FORM OF
MERCANTILE SMALL CAP MANAGER FUND LLC
LIMITED LIABILITY COMPANY AGREEMENT
Dated as of [December 1, 2002]
Table of Contents
Page
Article I.
Definitions................................................................1
Section 1.1. ADMINISTRATIVE SERVICES.....................................1
Section 1.2. ADMINISTRATOR...............................................1
Section 1.3. ADMINISTRATION AGREEMENT....................................1
Section 1.4. ADVISER.....................................................1
Section 1.5. ADVISERS ACT................................................2
Section 1.6. AFFILIATE...................................................2
Section 1.7. AGREEMENT...................................................2
Section 1.8. BOARD.......................................................2
Section 1.9. CAPITAL ACCOUNT.............................................2
Section 1.10 CERTIFICATE.................................................2
Section 1.11 CLOSING DATE................................................2
Section 1.12 CODE........................................................2
Section 1.13 COMPANY.....................................................2
Section 1.14 DELAWARE ACT................................................2
Section 1.15 DIRECTOR....................................................2
Section 1.16 FISCAL PERIOD...............................................2
Section 1.17 FISCAL YEAR.................................................3
Section 1.18 FORM N-2....................................................3
Section 1.19 INCENTIVE FEE...............................................3
Section 1.20 INCENTIVE PERIOD............................................3
Section 1.21 INDEPENDENT DIRECTORS.......................................3
Section 1.22 INITIAL MEMBER..............................................3
Section 1.23 INTEREST....................................................3
Section 1.24 INVESTMENT ADVISORY AGREEMENT ..............................3
Section 1.25 INVESTMENT FUNDS............................................3
Section 1.26 INVESTMENT MANAGERS.........................................3
Section 1.27 INVESTMENT MANAGEMENT AGREEMENT.............................4
Section 1.28 INVESTMENT PERCENTAGE.......................................4
Section 1.29 LOSS CARRYFOWARD AMOUNT.....................................4
Section 1.30 MANAGEMENT FEE..............................................4
Section 1.31 MANAGER.....................................................4
Section 1.32 MEMBER......................................................4
Section 1.33 NET ASSETS..................................................5
Section 1.34 NET PROFITS OR NET LOSSES...................................5
Section 1.35 1940 ACT....................................................5
Section 1.36 ORGANIZATIONAL MEMBER.......................................5
Section 1.37 PLACEMENT AGENT.............................................5
Section 1.38 PRINCIPAL DIRECTOR..........................................5
Section 1.39 PROMISSORY NOTE.............................................5
Section 1.40 PRIVATE PLACEMENT MEMORANDUM................................5
Section 1.41 SECURITIES..................................................5
Section 1.42 SUB-ADVISERS................................................5
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Table of Contents
Page
Section 1.43 TAXABLE YEAR................................................6
Section 1.44 TRANSFER....................................................6
Article II.
ORGANIZATION; ADMISSION OF MEMBERS.........................................6
Section 2.1. Formation of Limited Liability Company......................6
Section 2.2. Name........................................................6
Section 2.3. Principal and Registered Office.............................6
Section 2.4. Duration....................................................6
Section 2.5. Objective and Business of the Company.......................7
Section 2.6. Board of Directors..........................................7
Section 2.7. Members.....................................................8
Section 2.8. Placement Fees..............................................8
Section 2.9. Both Directors and Members..................................9
Section 2.10 Limited Liability...........................................9
Article III.
MANAGEMENT.................................................................9
Section 3.1. Management and Control......................................9
Section 3.2. Actions by the Board of Directors...........................10
Section 3.3. Meetings of Members.........................................11
Section 3.4. Custody of Assets of the Company............................12
Section 3.5. Other Activities of Members, the Manager and Directors......12
Section 3.6. Duty of Care................................................12
Section 3.7. Indemnification.............................................12
Section 3.8. Fees, Expenses and Reimbursement............................15
Article IV.
TERMINATION OF STATUS OF MANAGER AND DIRECTORS, TRANSFERS AND REPURCHASES..17
Section 4.1. Termination of Status of the Manager........................17
Section 4.2. Termination of Status of a Director.........................17
Section 4.3. Removal of the Directors....................................17
Section 4.4. Appointment of a Director...................................18
Section 4.5. Removal of the Manager......................................18
Section 4.6. Transfer of Interests of Members............................18
Section 4.7. Repurchase of Interests.....................................20
Article V.
CAPITAL....................................................................22
Section 5.1. Contributions to Capital....................................22
Section 5.2. Rights of Members to Capital................................22
Section 5.3. Capital Accounts............................................22
Section 5.4. Allocation of Net Profits and Net Losses....................23
Section 5.5. Allocation of Insurance Premiums and Proceeds...............23
Section 5.6. Allocation of Certain Expenditures..........................24
Section 5.7. Reserves....................................................24
Section 5.8. Allocation of Organizational Expenses.......................25
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Table of Contents
Page
Section 5.9. Tax Allocations.............................................25
Section 5.10 Distributions...............................................26
Section 5.11 Withholding.................................................26
Article VI.
DISSOLUTION AND LIQUIDATION................................................27
Section 6.1. Dissolution.................................................27
Section 6.2. Liquidation of Assets.......................................28
Article VII.
ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS...............................28
Section 7.1. Accounting and Reports......................................28
Section 7.2. Determinations by the Board of Directors....................29
Section 7.3. Valuation of Assets.........................................29
Article VIII.
MISCELLANEOUS PROVISIONS...................................................29
Section 8.1. Amendment of Limited Liability Company Agreement............29
Section 8.2. Special Power of Attorney...................................30
Section 8.3. Notices.....................................................32
Section 8.4. Agreement Binding Upon Successors and Assigns...............32
Section 8.5. Applicability of 1940 Act and Form N-2......................32
Section 8.6. Choice of Law; Arbitration..................................32
Section 8.7. Not for Benefit of Creditors................................34
Section 8.8. Consents....................................................34
Section 8.9. Merger and Consolidation....................................34
Section 8.10 Pronouns....................................................34
Section 8.11 Confidentality..............................................34
Section 8.12 Severability................................................35
Section 8.13 Filing of Returns...........................................35
Section 8.14 Tax Matters Partner.........................................35
Section 8.15 Section 754 Election........................................36
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LIMITED LIABILITY COMPANY AGREEMENT
OF
MERCANTILE SMALL CAP MANAGER FUND LLC
A Delaware Limited Liability Company
Dated as of [December 1, 0000]
Xxx Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000
(000) 000-0000
THIS LIMITED LIABILITY COMPANY AGREEMENT of Mercantile Small Cap Manager Fund
LLC (the "Company") is dated as of [December 1], 2002 by and among Mercantile
Capital Advisors, Inc. as the manager ("MCA" or the "Manager"), and Mercantile
Bankshares Corporation as Organizing Member and those persons hereinafter
admitted as Members.
WHEREAS, the Company has heretofore been formed as a limited liability company
under the Delaware Limited Liability Company Act pursuant to an initial
Certificate of Formation (the "Certificate") dated and filed with the
Secretary of State of Delaware on October 8, 2002,
NOW, THEREFORE, for and in consideration of the foregoing and the mutual
covenants hereinafter set forth, it is hereby agreed as follows:
Article I.
Definitions
For purposes of this Agreement:
Section 1.1. SERVICES. Such administrative services as the Administrator shall
provide to the Company pursuant to a separate written agreement with the
Company as contemplated by Section 3.1 hereof.
Section 1.2. ADMINISTRATOR. MCA, or any person who may hereafter provide
Administrative Services to the Company pursuant to an administration
agreement. For purposes of this Agreement the term "Administrator" includes a
"Sub-Administrator".
Section 1.3. ADMINISTRATION AGREEMENT. A separate written agreement entered
into by the Company pursuant to which MCA provides administrative services to
the Company.
Section 1.4. ADVISER. Agio Alternative Assets, LLC ("Agio"), a Delaware
limited liability company retained by the Manager to provide investment
advisory services to the Company or such other person appointed by the Manager
to provide similar services, with the consent of the Board of Directors.
Section 1.5. ADVISERS ACT. The Investment Advisers Act of 1940, as amended,
and the rules, regulations and orders thereunder, as amended from time to
time, or any successor law.
Section 1.6. AFFILIATE. Shall have such meaning as such term is defined in the
1940 Act.
Section 1.7. AGREEMENT. This Limited Liability Company Agreement, as amended
from time to time.
Section 1.8. BOARD. The Board of Directors established pursuant to Section
2.6.
Section 1.9. CAPITAL ACCOUNT. With respect to each Member, the capital account
established and maintained on behalf of each Member pursuant to Section 5.4.
Section 1.10. CERTIFICATE. The Certificate of Formation of the Company and any
amendments thereto as filed with the office of the Secretary of State of
Delaware.
Section 1.11. CLOSING DATE. The first date on or as of which a Member other
than the Organizational Member is admitted to the Company.
Section 1.12. CODE. The United States Internal Revenue Code of 1986, as
amended, and as hereafter amended from time to time, or any successor law.
Section 1.13. COMPANY. The limited liability company governed hereby, as such
limited liability company may from time to time be constituted.
Section 1.14. DELAWARE ACT. The Delaware Limited Liability Company Act as in
effect on the date hereof and as amended from time to time, or any successor
law.
Section 1.15. DIRECTOR. An individual designated as a Director of the Company
who is delegated authority provided for in Section 2.6 of this Agreement. For
purposes of this Agreement the term "Director" shall have the same meaning as
the term "Manager" as such term is defined under the Delaware Act (but is not
the same as the term "Manager" as used in this Agreement).
