EXHIBIT 10.3
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXXX XXXXX GLOBAL RELATIVE VALUE II, LLC
DATED AS OF MAY 1, 2003
TABLE OF CONTENTS
Page
----
ARTICLE I General Provisions..................................................1
Section 1.01 Company Name and Address.................................1
Section 1.02 Fiscal Year..............................................1
Section 1.03 Liability of Members.....................................1
Section 1.04 Purposes of the Company..................................2
Section 1.05 Assignability of Units; Assignment by Managing Member....2
Section 1.06 Registered Office and Agent for Service of Process.......3
ARTICLE II Management of the Company..........................................3
Section 2.01 Management Generally.....................................3
Section 2.02 Delegation by Managing Member............................3
Section 2.03 Authority of the Managing Member.........................4
Section 2.04 Reliance by Third Parties................................5
Section 2.05 Activity of the Managing Member..........................5
Section 2.06 Standard of Care; Indemnification........................6
Section 2.07 Management Fee; Payment of Costs and Expenses............7
Section 2.08 Principal Transactions and Other Related Party
Transactions.............................................9
Section 2.09 Termination of the Managing Member.......................9
ARTICLE III Series of Units; Admission of New Members.........................9
Section 3.01 Series of Units..........................................9
Section 3.02 Conversion of Series....................................10
Section 3.03 New Members.............................................10
Section 3.04 Adjustment to Number of Units Issued....................10
ARTICLE IV Capital Accounts of Members and Operation Thereof.................10
Section 4.01 Definitions.............................................10
Section 4.02 Capital Contributions...................................11
Section 4.03 Capital Accounts........................................11
Section 4.04 Membership Percentages..................................12
Section 4.05 Allocation of Net Capital Appreciation or Net
Capital Depreciation....................................12
Section 4.06 Amendment of Incentive Allocation.......................13
Section 4.07 Determination of Net Assets.............................14
Section 4.08 Determination of Net Asset Value........................15
Section 4.09 Allocation for Tax Purposes.............................15
Section 4.10 Determination by Managing Member of Certain Matters;
Managing Member's Discretion............................16
Section 4.11 Adjustments to Take Account of Interim Year Events......16
Section 4.12 Tax Withholding.........................................16
ARTICLE V Redemptions and Distributions......................................16
Section 5.01 Redemptions and Distributions in General................16
Section 5.02 Redemptions.............................................17
Section 5.03 Limitation on Redemptions...............................18
Section 5.04 Distributions...........................................18
ARTICLE VI Withdrawal, Death, Disability.....................................19
Section 6.01 Withdrawal, Death, etc. of Members......................19
Section 6.02 Required Withdrawals....................................20
ARTICLE VII Duration and Dissolution of the Company..........................20
Section 7.01 Duration................................................20
Section 7.02 Dissolution.............................................20
ARTICLE VIII Tax Returns; Reports to Members.................................21
Section 8.01 Independent Auditors....................................21
Section 8.02 Filing of Tax Returns...................................21
Section 8.03 Tax Matters Partner.....................................21
Section 8.04 Financial Reports to Current Members....................21
Section 8.05 Tax Reports to Members and Former Members...............21
ARTICLE IX Miscellaneous.....................................................21
Section 9.01 General.................................................21
Section 9.02 Power of Attorney.......................................22
Section 9.03 Amendments to Limited Liability Company Agreement.......22
Section 9.04 Instruments.............................................23
Section 9.05 No Personal Liability For Return of Capital.............23
Section 9.06 Choice of Law...........................................23
Section 9.07 Waiver of Trial By Jury.................................24
Section 9.08 No Third Party Rights...................................24
Section 9.09 Notices.................................................24
Section 9.10 Counterparts............................................24
Section 9.11 Grantors of Revocable Trusts............................24
Section 9.12 Each Interest in the Company is a Security..............24
Section 9.13 Goodwill................................................24
Section 9.14 Headings................................................25
Section 9.15 Pronouns................................................25
Section 9.16 Confidentiality.........................................25
LIMITED LIABILITY COMPANY AGREEMENT OF
XXXXXXX SACHS GLOBAL RELATIVE VALUE II, LLC
Dated as of May 1, 2003
The undersigned (herein called the "Members", which term shall include
any persons hereafter admitted to the Company (as defined below) pursuant
to Article III of this Agreement (as defined below) and shall exclude any
persons who cease to be Members pursuant to Article V or VI of this
Agreement) hereby agree to form and hereby form, as of the date and year
first above written, a limited liability company (herein called the
"Company"), pursuant to the provisions of the Limited Liability Company Act
of the State of Delaware (6 Del. Code ss. 18-101, et seq.) (the "Act"),
which shall be governed by, and operated pursuant to, the terms and
provisions of this Limited Liability Company Agreement (herein called this
"Agreement").
ARTICLE I
General Provisions
Section 1.01 Company Name and Address. The name of the Company is
Xxxxxxx Xxxxx Global Relative Value II, LLC. Its principal office is
located at 000 Xxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, or at such
other location as the Managing Member (as defined in Section 1.03) in the
future may designate. The Managing Member shall promptly notify the
Non-Managing Members (as defined in Section 1.03) of any change in the
Company's address.
Section 1.02 Fiscal Year. The fiscal year of the Company (herein
called the "fiscal year") shall end on December 31 of each calendar year;
provided, however, that the Managing Member may change the Company's fiscal
year-end, without the consent of the Non-Managing Members, as deemed
appropriate by the Managing Member, in its sole discretion.
Section 1.03 Liability of Members. The names of all of the Members and
the amounts of their respective contributions to the Company (herein called
the "Capital Contributions") are set forth in a schedule (herein called the
"Schedule"), which shall be filed with the records of the Company at the
Company's principal office (as set forth in Section 1.01) and is hereby
incorporated by reference and made a part of this Agreement.
The Member designated in Part I of the Schedule as the Managing Member
(herein called the "Managing Member") shall manage the operations of the
Company. The Members designated in Part II of the Schedule are referred to
herein as the "Non-Managing Members." The Managing Member, the Non-Managing
Members and the former Non-Managing Members shall be liable for the
repayment and discharge of all debts and obligations of the Company
attributable to any fiscal year (or relevant portion thereof) during which
they are or were Members of the Company.
The Members and all former Members shall share all losses, liabilities
or expenses suffered or incurred by virtue of the operation of the
preceding paragraph of this Section 1.03 in the proportions of their
respective Capital Accounts (determined as provided in Section 4.03) for
the fiscal year (or relevant portion thereof) to which any debts or
obligations of the Company are attributable. A Member's or former Member's
share of all losses, liabilities or expenses shall not be greater than its
respective interest in the Company for such fiscal year (or relevant
portion thereof).
As used in this Section 1.03, the terms "interests in the Company" and
"interest in the Company" shall mean with respect to any fiscal year (or
relevant portion thereof) and with respect to each Member (or former
Member), the Capital Account (or, in the case of a Member with more than
one series of Units (as defined below), the Capital Accounts) that such
Member (or former Member) would have received (or in fact did receive)
pursuant to the terms and provisions of Article VI upon withdrawal from the
Company as of the end of such fiscal year (or relevant portion thereof).
Notwithstanding any other provision in this Agreement to the contrary,
in no event shall any Member (or former Member) be obligated to make any
additional contribution or payment whatsoever to the Company, or have any
liability for the repayment and discharge of the debts and obligations of
the Company (apart from its interest in the Company), except that a
Non-Managing Member (or former Non-Managing Member) shall, in the
discretion of the Managing Member, be required, for purposes of meeting
such Member's (or former Member's) obligations under this Section 1.03, to
make additional contributions or payments, respectively, up to, but in no
event in excess of, the aggregate amount of returns of capital and other
amounts actually received by it from the Company during or after the fiscal
year to which any debt or obligation is attributable.
As used in this Agreement, the terms "former Non-Managing Member" and
"former Member" refer to such persons or entities as hereafter from time to
time cease to be a Non-Managing Member or Member, respectively, pursuant to
the terms and provisions of this Agreement.
Section 1.04 Purposes of the Company. The Company is organized for the
purposes of (i) allocating its assets directly or indirectly to a group of
investment managers (the "Advisors") (that may or may not be Affiliates (as
defined in Section 2.05) of the Managing Member), including through limited
liability companies or other entities managed by the Managing Member or one
of its Affiliates through which the Company accesses Advisors ("Portfolio
Companies"), that employ strategies within the relative value sector, (ii)
engaging in any other lawful act or activity for which limited liability
companies may be organized under the Act, and (iii) engaging in any and all
activities and transactions as the Managing Member may deem necessary or
advisable in connection therewith.
