filled by the
appointment of an individual having the qualifications described in Section
2.6(a) made by a written instrument signed by a majority of the Directors then
in office. No vacancy shall operate to annul 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.
|
|
SECTION
2.7.
|
MEMBERS.
|
The
Board of Directors or its authorized delegate may admit one or more Members as
of the first Business Day of each calendar month or more frequently as
determined by the Board of Directors as in accordance with applicable law. All
subscriptions are subject to the receipt of cleared funds on or before the
acceptance date in the full amount of the subscription, plus the applicable
sales charge, if any. Each potential Member must execute a signature page of
this Agreement or of the Company's subscription agreement pursuant to which such
Member agrees to be bound by all the terms and provisions hereof. The
Board of Directors or its authorized delegate may, in its sole discretion,
reject any subscription for an Interest. The Board of
8
Directors
may, in its sole discretion, suspend subscriptions for Interests at any time and
from time to time, for any reason. The admission of any person as a Member shall
be effective upon the revision of the books and records of the Company to
reflect the name and the contribution to the capital of the Company of such
additional Member. No act, vote or approval of any Member of the
Company is required to admit a new Member in accordance with this Section
2.7.
|
|
SECTION
2.8.
|
BOTH
DIRECTORS AND MEMBERS.
|
A
Person may at the same time be a Director and a Member, in which event such
Person's rights and obligations in each capacity shall be determined separately
in accordance with the terms and provisions hereof or as provided in the
Delaware Act.
|
|
SECTION
2.9.
|
LIMITED
LIABILITY.
|
No
Member of the Company shall be subject in such capacity to any personal
liability whatsoever to any Person in connection with Property of the Company 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 Delaware General Corporation Law.
No Director or officer of the Company shall be subject in such capacity to any
personal liability whatsoever to any Person, save only liability to the Company
or its Members arising from bad faith, willful misfeasance, gross negligence or
reckless disregard for his duty to such Person; and, subject to the foregoing
exception, all such Persons shall look solely to the Property of the Company for
satisfaction of claims of any nature arising in connection with the affairs of
the Company. If any Member, Director or officer, as such, of the Company, is
made a party to any suit or proceeding to enforce any such liability, subject to
the foregoing exception, he shall not, on account thereof, be held to any
personal liability. Any repeal or modification of this Section 2.9 shall not
adversely affect any right or protection of a Director or officer of the Company
existing at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
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|
SECTION
2.10.
|
AUTHORITY
TO DO BUSINESS.
|
If
determined to be in the interest of the Company by the Board of Directors, an
officer shall execute, deliver and file any other certificates (and any
amendments and/or restatements thereof) necessary for the Company to qualify to
do business in New York and in any other jurisdiction in which the Company may
wish to conduct business.
ARTICLE
III
MANAGEMENT
|
|
SECTION
3.1.
|
MANAGEMENT
AND CONTROL.
|
(a) Management
and control of the business of the Company shall be vested in the Board of
Directors, which shall have the right, power and authority, on behalf of the
Company and in its name, to exercise all rights, powers and authority of
"Managers" under the Delaware Act and to do all things necessary and proper to
carry out the objective and business of the Company and their duties
hereunder. No Director shall have the authority individually to act
on
9
behalf
of or to bind the Company except within the scope of such Director's authority
as delegated by the Board of Directors. The parties hereto intend
that, except to the extent otherwise expressly provided herein, (i) each
Director shall be vested with the same powers, authority and responsibilities on
behalf of the Company as are customarily vested in a director of a Delaware
corporation and (ii) each Independent Director shall be vested with the same
powers, authority and responsibilities on behalf of the Company as are
customarily vested in each director of a closed-end management investment
company registered under the 1940 Act who is not an "interested person" of such
company as such term is defined in the 1940 Act. During any period in
which the Company shall have no Directors, the Advisor may continue to serve as
the Advisor to the Company and to provide the Management Services to the
Company.
(b) The
Directors shall owe to the Company and its Members the same fiduciary duties as
directors of corporations owe to such corporations and their stockholders under
the Delaware General Corporation Law. The Directors may perform such acts as in
their sole discretion are proper for conducting the business of the Company. The
enumeration of any specific power herein shall not be construed as limiting the
aforesaid power. Such powers of the Directors may be exercised without order of
or resort to any court.
(c) The
Directors shall have power, subject to the Fundamental Policies in effect from
time to time with respect to the Company, to:
(1) manage,
conduct, operate and carry on the business of an investment
company;
(2) subscribe
for, invest in, reinvest in, purchase or otherwise acquire, hold, pledge, sell,
assign, transfer, exchange, distribute or otherwise deal in or dispose of any
and all sorts of property, tangible or intangible, including but not limited to
securities of any type whatsoever, whether equity or non-equity, of any issuer,
evidences of indebtedness of any person and any other rights, interests,
instruments or property of any sort and to exercise any and all rights, powers
and privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without limitation, the
right to consent and otherwise act with respect thereto, with power to designate
one or more Persons to exercise any of said rights, powers and privileges in
respect of any of said investments. The Directors shall not be limited by any
law limiting the investments which may be made by fiduciaries.
(d) The
Directors shall have the power to issue, sell, repurchase, redeem, retire,
cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal
in, Interests and, subject to the more detailed provisions set forth in this
Agreement, to apply to any such repurchase, redemption, retirement, cancellation
or acquisition of Interests any funds or property whether capital or surplus or
otherwise, to the full extent now or hereafter permitted corporations formed
under the Delaware General Corporation Law.
(e) Subject
to the Fundamental Policies in effect from time to time with respect to the
Company, the Directors shall have the power to borrow money or otherwise obtain
credit or utilize leverage to the maximum extent permitted by law or regulation
as such may be needed from time to time and to secure the same by mortgaging,
pledging or otherwise subjecting as
10
security
the assets of the Company, including the lending of portfolio securities, and to
endorse, guarantee, or undertake the performance of any obligation, contract or
engagement of any other person, firm, association or corporation.
(f) The
Directors shall have the power, consistent with their continuing exclusive
authority over the management of the Company and the Property of the Company, to
delegate from time to time to such of their number or to officers, employees or
agents of the Company the doing of such things, including any matters set forth
in this Agreement, and the execution of such instruments either in the name of
the Company or the names of the Directors or otherwise as the Directors may deem
expedient. The Directors may designate one or more committees which shall have
all or such lesser portion of the authority of the entire Board of Directors as
the Directors shall determine from time to time except to the extent action by
the entire Board of Directors or particular Directors is required by the 0000
Xxx.
(g) The
Directors shall have power to collect all property due to the Company; to pay
all claims, including taxes, against the Property of the Company or the Company,
the Directors or any officer, employee or agent of the Company; to prosecute,
defend, compromise or abandon any claims relating to the Property of the Company
or the Company, or the Directors or any officer, employee or agent of the
Company; to foreclose any security interest securing any obligations, by virtue
of which any property is owed to the Company; and to enter into releases,
agreements and other instruments. Except to the extent required for a
corporation formed under the Delaware General Corporation Law, 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.
(h) The
Directors shall have power to incur and pay out of the assets or income of the
Company any expenses which in the opinion of the Directors are necessary or
incidental to carry out any of the purposes of this Agreement, and the business
of the Company, and to pay reasonable compensation from the funds of the Company
to themselves as Directors. The Directors shall fix the compensation of all
officers, employees and Directors. The Directors may pay themselves such
compensation for special services, including legal, underwriting, syndicating
and brokerage services, as they in good faith may deem reasonable and
reimbursement for expenses reasonably incurred by themselves on behalf of the
Company. The Directors shall have the power, as frequently as they may
determine, to cause each Member to pay directly, in advance or arrears, for
charges of distribution, of the custodian or transfer, Member servicing or
similar agent, a pro rata amount as defined from time to time by the Directors,
by setting off such charges due from such Member from declared but unpaid
dividends or distributions owed such Member and/or by reducing a Member's
Interest in the Company.
(i) The
Directors shall have the exclusive authority to adopt and from time to time
amend or repeal By-Laws for the conduct of the business of the
Company.
(j) The
Directors shall have the power to: (a) employ or contract with such Persons as
the Directors may deem desirable for the transaction of the business of the
Company; (b) enter into joint ventures, partnerships and any other combinations
or associations; (c) purchase, and pay for out of Property of the Company,
insurance policies insuring the Members, Directors,
11
officers,
employees, agents, investment advisors, distributors, selected dealers or
independent contractors of the Company against all claims arising by reason of
holding any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not constituting negligence, or whether
or not the Company would have the power to indemnify such Person against such
liability; (d) establish pension, profit-sharing, interest purchase, and other
retirement, incentive and benefit plans for any Directors, officers, employees
and agents of the Company; (e) make donations, irrespective of benefit to the
Company, for charitable, religious, educational, scientific, civic or similar
purposes; (f) to the extent permitted by law, indemnify any Person with whom the
Company has dealings, including without limitation any advisor, administrator,
manager, transfer agent, custodian, distributor or selected dealer, or any other
person as the Directors may see fit to such extent as the Directors shall
determine; (g) guarantee indebtedness or contractual obligations of others; (h)
determine and change the Fiscal Year of the Company and the method in which its
accounts shall be kept; (i) notwithstanding the Fundamental Policies of the
Company, convert the Company from a master-feeder structure to another
structure; and (j) adopt a seal for the Company but the absence of such seal
shall not impair the validity of any instrument executed on behalf of the
Company.
(k) The
Directors shall have the power to conduct the business of the Company and carry
on its operations in any and all of its branches and maintain offices both
within and without the State of Delaware, in any and all states of the United
States of America, in the District of Columbia, and in any and all
commonwealths, territories, dependencies, colonies, possessions, agencies or
instrumentalities of the United States of America and of foreign governments,
and to do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the Company
although such things are not herein specifically mentioned. 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. The
Directors will not be required to obtain any court order to deal with the
Property of the Company.
(l)
Each Member agrees not to treat, on his personal income tax return or in any
claim for a tax refund, any item of income, gain, loss, deduction or credit in a
manner inconsistent with the treatment of such item by the Company. The Tax
Matters Partner, subject to the supervision of the Board of Directors, shall
make such elections under the Code and other relevant tax laws as to the
treatment of items of Company income, gain, loss, deduction and credit, and as
to all other relevant matters, as may be provided herein or as the Tax Matters
Partner deems necessary or appropriate, including, without limitation, elections
referred to in Section 754 of the Code, determination of which items of cash
outlay are to be capitalized or treated as current expenses, and selection of
the method of accounting and bookkeeping procedures to be used by the
Company.
(m) Members
shall have no right to participate in and shall take no part in the management
or control of the Company's business and shall have no right, power or authority
to act for or bind the Company. Members shall have the right to vote
on any matters only as provided in this Agreement or on any matters that require
the approval of the holders of "voting securities" under the 1940
Act.
12
(n) The Directors shall elect a
President, a Secretary and a Treasurer and may elect a Chairman or Vice Chairman
who shall serve at the pleasure of the Directors or until their successors are
elected. The Directors may elect or appoint or may authorize the Chairman, if
any, the Vice Chairman, if any, or President to appoint such other officers or
agents with such powers as the Directors may deem to be advisable. A Chairman
and any Vice Chairman shall, and the President, Secretary and Treasurer may, but
need not, be a Director. The term of office of an officer shall
terminate and a vacancy shall occur in the event of the death, resignation,
removal, bankruptcy, adjudicated incompetence or other incapacity to perform the
duties of the office, or removal, of an officer.
(o) The
Tax Matters Partner may in the future, subject to the supervision of the Board
of Directors, incorporate the Company and, if desired, elect to treat the
Company as an association taxable as a corporation for U.S. federal income tax
purposes and seek to qualification thereof as a registered investment company
under Subchapter M of the Code.
|
|
SECTION
3.2.
|
ACTIONS
BY THE BOARD OF DIRECTORS.
|
(a) Meetings
of the Directors shall be held from time to time upon the call of the Chairman,
if any, or the President or any two Directors. Regular meetings of the Directors
may be held without call or notice at a time and place fixed by the By-Laws or
by resolution of the Directors. Notice of any other meeting shall be given by
the Secretary and shall be delivered to the Directors orally not less than 24
hours, or in writing not less than 72 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 properly called or convened. Any time there is more than one
Director, a quorum for all meetings of the Directors shall be one-third, but not
less than two, of the Directors. Unless provided otherwise in this Agreement and
except as required under the 1940 Act, 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.
