BELAIR CAPITAL FUND LLC
AMENDED AND RESTATED OPERATING AGREEMENT
This AMENDED AND RESTATED OPERATING AGREEMENT of Belair Capital Fund LLC
(the "Fund") is dated as of this 6th day of February, 1998, by and among Xxxxx
Xxxxx Management, a Massachusetts business trust ("Xxxxx Xxxxx"), as manager of
the Fund and as a member and shareholder thereof, Boston Management and
Research, a Massachusetts business trust ("BMR" and sometimes herein called the
"Withdrawing Shareholder"), as resigning organizational member and shareholder,
and the Shareholders (as defined below).
The Fund was formed as a limited liability company by filing in the office
of the Secretary of the Commonwealth of Massachusetts a Certificate of
Organization of the Fund on October 27, 1997, pursuant to an Operating Agreement
dated as of October 27, 1997 (the "Original Agreement").
The Shareholders desire to be admitted to the Fund as members and
Shareholders.
The Manager (as defined below), Xxxxx Xxxxx (as a Shareholder), the
Withdrawing Shareholder and the Shareholders desire to amend the Original
Agreement as hereinafter provided and in consideration of the premises and the
agreements herein contained and intending to be legally bound hereby agree as
follows:
A. The Withdrawing Shareholder shall hereby withdraw from the Fund as a
member and Shareholder, its contribution to the Fund as organizational member
and Shareholder shall be returned in full satisfaction of its interest in the
Fund, and the Withdrawing Shareholder shall have no further claims against the
Fund with respect to such interest.
B. Effective upon the date hereof, the Shareholders shall hereby be
admitted to the Fund as members and Shareholders, and the Original Agreement
shall be amended and restated to read as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree to carry on a limited liability
company in accordance with the Act (as defined below) and the provisions of this
Agreement and subject to the terms and conditions of this Agreement.
ARTICLE 1
DEFINITIONS
The defined terms used in this Agreement shall have the meanings specified
below:
"Acceptable Securities" means the equity securities determined by the
Investment Adviser in its sole discretion to be acceptable for contribution, and
which are in fact contributed, to the Fund by the Shareholders as their Capital
Contributions.
"Accountant" means such firm of independent certified public accountants as
may be engaged from time to time by the Fund.
"Act" means the Massachusetts Limited Liability Company Act (chapter 156C
of the Massachusetts General Laws), as amended from time to time, and any
successor to such Act.
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"Agreement" means this Amended and Restated Operating Agreement of Limited
Liability Company, as it may be amended or restated from time to time.
"Bankruptcy of the Manager" means the occurrence of any of the following:
(i) the Manager is adjudged a bankrupt or insolvent, or has entered against it
an order for relief in any bankruptcy or insolvency proceeding; (ii) 120 days
after the commencement of any proceeding against the Manager seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, if the proceeding has
not been dismissed, or if within 90 days after the appointment without the
Manager's consent or acquiescence of a trustee, receiver or liquidator of the
Manager or of all or any substantial part of its properties, the appointment is
not vacated or stayed, or within 90 days after the expiration of any such stay,
the appointment is not vacated; or (iii) the Manager makes an assignment for the
benefit of creditors, files a voluntary petition in bankruptcy, files a petition
or answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation, files an answer or other pleading admitting or failing to contest
the material allegations of a petition filed against it in any proceeding of
this nature or seeks, consents to or acquiesces in the appointment of a trustee,
receiver or liquidator of the Manager or of all or any substantial part of its
properties.
"BMR" means Boston Management and Research, a Massachusetts business trust,
or any successor corporation or other entity which is wholly-owned by Xxxxx
Xxxxx or Xxxxx Xxxxx'x parent, Xxxxx Xxxxx Corp. BMR acts as investment adviser
of the Portfolio and will act as the initial investment adviser of the Fund.
"Book Gain" or "Book Loss" means the gain or loss recognized by the Fund
for book purposes in any Fiscal Year by reason of a sale or other disposition of
any asset. Such Book Gain or Book Loss shall be computed by reference to the
Book Value of such asset as of the date of such sale or other disposition,
rather than by reference to the tax basis of such asset as of such date, and
each and every reference herein to "gain" or "loss" shall be deemed to refer to
Book Gain or Book Loss, rather than to tax gain or tax loss, unless the context
manifestly otherwise requires.
"Book Value" of an asset means, as of any particular date, the value at
which the asset is reflected on the books of the Fund as of such date. The Book
Value of all Fund assets shall be adjusted to equal their respective values used
to determine Net Asset Value per Share, as determined by the Fund in accordance
with Treasury Regulations Section 1.704-1(b)(2)(iv)(f), as of the following
times: (i) the acquisition of additional Shares by any new or existing
Shareholder in exchange for more than a de minimis Capital Contribution; (ii)
the distribution by the Fund to a Shareholder of more than a de minimis amount
of property or money in exchange for all or part of the Shares owned by such
Shareholder; and (iii) the termination of the Fund for federal income tax
purposes pursuant to Code Section 708(b)(1)(B); provided, however, that
adjustments pursuant to clauses (i) and (ii) above shall be made only if the
Fund determines that such adjustments are necessary or appropriate to accurately
reflect the economic interests of the Shareholders in the Fund or are otherwise
required by Treasury Regulations Section 1.704-1(b)(2)(iv).
"business day" means any day on which the New York Stock Exchange is open
for trading.
"By-Laws" means the By-Laws of the Fund adopted by the Manager, as amended
from time to time.
"Capital Account" has the meaning set forth in Section 6.1 hereof.
"Capital Contribution" means, with respect to any Shareholder except the
Manager, the Exchange Value of Acceptable Securities contributed to the Fund by
such Shareholder, net of the selling commission paid by the Fund on behalf of
such Shareholder, if any.
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"Certificate" means the Certificate of Organization of the Fund as provided
for pursuant to the Act, as filed in the office of the State Secretary of the
Commonwealth of Massachusetts on October 27, 1997, as it may be amended or
restated from time to time.
"Closing" means the Initial Closing or any Subsequent Closing.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any subsequent federal law of similar import.
"Company" means Belvedere Capital Fund Company LLC, a Massachusetts limited
liability company.
"Company Servicing Agreement" means any agreement between the Company and
Xxxxx Xxxxx Distributors, Inc., or between the Company and any sub-agent
pursuant to which investor services will be rendered to one or more direct or
indirect investors in the Company. The Company Servicing Agreement with any
sub-agent may be contained in a sub-agency agreement between Xxxxx Xxxxx
Distributors, Inc. and such sub-agent.
"Consent of the Shareholders" means the consent or approval of Shareholders
holding the lesser of (i) 50% of the outstanding Shares, (ii) 67% of those
Shares acting on the matter if Shareholders holding more than 50% of the
outstanding Shares have responded to the consent solicitation or (iii) 67% of
those Shares present or represented by proxy at a meeting if Shareholders
holding more than 50% of the outstanding Shares are present or represented by
proxy at the meeting. The Manager shall determine the manner of making and
obtaining any such Consent, may establish record dates for this purpose, and
shall have complete authority to decide all matters in connection therewith.
"Covered Person" has the meaning set forth in Section 3.2 hereof.
"Depreciation" means, for each Fiscal Year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction allowable
with respect to an asset for such Fiscal Year or other period for federal income
tax purposes, except that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such Fiscal
Year or other period, then Depreciation shall be that amount which bears the
same relationship to the Book Value of such asset as the depreciation,
amortization or other cost recovery deduction allowable for federal income tax
purposes bears to its adjusted tax basis.
"Diversified Basket of Securities" means a group of securities that is
diversified among at least 10 different issuers such that not more than 25% of
the value of the securities are investments in the securities of any one issuer
and not more than 50% of the value of the securities are investments in the
securities of five or fewer issuers.
"Effective Date" means the date of this Agreement.
"Xxxxx Xxxxx" means Xxxxx Xxxxx Management, a Massachusetts business trust,
or any successor corporation or other entity which is wholly-owned by Xxxxx
Xxxxx'x parent, Xxxxx Xxxxx Corp. Xxxxx Xxxxx acts as Manager of the Fund and
currently owns all outstanding shares of BMR.
"Exchange Value" means the value of an Acceptable Security contributed at
any Closing as of the close of business on the business day immediately
preceding such Closing, determined with respect to (i) any security which is
freely tradable as the market value of said Security and (ii) any Restricted
Security as at a discount to the market value of freely tradable securities of
the same class in the principal market for said Restricted Security.
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"Fiscal Year" means the taxable year of the Fund selected by the Manager,
which is expected to be the calendar year, except that the initial Fiscal Year
shall commence on the Effective Date and the final Fiscal Year shall end on the
date on which the Fund is terminated under Article 9 hereof. The Manager, in its
discretion, may change the Fiscal Year subject to and upon compliance with
applicable restrictions and conditions imposed by the Code or the Service.
"Fund" means the Massachusetts limited liability company formed under the
Act and governed by and subject to the provisions of this Agreement.
"Fund Minimum Gain" has the same meaning as partnership minimum gain set
forth in Treasury Regulations Section 1.704-2(d) and, as provided therein, shall
generally be determined by computing, for each Nonrecourse Debt of the Fund, any
gain the Fund would realize if it disposed of the property subject to that
liability for no consideration other than full satisfaction of the liability,
and then aggregating the separate amounts of gain so computed.
"Fund Servicing Agreement" means any agreement between the Fund and Xxxxx
Xxxxx Distributors, Inc., or between the Fund and any sub-agent pursuant to
which investor services will be rendered to one or more Shareholders. The Fund
Servicing Agreement with any sub-agent may be contained in a sub-agency
agreement between Xxxxx Xxxxx Distributors, Inc. and such sub-agent.
"Immediate Family" means, with respect to any person, any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, and sister-in-law of
such person, and shall include adoptive relationships.
"Initial Closing" means the closing on the Effective Date at which the
initial Shareholders (other than Xxxxx Xxxxx which is an organizational
Shareholder) are admitted to the Fund in exchange for the contribution of
Acceptable Securities.
"Investment Adviser" means BMR or any replacement or successor investment
adviser of the Fund, in such capacity.
"Investment Advisory and Administrative Agreement" means the investment
advisory and administrative agreement entered into by the Fund and BMR, dated
the date hereof, as it may be amended from time to time, and any replacement
investment advisory agreement between the Fund and BMR or any replacement or
successor investment adviser of the Fund.
"Investment Property" has the meaning set forth in Section 2.4(b) hereof.
"Manager" means Xxxxx Xxxxx in its capacity as the manager of the Fund and
any other Person who or that becomes a substituted or successor Manager as
provided herein.
"marketable equity security" means an equity security for which market
quotations are readily available.
"Memorandum" means the Confidential Private Placement Memorandum of the
Fund dated October 28, 1997, prepared in connection with the offering and sale
of the Shares, as it may be amended and supplemented from time to time.
"Minimum Gain" means, as of any particular date, an amount determined with
respect to the Fund as of such date in accordance with Treasury Regulations
Section 1.704-2(d).
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"Net Asset Value Per Share" means the total value of the Fund's total
assets, less the Fund's accrued and allocated liabilities, divided by the number
of Shares outstanding. The assets and liabilities of the Fund shall be
calculated in the manner authorized by the Investment Adviser.
"Net Current Income" has the meaning set forth in Section 8.1 hereof.
"1940 Act" means the Investment Company Act of 1940, as amended.
"Nonrecourse Debt" means any Fund liability to the extent that no
Shareholder (or related person within the meaning of Treasury Regulations
Section 1.752-4(b)) bears the economic risk of loss for such liability under
Treasury Regulations Section 1.752-2.
"Nonrecourse Deductions" has the meaning set forth in Treasury Regulations
Section 1.704-2(c).
"Person" means any individual, corporation, association, business trust,
limited liability company, partnership, joint venture, trust or other entity,
and the heirs, executors, administrators, legal representatives, successors and
assigns of such Person where the context so admits.
"Placement Agency Agreement" means the placement agency agreement dated as
of October 28, 1997 between the Fund and Xxxxx Xxxxx Distributors, Inc., as it
may be amended from time to time.
"Portfolio" means Tax-Managed Growth Portfolio, a New York common law trust
registered under the 1940 Act as a diversified open-end management investment
company.
"Precontribution Gain" means with respect to any Acceptable Security which
a Shareholder contributes to the Fund, (i) the excess of the Exchange Value of
such Acceptable Security over its tax basis in the hands of the Fund immediately
after such contribution on the date of contribution or, if less, (ii) the excess
of the amount realized on a sale or other taxable disposition of such Acceptable
Security by the Fund, the Company or the Portfolio over its tax basis.
"Precontribution Loss" means with respect to any Acceptable Security which
a Shareholder contributes to the Fund, the excess of the tax basis of the
Acceptable Security in the hands of the Fund immediately after such contribution
over the Exchange Value of such Acceptable Security.
"Profit" or "Loss" means, for each Fiscal Year, an amount equal to the
Fund's taxable income or loss (as the case may be) for such year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(a) Any income of the Fund that is exempt from federal income tax and not
otherwise taken into account in computing Profit or Loss shall be added to
such taxable income or loss;
(b) Any expenditures of the Fund described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulations Sections 1.704-1(b)(2)(iv)(i) shall be subtracted from such
taxable income or loss;
(c) In lieu of the depreciation, amortization or other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year;
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(d) Book Gain or Book Loss shall be taken into account in lieu of any tax
gain or tax loss recognized by the Fund; and
(e) Items of income, gain, loss, or deduction specially allocated pursuant
to Section 6.5 or 6.6 hereof shall not be taken into account.
"Qualified Purchaser" has the meaning set forth in Section 2(a)(51) of the
1940 Act.
"Qualifying Assets" means assets that are acquired by the Fund in order for
the exchange of contributed securities for Shares of the Fund to be non-taxable,
and which are not assets described or referred to in Section 351(e)(1)(B) of the
Code.
"Regulatory Allocations" has the meaning given such term in Section 6.6
hereof.
"Restricted Securities" means, as of any time, Acceptable Securities which
are restricted as to disposition at such time by the Fund or Portfolio pursuant
to contract or the Securities Act, but shall not include any security if the
Fund or Portfolio can then sell its holdings of such security pursuant to the
provisions of Rule 144 under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Service" means the Internal Revenue Service.
"Share of Minimum Gain" means, at a particular time with respect to a
Shareholder, the amount of partnership minimum gain determined with respect to
such Shareholder as of such time in accordance with Treasury Regulations Section
1.704-2(g)(1).
"Shareholder" or "Shareholders" means any and all of those Persons
(including the Person designated as Manager) designated as Shareholders on the
books and records of the Fund, as they may be amended from time to time,
together with any Person who becomes a substituted or additional Shareholder as
provided herein, in such Person's capacity as a Shareholder of the Fund. Each
Shareholder designated as such on the books and records of the Fund is admitted
as a member of the Fund within the meaning of the Act, and is a holder of record
of Shares of the Fund. Only those Persons so designated are deemed to be
Shareholders for all purposes of this Agreement and the Act.