Section 1.05 Assignability of Units; Assignment by Managing Member.
(a) Except as provided in paragraph (b) below, without the prior
written consent of the Managing Member, which may be withheld in its sole
and absolute discretion, with or without cause, a Member may not substitute
any other person as a Member nor pledge, transfer or assign its units of
limited liability company interests in the Company ("Units") in whole or in
part to any person except by operation of law pursuant to the death,
bankruptcy, dissolution, corporate reorganization or merger of a Member.
Any attempted pledge, transfer, assignment or substitution not made in
accordance with this Section 1.05 shall be void.
(b) Without the consent of the Non-Managing Members, the Managing
Member may assign or otherwise transfer its Managing Member interest in the
Company to any corporation, partnership, limited liability company or other
entity controlling, controlled by or under common control with the Managing
Member, and may substitute any such corporation, partnership, limited
liability company or other entity as the Managing Member as long as such
transfer does not, as determined by the Managing Member in its sole
discretion, cause the Company to be taxable as a corporation. The Managing
Member's limited liability company interest in the Company in respect of
its Incentive Allocation (as defined in Section 4.05(b)(i)) and the Capital
Account maintained in respect thereof will not be represented by Units.
Section 1.06 Registered Office and Agent for Service of Process. The
registered office of the Company shall be: Corporation Trust Center, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and the registered agent for
service of process at such office shall be The Corporation Trust Company.
The Company may from time to time have such other place or places of
business within or without the State of Delaware as may be designated by
the Managing Member.
ARTICLE II
Management of the Company
Section 2.01 Management Generally. The management of the Company shall
be vested exclusively in the Managing Member. Except as authorized by the
Managing Member, or as expressly set forth in this Agreement, the
Non-Managing Members shall have no part in the management of the Company,
and shall have no authority or right to act on behalf of the Company in
connection with any matter. The Managing Member, and any Affiliate of the
Managing Member, may engage in any other business venture, whether or not
such business is similar to the business of the Company, and neither the
Company nor any Non-Managing Member shall have any rights in or to such
ventures or the income or profits derived therefrom.
Section 2.02 Delegation by Managing Member. The Managing Member shall
have the power and authority to delegate to one or more Persons (as defined
in Section 2.03(d)), including, without limitation, any officer, employee
or agent of the Company or the Managing Member, the Managing Member's
rights and powers to manage and control the business and affairs of the
Company. The Managing Member may, by written instrument, authorize any
Person to enter into and perform under any document on behalf of the
Company.
Section 2.03 Authority of the Managing Member. The Managing Member
shall have the power on behalf of and in the name of the Company to carry
out any and all of the objects and purposes of the Company set forth in
Section 1.04 and Section 2.01, and to perform all acts and enter into and
perform all contracts and other undertakings, which it may deem necessary
or advisable or incidental thereto, including, without limitation, the
power to:
(a) open, maintain and close accounts, including custodial accounts,
with banks, including banks located inside and outside the United States,
and draw checks or other orders for the payment of monies;
(b) lend, either with or without security, funds or other properties
of the Company, and borrow or raise funds (including borrowing from the
Managing Member or its Affiliates) and secure the obligations of the
Company by pledges or hypothecation of all or any part of the property of
the Company;
(c) do any and all acts on behalf of the Company, and exercise all
rights, powers, privileges and other incidents of ownership or possession
with respect to the Company's interest in the assets and other property and
funds held or owned by the Company, including, without limitation,
participation in arrangements with creditors, the institution and
settlement or compromise of suits and administrative proceedings and all
other like or similar matters;
(d) engage any person, general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business
trust, cooperative, association or other entity (each, a "Person")
(including the Managing Member and any of its Affiliates) pursuant to an
Administration Agreement (as defined in the Company's Confidential Private
Placement Memorandum) to provide certain administrative services (any such
person, firm or entity providing such services being referred to herein as
the "Administrator"), including, without limitation, calculating the net
asset value (the "NAV") of each series of Units and Members' Capital
Accounts, valuing the Company's assets, assisting with the valuation of
securities which are not readily marketable, assisting in the preparation
of the Company's financial statements, assisting in the preparation and
distribution of reports to each Member, maintaining a registry for the
ownership of each series of Units and providing other administrative
services to the Company;
(e) consent on behalf of the Company to any changes in the members,
directors or officers of the Managing Member, if such consent is required
by applicable law;
(f) engage any personnel, whether part time or full time, attorneys,
financial advisers, underwriters, accountants, consultants, appraisers,
custodians of the assets of the Company or other Persons as the Managing
Member may deem necessary or desirable, whether or not any such Person may
be an Affiliate of the Managing Member or may also be employed by any
Affiliate of the Managing Member;
(g) allocate the Company's assets to Advisors, Portfolio Companies and
investment funds, oversee such allocations and, from time to time, in the
sole discretion of the Managing Member, reallocate the Company's assets
among existing or new Advisors, Portfolio Companies or investment funds;
(h) invest any of the Company's cash balances which it determines at
any time, in its sole discretion, not to allocate to the Advisors,
Portfolio Companies or investment funds, in any instruments it deems
appropriate in its sole discretion, including, without limitation, money
market funds sponsored by Xxxxxxx, Xxxxx & Co. or its Affiliates;
(i) redeem the Company's interests in any investment fund or Portfolio
Company in order to obtain cash necessary to meet the redemption requests
of the Members, or for any other reason in its sole discretion;
(j) bring and defend actions and proceedings at law or equity and
before any governmental, administrative or other regulatory agency, body or
commission;
(k) make distributions to Members in cash or (to the extent permitted
hereunder) otherwise;
(l) prepare and file all necessary returns and statements, pay all
taxes, assessments and other impositions applicable to the assets of the
Company and withhold amounts with respect thereto from funds otherwise
distributable to any Member;
(m) determine the accounting methods and conventions to be used in the
preparations of any accounting or financial records of the Company;
(n) make any and all tax elections permitted to be made under the
Internal Revenue Code of 1986, as amended (the "Code"), and any applicable
state, local or foreign tax law;
(o) determine the tax treatment of any Company transaction or item for
purposes of completing the Company's federal, state, local or foreign tax
returns; and
(p) take all actions, and authorize any member, employee, officer,
director or other agent of the Managing Member or agent or employee of the
Company, to act for and on behalf of the Company, in all matters necessary
to, in connection with, or incidental to, any of the foregoing.
Section 2.04 Reliance by Third Parties. Persons dealing with the
Company are entitled to rely conclusively upon the certificate of the
Managing Member, to the effect that it is then acting as the Managing
Member and upon the power and authority of the Managing Member as herein
set forth.
Section 2.05 Activity of the Managing Member. The Managing Member and
persons controlling, controlled by or under common control with the
Managing Member and any of such person's directors, members, stockholders,
partners, officers, employees and controlling persons (each, an "Affiliate"
and collectively, "Affiliates"), shall devote so much of their time to the
affairs of the Company as in the judgment of the Managing Member the
conduct of its business shall reasonably require, and none of the Managing
Member or its Affiliates shall be obligated to do or perform any act or
thing in connection with the business of the Company not expressly set
forth herein. Nothing herein contained in this Section 2.05 shall be deemed
to preclude the Managing Member or its Affiliates from exercising
investment responsibility, from engaging directly or indirectly in any
other business or from directly or indirectly purchasing, selling or
holding securities, options, separate accounts, investment contracts,
currency, currency units or any other asset and any interest therein for
the account of any such other business, for their own accounts, for any of
their family members or for other clients.
Section 2.06 Standard of Care; Indemnification.
(a) None of the Managing Member (including, without limitation, in its
capacity as the Administrator) or its Affiliates (each, an "Indemnified
Person" and collectively the "Indemnified Persons") shall be liable to the
Company or to the Members for (i) any act or omission performed or failed
to be performed by such person (other than any criminal wrongdoing), or for
any losses, claims, costs, damages, or liabilities arising therefrom, in
the absence of any criminal wrongdoing, willful misfeasance or gross
negligence on the part of such person, (ii) any tax liability imposed on
the Company or any Member or (iii) any losses due to the actions or
omissions of the Advisors, any brokers or other agents of the Company.