Any
committee of the Directors, including an executive committee, if any, may act
with or without a meeting. A quorum for all meetings of any such committee shall
be one-third, but not less than two, of the members thereof. Unless provided
otherwise in this Declaration, any action of any such committee may be taken at
a meeting by vote of a majority of the committee members present (a quorum being
present).
With
respect to actions of the Directors and any committee of the Directors,
Directors who are Interested Directors 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 1940 Act.
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 can hear each other; participation in a meeting pursuant to any such
communications system shall constitute presence in person at such
meeting.
13
(b) Any
action which may be taken by Directors by vote may be taken without a meeting if
that number of the Directors, or members of a committee, as the case may be,
required for approval of such action at a meeting of the Directors or of such
committee consent to the action in writing and the written consents are filed
with the records of the meetings of Directors. Such consent shall be treated for
all purposes as a vote taken at a meeting of Directors.
|
|
SECTION
3.3.
|
MEETINGS
OF MEMBERS.
|
(a) The
Company may hold meetings of Members at any time called by a majority of the
Directors or the President and shall be called by any Director for any proper
purpose upon written request of Members holding in the aggregate not less than
fifty-one percent (51%) of the voting power (determined in accordance with
Section 3.3(i) hereof) of the Company or class or series of Interests having
voting rights on the matter, such request specifying the purpose or purposes for
which such meeting is to be called. Any Member meeting shall be held within or
without the State of Delaware on such day and at such time as the Directors
shall designate.
(b) Members
shall have no power to vote on any matter except matters on which a vote of
Members is required by applicable law, this Agreement or resolution of the
Directors. This Agreement expressly provides that no matter for which voting is
required by the Delaware Act in the absence of the contrary provision in the
Agreement shall require any vote. Except as otherwise provided herein, any
matter required to be submitted to Members and affecting one or more classes or
series of Interests shall require approval by the required voting power
(determined in accordance with Section 3.3(i) hereof) of all the affected
classes and series of Interests voting together as a single class; provided,
however, that as to any matter with respect to which a separate vote of any
class or series of Interests is required by the 1940 Act, such requirement as to
a separate vote by that class or series of Interests shall apply in addition to
a vote of all the affected classes and series voting together as a single class.
Members of a particular class or series of Interests shall not be entitled to
vote on any matter that affects only one or more other classes or series of
Interests. There shall be no cumulative voting in the election or removal of
Directors.
(c) 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 and not more
than 90 days before the meeting or otherwise in compliance with applicable law.
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 120 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 90 days nor less than 10 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.
(d) The
holders of a majority of the voting power (determined in accordance with Section
3.3(1) hereof) entitled to vote on any matter at a meeting present in person or
by proxy shall constitute a quorum at such meeting of the Members for purposes
of conducting business on such matter. The absence from any meeting, in person
or by proxy, of a quorum of Members for action upon any given matter shall not
prevent action at such meeting upon any other matter
14
or
matters which may properly come before the meeting, if there shall be present
thereat, in person or by proxy, a quorum of Members in respect of such other
matters.
Subject
to any provision of applicable law, this Agreement or a resolution of the
Directors specifying a greater or a lesser vote requirement for the transaction
of any item of business at any meeting of Members, (i) the affirmative vote of
Members holding a majority of the voting power (determined in accordance with
Section 3.3(i) hereof) present in person or represented by proxy and entitled to
vote on the subject matter shall be the act of the Members with respect to such
matter, and (ii) where a separate vote of one or more classes or series of
Interests is required on any matter, the affirmative vote of Members holding a
majority of the voting power (determined in accordance with Section 3.3(i)
hereof) of such class or series of Interests present in person or represented by
proxy at the meeting shall be the act of the Members of such class or series
with respect to such matter.
(e) At
any meeting of Members, any holder of an Interest entitled to vote thereat may
vote by properly executed 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. No proxy shall be valid after the
expiration of 11 months from the date thereof, unless otherwise provided in the
proxy. Only Members of record shall be entitled to vote. When any
Interest is held jointly by several persons, any one of them may vote at any
meeting in person or by proxy in respect of such Interest, 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 Interest. A proxy purporting to be
executed by or on behalf of a Member 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 Interest 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 Interest, 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.
(f) The
Directors shall cause to be prepared at least annually and more frequently to
the extent and in the form required by law or applicable regulation a report of
operations containing a balance sheet and statement of income and undistributed
income of the Company prepared in conformity with generally accepted accounting
principles and an opinion of an independent public accountant on such financial
statements. Copies of such reports shall be mailed to all Members of record
within the time required by the 1940 Act. The Directors shall, in
addition, furnish to the Members at least semi-annually to the extent required
by law, interim reports containing an unaudited balance sheet of the Company as
of the end of such period and an unaudited statement of income and surplus for
the period from the beginning of the current fiscal year to the end of such
period.
(g) The
records of the Company shall be open to inspection by Members to the same extent
as is permitted stockholders of a corporation formed under the Delaware General
Corporation Law.
15
(h) Any action which may be taken by
Members by vote may be taken without a meeting if the holders entitled to vote
thereon of the proportion of Interests required for approval of such action at a
meeting of Members pursuant to this Section 3.3 consent to the action in writing
and the written consents are filed with the records of the meetings of Members.
Such consent shall be treated for all purposes as a vote taken at a meeting of
Members.
(i) Each
Member shall be entitled to cast at any meeting of Members a number of votes
equal to the numeric value of such Member's Investment Percentage as of the
record date for such meeting multiplied by 1000. For example, if a
Member's Investment Percentage was equal to 10%, such Member would receive 100
votes (0.10 * 1000 = 100 votes). Similarly, a Member whose Investment
Percentage was equal to 0.02% would receive .2 votes (0.0002 * 1000 =
..2).
|
|
SECTION
3.4.
|
CUSTODY
OF ASSETS OF THE COMPANY.
|
The
physical possession of all funds, Securities or other properties of
the Company shall at all times, be held, controlled and administered by one or
more custodians retained by the Company in accordance with the requirements of
the 1940 Act and the rules thereunder.
|
|
SECTION
3.5.
|
OTHER
ACTIVITIES OF MEMBERS AND
DIRECTORS.
|
(a) The
Directors shall not be required to devote full time to the affairs of the
Company, but shall devote such time as may reasonably be required to perform
their obligations under this Agreement.
(b) Any
Member, Director, Advisor, and any Affiliate of any of them, may engage in or
possess an interest in other business ventures or commercial dealings of every
kind and description, independently or with others, including, but not limited
to, acquisition and disposition of Securities, provision of investment advisory
or brokerage services, serving as directors, officers, employees, advisors or
agents of other companies, partners of any partnership, members of any limited
liability company, or trustees of any trust, or entering into any other
commercial arrangements. No Member or Director shall have any rights
in or to such activities of any other Member, Director or Advisor or any
Affiliate thereof, or any profits derived therefrom.
|
|
SECTION
3.6.
|
DUTY
OF CARE.
|
(a) No
Director or officer of the Company shall be liable to the Company or to any of
its Members for any loss or damage occasioned by any act or omission in the
performance of his or her services to the Company as a Director, unless it shall
be determined by final judicial decision on the merits from which there is no
further right to appeal that such loss is due to an act or omission of such
Director or officer constituting willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Director's or officer's office.
(b) Members
not in breach of any obligation hereunder or under any agreement pursuant to
which a Member subscribed for an Interest shall be liable to the Company, any
Member or third parties only as provided under the Delaware Act.
16
|
|
SECTION
3.7.
|
INDEMNIFICATION.
|
(a) The
Company hereby agrees to indemnify each person who at any time serves as a
Director or officer of the Company (each such person being an "indemnitee")
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 indemnitee 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
indemnitee may be or may have been involved as a party or otherwise or with
which such indemnitee may be or may have been threatened, while acting in any
capacity set forth in this Section 3.7 by reason of the indemnitee having acted
in any such capacity, except with respect to any matter as to which the
indemnitee shall not have acted in good faith in the reasonable belief that the
indemnitee's action was in the best interest of the Company or, in the case of
any criminal proceeding, as to which the indemnitee shall have had reasonable
cause to believe that the conduct was unlawful, provided, however, that no
indemnitee shall be indemnified hereunder against any liability to any person or
any expense of such indemnitee arising by reason of (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence, or (iv) reckless disregard of the duties
involved in the conduct of the indemnitee's position (the conduct referred to in
such clauses (i) through (iv) being sometimes referred to as "disabling
conduct"). Notwithstanding the foregoing, with respect to any action, suit or
other proceeding voluntarily prosecuted by any indemnitee as plaintiff,
indemnification shall be mandatory only if the prosecution of such action, suit
or other proceeding by such indemnitee (1) was authorized by a majority of the
Directors or (2) was instituted by the indemnitee to enforce his or her rights
to indemnification hereunder in a case in which the indemnitee is found to be
entitled to such indemnification. The rights to indemnification set forth in
this Agreement shall continue as to a person who has ceased to be a Director or
officer of the Company and shall inure to the benefit of his or her heirs,
executors and personal and legal representatives. No amendment or restatement of
this Agreement or repeal of any of its provisions shall limit or eliminate any
of the benefits provided to any person who at any time is or was a Director or
officer of the Company or otherwise entitled to indemnification hereunder in
respect of any act or omission that occurred prior to such amendment,
restatement or repeal.
(b) Notwithstanding
the foregoing, no indemnification shall be made hereunder unless there has been
a determination (i) by a final decision on the merits by a court or other body
of competent jurisdiction before whom the issue of entitlement to
indemnification hereunder was brought that such indemnitee is entitled to
indemnification hereunder or, (ii) in the absence of such a decision, by (1) a
majority vote of a quorum of those Directors who are Disinterested Non-Party
Directors that the indemnitee is entitled to indemnification hereunder, or (2)
if such quorum is not obtainable or even if obtainable, if such majority so
directs, independent legal counsel in a written opinion concludes that the
indemnitee should be entitled to indemnification hereunder. 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 (c) below.
(c) 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 indemnitee of the indemnitee's
good faith belief
17
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 the indemnitee 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: (i) the indemnitee shall provide
adequate security for his or her undertaking, (ii) the Company shall be insured
against losses arising by reason of any lawful advances, or (iii) 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
indemnitee ultimately will be found entitled to indemnification.
(d) The
rights accruing to any indemnitee under these provisions shall not exclude any
other right which any person may have or hereafter acquire under this Agreement,
the By-Laws of the Company, any statute, agreement, vote of Members or Directors
who are ''disinterested persons'' (as defined in Section 2(a)(19) of the 0000
Xxx) or any other right to which he or she may be lawfully
entitled.
(e) Subject
to any limitations provided by the 1940 Act and this Agreement, the Company
shall have the power and authority to indemnify and provide for the advance
payment of expenses to employees, agents and other Persons providing services to
the Company or serving in any capacity at the request of the Company to the full
extent corporations organized under the Delaware General Corporation Law may
indemnify or provide for the advance payment of expenses for such Persons,
provided that such indemnification has been approved by a majority of the
Directors.
(f) Each
Member covenants for itself and its successors, assigns, heirs and personal
representatives that such Person shall, at any time prior to or after the
dissolution of the Company, whether before of after such Member's withdrawal
from the Company, pay to the Company and/or the Tax Matters Partner on demand
any amount which the Company or the Tax Matters Partner, as the case may be, is
required to pay in respect of taxes (including withholding taxes and, if
applicable, interest, penalties and costs and expenses of contesting any such
taxes) imposed upon income of or distributions to such Member.