"Shareholder Nonrecourse Debt Minimum Gain" shall be determined in the same
manner as partner nonrecourse minimum gain in Treasury Regulations Section
1.704-2(i)(3) and, as provided therein, shall generally be the amount, with
respect to each Shareholder Nonrecourse Debt, equal to the Fund Minimum Gain
that would result if such Shareholder Nonrecourse Debt were treated as a
Nonrecourse Debt.
"Shareholder Nonrecourse Debt" means any Fund liability to the extent such
liability is nonrecourse for purposes of Treasury Regulations Section 1.1001-2
and a Shareholder (or related person within the meaning of Treasury Regulation
Section 1.752-4(b)) bears the economic risk of loss with respect to such
liability under Treasury Regulations Section 1.752-2.
"Shareholder Nonrecourse Deductions" shall be determined in the manner set
forth with respect to partnership nonrecourse deductions in Treasury Regulations
Section 1.704-2(i)(2).
"Shares" means the limited liability company interests in the Fund in the
form of shares issued by the Fund from time to time, and includes a fraction of
a Share as well as a whole Share.
"Special Precontribution Gain Distribution" has the meaning set forth in
Section 8.1(b) hereof.
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"sub-agent" means any sub-agent appointed by Xxxxx Xxxxx Distributors, Inc.
with respect to the private offering and sale of the Shares.
"Subsequent Closing" means any Closing which may be held in the discretion
of the Manager to admit additional Shareholders and/or to receive additional
Capital Contributions by any Shareholder after the Initial Closing.
"Tax Matters Partner" means the Person designated as the Tax Matters
Partner in accordance with Section 6.9 of this Agreement.
"Tender Security" has the meaning set forth in Section 10.3 hereof.
"Treasury Regulations" means the Federal income tax regulations promulgated
under the Code, as such Treasury Regulations may be amended from time to time
(it being understood that all references herein to sections of the Treasury
Regulations shall be deemed also to refer to any corresponding provisions of
succeeding Treasury Regulations).
ARTICLE 2
THE FUND
2.1 The Fund. The Manager and Shareholders agree to carry on the business
of the Fund pursuant to the Act, this Agreement and the By-Laws. The rights,
powers and duties of the Manager and Shareholders shall be governed by the
provisions of this Agreement and the By-Laws.
2.2 Fund Name, Office and Resident Agent for Service of Process. The Fund
shall be known as "Belair Capital Fund LLC." The Massachusetts office required
by the Act and principal place of business of the Fund shall be located at 00
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or at such other location in the
Commonwealth of Massachusetts as may hereafter be determined by the Manager. The
Manager shall appoint, in accordance with the Act, a resident agent for service
of process on the Fund and reflect such agent in the Certificate.
2.3 Investment Objective and Fundamental Investment Restrictions. The
Fund's investment objective is to achieve long-term after-tax returns for
Shareholders. The Fund has adopted the following fundamental investment
restrictions:
(a) The Fund will not engage in the underwriting of securities.
(b) With respect to 75% of its total assets, the Fund will not, whether by
reason of its direct investments or by reason of its indirect interest in
the securities which are directly held by the Portfolio, invest more than
5% of its total assets (taken at current value) in the securities or
investments of any one issuer (except obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and except
securities of other investment companies), but this restriction shall not
apply to the Fund's direct investment in shares of the Company or the
Fund's indirect investment in the Portfolio held through the Company.
(c) The Fund will not, whether by reason of its direct investments or by
reason of its indirect interest in the securities which are directly held
by the Portfolio, invest more than 25% of its total assets (taken at
current value) in any one industry (or, with respect to real estate, in any
one sector of the real estate market), but this restriction shall not apply
to the Fund's direct investment in shares of the Company or the Fund's
indirect investment in the Portfolio held through the Company.
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This Section 2.3 and the foregoing investment objective and fundamental
investment restrictions may not be changed or eliminated without the Consent of
the Shareholders.
2.4 Purposes, Powers and Privileges. In furtherance of its investment
objective, the Fund shall have the following purposes, powers and privileges and
is specifically authorized:
(a) to acquire shares of the Company (which invests exclusively in the
Portfolio), to acquire Qualifying Assets, to engage in the other investment
activities referred to in the Memorandum, and to conduct, operate and carry on
the business of a private limited liability investment company;
(b) to hold cash and cash equivalents; to subscribe for, invest in,
reinvest in, purchase or otherwise acquire, hold, pledge, sell, assign,
transfer, lend, write options on, exchange, distribute or otherwise dispose of
and deal in and with securities (including restricted or illiquid securities and
shares or other interests in the Company), real estate and all types of
interests therein, personal property and all types of interests therein,
commodities and other assets, including, without limitation, all types of
stocks, shares (including shares issued by the Company), futures contracts,
bonds, debentures, notes, bills and other negotiable or non-negotiable
instruments, obligations, evidences of interest, certificates of interest,
certificates of participation, certificates, interests, participations,
evidences of ownership, guarantees, rights, warrants, options or evidences of
indebtedness issued or created by or guaranteed by any state or local government
or any agency or instrumentality thereof, by the United States Government or any
agency, instrumentality, territory, district or possession thereof, by any
foreign government or any agency, instrumentality, territory, district of
possession thereof, or by any corporation, association, business trust, limited
liability company, joint venture, partnership, trust or other entity (whether
public or private) organized or existing under the laws of any state, the United
States or any territory or possession thereof or under the laws of any foreign
country or other jurisdiction, bank certificates of deposit, bank time deposits,
bankers' acceptances and commercial paper; to use various investment techniques,
including, but not limited to, the purchase and sale of derivative instruments,
the purchase and sale of stock index futures contracts and options on stock
index futures, the purchase and sale of options on securities, the purchase and
sale of forward currency exchange contracts and currency futures, equity swaps,
short sales and interest rate xxxxxx; to hold or dispose of such other
investment property (or interest therein) of any kind or nature, real or
personal, tangible or intangible as may be received by the Fund as distributions
on, or with respect to, securities held directly or indirectly by the Fund (all
such investment property or interests which are not securities being herein
sometimes referred to as "Investment Property"), provided, however, that the
Fund shall not have the power to derive items of income to the extent that such
income would cause the Fund to fail to qualify under the 90% test in Section
7704(c)(2) of the Code; and to pay for the same in cash or by the issue of
Shares, bonds, notes or other securities of the Fund or otherwise; and to
exercise any and all rights, powers and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons to exercise any of
said rights, powers and privileges in respect of any such investments;
(c) to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security all or any part of the
assets of the Fund;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in, Shares, including Shares in
fractional denominations, and to apply to any such repurchase, redemption,
retirement, cancellation or acquisition of Shares any funds, securities or other
assets of the Fund, whether capital or surplus or otherwise, to the full extent
now or hereafter permitted by the laws of the Commonwealth of Massachusetts;
(e) to conduct its business, promote its purposes, and carry on its
activities and operations in any and all of its branches and maintain offices
both within and without the Commonwealth of Massachusetts, in any and all States
of the United States of America, including the District of Columbia; and
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(f) to do all and everything necessary, suitable, convenient, or proper for
the conduct, promotion, or attainment of any of the businesses, activities and
purposes herein specified or which at any time may be incidental thereto or may
appear conducive to or expedient for the accomplishment of any of such
businesses, activities and purposes and which might be engaged in or carried on
by a limited liability company formed under the Act; to enter into, make and
perform all contracts and other undertakings and engage in all activities as the
Manager may deem necessary or advisable to carry out the investment objective or
any purpose of the Fund; to indemnify and guarantee the obligations of other
Persons; to organize or form other limited liability companies and other
entities and to act as manager of the same; and to exercise any and all powers
and privileges that a natural person could exercise and to have and exercise all
of the powers and privileges conferred by the laws of the Commonwealth of
Massachusetts upon a Massachusetts limited liability company.
The foregoing provisions of this Section 2.4 shall be construed together as
purposes, powers and privileges and each as an independent purpose, power and
privilege.
ARTICLE 3
MANAGEMENT OF THE FUND
3.1 The Manager.
(a) The Shareholders designate Xxxxx Xxxxx as the initial Manager of the
Fund. The complete and entire management, control and operation of the Fund is
vested exclusively in the Manager, which is hereby empowered to exercise all the
powers and privileges of the Fund. No Shareholder other than the Manager shall
have any right, power or authority to manage, control or operate the Fund.
(b) The Manager shall have all rights, powers and authority necessary,
convenient or desirable to carry out or implement the investment objective and
purposes of the Fund, including, without limitation, the powers and privileges
referred to in Article 2. Without limiting the generality of the foregoing, the
Manager shall have full right, power and authority in the name and on behalf of
the Fund:
(i) To vote or give assent, or exercise any rights of ownership, with
respect to securities or other property; and to execute and deliver proxies
or powers of attorney to such Person or Persons as the Manager shall deem
proper, granting to such Person or Persons such power and discretion with
relation to securities or property as the Manager shall deem proper;
(ii) To hold any security, property or Qualifying Assets in bearer,
unregistered or other negotiable form or in the name of the Fund or a
custodian, subcustodian or other depository or a nominee or nominees or
otherwise;
(iii) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or other entity, any security of
which is held in the Fund; to consent to any contract, lease, mortgage,
purchase or sale of property by such corporation or other entity, and to
pay calls or subscriptions with respect to any security held in the Fund;
(iv) To join with other security holders in acting through a
committee, depository, voting trustee or otherwise, and in that connection
to deposit any security with, or transfer any security to, any such
committee, depository or trustee, and to delegate to them such power and
authority with relation to any security (whether or not so deposited or
transferred) as the Manager shall deem appropriate, and to agree to pay,
and to pay, such portion of the expenses and compensation of such
committee, depository or trustee as the Manager shall deem appropriate;
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(v) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Fund or any matter in controversy;
(vi) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(vii) To purchase and pay for entirely out of Fund property such
insurance as the Manager may deem necessary or appropriate for the conduct
of the business of the Fund, including, without limitation, insurance
policies insuring the assets of the Fund and payment of distributions and
principal on its portfolio investments, and insurance policies insuring the
Shareholders, Manager, Investment Adviser, officers, employees, agents
(including placement agents) or independent contractors of the Fund
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
person as Shareholder, Manager, Investment Adviser, officer, employee,
agent (including placement agent) or independent contractor, including any
action taken or omitted that may be determined to constitute negligence,
breach of duty or other wrongdoing, whether or not the Fund would have the
power to indemnify such Person against such liability;
(viii) To change the resident agent for service of process on the
Fund;
(ix) Subject to Section 12.3 hereof, to reorganize the Fund;
(x) To sell or otherwise dispose of all or substantially all of the
assets of the Fund;
(xi) To appoint officers of the Fund and to determine their duties,
powers and authority;
(xii) To adopt By-Laws which may contain provisions relating to the
business and activities of the Fund, the conduct of its affairs and its
rights, powers and privileges, or the rights, powers, duties or authority
of the Manager, Investment Adviser, Shareholders, officers, employees or
agents of the Fund, and to amend, supplement or repeal the same (and such
By-Laws are hereby deemed to be incorporated and included in this
Agreement), and to adopt rules, regulations and additional provisions
relating to any matter referred to in this Agreement or the By-Laws or
concerning the business, affairs, activities, investments or operations of
the Fund;
(xiii) To establish the methods and procedures for obtaining any
consent or approval of the Shareholders required by this Agreement
(including, without limitation, the calling and holding of Shareholder
meetings, the solicitation of proxies or consents, and the establishment of
record dates in connection therewith), and the Manager shall have complete
authority to decide all matters in connection therewith, which decisions
shall be conclusive and binding on all Persons interested;
(xiv) To establish record dates with respect to any allocation or
distribution which may be made by or on behalf of the Fund;
(xv) To employ one or more custodians, subcustodians, depositors,
administrators, transfer agents, shareholder servicing agents, agents for
the private offering and sale of Shares, consultants, attorneys,
accountants, appraisers, experts and such other agents and Persons as the
Manager may deem appropriate;
10
(xvi) To delegate to any officer, employee, agent or other Person such
of its rights, powers, duties or authority as the Manager may consider
necessary, convenient or desirable, including, without limitation, the
keeping of books and records and the making of allocations described in
this Agreement, the determination of items of the Fund's income, gain,
loss, deduction, basis, amount realized and credit (and the character and
source of such items), the determination of the Fund's net income, total
assets, liabilities and Net Asset Value per Share, and the valuation of any
security or asset held by the Fund;
(xvii) To execute, acknowledge and deliver such deeds, agreements,
instruments, certificates and other documents as it may deem necessary,
appropriate or desirable from time to time; and
(xviii) To have and exercise all of the rights, powers, privileges and
authority of the Manager of a Massachusetts limited liability company
provided under the Act or as otherwise permitted by law, custom or business
practice.
Further, without limiting the generality of the foregoing, the Manager
shall have full power and authority to incur and pay out of the principal or
income of the Fund such expenses and liabilities as may be deemed by the Manager
to be necessary, proper or desirable for the business, activities or purposes of
the Fund.
Any determination made in good faith and, so far as accounting matters are
involved, in accordance with generally accepted accounting principles, whether
by or pursuant to the authority granted by the Manager, as to: the amount of the
assets, debts, obligations or liabilities of the Fund or its Shareholders; the
amount of any reserves or charges set up and the propriety thereof; the time of
or purpose for creating such reserves or charges; the use, alteration or
cancellation of any reserves or charges (whether or not any debt, obligation or
liability for which such reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter required to be paid or
discharged); the cost of any investment or other asset owned or held by the
Fund; the value of any investment or other asset of the Fund; the number of
Shares outstanding; the estimated expense to the Fund in connection with the
issue and sale of its Shares; the ability to liquidate investments in an orderly
fashion; the extent to which it is practicable to deliver a selection of
securities to satisfy a redemption of Shares; and as to any and all other
matters relating to the issue, sale, redemption, transfer and/or other
acquisition or disposition of investments or Shares of the Fund, shall in each
and all cases be final and conclusive, and shall be binding upon the Fund and
its Shareholders, past, present and future, and Shares are issued and sold on
the condition and understanding that any and all such determinations shall be
binding as aforesaid.
The Manager or any organization with which the Manager may be affiliated or
associated also may act as broker for the Fund in making purchases and sales of
investments for or to the Fund for its portfolio, and may charge and receive
from the Fund the usual and customary commission for such service. Any
organization with which the Manager may be affiliated or associated in acting as
broker for the Fund shall be responsible only for the proper execution of
transactions in accordance with the instructions of the Fund and shall be
subject to no further liability of any sort whatsoever.
(c) The Manager, in the name and on behalf of the Fund, is specifically
authorized to enter into the Investment Advisory and Administrative Agreement
for the management of the assets of the Fund and the provision of certain
administrative services. Said agreement may contain such provisions and provide
for such compensation to the Investment Adviser as the Manager in its sole
discretion may determine, and may authorize the Investment Adviser to make all
decisions regarding the Fund's assets and, among other things, to find,
evaluate, structure, monitor and liquidate, upon dissolution or otherwise, such
assets and in connection therewith to enter into, execute, amend, supplement,
acknowledge and deliver any and all contracts, agreements or other instruments,
including, but not limited to, contracts with one or more banks, trust
companies, broker-dealers, investment firms, consultants or other investment
11
advisers, including affiliates or associates of the Investment Adviser, for the
performance of such duties, functions or activities as the Investment Adviser
may determine, including the investment and reinvestment of the Fund's
Qualifying Assets and the execution of securities and other transactions. Each
Shareholder, by becoming such, acknowledges and agrees that the Investment
Adviser shall be entitled to compensation as investment adviser to the Fund to
the extent provided for in the Investment Advisory and Administrative Agreement.