In the event that any Indemnified Person becomes involved in any
capacity in any action, proceeding or investigation brought by or against
any person (including any Non-Managing Member) in connection with any
matter arising out of or in connection with the Company's business or
affairs (including a breach of this Agreement by any Member), the Company
will periodically reimburse such Indemnified Person for its legal and other
expenses (including the costs of any investigation and preparation)
incurred in connection therewith, provided that such Indemnified Person
shall promptly repay to the Company the amount of any such reimbursed
expenses paid to it if it shall ultimately be determined by a court having
appropriate jurisdiction in a decision that is not subject to appeal, that
such Indemnified Person is not entitled to be indemnified by the Company in
connection with such action, proceeding or investigation as provided in the
exception contained in the next succeeding sentence.
To the fullest extent permitted by applicable law, the Company shall
also indemnify any Indemnified Person, jointly and severally, against any
losses, claims, costs, damages or liabilities to which such Indemnified
Person may become subject in connection with any matter arising out of or
in connection with the Company's business or affairs, except to the extent
that any such loss, claim, cost, damage, or liability results solely from
the willful misfeasance, bad faith or gross negligence of, or any criminal
wrongdoing by, such Indemnified Person. If for any reason (other than the
willful misfeasance, bad faith or gross negligence of, or any criminal
wrongdoing by, such Indemnified Person) the foregoing indemnification is
unavailable to such Indemnified Person, or is insufficient to hold it
harmless, then the Company shall contribute to the amount paid or payable
to the Indemnified Person as a result of such loss, claim, cost, damage, or
liability in such proportion as is appropriate to reflect not only the
relative benefits received by the Company on the one hand and such
Indemnified Person on the other hand but also the relative fault of the
Company and such Indemnified Person, as well as any relevant equitable
considerations.
The reimbursement, indemnity and contribution obligations of the
Company under this Section 2.06 shall be in addition to any liability which
the Company may otherwise have and shall be binding upon and inure to the
benefit of any successors, assigns, heirs, and personal representatives of
the Company, the Managing Member and any other Indemnified Person. The
foregoing provisions shall survive any termination of this Agreement.
(b) The reimbursement, indemnification and contribution rights
provided by this Section 2.06 shall not be deemed to be exclusive of any
other rights to which the Indemnified Person may be entitled under any
agreement or as a matter of law, or otherwise, both as to action in an
Indemnified Person's official capacity and to action in any other capacity,
and shall continue as to an Indemnified Person who has ceased to have an
official capacity for acts or omissions during such official capacity or
otherwise when acting at the request of the Managing Member and shall inure
to the benefit of the successors, assigns, heirs and personal
representatives of such Indemnified Person.
(c) Notwithstanding any of the foregoing to the contrary, the
provisions of this Section 2.06 shall not be construed as to relieve (or
attempt to relieve) from liability or to provide for the indemnification of
any Indemnified Person for any liability (including liability under federal
securities law which, under certain circumstances, impose liability even on
persons that act in good faith), to the extent (but only to the extent)
that such indemnification would be in violation of applicable law, but
shall be construed so as to effectuate the provisions of this Section 2.06
to the fullest extent permitted by applicable law.
(d) The Managing Member shall have power to purchase and maintain
insurance on behalf of the Managing Member and the Indemnified Persons at
the expense of the Company against any liability asserted against or
incurred by them in any such capacity or arising out of the Managing
Member's status as such, whether or not the Company would have the power to
indemnify the Indemnified Persons against such liability under the
provisions of this Agreement.
(e) An Indemnified Person may rely upon and shall be protected in
acting or refraining from action upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
bond debenture, or other document believed by it to be genuine and to have
been signed or presented by the proper party or parties.
(f) An Indemnified Person may consult with counsel, accountants and
other experts reasonably selected by it, and any opinion of an independent
counsel, accountant or expert retained with reasonable care shall be full
and complete protection in respect of any action taken or suffered or
omitted by the Indemnified Person hereunder in good faith and in accordance
with such opinion.
(g) The Managing Member may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys, and the Managing Member shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed
with reasonable care by it hereunder.
Section 2.07 Management Fee; Payment of Costs and Expenses. The
Company shall pay to the Managing Member a management fee, payable in
arrears, for investment management and other management services (the
"Management Fee") calculated and paid on a monthly basis of one-twelfth of
1.25% of the Net Assets (as defined in Section 4.01(d)) of the Company as
of the end of each month, appropriately adjusted to reflect capital
appreciation or depreciation and any subscriptions or redemptions. For
purposes of determining the Management Fee, Net Assets shall be reduced for
any Administration Fee (as defined in the Company's Confidential Private
Placement Memorandum) for such month, but shall not be reduced to reflect
any accrued Incentive Allocation (as defined in Section 4.05(b)) and any
Management Fee for such month.
If a Member is admitted to, or withdraws from, the Company as of a
date other than the first day of a month, the portion of the Management Fee
and Administration Fee determined with respect to such Member's Capital
Account shall be appropriately pro-rated to take into account the number of
days in such month during which such Member was a Member. Partial
withdrawals will result in similar pro-ration.
The Managing Member has the right, in its sole discretion, to waive
fees or impose different fees on any Member, as may be agreed to by the
Managing Member and the Member, and to make the appropriate amendments to
this Agreement in order to reflect such fee arrangements.
The Managing Member shall bear its own overhead costs and expenses and
provide to the Company news, quotation and computer equipment and services
(except to the extent paid for through the permitted use of soft dollars),
office space and utilities, and secretarial and clerical personnel.
The Company shall bear its operating expenses, including but not
limited to legal expenses, professional fees (including, without
limitation, expenses of consultants and experts) relating to investments,
accounting, auditing and tax preparation expenses, custodial expenses,
taxes, printing and mailing expenses, fees and out-of-pocket expenses of
any service company retained to provide accounting and bookkeeping services
to the Company, investment expenses (e.g., expenses related to the
investment of the Company's assets, such as fees to the Advisors, brokerage
commissions, expenses relating to short sales, clearing and settlement
charges, custodial fees, bank service fees, interest expenses, borrowing
costs and extraordinary expenses) and other expenses associated with the
operation of the Company.
In addition, the Company will bear its organizational expenses and the
expenses incurred in connection with the offer and sale of Units, including
printing costs and legal fees and expenses of the Company, the Managing
Member and any placement agent and other expenses of the offering of Units.
In addition, the Company will bear, indirectly through its investment in
each Portfolio Company or investment fund in which it invests, its pro rata
portion of the offering, organizational and operating expenses of each
Portfolio Company or investment fund, including, without limitation, the
expenses of the type described in this and the prior paragraph.
To the extent that expenses to be borne by the Company are paid by the
Managing Member, the Company shall reimburse the Managing Member for such
expenses. The Managing Member may elect, from time to time, to bear certain
of the Company's expenses described above.
Section 2.08 Principal Transactions and Other Related Party
Transactions. Each Non-Managing Member hereby authorizes the Managing
Member, on behalf of such Non-Managing Member, to select one or more
persons, who shall not be affiliated with the Managing Member, to serve on
a committee, the purpose of which will be to consider and, on behalf of the
Non-Managing Members, approve or disapprove, to the extent required by
applicable law, of principal transactions and certain other related party
transactions. In no event shall any such transaction be entered into unless
it complies with applicable law.
Section 2.09 Termination of the Managing Member. Upon the written
consent of the Members having at least 66-2/3% of the voting power of the
outstanding Units (other than the Units held by Xxxxxxx, Xxxxx & Co., its
Affiliates, employees or officers), based on the NAV of such Units, the
Managing Member will be required to withdraw from the Company, and the
Company will be wound-up and terminated in accordance with Article VII,
unless the Members having at least 66-2/3% of the voting power of the
outstanding Units (other than the Units held by Xxxxxxx, Sachs & Co., its
Affiliates, employees or officers), based on the NAV of such Units, agree
in writing to continue the business of the Company and to the appointment
of one or more new managing members. If the withdrawal of the Managing
Member pursuant to this Section 2.09 occurs prior to the end of a month,
the Managing Member shall receive the amount of the Management Fee and any
applicable Administration Fee prorated through the date of the effective
date of the withdrawal, and the Managing Member shall receive the Incentive
Allocation for the fiscal year in which the withdrawal occurred calculated
in accordance with Section 4.05(c) as if the date of withdrawal were the
last day of the fiscal year.