SECTION
3.8. NO
BOND REQUIRED OF DIRECTORS. No
Director shall, as such, be obligated to give any bond or other security for the
performance of any of his or her duties hereunder.
SECTION
3.9. NO DUTY OF INVESTIGATION; NO NOTICE IN
COMPANY INSTRUMENTS, ETC. 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, Interest, 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
18
as
Directors under this Agreement or in their capacity as officers, employees or
agents of the Company. The Directors may maintain insurance for the protection
of the property of the Company, the Members, Directors, officers, employees and
agents in such amount as the Directors shall deem adequate to cover possible
tort liability, and such other insurance as the Directors in their sole judgment
shall deem advisable or is required by the 1940 Act.
SECTION
3.10. RELIANCE ON
EXPERTS, ETC. Each
Director and officer or employee of the Company shall, in the performance of his
or 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 expert may also be a Director.
|
|
SECTION
3.11.
|
FEES,
EXPENSES AND REIMBURSEMENT.
|
(a) The
Board of Directors may cause the Company to compensate each Director for his or
her services as such. In addition, the Directors shall be reimbursed by the
Company for reasonable out-of-pocket expenses incurred by them in performing
their duties under this Agreement.
(b) The
Company shall bear all expenses incurred in its business and operations, other
than those specifically required to be borne by the Advisor pursuant to an
Investment Management Agreement or by any other service provider to the Company
pursuant to a duly authorized Agreement with the Company. Expenses to
be borne by the Company include, but are not limited to, organizational and
initial offering expenses; ongoing offering expenses; Directors' fees; costs of
directors and officers/errors and omissions insurance; fidelity bond expenses;
administrative expenses; legal, tax, custodial, audit, professional, escrow,
internal and external fund accounting, transfer agency and valuation expenses;
corporate licensing and printing expenses; record keeping expenses; expenses
incurred in communicating with Members, including the costs of preparing,
printing and mailing reports to Members; and extraordinary
expenses. Company expenses will also include investment-related
expenses, including, but not limited to, brokerage commissions, dealer xxxx-ups,
and other transactions costs on its cash management or any direct investment in
Securities; interest expense on any borrowings it may make; and any subscription
or redemption charges imposed by the Portfolio Funds. The Advisor shall be
entitled to reimbursement from the Company for any of the Company's expenses
that it pays on behalf of the Company other than those required to be borne by
the Advisor pursuant to the Investment Management Agreement.
(c) Subject
to procuring any required regulatory approvals, from time to time the Company
may, alone or in conjunction with other accounts for which the Advisor, or any
Affiliate of the Advisor, acts as general partner or investment adviser,
purchase insurance in such amounts, from such insurers and on such terms as the
Board of Directors shall determine.
19
ARTICLE
IV
TRANSFERS
AND REPURCHASES
|
|
SECTION
4.1.
|
TRANSFER
OF INTERESTS.
|
(a) Except
with the express written consent of the Board of Directors, or any committee of
the Board of Directors, any officers of the Company or the Advisor to whom the
Board of Directors have conferred authority to make Transfer decisions (a
"Transfer Decision Person"), which consent may be withheld in such Transfer
Decision Person's sole and absolute discretion, a Member may not Transfer any of
its Interest or any attributes of its Interest in whole or in part to any
Person, except for a Transfer that is effected solely by operation of law
pursuant to the death, bankruptcy or dissolution of such Member. Any
Transfer made or purported to be made in violation of this Agreement shall be
void and of no effect. No assignee, purchaser or transferee of any
Interest may be admitted as a Substitute Member except with the written consent
of a Transfer Decision Person, which consent may be given or withheld in its
sole and absolute discretion. No Transfer will be permitted unless a
Transfer Decision Person concludes that such Transfer will not cause the Company
to be treated as a "publicly traded partnership" taxable as a corporation for
U.S. federal income tax purposes. To the extent any Member,
transferee or successor Member is purported to have transferred any economic
interest in the Company in violation of this Agreement, the Company shall not
recognize such action and a Transfer Decision Person may terminate all or any
part of the Interest of such Member, transferee or successor Member at no value
or such value as such Transfer Decision Person determines in its sole and
absolute discretion and the Member, transferee or successor Member will forfeit
all or such portion of its capital account in connection with such termination
as determined by such Transfer Decision Person in connection
therewith. With respect to a Repurchase Instrument or a Compulsory
Repurchase Instrument, a Member may not Transfer all or any portion of the
Repurchase Instrument or Compulsory Repurchase Instrument to any person
(collectively a "Repurchase Instrument Transfer"), except for a Repurchase
Instrument Transfer that is effected solely by operation of law pursuant to the
death, bankruptcy or dissolution of the Member or a Repurchase Instrument
Transfer that is effected with the written consent of a Transfer Decision
Person, which consent may be given or withheld in its sole and absolute
discretion.
(b) Without
limiting Section 4.1(a) the Company shall not consent to a Transfer of all or a
portion of a Member's Interest unless: (i) the person to whom such
Interest is to be Transferred is a person whom the Company reasonably believes
is an "accredited investor," as such term is defined in Regulation D under the
1933 Act or any successor thereto; and (ii) the Interest is to be Transferred to
a single transferee or, if to be Transferred to multiple transferees or if less
than the entire Interest will be Transferred, the balance of the Capital Account
of each transferee and the transferor (if the transferee retains any of its
Interest) would not be less than $25,000. Any transferee that
acquires an Interest by operation of law as the result of the death, divorce,
bankruptcy, insolvency, adjudication of incompetence, dissolution, merger,
reorganization or termination of a Member or otherwise shall be entitled to the
allocations and distributions allocable to an Interest so acquired and to
Transfer such Interest in accordance with the terms of this Agreement, but to
the extent permitted by applicable law (including the 0000 Xxx) shall not be
entitled to the other rights of a Member unless and until such
transferee
20
becomes
a substituted Member. If a Member transfers its Interest with the
approval of a Transfer Decision Person, the Company shall promptly take all
necessary actions so that the transferee is admitted to the Company as a
Member. Each Member effecting a Transfer and its transferee agree to
pay all expenses, including attorneys' and accountants' fees, incurred by the
Company in connection with such Transfer.
(c) Each
Member shall indemnify and hold harmless all Transfer Decision Persons, the
Company, the Board of Directors, the Advisor, each other Member and any
Affiliate of the foregoing against all losses, claims, damages, liabilities,
costs and expenses (including legal or other expenses incurred in investigating
or defending against any such losses, claims, damages, liabilities, costs and
expenses or any judgments, fines and amounts paid in settlement), joint or
several, to which such persons may become subject by reason of or arising from
(i) any Transfer made by such Member in violation of this Section 4.1 and (ii)
any misrepresentation by such Member in connection with any such
Transfer.
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|
SECTION
4.2.
|
REPURCHASE
OF INTERESTS.
|
(a) Except
as otherwise provided in this Agreement, no Member or other person holding an
Interest shall have the right to require the Company to redeem its
Interest. The Board of Directors may, from time to time and in its
sole discretion and on such terms and conditions as it may determine (subject to
the 1940 Act and other applicable law), cause the Company to offer to repurchase
Interests pursuant to written tender offers. The Company shall not
offer to repurchase Interests on more than four occasions during any one Fiscal
Year unless it has been advised by counsel to the Company to the effect that
more frequent offers would not cause material adverse tax consequences to the
Company. In determining whether to cause the Company to offer to
repurchase Interests pursuant to written tender offers, the Board of Directors
shall consider the recommendation of the Advisor, and will also consider the
following factors, including:
(1) whether
any Members have requested to tender Interests to the Company;
(2) the
liquidity of the Company's assets (including fees and costs associated with the
Company or Master Fund, as the case may be, withdrawing from Portfolio
Funds);
(3) the
investment plans and working capital requirements of the Company or Master Fund,
as the case may be;
(4) the
history of the Company in repurchasing Interests;
(5) the
availability of information as to the value of the Company's or the Master
Fund's, as the case may be, interests in underlying Portfolio
Funds;
(6) the
existing conditions of the securities markets and the economy generally, as well
as political, national or international developments or current affairs;
and
21
(7) any
anticipated tax or regulatory consequences to the Company or the Master Fund of
any proposed repurchases of Interests.
The
Board of Directors shall cause the Company to repurchase Interests pursuant to
written tender offers only on terms it determines, in its sole discretion, to be
reasonable and fair to the Company and to all Members.
(b) A
Member who tenders for repurchase only a portion of such Member's Interest shall
be required to maintain a Capital Account balance of at least $25,000 (or such
lower amount equal to the Member's initial capital contribution net of any
placement or other fees) after giving effect to the repurchase. If a
Member tenders an amount that would cause the Member's Capital Account balance
to fall below the required minimum Capital Account balance, the Company reserves
the right to reduce the amount to be purchased from the Member pursuant to the
tender so that the required minimum balance is maintained or to cause the
Company to repurchase the Member's entire interest in the Company.
(c) The
Advisor or any Director may tender its, his or her Interest under Section 4.2(a)
hereof.
(d) The
Board of Directors may cause the Company to repurchase the Interest of a Member
or any person acquiring an Interest from or through a Member, and each Member
shall by acquiring such Interest be deemed to have affirmatively consented to
such repurchase, in the event that the Board of Directors in its sole discretion
determines that:
(1) such
Interest has been transferred in violation of Section 4.1, or such Interest has
vested in any person other than by operation of law as the result of the death,
divorce, bankruptcy, insolvency, adjudicated incompetence, dissolution, merger,
reorganization or termination of a Member and the Board of Directors, in its
sole discretion, did not approve the admission of a substitute
Member;
(2) ownership
of such Interest by a Member or other person is likely to cause the Company to
be in violation of, or require registration of any Interests under, or subject
the Company to additional registration or regulation under, the securities,
commodities or other laws of the United States or any other relevant
jurisdiction;
(3) continued
ownership of such Interest by a Member may be harmful or injurious to the
business or reputation of the Company, the Board of Directors, the Advisor or
any of their affiliates, or may subject the Company, or any Member to an undue
risk of adverse tax or other fiscal or regulatory consequences;
(4) any
of the representations and warranties made by a Member or other person in
connection with the acquisition of an Interest was not true when made or has
ceased to be true;
(5) with
respect to a Member subject to Special Laws or Regulations, such Member is
likely to cause the Company to be subject to additional regulatory or compliance
requirements under these Special Laws or Regulations by virtue of such Member
continuing to hold an Interest; or
22
(6) it
would be in the best interests of the Company for the Company to repurchase the
Interest or a portion of it, including without limitation in connection with the
liquidation or termination of the Company.
(e) Repurchases
pursuant to Company tender offers shall be effective after receipt and
acceptance by the Company of all eligible written tenders of Interests from
Members and, unless otherwise determined by the Board of Directors from time to
time including as a result of changes in applicable law or the interpretation
thereof, shall be subject to the following repurchase procedures:
(1) Members
choosing to tender Interests for repurchase must do so by the applicable Notice
Date. Generally, the Notice Date will be the 25th day of the second
month prior to the month containing the date as of which Interests are to be
repurchased. (For example, the Notice Date for a repurchase offer
having a December 31 repurchase date would be October 25.) Interests (or
portions thereof) will be valued as of the "Repurchase Valuation Date" (which
date, unless otherwise determined by the Board of Directors, shall be the last
Business Day of the month on which such Interests are to be
repurchased);
(2) promptly
after the Notice Date, the Company will give to each Member whose Interest (or
portion thereof) has been accepted for repurchase an instrument (the "Repurchase
Instrument") entitling the Member to be paid an amount equal to the value,
determined as of the Repurchase Valuation Date and in accordance with Section
7.2 hereof, of the repurchased Interest (or portion thereof) (the "Payment
Amount")
(3) the
Repurchase Instrument will be non-negotiable, non-interest bearing and
nontransferable; and
(4) a
Member who receives a Repurchase Instrument (the “Payee”) shall retain all
rights, with respect to its tendered Interest, to inspect the books and records
of the Company and to receive financial and other reports relating to the
Company until the payment date. Except as otherwise provided in the
preceding sentence or in the Repurchase Instrument, such Payee shall not be a
Member of the Company and shall have no other rights (including, without
limitation, any voting rights) under this Agreement. For purposes of
calculating the value of the repurchased Interest, the amount payable to the
Payee will take into account and include all Company income, gains, losses,
deductions and expenses that the Payee would have been allocated for tax and
book purposes had the Payee remained the owner of the repurchased Interest until
the Valuation Date. If the Company is liquidated or dissolved prior
to the original Valuation Date, the Valuation Date shall become the date on
which the Company is liquidated or dissolved and the value of the repurchased
Interest will be calculated in accordance with the foregoing
sentence. Payment in respect of the Repurchase Instrument will be
made as of the later of (i) a period of within 45 days after the Repurchase
Valuation Date, or (ii) if the Company has requested withdrawal of its capital
from one or more Portfolio Funds in order to fund the repurchase of Interests,
within ten Business Days after the Company has received at least 90% of the
aggregate amount withdrawn from such Portfolio Funds. Payment in
respect of the Repurchase Instrument may be made in one or more
23
installments. The
Repurchase Instrument may be prepaid, without premium, penalty or notice, at any
time on or after the Repurchase Valuation Date.