(d) Any affiliate or associate of the Manager may act as a placement agent
(with authority to appoint sub-agents) with respect to the private offering and
sale of Shares, and the Manager is authorized, in the name and on behalf of the
Fund, to execute and deliver the Placement Agency Agreement. Any such affiliate
or associate may also provide services to the Shareholders and assist the
sub-agents in providing services to investors in the Fund and receive
compensation therefor from the Company and from the Fund, and may also assign
its servicing responsibilities and compensation therefor to one or more
sub-agents. Sub-agents which provide such services may also receive compensation
therefor from the Company and from the Fund. Each Shareholder, by becoming such,
acknowledges and agrees that Xxxxx Xxxxx Distributors, Inc. shall be entitled to
the compensation and fees to the extent provided in its Company Servicing
Agreement and its Fund Servicing Agreement, and that each sub-agent may receive
the compensation provided in its Company Servicing Agreement and its Fund
Servicing Agreement.
(e) The Manager shall devote such time and effort to the affairs and
business of the Fund as is sufficient to allow the Fund to pursue its investment
objective. The Manager may, directly and indirectly, devote substantial time and
effort to other business endeavors, activities and ventures, including, without
limitation, acting as investment adviser of investment companies and rendering
investment advice and other services to investment trusts, limited liability
companies, partnerships and other entities with an investment objective similar
to the Fund, and neither the Fund nor any Shareholder as such shall have any
interest therein. Each Shareholder, by acquiring Shares, acknowledges and agrees
that the Manager, the affiliates, associates, officers, employees and trustee of
the Manager and any officers and employees of the Fund may (i) engage in, pursue
or have an interest in, directly or indirectly, other business endeavors,
activities and ventures of any kind, nature or description, independently or
with other Persons, and whether or not such endeavors, activities or ventures
are competitive with the activities or operations of the Fund, and (ii) contract
or enter into any financial, advisory or other transaction with any Shareholder
or any corporation or other entity whose securities or other assets are held by
the Fund or the Portfolio or may be interested in any such contract or
transaction; and that none of the foregoing Persons shall be liable to account
to the Fund or the Shareholders for any profit or benefit made or derived
thereby or in connection therewith.
(f) Third parties and other Persons dealing with the Fund are entitled to
rely conclusively on the authority of the Manager to bind and act for the Fund,
and to assume without inquiry that any necessary consents (if any should ever be
required) of Shareholders have been obtained.
(g) The Fund may have dealings and enter into transactions with the Person
designated as the Manager and affiliates and associates of the Manager. The Fund
may engage the Person designated as the Manager and/or affiliates and associates
of the Manager to provide various services to the Fund or its Shareholders and
in return for such services may pay compensation and other fees to the Person
designated as the Manager and/or affiliates and associates of the Manager, in
such amounts and on such terms as the Manager in its sole discretion shall
determine, provided that such terms shall be at least as favorable to the Fund
as may reasonably be expected to be obtained from unrelated third parties. Each
Shareholder, by acquiring Shares, acknowledges and agrees, without limiting the
generality of the foregoing, that BMR and Xxxxx Xxxxx Distributors, Inc. shall
be entitled to receive the compensation, fees and commissions described in the
Memorandum.
12
(h) Anything in this Agreement to the contrary notwithstanding, the Manager
may at any time resign if (i) the Manager has designated and admitted to the
Fund as a successor Manager any corporation, trust, business trust, limited
liability company, partnership or other entity that is wholly-owned, directly or
indirectly by Xxxxx Xxxxx'x parent, Xxxxx Xxxxx Corp. (provided that such
corporation, trust, business trust, limited liability company, partnership or
other entity has, or its personnel have, similar management experience to Xxxxx
Xxxxx and that its financial position is at least comparable to that of Xxxxx
Xxxxx) and each of the Shareholders, by acquiring Shares of the Fund, hereby
consents to the admission of such successor Manager; or (ii) the Manager, with
the consent of those Shareholders holding at least a majority of the outstanding
Shares, has designated and admitted a substitute Manager; provided that any such
succession or substitution shall be effective upon such resignation and shall
not in the opinion of tax counsel to the Fund adversely affect the
classification of the Fund as a partnership for Federal income tax purposes. In
the case of the Bankruptcy of the Manager (herein in such event called a
"Bankrupt Manager") those Shareholders holding a majority of the outstanding
Shares shall have the right to designate and admit to the Fund a substitute
Manager by filing written consents to such action with the records of the Fund.
The Bankrupt Manager or its legal representative shall give the Shareholders
prior notice if practicable or prompt notice of any Bankruptcy of the Manager.
From and after the date of the designation and admission of the substitute
Manager by the Shareholders, the Bankrupt Manager's Shares shall be assigned to
the successor Manager, such Bankrupt Manager shall have no further interest in
the Fund and, except as hereinafter otherwise provided in this Section 3.1(h),
shall not be entitled to any payment or other compensation for its previously
held Shares, and neither the Fund nor the Shareholders shall be liable in any
manner to the Bankrupt Manager as a result thereof. The Bankrupt Manager shall
be forthwith entitled to receive from the successor Manager an amount, in cash,
equal to the Net Asset Value Per Share multiplied by the number of Shares so
assigned to the successor Manager. If the Shareholders fail to designate and
admit a successor Manager, the Bankrupt Manager shall continue as the Manager of
the Fund. Neither the Bankruptcy of the Manager nor any other action taken
pursuant to and in accordance with this Section 3.1(h) shall cause a dissolution
or termination of the Fund.
(i) There shall be no more than one Manager of the Fund at any one time.
The Manager shall be required to be a Shareholder of the Fund. Unless and until
a successor or substitute Manager has been designated and admitted in accordance
with Section 3.1(h), the Manager shall not voluntarily resign or sell, transfer,
pledge or otherwise dispose of (except by way of redemption of part of its
Shares pursuant to Article 10) all or any part of its Shares.
3.2 Limitation of Liability. Each Person who is or was (i) a Manager or an
Investment Adviser, or (ii) an affiliate, associate, officer, employee or
trustee of a Manager or of an Investment Adviser, or (iii) an officer or
employee of the Fund (each, a "Covered Person", and collectively, the "Covered
Persons"), when acting in their respective capacities in connection with the
Fund's business or affairs, shall not be liable to any Person (including,
without limitation, the Fund or a Shareholder) for any act, omission or
obligation of the Fund, Manager, Investment Adviser or Covered Person or for
breach of any duty to the Fund. Notwithstanding anything in this Agreement to
the contrary, the Manager and the Investment Adviser shall not be responsible or
liable to the Fund or a Shareholder in any event for any mistake, error,
neglect, wrongdoing or breach of duty of any Covered Person or for losses
attributable thereto, nor shall any Manager, Investment Adviser or Covered
Person be liable or responsible to the Fund or a Shareholder for the act,
omission, obligation or breach of duty of any other Manager, Investment Adviser
or Covered Person; provided that nothing in this paragraph shall be deemed to
exonerate a Manager, Investment Adviser or Covered Person from liability to the
Fund or any Shareholder who has been finally adjudicated by a court or other
body before which a proceeding was brought not to have acted in good faith in
the reasonable belief that his action was in the best interest of the Fund and
to be liable to the Fund or to such Shareholder by reason thereof.
13
Each Covered Person shall, in the performance of such Covered Person's
duties (whether or not the Fund would have the power to indemnify such Covered
Person against liability), be fully and completely justified and protected with
regard to any act or failure to act resulting in or from reliance in good faith
upon (i) the provisions of this Agreement or of the By-Laws, (ii) the books of
account or other records of the Fund, (iii) advice of counsel, or (iv)
information, opinions, statements or reports made, presented or given to the
Fund, the Manager or the Investment Adviser by any of their respective officers
or employees or by any attorney, accountant, appraiser, expert, consultant or
other Person selected with reasonable care by or on behalf of the Manager or the
Investment Adviser.
The Manager, the Investment Adviser and all other Covered Persons shall not
be personally liable for the payment or repayment of any amounts standing in the
account of a Shareholder including, but not limited to, the Capital
Contributions of such Shareholder. Any such payment or repayment, if required to
be made, shall be made solely from the assets of the Fund.
In addition, the Manager, the Investment Adviser and all other Covered
Persons shall not be liable to the Fund or any Shareholder by reason of (i) any
tax liabilities incurred by the Shareholders (including, without limitation, as
a result of their contribution of securities to the Fund in exchange for Shares
or upon the exchange of such securities from the Fund into the Company or from
the Company into the Portfolio or as a result of any sale or distribution of any
such securities); (ii) any failure to withhold income tax under federal or state
tax laws with respect to income or gains allocated to the Shareholders; or (iii)
any change in the federal or state tax laws or regulations or in the
interpretations thereof as they may apply to the Fund, the Company, the
Portfolio or the Shareholders, whether such change or interpretation occurs
through legislative, judicial or administrative action.
Every note, bond, agreement, instrument, certificate, Share, undertaking or
other document and every other act or thing whatsoever executed or done by the
Manager, the Investment Adviser or a Covered Person or any of them on behalf of
the Fund, in connection with the Fund's business, shall be deemed conclusively
to have been executed or done only in such Person's capacity as Manager,
Investment Adviser or Covered Person, and such Manager, Investment Adviser or
Covered Person shall not be personally liable thereon to any Person.
To the extent that, at law or in equity, the Manager, the Investment
Adviser or a Covered Person has duties (including fiduciary duties) and
liabilities relating thereto, whether to the Fund or to the Shareholders, the
Manager, Investment Adviser or Covered Person acting in connection with the
Fund's business or affairs shall not be liable to the Fund or to any Shareholder
for such Manager's, Investment Adviser's or Covered Person's good faith reliance
on the provisions of this Agreement. The provisions of this Agreement, to the
extent that they restrict, limit or eliminate the duties and liabilities of the
Manager, the Investment Adviser or a Covered Person otherwise existing at law or
in equity, are agreed by the Shareholders to replace such other duties and
liabilities of the Manager, Investment Adviser or Covered Person.
3.3 Ownership of Assets of the Fund. Title to all of the assets of the Fund
shall at all times be vested in the Fund as a separate legal entity under the
Act. Securities owned by the Fund may be registered in or made payable to, and
title to Qualifying Assets which are not securities or any item of Investment
Property may be held by, the Fund in its name or the name of a nominee or agent
or in a "street" name. Any issuer of securities, transfer agent or other person
called upon to transfer any security, Qualifying Asset or item of Investment
Property to or from the name of the Fund shall be entitled to rely on
instructions or assignments signed or purporting to be signed by the Manager
without inquiry as to the authority of the Person so acting or as to the
validity of any transfer to or from the name of the Fund. At any time of
transfer, unless notified in writing to the contrary, such issuer, transfer
agent or other Person may act on the basis that the Fund is still in existence
and this Agreement is in full force and effect.
14
ARTICLE 4
INTERESTS IN THE FUND AND CAPITAL CONTRIBUTIONS
4.1 Shares of Interest. The limited liability company interests in the Fund
shall at all times be divided into Shares, without par value, which may be
issued from time to time in such amounts as the Fund (without any prior
authorization of the Shareholders) and for such consideration as the Fund may
deem appropriate. Except as otherwise provided in this Agreement, each Share
shall represent an equal proportionate interest in the Fund with each other
Share. The number of Shares authorized to be issued shall be unlimited, and the
Shares so authorized may be represented in part by fractional Shares. From time
to time the Fund may divide or combine the Shares into a greater or lesser
number without thereby changing the proportionate interests in the Fund.
4.2 Issuance of Shares. The Fund is authorized to issue or authorize the
issuance of full and fractional Shares and to fix the price or the consideration
(whether in cash and/or such other property, real or personal, tangible or
intangible, including without limitation the securities of other entities) or
the minimum consideration for such Shares, all in such manner as the Fund shall
from time to time determine. Shares may be issued in fractional denominations to
the same extent as whole Shares. Shares in fractional denominations shall be
Shares having proportionately to the respective fractions represented thereby
all the rights of whole Shares, except as otherwise provided in this Agreement.
Shares shall be issued in book entry form, and no certificates shall be issued
for Shares except as the Fund shall otherwise determine from time to time.
4.3 Capital Contributions by the Manager. Xxxxx Xxxxx as an organizational
member purchased 100 Shares and the Withdrawing Shareholder as an organizational
member purchased one Share at the purchase price of $100 per Share paid in cash
and each was admitted as an organizational Shareholder of the Fund. At its
discretion, the Manager may purchase additional Shares at the Initial Closing
and from time to time. Additional Shares acquired by the Manager at the Initial
Closing will be purchased at a price of $100 per Share, and any additional
Shares purchased by the Manager at any subsequent time will be acquired at the
Net Asset Value per Share as of such date. Capital Contributions of the Manager
are not subject to selling commissions. The Share owned by the Withdrawing
Shareholder will be redeemed by the Fund (without payment of a redemption fee)
on the effective date of this Agreement.
4.4 Capital Contributions by Initial Shareholders. At the Initial Closing,
the initial Shareholders shall purchase full and fractional Shares (rounded to
the nearest 1/1000) at a purchase price of $100 per Share, and shall contribute
to the capital of the Fund their Capital Contributions in the form of Acceptable
Securities. The Capital Contributions of each initial Shareholder will be net of
the selling commissions paid by the Fund on behalf of such Shareholder, if any.
On the Effective Date, the Initial Closing of the sale of Shares will be
consummated in the manner described in the Memorandum.
4.5 Capital Contributions of Additional Shareholders. Upon the admission of
additional Shareholders or upon an additional Capital Contribution by an
existing Shareholder as provided in Section 5.1 at any Subsequent Closing, each
such Shareholder shall purchase full and fractional Shares (rounded to the
nearest 1/1,000) at a purchase price equal to the Net Asset Value Per Share
prior to giving effect to such purchase as of the date of such Subsequent
Closing, and shall contribute to the capital of the Fund a Capital Contribution
in the form of Acceptable Securities. At any Subsequent Closing, the Capital
Contribution of each such Shareholder will be net of the selling commissions
paid by the Fund on behalf of such Shareholder at such Closing, if any.
4.6 Withdrawal of Capital. Except as specifically provided in Article 10
and elsewhere in this Agreement, no Shareholder shall have the right (a) to
withdraw from the Fund all or any part of such Shareholder's Capital
Contribution or (b) to demand and receive property or cash of the Fund in return
for such Shareholder's Capital Contribution.