ARTICLE III
Series of Units; Admission of New Members
Section 3.01 Series of Units. An initial series of Units (the "Initial
Series") will be issued on the initial closing date. The initial purchase
price per Unit for the Initial Series of Units shall be $100. The Managing
Member may, at any time and from time to time, in its sole discretion,
elect to raise additional capital for the Company from Members and from new
subscribers on such terms and conditions as may be determined by the
Managing Member in its sole discretion. Generally, a new series of Units
will be issued on each date an existing Member makes an additional Capital
Contribution in accordance with Section 4.02 and on each date a new Member
is admitted to the Company in accordance with Section 3.03, except that the
Managing Member may issue additional Units of an existing series, or Units
of a new series at an initial purchase price other than $100, provided that
any such issuance does not have a material adverse effect on the NAV or
Prior High NAV (as defined in Section 4.05(b)(i)) of the Units of any
Member. Each Unit will carry equal rights and privileges with each other
Unit of the same series. Units issued at the beginning of any fiscal year
will be offered at the then current NAV per Unit of the Initial Series if
such Initial Series is at or above its Prior High NAV per Unit. If the
Initial Series is not at or above its Prior High NAV per Unit, Units will
be issued in the next offered series that is at or above its Prior High
NAV. If no series of Units is at or above its Prior High NAV at such time,
such additional Units will be issued as a separate series at a price per
Unit determined by the Managing Member, in its sole discretion. Fractions
of Units may be issued to one ten-thousandth of a Unit.
Section 3.02 Conversion of Series. Following the end of each fiscal
year, any issued and outstanding series of Units (other than the Initial
Series) that is at or above its Prior High NAV may, in the sole discretion
of the Managing Member, be exchanged (after reduction for the Management
Fee, Administration Fee and any Incentive Allocation) into Units of the
Initial Series (or if the Initial Series is not at or above its Prior High
NAV per Unit, the next offered series that is at or above its Prior High
NAV) at the prevailing NAV per Unit of the Initial Series or such other
series of Units (as applicable).
Section 3.03 New Members. Subject to the condition that each new
Member shall execute an appropriate counterpart to this Agreement pursuant
to which it agrees to be bound by the terms and provisions hereof, the
Managing Member may admit one or more new Members on the first day of each
calendar quarter or at such other times as the Managing Member may
determine in its sole discretion. Admission of a new Member shall not be a
cause for dissolution or termination of the Company.
Section 3.04 Adjustment to Number of Units Issued. If at any time the
Managing Member determines, in its sole discretion, that an incorrect
number of Units was issued to a Member because the NAV in effect on the
date of issuance was incorrect, the Company will adjust such Member's Units
by increasing or decreasing them, as appropriate, to such number of Units
as would have been issued at the correct NAV.
ARTICLE IV
Capital Accounts of Members
and Operation Thereof
Section 4.01 Definitions. For the purposes of this Agreement, unless
the context otherwise requires:
(a) The term "Accounting Period" shall mean the following periods: The
initial Accounting Period shall commence upon the commencement of
operations of the Company. Each subsequent Accounting Period shall commence
immediately after the close of the preceding Accounting Period. Each
Accounting Period hereunder shall close immediately before the opening of
business on the first to occur of (i) the first day of each fiscal year of
the Company, (ii) the effective date of the admission of a new Member
pursuant to Section 3.03, (iii) the effective date of an additional Capital
Contribution pursuant to Section 4.02, or (iv) the effective date of any
redemption or complete withdrawal pursuant to Articles V or VI hereof. The
final Accounting Period shall end on the date the Company dissolves.
(b) The term "Beginning Value" shall, with respect to any Accounting
Period, mean the value of the Company's Net Assets (as defined below) at
the beginning of such Accounting Period.
(c) The term "Ending Value" shall, with respect to any Accounting
Period, mean the value of the Company's Net Assets at the end of such
Accounting Period (before giving effect to the Incentive Allocation, the
Management Fee and the Administration Fee for such Accounting Period, but
after giving effect to all other expenses for such Accounting Period).
(d) The term "Net Assets" shall mean the excess of the Company's total
assets over its total liabilities, determined in accordance with Section
4.07.
(e) The term "Net Capital Appreciation," with respect to any
Accounting Period, shall mean the excess, if any, of the Ending Value over
the Beginning Value.
(f) The term "Net Capital Depreciation," with respect to any
Accounting Period, shall mean the excess, if any, of the Beginning Value
over the Ending Value.
Section 4.02 Capital Contributions. Each Member has paid or conveyed
by way of contribution to the Company in exchange for the issuance of Units
cash and/or marketable securities having an aggregate value equal to the
amount set forth opposite such Member's name in Part I or II of the
Schedule (herein called the "Initial Capital Contribution"). Additional
Capital Contributions may be made by Members only in accordance with the
provisions of this Section 4.02.
Upon the approval of the Managing Member, any existing or prospective
Member may purchase additional or newly-issued Units by contributing cash
and/or marketable securities to the Company on the first day of any
calendar quarter or at such other times as the Managing Member may
determine in its sole discretion. The Managing Member and any of its
Affiliates may make additional Capital Contributions to the Company in cash
and/or marketable securities at any time and in any amounts.
Whether marketable securities shall be accepted as a contribution to
the Company shall be determined in the sole discretion of the Managing
Member.
Section 4.03 Capital Accounts. (a) A separate capital account (herein
called a "Capital Account") shall be established on the books of the
Company for each series of Units. The Capital Account of each series shall
initially be an amount equal to the initial Capital Contributions with
respect to such series. The Capital Account of a series shall be (i)
increased as of the beginning of each Accounting Period to reflect any
additional Capital Contributions pursuant to Section 4.02 in respect of
such series, (ii) increased as of the end of each Accounting Period to
reflect the Net Capital Appreciation of such series, (iii) decreased as of
the beginning of each Accounting Period to reflect the redemption of any
Units of such series, pursuant to Section 5.02, (iv) decreased as of the
end of each Accounting Period to reflect the amount of any distributions
(other than in redemption of Units pursuant to Section 5.02) pursuant to
Section 5.04 in respect of such series (including any deemed distributions
of taxes paid by the Company pursuant to Section 5.04(c) in respect of such
series); (v) decreased for any Incentive Allocation pursuant to Section
4.05(b), any Administration Fee and any Management Fee in respect of such
series; and (vi) decreased as of the end of each Accounting Period to
reflect the Net Capital Depreciation of such series.
(b) At the time of the conversion of any series of Units into Units of
the Initial Series or any other series of Units pursuant to Section 3.02,
the Capital Account of the converted series of Units shall be reduced to
zero, and the Capital Account of the series of Units into which such Units
were converted shall be increased by the balance of the Capital Account of
the converted series of Units immediately prior to the conversion.
(c) A separate Capital Account shall also be established on the books
of the Company for each Member with respect to each series of Units held by
such Member. Each Member's Capital Account with respect to a series of
Units shall equal the Capital Account of such series times the Member's
Membership Percentage (as defined in Section 4.04) with respect to such
series of Units.
(d) The Managing Member shall have a separate Capital Account, which
shall initially be equal to zero, and which shall be (A) increased by any
Incentive Allocation at the time such Incentive Allocation is made, and (B)
decreased to reflect the amount of any distributions (including any deemed
distributions in connection with the withholding of taxes in respect of
such Incentive Allocation pursuant to Section 5.04(c)) made to the Managing
Member in respect of such Incentive Allocation for such Accounting Period.
Section 4.04 Membership Percentages. A membership percentage (a
"Membership Percentage") shall be determined for each Member for any given
series of Units for each Accounting Period of the Company by dividing the
number of Units owned by such Member within a given series by the aggregate
number of outstanding Units of such series as of the beginning of such
Accounting Period. The aggregate Membership Percentages for each series of
Units shall equal 100 percent.
Section 4.05 Allocation of Net Capital Appreciation or Net Capital
Depreciation.
(a) Any Net Capital Appreciation or Net Capital Depreciation, as the
case may be, for an Accounting Period shall be allocated among the
different series of Units pro rata in accordance with the relative Capital
Accounts of each series at the beginning of such Accounting Period (prior
to any year-to-date accrued Incentive Allocation).