Notwithstanding
anything in the foregoing to the contrary, the Board of Directors, in its sole
and absolute discretion, may pay all or any portion of the Repurchase Instrument
in marketable Securities (or any combination of marketable Securities and
cash). The Board of Directors may from time to time establish such
other policies and procedures in connection with the repurchase of Interests as
it deems to be necessary or desirable and in the interests of the Company and
the Members, including without limitation the imposition of fees for the
repurchase or all or some Interests through tender offers.
(f) In
the event that the Board of Directors determines that the Company should
repurchase all or a portion of an Interest of a Member, or any person acquiring
an Interest from or through a Member, pursuant to Section 4.2(d) hereof,
repurchases shall be subject to the following repurchase procedures unless
otherwise determined by the Board of Directors from time to time:
(1) Interests
(or portions thereof) will be valued as of the "Compulsory Repurchase Valuation
Date" (which date, unless otherwise determined by the Board of Directors, shall
be the last Business Day of the month in which the Company intends to repurchase
the Interests);
(2) promptly
after the Board of Directors determines that the Company should repurchase all
or a portion of an Interest of a Member, or any person acquiring an Interest
from or through a Member, pursuant to Section 4.2(d) hereof, the Company will
give to such Person whose Interest (or portion thereof) has been called for
repurchase (a "Compulsorily Repurchased Member") notice of the Company's intent
to repurchase the Interest and the expected Compulsory Repurchase Valuation Date
for such Interest;
(3) promptly
after the Compulsory Repurchase Valuation Date, the Company will give to the
Compulsorily Repurchased Member an instrument (the "Compulsory Repurchase
Instrument") entitling the Compulsorily Repurchased Member to be paid an amount
equal to the value, determined as of the Compulsory Repurchase Valuation Date
and in accordance with Section 7.2 hereof, of the repurchased
Interests;
(4) the
Compulsory Repurchase Instrument will be non-negotiable, non-interest bearing
and nontransferable; and
(5) a
Member who receives a Compulsory Repurchase Instrument (the “Compulsory
Repurchase Instrument Payee”) shall retain all rights, with respect to its
tendered Interest, to inspect the books and records of the Company and to
receive financial and other reports relating to the Company until the payment
date. Except as otherwise provided in the preceeding sentence or in
the Compulsory Repurchase Instrument, such Compulsory Repurchase Instrument
Payee shall not be a Member of the Company and shall have no other rights
(including, without limitation, any voting rights) under this
Agreement. For purposes of calculating the value of the repurchased
Interest, the amount payable to the Compulsory Repurchase Instrument Payee will
take into
24
account
and include all Company income, gains, losses, deductions and expenses that the
Compulsory Repurchase Instrument Payee would have been allocated for tax and
book purposes had the Compulsory Repurchase Instrument Payee remained the owner
of the repurchased Interest until the Valuation Date. If the Company
is liquidated or dissolved prior to the original Valuation Date, the Valuation
Date shall become the date on which the Company is liquidated or dissolved and
the value of the repurchased Interest will be calculated in accordance with the
foregoing sentence. Payment in respect of the Compulsory Repurchase
Instrument will be made as of the later of (i) a period of within 45 days after
the Compulsory Repurchase Valuation Date, or (ii) if the Company has requested
withdrawal of its capital from one or more Portfolio Funds in order to fund the
repurchase of Interests, within ten Business Days after the Company has received
at least 90% of the aggregate amount withdrawn from such Portfolio
Funds. Payment in respect of the Compulsory Repurchase Instrument may
be made in one or more installments. The Compulsory Repurchase
Instrument may be prepaid, without premium, penalty or notice, at any time on or
after the Repurchase Valuation Date.
Notwithstanding
anything in the foregoing to the contrary, the Board of Directors, in its sole
and absolute discretion, may pay all or any portion of the Compulsory Repurchase
Instrument in marketable Securities (or any combination of marketable Securities
and cash).
ARTICLE
V
CAPITAL
|
|
SECTION
5.1.
|
CONTRIBUTIONS
TO CAPITAL.
|
(a) The
minimum initial contribution by a Member to the capital of the Company shall be
$100,000 (not including any placement or similar fees). The amount of the
initial contribution of each Member shall be recorded on the books and records
of the Company upon acceptance as a contribution to the capital of the
Company. The Directors shall not be entitled to make voluntary
contributions of capital to the Company as Directors of the Company, but may
make voluntary contributions to the capital of the Company as
Members. Notwithstanding the foregoing, the Advisor shall contribute
$1,000 to the capital of the Company and shall be treated as a Member for all
purposes of this Agreement.
(b) Members
may make additional contributions to the capital of the Company in increments of
such amount as the Board of Directors or its delegate, in their respective
discretion, may determine from time to time, but will generally not be less than
$25,000, effective as of such times as the Board of Directors, in its
discretion, may permit, subject to the limitations applicable to the admission
of Members pursuant to Section 2.7 hereof, but no Member shall be obligated to
make any additional contribution to the capital of the Company except to the
extent provided in Section 5.6 hereof.
(c) Except
as otherwise permitted by the Board of Directors, (i) initial and any additional
contributions to the capital of the Company by any Member shall be payable in
cash or in such Securities as the Board of Directors, in its absolute
discretion, may agree to accept on behalf of the Company, and (ii) initial and
any additional contributions in cash shall be payable
25
in
readily available funds at the date of the proposed acceptance of the
contribution. The value of contributed Securities shall be determined
in accordance with Section 7.2 hereof.
|
|
SECTION
5.2.
|
RIGHTS
OF MEMBERS TO CAPITAL.
|
No
Member shall be entitled to interest on any contribution to the capital of the
Company, nor shall any Member be entitled to the return of any capital of the
Company except (i) upon the repurchase by the Company of such Member's Interest
pursuant to Section 4.2 hereof, (ii) pursuant to the provisions of Section
5.6(c) hereof or (iii) upon the liquidation of the Company's assets pursuant to
Section 6.2 hereof. Except as provided by applicable law, no Member
shall be liable for the return of any such capital properly paid to such Member
pursuant to the provisions of (i), (ii) and/or (iii) of the preceding sentence.
No Member shall have the right to require partition of the Company's property or
to compel any sale or appraisal of the Company's assets.
|
|
SECTION
5.3.
|
CAPITAL
ACCOUNTS.
|
(a) The
Company will maintain a separate Capital Account for each Member.
(b) Each
Member's Capital Account will have an initial balance equal to the amount
constituting such Member's initial contribution to the capital of the
Company.
(c) Each
Member's Capital Account will be increased by the sum of (i) the amount of cash
constituting additional contributions by such Member to the capital of the
Company permitted pursuant to Section 5.1 hereof, plus (ii) all amounts credited
to such Member's Capital Account pursuant to Sections 5.4 through
5.6.
(d) Each
Member's Capital Account will be reduced by the sum of (i) the amount paid to
repurchase the Member's Interest or distributions to such Member pursuant to
Sections 4.2, 5.14 or 6.2 hereof (net of any liabilities secured by any asset
distributed that such Member is deemed to assume or take for purposes of section
752 of the Code), plus (ii) any amounts debited against such Capital Account
pursuant to Sections 5.4 through 5.6 hereof.
(e) No
Member shall be required to pay to the Company or to any other Member or person
any deficit in such Member's Capital Account upon dissolution or
otherwise.
(f) Before
decreasing a Member's Capital Account (as described in this Article V) with
respect to the distribution of any property (other than cash) to such Member,
all Members' accounts shall be adjusted as provided in Section
5.12.
(g) In
determining the amount of any liability for purposes of this Section 5.3, there
shall be taken into account Code Section 752 and any other applicable provisions
of the Code and any Regulations promulgated thereunder.
(h) Members'
Capital Accounts shall be adjusted in accordance with, and upon the occurrence
of an event described in Regulations Section 1.704-1(b)(2)(iv)(f) to reflect a
revaluation of the Company's assets on the Company's books. Such
adjustments to the Members' Capital Accounts shall be made in accordance with
Regulations Section 1.704-1(b)(2)(iv)(g) for
26
allocations
of depreciation, depletion, amortization and gain or loss with respect to such
revalued property.
(i) All
provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with the Regulations under Section 1.704 of the Code, and
shall be interpreted and applied in a manner consistent with such
Regulations. The Tax Matters Partner, subject to the supervision of
the Board of Directors, shall make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with the
Regulations promulgated under Section 1.704 of the Code.
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|
SECTION
5.4.
|
ALLOCATION
OF NET PROFIT AND NET LOSS.
|
As
of the last day of each Fiscal Period, any Net Profit or Net Loss for the Fiscal
Period shall be allocated among and credited to or debited against the Capital
Accounts of the Members in accordance with their respective Investment
Percentages for such Fiscal Period.
|
|
SECTION
5.5.
|
ALLOCATION
OF CERTAIN EXPENDITURES.
|
Except
as otherwise provided for in this Agreement and unless prohibited by the 1940
Act, any expenditures payable by the Company, to the extent determined by the
Board of Directors to have been paid or withheld on behalf of, or by reason of
particular circumstances applicable to, one or more but fewer than all of the
Members, shall be charged only to those Members on whose behalf such payments
are made or whose particular circumstances gave rise to such
payments. Such charges shall be debited from the Capital Accounts of
such Members as of the close of the Fiscal Period during which any such items
were paid or accrued by the Company.
|
|
SECTION
5.6.
|
RESERVES.
|
(a) Appropriate
reserves may be created, accrued and charged against Net Assets and
proportionately against the related Capital Accounts for any liabilities,
including those contingent liabilities where the contingency has occurred and is
recognizable, as of the date any such liability becomes known to the Advisor or
the Board of Directors, such reserves to be in the amounts that the Board of
Directors (or its authorized delegate), in its sole discretion, deems necessary
or appropriate. The Board of Directors (or its authorized delegate)
may increase or reduce any such reserves from time to time by such amounts as
the Board of Directors (or its authorized delegate), in its sole discretion,
deems necessary or appropriate. The amount of any such reserve, or
any increase or decrease therein, shall be proportionately charged or credited,
as appropriate, to the Capital Accounts of those parties who are Members of the
Company at the time such reserve is created, increased or decreased, as the case
may be; provided, however, that if any such individual reserve item, adjusted by
any increase therein, exceeds the lesser of $500,000 or 1% of the aggregate
value of the Capital Accounts of all such Members, the amount of such reserve,
increase, or decrease shall instead be charged or credited to those parties who
were Members at the time, as determined by the Board of Directors in its sole
discretion, of the act or omission giving rise to the contingent liability for
which the reserve was established, increased or decreased in proportion to their
Capital Accounts at that time.