15
4.7 Nontransferability of Shares. In no event shall a Shareholder or the
legal representative of such Shareholder's estate transfer, sell, alienate,
pledge, encumber, assign or otherwise dispose of all or any part of such
Shareholder's Shares or any interest therein whether voluntarily, involuntarily,
by operation of law, at judicial sale or otherwise, without the prior written
consent of the Manager, which consent may be withheld in its sole discretion for
any reason or for no reason; provided, however, that upon the death of a
Shareholder the interest in such Shareholder's Shares may be transferred by
operation of law to his estate, and provided further that, in the absence of the
foregoing written consent of the Manager, such estate will be entitled only to
the deceased Shareholder's economic interest in the profits, losses and capital
of the Fund but will not be entitled to the prior right of the deceased
Shareholder to give consents when required by this Agreement or by the
Memorandum (or otherwise participate in decisions made on behalf of the Fund) or
to be admitted to the Fund as a substituted Shareholder. In no event shall a
Shareholder transfer, sell, alienate, pledge or otherwise encumber, assign or
dispose of all or any part of his Shares unless counsel for the Fund shall have
rendered an opinion (unless the delivery of an opinion shall have been waived by
the Manager) (i) that such transaction would not violate the Securities Act or
applicable state securities or blue sky laws (including investor qualification
standards); and (ii) that the Fund will not as a result thereof (A) be
considered to be terminated pursuant to Section 708 of the Code, (B) be
classified as an association or a publicly traded partnership taxable as a
corporation, or (C) be required to register under the 1940 Act, as then in
effect. No Shareholder shall be permitted to sell, assign, transfer, alienate or
dispose of such Shareholder's Shares to a minor or incompetent Person, unless in
trust for the benefit of such Person. Any Person desiring to consummate a
transfer or other disposition of Shares shall execute and deliver to the Fund
such instruments, agreements and other documents as the Manager may require. Any
Person desiring to become a substituted Shareholder shall execute and deliver to
the Fund such representations, instruments, agreements, powers of attorney and
other documents, including an agreement to be bound by this Agreement, as the
Manager may deem necessary or desirable to effect such substitution. Provided
the written consent of the Manager has been obtained, any transferee Shareholder
shall be substituted as a Shareholder and shall succeed to all of the rights,
privileges, restrictions, obligations and liabilities of the transferor
Shareholder. Each Shareholder, by acquiring Shares of the Fund, consents to the
admission of any substituted Shareholder pursuant to the terms of this Section
4.7. If any transfer of Shares pursuant to this Section 4.7 (other than a
transfer to other Shareholders) shall result in multiple ownership of any
Shareholder's interest in the Fund, the Manager may require that one or more
trustees or nominees be designated as representing a portion of or the entire
interest transferred for the purpose of receiving all notices which may be given
and all payments which may be made under this Agreement and for the purpose of
exercising all rights and privileges which the transferor as a Shareholder had
pursuant to the provisions of this Agreement. Every transfer or other
disposition of Shares shall be subject to all terms, conditions, restrictions
and obligations of this Agreement. Each of the Shareholders agrees not to make
any transfer or other disposition of Shares except as permitted by the
provisions of this Section 4.7, and any act by any Shareholder in violation of
this Section 4.7 shall be null and void ab initio. The transferee of Shares
shall bear all of the Fund's expenses incurred in connection with any transfer,
including, without limitation, reasonable attorneys fees. The Manager may impose
additional restrictions on transfers or redemptions of Shares in order to ensure
that the Fund (i) will be an exempted issuer described in Section 3(c)(1) or
3(c)(7)(A) of the 1940 Act, (ii) will not be classified as or an association or
a publicly traded partnership subject to tax as a corporation or (iii) will not
be required to register under the 1940 Act.
4.8 Ownership of Shares. It is intended that Shares may be purchased and
owned only by Persons who are, or who are deemed to be, Qualified Purchasers.
Shares that are owned by Persons who received the same from a Qualified
Purchaser as a gift or bequest, or in a case in which the transfer was caused by
legal separation, divorce, death or other involuntary event, shall be deemed to
be owned by a Qualified Purchaser, subject to such rules, regulations and orders
as the Securities and Exchange Commission may from time to time prescribe or
adopt. The Manager may impose additional restrictions on the ownership of Shares
to ensure that the Fund (i) will be an exempted issuer described in Section
3(c)(1) or 3(c)(7)(A) of the 1940 Act, (ii) will not be classified as an
association or a publicly traded partnership subject to tax as a corporation or
(iii) will not be required to register under the 0000 Xxx. The ownership of
16
Shares will be recorded in the books of the Fund or a transfer agent. The record
books of the Fund or any transfer agent, as the case may be, shall be conclusive
as to who are the holders of Shares and as to the number of Shares held from
time to time by each holder. No Shares shall be recorded as being owned by a
Shareholder except in accordance with the procedures set forth in Section 5.1 of
this Agreement. No certificates certifying the ownership of Shares shall be
issued except as the Manager may otherwise determine from time to time.
4.9 No Preemptive Rights; Derivative Suits. Shareholders shall have no
preemptive or other right to subscribe for any additional Shares or other
securities issued by the Fund. No suit, action or other proceeding may be
brought by a Shareholder in the right of or on behalf of or in the name of the
Fund unless such Shareholder has first obtained the written consents of those
Shareholders holding at least a majority of the outstanding Shares, which
consents specifically authorize the bringing of such suit, action or other
proceeding.
4.10 Status of Shares. Shares shall be deemed to be personal property
giving only the rights and privileges provided in this Agreement. Every
Shareholder by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms of this Agreement and to have become
a party hereto. The death of a Shareholder during the continuance of the Fund
shall not operate to terminate the same nor entitle the representative of any
deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Fund or the Manager; and the deceased Shareholder's estate
shall only be entitled to the rights of said decedent under this Agreement.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the assets of the Fund or rights to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders to be deemed partners, irrespective of the fact that
the Fund is intended to be classified as a partnership for federal income tax
purposes. Neither the Fund nor the Manager shall have any power to call upon any
Shareholder for the payment of any debt or obligation of the Fund or of any sum
of money or assessment whatsoever other than such as the Shareholder at any time
personally may agree to pay by way of subscription for any Shares or otherwise.
ARTICLE 5
RIGHTS AND OBLIGATIONS OF SHAREHOLDERS
5.1 Shareholders. Only those Persons admitted by the Fund as a record owner
of Shares shall be considered Shareholders of the Fund. The Fund shall change or
adjust, or cause to be changed or adjusted, the Shareholder records from time to
time to reflect the resignation, withdrawal, addition and substitution of
Shareholders and the change in the number of Shares owned by the Shareholders.
Shareholders may be substituted in accordance with Section 4.7 of this
Agreement, and additional Shareholders may be admitted to the Fund and/or
existing Shareholders may make additional Capital Contributions, at any
Subsequent Closing or Subsequent Closings, in the sole discretion of the Manager
on the terms and conditions determined by the Manager.
5.2 No Liability for Fund Obligations. No Shareholder shall be liable for
any debts, obligations or liabilities of the Fund, whether arising in contract,
tort or otherwise; provided, however, that contributions of a Shareholder and
his share of any undistributed assets of the Fund shall be subject to the risks
of the operations of the Fund.
5.3 No Right of Management or Authority to Act. No Shareholder in its
capacity as a Shareholder shall take any part in the direction, management or
control of the business or activities of the Fund, transact any business for or
on behalf of the Fund or have any right, power or authority to bind the Fund.
Except as specifically otherwise required by this Agreement, no Shareholder
shall have any right, power or privilege to vote on, consent to or approve any
action or matter under any circumstances whatsoever. The Shareholders shall have
the limited right to consent only as and when required by Section 2.3, 3.1(h),
4.9, 9.1 or 9.3 of this Agreement.
17
ARTICLE 6
CAPITAL ACCOUNTS AND TAX ALLOCATIONS
6.1 Capital Accounts. There shall be established on the books of the Fund a
capital account for each Shareholder which shall reflect the value of such
Shareholder's interest in the Fund (hereinafter a "Capital Account"), which
Capital Account shall initially be equal to such Shareholder's Capital
Contribution (as it may be adjusted pursuant to Article 4) and shall thereafter
be adjusted in accordance with the following provisions:
(a) To each Shareholder's Capital Account there shall be credited such
Shareholder's allocable share of Profit and the amount of any Fund liabilities
(as determined under Code Section 752) that are expressly assumed in writing by
such Shareholder (other than liabilities secured by property distributed to the
Shareholder).
(b) To each Shareholder's Capital Account there shall be debited the amount
of cash and the value (as used for purposes of determining Net Asset Value per
Share) of any Fund asset distributed to such Shareholder pursuant to any
provision of this Agreement (net of any liabilities that are assumed by such
Shareholder or to which such asset is taken subject), such Shareholder's
allocable share of Loss, and the amount of any liabilities of such Shareholder
that are assumed by the Fund.
(c) In the event that the Book Value of the Fund assets is adjusted
pursuant to the definition of Book Value in Article 1 hereof, the Capital
Accounts of all Shareholders shall be adjusted simultaneously to reflect the
aggregate net adjustments as if the Fund recognized Profit or Loss equal to the
respective amounts of such aggregate net adjustments immediately before the
event causing such adjustment to Book Value.
(d) A Shareholder shall not be entitled to withdraw any part of such
Shareholder's Capital Account or to receive any distributions from the Fund,
except as provided in Articles 8, 9, and 10; nor shall a Shareholder be entitled
to make any Capital Contribution to the Fund other than as expressly provided
herein. No Shareholder shall receive interest on such Shareholder's Capital
Account.
(e) The provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) as
in effect on the date hereof, and shall be interpreted and applied in a manner
consistent with such Treasury Regulations. In the event the Manager shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto, are computed in order to comply with such
Regulations and any amended or successor Regulations, the Manager may make such
modification, provided that it shall not have a material adverse effect on the
amounts distributable to any Shareholder pursuant to Article 8 or upon the
dissolution of the Fund.
6.2 Allocations Generally. Except as otherwise provided in this Article 6,
Profit or Loss of the Fund shall be allocated pro rata to and among the
Shareholders in proportion to the number of Shares owned by each Shareholder.
6.3 Tax Allocations.
(a) Except as otherwise provided in this Agreement, for federal income tax
purposes, all items of Fund income, gain, loss, deduction, basis, amount
realized, and credit (and the character and source of such items) shall be
allocated among the Shareholders in the same manner as the corresponding items
of income, gain, loss, deduction or credit are allocated to Capital Accounts
pursuant to Section 6.1 and 6.2, and the Fund shall maintain such books, records
and accounts as are necessary to make such allocations.
18
(b) The Manager is authorized to make, for tax purposes, allocations of
income, gain, loss or deduction or adopt conventions as are necessary or
appropriate to comply with Section 704(c) of the Code and the relevant Treasury
Regulations or Internal Revenue Service pronouncements thereunder, in
particular, in respect of Precontribution Gain or Loss and adjustments to the
Book Value of Fund assets in accordance with the definition thereof.
(i) The Manager intends to make such allocations with respect to any
gain realized from the sale of Acceptable Securities (whether by the Fund,
the Company or the Portfolio) to and among the Shareholders pursuant to the
traditional method under Section 704(c) of the Code and Section 1.704-3(b)
of the Treasury Regulations, with such simplifying conventions as the
Manager may determine are appropriate, so as to take into account, to the
full extent permitted by applicable law and regulations, any
Precontribution Gain or Precontribution Loss.
(ii) Allocations with respect to any property held by the Portfolio
that has a value (as determined for purposes of determining Net Asset Value
per Share) different from its adjusted tax basis on the date on which the
Fund issues any Shares (or fractions thereof) pursuant to Section 4.5 or
8.1(c) will be made to and among the Shareholders in accordance with the
traditional method under Section 704(c) of the Code and Section 1.704-3(b)
of the Treasury Regulations, with such simplifying conventions as the
Manager may determine are appropriate, and in conformity with Section
1.704-1(b)(2)(iv)(f) and 1.704-1(b)(4)(i) of the Treasury Regulations.
(iii) The Manager intends to account for any shifts in Precontribution
Gain or Precontribution Loss caused by the distribution of securities
(other than securities contributed by the receiving Shareholder) in a
manner designed to preserve with respect to each Shareholder the amount of
the Shareholder's Precontribution Gain or Loss. Thus, the Manager currently
intends that if a security with Precontribution Gain as to one Shareholder
is distributed to another Shareholder or another investor in the Portfolio
or Company, the amount of the first Shareholder's Precontribution Gain
attributable to the distributed security would be reallocated among the
remaining securities contributed to and then held in the Portfolio in
proportion to the respective amounts by which their market values exceed
the sum of their tax bases and other precontribution gain in respect of
such contributed securities. Upon the Portfolio's later disposition at a
gain of any security to which such Precontribution Gain has been so
reallocated, gain on such disposition generally would be allocated as
follows: (1) gain to the extent of the original precontribution gain in
respect of such security would be allocated to the investor in the
Portfolio (and the investor in the Company and the Shareholder, as
applicable) which contributed such security, (2) Precontribution Gain
reallocated to the security would be allocated through the Company and the
Fund to the Shareholder which contributed the security the previous
distribution of which gave rise to such reallocation and (3) any remaining
gain would generally (after taking into account any allocations required
under Section 6.3(b)(ii) hereof) be allocated to and among all investors in
the Portfolio (and all investors in the Company and all Shareholders) in
proportion to their respective shares of the post-contribution
appreciation. The Manager also currently intends that, in general, if
securities are distributed in redemption of Shares to a Shareholder who has
Precontribution Gain with respect to other securities contributed to the
Fund and then held by the Portfolio, the Precontribution Gain of such
distributee Shareholder with respect to such other securities contributed
to the Fund and then held by the Portfolio would be reduced by an amount
equal to the excess of the fair market value of the distributed securities
at the time of the redemption over the tax basis of the distributed
securities in the hands of the distributee Shareholder, which reduction
would be allocated pro rata to such Precontribution Gain (subject to
possible simplifying conventions). The Manager currently intends to account
for shifts for built-in gain and built-in loss items described in Section
6.3(b)(ii) in a manner similar to that described in this subparagraph (iii)
for Precontribution Gain and Precontribution Loss.
19
(c) If a Shareholder sells or redeems any or all of such Shareholder's
Shares or purchases additional Shares, or if the number of Shares held by a
Shareholder is otherwise reduced or increased during a taxable year of the Fund
for any reason, the Shareholders' respective distributive shares of items for
such year shall be determined on a daily pro rata basis.
(d) The allocations provided in this Section 6.3 are for tax purposes only
and shall in no way affect the allocations provided for in Section 6.2, the
distributions provided for in Article 8 (except for Special Precontribution Gain
Distributions), the withdrawals provided for in Article 10, or the distribution
of proceeds upon termination of the Fund as provided in Article 9. The
allocations provided in this Section 6.3 are intended to comply with Treasury
Regulations Section 1.704-1(b) and 1.704-3(b). The Manager may amend the
provisions of this Section 6.3 to conform with any amendments to such
Regulations or with any additional Regulations promulgated under Code Section
704.
6.4 Transfer of Capital Accounts. The original Capital Account established
for each substituted Shareholder shall be in the same amount as the Capital
Account of the Shareholder to which such substituted Shareholder succeeds, as of
the date that such substituted Shareholder is admitted to the Fund. The Capital
Account of any Shareholder whose interest in the Fund is increased by means of
the transfer to such Shareholder of all or part of the Shares of another
Shareholder shall be appropriately adjusted to reflect such transfer. Any
reference in this Agreement to a Capital Contribution of or distribution or
allocation to a then Shareholder shall include a Capital Contribution or
distribution or allocation previously made by or to any prior Shareholder on
account of the Shares of such then Shareholder.