(b) (i) At the end of each fiscal year of the Company, or at such
other date during a fiscal year as of which the following determination is
required pursuant to this Section 4.05, five percent (5%) of the amount by
which the NAV of a series of Units (determined prior to any applicable
Incentive Allocation accrual with respect to such series of Units and
appropriately adjusted as determined by the Managing Member in its sole
discretion for contributions, distributions and redemptions, but after
giving effect to the allocation, pursuant to Section 4.05(a), of Net
Capital Appreciation and Net Capital Depreciation for the Accounting Period
then ending) exceeds such series' Prior High NAV at such date shall be
reallocated to the Capital Account of the Managing Member (the "Incentive
Allocation"). The "Prior High NAV" with respect to a series of Units
initially shall mean an amount equal to the NAV of such series as of the
date of its initial issue. The new Prior High NAV with respect to a series
of Units immediately following the end of any period for which an Incentive
Allocation has been made with respect to such series shall be reset to
equal the NAV of such series, unless the series is exchanged pursuant to
Section 3.02 into the Initial Series or another series, in which case the
new Prior High NAV shall be reset to equal the NAV of the Initial Series or
such other series. If the NAV of such series at the end of any fiscal year
of the Company, and such other date during a fiscal year as of which the
determination of the Incentive Allocation is required pursuant to Section
4.05(c) is less than its Prior High NAV, the Prior High NAV of that series
shall not change. The Prior High NAV for each series of Units shall be
appropriately adjusted as determined by the Managing Member in its sole
discretion to account for contributions, distributions and redemptions made
with respect to such series of Units.
(ii) The Incentive Allocation with respect to a series of Units
accrues daily and the Company shall credit the Capital Account of the
Managing Member as of December 31 of each year for the Incentive
Allocation.
(c) In the event that the Company is dissolved other than at the end
of a fiscal year, or the effective date of a Member's redemption of Units
is other than a fiscal year-end, then the Incentive Allocation described
above shall be determined and made as if such date were a fiscal year-end.
(d) Notwithstanding anything to the contrary herein, to the extent
that the Company invests in "Hot Issues" (as defined below), and there are
Members who are restricted persons within the meaning of the National
Association of Securities Dealers, Inc. (the "NASD") Conduct Rule 2110 and
the interpretation set forth thereunder in IM-2110-1 entitled "Free-Riding
and Withholding" (collectively, the "Interpretation"), investments in Hot
Issues will be made through a special account and profits and losses
attributable to Hot Issues will not be allocated to the Capital Accounts of
Members who are restricted from participating in Hot Issues under the
Interpretation. Only those Members who are not restricted persons shall
have any beneficial interest in such an account. Notwithstanding anything
in this Agreement to the contrary, the Managing Member shall have the
right, without the consent of the Members, to make such amendments to this
Agreement, and to take such other actions, as it deems advisable and
appropriate, in its sole discretion, to implement the purposes of this
Section 4.05(d). A "Hot Issue" is any of the securities of a public
offering which trade at a premium in the secondary market whenever such
secondary market begins, or otherwise as such term may be interpreted from
time to time under the then current rules of the NASD.
Section 4.06 Amendment of Incentive Allocation. The Managing Member
shall have the right to amend, without the consent of the Non-Managing
Members, Section 4.05 of this Agreement so that the Incentive Allocation
(or other performance-based allocation) therein provided conforms to any
applicable requirements of the Securities and Exchange Commission and other
regulatory authorities; provided, however, that no such amendment shall
increase the Incentive Allocation (or other performance-based allocation)
as so amended to more than the amount payable in accordance with Section
4.05 of this Agreement (or, in the case of any other performance-based
allocation arrangement, the specific arrangement set forth in a written
agreement between the affected Non-Managing Member and the Company),
without the written consent of the affected Non-Managing Member. The
Managing Member reserves the right, in its sole discretion, to apply
different performance-based percentage allocations and performance-based
compensation arrangements to any Member, as may be agreed by the Managing
Member and such Member.
Section 4.07 Determination of Net Assets.
(a) The Company's Net Assets shall be determined in accordance with
U.S. generally accepted accounting principles consistently applied as a
guideline and the following principles:
(i) The value of the Company's investment in a Portfolio Company
or other investment fund shall be equal to the Company's proportionate
interest in the NAV of the Portfolio Company or investment fund,
determined in accordance with the terms and conditions of the
respective governing agreement of each Portfolio Company or investment
fund, as it may be amended, supplemented or otherwise modified from
time to time.
(ii) The assets of the Company that are invested pursuant to
investment management agreements shall be valued at fair value in a
commercially reasonable manner.
(iii) All other assets or liabilities of the Company shall be
assigned such value as the Administrator may reasonably determine.
(iv) The amount of the Company's assets and liabilities
(including without limitation indebtedness for money borrowed, the
Management Fee and the Administration Fee) shall be determined in
accordance with U.S. generally accepted accounting principles and
guidelines, applied on a consistent basis, provided that the
Administrator in its discretion may provide reserves for estimated
accrued expenses, liabilities and contingencies, even if such reserves
are not required by U.S. generally accepted accounting principles.
(v) The amount payable to a Member or former Member in redemption
of part or all of such Member's or former Member's Units pursuant to
Section 5.02 shall be treated as a liability of the Company, until
paid, from (but not prior to) the beginning of the Accounting Period
on the Redemption Date (as defined in Section 5.02(a)) for such Units.
(vi) The amount to be received by the Company on account of any
Capital Contributions pursuant to Section 4.02 shall be treated as an
asset of the Company from (but not before) the beginning of the
Accounting Period on the effective date of such Capital Contributions.
(vii) Distributions (other than in redemption of Units pursuant
to Section 5.02) made pursuant to Section 5.04 (including deemed tax
distributions pursuant to Section 5.04(c)) other than as of the
beginning of an Accounting Period shall be treated as an advance and
as an asset of the Company, until the beginning of the Accounting
Period following the date of distribution.
(viii) The Incentive Allocation, if any, credited to the Capital
Account of the Managing Member pursuant to Section 4.05(d) shall be
treated as a liability, until distributed, from the beginning of the
Accounting Period following the Accounting Period in which the
Incentive Allocation was credited to such Capital Account.
(b) The Company may suspend the valuation of its assets and
liabilities, and any distributions or redemptions of any amounts from
Capital Accounts, for any period during which a Portfolio Company or other
investment fund with which the Company has made an investment has suspended
the valuation of its assets and liabilities. The Managing Member shall
promptly notify Members of any such suspension, and the termination of any
such suspension, by means of a written notice.
(c) All values assigned to securities and other assets by the Managing
Member or the Administrator pursuant to this Section 4.07 shall be final
and conclusive as to all of the Members. The Managing Member may consult
with and rely upon valuations of the Company's securities and other assets
provided by the Administrator.
Section 4.08 Determination of Net Asset Value. The NAV of a series of
Units shall be equal to the balance of the Capital Account with respect to
such series of Units. The NAV per Unit of a series shall be equal to the
NAV of such series divided by the number of outstanding Units of such
series.
Section 4.09 Allocation for Tax Purposes. (a) For each fiscal year,
items of income, deduction, gain, loss or credit shall be allocated for
income tax purposes among the Members in such manner as to equitably
reflect the amounts credited or debited to each Member's Capital Account
for the current and prior fiscal years (or relevant portions thereof).
Allocations under this Section 4.09 shall be made by the Managing Member in
accordance with the principles of Sections 704(b) and 704(c) of the Code
and in conformity with applicable Regulations promulgated thereunder
(including, without limitation, Treasury Regulation Sections
1.704-1(b)(2)(iv)(f)(4), 1.704-1(b)(4)(i) and 1.704-3(e)).
If any Member redeems all of its Units in the Company during a fiscal
year or immediately following the end of a fiscal year, and the Member
would (absent this sentence) recognize gain under Section 731 of the Code
as a result of such withdrawal, the Managing Member may elect to specially
allocate to such Member, for U.S. federal income tax purposes, any income
and capital gains (including short-term capital gains) realized by the
Company during such fiscal year, through and including the date of
withdrawal, in an amount up to that amount of income and gain which if so
allocated would avoid the Member recognizing gain on the withdrawal under
Section 731 of the Code (ignoring for this purpose any adjustments that
have been made to the tax basis of the withdrawing Member's Units resulting
from any transfers or assignment of the Units (other than the original
issue of the Units), including by reason of death). Any such election by
the Managing Member shall, to the extent reasonably practicable as
determined by the Managing Member in its sole discretion, be applied on an
equitable basis to all Members withdrawing during such fiscal year or
immediately following the end of such fiscal year.
Section 4.10 Determination by Managing Member of Certain Matters;
Managing Member's Discretion.