Section 1.16. FISCAL PERIOD. The period commencing on the Closing Date of the
Company, and thereafter each period commencing on the day following the last
day of the preceding Fiscal Period, and ending at the close on business on the
first to occur of the following dates:
(a) the last day of a Fiscal Year;
(b) the last day of a Taxable Year;
(c) the day preceding the date on which a contribution to the capital
of the Company is made;
(d) the day on which a substitute member is admitted;
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(e) the day on which the Company repurchases any Interest, or portion
of an Interest, of a Member; or
(f) any day on which any amount is credited to, or debited against,
the Capital Account of a Member, other than an amount to be
credited to, or debited against, the Capital Account of all
Members in accordance with their respective Investment
Percentages.
Section 1.17. FISCAL YEAR. The period commencing on the Closing Date and
ending on March 31, 2003, and thereafter each period commencing on April 1 of
each year and ending on March 31 of the following year (or on the date of a
final distribution pursuant to Section 6.2 hereof), unless the Board elect
another fiscal year for the Company.
Section 1.18. FORM N-2. The Company's Registration Statement on Form N-2 filed
with the Securities and Exchange Commission, as amended from time to time.
Section 1.19. INCENTIVE FEE. The fee paid to the Manager at the end of each
fiscal year and accrued at the end of each Incentive Period (as defined below)
which is based upon the performance of the Company. The Incentive Fee is an
amount equal to 10% of each Member's net profits in excess of such Member's
Loss Carryforward Amount (before any accruals of Incentive Fees).
Section 1.20. INCENTIVE PERIOD. The Incentive Period, which may be composed of
one or more consecutive fiscal periods, generally corresponds to a fiscal
year, but may vary with respect to Members. An Incentive Period may be compsed
of one or more consecutive fiscal periods.
Section 1.21. INDEPENDENT DIRECTORS. Those Directors who are not "interested
persons" of the Company as such term is defined in the 1940 Act.
Section 1.22. INITIAL MEMBER. Mercantile Capital Advisors, Inc.
Section 1.23. INTEREST. The ownership interest in the Company at any
particular time of a Member, or other person to whom an Interest of a Member
or portion thereof has been transferred pursuant to Section 4.5 hereof,
including the rights and obligations of such Member or other person under this
Agreement and the Delaware Act.
Section 1.24. INVESTMENT ADVISORY AGREEMENT. A separate written agreement
entered into by the Adviser, the Manager and the Company pursuant to which the
Adviser provides advisory services to the Company.
Section 1.25. INVESTMENT FUNDS. Unregistered general or limited partnerships,
pooled investment vehicles or managed accounts in which the Company invests
its assets that are advised by an Investment Manager and includes Investment
Funds that may be formed by the Company.
Section 1.26 INVESTMENT MANAGERS. Third party investment managers designated
by the Adviser to manage a portion of the assets of the Company either
directly or through the
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investment by the Company in an Investment Fund. For purposes of this
Agreement the term "Investment Manager" includes Sub-advisers.
Section 1.27. INVESTMENT MANAGEMENT AGREEMENT. A separate written agreement
entered into by the Company pursuant to which MCA provides investment
management services to the Company.
Section 1.28. INVESTMENT PERCENTAGE. 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 period by the sum of the Capital Accounts of all of the Members as of the
commencement of such period. The sum of the Investment Percentages of all
Members for each Fiscal Period shall equal 100%.
Section 1.29. LOSS CARRYFORWARD AMOUNT. The excess, with respect to any
Incentive Period, and to the extent not subsequently offset by allocations of
profits or otherwise reduced, of (1) a Member's allocable share of net losses
calculated in accordance with Section 5.4 of this Agreement (excluding amounts
previously allocated to repurchased or distributed portions of the Capital
Account during the Incentive Period) over (2) the Member's allocable share of
net profits calculated in accordance with Section 5.4 of this Agreement
(excluding amounts previously allocated to repurchased or distributed portions
of the Capital Account during the Incentive Period), in each case for the
current and any prior Incentive Periods. If at the end of any subsequent
Incentive Period, profits allocated to a Member's Capital Account exceed the
losses allocated during that period (excluding profits and losses previously
taken into account for this purpose by reason of a partial repurchase or
distribution during that period), any Loss Carryforward Amount for such Member
will be reduced (but not below zero) by the amount of the excess. No
transferee may succeed to any portion of the Loss Carryforward Account
applicable to the Transferring Member unless the transfer of the Interest or
portion of the Interest results in no change in beneficial ownership in the
Interest or portion of the Interest. The Loss Carryforward Amount, for a given
Incentive Period, will be adjusted with respect to any contributions,
transfers, distributions, withdrawals and repurchases applicable to the
Member's Capital Account for that Incentive Period, or portion thereof.
Section 1.30. MANAGEMENT FEE. The fee paid to the Manager out of the Company's
assets, and debited against Members' Capital Accounts, as provided in Section
3.8(g) of this Agreement
Section 1.31. MANAGER. Mercantile Capital Advisors Inc., a Maryland
corporation, or any person who may hereinafter serve as the Manager to the
Company pursuant to an investment management agreement.
Section 1.32. MEMBER. Any person who shall have been admitted to the Company
as a member (including any Director in such person's capacity as a member of
the Company but excluding any Director in such person's capacity as a Director
of the Company) until the Company repurchases the entire Interest of such
person as a member pursuant to Section 4.6 hereof or a substituted member or
members are admitted with respect to any such person's entire Interest as a
member pursuant to Section 4.5 hereof.
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Section 1.33. NET ASSETS. The total value of all assets of the Company, less
an amount equal to all accrued debts, liabilities and obligations of the
Company, calculated before giving effect to any repurchases of Interests.
Section 1.34. NET PROFITS OR NET LOSSES. 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:
(a) the amount of any insurance premiums or proceeds to be allocated
among the Capital Accounts of the Members pursuant to Section 5.5
hereof;
(b) any items to be allocated among the Capital Accounts of the
Members on a basis that is not in accordance with the respective
Investment Percentages of all Members as of the commencement of
such Fiscal Period pursuant to Section 5.6 and Section 5.7 hereof;
and
(c) Monthly reimbursement of Organization Expenses allocated among the
Capital Accounts of the Members pursuant to Sections 3.8 and 5.8
hereof.
Section 1.35. 1940 ACT. The Investment Company Act of 1940 and the rules,
regulations and orders thereunder, as amended from time to time, or any
successor law.
Section 1.36. ORGANIZATIONAL MEMBER. Mercantile Bankshares Corporation.
Section 1.37. PLACEMENT AGENT. An agent who is hired by the Manager to sell
Interests in the Company.
Section 1.38. PRINCIPAL DIRECTOR. The Director selected to preside over
meetings of the Board.
Section 1.39. PROMISSORY NOTE. The Promissory Note is a non-interest bearing
and non-transferable promise to pay which will contain terms providing for
payment to a redeeming Member at two separate times.
Section 1.40. PRIVATE PLACEMENT MEMORANDUM. The Company's placement
memorandum, as included in the Form N-2, as amended or supplemented from time
to time.
Section 1.41. SECURITIES. Securities (including, without limitation, equities,
debt obligations, options, and other "securities" as that term is defined in
Section 2(a)(36) of the 0000 Xxx) and any contracts for forward or future
delivery of any security, debt obligation or currency, or commodity, all types
of derivative instruments and any contracts based on any index or group of
securities, debt obligations or currencies, or commodities, and any options
thereon, as well as investments in registered investment companies and private
investment funds.
Section 1.42. SUB-ADVISERS. Investment Managers selected to directly manage
the Company's assets in separate Investment Funds or managed accounts that
would be managed by
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one or more of the Investment Managers and for which the Company would
generally be the sole investor.
Section 1.43. TAXABLE YEAR. The period from January 1 to December 31 of each
year.
Section 1.44. TRANSFER. The assignment, transfer, sale, encumbrance, pledge or
other disposition of all or any portion of an Interest, including any right to
receive any allocations and distributions attributable to an Interest. Verbs,
adverbs or adjectives such as "Transfer," "Transferred" and "Transferring"
have correlative meanings.
Article II.
ORGANIZATION; ADMISSION OF MEMBERS
Section 2.1. Formation of Limited Liability Company.
The Board shall execute and file in accordance with the Delaware Act any
amendment to the Certificate and shall execute and file with applicable
governmental authorities any other instruments, documents and certificates
that, in the opinion of the 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 that 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 Mercantile Small Cap Manager Fund LLC
or such other name as the Board may hereafter adopt upon (i) causing an
appropriate amendment to the Certificate to be filed in accordance with the
Delaware Act and (ii) sending notice thereof to each Member.
Section 2.3. Principal and Registered Office.
(a) The Company shall have its principal office at Xxx Xxxxxxx Xxxxxx
Xxxxx, Xxxx, Xxxxxxxxxxxx 00000, or at such other place designated
from time to time by the Board.
(b) The Company shall have its registered office in Delaware at 000
Xxxxx Xxxxxx Xxxxxxx, Xxxxx, Xxxxxxxx, 00000 and shall have
National Corporate Research, Ltd. 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.
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.
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Section 2.5. Objective and Business of the Company.
(a) The objective of the Company is to seek capital appreciation
principally through investing in Investment Funds managed by
third-party Investment Managers who employ a variety of
alternative investment strategies. The business of the Company is
to purchase, sell (including short sales), invest and trade in
Securities, on margin or otherwise, and to engage in any financial
or derivative transactions relating thereto or otherwise. The
Company may execute, deliver and perform all contracts,
agreements, subscription documents and other undertakings and
engage in all activities and transactions as may in the opinion of
the Board be necessary or advisable to carry out its objective or
business. The Company shall be operated subject to any applicable
restrictions of the Bank Holding Company Act of 1956, as amended.