27
(b) If
at any time an amount is paid or received by the Company (other than
contributions to the capital of the Company, distributions or repurchases of
Interests) and such amount exceeds the lesser of $500,000 or 1% of the aggregate
value of the Capital Accounts of all Members of the Company, at the time of
payment or receipt and such amount was not accrued or reserved for but would
nevertheless, in accordance with the Company's accounting practices, be treated
as applicable to one or more prior Fiscal Periods, then such amount shall be
proportionately charged or credited, as appropriate, to those parties who were
Members during such prior Fiscal Period or Periods.
(c) If
any amount is required by paragraph (a) or (b) of this Section 5.6 to be charged
or credited to a party who is no longer a Member, such amount shall be paid by
or to such party, as the case may be, in cash, with interest from the date on
which the Board of Directors determines that such charge or credit is
required. In the case of a charge, the former Member shall be
obligated to pay the amount of the charge, plus interest as provided above, to
the Company on demand; provided, however, that (i) in no event shall a former
Member be obligated to make a payment exceeding the amount of such Member's
Capital Account at the time to which the charge relates; and (ii) no such demand
shall be made after the expiration of three years since the date on which such
party ceased to be a Member. In the case of a credit, no former
Member shall be entitled to receive such a payment if the credit is received by
the Company more than three (3) years following the date on which such Person
ceased to be a Member. To the extent that a former Member fails to
pay to the Company, in full, any amount required to be charged to such former
Member pursuant to paragraph (a) or (b), whether due to the expiration of the
applicable limitation period or for any other reason whatsoever, the deficiency
shall be charged proportionately to the Capital Accounts of the Members at the
time of the act or omission giving rise to the charge to the extent feasible,
and otherwise proportionately to the Capital Accounts of the current
Members.
|
|
SECTION
5.7.
|
TAX
ALLOCATIONS.
|
As
of the end of each Fiscal Year, income, gain, loss, deduction and expense of the
Company, all as determined for U.S. federal income tax purposes, shall be
allocated, solely for tax purposes, among the Members as provided
below.
(a) Items
of ordinary income (such as interest income) and expense (such as performance
fees and brokerage fees) shall be allocated in a manner consistent with the
economic allocations described in this Article V.
(b) Net
realized capital gains and losses from the Company's trading activity shall be
allocated as follows:
(i) there
shall be established a tax basis account with respect to each Member's
Interest. The initial balance of each tax basis account shall be the
amount contributed to the capital of the Company for such
Interests. As of the end of each Fiscal Year:
(a) each
tax basis account shall be increased by the amount of (I) any additional Capital
Contributions made with respect to such Member’s Interest and (II) any taxable
income or gain allocated to such Member pursuant to this Section
5.7;
28
(b) each
tax basis account shall be decreased by the amount of (I) taxable expense,
deduction or loss allocated to such Member pursuant to this Section 5.7 and (II)
any distribution received by such Member with respect to its Interest other than
upon a partial or complete withdrawal or redemption;
(c) when
any Interests are redeemed or withdrawn, the tax basis account attributable to
such redeemed Interests shall be eliminated; and
(d) to
the extent a valid election pursuant to Section 754 of the Code has been made,
each tax basis account shall be increased or decreased, where appropriate, to
reflect any adjustments to the tax basis of the Company property pursuant to
Sections 734 or 743 of the Code.
(ii) Net
realized capital gains shall be allocated first to each Member who has withdrawn
all of its Interest during the Fiscal Year up to any excess of the amount
received upon such withdrawal over the tax basis account maintained for the
withdrawn Interest at the time of such withdrawal (after taking into account the
allocations described in Section 5.7(a)). If the gain to be so
allocated to all Members who have withdrawn all of their Interests during a
Fiscal Year is less than the excess of all such amounts received upon withdrawal
over all such tax basis accounts, the entire net realized capital gain for such
Fiscal Year shall be allocated among all such Members in the ratio that each
such Member's allocable share of such excess bears to the aggregate excesses of
all such Members who withdrew Interests during such Fiscal Year.
(iii) Net
realized capital gains remaining after the allocations in subclause (ii) above
shall be allocated to each Member who has withdrawn less than all of its
Interest during the Fiscal Year up to any excess of the amount received upon
such partial withdrawal over that portion of the tax basis account maintained
for the partially withdrawn Interest at the time of such withdrawal (after
taking into account the allocations described in Section 5.7(a)). If
the gain to be so allocated to all Members who have partially withdrawn
Interests during a Fiscal Year is less than the excess of all such amounts
received upon withdrawal over all such tax basis accounts, the net realized
capital gain remaining after the allocations provided for in subclause (ii)
above for such Fiscal Year shall be allocated among all partially withdrawing
Members in the ratio that each such Member's allocable share of such excess
bears to the aggregate excess of all such Members who partially withdrew
Interests during such Fiscal Year.
(iv) Net
realized capital gains remaining after the allocation in subclause (iii) above
shall be allocated among all Members whose Capital Accounts are in excess of
their tax basis accounts (after taking into account the allocations described in
Section 5.7(a)) in the ratio that each such Member's allocable share of such
excess bears to all such Members' excesses. If the gain to be so
allocated is greater than the excess of all such Members' Capital Accounts over
all such tax basis accounts, the excess shall be allocated among all Members in
the ratio that each Member's Capital Account bears to all Members' Capital
Accounts.
29
(v) Net
realized capital loss shall be allocated first to each Member who has withdrawn
all of its Interest during the Fiscal Year up to any excess of the tax basis
account maintained for the withdrawn Interest over the amount received upon such
withdrawal at the time of such withdrawal (after taking into account the
allocations described in Section 5.7(a)). If the losses to be so
allocated to all Members who have completely withdrawn their Interests during a
Fiscal Year is less than the excess of all such tax basis accounts over all such
amounts received upon such complete withdrawal, the entire net realized capital
loss for such Fiscal Year shall be allocated among all such Members in the ratio
that each such Member's excess bears to the aggregate excess of all such Members
during such Fiscal Year.
(vi) Net
realized capital loss remaining after the allocations provided for in subclause
(v) above shall be allocated to each Member withdrawing less than all of its
Interest during a Fiscal Year up to the excess of the tax basis account (after
taking into account the allocations provided for in Section 5.7(a)) maintained
for the withdrawn Interest over the amount received upon such partial withdrawal
at the time of such withdrawal. If the loss to be so allocated to all
Members who have partially withdrawn Interests during a Fiscal Year is less than
the excess of all such tax basis accounts over all such amounts received upon
withdrawal, the entire capital loss for such Fiscal Year shall be allocated
among all such Members in the ratio that each such Member's excess bears to the
aggregate excess of all such Members who withdrew interests in the Company
during such Fiscal Year.
(vii) Net
realized capital loss remaining after the allocation in subclause (vi) above
shall be allocated among all Members whose tax basis accounts are in excess of
their Capital Accounts (after taking into account the allocations provided for
in Section 5.7(a)) in the ratio that each such Member's allocable share of such
excess bears to all such Members' excesses. If the loss to be so
allocated is greater than the excess of all such tax basis accounts over all
such Members' Capital Accounts, the excess loss shall be allocated among all
Members in the ratio that each Member's Capital Account bears to all Members'
Capital Accounts.
(viii) Any
gain or loss required to be taken into account in accordance with the relevant
xxxx-to-market provisions of the Code shall be considered gain or loss for
purposes of this Section 5.7.
(c) The
allocation of profit and loss for U.S. federal income tax purposes set forth
herein is intended to allocate taxable profit and loss so as to eliminate, to
the extent possible, any disparity between a Member's Capital Account and its
tax basis account, consistent with principles set forth in Section 704(c) of the
Code. In addition, for purposes of this Article V, to the extent a
Member contributes to the Company property with a fair market value that differs
from the adjusted tax basis of such property, income, gain, loss, deduction and
expense with respect to such property shall be allocated among the tax basis
accounts of Members so as to take account of the variation between the adjusted
tax basis and fair market value of such property, consistent with Section 704(c)
of the Code and applicable Regulations.
(d) The
allocations of profit and loss to the tax basis accounts of Members provided in
this Section 5.7 shall not exceed the allocations permitted under Subchapter K
of the
30
Code
as determined by the Tax Matters Partner, subject to the supervision of the
Board of Directors, whose determination shall be binding on the
Members.
(e) The
Members are aware of tax consequences of the allocations made by this Section
5.7 and hereby agree to be bound by the provisions of this Section 5.7 in
reporting their respective shares of items of Company income, gain, loss,
deduction and expense.
(f) The
allocations of profit and loss to the tax basis accounts of the Members provided
in this Section 5.7 shall be determined by reference to the tax items
attributable to each class of Interests, as determined by the Tax Matters
Partner, subject to the supervision of the Board of Directors.
|
|
SECTION
5.8.
|
TRANSFER
OF OR CHANGE IN INTERESTS.
|
The
Tax Matters Partner, subject to the supervision of the Board of Directors, is
authorized to use any convention or combination of conventions likely to be
upheld for federal income tax purposes regarding the allocation of items of
Company income, gain, loss, deduction and expense with respect to a new Member's
Interest, a transferred Interest and a withdrawn Interest. A
transferee who takes all or part of a Member's Interest shall succeed to the
Capital Account of the transferor Member to the extent it relates to the whole
or partial Interest transferred.
|
|
SECTION
5.9.
|
REGULATORY
AND RELATED ALLOCATIONS.
|
Notwithstanding
anything expressed or implied to the contrary in this Agreement, the following
special allocations shall be made, if and to the extent required by the
Regulations pursuant to Section 704 of the Code, in the following order: (A)
"minimum gain chargeback"; (B) "partner minimum gain chargeback"; and (C)
"qualified income offset" (each as defined in the Regulations under Section 704
of the Code). No allocation of Net Loss (or items thereof) shall be
made to any Member to the extent that such allocation would create or increase
an Adjusted Capital Account Deficit with respect to such Member. In
addition, all nonrecourse deductions (within the meaning of such Regulations)
for any Fiscal Year shall be allocated to the Members in accordance with any
permissible method under the applicable Regulations, and all "partner
nonrecourse deductions" (within the meaning of such Regulations) for any Fiscal
Year shall be allocated to the Member who bears the economic risk of loss with
respect to the "partner nonrecourse debt" (within the meaning of such
Regulations) to which such partner nonrecourse deductions are attributable in
accordance with the Regulations under Section 704 of the Code.
|
|
SECTION
5.10.
|
CURATIVE
ALLOCATIONS.
|
The
allocations set forth in Section 5.9 (the "Regulatory Allocations'') are
intended to comply with certain requirements of Regulations Section 1.704.
Notwithstanding any other provisions of this Section, the Regulatory Allocations
shall be taken into account in allocating other profits, losses and items of
income, gain, loss and deduction among the Members so that, to the extent
possible, the net amount of such allocations of other profits, losses and other
items and the Regulatory Allocations to each Member shall be equal to the net
amount that would have been allocated to each such Member if the Regulatory
Allocations had not occurred.