(a) All matters concerning the valuation of securities and other
assets and liabilities of the Company, the allocation of profits, gains and
losses among the Members (including for tax purposes) and accounting
procedures not expressly provided for by the terms of this Agreement
(including, without limitation, allocation and accounting procedures in the
event a Member that has an account managed by the Managing Member in a
manner similar to the investment program utilized by the Company which
causes the assets and liabilities in such account to be transferred to the
Company) shall be determined by the Managing Member (or such person as the
Managing Member may authorize to make such determination), whose
determination shall be final, binding and conclusive as to all of the
Members.
(b) Whenever in this Agreement the Managing Member is permitted or
required to make a decision (i) in its "sole discretion" or "discretion,"
or under a similar grant of authority or latitude, the Managing Member
shall be entitled to consider only such interests and factors as it desires
and may consider its own interests and the interests of its Affiliates and
its determination shall be final, binding and conclusive as to all of the
Members, or (ii) in its "good faith" the Managing Member shall act under
such express standards and shall not be subject to any other or different
standards imposed by this Agreement or by law or any other agreement
contemplated herein.
Section 4.11 Adjustments to Take Account of Interim Year Events. If
the Code or regulations promulgated thereunder require an adjustment to the
Capital Account of a Member or some other interim year event occurs
necessitating in the Managing Member's judgment an equitable adjustment,
the Managing Member shall make such adjustments in the determination and
allocation among the Members of Net Capital Appreciation, Net Capital
Depreciation, Capital Accounts, Membership Percentages, Incentive
Allocation, the Management Fee, Administration Fee, Company expenses, items
of income, deduction, gain, loss, credit or withholding for tax purposes,
accounting procedures or such other financial or tax items as shall
equitably take into account such interim year event and applicable
provisions of law, and the determination thereof by the Managing Member
shall be final, binding and conclusive as to all of the Members.
Section 4.12 Tax Withholding. If the Company is required to withhold
taxes on any distribution to, or to pay or incur any tax with respect to
any income allocable to or otherwise on account of, any Member or series of
Units, the Company may withhold such amounts and make such payments to such
taxing authorities as are necessary to ensure compliance with such tax
laws.
ARTICLE V
Redemptions and Distributions
Section 5.01 Redemptions and Distributions in General. No Member shall
be entitled (i) to receive distributions from the Company, except as
provided in Section 5.04 and Section 7.02; or (ii) to redeem any of its
Units other than upon such Member's withdrawal from the Company, except as
provided in Sections 5.02 and 6.01 or upon the consent of, or as may be
required by, and upon such terms as may be determined by, the Managing
Member in its sole discretion. In no event shall a Member be entitled to
demand to receive property other than cash.
Section 5.02 Redemptions.
(a) Subject to Sections 5.02(c) and 5.03, as of the time immediately
prior to the opening of business on each January 1 or July 1 occurring on
or after the first anniversary of the purchase of such Units by the Member
(each, a "Redemption Date"), each Member shall have the right, upon 45
days' prior written notice to the Managing Member (unless such notice is
waived by the Managing Member in its sole discretion), to redeem some or
all of its Units. No partial redemption shall be permitted if thereafter
the aggregate NAV of the remaining Units held by the redeeming Member would
be less than $500,000, unless such limitation is waived by the Managing
Member in its sole discretion. Units of a particular series will be
redeemed at a per Unit price (the "Redemption Price") based upon the NAV of
such series as of the close of business on the day immediately preceding
the applicable Redemption Date (taking into account the allocation of any
Net Capital Appreciation or Net Capital Depreciation under Section 4.05,
and any distributions under Section 5.04 for the Accounting Period then
ending), after reduction for any Management Fee, Administration Fee and
Incentive Allocation and other liabilities of the Company to the extent
accrued or otherwise attributable to the Units being redeemed (calculated
as if the Redemption Date were the last day of the fiscal year), and the
amount of any such reduction for the Management Fee and the Administration
Fee shall be paid to the Managing Member, and the amount of any such
reduction for any Incentive Allocation shall be allocated to the Capital
Account of the Managing Member. If a redeeming Member owns Units of more
than one series, unless otherwise specified by such Member in writing,
Units shall be redeemed on a "first in-first out" basis for purposes of
determining the Redemption Price. The Company will endeavor to pay the
redemption proceeds, within 45 days following the applicable Redemption
Date, without interest. The Managing Member may permit redemptions at other
times and in other amounts, subject to any conditions that it may impose in
its sole discretion.
(b) The Managing Member shall have the right, in its sole discretion,
as of any date that it determines (including during a fiscal year) and for
any reason (including, without limitation, pursuant to Article VI, for
regulatory or tax reasons, or for any other reason), to redeem any or all
of a Member's Units. Any redemptions made pursuant to this Section 5.02(b)
shall be paid out in accordance with Section 5.02(a).
(c) The Managing Member, and any Affiliate of the Managing Member,
shall have the right at any time (including during a fiscal year or other
period) to redeem any and all of its interest or withdraw all or a portion
of the assets in its Capital Account without notice to the Members.
(d) If at any time after a redemption of Units (including in
connection with any withdrawal of a Member from the Company pursuant to
Article VI) the Managing Member determines, in its sole discretion, that
the amount paid to such Member or former Member pursuant to such redemption
was materially incorrect (including because the NAV at which the Member or
former Member purchased such Units was incorrect), the Company will pay to
such Member or former Member any additional amount that it determines such
Member or former Member would have been entitled to receive had the
redemption been effected at the correct NAV, or, in its sole discretion,
seek payment from such Member or former Member of (and such Member or
former Member shall be required to pay) the amount of any excess payment
that the Managing Member determines such Member or former Member received,
in each case without interest.
Section 5.03 Limitation on Redemptions.
(a) The right of any Member to redeem some or all of its Units
pursuant to the provisions of Section 5.02 is subject to the provision by
the Managing Member for all Company liabilities in accordance with the Act,
and for reserves for estimated accrued expenses, liabilities and
contingencies in accordance with Section 4.07.
(b) The Managing Member may suspend redemptions, at any time prior to
the effective date of the redemption, and notwithstanding the fact that a
timely redemption request has previously been made, for the whole, or any
part, of any of the following periods: (i) during the closing of the
principal stock exchange or other markets on which any substantial portion
of the Company's direct or indirect investments, in the opinion of the
Managing Member, is quoted or dealt in other than for ordinary holidays, or
the restriction of suspension of dealings therein; (ii) during the
existence of any state of affairs which, in the opinion of the Managing
Member, constitutes an emergency as a result of which the determination of
the price, value or disposition of the Company's direct or indirect
investments would be impractical or prejudicial to Members; (iii) during
which redemptions would, in the opinion of the Managing Member, result in a
violation of applicable law; (iv) during any breakdown in the means of
communication or computation normally employed in determining the price or
value of any of the investments of the Company or the current price or
values on any stock exchange in respect of assets of the Company; (v)
during the occurrence of any period when the Company is unable to withdraw
sufficient funds from investment funds or Portfolio Companies or otherwise
to meet redemption requests or in circumstances when the disposal of part
or all of the Company's assets to meet such redemption requests would be
prejudicial to Members; and (vi) during which any transfer of funds
involved in the realization or acquisition of investments or payments due
on redemption of Units cannot, in the opinion of the Managing Member, be
effected at advantageous rates of exchange. Postponed redemptions shall be
effected at the month-end following the termination of the suspension. Any
part of a redemption request that is postponed shall take precedence over
later-received redemption requests until the postponed request or requests
have been satisfied in full. Members shall be given notice in writing of
the suspension of redemptions and the termination of any such suspension.
Units shall be held by the Member during the suspension period as if no
redemption request had been made.
Section 5.04 Distributions.
(a) The Managing Member may, in its discretion, make distributions in
cash or in-kind (i) in connection with redemptions from the Company by a
Member or in connection with a Member's complete withdrawal from the
Company pursuant to Article VI, (ii) in its discretion, at any time to the
Managing Member in an amount not in excess of the then positive balance in
its Capital Account to which the Incentive Allocation is credited pursuant
to Section 4.03 and (iii) in its discretion, at any time to all of the
Members on a pro rata basis in accordance with the Members' Capital
Accounts.
(b) If a distribution is made in-kind, immediately prior to such
distribution, the Managing Member shall determine the fair market value of
the property distributed and adjust the Capital Accounts of all Members
upwards or downwards to reflect the difference between the book value and
the fair market value thereof, as if such gain or loss had been recognized
upon an actual sale of such property and allocated pursuant to Section
4.05. Each such distribution shall reduce the Capital Account of the Member
to which the distribution was made by the fair market value thereof.