(b) The Company shall operate as a closed-end, non-diversified,
management investment company in accordance with the 1940 Act and
subject to any fundamental policies and investment restrictions
set forth in the Form N-2.
Section 2.6. Board of Directors.
(a) Prior to the Closing Date, the Organizational Member may designate
such persons who shall agree to be bound by all of the terms of
this Agreement to serve as the initial Directors on the Board,
subject to the election of such persons prior to the Closing Date
by the Organizational Member. By signing this Agreement or the
signature page of the Company's subscription agreement, a Member
admitted on the Closing Date shall be deemed to have voted for the
election of each of the initial Directors to the Board. After the
Closing Date, the Board may, subject to the provisions of
paragraphs (a) and (b) of this Section 2.6 with respect to the
number of, and vacancies in, the position of Director and the
provisions of Section 3.3 hereof with respect to the election of
Directors to the Board by Members, designate any person who shall
agree to be bound by all of the terms of this Agreement as a
Director. The names and mailing addresses of the Directors shall
be set forth in the books and records of the Company. The number
of Directors shall be fixed from time to time by the Board.
(b) Each Director shall serve on the Board for the duration of the
term of the Company, unless his or her status as a Director shall
be sooner terminated pursuant to Section 4.2 hereof. In the event
of any vacancy in the position of Director, the remaining
Directors may appoint an individual to serve in such capacity, so
long as immediately after such appointment at least two-thirds
(2/3) of the Directors then serving would have been elected by the
Members. The Board may call a meeting of Members to fill any
vacancy in the position of Director, and shall do so within 60
days after any date on which Directors who were elected by the
Members cease to constitute a majority of the Directors then
serving on the Board.
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(c) In the event that no Director remains to continue the business of
the Company, the Manager shall promptly call a meeting of the
Members, to be held within 60 days after the date on which the
last Director ceased to act in that capacity, for the purpose of
determining whether to continue the business of the Company and,
if the business shall be continued, of electing the required
number of Directors to the Board. If the Members shall determine
at such meeting not to continue the business of the Company or if
the required number of Directors is not elected within 60 days
after the date on which the last Director ceased to act in that
capacity, then the Company shall be dissolved pursuant to Section
6.1 hereof and the assets of the Company shall be liquidated and
distributed pursuant to Section 6.2 hereof.
Section 2.7. Members.
The Board expects to admit Members as of the first business day of each
calendar quarter. Members may be admitted to the Company subject to the
condition that each such Member shall execute an appropriate signature page of
this Agreement and of the Company's subscription agreement pursuant to which
such Member agrees to be bound by all the terms and provisions hereof. The
Board may in its sole discretion reject any subscription for Interests. The
Board may, in its sole discretion, suspend subscriptions for Interests at any
time. 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.
Section 2.8. Placement Fees
(a) A Member may be charged a Placement Fee when a Placement Agent is
used to place such Member's Interest with the Company. The
specific amount of the Placement Fee is dependent on the size of
the investment in the Company. The fees are as follows:
Amount Subscribed For Placement Fee
$75,000 to $1 million 3.0% of subscription amount
Between $1 million and $5 million 1.5% of subscription amount
$5 million to $10 million 1% of subscription amount
More than $10 million No fee
(b) The placement fee will be added to a prospective Member's
subscription amount; it will not constitute a Capital Contribution
made by the Member to the Company nor part of the assets of the
Company and may be adjusted or waived at the sole discretion of
the Placement Agent in consultation with the Manager.
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Section 2.9. Both Directors and Members.
A Member may at the same time be a Director and a Member, in which event
such Member's rights and obligations in each capacity shall be determined
separately in accordance with the terms and provisions hereof and as provided
in the Delaware Act.
Section 2.10. Limited Liability.
Except as provided under applicable law, including capital contribution
obligations, a Member shall not be liable for the Company's debts, obligations
and liabilities in any amount in excess of such Member's contributions to the
capital of the Company (plus such Member's share of undistributed profits and
assets). Except as provided under applicable law, a Director shall not be
liable for the Company's debts, obligations and liabilities.
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, 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 "manager" as defined under the
Delaware Act (but is not the same as the term "Manager" as defined
in this Agreement) 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 behalf of or to bind the Company except
within the scope of such Director's authority as delegated by the
Board. 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 each 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 that is organized as a Delaware corporation who is not an
"interested person" (as such term is defined in the 0000 Xxx) of
such company. During any period in which the Company shall have no
Directors, the Manager shall continue to provide management and
administrative services to the Company pursuant to the Investment
Management and Administration Agreements. The Manager will oversee
the day-to-day management of the Company and, subject to the
approval of the Board, has the authority to: approve the
acceptance of initial and subsequent subscriptions on behalf of
the Company; determine whether additional subscriptions should be
suspended; make determinations on the transfer of Interests; and
manage and oversee the general administrative and operational
aspects of the Company.
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(b) 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 or
as otherwise required in the Delaware Act.
(c) The Board may delegate to any other person any rights, power and
authority vested by this Agreement in the Board to the extent
permissible under applicable law.
(d) The Company will file a tax return as a partnership for U.S.
federal income tax purposes. Except as otherwise specifically
provided herein, all decisions for the Company relating to tax
matters including, without limitation, whether to make any tax
elections, the positions to be made on the Company's tax returns
and the settlement or further contest or litigation of any audit
matters raised by the Internal Revenue Service or other taxing
authority, will be made by the Board. All actions (other than
ministerial actions) taken by the Manager, as designated in this
Section 3.1 and Section 3.2 below, will be subject to the approval
of the Board. Each Member agrees not to treat, on his personal
income tax return or 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.
Section 3.2. Actions by the Board of Directors.
(a) Unless provided otherwise in this Agreement, the Board shall act
only: (i) by the affirmative vote of a majority of the Directors
(including the vote of a majority of the Independent Directors, if
required by the 0000 Xxx) present at a meeting duly called at
which a quorum of the Directors shall be present (in person or, if
in person attendance is not required by the 1940 Act, by
telephone) or (ii) by unanimous written consent of all of the
Directors without a meeting, if permissible under the 1940 Act.
(b) The Board may designate from time to time a Principal Director who
shall preside at all meetings. Meetings of the Board may be called
by the Principal Director or by any two Directors, and may be held
on such date and at such time and place as the Board shall
determine. Each Director shall be entitled to receive written
notice of the date, time and place of such meeting within a
reasonable time in advance of the meeting. Notice need not be
given to any Director who shall attend a meeting without objecting
to the lack of notice or who shall execute a written waiver of
notice with respect to the meeting. Directors may attend and
participate in any meeting by telephone except where in person
attendance at a meeting is required by the 1940 Act. A majority of
the Directors shall constitute a quorum at any meeting.
(c) The Board may designate from time to time agents and employees of
the Company who shall have the same powers and duties on behalf of
the Company
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(including the power to bind the Company) as are customarily
vested in officers of a Delaware corporation, and designate them
as officers of the Company.
Section 3.3. Meetings of Members.
(a) Actions requiring the vote of the Members may be taken at any duly
constituted meeting of the Members at which a quorum is present.
Meetings of the Members may be called by the Board or by Members
holding a majority of the total number of votes eligible to be
cast by all Members, and may be held at such time, date and place
as the Board shall determine. The Board shall arrange to provide
written notice of the meeting, stating the date, time and place of
the meeting and the record date therefor, to each Member entitled
to vote at the meeting within a reasonable time prior thereto.
Failure to receive notice of a meeting on the part of any Member
shall not affect the validity of any act or proceeding of the
meeting, so long as a quorum shall be present at the meeting,
except as otherwise required by applicable law. Only matters set
forth in the notice of a meeting may be voted on by the Members at
a meeting. The presence in person or by proxy of Members holding a
majority of the total number of votes eligible to be cast by all
Members as of the record date shall constitute a quorum at any
meeting. In the absence of a quorum, a meeting of the Members may
be adjourned by action of a majority of the Members present in
person or by proxy without additional notice to the Members.
Except as otherwise required by any provision of this Agreement or
of the 1940 Act, (i) those candidates receiving a plurality of the
votes cast at any meeting of Members shall be elected as Directors
and (ii) all other actions of the Members taken at a meeting shall
require the affirmative vote of Members holding a majority of the
total number of votes eligible to be cast by those Members who are
present in person or by proxy at such meeting.
(b) Each Member shall be entitled to cast at any meeting of Members a
number of votes equivalent to such Member's Investment Percentage
as of the record date for such meeting. The Board shall establish
a record date not less than 10 nor more than 60 days prior to the
date of any meeting of Members to determine eligibility to vote at
such meeting and the number of votes that each Member will be
entitled to cast thereat, and shall maintain for each such record
date a list setting forth the name of each Member and the number
of votes that each Member will be entitled to cast at the meeting.
(c) A Member may vote at any meeting of Members by a proxy properly
executed in writing by the Member and filed with the Company
before or at the time of the meeting. A proxy may be suspended or
revoked, as the case may be, by the Member executing the proxy by
a later writing delivered to the Company at any time prior to
exercise of the proxy or if the Member executing the proxy shall
be present at the meeting and decide to vote in person. Any action
of the Members that is permitted to be taken at a meeting of the
Members may be taken without a meeting if consents in writing,
setting forth the action taken, are signed by Members holding a
majority of the total number of votes eligible to be cast or such
greater percentage as may be required in order to approve such
action.
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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. The Manager will have no
responsibility, other than that associated with the oversight and supervision
of custodians retained by the Company, with respect to the collection of
income or the physical acquisition or safekeeping of the funds, securities or
other assets of the Company, all duties of collection physical acquisition or
safekeeping being the sole obligation of such custodians.
Section 3.5. Other Activities of Members, the Manager and Directors.