31
|
|
SECTION
5.11.
|
FEDERAL
INCOME TAX.
|
It
is the intent of this Company and its Members that this Company will be governed
by the applicable provisions of Subchapter K, of Chapter 1, of the
Code. The Members intend that the Company shall not be a partnership
(including a limited partnership) or joint venture, and that no Member or
Members shall be a partner or joint venturer of any other Member or Members, for
any purpose other than federal and, if applicable, state tax purposes, and this
Agreement shall not be construed to the contrary. The Members intend
that the Company shall be treated as a partnership for federal and, if
applicable, state income tax purposes, and each Member and the Company shall
file all tax returns and shall otherwise take all tax and financial reporting
positions in a manner consistent with such treatment and shall exercise
commercially reasonable efforts to cause the Company to remain classified as a
partnership for federal and, if applicable, state income tax
purposes.
|
|
SECTION
5.12.
|
DEEMED
SALE OF ASSETS.
|
For
all purposes of this Agreement, any property (other than cash) that is
distributed or to be distributed in-kind to one or more Members for a Fiscal
Period (including, without limitation, any non-cash asset which shall be deemed
distributed immediately prior to the dissolution and winding up of the Company
so as to permit the unrealized gain or loss inherent in such assets to be
allocated to the Members), or that is constructively distributed on termination
of the Company pursuant to Section 708(b)(1)(B) of the Code, shall be deemed to
have been sold for cash equal to its fair market value, and the unrealized gain
or loss inherent in such assets shall be treated as recognized gain or loss for
purposes of determining the Net Profits and Net Loss of the Company to be
allocated pursuant to Section 5.2 hereof for such Fiscal Period.
|
|
SECTION
5.13.
|
CERTAIN
DETERMINATIONS BY TAX MATTERS
PARTNER.
|
All
matters concerning the computation of Capital Accounts, Loss Carryforward
Accounts, the allocation of Net Profit (and items thereof) and Net Loss (and
items thereof), the allocation of items of Company income, gain, loss, deduction
and expense for tax purposes and the adoption of any accounting procedures not
expressly provided for by the terms of this Agreement shall be determined by the
Tax Matters Partner subject to the supervision of the Board of
Directors. Such determination shall be final and conclusive as to all
Members. Notwithstanding anything expressed or implied in this
Agreement to the contrary, in the event the Tax Matters Partner shall determine,
subject to the supervision of the Board of Directors, that it is prudent to
modify the manner in which the Members' Capital Accounts, or any debits or
credits thereto, and/or allocations of items of income, gain, loss, deduction or
expense are computed in order to effectuate the intended economic sharing
arrangement of the Members as reflected in Sections 5.2(a) and (b), the Tax
Matters Partner may make such modification.
|
|
SECTION
5.14.
|
DISTRIBUTIONS
|
The
Board of Directors, in its sole discretion, may authorize the Company to make
distributions in cash at any time to all of the Members on a pro rata basis in
accordance with the Members' Investment Percentages. Notwithstanding
the foregoing or any other provision contained in this Agreement, the Company,
and the Board of Directors on behalf of the
32
Company,
shall not be required to make a distribution to a Member in respect of its
Interest if such distribution would violate the Delaware Act or other applicable
law.
|
|
SECTION
5.15.
|
WITHHOLDING.
|
(a) Notwithstanding
anything expressed or implied to the contrary in this Agreement, the Tax Matters
Partner is authorized to take any action that it determines to be necessary or
appropriate to cause the Company to comply with any foreign or United States
federal, state or local withholding requirement with respect to any allocation,
payment or distribution by the Company to any Member or other
Person. All amounts so withheld, and, in the manner determined by the
Tax Matters Partner, subject to the supervision of the Board of Directors,
amounts withheld with respect to any allocation, payment or distribution by any
Person to the Company, shall be treated as distributions to the applicable
Members under the applicable provision of this Agreement. If any such
withholding requirement with respect to any Member exceeds the amount
distributable to such Member under this Agreement, or if any such withholding
requirement was not satisfied with respect to any item previously allocated,
paid or distributed to such Member, or any successor or assignee with respect to
such Member's Interest, the Company hereby indemnifies and agrees to hold
harmless the Tax Matters Partner, the other Members and the Company for such
excess amount or such amount required to be withheld, as the case may be,
together with any applicable interest, additions or penalties
thereon.
(b) The
Tax Matters Partner shall not be obligated to apply for or obtain a reduction of
or exemption from withholding tax on behalf of any Member that may be eligible
for such reduction or exemption. To the extent that a Member claims
to be entitled to a reduced rate of, or exemption from, a withholding tax
pursuant to an applicable income tax treaty, or otherwise, the Member shall
furnish the Tax Matters Partner with such information and forms as such Member
may be required to complete when necessary to comply with any and all laws and
regulations governing the obligations of withholding tax agents. Each
Member represents and warrants that any such information and forms furnished by
such Member shall be true and accurate and agrees to indemnify the Company and
each of the Members from any and all damages, costs and expenses resulting from
the filing of inaccurate or incomplete information or forms relating to such
withholding taxes.
|
|
SECTION
5.16.
|
ALLOCATION
OF ORGANIZATIONAL EXPENSES.
|
(a) Organizational
Expenses initially shall be borne by the Advisor or an affiliate, who shall be
reimbursed for such expenses by the Company over a period not to exceed 12
months from the Closing Date. Such reimbursements shall be allocated among and
debited against the Capital Accounts of the Members during such 12-month period
in accordance with the value of their respective Capital Accounts on each
applicable Expense Allocation Date.
(b) If
the Advisor is fully reimbursed before the 12-month anniversary of the Closing
Date, as of each Expense Allocation Date during the remainder of such 12-month
period, all amounts previously debited against the Capital Account of a Member
pursuant to this Section 5.16 on the preceding Expense Allocation Date shall be
credited to the Capital Account of such Member, and Organizational Expenses
shall then be re-allocated among and debited against the
33
Capital
Accounts of all Members in accordance with the balance of their respective
Capital Accounts on such Expense Allocation Date.
ARTICLE
VI
DISSOLUTION
AND LIQUIDATION
|
|
SECTION
6.1.
|
DISSOLUTION.
|
The
Company will be dissolved:
(1) upon
the affirmative vote to dissolve the Company by not less than 80% of the
Directors (including a majority of the Independent Directors); or
(2) as
required by the Delaware Act or other applicable law.
Dissolution
of the Company will be effective on the day on which the event giving rise to
the dissolution shall occur, but the existence of the Company as a separate
legal entity shall not terminate until the assets of the Company have been
liquidated in accordance with Section 6.2 hereof and the Certificate has been
canceled.
|
|
SECTION
6.2.
|
WINDING
UP.
|
(a) Upon
the dissolution of the Company as provided in Section 6.1 hereof, the Board of
Directors (or its delegate), acting as the liquidator, shall wind up the
business and administrative affairs of the Company, except that if the Board of
Directors is unable to perform this function (or to designate an appropriate
delegate to do so), a liquidator elected by Members holding a majority of the
voting power (determined in accordance with Section 3.3(i) hereof) of the
Interests eligible to vote shall promptly wind up the business and
administrative affairs of the Company. Net Profit and Net Loss during the period
of winding up shall be allocated pursuant to Section 5.4 hereof. The
proceeds from liquidation of the Company's assets shall be distributed in the
following manner:
(1) the
debts of the Company, other than debts, liabilities or obligations to Members,
and the expenses of liquidation (including legal and accounting expenses
incurred in connection therewith and amounts, if any, owed to Affiliates of the
Company), up to and including the date that distribution of the Company's assets
to the Members has been completed, shall first be satisfied (whether by payment
or reasonable provision for payment thereof) on a pro rata basis;
(2) such
debts, liabilities or obligations as are owing to the Members shall next be paid
in their order of seniority and on a pro rata basis; and
(3) to
the Members or their legal representatives in accordance with the positive
balances in their respective Capital Accounts as determined after taking into
account all adjustments to Capital Accounts for all periods.
34
(b) Anything
in this Section 6.2 to the contrary notwithstanding, but subject to the Delaware
Act, upon dissolution of the Company, the Board of Directors or other liquidator
may distribute ratably in kind any assets of the Company; provided, however,
that if any in-kind distribution is to be made (i) the assets distributed in
kind shall be valued pursuant to Section 7.2 hereof as of the actual date of
their distribution and charged as so valued and distributed against amounts to
be paid under Section 6.2(a) above, and (ii) any profit or loss attributable to
property distributed in kind shall be included in the Net Profit or Net Loss for
the Fiscal Period ending on the date of such distribution.
ARTICLE
VII
ACCOUNTING,
VALUATIONS AND BOOKS AND RECORDS
|
|
SECTION
7.1.
|
ACCOUNTING
AND REPORTS.
|
(a) The
Company will maintain its books and records on the accrual method of accounting
based upon generally accepted accounting principles except as otherwise
described in this Agreement; provided that the Board of Directors may adopt any
accounting method determined by the Board of Directors to be in the best
interests of the Company, in its sole discretion. The Company's
accounts shall be maintained in U.S. currency. The Company shall
cause annual financial statements prepared in accordance with this Section
7.1(a), subject always to any requirements of the 1940 Act, to be accompanied by
a report of independent public accountants based upon an audit performed in
accordance with generally accepted auditing standards.
(b) After
the end of each tax year, the Company shall furnish to each Member such
information regarding the operation of the Company and such Member's Interest as
is determined by the Board of Directors to be reasonably necessary for Members
to complete federal, state and local income tax or information returns and any
other tax information required by federal, state or local law.
(c) Except
as otherwise required by the 1940 Act, or as may otherwise be permitted by rule,
regulation or order, within 60 days after the close of the period for which a
report required under this Section 7.1(c) is being made, the Company shall
furnish to each Member a semi-annual report and an annual report containing the
information required by the 1940 Act. The Company may furnish to each Member
such other periodic reports as it deems necessary or appropriate in its
discretion.
|
|
SECTION
7.2.
|
VALUATION
OF NET ASSETS.
|
(a) Except
as may be required by the 1940 Act, the Board of Directors shall value or have
valued any Securities or other assets and liabilities of the Company as of the
close of business on the last Business Day of each month prior to such date as
determined from time to time by the Advisor in accordance with such valuation
procedures as shall be established from time to time by the Board of Directors
and that conform to the requirements of the 1940 Act. In determining the value
of the assets of the Company, no value shall be placed on the goodwill
or
35
name
of the Company, or the office records, files, statistical data or any similar
intangible assets of the Company not normally reflected in the Company's
accounting records.
(b) The
Company will value its Securities, in accordance with policies and procedures
adopted from time to time by the Board of Directors.
(c) The
value of Securities and other assets of the Company and the net asset value of
the Company as a whole determined pursuant to this Section 7.2 shall be
conclusive and binding on all of the Members and all parties claiming through or
under them.
ARTICLE
VIII
MISCELLANEOUS
PROVISIONS
|
|
SECTION
8.1.
|
AMENDMENT
OF LIMITED LIABILITY COMPANY
AGREEMENT.
|
(a) Except
as otherwise provided in this Section 8.1, this Agreement may be amended, in
whole or in part, with: (i) the approval of a majority of the Board of Directors
(including the approval of a majority of the Independent Directors, if required
by the 0000 Xxx) and (ii) if required by the 1940 Act, the approval of the
Members by such vote as is required by the 0000 Xxx.
(b) Any
amendment that would:
(1) increase
the obligation of a Member to make any contribution to the capital of the
Company; or
(2) reduce
the Capital Account of a Member;
may
be made only if (i) the written consent of each Member adversely affected
thereby is obtained prior to the effectiveness thereof or (ii) such amendment
does not become effective until (A) each affected Member has received written
notice of such amendment and (B) any such Member objecting to such amendment has
been afforded a reasonable opportunity (pursuant to such procedures as may be
prescribed by the Board of Directors) to tender all of its Interest for
repurchase by the Company.
(c) No
amendment, supplement or other modification may be made to Section 2.6(a), this
Section 8.1(c), Section 8.6, Section 8.10 and Section 8.11 of this Agreement and
no amendment may be made to this Agreement which would change any rights with
respect to any Interests by reducing the amount payable thereon upon liquidation
of the Company or by diminishing or eliminating any voting rights pertaining
thereto (except that this provision shall not limit the ability of the Directors
to authorize, and to cause the Company to issue, Interests and other securities
pursuant to Section 6.2), except after a majority of the Directors have approved
a resolution therefore which thereafter is approved by the affirmative vote of
Members holding not less than seventy-five percent (75%) of the voting power
(determined in accordance with Section 3.3(i) hereof) of each affected class or
series outstanding, voting as separate classes or series, unless such amendment
has been approved by eighty percent (80%) of the Directors, in
36
which
case approval by a Majority Vote of each affected class or series outstanding
shall be required. 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 or to
permit assessments upon Members. Any amendment that would affect any
Director's right to indemnification under this Agreement may only be effected by
the written consent of such Director.