6.5 Regulatory Allocations.
(a) Qualified Income Offset. If any Shareholder unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) in any Fiscal Year, and as a result would,
but for this Section 6.5(a), have a deficit balance in his Capital Account as of
the last day of such Fiscal Year (taking into account the amount of such
Shareholder's share of Fund Minimum Gain (including for this purpose such
Shareholder's share of Shareholder Nonrecourse Debt Minimum Gain) as of such
last day) which is in excess of the amount (if any) such Shareholder is
unconditionally obligated to pay or contribute to the Fund as described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(c), then items of income and gain
of the Fund (consisting of a pro rata portion of each item of Fund income,
including gross income and gain) for such Fiscal Year (and, if necessary, for
subsequent Fiscal Years) shall be specially allocated to such Shareholder in the
amount and in the proportions required to eliminate such excess as quickly as
possible. For purposes of this Section 6.5(a), a Shareholder's Capital Account
shall be computed as of the last day of a Fiscal Year in the manner provided in
Section 6.1 hereof, but shall be increased by any allocation of income to such
Shareholder for such Fiscal Year under Sections 6.5(b), 6.5(c) and 6.5(d)
hereof.
(b) Gross Income Allocation. If any Shareholder would otherwise have a
deficit balance in his Capital Account as of the last day of any Fiscal Year
(taking into account the amount of such Shareholder's share of Fund Minimum Gain
(including for this purpose such Shareholder's share of Fund Nonrecourse Debt
Minimum Gain) as of such last day) which is in excess of the amount (if any)
such Shareholder is unconditionally obligated to pay or contribute to the Fund
as described in Treasury Regulations Section 1.704-(b)(2)(ii)(c), then items of
income and gain of the Fund shall be specially allocated to such Shareholder (in
the manner specified in Section 6.5(a) hereof) so as to eliminate such excess as
quickly as possible. For purposes of this Section 6.5(b), a Shareholder's
Capital Account shall be computed as of the last day of a Fiscal Year in the
manner provided in Section 6.1 hereof, but shall be increased by any allocation
of income to such Shareholder for such Fiscal Year under Sections 6.5(c) and
6.5(d) hereof.
20
(c) Fund Minimum Gain Chargeback. If there is a net decrease in Fund
Minimum Gain during any Fiscal Year, each Shareholder shall be allocated items
of Fund income and gain for such Fiscal Year (and, if necessary, for subsequent
Fiscal Years) in proportion to, and to the extent of, an amount equal to such
Shareholder's share of the net decrease in Fund Minimum Gain during such Fiscal
Year, determined in accordance with Treasury Regulations Section 1.704-2(g). The
requirement set forth in the preceding sentence shall be subject to the
exceptions and limitations referred to in Treasury Regulations Section
1.704-2(f). This Section 6.5(c) is intended to constitute a "minimum gain
chargeback" provision as described in Treasury Regulations Section 1.704-2(f)
and shall be construed so as to meet the requirements of such Treasury
Regulation.
(d) Shareholder Nonrecourse Debt Minimum Gain Chargeback. If there is a net
decrease in Shareholder Nonrecourse Debt Minimum Gain during any Fiscal Year,
each Shareholder shall be allocated items of Fund income and gain for such
Fiscal Year or other period (and, if necessary, for subsequent Fiscal Years) in
proportion to, and to the extent of, an amount equal to such Shareholder's share
of the net decrease in Shareholder Nonrecourse Debt Minimum Gain during such
Fiscal Year, determined in a manner consistent with the provisions of Treasury
Regulations Section 1.704-2(g)(2). The requirement set forth in the preceding
sentence shall be subject to the exceptions and limitations referred to in
Treasury Regulations Section 1.704-2(i)(4). This Section 6.5(d) is intended to
comply with the minimum gain chargeback requirement contained in Treasury
Regulations Section 1.704-2(i)(4), and shall be construed so as to meet the
requirements of said Treasury Regulation.
(e) Shareholder Nonrecourse Deductions. If one or more Shareholders bear
the economic risk of loss (within the meaning of Section 1.752-2 of the Treasury
Regulations) with respect to any Shareholder Nonrecourse Debt, Shareholder
Nonrecourse Deductions attributable thereto shall be allocated among such
Shareholders in accordance with the ratios in which such Shareholders share the
economic risk of loss for such Shareholder Nonrecourse Debt.
(f) Limitation on Loss Allocations. With respect to any Shareholder,
notwithstanding the provisions of Section 6.2, the amount of Loss for any Fiscal
Year that would otherwise be allocated to a Shareholder under Section 6.2 shall
not be so allocated if to do so would cause or increase a deficit balance in
such Shareholder's Capital Account in excess of such Shareholder's share of Fund
Minimum Gain (including such Shareholder's share of Shareholder Nonrecourse Debt
Minimum Gain) plus his exposure with respect to debt or other obligations or
liabilities of the Fund as of the last day of such Fiscal Year. Any Loss in
excess of the limitation set forth in the preceding sentence shall be allocated
among the Shareholders, pro rata, to the extent each, respectively, is liable or
exposed with respect to any debt or other obligations or liabilities of the
Fund. For purposes of this Section 6.5(f), a Shareholder's Capital Account shall
be computed as of the last day of such Fiscal Year in the manner provided in
Section 6.1, but shall be reduced for the items described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
6.6 Curative Allocations. The allocations set forth in Section 6.5 (the
"Regulatory Allocations") are intended to comply with certain requirements of
Treasury Regulations Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations
may not be consistent with the manner in which the Shareholders intend to
allocate Profit and Loss or make Fund distributions. Accordingly,
notwithstanding the other provisions of this Article 6, but subject to the
Regulatory Allocations, the Manager is hereby directed to reallocate items of
income, gain, deduction and loss among the Shareholders so as to eliminate the
effect of the Regulatory Allocations and thereby to cause the respective Capital
Accounts of the Shareholders to be in the amounts (or as close thereto as
possible) they would have been if Profit and Loss (and such other items of
income, gain, deduction and loss) had been allocated without reference to the
Regulatory Allocations. In general, the Manager anticipates that this will be
accomplished by specially allocating other Profit and Loss (and such other items
of income, gain, deduction and loss) among the Shareholders so that the net
amount of the Regulatory Allocations and such special allocations to each such
Shareholder is zero. The Manager shall have discretion to accomplish this result
in any reasonable manner. In addition, if in any Fiscal Year there is a decrease
21
in Fund Minimum Gain, or in Shareholder Nonrecourse Debt Minimum Gain, and
application of the minimum gain chargeback requirements contained in Section
6.5(c) or Section 6.5(d) would cause a distortion in the economic arrangement
among the Shareholders, the Manager may, if the Manager does not expect that the
Fund will have sufficient other income to correct such distortion, request the
Internal Revenue Service to waive either or both of such minimum gain chargeback
requirements. If such request is granted, this Agreement shall be applied in
such instance as if it did not contain such minimum gain chargeback
requirements.
6.7 Special Allocation of Profit. In the event that there is distributed to
a Shareholder a Special Precontribution Gain Distribution pursuant to Section
8.1(c), there shall be specially allocated to such Shareholder prior to any
other allocations hereunder other than those pursuant to Section 6.5 and 6.6 an
amount of Profit equal to the sum of the amounts described in subclauses (A) and
(B) of clause (i) of Section 8.1(c) divided by one minus the effective
percentage used to calculate that portion of the Special Precontribution Gain
Distribution referred to in clause (ii) of Section 8.1(c).
6.8 Partnership Classification; Federal Tax Elections.
(a) Partnership Classification. It is intended that the Fund will be
treated as a partnership for federal income tax purposes and for purposes of the
tax laws of the Commonwealth of Massachusetts and other jurisdictions. Each
Shareholder agrees to take any action requested by the Manager that may be
desirable to ensure that the Fund is so treated. Neither the Fund nor any
Shareholder shall not take any action that is inconsistent with such treatment.
The Manager shall cause the preparation and timely filing of all Fund tax
returns and shall file all other writings required by any tax authority having
jurisdiction to require such filings.
(b) Federal Tax Elections. The Fund, in the sole discretion of the Manager,
may make or revoke elections for federal tax purposes as follows:
(i) In the case of a distribution of property within the meaning of
Section 734 of the Code, the Fund, in the absolute discretion of the
Manager, may elect pursuant to Section 754 of the Code (or corresponding
provisions of future law) and pursuant to similar provisions of applicable
state or local income tax laws, to adjust the basis of the remaining assets
of the Fund; and
(ii) All other elections required or permitted to be made by the Fund
under the Code shall be made by the Manager in such manner as will, in the
opinion of the Manager, be in the best interest of the Fund and
advantageous to individual Shareholders who are (1) married and filing
joint federal income tax returns and (2) in the maximum marginal federal
income tax bracket. (In reaching such opinion the Manager shall not be
required to poll or survey the Shareholders.) The Fund shall, to the extent
permitted by applicable law and regulations, elect to treat as an expense
for federal income tax purposes all amounts incurred by it for state and
local taxes, interest and other charges that may, in accordance with
applicable law and regulations, be considered as expenses.
6.9 Tax Matters Partner.
(a) The Manager shall be the Tax Matters Partner pursuant to Section 6231
of the Code. The Tax Matters Partner shall have the following duties:
(i) to the extent and in the manner required by applicable law and
regulations, to furnish the name, address, profits interest and taxpayer
identification number of each Shareholder, and such other information as
may be required by such law or regulations, to the Secretary of the
Treasury or his delegate (the "Secretary"); and
22
(ii) to the extent and in the manner required by applicable law and
regulations, to keep each Shareholder informed of administrative and
judicial proceedings for the adjustment at the Fund level of any item
required to be taken into account by a Shareholder for federal income tax
purposes (such administrative and judicial proceedings referred to
hereinafter as "judicial review").
(b) The Fund shall indemnify and reimburse the Tax Matters Partner (solely
out of Fund assets) for any and all expenses, including, without limitation,
legal and accounting fees, claims, liabilities, losses and damages incurred in
connection with any judicial or administrative review with respect to the tax
liability of the Shareholders. The payment of all such expenses shall be made
before any distributions are made. No Manager (nor any affiliate or associate
thereof) shall have any obligation to provide funds for such purpose. The taking
of any action and the incurring of any expense by the Tax Matters Partner in
connection with any such proceeding, except to the extent required by law, is a
matter in the sole discretion of the Tax Matters Partner.
(c) The Tax Matters Partner is hereby authorized, but not required:
(i) to enter into any settlement agreement with the Service with
respect to any tax audit or judicial review, in which agreement the Tax
Matters Partner may expressly state that such agreement shall bind the Fund
and the Shareholders, except that such settlement agreement shall not bind
any person or entity who is entitled to file and who (within the time
prescribed pursuant to the Code and regulations thereunder) files a
statement with the Service stating that the Tax Matters Partner shall not
have the authority to enter into a settlement agreement on behalf of such
person or entity;
(ii) in the event that a notice of a final administrative adjustment
at the Fund level of any item required to be taken into account by a
Shareholder for tax purposes (a "final adjustment") is mailed to the Tax
Matters Partner, to seek judicial review of such final adjustment,
including the filing of a petition for readjustment with the Tax Court, the
District Court of the United States for the district in which the Fund's
principal place of business is located or the United States Claims Court;
(iii) to intervene in any action brought by or on behalf of the Fund
or a Shareholder for judicial review of a final adjustment;
(iv) to file a request for an administrative adjustment with the
Service at any time and, if any part of such request is not allowed by the
Service, to file a petition for judicial review with respect to such
request;
(v) to enter into an agreement with the Service to extend the period
for assessing any tax which is attributable to any Fund item required to be
taken into account by a Shareholder for tax purposes, or an item affected
by any such item; and
(vi) to take any other action on behalf of the Fund or a Shareholder
in connection with any administrative or judicial tax proceeding to the
extent permitted by applicable law or regulations.
ARTICLE 7
VALUATION OF FUND ASSETS
Whenever valuation of the Fund's net worth or of any particular asset of
the Fund is required, unless otherwise expressly provided in this Agreement, the
Manager shall authorize and empower the Investment Adviser to make a good faith
determination of the value of all non-cash assets of the Fund (if net worth is
to be evaluated) or of such particular asset.
23
(a) The value of the Fund's shares of the Company shall reflect the value
of the Company's proportionate interest in the Portfolio.
(b) The Qualifying Assets will be valued as determined in good faith by the
Investment Adviser, after consideration of all relevant factors, data and
information including, with respect to the Qualifying Assets that are preferred
equity interests in operating partnerships affiliated with publicly-traded real
estate investment trusts, information from dealers and similar firms with
knowledge of such issues, and the prices of comparable preferred equity
securities and other fixed or adjustable-rate instruments having similar
investment characteristics. Holdings of traded physical commodities will be
valued at their current values based on closing sale prices (or the mean between
the closing bid and asked prices on days when no sales occur) in the principal
market on which such commodities are normally traded.
(c) Over-the-counter options, interest rate and equity swaps, and other
derivatives for which prices are not readily available will be valued as
determined in good faith by the Investment Adviser. In determining such value,
the Investment Adviser may consider, among other things, dealer and counterparty
quotes and pricing models.
(d) Investment Property will be valued as determined in good faith by the
Investment Adviser.
Subject to the foregoing provisions of this Article 7, any determination of
the Fund's net worth or the value of a particular asset shall be made in
accordance with generally accepted accounting principles as applicable to the
Fund; provided, however, that no value shall be assigned to the Fund name and
goodwill or to the office records, files, statistical data or any similar
intangible assets of the Fund not normally reflected in the Fund's accounting
records; and provided, further, that liabilities of the Fund shall be taken at
the amounts at which they are carried on the books of the Fund, reasonable
provision to be made, however, for contingent or other liabilities not reflected
on such books and, in the case of the liquidation of the Fund, for the expenses
(to be borne by the Fund) of the liquidation and winding up of the Fund's
affairs. Promptly after completing any such determination of value with respect
to the Fund's portfolio in connection with a distribution of assets in kind on
the termination of the Fund, the Manager shall give written notice of such
determination to all Shareholders.
ARTICLE 8
DISTRIBUTIONS
8.1 Distributions of Current Income; Distributions of Capital Gain;
Reinvestment.
(a) On the last business day of each Fiscal Year or shortly thereafter, the
Fund shall distribute an amount approximately equal to the Net Current Income of
the Fund for the Fiscal Year, if any, to the Shareholders. Such distributions
shall be made to the Shareholders in proportion to the number of Shares owned by
each. The term "Net Current Income" shall mean the net income accrued by or
allocated to the Fund (other than net income attributable to gains described in
Section 8.1(b) and Section 8.1(c) of this Agreement) for the Fiscal Year ended,
determined in accordance with generally accepted accounting principles.