(a) Neither the Manager nor any Director shall be required to devote
its full time to the affairs of the Company, but shall devote such
time as may reasonably be required to perform its obligations
under this Agreement.
(b) Any Member, Manager or Director, and any Affiliate of any Member,
Manager or Director, 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, Manager or Director
shall have any rights in or to such activities of any other
Member, Manager or Director, or any profits derived therefrom.
Section 3.6. Duty of Care.
(a) The Manager and Directors shall not 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 their services under this
Agreement, 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 Manager
or Director constituting willful misfeasance, bad faith, or gross
negligence of the duties involved in the conduct of such Manager's
or Director's office.
(b) Members not in breach of any obligation hereunder or under any
agreement pursuant to which the Member subscribed for an Interest
shall be liable to the Company, any Member or third parties only
as provided under the Delaware Act.
Section 3.7. Indemnification.
(a) To the fullest extent permitted by law, the Company shall, subject
to Section 3.7(b) hereof, indemnify the Manager and Adviser
(including for this purpose each officer, director, member,
partner, principal, employee or agent of, or any Person who
controls, is controlled by or is under common control with, the
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Manger or Adviser or partner of the Manager or Adviser and their
respective executors, heirs, assigns, successors or other legal
representatives), its Officers and each Director (and his
respective executors, heirs, assigns, successors or other legal
representatives) (each such person an "indemnitee") against all
losses, claims, damages, liabilities, costs and expenses,
including, but not limited to, amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties, and reasonable
counsel fees, incurred in connection with the defense or
disposition of any action, suit, investigation or other
proceeding, whether civil or criminal, before any judicial,
arbitral, administrative or legislative body, in which such
indemnitee may be or may have been involved as a party or
otherwise, or with which such indemnitee may be or may have been
threatened, while in office or thereafter. Except to the extent
that such loss, claim, damage, liability, cost or expense shall
have been finally determined in a judicial decision on the merits
from which no further right to appeal may be taken in any such
action, suit, investigation or other proceeding to have been
incurred or suffered by such indemnitee by reason of willful
misfeasance, bad faith, breach of fiduciary duty or gross
negligence of the duties involved in the conduct of such
indemnitee's office. The rights of indemnification provided under
this Section 3.7 shall not be construed so as to provide for
indemnification of a Director for any liability (including
liability under Federal securities laws which, under certain
circumstances, impose liability even on persons that act in good
faith) to the extent (but only to the extent) that such
indemnification would be in violation of applicable law, but shall
be construed so as to effectuate the applicable provisions of this
Section 3.7 to the fullest extent permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred by any
such indemnitee (but excluding amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties), may be paid
from time to time by the Company in advance of the final
disposition of any such action, suit, investigation or proceeding
upon receipt of an undertaking by or on behalf of such indemnitee
to repay to the Company amounts so paid if it shall ultimately be
determined that indemnification of such expenses is not authorized
under Section 3.7 hereof; provided, that (i) such indemnitee shall
provide security for such undertaking, (ii) the Company shall be
insured by or on behalf of such indemnitee against losses arising
by reason of such indemnitee's failure to fulfill such
undertaking, or (iii) a majority of the Directors (excluding any
Director who is either seeking advancement of expenses hereunder
or is or has been a party to any other action, suit, investigation
or proceeding involving claims similar to those involved in the
action, suit, investigation or proceeding giving rise to a claim
for advancement of expenses hereunder) or independent legal
counsel in a written opinion determines based on a review of
readily available facts (as opposed to a full trial-type inquiry)
that there is reason to believe such indemnitee ultimately will be
entitled to indemnification.
(c) As to the disposition of any action, suit, investigation or
proceeding (whether by a compromise payment, pursuant to a consent
decree or otherwise) without an adjudication or a decision on the
merits by a court, or by any other body before
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which the proceeding shall have been brought, that an
indemnitee is liable to the Company or its Members by reason
of willful misfeasance, bad faith, breach of fiduciary duty
or gross negligence of the duties involved in the conduct of
such indemnitee's office, indemnification shall be provided
pursuant to Section 3.7(a) hereof if:
(i) approved as in the best interests of the Company by a
majority of the Directors (excluding any Director who
is either seeking indemnification hereunder or is or
has been a party to any other action, suit,
investigation or proceeding involving claims similar
to those involved in the action, suit, investigation
or proceeding giving rise to a claim for
indemnification hereunder) upon a determination based
upon a review of readily available facts (as opposed
to a full trial-type inquiry) that such indemnitee
acted in good faith and in the reasonable belief that
such actions were in the best interests of the Company
and that such indemnitee is not liable to the Company
or its Members by reason of willful misfeasance, bad
faith, breach of fiduciary duty or gross negligence of
the duties involved in the conduct of such
indemnitee's office, or
(ii) the Board secures a written opinion of independent
legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry) to the
effect that such indemnification would not protect
such indemnitee against any liability to the Company
or its Members to which such indemnitee would
otherwise be subject by reason of willful misfeasance,
bad faith, breach of fiduciary duty or gross
negligence of the duties involved in the conduct of
such indemnitee's office.
(d) Any indemnification or advancement of expenses made pursuant
to this Section 3.7 shall not prevent the recovery from any
indemnitee of any such amount if such indemnitee
subsequently is determined in a final judicial decision on
the merits in any action, suit, investigation or proceeding
involving the liability or expense that gave rise to such
indemnification or advancement of expenses to be liable to
the Company or its Members by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of such indemnitee's office.
In (i) any suit brought by an indemnitee (or other person
entitled to indemnification hereunder) to enforce a right to
indemnification under this Section 3.7 it shall be a defense
that, and (ii) in any suit in the name of the Company to
recover any indemnification or advancement of expenses made
pursuant to this Section 3.7 the Company shall be entitled
to recover such expenses upon a final adjudication that, the
Director or other person claiming a right to indemnification
under this Section 3.7 has not met the applicable standard
of conduct set forth in this Section 3.7. In any such suit
brought to enforce a right to indemnification or to recover
any indemnification or advancement of expenses made pursuant
to this Section 3.7, the burden of proving that the
indemnitee is not entitled to be indemnified, or to any
indemnification or advancement of expenses, under this
Section 3.7 shall be on the Company (or any Member acting
derivatively or otherwise on behalf of the Company or its
Members).
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(e) An indemnitee may not satisfy any right of indemnification
or advancement of expenses granted in this Section 3.7 or to
which such indemnitee may otherwise be entitled except out
of the assets of the Company, and no Member shall be
personally liable with respect to any such claim for
indemnification or advancement of expenses.
(f) The rights of indemnification provided hereunder shall not
be exclusive of or affect any other rights to which any
person may be entitled by contract or otherwise under law.
Nothing contained in this Section 3.7 shall affect the power
of the Company to purchase and maintain liability insurance
on behalf of the Manager, any Director, the Adviser or other
person.
Section 3.8. Fees, Expenses and Reimbursement.
(a) So long as the Administrator provides Administrative
Services to the Company, it shall be entitled to receive
reasonable and customary fees for such services as well as
out-of-pocket expenses as may be agreed to by the
Administrator and the Company pursuant to a separate written
agreement.
(b) As consideration for providing advisory services, and for so
long as the Manager provides such advisory services to the
Company pursuant to the Investment Management Agreement, the
Manager shall be entitled to receive the Incentive Fee equal
to 10% of each Member's Net Profits in excess of the Loss
Carryforward Amount applicable to such Member's capital
account (before any accruals of Incentive Fees).
(c) The Board may cause the Company to compensate each Director
for his or her services rendered in connection with the
Company as may be agreed to by the Directors and the
Manager, and as described in the Private Placement
Memorandum. 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.
(d) The Company shall bear all expenses related to its
investment program, including, travel and other expenses
related to the selection and monitoring of Investment
Managers as well as indirect expenses of the Investment
Funds in which the Company invests. Expenses to be borne by
the Company (both directly and indirectly) include, but are
not limited to, fees paid and expenses reimbursed to
Investment Funds or Investment Managers (including
management fees, performance or incentive fees or
allocations and redemption or withdrawal fees, however
titled or structured), all costs and expenses directly
related to portfolio transactions and positions for the
Company's account such as direct and indirect expenses
associated with the Company's investments, including its
investments in Investment Funds (including those managed by
Sub-advisers, whether or not consummated), and enforcing the
Company's rights in respect of such investments, transfer
taxes and premiums, taxes withheld on non-U.S. dividends,
fees for data and software providers, research expenses,
professional fees
-15-
(including, without limitation, the fees and expenses of
consultants, attorneys and experts) and, if applicable in
the event the Company utilizes a Sub-adviser (or in
connection with its temporary or cash management
investments), brokerage commissions, interest and commitment
fees on loans and debit balances, borrowing charges on
securities sold short, dividends on securities sold but not
yet purchased and margin fees; all costs and expenses
associated with the establishment of Investment Funds
(whether or not consummated) managed by Sub-advisers; any
non-investment related interest expense; attorneys' fees and
disbursements associated with preparing and updating the
offering materials and with qualifying prospective
investors; fees and disbursements of any accountants engaged
by the Company, and expenses related to the annual audit of
the Company; record-keeping, custody and escrow fees and
expenses; the costs of errors and omissions / directors' and
officers' liability insurance and a fidelity bond; the
Management Fee; the Incentive Fee; the costs of preparing
and mailing reports and other communications, including
proxy, tender offer correspondence or similar materials, to
Members; fees and travel expenses of Directors relating to
meetings of the Board and committees thereof; all costs and
charges for equipment or services used in communicating
information regarding the Company's transactions among the
Adviser and any custodian or other agent engaged by the
Company; any extraordinary expenses, including
indemnification expenses as provided for in this Agreement.