(c) Any taxes paid over to a governmental authority by the Company
pursuant to Section 4.12 with respect to any Member (other than on account
of all Members equally) shall be deemed to be a distribution to such
Member. If a Member who receives a deemed distribution of taxes under this
Section 5.04(c) owns more than one series of Units, the Managing Member in
its sole discretion may allocate such deemed distribution among such
Member's different series of Units. Notwithstanding the foregoing, the
Managing Member in its sole discretion may elect to treat any deemed
distribution to a Member under this Section 5.04(c), not as a distribution,
but as an advance to the Member and a partial redemption of such Member's
Units as of the next Redemption Date following the deemed distribution, and
such Member's Units shall be reduced thereby as appropriately determined by
the Managing Member.
ARTICLE VI
Withdrawal, Death, Disability
Section 6.01 Withdrawal, Death, etc. of Members.
(a) The withdrawal, death, disability, incapacity, adjudication of
incompetency, termination, bankruptcy, insolvency or dissolution of a
Member shall not dissolve the Company. Subject to the restrictions set
forth in Section 1.05(a), the legal representatives or successors of such
Member shall succeed as assignee to the Member's interest in the Company
upon the death, disability, incapacity, adjudication of incompetency,
termination, bankruptcy, insolvency or dissolution of such Member, but
shall not be admitted as a substituted member without the consent of the
Managing Member.
(b) In the event of the death, disability, incapacity, adjudication of
incompetency, termination, bankruptcy, insolvency or dissolution of a
Member, the interest of such Member shall continue at the risk of the
Company's business until the last day of the calendar month following the
calendar month in which the Managing Member received written notice of such
event. At the end of such period, the Managing Member shall, in its sole
discretion, either (i) substitute the legal representatives or successors
of the former Members as Members of the Company, provided that the Managing
Member determines in its sole discretion that such legal representatives or
successors are qualified to become Members of the Company, or (ii) redeem
such former Member's interest in the Company in accordance with the
redemption provisions set forth in this Article VI.
Section 6.02 Required Withdrawals. The Managing Member may at any time
and for any reason, in its sole discretion, terminate the interest of any
Member in the Company or require a Member to withdraw any part of its
Capital Account. A Member required to withdraw under this Section 6.02
shall be treated for all purposes of distribution of redemption proceeds as
a Member who has given notice of a redemption of all of its capital under
Article V.
ARTICLE VII
Duration and Dissolution of the Company
Section 7.01 Duration. The Company shall continue until the earlier of
(i) a determination by the Managing Member that the Company should be
dissolved and wound-up; (ii) the termination, bankruptcy, insolvency,
dissolution or withdrawal by the Managing Member other than by assignment
of the Managing Member's interest as provided in Section 1.05(b); or (iii)
upon 60 days' prior written notice to the Managing Member of the
affirmative vote of the holders of at least 66-2/3% of the voting power of
the outstanding Units (other than Units held by Xxxxxxx, Xxxxx & Co., its
Affiliates, employees and officers), based on the NAV of such Units, at a
meeting duly called for the purpose of liquidating the Company. Upon a
determination to dissolve the Company, redemptions, and distributions in
respect thereof, may not be made.
Section 7.02 Dissolution.
(a) On dissolution of the Company, the Managing Member shall, within
no more than 30 days after completion of a final audit of the Company's
financial statements, make distributions out of Company assets, in the
following manner and order:
(i) to creditors, including Members who are creditors, to the
extent otherwise permitted by law, in satisfaction of liabilities of
the Company (whether by payment or by establishment of reserves); and
(ii) to the Members in the proportion of their respective Capital
Accounts.
(b) The Managing Member, in its discretion, at any time and from time
to time, may designate one or more liquidators, including, without
limitation, one or more partners, members or officers of the Managing
Member, who shall have full authority to wind up and liquidate the business
of the Company and to make final distributions as provided in this Section
7.02. The appointment of any liquidator may be revoked or a successor or
additional liquidator or liquidators may be appointed at any time by an
instrument in writing signed by the Managing Member. Any such liquidator
may receive compensation as shall be fixed, from time to time, by the
Managing Member.
(c) In the event that the Company is dissolved on a date other than
the last day of a fiscal year, the date of such dissolution shall be deemed
to be the last day of a fiscal year for purposes of adjusting the Capital
Accounts of the Members pursuant to Section 4.03. For purposes of
distributing the assets of the Company upon dissolution, the Managing
Member shall be entitled to a return, on a pari passu basis with the
Non-Managing Members, of the amount standing to its credit in its Capital
Account.
ARTICLE VIII
Tax Returns; Reports to Members
Section 8.01 Independent Auditors. The financial statements of the
Company shall be audited by Ernst & Young LLP, or such other certified
public accountants of similar standing selected by the Managing Member, as
of the end of each fiscal year of the Company.
Section 8.02 Filing of Tax Returns. The Managing Member shall prepare
and file, or cause the accountants of the Company to prepare and file, a
federal information tax return in compliance with Section 6031 of the Code,
and any required state and local income tax and information returns for
each tax year of the Company.
Section 8.03 Tax Matters Partner. The Managing Member shall be
designated on the Company's annual federal information tax return, and have
full powers and responsibilities, as the Tax Matters Partner of the Company
for purposes of Section 6231(a)(7) of the Code. In the event the Company
shall be the subject of an income tax audit by any federal, state or local
authority, to the extent the Company is treated as an entity for purposes
of such audit, including administrative settlement and judicial review, the
Tax Matters Partner shall be authorized to act for, and its decision shall
be final and binding upon, the Company and each Member thereof. All
expenses incurred in connection with any such audit, investigation,
settlement or review shall be borne by the Company.
Section 8.04 Financial Reports to Current Members. The Company shall
prepare and mail to each Non-Managing Member (i) annual audited financial
statements after the end of the Company's fiscal year, (ii) quarterly
unaudited information as to the performance of the Company and (iii)
information necessary for such Member to complete its U.S. federal, state
and local income tax returns (including such information that such Member
may reasonably require annually to complete its tax filing obligations,
provided that the Managing Member may provide the same without undue effort
or expense).
Section 8.05 Tax Reports to Members and Former Members. The Company
shall use reasonable efforts to prepare and mail, or cause its accountants
to prepare and mail, to each Member and, to the extent necessary, to each
former Member (or its legal representatives), as soon as possible after the
close of each fiscal year of the Company, a report setting forth in
sufficient detail such information as shall enable such Member or former
Member (or such Member's legal representatives) to prepare their respective
federal income tax returns and/or extensions in accordance with the laws,
rules and regulations then prevailing.
ARTICLE IX
Miscellaneous
Section 9.01 General. This Agreement (i) shall be binding on the
permitted transferees, assigns, executors, administrators, estates, heirs,
and legal successors and representatives of the Members and (ii) may be
executed, through the use of separate signature pages or supplemental
agreements in any number of counterparts with the same effect as if the
parties executing such counterparts had all executed one counterpart;
provided, however, that each such counterpart shall have been executed by
the Managing Member and that the counterparts, in the aggregate, shall have
been signed by all of the Members.
Section 9.02 Power of Attorney. Each of the Members hereby appoints
the Managing Member as its true and lawful representative and
attorney-in-fact, in its name, place and stead to make, execute, sign,
acknowledge, swear to and file:
(a) a Certificate of Formation of the Company and any amendments
thereto as may be required under the Act;
(b) any duly adopted amendment to this Agreement;
(c) any and all instruments, certificates, and other documents that
may be deemed necessary or desirable to effect the dissolution and
winding-up of the Company (including, but not limited to, a Certificate of
Cancellation of the Certificate of Formation); and
(d) any business certificate, fictitious name certificate, amendment
thereto, or other instrument or document of any kind whatsoever necessary,
desirable or convenient to accomplish the business, purpose and objectives
of the Company, or required by any applicable federal, state, local or
foreign law.
The power of attorney hereby granted by each of the Non-Managing
Members is coupled with an interest, is irrevocable, and shall survive, and
shall not be affected by, the subsequent death, disability, incapacity,
incompetency, termination, bankruptcy, insolvency or dissolution of such
Non-Managing Member; provided, however, that such power of attorney shall
terminate upon the substitution of another non-managing member for all of
such Non-Managing Member's interest in the Company or upon the complete
withdrawal of such Non-Managing Member from participation in the Company.