(b) On the last business day of each Fiscal Year or shortly thereafter, the
Fund shall distribute an amount approximately equal to (i) 22% (which percentage
may be adjusted to reflect changes in the effective maximum marginal individual
federal tax rate for long-term capital gains) of net realized capital gains that
are long-term gains, if any, other than net realized long-term capital gains
that are Precontribution Gains plus (ii) 30% (which percentage may be adjusted
to reflect changes in the effective maximum marginal individual federal tax rate
for mid-term capital gains) of net realized capital gain that are mid-term
gains, if any, other than net realized mid-term capital gains that are
Precontribution Gains. Distributions with respect to net realized gains other
than Precontribution Gains shall be made to the Shareholders in proportion to
the number of Shares held by each.
24
(c) On the last business day of each year or shortly thereafter, the Fund
shall distribute (i) an amount approximately equal to (A) 22% (which percentage
may be adjusted to reflect changes in the effective maximum marginal individual
federal tax rate for long-term capital gains) of the realized Precontribution
Gains allocated to any Shareholder that are long-term gains other than realized
long-term Precontribution Gains allocated to a Shareholder with respect to a
Tender Security contributed by such Shareholder plus (B) 30% (which percentage
may be adjusted to reflect changes in the effective maximum marginal individual
federal tax rate for mid-term capital gains) of the net realized Precontribution
Gains allocated to any Shareholder that are mid-term gains other than realized
mid-term Precontribution Gains allocated to a Shareholder with respect to a
Tender Security contributed by such Shareholder, plus (ii) an amount
approximately equal to 22% (which percentage may be adjusted to reflect any
material ordinary income or mid-term gain component or changes in the effective
maximum marginal individual federal tax rate for long-term capital gains) of the
amount of Profit specially allocated to the Shareholder pursuant to the
provisions of Section 6.7 (any such distribution under (i) and (ii) is referred
to herein as a "Special Precontribution Gain Distribution"). Any Special
Precontribution Gain Distributions shall be made solely to the Shareholders to
which such realized Precontribution Gains have been allocated and, among such
Shareholders, will be made in proportion to the allocation of such realized
Precontribution Gains. No distribution shall be made to a Shareholder with
respect to Precontribution Gain realized on a Tender Security contributed by
such Shareholder.
(d) If a Shareholder has elected in the letter of transmittal heretofore
executed by each Shareholder to have such Shareholder's portion of any
distributions from the Fund reinvested in the Fund instead of being distributed
to such Shareholder in cash, the reinvested amount of such distributions shall
be applied to the purchase of Shares (including fractional Shares) at the Net
Asset Value Per Share as of the date of distribution. The number of Shares owned
by a Shareholder after a distribution under this Section 8.1 shall equal the
number of Shares owned by such Shareholder immediately prior to such
distribution plus the number of Shares purchased as provided above. Unless and
until the Shareholder having made such election notifies the Manager of said
Shareholder's decision to terminate such election (which notice must be received
at least five days prior to the date of a distribution to be effective with
respect to such distribution), such election shall be deemed to be a continuing
election to have future distributions reinvested. Any such termination notice
which is received within 5 days prior to the end of a Fiscal Year shall
initially apply to the next Fiscal Year unless the Manager in its sole
discretion determines otherwise. All notices given pursuant to this Section 8.1
shall be in such form or forms as the Manager may from time to time specify.
Anything herein to the contrary notwithstanding, the Manager may in its sole
discretion reduce or suspend distributions under Section 8.1 (a) or (b), or
both, or limit or suspend the right of any or all Shareholders to reinvest
distributions, in each case if the Manager determines that such action is in the
best interest of the Fund.
8.2 Other Distributions. The Fund may, from time to time, in the Manager's
sole discretion, make distributions (whether from income, gains, capital or any
other source whatsoever) of Fund assets to the Shareholders in whole or in part
in marketable equity securities or cash; provided that the Manager shall not
distribute any marketable equity securities to a Shareholder unless such
distribution will not give rise to the recognition of capital gain by any
Shareholder. Such distributions shall be made pro rata to the Shareholders in
proportion to the number of Shares owned by each. Any marketable equity
securities so distributed shall be subject to the requirements of state and
federal securities laws. In the event of a distribution of marketable equity
securities, the value of such distribution (other than for Capital Account
purposes) shall be the value of such marketable equity securities as of the date
of such distribution, determined pursuant to the provisions of Article 7. For
purposes of such distribution, each class of marketable equity securities of any
issuer shall be considered a different asset, with each portion of such class
having a different adjusted tax basis for federal income tax purposes being
considered a different asset.
8.3 No Liability for Distributions. No Shareholder or Manager shall be
liable to the Fund for any distribution made pursuant to this Article 8, and all
such distributions shall be deemed to have been made in full compliance with
this Agreement for purposes of Section 35 of the Act.
25
ARTICLE 9
DISSOLUTION AND TERMINATION OF FUND
9.1 Dissolution.
(a) Except as otherwise provided in Section 9.1(b) the Fund shall be
dissolved upon the first to occur of the following events:
(i) the election to dissolve the Fund by the Manager with the Consent
of the Shareholders;
(ii) the election of the Manager to dissolve the Fund at such time as
the net asset value of the Fund is less than $25,000,000;
(iii) the Fund disposes of all or substantially all of its assets;
(iv) the filing with the records of the Fund of written consents to
such dissolution executed by all of the Shareholders;
(v) whenever there exists less than two Shareholders of the Fund; and
(vi) any other act or event that causes a dissolution of the Fund
under the Act.
(b) Upon the occurrence of any other act or event as provided in Section
9.1(a)(vi), the Fund shall dissolve unless those Shareholders holding at least a
majority of the outstanding Shares consent to the designation and admission of a
successor Manager (if necessary) and the election to continue the Fund as a
limited liability company (or, if necessary, as a successor limited liability
company), upon substantially the same terms and conditions as are set forth in
this Agreement or as otherwise agreed in writing. The election to continue the
Fund as a limited liability company (or, if necessary, as a successor limited
liability company) shall be exercisable only within 120 days after the
occurrence of the act or event referred to in Section 9.1(a)(vi).
9.2 Death or Termination of a Shareholder. The death, insanity,
incompetence, withdrawal, retirement, resignation, expulsion, bankruptcy,
insolvency, dissolution or termination of a Shareholder, or the occurrence of
any other event which terminates the membership of a member in the Fund within
the meaning of the Act shall not result in the termination or dissolution of the
Fund.
9.3 Liquidation of Fund Assets upon Dissolution.
(a) Upon dissolution, the Fund business shall be liquidated in an orderly
manner in accordance with the provisions of this Section 9.3. The Manager shall
be the liquidator to wind up the affairs of the Fund pursuant to this Agreement;
provided, however, that if there shall be no Manager, the Shareholders (acting
by Consent of the Shareholders) may appoint one or more liquidators to act as
the liquidator(s) in effecting such liquidation. The liquidator(s) are
authorized to sell, exchange or otherwise dispose of the assets of the Fund, or
to distribute Fund assets in kind, as the liquidator(s) shall determine to be in
the best interest of the Shareholders. The liquidator(s) are also authorized to
hold any funds required to be held in escrow pursuant to the provisions of any
agreement for the sale of investments which require such an escrow. Such
escrowed funds shall be deposited in an interest bearing account. The reasonable
out-of-pocket expenses incurred by the liquidator(s) in connection with winding
up the Fund, all other liabilities or losses of the Fund or the liquidator(s)
incurred in accordance with the terms of this Agreement and reasonable
compensation for the services of the liquidator(s) shall be borne by the Fund;
provided, however, that if the amount reserved to cover contingent liabilities
and the expenses of liquidation and winding up the affairs of the Fund
(including compensation for the services of the liquidator(s)) shall be in
excess of the amount required, or shall be insufficient to fund all such
26
liabilities and expenses, then the excess or deficiency, as the case may be,
shall be allocated among the Capital Accounts of the Shareholders in accordance
with paragraph (iii) of Section 9.3(b) below. Subject to the provisions of the
preceding sentence, the liquidator(s) shall not be liable to any Shareholder or
the Fund for any loss attributable to any act or omission of the liquidator(s)
taken in good faith in connection with the winding up of the Fund and the
distribution of Fund assets, provided that nothing in this Section 9.3(a) shall
be deemed to protect or exonerate from liability to any Shareholder or to the
Fund any liquidator(s) who shall have been finally adjudicated by a court or
other body before which the proceeding was brought not to have acted in good
faith in the reasonable belief that his action was in the best interest of the
Fund and to be liable to the Shareholder or the Fund by reason thereof. The
liquidator(s) may consult with counsel and accountants with respect to winding
up the Fund and distributing its assets and shall be justified and protected in
acting or omitting to act in accordance with the advice or opinion of such
counsel or accountants, provided that the liquidator(s) shall have used
reasonable care in selecting such counsel or accountants. Except as otherwise
set forth in this Agreement, the Manager or liquidator(s) shall not be liable
for the return or repayment of the Capital Contributions of any Shareholders.
(b) Upon termination of the Fund, its liabilities and obligations to
creditors (including creditors who are Shareholders) shall be paid from cash on
hand or from the liquidation of Fund properties, and, after payment or provision
for payment of all debts of the Fund, the following provisions shall govern with
respect to the distribution of the remaining assets to the Shareholders:
(i) The liquidator(s) shall determine which of the assets of the Fund
shall be liquidated and which shall be distributed to the Shareholders in
kind.
(ii) After the liquidation of all Fund assets other than assets which
the liquidator(s) shall have determined to distribute in kind, the Fund net
worth shall be determined. For purposes of determination of net worth all
values shall be established in accordance with the provisions of Article 7
as of the valuation date.
(iii) All Fund assets remaining after provision for liquidation
expenses (including the excess or deficiency, referred to in Section
9.3(a), of the amount reserved to cover contingent liabilities and the
expenses of liquidation and winding up) shall then be distributed to the
Shareholders in cash or in kind in proportion to the positive balances in
their respective Capital Accounts. All Shareholders shall be furnished a
written report accounting for the manner of all such distributions, and all
distributions in cash or in kind shall be made pro-rata with each class of
securities of any issuer being considered a different asset.
ARTICLE 10
REDEMPTION OF SHARES
10.1 Redemption by Shareholders and the Fund.
(a) Each Shareholder may withdraw capital from the Fund by redeeming all or
any portion of such Shareholder's Shares on any business day. The redemption
price will be based on the Net Asset Value per Share next determined after
receipt by the Fund of a written redemption request executed by the Shareholder
or his legal representative, together with any documentation the Fund may
require to effect the redemption. Shares redeemed within three years of issuance
will be subject to a redemption fee payable to BMR and equal to 1% of the
aggregate net asset value of the Shares redeemed, except that no redemption fee
will be imposed on (i) Shares acquired through the reinvestment of distributions
made by the Fund, (ii) Shares redeemed in connection with a tender offer or
other extraordinary corporate event involving securities contributed by the
redeeming Shareholder, (iii) Shares redeemed following the death of all of the
27
during any 12-month period by a Shareholder who, during such period, redeems
less than 8% of the total number of Shares held by such Shareholder at the
beginning of such period, or (v) Shares redeemed by the Manager. The redemption
fee, if applicable, will be deducted from the redemption proceeds and paid to
BMR in cash by the Fund on behalf of the redeeming Shareholder. The Fund may
redeem shares of the Company for cash to provide for such payment.
(b) The Fund intends to satisfy redemption requests principally by
distributing securities drawn by the Company from the Portfolio, but may also
distribute cash. If specified by the redeeming Shareholder, the Fund will
satisfy a redemption request by distributing securities held in the Portfolio at
the time of the redemption that were contributed to the Fund by such
Shareholder. In meeting a shareholder redemption occurring within seven years of
a contribution of securities by the redeeming Shareholder, the Fund will not,
unless requested in writing by the redeeming Shareholder, distribute any
securities other than securities contributed by such Shareholder while retaining
in the Fund, the Company or the Portfolio any securities that were contributed
by such Shareholder during the preceding seven years if the value of the
distributed securities exceeds the redeeming Shareholder's adjusted basis in the
Fund. If requested by a redeeming Shareholder making a redemption of at least $1
million occurring more than seven years after such Shareholder's admission to
the Fund, the Fund will generally provide the redeeming Shareholder with a
Diversified Basket of Securities representing a range of industry groups that is
drawn from the Portfolio and selected by the Investment Adviser in its sole
discretion. The Fund will not provide a redeeming Shareholder with a Diversified
Basket of Securities if such a distribution is expected to cause any other
Shareholder, any investor in the Company or any investor in the Portfolio to
realize taxable gain. No Qualifying Asset will be distributed to satisfy a
redemption request, and any Restricted Security will be distributed only to the
Shareholder which contributed it to the Fund or to such Shareholder's successor
in interest. Except as otherwise provided above in this paragraph (b), the
allocation of the redemption between securities and cash and the selection of
securities to be distributed will be at the sole discretion of the Investment
Adviser. Distributed securities may include securities contributed by the
redeeming Shareholder as well as other readily marketable securities held in the
Portfolio.
(c) Notwithstanding anything in this Agreement to the contrary, the Fund
may delay or suspend redemption of Shares if such delay or suspension is
required under a loan agreement or other contract of the Fund. The right of a
Shareholder to redeem can be suspended and the payment of the redemption price
deferred when the New York Stock Exchange is closed, during periods when trading
on said Exchange is restricted or during any emergency as determined by the
Securities and Exchange Commission, during any emergency which makes it
impracticable for the Fund, Company or Portfolio to dispose of or value its
assets, or during any other period permitted by order of the Securities and
Exchange Commission for the protection of investors. Redemption requests that
are timely made but not yet honored due to delay or suspension in accordance
with this Section 10.1(c) will be honored in the order in which they are
submitted (on a pro-rata basis with respect to requests made as of the same date
in proportion to the Shareholders' respective withdrawal requests). Once the
Fund has received a written request for redemption of Shares, such request
cannot be revoked without the consent of the Manager.
(d) The Fund may compulsorily redeem all or any portion of the Shares of a
Shareholder if the Manager has determined that such redemption is necessary or
appropriate to avoid registration of the Fund under the 1940 Act or the
Securities Exchange Act of 1934, as amended, or to avoid adverse tax or other
consequences to the Fund or the Shareholders. Each Shareholder, by acquiring
Shares of the Fund, agrees that he will execute and deliver such instruments and
documents as the Manager may require to effect such compulsory redemption. No
redemption fee will be payable in the event of a compulsory redemption.
28
(e) Each Shareholder, by acquiring Shares of the Fund, acknowledges and
agrees that the Investment Adviser has the sole and exclusive right and power
(subject to the Shareholder's right described in Section 10.1(b) to specify that
the Fund service such Shareholder's redemption request by distributing
securities held in the Portfolio at the time of the redemption that were
contributed to the Fund by such Shareholder) to select the securities
distributed to service the redemption of Shares, and that such Shareholder upon
redemption of such Shareholder's Shares may be compelled to accept a
distribution of an asset in kind from the Fund notwithstanding the fact that the
percentage of the asset distributed to such Shareholder exceeds a percentage of
the asset which is equal to the percentage in which such Shareholder would share
in distributions from the Fund pursuant to Article 8 hereof.