(e) Subject to procuring any required regulatory approvals, from
time to time the Company may, alone or in conjunction with
other accounts for which the Manager, or any of its
affiliates, acts as general partner or investment adviser,
purchase insurance in such amounts, from such insurers and
on such terms as the Board shall determine.
(f) The expenses incurred by the Manager in connection with the
Company's formation, initial registration as an investment
company under the 1940 Act, and the initial offering of
Interests of the Company will be reimbursed to the Manager
from the assets of the Company. The Manager hereby agrees to
limit the amount of each monthly reimbursement to 0.0125%
(0.15% on an annualized basis) of the Company's net assets
as of the end of each month. The Company will only be
obliged to reimburse organizational expenses and offering
costs for twelve months after the Closing Date and if after
such time such costs remain unpaid to the Manager, the
Manager will bear the remaining portion of such
expenditures. If such expenditures are paid in full prior to
the twelfth month then, during the remainder of the twelve
month period, newly admitted Members, and existing Members
that subscribe for additional Interests, will be allocated
proportionate share of the amount previously reimbursed to
the Manager, and those Members who bore the previously
reimbursed expenditures will be credited with a
proportionate share of the expenditures allocated to such
newly admitted or existing Members.
(g) In consideration of the services provided by the Manager to
the Company under the Investment Management Agreement, the
Company will pay the Manager a
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quarterly fee of 0.3125% of the Company's net assets (the
"Management Fee"). The Management Fee will be an expense
paid out of the Company's assets, and will be reflected in
each Member's Capital Account (including the Capital Account
of the Adviser and the Manager or any of their respective
affiliates to the extent any of them holds a Member
Interest) as a reduction to net profits or an increase to
net losses credited to or debited against each Member's
Capital Account. The Manager shall be entitled to reduce the
Management Fee, in a non-discriminatory manner, in its sole
discretion.
(h) In the event that the Company is terminated other than at
the end of a fiscal quarter or if the Manager is terminated
other than at the end of a fiscal quarter or if the
effective date of a Member's redemption is other than at the
end of a fiscal quarter, then the Management Fee provided
above shall be computed on the basis of the period ending on
the last business day prior to the termination or redemption
date subject to a pro rata adjustment based on the number of
days elapsed in the current fiscal quarter as a percentage
of the total number of days in such quarter.
Article IV.
TERMINATION OF STATUS OF MANAGER AND DIRECTORS, TRANSFERS AND REPURCHASES
Section 4.1. Termination of Status of the Manager.
The status of the Manager as an investment adviser to the Company shall
be terminated at any time, (i) by the Company on 60 days' written notice to
the Manager, without the payment of any penalty, by a vote of a majority of
the entire Board or by vote of a majority of the outstanding voting securities
of the Company; or (ii) upon 90 days' written notice by the Manager. The
Investment Management Agreement will automatically and immediately terminate
in the event of its assignment by the Manager, provided that an assignment to
a successor to all or substantially all of the Manager's business or to a
wholly-owned subsidiary of such successor which does not result in a change of
actual control of the Manager's business shall not be deemed to be an
assignment for the purposes of the Investment Management Agreement.
Section 4.2. Termination of Status of a Director.
The status of a Director shall terminate if the Director, pursuant to
Delaware law, is removed, resigns or is subject to various disabling events
such as death, incapacity or bankruptcy. A Director may resign, subject to
giving 90 days' prior written notice to the other Directors if such
resignation is likely to affect adversely the tax status of the Company.
Section 4.3. Removal of the Directors.
Any Director may be removed either by (a) the vote or written consent of
at least two-thirds (2/3) of the Directors not subject to the removal vote or
(b) the vote or written consent of
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Members holding not less than two-thirds (2/3) of the total number of votes
eligible to be cast by all Members.
Section 4.4.Appointment of a Director.
In the event of any vacancy in the position of a Director, the remaining
Directors serving on the Board may appoint an individual to serve as a
Director on the Board, so long as immediately after the appointment at least
two-thirds (2/3) of the Directors then serving on the Board would have been
elected by the Members. The Board may call a meeting of Members to fill any
vacancy in the position of a Director, and must do so within 60 days after any
date on which Directors who were elected by the Members cease to constitute a
majority of the Board then serving.
Section 4.5. Removal of the Manager.
The Manager may be removed as Manager under this Agreement by the vote
or written consent of Members holding not less than 80% of the total number of
votes eligible to be cast by all Members.
Section 4.6. Transfer of Interests of Members.
(a) An Interest of a Member may be transferred only (i) by
operation of law pursuant to the death, bankruptcy,
insolvency, dissolution or incompetency of such Member or
(ii) under certain limited circumstances with the written
consent of the Board (which may be withheld in its sole
discretion).
(b) The Board may not consent to a Transfer unless (x) the
Company consults with legal counsel to the Company and
counsel confirms that the Transfer will not cause the
Company to be treated as a "publicly traded partnership"
taxable as a corporation or be subject to any other adverse
tax or regulatory treatment or (y) the following conditions
are met: (i) the Transferring Member has been a Member for
at least six months; (ii) the proposed Transfer is to be
made on the effective date of an offer by the Company to
repurchase Interests; and (iii) the Transfer is (A) one in
which the tax basis of the Interest in the hands of the
transferee is determined, in whole or in part, by reference
to its tax basis in the hands of the Transferring Member
(e.g., certain Transfers to affiliates, gifts and
contributions to family entities), (B) to members of the
Transferring Member's immediate family (siblings, spouse,
parents and children), or (C) a distribution from a
qualified retirement plan or an individual retirement
account.
(c) In no event, however, will any transferee or assignee be
admitted as a Member without the consent of the Board, which
may be withheld in its sole discretion. Any pledge,
transfer, or assignment not made in accordance with this
Section 4.5 shall be void.
(d) The Board may not consent to a Transfer of an Interest
unless: (i) the person to whom the Interest is Transferred
is a person whom the Company believes is an "accredited
investor," as that term is defined in Regulation D under the
Securities
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Act of 1933, as amended, or any successor rule thereto; (ii)
the person to whom the Interest is Transferred (or each of
the person's beneficial owners if such a person is a
"private investment company" as defined in paragraph (d)(3)
of Rule 205-3 under the Advisers Act) is a person whom the
Board believes meets the requirements of paragraph (d)(1) of
Rule 205-3 under the Advisers Act or any successor rule
thereto; (iii) the person to whom the Interest is
Transferred is a person whom the Board believes meets the
requirements of paragraph (a)(2) of section 4.7 of the
Commodity Exchange Act; and (iv) the entire Interest of the
Member is Transferred to a single transferee or, after the
Transfer of a portion of an Interest, the balance of the
Capital Account of each of the transferee and transferor is
not less than $75,000 or such lesser amount as the Board may
determine in its sole discretion. Any transferee that
acquires an Interest by operation of law as the result of
the death, bankruptcy, insolvency, dissolution or
incompetency of a Member, shall be entitled to the
allocations and distributions allocable to the Interest so
acquired and to Transfer such Interest in accordance with
the terms of this Agreement, but shall not be entitled to
the other rights of a Member unless and until such
transferee becomes a substituted Member. Once a Member
obtains the approval of the Board and satisfies the other
requirements to transfer its Interests, the Board shall
promptly take all necessary actions so that the transferee
to whom such Interest is transferred is admitted to the
Company as a Member.
(e) The admission of any transferee as a substituted Member will
be effective upon the execution and delivery by, or on
behalf of, the substituted Member of this Agreement or an
instrument that constitutes the execution and delivery of
this Agreement. Each Member and transferee agrees to pay all
expenses, including attorneys' and accountants' fees,
incurred by the Company in connection with any Transfer. In
connection with any request to Transfer an Interest or
portion of an Interest, the Company may require the Member
requesting the Transfer to obtain, at the Member's expense,
an opinion of counsel selected by the Manager as to such
matters as the Manager may reasonably request. If a Member
Transfers its entire Interest as a Member, it will not cease
to be a Member unless and until the transferee is admitted
to the Company as a substituted Member in accordance with
this Section 4.5.
(f) Each Member shall indemnify and hold harmless the
Company, the Directors, the Manager, 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
4.5 and (ii) any misrepresentation by such Member in
connection with any such Transfer.
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Section 4.7. Repurchase of Interests.
(a) Except as otherwise provided in this Agreement, no Member or
other person holding an Interest or portion thereof shall
have the right to withdraw or tender to the Company for
repurchase that Interest or portion thereof. The Board from
time to time, in its sole discretion and on such terms and
conditions as it may determine, may cause the Company to
repurchase Interests or portions thereof pursuant to written
tenders. In determining whether to cause the Company to
repurchase Interests pursuant to written tenders, the Board
shall consider the recommendation of the Manager, and shall
also consider the following factors, among others:
(i) whether any Members have requested to tender Interests
or portions thereof to the Company;
(ii) the liquidity of the Company's assets (including fees
and costs associated with withdrawing from Investment
Funds and/or disposing of assets managed by
Sub-advisers);
(iii) the investment plans and working capital and reserve
requirements of the Company;
(iv) the relative economies of scale with respect to the
size of the Company;
(v) the history of the Company in repurchasing Interests;
(vi) the availability of information as to the value of the
Company's interests in underlying Investment Funds;
(vii) the economic condition of the securities markets and
the economy generally as well as political, national
or international developments or current affairs; and
(viii)the anticipated tax consequences of any proposed
repurchases of Interests.
The Board shall cause the Company to repurchase Interests or portions
thereof pursuant to written tenders only on terms fair to the Company and to
all Members (including persons holding Interests acquired from Members), as
applicable. The Company shall not repurchase Interests pursuant to written
tenders more than twice during any Taxable Year.