Section 9.03 Amendments to Limited Liability Company Agreement. The
terms and provisions of this Agreement may be modified or amended at any
time and from time to time with the written consent of Members having in
excess of 50% of the voting power of the outstanding Units, (or, if an
amendment affects only a particular series of Units, with the written
consent of Members having in excess of 50% of that series of Units), based
on the NAV of such Units, and the affirmative vote of the Managing Member
insofar as is consistent with the laws governing this Agreement; provided,
however, that without the consent of the Non-Managing Members, the Managing
Member may amend the Agreement or the Schedule hereto to (i) reflect
changes validly made in the membership of the Company, the Capital
Contributions, Membership Percentages and changes in the number of Units
held by the Members; (ii) change the provisions relating to the Incentive
Allocation so that such provisions conform to the applicable requirements
of the Securities and Exchange Commission and other regulatory authorities,
so long as such amendment does not increase the Incentive Allocation to
more than the amount that would otherwise be determined absent such
amendment; (iii) reflect a change in the name of the Company; (iv) make a
change that is necessary or, in the opinion of the Managing Member,
advisable to qualify the Company as a limited liability company or other
entity in which the Members have limited liability under the laws of any
state, or ensure that the Company shall not be treated as an association or
a publicly traded partnership taxable as a corporation for federal income
tax purposes; (v) make any change that does not adversely affect the
Members in any material respect; (vi) make a change that is necessary or
desirable to satisfy any requirements, conditions or guidelines contained
in any opinion, directive, order, ruling or regulation of any federal,
state or foreign statute, so long as such change is made in a manner which
minimizes to the extent practicable, as determined by the Managing Member
in its sole discretion, any adverse effect on the Members or that is
required or contemplated by this Agreement; (vii) make a change in any
provision of the Agreement that requires any action to be taken by or on
behalf of the Managing Member or the Company pursuant to the requirements
of applicable Delaware law if the provisions of applicable Delaware law are
amended, modified or revoked so that the taking of such action is no longer
required; (viii) prevent the Company or the Managing Member from in any
manner being deemed an "investment company" subject to the provisions of
the Investment Company Act of 1940, as amended; (ix) correct mistakes or
clarify ambiguities; (x) in the event of adverse changes in the tax law or
interpretations thereof applicable to the Company, amend the Agreement as
determined by the Managing Member if it deems advisable or necessary to
address such changes; (xi) conform the Agreement to the disclosure provided
in the Company's Confidential Private Placement Memorandum; (xii) correct
or supplement any conflicting provisions and delete or add provisions as
may be required by applicable law or regulations, in each case, as
determined by the Managing Member in its sole discretion; (xiii) make any
other amendment provided such amendment does not become effective until
after such affected Members have been given prior written notice of such
change and have had the right following receipt of such notice to request
the redemption of their Units and such redemption shall have become
effective; or (xiv) make any other amendments similar to the foregoing.
Each Member, however, must consent to any amendment that would (a) reduce
its Capital Account or rights of redemption or withdrawal; or (b) amend the
provisions of this Agreement relating to amendments.
Section 9.04 Instruments. The parties agree to execute and deliver any
further instruments or perform any acts which are or may become necessary
to carry on the Company created by this Agreement or to effectuate its
purposes.
Section 9.05 No Personal Liability For Return of Capital. The Managing
Member shall not be personally liable for the return or repayment of all or
any portion of Capital Contribution or profits of any Member, it being
expressly agreed that any such return of Capital Contribution or profits
made pursuant to this Agreement shall be made solely from the assets (which
shall not include any right of contribution from the Managing Member) of
the Company.
Section 9.06 Choice of Law. Notwithstanding the place where this
Agreement may be executed by any of the parties hereto, the parties
expressly agree that all the terms and provisions hereof shall be construed
under the laws of the State of Delaware and, without limitation thereof,
that the Act as now adopted or as may be hereafter amended shall govern the
limited liability company aspects of this Agreement. The parties also
expressly agree that all actions and proceedings brought by a party against
a Member or the Company, in connection with the Company's business or
affairs (including a breach of this Agreement by a party hereto) shall be
brought in and be subject to the jurisdiction of a court of the State of
New York or any federal district court in the State of New York.
Section 9.07 Waiver of Trial By Jury. The parties hereto irrevocably
waive to the fullest extent permitted by law any objection that they may
now or hereafter have to the laying of venue of any such action or
proceeding in the courts of the State of New York located in the City of
New York or of the United States District Court for the Southern District
of New York and any claim that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
Section 9.08 No Third Party Rights. The provisions of this Agreement,
including, without limitation, the provisions of Section 1.03, are not
intended to be for the benefit of any creditor or other person (other than
the Members in their capacities as such) to whom any debts, liabilities or
obligations are owed by (or who otherwise have a claim against or dealings
with) the Company or any Member, and no such creditor or other Person shall
obtain any rights under any of such provisions (whether as a third party
beneficiary or otherwise) or shall obtain any rights under any of such
provisions (whether as a third party beneficiary or otherwise) or shall by
reason of any such provisions make any claim in respect to any debt,
liability or obligation (or otherwise) including any debt, liability or
obligation pursuant to Section 1.03, against the Company or any Member.
Section 9.09 Notices. Each notice relating to this Agreement shall be
in writing and delivered in person or by registered or certified mail. All
notices to the Company shall be addressed to its principal office and place
of business. All notices addressed to a Member shall be addressed to such
Member at the address set forth in the Schedule. Any Member may designate a
new address by notice to that effect given to the Company. Unless otherwise
specifically provided in this Agreement, a notice shall be deemed to have
been effectively given when mailed by registered or certified mail to the
proper address or delivered in person.
Section 9.10 Counterparts. This Agreement may be executed in
counterparts with the same force and effect as if each of the signatories
had executed the same instrument.
Section 9.11 Grantors of Revocable Trusts. Each Non-Managing Member
that is a revocable trust agrees that, if the trustee of such revocable
trust and the grantor of such revocable trust are the same person, the
trustee's execution of this Agreement and any other documents executed in
connection with the Company shall bind such person in his or her capacity
both as trustee and as grantor of such revocable trust.
Section 9.12 Each Interest in the Company is a Security. The parties
expressly agree that each interest in the Company, including without
limitation the Units and the interests of the Managing Member in the
Company, is a security governed by Article 8 of the Uniform Commercial Code
of the State of Delaware, and the Company, each Member and any other party
hereto expressly agrees that (i) this establishes the terms of the
interests in the Company, and (ii) interests in the Company shall not be
represented or evidenced by certificates.
Section 9.13 Goodwill. No value shall be placed on the name or
goodwill of the Company, which shall belong exclusively to the Managing
Member.
Section 9.14 Headings. The titles of the Articles and the headings of
the Sections of this Agreement are for convenience of reference only, and
are not to be considered in construing the terms and provisions of this
Agreement.
Section 9.15 Pronouns. All pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the
person or persons, firm or corporation may require in the context thereof.
Section 9.16 Confidentiality. The Managing Member and the Company may,
in their discretion, keep confidential and not disclose to the Non-Managing
Members any proprietary information concerning the Company, including,
without limitation, investments, valuations, information regarding
potential investments, financial information, trade secrets and the like
which is proprietary in nature and non-public, or any information about any
investment, to the extent that such information is required to be kept
confidential or is otherwise subject to disclosure restrictions imposed by
the issuer of the investment or the Managing Member, in its reasonable
discretion (collectively, "Confidential Information"). Each Non-Managing
Member shall not disclose or cause to be disclosed any Confidential
Information to any other Person, except as otherwise required by any
regulatory authority, law or regulation, or by legal process, without the
prior written consent of the Managing Member. Notwithstanding anything in
the foregoing or anything else contained in this Agreement to the contrary,
except as reasonably necessary to comply with applicable securities laws,
each Member (and any employee, representative or other agent thereof) may
disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the offering and ownership of Units and any
transaction described in this Section 9.16 or elsewhere in this Agreement
and all materials of any kind (including opinions and other tax analyses)
that are provided to such Member relating to such tax treatment and tax
structure. For this purpose, "tax structure" means any facts relevant to
the federal income tax treatment of the offering and ownership of Units and
any transaction described in this Section 9.16 or elsewhere in this
Agreement, and does not include information relating to the identity of the
Company or its Affiliates.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as
of the date first set forth above.
MANAGING MEMBER:
XXXXXXX XXXXX PRINCETON LLC
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Director
NON-MANAGING MEMBERS:
By: XXXXXXX SACHS PRINCETON LLC
on behalf of each Member as attorney-in-fact
By: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Director