10.2 Effecting Redemptions; Time and Method of Distribution.
(a) Any Shareholder or his legal representative who shall be entitled
pursuant to Section 10.1(a) or 10.3 hereof, or be required pursuant to Section
10.1(d) hereof, to withdraw capital from the Fund shall be entitled to receive
the proceeds of his redeemed Shares (whether in securities or cash or both), net
of any applicable redemption fee, ordinarily not more than five business day
after
(i) the Manager receives the redemption request made pursuant to
Section 10.1(a) or election made pursuant to Section 10.3, or
(ii) a compulsory redemption is effected pursuant to Section 10.1(d),
or as soon as practicable after all necessary registration and transfer
documentation has been executed if payment is to be made in securities. No
interest shall accrue or be paid with respect to amounts of withdrawn
capital due to Shareholders.
(b) The withdrawal of capital by a Shareholder pursuant to Section 10.1(a)
shall be accomplished by redeeming Shares of such Shareholder in accordance with
Section 10.1 on the business day on which the Manager receives the written
withdrawal request, which may be provided by facsimile transmission. On any
redemption of Shares under this Article 10, the securities to be delivered in
distribution to the withdrawing Shareholder or such Shareholder's representative
shall be designated by notice to such Shareholder or such representative within
five business days from the date of the determination of the value of the
redeemed Shares. The value of securities being distributed will be determined in
accordance with the provisions of Article 7. Such Shareholder or such
representative shall be entitled to such increases and shall bear such decreases
in value of the designated securities as may occur after the date of
designation. Any distribution of securities shall in any event be subject to
compliance with federal and state securities laws.
(c) The number of Shares owned by a Shareholder after a withdrawal of
capital by such Shareholder shall equal the number of Shares owned by such
Shareholder immediately prior to such withdrawal minus the number of Shares (or
fractions thereof) redeemed as provided herein. In the event of the redemption
of all of the Shares of any Shareholder, such Shareholder shall, immediately and
without further action by such Shareholder or the Fund, be deemed to have
resigned from the Fund within the meaning of the Act and shall thereupon cease
to be a member and Shareholder of the Fund. Except as otherwise provided in this
Article 10, a Shareholder shall not have any right to resign as a member and
Shareholder of the Fund.
10.3 Tender Offers. In the event of a tender offer or other extraordinary
corporate event with respect to a security held by the Portfolio which was
contributed by a Shareholder to the Fund (a "Tender Security"), the Manager or
Investment Adviser will, to the extent practicable, notify the Shareholder who
contributed the security of the pending tender offer prior to the sale or tender
of the security by the Portfolio. Upon such notice, the Shareholder can elect to
redeem some or all of such Shareholder's Shares. If the Shareholder elects to
29
redeem, such Shareholder's Shares will be redeemed to the extent requested by
distributing to such Shareholder shares of the Tender Security (up to the number
of shares thereof contributed by the redeeming Shareholder), plus other
securities and/or cash as required to complete the redemption. No redemption fee
will be payable in connection with any such redemption.
10.4 Redemption Practices May Be Changed. The redemption practices of the
Fund referred to in this Agreement may be altered or changed to reflect,
accommodate or conform to changes in the Code, Treasury Regulations and
administrative interpretations relating to the federal income tax law.
ARTICLE 11
RECORDS AND REPORTS
11.1 Books and Records. The Manager shall maintain or cause to be
maintained books of account, kept on the accrual method of accounting, in which
shall be entered fully and accurately the transactions of the Fund. The Manager
may reflect any action taken by it on behalf of the Fund in any book, record or
other document as the Manager may deem appropriate. The documents referred to in
Section 9 of the Act shall be kept at the principal office of the Fund in
Boston, Massachusetts, and such documents shall be subject to inspection and
copying at the reasonable request and at the expense of any Shareholder during
ordinary business hours. Subject to such reasonable standards as may be
determined by the Manager from time to time, including without limitation
standards governing what information and documents are to be furnished at what
time and location and at whose expense, a Shareholder may obtain from the Fund
upon reasonable demand in writing (but only for a purpose stated in such demand
which purpose must be reasonably related to such Shareholder's interest in the
Fund) the information and documents referred to in Section 10 of the Act.
11.2 Financial Reports. Semi-annual unaudited financial statements
reporting on the financial condition of the Fund's business and the results of
its operations shall be furnished to each of the Shareholders. An annual audit
of the Fund's financial statements shall be made by the Accountant and a copy of
the report of such audit, together with the financial statements (consisting of
a balance sheet, a statement of operations, a statement of cash flows, a list of
the Fund's investments and related notes) shall be furnished to all Shareholders
within a reasonable period after the close of each Fiscal Year. On or about
March 15 of each year, a report shall also be furnished to each Shareholder
indicating such Shareholder's share of the income or loss of the Fund for the
preceding Fiscal Year for federal income tax purposes. The Manager shall cause
to be delivered to each Shareholder a Schedule K-1 with respect to each Fiscal
Year. The Manager shall also cause to be delivered to each Shareholder upon
request such other information as shall be reasonably requested by such
Shareholder for purposes of filing any tax returns, and the Manager shall from
time to time furnish such other information as any Shareholder shall reasonably
request for the purpose of enabling such Shareholder to comply with any
reporting or filing requirements imposed by any statute, rule, regulation or
otherwise by any governmental agency or authority.
ARTICLE 12
AMENDMENTS
12.1 Amendments of this Agreement. This Agreement may be amended or
restated only by the Manager. Any such amendment or restatement shall be made by
an instrument in writing signed by or on behalf of the Manager. No such
amendment or restatement shall in any material respect increase, add to or alter
any financial obligation of any Shareholder. Except as otherwise specifically
required by Section 2.3, no consent or approval of the Shareholders is required
to effect any such amendment or restatement.
30
12.2 Amendment of Certificate. The Certificate may be amended or restated
only by the Manager. The Manager shall prepare and file, in accordance with the
Act, any certificate of amendment, certificate of cancellation or certificate of
consolidation or merger, and each of such certificates may be signed solely by
the Manager.
12.3 Reorganization. Notwithstanding anything else herein, the Manager, in
order to change the form of organization of the Fund, may, without Shareholder
approval or consent, cause the Fund to consolidate or merge with or into one or
more trusts, partnerships, limited liability companies, associations or other
entities so long as the surviving or resulting entity is an entity intended to
be classified as a partnership for federal income tax purposes.
Pursuant to and in accordance with the provisions of Section 61(d) of the
Act, and notwithstanding anything else herein, an agreement of consolidation or
merger approved by the Manager in accordance with this Section 12.3 may effect
any amendment to this Agreement or effect the adoption of a new operating
agreement of the Fund if the Fund is the surviving or resulting entity in the
consolidation or merger.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification of Covered Persons.
(a) Each Person who was or is made a party to or is threatened to be made a
party to or is otherwise involved in any action, suit, arbitration or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that such Person is or was a
Covered Person or is or was serving at the request of the Fund as a director,
trustee, officer, employee or agent of another Person in which the Fund has or
had any interest as a shareholder, creditor or otherwise (hereinafter an
"indemnitee"), whether the basis for such proceeding is alleged action in an
official capacity as a Covered Person or as a director, trustee, officer,
employee or agent of another Person or in any other capacity while serving as
such, shall be indemnified and held harmless by the Fund from and against any
and all demands, claims, expenses, liabilities and losses whatsoever (including,
without limitation, attorneys' fees, judgments, fines, penalties and amounts
paid in settlement) incurred or suffered by such indemnitee in connection
therewith; provided that no indemnification shall be provided under this Section
13.1(a) for any indemnitee with respect to any matter as to which it shall
ultimately be determined by final judicial decision from which there is no
further right of appeal (hereinafter a "final adjudication") that such
indemnitee did not act in good faith in the reasonable belief that his action
was in the best interest of the Fund and therefore is not entitled to
indemnification hereunder. To the extent that the Act is hereafter amended to
permit broader or more complete indemnification rights to any such indemnitee,
then this Section 13.1(a) shall be deemed and construed to permit such broader
or more complete indemnification rights.
(b) The indemnification rights conferred in Section 13.1(a) shall include
the right to be paid by the Fund all expenses (including, without limitation,
attorneys' fees) incurred in defending any such proceeding in advance of its
final disposition upon receipt of an undertaking by such indemnitee to repay all
amounts so advanced if a final adjudication shall have determined that such
indemnitee is not entitled to indemnification hereunder. The Fund shall be
entitled to accept such undertaking without reference to the financial ability
of such indemnitee to make repayment. The rights to indemnification and to the
advancement of expenses conferred in Section 13.1(a) and 13.1(b) shall be
contract rights and such rights shall continue as to any indemnitee who has
ceased to be a Covered Person (or who has ceased to serve at the request of the
Fund as a director, trustee, officer, employee or agent of another Person) and
shall inure to the benefit of the indemnitee's heirs, executors, administrators,
successors and assigns.
31
(c) In any action brought by an indemnitee to enforce a right to
indemnification or to an advancement of expenses hereunder, or brought by the
Fund to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the indemnitee is not entitled to be
indemnified, or to such advancement of expenses, under this Section 13.1 or
otherwise shall be on the Fund.
(d) The rights to indemnification and to the advancement of expenses
conferred in this Section 13.1 shall not be exclusive of any other right which
any Person may have or hereafter acquire under any statute, amendment or
restatement of this Agreement, the By-Laws, contract or otherwise.
(e) The Fund may maintain insurance, at its expense, to protect itself, the
Manager, the Investment Adviser, any indemnitee, the Shareholders or any other
Person against any claim, expense, liability or loss, whether or not the Fund
would have the power to indemnify any such Person against such claim, expense,
liability or loss under applicable law.
13.2 Merged Persons. For the purposes of this Article 13 references to "the
Fund" include any constituent Person (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power to indemnify an indemnitee as well
as the resulting or surviving Person; so that any Person who is or was a Covered
Person of such a constituent Person or is or was serving at the request of such
a constituent Person as a trustee, director, officer, employee or agent of
another Person shall stand in the same position under the provisions of this
Article 13 with respect to the resulting or surviving Person as he would have
with respect to such a constituent Person if its separate existence had
continued.
13.3 Shareholders. Notwithstanding the limitation on a Shareholder's
liability set forth in Section 5.2 of this Agreement, in case any Shareholder or
former Shareholder shall be held to be liable by reason of his or her being or
having been a Shareholder and not because of his or her acts or omissions or for
some other reason, the Shareholder or former Shareholder (or his or her heirs,
executors, administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets of the Fund to be indemnified against all losses and
expenses arising from such liability, provided that no indemnification shall be
granted by the Fund in violation of applicable law. Upon request, the Fund shall
cause its counsel to assume the defense of any claim which, if successful, would
result in an obligation of the Fund to indemnify the Shareholder as aforesaid.
ARTICLE 14
POWER OF ATTORNEY
14.1 Appointment; Power. Each of the Shareholders hereby constitutes and
appoints the Manager and each officer and the trustee of the Manager, and each
of them, as such Shareholder's true and lawful agent and attorney-in-fact with
full power of substitution, and with power to act in such Shareholder's name and
on such Shareholder's behalf, to make, execute and deliver, swear to,
acknowledge, file, and record (i) this Agreement, and amendments hereto or
restatements hereof adopted pursuant to the provisions hereof (including but not
limited to any such amendment required upon the admission of a successor or
substitute Manager or a substitute or additional Shareholder, or the making of
withdrawals of capital, the continuation of this Fund, the formation of a
successor limited liability company or other successor entity or the doing of
any act requiring the amendment of this Agreement under the laws of the
Commonwealth of Massachusetts and any such amendment relating to a successor
limited liability company or other successor entity) and, upon termination of
the Fund (or its successor), a certificate of cancellation, as and if the same
may be required by the laws of the Commonwealth of Massachusetts, (ii) any
certificate of organization or certificate of amendment thereto, or any
certificate of consolidation or merger, required or permitted to be filed on
behalf of the Fund, and any and all certificates as necessary to qualify or
32
continue the Fund as a limited liability company wherein the shareholders or
members thereof have limited liability in the states where the Fund may be
conducting activities, and all instruments which effect a change or modification
of the Fund in accordance with this Agreement, (iii) any certificate of
fictitious name, if required by law, (iv) any documents containing any
investment representations and/or representations relating to the citizenship,
residence and tax status required by any state or federal law or regulation, and
(v) such other certificates or instruments as may be required under the laws of
the Commonwealth of Massachusetts or any other jurisdiction, or by any
regulatory agency, as the Manager may deem necessary or advisable, in each case
having the power to execute such instruments on the Shareholder's behalf,
whether or not such Shareholder consented to or approved such action; provided,
however, that none of the foregoing acts shall increase the liability of any
Shareholder beyond that expressly set forth in this Agreement.
14.2 Nature of Power.
(a) The power of attorney granted in this Article 14 is a special power of
attorney coupled with an interest and is irrevocable, shall survive the death or
incompetency of a Shareholder, may be exercised by the attorney-in-fact by
signature on behalf of any or all Shareholders and shall survive the delivery of
an assignment by a Shareholder of the whole or any portion of such Shareholder's
economic interest in the Fund, except that where the assignee, donee or other
transferee of any such interest has been approved for admission to the Fund as a
substituted Shareholder pursuant to the provisions of Section 4.7, the power of
attorney shall survive the delivery of such assignment solely for the purpose of
enabling the attorney-in-fact to execute, acknowledge, and file any instrument
necessary to effect such substitution.
(b) Each Shareholder hereby gives and grants to such Shareholder's said
attorney under this Power of Attorney full power and authority to do and perform
each and every act and thing whatsoever requisite, necessary or appropriate to
be done in or in connection with this Power of Attorney as fully to all intents
and purposes as such Shareholder might or could do if personally present, hereby
ratifying all that such Shareholder's said attorney shall lawfully do or cause
to be done by virtue of this Power of Attorney.
(c) The existence of this Power of Attorney shall not preclude execution of
any such instrument by such Shareholder individually on any such matter. A
Person dealing with the Fund may conclusively presume and rely on the fact that
any such instrument executed by such agent and attorney-in-fact is authorized,
regular and binding without further inquiry.
ARTICLE 15
GENERAL PROVISIONS
15.1 Notices. Except as specifically provided elsewhere in this Agreement
or in the By-Laws, all notices, requests and statements shall be deemed to have
been properly given if mailed by overnight or first class mail, postage prepaid,
or if sent by prepaid telegram, addressed, if to the Fund or Manager to 00
Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, or to any Shareholder to the
address set forth in the shareholder record of the Fund, or, in any case, to
such other address or addresses as may be specified by written notice.
15.2 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts. The Fund is a
limited liability company formed under, and subject to the provisions of, the
Act. In the event of any conflict or inconsistency between any provisions of
this Agreement and any non-mandatory or default provision of the Act, the
provisions of this Agreement shall control and take precedence.
15.3 Binding Effect. Each Shareholder of the Fund, by complying with the
conditions for becoming a beneficial owner and acquiring Shares, is bound by all
of the terms and provisions of the Agreement and of the By-Laws. The exercise by
the Manager of its rights, powers, privileges, authority and discretion under
this Agreement and the By-Laws under the circumstances then prevailing, shall be
33
binding upon each Shareholder and every other Person interested. This Agreement
and all of the terms and provisions hereof shall be binding upon, and shall
inure to the benefit of the Manager and the Shareholders, and their legal
representatives, heirs, successors and permitted assigns, except as expressly
noted otherwise herein and except that no Shareholder may assign or transfer
such Shareholder's rights or obligations under this Agreement in any manner
other than as provided herein.
15.4 Interest on Capital Accounts; Loans. No interest shall accrue on the
Capital Accounts of the Shareholders. Any Shareholder may make loans to the Fund
on such terms as the lender and the Manager may agree.
15.5 Not a Public Offering. Each of the Shareholders understand that the
sale to such Shareholder of Shares has not been registered under the Securities
Act and that the offering and sale of the Shares was made in reliance upon an
exemption from registration provided under the Securities Act. Each Shareholder
represents and warrants that (a) such Shareholder is an "accredited investor"
within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act, (b) such Shareholder has such knowledge and experience in
financial and business matters that such Shareholder is capable of evaluating
the merits and risks of an investment in the Shares, and (c) such Shareholder,
at each time such Shareholder acquires Shares, is a Qualified Purchaser.
15.6 Investment Representations. Each Shareholder by acquiring Shares
acknowledges that such Shareholder is acquiring such Shares for such
Shareholder's own account for investment purposes and not with a view to the
resale or distribution thereof, or of any part of such Shares, within the
meaning of the Securities Act, and agrees that such Shareholder will not sell or
otherwise dispose of such Shares or any part thereof without registration under
the Securities Act or unless, in the opinion of counsel to the Fund, an
exemption therefrom is available.
15.7 Gender and Number. The masculine gender shall be deemed to denote the
feminine or neuter genders, the singular to denote the plural, and the plural to
denote the singular, where the context so permits.
15.8 Partition. Each Shareholder waives any right to partition or the right
to take any other action which might otherwise be available to such Shareholder
outside of the provisions of this Agreement for the purpose of severing such
Shareholder's relationship with the Fund or such Shareholder's interest in the
property held by the Fund from the interests of the other Shareholders until the
end of the term of both this Fund and any successor entity formed pursuant to
the terms hereof.
15.9 Severability. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflicting of any provision with
any constitution or statute or rule of public policy or for any other reason,
such circumstance shall not have the effect of rendering the provision or
provisions in question invalid, inoperative or unenforceable in any other
jurisdiction or in any other case or circumstance or of rendering any other
provision or provisions herein contained invalid, inoperative or unenforceable
to the extent that such other provision or provisions are not themselves
actually in conflict with such constitution, statute or rule of public policy,
but this Agreement shall be reformed and construed in any such jurisdiction or
case as if such invalid, inoperative or unenforceable provision had never been
contained herein and such provision reformed so that it would be valid,
operative and enforceable to the maximum extent permitted in such jurisdiction
or in such case.
15.10 Agreement, References, Headings. A copy of this Agreement and of each
amendment hereto and of the By-Laws shall be kept at the principal office of the
Fund in Massachusetts where they may be inspected by any Shareholder during
ordinary business hours. Anyone dealing with the Fund may rely on a certificate
by an officer of the Fund as to whether or not any such amendments have been
made and as to other matters in connection with the Fund hereunder; and, with
the same effect as if it were the original, may rely on a copy certified by an
34
officer of the Fund or by an officer of the Manager to be a copy of this
Agreement or of any such amendment thereto. In this Agreement or in any such
amendment references to this Agreement, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this Agreement as amended
or affected by any such amendment. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this Agreement, rather
than the headings, shall control. This Agreement and each amendment or
restatement thereof may be executed in any number of counterparts each of which
shall be deemed an original but all of which taken together shall constitute one
Agreement.
15.11 Authority of Shareholder Entities. Any corporation, partnership,
trust or other entity which is a Shareholder represents and warrants that the
execution, delivery and performance of private placement documents referred to
in the Memorandum by such entity has been duly authorized by all necessary
action and is valid and binding upon such entity. When such documents are
executed by the trustee of any trust, such execution is by the trustee, not
individually, but solely as trustee in the exercise of and under the power and
authority conferred upon and invested in such trustee.
15.12 Status of Successor Trustees as Shareholders. Any successor trustee
or trustees of any trust which is a Shareholder of the Fund shall be entitled to
exercise the same rights and privileges and be subject to the same duties and
obligations as his predecessor trustee. As used in this Agreement, the term
"trustee" shall include any and all such successor trustees.
15.13 No Personal Liability to Others. All Persons extending credit to,
contracting with or having any claim against the Fund shall look only to the
assets of the Fund for payment under or satisfaction or such credit, contract or
claim; and no Shareholder, Manager or officer or employee of the Fund or
trustee, officer or employee of the Manager, whether past, present or future,
shall be personally liable therefor.
15.14 Indulgences. Neither the failure nor any delay on the part of any
party hereto to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
35
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
MANAGER
XXXXX XXXXX MANAGEMENT
By /s/ Xxxxxx Xxxx
----------------------------------
Vice President
ORGANIZATIONAL SHAREHOLDER
XXXXX XXXXX MANAGEMENT
By /s/ Xxxxxx Xxxx
----------------------------------
Vice President
WITHDRAWING ORGANIZATIONAL SHAREHOLDER
BOSTON MANAGEMENT AND RESEARCH
By /s/ Xxxx X. Xxxxxx
----------------------------------
Vice President
SHAREHOLDERS:
THE PERSONS LISTED ON THE RECORDS OF THE FUND AS
SHAREHOLDERS
By XXXXX XXXXX MANAGEMENT, AS MANAGER
AND ATTORNEY-IN-FACT
By /s/ Xxxxxx Xxxx
----------------------------------
Vice President
36
FIRST AMENDMENT TO
AMENDED AND RESTATED OPERATING AGREEMENT
OF BELAIR CAPITAL FUND LLC
This First Amendment to the Amended and Restated Operating Agreement (the
"Agreement") of Belair Capital Fund LLC (the "Fund") dated as of February 6,
1998 is made and effective this 24th day of November, 1998.
A. The following definitions of BRC and Real Estate Assets will be added to
Article 1 of the Agreement and the definitions of Qualifying Assets and
Issue Price Per Share therein will be changed to read as follows:
"BREC" means Belair Real Estate Corporation, a Delaware corporation, 100%
of the common stock of which will be owned by the Fund so long as BREC
holds the Real Estate Assets.
"Qualifying Assets" means assets that are acquired by the Fund or by BREC
in order for the exchange of contributed securities for Shares of the Fund
to be non-taxable, and which are not assets described or referred to in
Section 351(e)(1)(B) of the Code.
"Real Estate Assets" shall mean those Qualifying Assets constituting real
property or interests in real property, including the Partnership
Preference Units referred to in the Memorandum, equity interests in private
partnerships holding real properties subject to long-term leases and equity
interests in other types of private operating partnerships holding income
producing real properties.
B. Paragraph (a) of Section 2.4 of the Agreement is hereby amended to read as
follows:
(a) to acquire shares of the Company (which invests exclusively in the
Portfolio), to acquire securities issued by BRC, to acquire Qualifying
Assets, to engage in the other investment activities referred to in the
Memorandum, and to conduct, operate and carry on the business of a private
limited liability investment company;
C. Section 5.2 of the Agreement is hereby amended to read as follows:
5.2 No Liability for Fund or BRC Obligations. No Shareholder shall be
liable for any debts, obligations or liabilities of the Fund or of BRC;
whether arising in contract, tort or otherwise; provided, however, that
contributions of a Shareholder and his share of any undistributed assets of
the Fund shall be subject to the risks of the operations of the Fund.
D. Paragraph (b) of Article 7 of the Agreement is hereby amended to read as
follows:
(b) The Qualifying Assets will be valued as determined in good faith by the
Investment Adviser, after consideration of all relevant factors, data and
information. Holdings of traded physical commodities will be valued at
their current values based on closing sale prices (or the mean between the
closing bid and asked prices on days when no sales occur) in the principal
market on which such commodities are normally traded.
E. A new paragraph (e) is hereby added to Article 7 of the Agreement as
follows:
(e) The value of the Fund's investments in BRC shall reflect the Fund's
proportionate interest in the value of BRC's assets.
F. Section 6.7 of the Agreement is hereby amended to read as follows:
6.7 Special Allocation of Profit. In the event that there is distributed to
a Shareholder a Special Precontribution Gain Distribution pursuant to
Section 8.1(c), there shall be specially allocated to such Shareholder
prior to any other allocations hereunder other than those pursuant to
Section 6.5 and 6.6 an amount of Profit equal to the amount described in
clause (i) of Section 8.1(c) divided by one minus the effective percentage
used to calculate that portion of the Special Precontribution Gain
Distribution referred to in clause (ii) of Section 8.1(c).
G. Paragraphs (b) and (c) of Section 8.1 of the Agreement are hereby amended
to read as follows:
(b) On the last business day of each Fiscal Year or shortly thereafter, the
Fund shall distribute an amount approximately equal to 22% (which
percentage may be adjusted to reflect changes in the effective maximum
marginal individual federal tax rate for long-term capital gains) of net
realized capital gains that are long-term gains, if any, other than net
realized long-term capital gains that are Precontribution Gains.
Distributions with respect to net realized gains other than Precontribution
Gains shall be made to the Shareholders in proportion to the number of
Shares held by each.
(c) On the last business day of each year or shortly thereafter, the Fund
shall distribute (i) an amount approximately equal to 22% (which percentage
may be adjusted to reflect changes in the effective maximum marginal
individual federal tax rate for long-term capital gains) of the realized
Precontribution Gains allocated to any Shareholder that are long-term gains
other than realized long-term Precontribution Gains allocated to a
Shareholder with respect to a Tender Security contributed by such
Shareholder, plus (ii) an amount approximately equal to 22% (which
percentage may be adjusted to reflect any material ordinary income
component or changes in the effective maximum marginal individual federal
tax rate for long-term capital gains) of the amount of Profit specially
allocated to the Shareholder pursuant to the provisions of Section 6.7 (any
such distribution under (i) and (ii) is referred to herein as a "Special
Precontribution Gain Distribution"). Any Special Precontribution Gain
Distributions shall be made solely to the Shareholders to which such
realized Precontribution Gains have been allocated and, among such
Shareholders, will be made in proportion to the allocation of such realized
Precontribution Gains. No distribution shall be made to a Shareholder with
respect to Precontribution Gain realized on a Tender Security contributed
by such Shareholder.
H. A new paragraph (c) is hereby added to Section 6.8 of the Agreement:
(c) Other Tax Elections. The Fund, in the sole discretion of the Manager,
may make, alter, amend or revoke all elections required or permitted to be
made by the Fund under any applicable state or local tax law or regulation.
2
I. Sections 8.4 and 8.5 are hereby added to Article 8 of the Agreement:
8.4 Treatment of State Taxes Withheld or Paid on Behalf of Shareholders.
All amounts withheld or paid pursuant to any provisions of any state tax
law or regulation and Section 8.5 hereof with respect to any allocation,
payment or distribution to any Shareholder may be paid, solely out of
assets of the Fund, by the Fund or the Manager to the appropriate taxing
authority. Each tax payment (including any estimated tax payment) so made
by the Fund on behalf of a Shareholder shall be treated by the Fund as a
loan by the Fund to such Shareholder bearing interest as provided in
Section 8.5, which loan and all interest accrued thereon shall (until
repaid in full) be satisfied from and hence reduce amounts otherwise
distributable or payable to such Shareholder pursuant to this Agreement.
Whenever amounts are applied to reduce or repay the loan (and accrued
interest thereon) made by the Fund to such Shareholder (whether by way of
withholding from a distribution or redemption proceeds or a compulsory
redemption of Shares), such amounts shall be treated as a cash distribution
or cash payment to such Shareholder and the Capital Account of such
Shareholder shall be reduced.
8.5 State Tax Withholdings and Payments. Each Shareholder who has executed
an election to be included in one or more composite state tax filings
hereby authorizes the Fund to withhold from or pay on behalf of or with
respect to such Shareholder any amount of state taxes that the Manager
determines that the Fund is required or permitted to withhold or pay with
respect to any amount distributable or allocable to such Shareholder
pursuant to this Agreement or with respect to the exercise by such
Shareholder of the redemption right set forth in Article 10, including,
without limitation, any taxes required or permitted to be withheld or paid
by the Fund pursuant to any state tax law or regulation. Each amount paid
on behalf of or with respect to a Shareholder shall constitute a loan by
the Fund to such Shareholder, which loan shall bear interest at the LIBOR
Three Months Rate plus two percentage points (but not higher than the
maximum lawful rate) beginning on the day following the day each such tax
payment is made by the Fund until, and including, the day the loan and all
interest accrued thereon is paid in full and received by the Fund. All
interest shall accrue from day to day and shall be calculated on the basis
of a 360 day year and the number of days elapsed. The calculation of
interest by the Fund shall be binding on the Shareholder. The Fund will
withhold sufficient amounts from each distribution which would otherwise be
made to a Shareholder and apply such amounts to discharge all such loans
made to such Shareholder and interest accrued thereon; if a deficiency
exists after such application, the Fund shall be entitled to redeem such
portion of the Shareholder's Shares as may be necessary to discharge the
unpaid amount of such loans and interest accrued thereon. The Fund shall
also be entitled to withhold sufficient amounts from any redemption
proceeds which would otherwise be paid to a redeeming Shareholder in order
to discharge the unpaid amount of such loans and interest accrued thereon.
Each Shareholder hereby unconditionally and irrevocably grants to the Fund
a first priority security interest in and lien upon such Shareholder's
Shares to secure such Shareholder's unconditional obligation to pay to the
Fund the unpaid amount of such loans and interest accrued thereon (together
with attorney's fees and other costs in enforcing the Fund's rights against
the collateral), and agrees that the Fund may compulsorily redeem such
portion of the Shareholder's Shares as may be necessary to discharge such
obligation. Each Shareholder and each redeeming Shareholder shall take such
actions and execute and deliver such instruments and documents as the Fund
or the Manager shall request in order to effect the compulsory redemption
of the Shareholder's Shares to satisfy the Shareholder's obligations
hereunder or to perfect or enforce the security interest and lien created
pursuant to this Section 8.5.
3
J. Paragraph (d) of Section 10.1 of the Agreement is hereby amended to read as
follows:
(d) The Fund may compulsorily redeem all or any portion of the Shares of a
Shareholder if the Manager has determined that such redemption is necessary
or appropriate to avoid registration of the Fund under the 1940 Act or the
Securities Exchange Act of 1934, as amended, or to avoid adverse tax or
other consequences to the Fund or the Shareholders, or to discharge the
Shareholder's obligations pursuant to Section 8.5. Each Shareholder, by
acquiring Shares of the Fund, agrees that he will execute and deliver such
instruments and documents as the Manager may require to effect such
compulsory redemption. No redemption fee will be payable in the event of a
compulsory redemption.
IN WITNESS WHEREOF, the undersigned Manager of the Fund, acting pursuant to
Section 12.1 of the Agreement, has executed this First Amendment to the
Agreement as of the day and year set forth above.
MANAGER
XXXXX XXXXX MANAGEMENT
By: /s/ Xxxxxx X. Xxxxx, Xx.
--------------------------------
Xxxxxx X. Xxxxx, Xx.
Vice President
4