(d) The
power of the Board of Directors to amend this Agreement at any time without the
consent of the Members in accordance with paragraph (a) of this Section 8.1
shall specifically (and without limitation) include the power to:
(1) restate
this Agreement together with any amendments hereto that have been duly adopted
in accordance herewith to incorporate such amendments in a single, integrated
document;
(2) amend
this Agreement (other than with respect to the matters set forth in Section
8.1(b) hereof) to effect compliance with any applicable law or regulation,
including to reflect any relaxation of the requirements of applicable law;
and
(3) amend
this Agreement to make such changes as may be necessary or advisable for federal
tax purposes, including, without limitation, to ensure that (i) the Company will
not be treated as an association or as a publicly traded partnership taxable as
a corporation as defined in section 7704(b) of the Code (or any successor
provision) and (ii) the allocation provisions hereunder are respected for
Federal income tax purposes, provided that such changes do not materially reduce
any Member's allocations or distributions hereunder.
(e) After
the Closing, the Board of Directors shall cause written notice to be given of
any amendment to this Agreement (other than any amendment of the type
contemplated by clause (1) of Section 8.1(c) hereof) to each Member, which
notice shall set forth (i) the text of the amendment or (ii) a summary thereof
and a statement that the text thereof will be furnished to any Member upon
request.
|
|
SECTION
8.2.
|
SPECIAL
POWER OF ATTORNEY.
|
(a) Each
Member hereby irrevocably makes, constitutes and appoints the Advisor, with full
power of substitution, the true and lawful representative and attorney-in-fact
of, and in the name, place and stead of, such Member, with the power from time
to time to make, execute, sign, acknowledge, swear to, verify, deliver, record,
file and/or publish:
(1) any
amendment to this Agreement that complies with the provisions of this Agreement
(including the provisions of Section 8.1 hereof);
(2) any
amendment to the Certificate required because this Agreement is amended,
including, without limitation, an amendment to effectuate any change in the
membership of the Company; and
37
(3) all
such other instruments, documents and certificates that, in the opinion of legal
counsel to the Company, may from time to time be required by the laws of the
United States of America, the State of Delaware or any other jurisdiction in
which the Company shall determine to do business, or any political subdivision
or agency thereof, or that such legal counsel may deem necessary or appropriate
to effectuate, implement and continue the valid existence and business of the
Company as a limited liability company under the Delaware Act.
(b) Each
Member is aware that the terms of this Agreement permit certain amendments to
this Agreement to be effected and certain other actions to be taken or omitted
by or with respect to the Company without such Member's consent. If
an amendment to the Certificate or this Agreement or any action by or with
respect to the Company is taken in the manner contemplated by this Agreement,
each Member agrees that, notwithstanding any objection that such Member may
assert with respect to such action, the attorney-in-fact appointed hereby is
authorized and empowered, with full power of substitution, to exercise the
authority granted above in any manner that may be necessary or appropriate to
permit such amendment to be made or action lawfully taken or
omitted. Each Member is fully aware that each Member will rely on the
effectiveness of this special power of attorney with a view to the orderly
administration of the affairs of the Company.
(c) This
power of attorney is a special power of attorney and is coupled with an interest
in favor of the Advisor and as such:
(1) shall
be irrevocable and continue in full force and effect notwithstanding the
subsequent death or incapacity of any party granting this power of attorney,
regardless of whether the Advisor shall have had notice thereof;
and
(2) shall
survive the delivery of a Transfer by a Member of all or portion of such
Member's Interest, except that when the transferee thereof has been approved by
the Board of Directors for admission to the Company as a substituted Member,
this power of attorney given by the transferor shall survive the delivery of
such assignment for the sole purpose of enabling the Advisor to execute,
acknowledge and file any instrument necessary to effect such
substitution.
|
|
SECTION
8.3.
|
NOTICES.
|
Any
and all notices to which any Member hereunder may be entitled and any and all
communications shall be deemed duly served or given if mailed by regular mail or
commercial courier, postage prepaid, addressed to any Member of record at his
last known address as recorded on the applicable register of the
Company. Notices that may be or are required to be provided under
this Agreement to the Board of Directors or the Advisor shall be made
by hand delivery, registered or certified mail return receipt requested,
commercial courier service, or telecopier (receipt confirmed), and shall be
addressed to the respective parties hereto at their addresses as set forth in
the books and records of the Company. Notices shall be deemed to have
been provided when delivered by hand, on the date indicated as the date of
receipt on a return receipt or when received if sent by regular mail, commercial
courier service, or telecopier. A
38
document
that is not a notice and that is required to be provided under this Agreement by
any party to another party may be delivered by any reasonable
means.
|
|
SECTION
8.4.
|
AGREEMENT
BINDING UPON SUCCESSORS AND
ASSIGNS.
|
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and each Member of the Company and their respective heirs, successors, assigns,
executors, trustees or other legal representatives, but the rights and
obligations of the parties hereunder may not be Transferred or delegated except
as provided in this Agreement and any attempted Transfer or delegation thereof
that is not made pursuant to the terms of this Agreement shall be void and the
value of such Member's Interests will be determined according to Section
4.1.
|
|
SECTION
8.5.
|
APPLICABILITY
OF 1940 ACT.
|
The
parties hereto acknowledge that this Agreement is not intended to, and does not,
set forth the substantive provisions contained in the 1940 Act that affect
numerous aspects of the conduct of the Company's business and of the rights,
privileges and obligations of the Members. Each provision of this
Agreement shall be subject to and interpreted in a manner consistent with the
applicable provisions of the 1940 Act.
|
|
SECTION
8.6.
|
CONVERSION.
|
Notwithstanding
any other provisions of this Agreement or the By-Laws of the Company, a
favorable vote of a majority of the Directors then in office followed by the
favorable vote of the Members holding not less than seventy-five percent (75%)
of the voting power (determined in accordance with Section 3.3(i) hereof) of
each affected class or series outstanding, voting as separate classes or series,
shall be required to approve, adopt or authorize an amendment to this Agreement
that makes the Interests a ''redeemable security'' as that term is defined in
the 1940 Act, unless such amendment has been approved by eighty percent (80%) of
the Directors, in which case approval by Majority Vote shall be required. Upon
the adoption of a proposal to convert the Company from a ''closed-end company''
to an ''open-end company'' as those terms are defined by the 1940 Act and the
necessary amendments to this Agreement to permit such a conversion of the
Company's outstanding Interests entitled to vote, the Company shall, upon
complying with any requirements of the 1940 Act and state law, become an
''open-end'' investment company. Such affirmative vote or consent shall be in
addition to the vote or consent of the holders of the Interests otherwise
required by law.
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SECTION
8.7.
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CHOICE
OF LAW; ARBITRATION.
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(a) Notwithstanding
the place where this Agreement may be executed by any of the parties thereto,
the parties expressly agree that all the terms and provisions hereof shall be
construed in accordance with the laws of Delaware without regard to principles
of conflict of laws thereof that would mandate the application of the laws of
another jurisdiction and, without limitation thereof, that the
Delaware Act as now adopted or as may be hereafter amended shall govern the
limited liability company aspects of the Agreement.
(b) TO
THE FULLEST EXTENT PERMITTED BY LAW, UNLESS OTHERWISE AGREED IN
WRITING, EACH MEMBER AGREES TO SUBMIT ALL CONTROVERSIES
39
ARISING
BETWEEN MEMBERS OR ONE OR MORE MEMBERS AND THE COMPANY TO ARBITRATION IN
ACCORDANCE WITH THE PROVISIONS SET FORTH BELOW AND UNDERSTANDS
THAT:
(1) ARBITRATION
IS FINAL AND BINDING ON THE PARTIES;
(2) THE
PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT
TO A JURY TRIAL;
(3) PRE-ARBITRATION
DISCOVERY IS GENERALLY MORE LIMITED AND DIFFERENT FROM COURT
PROCEEDINGS;
(4) THE
ARBITRATOR'S AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING AND A PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF RULINGS BY
ARBITRATORS IS STRICTLY LIMITED; AND
(5) THE
PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE ARBITRATORS WHO WERE OR ARE
AFFILIATED WITH THE SECURITIES INDUSTRY.
(c) ALL
DISPUTES, CONTROVERSIES OR CLAIMS THAT MAY ARISE AMONG MEMBERS AND/OR ONE OR
MORE MEMBERS AND THE COMPANY CONCERNING OR RELATING TO THIS AGREEMENT OR THE
BREACH, TERMINATION OR VALIDITY THEREOF, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES HERETO
INCLUDING, BUT NOT LIMITED TO, ANY DISPUTES REGARDING THE VALIDITY OR SCOPE OF
THIS AGREEMENT TO ARBITRATE (EACH A "DISPUTE") SHALL BE FINALLY DETERMINED BY
ARBITRATION IN NEW YORK CITY IN ACCORDANCE WITH THE RULES THEN OBTAINING OF THE
INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION AND RESOLUTION ("CPR") RULES FOR
NON-ADMINISTERED ARBITRATION IN NEW YORK CITY, BY THREE ARBITRATORS APPOINTED IN
ACCORDANCE WITH THE RULES. THE ARBITRAL TRIBUNAL IS NOT EMPOWERED TO AWARD
DAMAGES IN EXCESS OF COMPENSATORY DAMAGES, AND EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT TO RECOVER PUNITIVE, EXEMPLARY, MULTIPLE OR SIMILAR DAMAGES
WITH RESPECT TO ANY DISPUTE. THE FEDERAL ARBITRATION ACT (9 U.S.C.
SECTION 1 ET SEQ).SHALL
APPLY TO ANY ARBITRATION HEREUNDER, AND JUDGMENT ON ANY AWARD OF ANY SUCH
ARBITRATION MAY BE ENTERED AND ENFORCED IN ANY COURT HAVING
JURISDICTION. ANY NOTICE OF SUCH ARBITRATION OR THE CONFIRMATION OF
ANY AWARD IN ANY ARBITRATION SHALL BE SUFFICIENT IF GIVEN IN ACCORDANCE WITH THE
PROVISIONS OF THIS AGREEMENT. EACH MEMBER AGREES THAT THE
DETERMINATION OF THE ARBITRATORS SHALL BE FINAL, BINDING AND CONCLUSIVE UPON
THEM.
(d) THE
COMPANY AND EACH MEMBER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
ANY RIGHTS THEY MAY HAVE TO A
40
TRIAL
BY JURY IN RESPECT OF ANY DISPUTE. EACH OF THE COMPANY AND EACH
MEMBER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR SUCH PARTY'S ENTERING INTO THIS AGREEMENT.
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SECTION
8.8.
|
NOT
FOR BENEFIT OF CREDITORS.
|
The
provisions of this Agreement are intended only for the regulation of relations
among past, present and future Members, Directors and the Company. This
Agreement is not intended for the benefit of non-Member creditors and no rights
are granted to non-Member creditors under this Agreement.
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SECTION
8.9.
|
CONSENTS.
|
Any
and all consents, agreements or approvals provided for or permitted by this
Agreement shall be in writing and a signed copy thereof shall be filed and kept
with the books of the Company.
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SECTION
8.10.
|
MERGER
AND CONSOLIDATION.
|
(a) The
Company may merge or consolidate with or into one or more limited liability
companies formed under the Delaware Act or other business entities pursuant to
an agreement of merger or consolidation that has been approved by two-thirds of
the Directors and in the manner contemplated by Section 18-209(b) of the
Delaware Act. Notwithstanding any other provision of this Agreement,
the Company may effect such merger or consolidation without a vote of the
Members, unless otherwise required by the 0000 Xxx.
(b) If
approved by the Board of Directors (and subject always to any requirements or
limitations imposed by the 1940 Act), notwithstanding anything to the contrary
contained elsewhere in this Agreement, an agreement of merger or consolidation
approved in accordance with Section 18-209(b) of the Delaware Act may, to the
extent permitted by Section 18-209(f) of the Delaware Act, (i) effect any
amendment to this Agreement, (ii) effect the adoption of a new limited liability
company agreement for the Company if it is the surviving or resulting limited
liability company in the merger or consolidation, or (iii) provide that the
limited liability company agreement of any other constituent limited liability
company to the merger or consolidation (including a limited liability company
formed for the purpose of consummating the merger or consolidation) shall be the
limited liability company agreement of the surviving or resulting limited
liability company.