(b) A Member tendering for repurchase only a portion of the Member's
Interest will be required to maintain a Capital Account balance of
at least $50,000 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, the Manager
reserves the right to reduce the amount to be repurchased from the
Member so that the required minimum balance is maintained or to
repurchase the Member's entire Interest in the Company.
(c) A Member choosing to tender an Interest or a portion of an
Interest for repurchase must do so by the expiration date, which
generally will be no sooner than 20 days
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after the commencement date (the "Expiration Date"). Tenders will
be irrevocable at such time. Interests will be valued as of the
valuation date (the "Valuation Date"), which is generally expected
to be at the end of each fiscal quarter (and no less than 65 days
after the Expiration Date).
(i) For purposes of this section, the "Valuation Date" is the
day Interests in the Company will be valued for the payment
of the Promissory Note;
(ii) Promptly after the Expiration Date, the Company will give to
each Member whose Interest has been accepted for repurchase
a promissory note (the "Promissory Note") entitling the
Member to be paid an amount equal to the value, determined
as of the Valuation Date, of the repurchased Interest;
(iii) The Promissory Note, which will be non-interest bearing and
non-transferable, is expected to contain terms providing for
payment at two separate times; and
(iv) Although the amounts required to be paid by the Company
under the Promissory Note will generally be paid in cash,
the Company may under certain limited circumstances pay all
or a portion of the amounts due by an in-kind distribution
of securities.
(d) Repurchases of Interests or portions thereof by the Company shall
be payable after the expiration date of such repurchase offer in
accordance with the terms of such repurchase offer. The initial
payment in respect of the Promissory Note (the "Initial Payment")
will be in an amount equal to at least 90% of the estimated value
of the repurchased Interest, determined as of the Valuation Date.
The Initial Payment will be made as of the later of (1) 30 days
after the Valuation Date, or (2) if the Company has requested
withdrawals of its capital from any Investment Funds in order to
fund the repurchase of Interests, ten business days after the
Company has received at least 90% of the aggregate amount
withdrawn by the Company from the Investment Funds. The second and
final payment in respect of the Promissory Note (the "Post-Audit
Payment") will be in an amount equal to the excess, if any, of (1)
the value of the repurchased Interest, determined as of the
Valuation Date and based upon the results of the annual audit of
the Company's financial statements for the year in which the
Valuation Date occurs, over (2) the Initial Payment. The Manager
anticipates that the annual audit of the Company's financial
statements will be completed within 60 days after the end of each
fiscal year of the Company and that the Post-Audit Payment will be
made promptly after the completion of the audit.
(e) Notwithstanding anything in the foregoing to the contrary, the
Board, in its discretion, may pay all or any portion of the
repurchase price in marketable Securities (or any combination of
marketable Securities and cash) having a value, determined as of
the date of repurchase, equal to the amount to be repurchased. All
repurchases of Interests shall be subject to any and all
conditions as the Board
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may impose in its sole discretion. The amount due to any Member
whose Interest or portion thereof is repurchased shall be equal to
the audited value of such Member's Capital Account or portion
thereof, as applicable, as of the effective date of repurchase,
after giving effect to all allocations to be made to such Member's
Capital Account as of such date.
Article V.
CAPITAL
Section 5.1. Contributions to Capital.
(a) The minimum initial contribution of each Member to the capital of
the Company shall be $75,000, subject to the discretion of the
Manager to accept initial investments in lesser amounts. 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.
(b) The Members may make additional contributions to the capital of
the Company of at least $50,000 (subject to the discretion of the
Manager to accept additional contributions in lesser amounts),
effective as of such times as the Manager, in its discretion, may
permit, subject 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 5.7 hereof.
(c) Except as otherwise permitted by the Board, (i) initial and any
additional contributions to the capital of the Company by any
Member shall be payable in cash, and (ii) initial and any
additional contributions in cash shall be payable in readily
available funds on the business day prior to the subscription
date.
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 a part
or all of such Member's Interest pursuant to Section 4.7 hereof or (ii) upon
the liquidation of the Company's assets pursuant to Section 6.2 hereof. Except
as specified in the Delaware Act, or with respect to distributions or similar
disbursements made in error, no Member shall be liable for the return of any
such amounts. 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 shall maintain a separate Capital Account for each
Member.
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(b) Each Member's Capital Account shall have an initial balance equal
to the amount of cash constituting such Member's initial
contribution to the capital of the Company.
(c) Each Member's Capital Account shall 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 Section 5.4 through Section 5.8
hereof.
(d) Each Member's Capital Account shall be reduced by the sum of (i)
the amount of any repurchase of the Interest, or portion thereof,
of such Member or distributions to such Member pursuant to Section
4.7, Section 5.10, Section 5.11 or Section 6.2 hereof that are not
reinvested (net of any liabilities secured by any asset
distributed that such Member is deemed to assume or take subject
to under Section 752 of the Code), plus (ii) any amounts debited
against the Member's Capital Account pursuant to Section 5.4
through Section 5.8 hereof.
(e) In the event all or a portion of the Interest of a Member is
Transferred in accordance with the terms of this Agreement, the
Transferee will succeed to the Capital Account of the Transferor
to the extent of the Transferred Interest or portion of an
Interest.
(f) No Member will be required to pay the Company or any other Member
any deficit in such Member's Capital Account upon dissolution of
the Company or otherwise.
Section 5.4. Allocation of Net Profits and Net Losses.
As of the last day of each Fiscal Period, any Net Profits or Net Losses
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 Insurance Premiums and Proceeds.
(a) Any premiums payable by the Company for insurance purchased
pursuant to Sections 3.8(d) and (e) above shall be apportioned
evenly over each Fiscal Period or portion thereof falling within
the period to which such premiums relate under the terms of such
insurance, and the portion of the premiums so apportioned to any
Fiscal Period shall be allocated among and debited against the
Capital Accounts of each Member who is a member of the Company
during such Fiscal Period in accordance with such Member's
Investment Percentage for such Fiscal Period.
(b) Proceeds, if any, to which the Company may become entitled
pursuant to such insurance shall be allocated among and credited
to the Capital Accounts of each Member who is a member of the
Company during the Fiscal Period in which the
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event that gives rise to recovery of proceeds occurs in accordance
with such Member's Investment Percentage for such Fiscal Period.
Section 5.6. 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 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 to only 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 5.7.Reserves.
(a) Appropriate reserves may be created, accrued and charged against
Net Assets and proportionately against the Capital Accounts of the
Members for contingent liabilities, if any, as of the date any
such contingent liability becomes known to the Manager or the
Board. Such reserves will be in the amounts that the Board, in its
sole discretion, deems necessary or appropriate. The Board may
increase or reduce any such reserves from time to time by such
amounts as the Board, in its sole discretion, deems necessary or
appropriate. 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 at the time when such reserve is created, increased or
decreased, except 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, then the amount of the reserve, increase or decrease may
instead be charged or credited to those parties who were Members
at the time, as determined by the Board 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.
(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 or portions thereof) and such amount
exceeds the lesser of $500,000 or 1% of the aggregate value of the
Capital Accounts of all Members 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.
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Section 5.8.Allocation of Organizational Expenses.
The Manager will allocate among the Members a monthly expense to
reimburse the Manager for the Company's organizational expenses and offering
costs, as described in Section 3.8(f).
Section 0.0.Xxx Allocations.
(a) For each Fiscal Year, items of income, deduction, gain, loss or
credit shall be allocated for income tax purposes among the
Members in such manner as to reflect equitably amounts credited or
debited to each Member's Capital Account for the current and prior
fiscal years (or relevant portions thereof). Allocations under
this Section 5.9 shall be made pursuant to the principles of
Sections 704(b) and 704(c) of the Code, and in conformity with
Treasury Regulations Sections 1.704-1(b)(2)(iv)(f),
1.704-1(b)(4)(i) and 1.704-3(e) promulgated thereunder, as
applicable, or the successor provisions to such Section and
Regulations. Notwithstanding anything to the contrary in this
Agreement, there shall be allocated to the Members such gains or
income as shall be necessary to satisfy the "qualified income
offset" requirements of Treasury Regulation Section
1.704-1(b)(2)(ii)(d).
(b) If the Company realizes capital gains (including short-term
capital gains) for U.S. Federal income tax purposes ("net gains")
for any Fiscal Year during or as of the end of which the Interests
of one or more Positive Basis Members (as hereinafter defined) are
repurchased by the Company pursuant to Article IV, the Manager may
elect to allocate such net gains as follows:
(i) to such Positive Basis Members, in proportion to the
Positive Basis (as hereinafter defined) of each such
Positive Basis Member, until either the full amount of the
net gains has been so allocated or the Positive Basis of
each Positive Basis Member shall have been eliminated; and
(ii) any net gains not so allocated to Positive Basis Members to
the other Members in a manner that equitably reflects the
amounts credited to the Members' Capital Accounts.
(c) If the Company realizes capital losses for U.S. Federal Income tax
purposes for any Fiscal year during or as of the end of which the
Interests of one or more Negative Basis Members (as hereinafter
defined) are repurchased by the Company under Article IV of this
Agreement, the Manager may elect to allocate net losses as
follows:
(i) to such Negative Basis Members, in proportion to the
Negative Basis (as hereafter defined) of each Negative Basis
Member, until either the full amount of net losses will have
been so allocated or the Negative Basis of each Negative
Basis Member has been eliminated, and
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(ii) any net losses not so allocated to Negative Basis Members,
to the other Members in a manner that reflects equitably the
amounts credited to the Members' Capital Accounts.