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SECTION
8.11.
|
CERTAIN
TRANSACTIONS.
|
(a) Notwithstanding
any other provision of this Agreement and subject to the exceptions provided in
paragraph (d) of this Section, the types of transactions described in paragraph
(c) of this Section shall require the affirmative vote or consent of a majority
of the Directors then in office followed by the affirmative vote of the Members
holding not less than seventy-five percent (75%) of the voting power (determined
in accordance with Section 3.3(i) hereof) of each affected class or series
outstanding, voting as separate classes or series, when a Principal Member (as
defined in paragraph (b) of this Section) is a party to the transaction. Such
affirmative vote or consent shall be in addition to the vote or consent of the
holders of Interests
41
otherwise
required by law or by the terms of any class or series of preferred stock,
whether now or hereafter authorized, or any agreement between the Company and
any national securities exchange.
(b) The
term ''Principal Member'' shall mean any corporation, Person or other entity
which is the beneficial owner, directly or indirectly, of five percent (5%) or
more of the outstanding Interests of all outstanding classes or series and shall
include any affiliate or associate, as such terms are defined in clause (ii)
below, of a Principal Member. For the purposes of this Section, in addition to
the Interest which a corporation, Person or other entity beneficially owns
directly, (a) any corporation, Person or other entity shall be deemed to be the
beneficial owner of any Interests (i) which it has the right to acquire pursuant
to any agreement or upon exercise of conversion rights or warrants, or otherwise
(but excluding interest options granted by the Company) or (ii) which are
beneficially owned, directly or indirectly (including Interests deemed owned
through application of clause (i) above), by any other corporation, Person or
entity with which its ''affiliate'' or ''associate'' (as defined below) has any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of Interests, or which is its ''affiliate'' or ''associate''
as those terms are defined in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, and (b) the outstanding Interests
shall include Interests deemed owned through application of clauses (i) and (ii)
above but shall not include any other Interests which may be issuable pursuant
to any agreement, or upon exercise of conversion rights or warrants, or
otherwise.
(c) This
Section shall apply to the following transactions:
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(1)
|
The
merger or consolidation of the Company or any subsidiary of the Company
with or into any Principal Member;
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(2)
|
The
issuance of any securities of the Company to any Principal Member for cash
(other than pursuant to any automatic dividend reinvestment
plan);
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(3)
|
The
sale, lease or exchange of all or any substantial part of the assets of
the Company to any Principal Member (except assets having an aggregate
fair market value of less than two percent (2%) of the total assets of the
Company, aggregating for the purpose of such computation all assets sold,
leased or exchanged in any series of similar transactions within a
twelve-month period.); and
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(4)
|
The
sale, lease or exchange to the Company or any subsidiary thereof, in
exchange for securities of the Company, of any assets of any Principal
Member (except assets having an aggregate fair market value of less than
two percent (2%) of the total assets of the Company, aggregating for the
purposes of such computation all assets sold, leased or exchanged in any
series of similar transactions within a twelve-month
period).
|
(d) The
provisions of this Section shall not be applicable to (i) any of the
transactions described in paragraph (c) of this Section if eighty percent (80%)
of the Directors shall by resolution have approved a memorandum of understanding
with such Principal Member with
42
respect
to and substantially consistent with such transaction, in which case approval by
a Majority Vote shall be the only vote of Members required by this Section, or
(ii) any such transaction with any entity of which a majority of the voting
power (determined in accordance with Section 3.3(i) hereto) of all classes and
series of a stock normally entitled to vote in elections of directors is owned
of record or beneficially by the Company and its subsidiaries.
(e) The
Board of Directors shall have the power and duty to determine for the purposes
of this Section on the basis of information known to the Company whether (i) a
corporation, person or entity beneficially owns five percent (5%) or more of the
outstanding Interests of any class or series, (ii) a corporation, person or
entity is an ''affiliate'' or ''associate'' (as defined above) of another, (iii)
the assets being acquired or leased to or by the Company or any subsidiary
thereof constitute a substantial part of the assets of the Company and have an
aggregate fair market value of less than two percent (2%) of the total assets of
the Company, and (iv) the memorandum of understanding referred to in paragraph
(d) hereof is substantially consistent with the transaction covered thereby. Any
such determination shall be conclusive and binding for all purposes of this
Section.
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|
SECTION
8.12.
|
PRONOUNS;
USAGE; GENERIC TERMS.
|
All
pronouns shall be deemed to refer to the masculine, feminine, neuter, singular
or plural, as the identity of the person or persons, firm or corporation may
require in the context thereof. The words "herein," "hereby,"
"hereof" and "hereto," and words of similar import, refer to this Agreement in
its entirety and not to any particular paragraph, clause or other subdivision,
unless otherwise specified. The word "including" shall mean
"including without limitation" unless otherwise specified. Section
references are to this Agreement unless otherwise specified.
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SECTION
8.13.
|
CONFIDENTIALITY.
|
(a) A
Member may obtain from the Company such information regarding the affairs of the
Company as is just and reasonable under the Delaware Act, subject to reasonable
standards (including standards governing what information and documents are to
be furnished, at what time and location and at whose expense) established by the
Board of Directors.
(b) Each
Member covenants that, except as required by applicable law or any regulatory
body, it will not divulge, furnish or make accessible to any other person the
name and/or address (whether business, residence or mailing) of any Member
(collectively, "Confidential Information") without the prior written consent of
the Board of Directors, which consent may be withheld in its sole
discretion.
(c) Each
of the Members wishes to maintain maximum confidentiality with respect to their
investment in the Company. Accordingly, pursuant to Section 18-305(g)
of the Delaware Act, the Members desire to restrict the rights of Members to
obtain information as otherwise provided in Section 18-305(a) of the Delaware
Act. The Members, therefore, agree that each Member shall only be
entitled to the information and reports provided pursuant to Article VII hereof
and shall not be entitled to any other information concerning the Company or its
business or affairs or the Members or their Interests in the Company whether
pursuant to Section 18-305(a) of the Delaware Act or
otherwise. Without limiting the generality of the foregoing,
each
43
Member
agrees that it shall have no access to, and shall not be entitled to know, the
name and/or address (whether business, residence or mailing) of any other
Member. If, notwithstanding the foregoing restriction, any Member
shall obtain any information concerning the Company or its business or affairs
or any other Member or such Member's Interest in the Company or any other
information other than that provided pursuant to Article VII hereof, such Member
agrees that it will not divulge, furnish or make accessible to any other person
any such information (all such information being referred to herein as
"Confidential Information") without the prior written consent of the Board of
Directors which consent may be withheld at the sole discretion of the Board of
Directors.
(d) Each
Member recognizes that in the event that this Section 8.13 is breached by any
Member or any of its principals, partners, members, directors, officers,
employees or agents or any of its affiliates, including any of such affiliates'
principals, partners, members, directors, officers, employees or agents,
irreparable injury may result to the non-breaching Members and the
Company. Accordingly, in addition to any and all other remedies at
law or in equity to which the non-breaching Members and the Company may be
entitled, such Members and the Company shall also have the right to obtain
equitable relief, including, without limitation, injunctive relief, to prevent
any disclosure of Confidential Information, plus reasonable attorneys' fees and
other litigation expenses incurred in connection therewith. In the
event that any non-breaching Member or the Company determines that any of the
other Members or any of its principals, partners, members, directors, officers,
employees or agents or any of its affiliates, including any of such affiliates'
principals, partners, members, directors, officers, employees or agents should
be enjoined from or required to take any action to prevent the disclosure of
Confidential Information, each of the other non-breaching Members agrees to
pursue in a court of appropriate jurisdiction such injunctive
relief. Notwithstanding any other provision of this Agreement, any
Member or authorized representative may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the Company and
all materials of any kind (including opinions or other tax analyses) that are
provided to such Member relating to such tax treatment or tax structure;
provided that the foregoing does not constitute an authorization to disclose
information identifying the Company, the Members or any parties to transactions
engaged in by the Company (except to the extent relating to such tax structure
or tax treatment) any non-public commercial or financial
information.
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|
SECTION
8.14.
|
CERTIFICATION
OF NON-FOREIGN STATUS.
|
Each
Member or transferee of an Interest from a Member shall certify, upon admission
to the Company and at such other times thereafter as the Tax Matters Partner may
request, whether such Member is a "United States Person" within the meaning of
section 7701(a)(30) of the Code on forms to be provided by the Company, and
shall notify the Company within 30 days of any change in such Member's
status. Any Member who shall fail to provide such certification when
requested to do so by the Tax Matters Partner may be treated as a non-United
States Person for purposes of U.S. federal tax withholding.
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SECTION
8.15.
|
SEVERABILITY.
|
If
any provision of this Agreement is determined by a court of competent
jurisdiction not to be enforceable in the manner set forth in this Agreement,
each Member agrees that it is the
44
intention
of the Members that such provision should be enforceable to the maximum extent
possible under applicable law. If any provisions of this Agreement are held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect the validity or enforceability of any other provision of this Agreement
(or portion thereof).
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SECTION
8.16.
|
FILING
OF RETURNS.
|
The
Tax Matters Partner or its designated agent, subject to the supervision of the
Board of Directors, shall prepare and file, or cause the Advisor or accountants
of the Company to prepare and file, on behalf of the Company, a federal
information tax return in compliance with section 6031 of the Code and any
required state and local income tax and information returns for each tax year of
the Company.
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|
SECTION
8.17.
|
TAX
DECISIONS AND TAX MATTERS PARTNER.
|
(a) All
decisions for the Company relating to tax matters, including, without
limitation, whether to make any tax elections (including the election under
Section 754 of the Code), the positions to be made on the Company's tax and
information returns and the settlement or further contest or litigation of any
audit matters raised by the Internal Revenue Service or any other taxing
authority, shall be made by the Tax Matters Partner, subject to the supervision
of the Board of Directors.
(b) The
Advisor shall be designated on the Company's annual federal income tax
information return, and have full powers and responsibilities, as the Tax
Matters Partner of the Company for purposes of section 6231(a)(7) of the Code.
The Tax Matters Partner for the Company for purposes of Section 6231(a)(7) of
the Code shall be subject to the supervision of the Board of
Directors. The Tax Matters Partner for the Company under section
6231(a)(7) of the Code shall be indemnified and held harmless by the Company
from any and all liabilities and obligations that arise from or by reason of
such designation.
(c) Each
person (for purposes of this Section 8.17, called a "Pass-Thru Member") that
holds or controls an Interest on behalf of, or for the benefit of, another
person or persons, or which Pass-Thru Member is beneficially owned (directly or
indirectly) by another person or persons, shall, within 10 days following
receipt from the Tax Matters Partner of any notice, demand, request for
information or similar document, convey such notice or other document in writing
to all holders of beneficial interests in the Company holding such interests
through such Pass-Thru Member. In the event the Company shall be the subject of
an income tax audit by any federal, state or local authority, to the extent the
Company is treated as an entity for purposes of such audit, including
administrative settlement and judicial review, the Tax Matters Partner shall be
authorized to act for, and its decision shall be final and binding upon, the
Company and each Member thereof. All expenses incurred in connection
with any such audit, investigation, settlement or review shall be borne by the
Company. Each Member who elects to participate in such proceedings
shall be responsible for any expenses incurred by such Member in connection with
such participation. The costs of any resulting audits or adjustments
of a Member's tax return shall be borne solely by the affected
Member.
45
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SECTION
8.18.
|
COUNTERPARTS.
|
This
Agreement may be executed in any number of counterparts with the same effect as
if all parties had signed the same document. All counterparts shall be construed
together and shall constitute one instrument.
EACH
OF THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY
BEFORE SIGNING, INCLUDING THE PRE-DISPUTE ARBITRATION CLAUSE SET FORTH IN
SECTION 8.7 AND THE CONFIDENTIALITY CLAUSE SET FORTH IN SECTION
8.13.