(d) As used herein, (i) the term "Positive Basis" shall mean, with
respect to any Member and as of any time of calculation, the
amount by which the value of its Interest as of such time exceeds
its "adjusted tax basis," for U.S. Federal income tax purposes, in
its Interest as of such time (determined without regard to any
adjustments made to such "adjusted tax basis" by reason of any
transfer or assignment of such Interest, including by reason of
death, and without regard to such Member's share of the
liabilities of the Company under Section 752 of the Code), and
(ii) the term "Positive Basis Member" shall mean any Member whose
Interest is repurchased by the Company and who has Positive Basis
as of the effective date of the repurchase, but such Member shall
cease to be a Positive Basis Member at such time as it shall have
received allocations pursuant to clause (i) of paragraph (b) equal
to its Positive Basis as of the effective date of such repurchase.
(e) The term "Negative Basis" means, with respect to any Member and as
of any time of calculation, the amount by which the Member's
"adjusted tax basis," for U.S. Federal income tax purposes, in the
Member's Interest in the Company as of that time (determined
without regard to any adjustments made to the "adjusted tax basis"
by reason of any Transfer or assignment of the Interest, including
by reason of death, and without regard to such Member's share of
the liabilities of the Company under section 752 of the Code)
exceeds the value of its Interest as of such time. As used in this
Section 5.9, the term "Negative Basis Member" means any Member
whose Interest is repurchased by the Company and who has Negative
Basis as of the effective date of the repurchase, but such Member
shall cease to be a Negative Basis Member at such time as it shall
have received allocations pursuant to clause (i) of paragraph (c)
equal to its Negative Basis as of the effective date of such
repurchase.
Section 5.10. Distributions.
The Board, in its sole discretion, may authorize the Company to make
distributions in cash or in kind at any time to all of the Members on a pro
rata basis in accordance with the Members' Investment Percentages.
Section 5.11. Withholding.
(a) The Board may withhold and pay over to the Internal Revenue
Service (or any other relevant taxing authority) taxes from any
distribution to any Member to the extent required by the Code or
any other applicable law.
(b) For purposes of this Agreement, any taxes so withheld by the
Company with respect to any amount distributed by the Company to
any Member shall be deemed to be a distribution or payment to such
Member pursuant to this Agreement, reducing the amount otherwise
distributable to such Member pursuant to this
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Agreement and reducing the Capital Account of such Member. If the
amount of such taxes is greater than any such distributable
amounts, then such Member and any successor to such Member's
Interest shall pay to the Company as a contribution to the capital
of the Company, upon demand of the Board, the amount of such
excess.
(c) The Board shall not be obligated to apply for or obtain a
reduction of or exemption from withholding tax on behalf of any
Member that may be eligible for such reduction or exemption. To
the extent that a Member claims to be entitled to a reduced rate
of, or exemption from, a withholding tax pursuant to an applicable
income tax treaty, or otherwise, the Member shall furnish the
Board with such information and forms as such Member may be
required to complete where necessary to comply with any and all
laws and regulations governing the obligations of withholding tax
agents. Each Member represents and warrants that any such
information and forms furnished by such Member shall be true and
accurate and agrees to indemnify the 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.
Article VI.
DISSOLUTION AND LIQUIDATION
Section 6.1. Dissolution.
The Company shall be dissolved:
(a) upon the affirmative vote to dissolve the Company by: (i) the
Board or (ii) Members holding at least two-thirds (2/3) of the
total number of votes eligible to be cast by all Members;
(b) upon the failure of the Members to elect a successor Director at a
meeting called by Manager in accordance with Section 2.6 hereof
when no Director remains to continue the business of the Company;
(c) upon the expiration of any two year period that commences on the
date on which any Member has submitted a written notice to the
Company requesting to tender its entire Interest for repurchase by
the Company, if such Interest has not been repurchased by the
Company; or
(d) as required by operation of law.
Dissolution of the Company shall be effective on the later of the day on
which the event giving rise to the dissolution shall occur, but the Company
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.
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Section 6.2.Liquidation of Assets.
(a) Upon the dissolution of the Company as provided in Section 6.1
hereof, the Board shall promptly appoint the Board or Manager as
the liquidator and the Board or Manager shall liquidate the
business and administrative affairs of the Company, except that if
the Board does not appoint the Manager as the liquidator or the
Board is unable to perform this function, another liquidator will
be elected by the Board. Net Profits and Net Losses during the
period of liquidation shall be allocated pursuant to Section 5.4
hereof. The proceeds from liquidation (after establishment of
appropriate reserves for contingencies in such amount as the Board
or other liquidator shall deem appropriate in its sole discretion
as applicable) shall be distributed in the following manner:
(i) the debts, liabilities and obligations of the Company, other
than debts to Members, and the expenses of liquidation
(including legal and accounting expenses incurred in
connection therewith), up to and including the date that
distribution of the Company's assets to the Members has been
completed, shall first be paid on a proportionate basis;
(ii) such debts, liabilities or obligations as are owing to the
Members shall next be paid in their order of seniority and
on a proportionate basis; and
(iii) the Members shall next be paid on a proportionate basis the
positive balances of their respective Capital Accounts after
giving effect to all allocations to be made to such Members'
Capital Accounts for the Fiscal Period ending on the date of
the distributions under this Section 6.2.
(b) Anything in this Section 6.2 to the contrary notwithstanding, upon
dissolution of the Company, the Board 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 7.3
hereof as of the actual date of their distribution and charged as
so valued and distributed against amounts to be paid under Section
6.2(a) above, and (ii) any profit or loss attributable to property
distributed in-kind shall be included in the Net Profits or Net
Losses 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 shall adopt for tax accounting purposes any accounting
method that the Board shall decide in its sole discretion is in
the best interests of the Company. The Company's accounts shall be
maintained in U.S. currency.
(b) After the end of each taxable year, the Company shall furnish to
each Member such information regarding the operation of the
Company and such Member's
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Interest as is necessary for Members to complete Federal and state
income tax or information returns and any other tax information
required by Federal and state 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 is being made, the Company shall furnish to each
Member an unaudited semi-annual report and an audited annual
report containing the information required by such Act. The
Company shall cause financial statements contained in each annual
report furnished hereunder to be accompanied by a certificate of
independent public accountants based upon an audit performed in
accordance with generally accepted accounting principles. The
Company may furnish to each Member such other periodic reports as
it deems necessary or appropriate in its discretion.
Section 7.2. Determinations by the Board of Directors.
(a) All matters concerning the determination and allocation among the
Members of the amounts to be determined and allocated pursuant to
Article V hereof, including any taxes thereon and accounting
procedures applicable thereto, shall be determined by the Board
unless specifically and expressly otherwise provided for by the
provisions of this Agreement or required by law, and such
determinations and allocations shall be final and binding on all
the Members.
(b) The Board may make such adjustments to the computation of Net
Profits or Net Losses, and the allocation thereof to a Member's
Capital Account, or any components comprising any of the foregoing
as it considers appropriate to reflect fairly and accurately the
financial results of the Company and the intended allocation
thereof among the Members.
Section 7.3. Valuation of Assets.
(a) Valuation of Securities and other assets shall be made by the
Board in accordance with the requirements of the 1940 Act and the
valuation procedures adopted by the Board.
(b) The value of the assets and liabilities shall be determined by
reference to the latest market prices and values available and in
further accordance with the valuation procedures adopted by the
Board.
(c) The value of Securities and other assets of the Company and the
net worth of the Company as a whole determined pursuant to this
Section 7.3 shall be conclusive and binding on all of the Members
and all parties claiming through or under them.
Article VIII.
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment of Limited Liability Company Agreement.
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(a) Except as otherwise provided in this Section 8.1, this Agreement
may be amended, in whole or in part, with: (i) the approval of the
Board (including the vote of a majority of the Independent
Directors, if required by the 0000 Xxx) without the Members
approval; 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:
(i) increase the obligation of a Member to make any contribution
to the capital of the Company;
(ii) reduce the Capital Account of a Member other than in
accordance with Article V; or
(iii) modify the events causing the dissolution of the company;
may be made only if (i) the written consent of each Member adversely affected
thereby is obtained prior to the effectiveness thereof or (ii) such amendment
does not become effective until (A) each Member has received written notice of
such amendment and (B) any Member objecting to such amendment has been
afforded a reasonable opportunity (pursuant to such procedures as may be
prescribed by the Board) to tender its entire Interest for repurchase by the
Company.
(c) The power of the Board to amend this Agreement at any time without
the consent of the other Members as set forth in paragraph (a) of
this Section 8.1 shall specifically include the power to:
(i) 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;
(ii) 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 or to cure any
ambiguity or to correct or supplement any provision hereof
that may be inconsistent with any other provision hereof;
and
(iii) amend this Agreement to make such changes as may be
necessary or advisable to ensure that the Company will not
be treated as an association or a publicly traded
partnership taxable as a corporation as defined in Section
7704(b) of the Code for U.S. Federal income tax purposes.
(d) The Board shall cause written notice to be given of any amendment
to this Agreement to each Member, which notice shall set forth (i)
the text of the proposed amendment or (ii) a summary thereof and a
statement that the text of the amendment thereof will be furnished
to any Member upon request.
Section 8.2. Special Power of Attorney.
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(a) Each Member hereby irrevocably makes, constitutes and appoints
each Director, acting severally, and any liquidator of the
Company's assets appointed pursuant to Section 6.2 hereof with
full power of substitution, the true and lawful representatives
and attorneys-in-fact of, and in the name, place and stead of,
such Member, with the power from time to time to make, execute,
sign, acknowledge, swear to, verify, deliver, record, file and/or
publish:
(i) any amendment to this Agreement that complies with the
provisions of this Agreement (including the provisions of
Section 8.1 hereof);
(ii) 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
(iii) 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
attorneys-in-fact appointed hereby are authorized and empowered,
with full power of substitution, to exercise the authority granted
above in any manner that may be necessary or appropriate to permit
such amendment to be made or action lawfully taken or omitted.
Each Member is fully aware that each Member will rely on the
effectiveness of this special power-of-attorney with a view to the
orderly administration of the affairs of the Company.
(c) This power-of-attorney is a special power-of-attorney and is
coupled with an interest in favor of each of the Directors and as
such:
(i) 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 Company or Board shall have had notice thereof; and
(ii) shall survive the delivery of a Transfer by a Member of the
whole or any portion of such Member's Interest, except that
where the transferee thereof
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has been approved by the Board for admission to the Company as a
substituted Member or upon the withdrawal of a Member from the
Company pursuant to a periodic tender, this power-of-attorney
given by the transferor shall survive the delivery of such
assignment or withdrawal for the sole purpose of enabling the
Board to execute, acknowledge and file any instrument necessary to
effect such substitution or withdrawal.
Section 8.3. Notices.
Notices that may or are required to be provided under this Agreement
shall be made, if to a Member, by regular mail, or if to the Board or the
Manager, by hand delivery, registered or certified mail return receipt
requested, commercial courier service, telex or telecopier, and shall be
addressed to the respective parties hereto at their addresses as set forth in
the books and records of the 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, telex or telecopier. A document that is not a notice and that
is required to be provided under this Agreement by any party to another party
may be delivered by any reasonable means.
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 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.
Section 8.5. Applicability of 1940 Act and Form N-2.
The parties hereto acknowledge that this Agreement is not intended to,
and does not, set forth the substantive provisions contained in the 1940 Act
and the Form N-2 that affect numerous aspects of the conduct of the 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 and the Form N-2.
Section 8.6. Choice of Law; Arbitration.
(a) Notwithstanding the place where this Agreement may be executed by
any of the parties hereto, the parties expressly agree that all
the terms and provisions hereof shall be construed under the laws
of the State of Delaware, including the Delaware Act without
regard to the conflict of law principles of such State.
(b) To the extent such action is consistent with the provisions of the
1940 Act and any other applicable law, except as provided in
Section 8.11(b) of this Agreement, each Member agrees to submit
all controversies arising between or among Members or one or more
Members and the Company in connection with the Company or its
businesses or concerning any transaction, dispute or the
construction, performance or breach of this Agreement or any other
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agreement relating to the Company, whether entered into prior to,
on or subsequent to the date of this Agreement, to arbitration in
accordance with the provisions set out in this Section 8.6. EACH
MEMBER UNDERSTANDS THAT ARBITRATION IS FINAL AND BINDING ON THE
MEMBERS AND THAT THE MEMBERS IN EXECUTING THIS AGREEMENT ARE
WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE
RIGHT TO JURY TRIAL.
(c) Controversies will be finally settled by, and only by, arbitration
in accordance with the commercial arbitration rules of the
American Arbitration Association (the "AAA") to the fullest extent
permitted by law. The place of arbitration will be New York, New
York. Any arbitration under this Section 8.6 will be conducted
before a panel of three arbitrators. The Member or Members
initiating arbitration under this Section 8.6 will appoint one
arbitrator in the demand for arbitration. The Member or Members
against whom or which arbitration is sought will jointly appoint
one arbitrator within 30 Business Days after notice from the AAA
of the filing of the demand for arbitration. The two arbitrators
nominated by the Members will attempt to agree on a third
arbitrator within 30 Business Days of the appointment of the
second arbitrator. If the two arbitrators fail to agree on the
third arbitrator within the 30-day period, then the AAA will
appoint the third arbitrator within 30 Business Days following the
expiration of the 30-day period. Any award rendered by the
arbitrators will be final and binding on the Members, and judgment
upon the award may be entered in the supreme court of the state of
New York and/or the U.S. District Court for the Southern District
of New York, or any other court having jurisdiction over the award
or having jurisdiction over the Members or their assets. The
arbitration agreement contained in this Section 8.6 will not be
construed to deprive any court of its jurisdiction to grant
provisional relief (including by injunction or order of
attachment) in aid of arbitration proceedings or enforcement of an
award. In the event of arbitration as provided in this Section
8.5, the arbitrators will be governed by and will apply the
substantive (but not procedural) law of Delaware, to the exclusion
of the principles of the conflicts of law of Delaware. The
arbitration will be conducted in accordance with the procedures
set out in the commercial arbitration rules of the AAA. If those
rules are silent with respect to a particular matter, the
procedure will be as agreed by the Members, or in the absence of
agreement among or between the Members, as established by the
arbitrators. Notwithstanding any other provision of this
Agreement, this Section 8.6(c) will be construed to the maximum
extent possible to comply with the laws of the State of Delaware,
including the Uniform Arbitration Act (10 Del. C. (S) 5701 et
seq.) (the "Delaware Arbitration Act"). If, nevertheless, it is
determined by a court of competent jurisdiction that any provision
or wording of this Section 8.6(c), including any rules of the AAA,
are invalid or unenforceable under the Delaware Arbitration Act or
other applicable law, such invalidity will not invalidate all of
this Section 8.6(c). In that case, this Section 8.6(c) will be
construed so as to limit any term or provision so as to make it
valid or enforceable within the requirements of the Delaware
Arbitration Act or other applicable law, and, in the
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event such term or provision cannot be so limited, this Section 8.6(c)
will be construed to omit such invalid or unenforceable provision.
Section 8.7. Not for Benefit of Creditors.
The provisions of this Agreement are intended only for the regulation of
relations among past, present and future Members, Directors, the Manager 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.
Section 8.8. Consents.
Any and all consents, agreements or approvals provided for or permitted
by this Agreement (including minutes of any meeting) shall be in writing and a
signed copy thereof shall be filed and kept with the books of the Company.
Section 8.9. 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 in the manner contemplated by
Section 18-209(b) of the Delaware Act.
(b) 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.
Section 8.10.Pronouns.
All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identity of the person or persons, firm or
corporation may require in the context thereof.
Section 8.11. 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.
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(b) Each Member covenants that, except as required by applicable law
or any regulatory body, it will not divulge, furnish or make
accessible to any other person the name and/or address (whether
business, residence or mailing) of any Member (collectively,
"Confidential Information") without the prior written consent of
the Board, which consent may be withheld in its sole discretion.
(c) Each Member recognizes that in the event that this Section 8.11 is
breached by any Member or any of its principals, partners,
members, directors, officers, employees or agents or any of its
affiliates, including any of such affiliates' principals,
partners, members, directors, officers, employees or agents,
irreparable injury may result to the non-breaching Members and the
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 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.
Section 8.12. Severability.
If any provision of this Agreement is determined by a court of competent
jurisdiction not to be enforceable in the manner set forth in this Agreement,
each Member agrees that it is the intention of the Members that such provision
should be enforceable to the maximum extent possible under applicable law. If
any provisions of this Agreement are held to be invalid or unenforceable, such
invalidation or unenforceability shall not affect the validity or
enforceability of any other provision of this Agreement (or portion thereof).
Section 8.13. Filing of Returns.
The Board or its designated agent shall prepare and file, or cause the
accountants of the Company to prepare and file, a U.S. 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.
Section 8.14. Tax Matters Partner.
(a) The Manager shall be designated on the Company's annual Federal
income tax 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. In the event the Manager cannot act as Tax
Matters Partner, another Member shall be so designated. Should any
Member other than the Manager be designated as the Tax Matters
Partner for the Company pursuant to Section 6231(a)(7) of the
Code, it shall, and each Member hereby does, to the fullest extent
permitted by law, delegate to the Manager all of its rights,
powers and authority to act as such Tax Matters Partner and hereby
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constitutes and appoints the Manager as its true and lawful
attorney-in-fact, with power to act in its name and on its behalf,
including the power to act through such agents or attorneys as it
shall elect or appoint, to receive notices, to make, execute and
deliver, swear to, acknowledge and file any and all reports,
responses and notices, and to do any and all things required or
advisable, in the Manager's judgment, to be done by such a Tax
Matters Partner. Any Member designated as the Tax Matters Partner
for the 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.
(b) Each person (for purposes of this Section 8.14(b), called a
"Pass-Thru Partner") that holds or controls an interest as a
Member on behalf of, or for the benefit of, another person or
persons, or which Pass-Thru Partner is beneficially owned
(directly or indirectly) by another person or persons, shall,
within 30 days following receipt from the Tax Matters Partner of
any notice, demand, request for information or similar document,
convey such notice or other document in writing to all holders of
beneficial interests in the Company holding such interests through
such Pass-Thru Partner. 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 by the
Company or the Tax Matters Partner in connection with any such
audit, investigation, settlement or review shall be borne by the
Company.
Section 8.15. Section 754 Election.
In the event of a distribution of Company property to a Member or an
assignment or other transfer (including by reason of death) of all or part of
the interest of a Member in the Company, at the request of a Member, the
Manager, in its discretion, may cause the Company to elect, pursuant to
Section 754 of the Code, or the corresponding provision of subsequent law, to
adjust the basis of the Company property as provided by Sections 734 and 743
of the Code.
EACH OF THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS
ENTIRETY BEFORE SIGNING, INCLUDING THE CONFIDENTIALITY CLAUSE SET FORTH IN
SECTION 8.11.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
MANAGER:
MERCANTILE CAPITAL ADVISORS, INC.
By: _____________________________
Name:
Title:
ORGANIZATIONAL MEMBER:
MERCANTILE BANKSHARES CORPORATION
By: _____________________________
Name:
Title:
MEMBERS:
Each person who shall sign a Member Signature Page and who shall be accepted
by the Board to the Company as a Member.
By: _____________________________
Name:
Title: