Exhibit 99.2(a)(ii)
APPENDIX A
MOUNT YALE OPPORTUNITY FUND, LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT of Mount Yale
Opportunity Fund, LLC (the "Fund") is made effective as of **[ ], 2004 by and
among the Organizational Member, each Manager, the Investment Adviser, and each
person hereinafter admitted to the Fund and reflected on the books of the Fund
as a Member.
WITNESSETH:
WHEREAS, the Fund heretofore has been formed as a limited liability
company under the Delaware Act, pursuant to the Certificate dated as of May 26,
2004 and filed with the Secretary of State of the State of Delaware on May 26,
2004;
NOW, THEREFORE, for and in consideration of the foregoing and the
mutual covenants hereinafter set forth, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
1.1 ADVISERS ACT means the Investment Advisers Act of 1940 and the
rules, regulations, and orders thereunder, as amended from time to time, or any
successor law.
1.2 ADVISORY FEE means the fee paid to the Investment Adviser out of
the Fund's assets pursuant to an Investment Advisory Agreement, and debited
against Members' Capital Accounts.
1.3 AFFILIATE means affiliated person as such term is defined in the
1940 Act, as hereinafter defined.
1.4 AGREEMENT means this Limited Liability Company Operating Agreement,
as amended and/or restated from time to time.
1.5 BOARD means the Board of Managers established pursuant to Section
2.6 and each Manager on the Board shall be deemed a "Manager" of the Fund within
the meaning of the Delaware Act.
1.6 CAPITAL ACCOUNT means, with respect to each Member, the capital
account established and maintained on behalf of each Member pursuant to Section
5.3.
1.7 CAPITAL CONTRIBUTION means the contribution, if any, made, or to be
made, as the context requires, to the capital of the Fund by a Member.
1.8 CAPITAL PERCENTAGE means a percentage established for each Member
as of each Expense Allocation Date. The Capital Percentage of a Member on an
Expense Allocation Date shall be determined by dividing the amount of capital
contributed to the Fund by the Member pursuant to Section 5.1 by the sum of the
capital contributed to the Fund by each Member pursuant to Section 5.1 on or
prior to such Expense Allocation Date. The sum of the Capital Percentages of all
Members on each Expense Allocation Date shall equal 100%.
1.9 CERTIFICATE means the Certificate of Formation of the Fund and any
amendments thereto as filed with the office of the Secretary of State of the
State of Delaware.
1.10 CLASS means any class of limited liability company interests
established by the Board from time to time.
1.11 CLOSING means the closing of a subscription to purchase a Unit.
1.12 CODE means the United States Internal Revenue Code of 1986, as
amended and as hereafter amended from time to time, or any successor law.
1.13 CONFIDENTIAL INFORMATION shall have the meaning as set forth in
Section 8.11(a).
1.14 DELAWARE ACT means the Delaware Limited Liability Company Act (6
DEL.C. Sections 18-101, et seq.) as in effect on the date hereof and as amended
from time to time, or any successor law.
1.15 MANAGER means each person who initially serves on the Board
pursuant to Section 2.6 or who, from time to time, pursuant to this Agreement
shall serve on the Board as indicated in the records of the Fund. Each Manager
shall be deemed a "Manager" of the Fund within the meaning of the Delaware Act.
1.16 EXPENSE ALLOCATION DATE means the initial Closing, and thereafter
each day, through and including the date which is twelve months after the
initial Closing, as of which a contribution to the capital of the Fund is made
pursuant to Section 5.1.
1.17 FISCAL PERIOD means the period commencing on the initial Closing,
and thereafter each period commencing on the day immediately following the last
day of the preceding Fiscal Period, and ending at the close of business on the
first to occur of the following dates:
(1) the last day of a Fiscal Year;
(2) the day preceding any day as of which a contribution to
the capital of the Fund is made pursuant to Section 5.1;
(3) the day as of which the Fund repurchases all or a portion
of the Units of any Member pursuant to this Agreement;
(4) any day as of which there is any distribution to a Member
pursuant to Section 5.8;
(5) any other day as of which this Agreement provides for any
amount to be credited to or debited against the Capital Account of any Member,
other than an amount to be credited to or debited against the capital accounts
of all Members in accordance with their respective Fund Percentages;
(6) the date as of which the Fund terminates; or
(7) any other date as established by the Board.
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1.18 FISCAL YEAR, for accounting purposes, means the period commencing
on the initial Closing and ending on December 31 and thereafter each period
commencing on January 1 of each year and ending on December 31 of each year (or
on the date of a final distribution pursuant to Section 6.2 hereof), unless the
Managers shall designate another fiscal year for the Fund that is a permissible
taxable year under the Code. For tax purposes, the 12-month period ending
December 31 of each year will be the Fund's taxable year.
1.19 FORM N-2 means the Fund's Registration Statement on Form N-2 or
any successive form filed with the Securities and Exchange Commission ("SEC"),
as amended from time to time.
1.20 FUND means the limited liability company governed hereby, as such
limited liability company may from time to time be constituted.
1.21 FUND PERCENTAGE means a percentage established for each Member on
the Fund's books as of the first day of each Fiscal Period. The Fund Percentage
of a Member for a Fiscal Period shall be determined by dividing the balance of
the Member's Capital Account as of the commencement of such Fiscal Period by the
sum of the capital accounts of all of the Members as of the commencement of such
Fiscal Period. The sum of the Fund Percentages of all Members for each Fiscal
Period shall equal 100%.
1.22 INDEPENDENT MANAGERS means those Managers who are not "interested
persons" of the Fund as such term is defined in the 1940 Act.
1.23 INTEREST means the entire limited liability company interest (as
defined in the Delaware Act) in the Fund at any particular time of a Member or
other person to whom an Interest or portion thereof has been transferred
pursuant to this Agreement, including the rights and obligations of such Member
or other person under this Agreement and the Delaware Act.
1.24 INVESTED CAPITAL means, with respect to any Member, the amount of
such Member's aggregate Net Capital Contributions to the Fund, subject to any
adjustments made and decreased by any withdrawals, repurchases, or
distributions.
1.25 INVESTMENT ADVISER means the person who at any particular time
serves as the investment adviser to the Fund pursuant to a written agreement
with the Fund.
1.26 INVESTMENT ADVISORY AGREEMENT means a separate written agreement
between the Fund and the Investment Adviser pursuant to which the Investment
Adviser performs certain investment advisory and supervisory services to the
Fund.
1.27 INVESTMENT FUNDS means unregistered investment funds and/or
registered investment companies in which the Fund may invest.
1.28 MEMBER means any person who shall have been admitted to the Fund
as a member or a substitute Member who is admitted to the Fund pursuant to this
Agreement, in such person's capacity as a Member until the Fund repurchases the
entire Interest of such person as a Member pursuant to Section 4.5 hereof or a
substituted Member or Members are admitted with respect to any such person's
entire Interest as a Member pursuant to Section 4.4 hereof. The Members shall
constitute a single class or group of members.
1.29 NET ASSET VALUE means the total value of all assets of the Fund as
valued pursuant to Section 7.3, less an amount equal to all accrued debts,
liabilities, and obligations of the Fund, calculated before giving effect to any
repurchase of Units.
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1.30 NET CAPITAL CONTRIBUTION means the Member's Capital Contribution
minus fees or expenses, if any.
1.31 NET PROFIT OR NET LOSS means the amount by which the Net Assets as
of the close of business on the last day of a Fiscal Period exceed (in the case
of Net Profit) or are less than (in the case of Net Loss) the Net Assets as of
the commencement of the same Fiscal Period, such amount to be adjusted to
exclude any items to be allocated among the Capital Accounts of the Members on a
basis that is not in accordance with the respective Fund Percentages of all
Members as of the commencement of such Fiscal Period pursuant to this Agreement;
1.32 1940 ACT means the Investment Company Act of 1940 and the rules,
regulations, and orders thereunder, as amended from time to time, or any
successor law.
1.33 1934 ACT means the Securities Exchange Act of 1934 and the rules,
regulations, and orders thereunder, as amended from time to time, or any
successor law.
1.34 OFFERING PERIOD means the period beginning when the Fund commences
the sale of Units.
1.35 ORGANIZATIONAL EXPENSES means the expenses, including initial
registration fees with the SEC, incurred by the Fund in connection with its
formation, its initial registration as an investment company under the 1940 Act,
and the initial offering of Units.
1.36 ORGANIZATIONAL MEMBER means Xxxx X. Sabre.
1.37 PERSON means any individual, entity, corporation, partnership,
association, limited liability company, joint-stock company, trust, estate,
joint venture, organization, or unincorporated organization.
1.38 PORTFOLIO MANAGERS means portfolio managers of the Investment
Funds in which the Fund invests, among which the Fund deploys some or all of its
assets.
1.39 POSITIVE BASIS shall have the meaning as set forth in Section 5.7.
1.40 POSITIVE BASIS MEMBER shall have the meaning as set forth in
Section 5.7.
1.41 REPURCHASE VALUATION DATE shall have the meaning set forth in
Section 4.5.
1.42 SECURITIES means securities (including, without limitation,
equities, debt obligations, options, and other "securities" as that term is
defined in Section 2(a)(36) of the 0000 Xxx) and any contracts for forward or
future delivery of any security, debt obligation, currency, or commodity, all
manner of derivative instruments and any contracts based on any index or group
of securities, debt obligations, currencies, or commodities, and any options
thereon.
1.43 SECURITIES ACT means the Securities Act of 1933, as amended and
any regulations promulgated thereunder.
1.44 SERIES means any series of limited liability company interests
established by the Board relating to a distinct portfolio and having separate
rights and powers with respect to the assets of the Fund allocated to such
Series.
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1.45 TAX MATTERS MEMBER means the Member designated as "tax matters
member" of the Fund pursuant to Section 8.18 hereof.
1.46 TRANSFER means the assignment, transfer, sale, or other
disposition of all or any portion of an Interest, including any right to receive
any allocations and distributions attributable to an Interest.
1.47 UNIT means the interest of a Member in the Fund represented by an
original Capital Contribution of $1,000 at the initial Closing of subscriptions
for Interests in the Fund, and with a net asset value determined from time to
time thereafter as provided in Section 7.3.
1.48 VALUATION DATE means any date in which the Net Asset Value of the
Fund is computed.
ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS; BOARD
2.1 FORMATION OF LIMITED LIABILITY COMPANY. The Organizational Member
and any person designated by the Board hereby are designated as authorized
persons, within the meaning of the Delaware Act, to execute, deliver, and file
all certificates (and any amendments and/or restatements thereof) required or
permitted by the Delaware Act to be filed in the office of the Secretary of
State of the State of Delaware. The Board shall cause to be executed and filed
with applicable governmental authorities any other instruments, documents, and
certificates which, in the opinion of the Fund's legal counsel, may from time to
time be required by the laws of the United States of America, the State of
Delaware, or any other jurisdiction in which the Fund shall determine to do
business, or any political subdivision or agency thereof, or which such legal
counsel may deem necessary or appropriate to effectuate, implement, and continue
the valid existence and business of the Fund.
2.2 NAME. The name of the company shall be "Mount Yale Opportunity
Fund, LLC or such other name as the Board hereafter may adopt upon (i) causing
an appropriate amendment to the Certificate to be filed in accordance with the
Delaware Act and (ii) sending notice thereof to each Member. The Fund's business
may be conducted under the name of the Fund or, to the fullest extent permitted
by law, any other name or names deemed advisable by the Board.
2.3 PRINCIPAL AND REGISTERED OFFICE. The Fund shall have its principal
office at the principal office of the Investment Adviser, or at such other place
designated from time to time by the Board.
The Fund shall have its registered office in the State of Delaware at
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000, and shall
have the Corporation Trust Company as its registered agent at such registered
office for service of process in the State of Delaware, unless a different
registered office or agent is designated from time to time by the Board in
accordance with the Delaware Act.
2.4 DURATION. The term of the Fund commenced on the filing of the
Certificate with the Secretary of State of the State of Delaware and shall
continue perpetually unless and until the Fund is dissolved pursuant to Section
6.1 hereof.
2.5 BUSINESS OF THE FUND. The business of the Fund is, without
limitation, to purchase, sell, invest, and trade in Securities, both directly
and through the purchase of limited partnership and other interests in the
Investment Funds and to engage in any financial or derivative transactions
relating thereto or otherwise and to engage in such other activities and to
exercise such rights and powers as permitted by limited liability companies
under the Delaware Act. On behalf of the Fund, the officers of the Fund may
execute, deliver, and perform all contracts, agreements, and other undertakings
and engage in all activities and transactions as may in the opinion
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of the Board be necessary or advisable to carry out the Fund's business and any
amendments to any such contracts, agreements, and other undertakings, all
without any further act, vote, or approval of any other person, notwithstanding
any other provision of this Agreement.
2.6 THE BOARD.
(a) The Organizational Member shall serve as the sole Manager on the
Initial Board as of May 26, 2004, 2004, until the proper designation of those
persons first listed on Schedule I who shall agree to be bound by all of the
terms of this Agreement to serve as Managers on the initial Board which
agreement to be bound shall be effective as of the date of their acceptance of
their appointment as Manager. The Board may, subject to the provisions of
paragraphs (a) and (b) of this Section 2.6 with respect to the number of and
vacancies in the position of Manager and the provisions of Section 3.3 hereof
with respect to the election of Managers by Members, designate any person who
shall agree to be bound by all of the terms of this Agreement as a Manager. The
names and mailing addresses of the Managers shall be set forth in the books and
records of the Fund. The number of Managers shall be fixed from time to time by
a written instrument signed by, or by resolution approved at a duly constituted
meeting, by vote of a majority of the Board, provided however that the number of
Managers shall at all times be at least one and no more than ten as determined,
from time to time, by the Managers pursuant to this Agreement.
(b) Each Manager shall serve as a Manager for the duration of the term
of the Fund, unless his or her status as a Manager shall be sooner terminated
pursuant to Section 4.2 hereof. If any vacancy in the position of a Manager
occurs, the remaining Managers may appoint a person to serve in such capacity,
provided such appointment is in accordance with the 1940 Act. The Managers may
call a meeting of Members to fill any vacancy in the position of Manager, and
shall do so when required by the 1940 Act.
(c) In the event that no Manager remains to continue the business of
the Fund, the Investment Adviser shall promptly call a meeting of the Members,
to be held within 60 days after the date on which the last Manager ceased to act
in that capacity, for the purpose of determining whether to continue the
business of the Fund and, if the business shall be continued, of electing the
required number of Managers to the Board. If the Members shall determine at such
meeting not to continue the business of the Fund or if the required number of
Managers is not elected within 60 days after the date on which the last Manager
ceased to act in that capacity, then the Fund shall be dissolved pursuant to
Section 6.1 hereof and the assets of the Fund shall be liquidated and
distributed pursuant to Section 6.2 hereof.
2.7 MEMBERS.
(a) The Board may admit one or more Members at such times as the Board
may determine. Members may be admitted to the Fund subject to the condition that
each such Member execute an appropriate signature page of this Agreement,
application, subscription agreement, or without such execution, if such Member
orally, in writing, or by other action, including, but not limited to payment
for Units, complies with the conditions for becoming a Member and pursuant to
which such Member agrees to be bound by all the terms and provisions hereof.
This Agreement shall not be unenforceable by reason of it not having been signed
by a person being admitted as a Member. The Board, in its sole and absolute
discretion, may reject applications or subscription agreements for Units in the
Fund. The admission of any person as a Member shall be effective upon the
revision of the books and records of the Fund to reflect the name and the
contribution to the capital of the Fund of such additional Member. Such record
of Members shall also set forth the number of Units that each Member holds. The
Organizational Member hereby is admitted as a Member on the date hereof.
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(b) If a Member is admitted to the Fund prior to the initial Closing,
the Invested Capital of such Member shall be adjusted by any Net Profit or Net
Loss allocable to such Member for the period through the initial Closing.
2.8 BOTH MANAGERS AND MEMBERS. A Member may at the same time be a
Manager, a Member, or an Investment Adviser, and a Member in which event such
Member's rights and obligations in each capacity shall be determined separately
in accordance with the terms and provisions hereof and as provided in the
Delaware Act and the 1940 Act. A Manager need not be a Member.
2.9 ORGANIZATIONAL MEMBER. Xxxx X. Sabre shall be the Organizational
Member of the Fund.
2.10 LIMITED LIABILITY. To the fullest extent permitted under
applicable law, a Member shall not be liable for the Fund's debts, obligations,
or liabilities in any amount in excess of the Capital Account balance of such
Member. To the fullest extent permitted under applicable law, the Investment
Adviser and Managers shall not be liable for the Fund's debts, obligations, and
liabilities.
2.11 SERIES. The Fund may create one or more Series and/or classes from
time to time. With respect to any Series established by the Fund, the following
provisions shall apply:
(a) Separate and distinct records shall be maintained for each Series,
and the assets associated with any such Series shall be held and accounted for
separately from the other assets of the Fund or any other Series;
(b) the debts, liabilities and obligations incurred, contracted for or
otherwise existing with respect to a particular Series shall be enforceable
against the assets of such Series only, and not against the assets of the Fund
generally or any other Series;
(c) the Board, in its sole and absolute discretion, shall have
authority to restrict allocations or transfers of Member Capital Contributions
to or from any Series; and
(d) notwithstanding Section 18-215 of the Delaware Act, the failure of
a Series to have any Member associated with it shall not be the basis for the
dissolution of the Series and the winding up of its affairs unless in accordance
with the provisions of Article VI.
ARTICLE III
MANAGEMENT
3.1 MANAGEMENT AND CONTROL.
(a) Management and control of the business of the Fund shall be vested
in the Board, which shall have the right, power, and authority, on behalf of the
Fund and in its name, to exercise all rights, powers, and authority of
"managers" under the Delaware Act and to do all things necessary and proper to
carry out the objective and business of the Fund and its duties hereunder. No
Manager shall have the authority individually to act on behalf of or to bind the
Fund except within the scope of such Manager's authority as delegated by the
Board. The parties hereto intend that, except to the extent otherwise expressly
provided herein, (i) each Manager shall be vested with the same powers,
authority, and responsibilities on behalf of the Fund as are customarily vested
in each director of a Delaware corporation and (ii) each Independent Manager
shall be vested with the same powers, authority, and responsibilities on behalf
of the Fund as are customarily vested in each director of a closed-end
management investment company registered under the 1940 Act that is organized as
a Delaware corporation who is not an "interested person" of such company as such
term is defined in the 1940 Act. During any period in which the
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Fund shall have no Managers, the Investment Adviser shall continue to serve as
the adviser to the Fund. The Managers may make Capital Contributions and own
Units in the Fund.
(b) Each Member agrees not to treat, on his personal income tax return
or in any claim for a tax refund, any item of income, gain, loss, deduction, or
credit in a manner inconsistent with the treatment of such item by the Fund. The
Board shall have the exclusive authority and discretion to make any elections
required or permitted to be made by the Fund under any provisions of the Code or
any other revenue laws.
(c) Members shall have no right to participate in and shall take no
part in the management or control of the Fund's business, except to the extent
specifically provided herein, and shall have no right, power, or authority to
act for or bind the Fund. Members shall have the right to vote on any matters
only as provided in this Agreement or on any matters that require the approval
of the holders of voting securities under the 1940 Act or as otherwise required
in the Delaware Act.
(d) The Board may delegate to any person, including officers of the
Fund, any rights, power, and authority vested by this Agreement in the Board to
the extent permissible under applicable law.
3.2 ACTIONS BY THE BOARD.
(a) Unless provided otherwise in this Agreement, the Board shall act
only: (i) by the affirmative vote of a majority of the Managers (which majority
shall include any requisite number of Independent Managers required by the 0000
Xxx) present at a meeting duly called at which a quorum of the Managers shall be
present (in person, which may include any means of communication that allows all
Managers participating to hear each other simultaneously during the meeting, as
permitted by the SEC and/or the 1940 Act, or, if in person attendance is not
required by the 1940 Act, in person or by telephone) or (ii) by unanimous
written consent of all of the Managers without a meeting, if permissible under
the 1940 Act.
(b) The Board may designate from time to time a Chairperson who shall
preside at all meetings. Meetings of the Board may be called by the Chairperson
or any two Managers, and may be held on such date and at such time and place as
the Board shall determine. Each Manager shall be entitled to receive written
notice of the date, time, and place of such meeting within a reasonable time in
advance of the meeting. Notice need not be given to any Manager who shall attend
a meeting without objecting to the lack of notice or who shall execute a written
waiver of notice with respect to the meeting. Managers may attend and
participate in any meeting by telephone, except where in person attendance at a
meeting is required by the 1940 Act. A majority of the Managers then in office
shall constitute a quorum at any meeting.
(c) The Board may designate from time to time agents and employees of
the Fund, including without limitation employees of the Investment Adviser, who
shall have the same powers and duties on behalf of the Fund (including the power
to bind the Fund) as are customarily vested in officers of a Delaware
corporation, and designate them as officers of the Fund.
3.3 MEETINGS OF MEMBERS.
(a) Actions requiring the vote of the Members may be taken at any duly
constituted meeting of the Members at which a quorum is present. Meetings of the
Members may be called by the Board or by Members holding a majority of the total
number of votes eligible to be cast by all Members, and may be held at such
time, date, and place as the Board shall determine. The Board shall arrange to
provide written notice of the meeting, stating the date, time, and place of the
meeting and the record date therefor, to each Member entitled to vote at the
meeting within a reasonable time prior thereto. Failure to receive notice of a
meeting on the part of any Member shall not affect the validity of any act or
proceeding of the meeting, so long as a quorum shall be present at the
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meeting. Only matters set forth in the notice of a meeting may be voted on by
the Members at a meeting. The presence in person or by proxy of Members holding
a majority of the total number of votes eligible to be cast by all Members as of
the record date shall constitute a quorum at any meeting. In the absence of a
quorum, a meeting of the Members may be adjourned by action of a majority of the
Members present in person or by proxy without additional notice to the Members.
Except as otherwise required by any provision of this Agreement or of the 1940
Act, (i) those candidates receiving a plurality of the votes cast at any meeting
of Members shall be elected as Managers and (ii) all other actions of the
Members taken at a meeting shall require the affirmative vote of Members holding
a majority of the total number of votes eligible to be cast by those Members who
are present in person or by proxy at such meeting.
(b) Each Member shall be entitled to cast at any meeting of Members a
number of votes equivalent to such Member's Fund Percentage as of the record
date for such meeting. The Board shall establish a record date not less than 10
nor more than 60 days prior to the date of any meeting of Members to determine
eligibility to vote at such meeting and the number of votes which each Member
will be entitled to cast thereat, and shall maintain for each such record date a
list setting forth the name of each Member and the number of votes that each
Member will be entitled to cast at the meeting.
(c) A Member may vote at any meeting of Members by a proxy properly
executed in writing by the Member and filed with the Fund before or at the time
of the meeting. A proxy may be suspended or revoked, as the case may be, by the
Member executing the proxy by a later writing delivered to the Fund at any time
prior to exercise of the proxy or if the Member executing the proxy shall be
present at the meeting and decide to vote in person. Any action of the Members
that is permitted to be taken at a meeting of the Members may be taken without a
meeting if consents in writing, setting forth the action taken, are signed by
Members holding a majority of the total number of votes eligible to be cast or
such greater percentage as may be required in order to approve such action.
3.4 CUSTODY OF ASSETS OF THE FUND. The physical possession of all
funds, Securities, or other property of the Fund shall at all times, be held,
controlled, and administered by one or more custodians retained by the Fund in
accordance with the requirements of the 1940 Act.
3.5 OTHER ACTIVITIES OF MEMBERS AND MANAGERS.
(a) The Managers shall not be required to devote full time to the
affairs of the Fund, but shall devote such time as may reasonably be required to
perform their obligations under this Agreement.
(b) Any Member, Manager, or Affiliate of the foregoing may engage in or
possess an interest in other business ventures or commercial dealings of every
kind and description, independently or with others, including, but not limited
to, acquisition and disposition of Securities, provision of investment advisory
or brokerage services, serving as directors, officers, employees, advisers, or
agents of other companies, partners of any partnership, members of any limited
liability company, or trustees of any trust, or entering into any other
commercial arrangements. No Member shall have any rights in or to such
activities of any other Member or Manager, or any profits derived therefrom.
3.6 DUTY OF CARE.
(a) A Manager shall not be liable to the Fund or to any of its Members
for any loss or damage occasioned by any act or omission in the performance of
the Manager's services under this Agreement, unless it shall be determined by
final judicial decision in a court of competent jurisdiction on the merits from
which there is no further right to appeal that such loss is due to an act or
omission of such person constituting willful misfeasance,
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bad faith, negligence, or reckless disregard of the duties involved in the
conduct of such Manager's office or as otherwise required by law.
(b) A Member not in breach of any obligation hereunder or under any
agreement pursuant to which the Member subscribed for Units shall be liable to
the Fund, any other Member, or third parties only as required by the Delaware
Act or otherwise provided in this Agreement.
3.7 INDEMNIFICATION.
(a) To the fullest extent permitted by law, the Fund shall, subject to
Section 3.7(b) hereof, indemnify each Manager (including for this purpose their
executors, heirs, assigns, successors, or other legal representatives), the
Investment Adviser and Tax Matters Member (including for this purpose each
affiliate, shareholder, partner, member, officer, director, principal, employee,
or agent of the Investment Adviser and the Tax Matters Member) and the
executors, heirs, assigns, successors, or other legal representatives of each of
the foregoing, and of any person who controls or is under common control, or
otherwise affiliated, with the Investment Adviser and the Tax Matters Member
(and their executors, heirs, assigns, successors, or other legal
representatives) against all losses, claims, damages, liabilities, costs, and
expenses, including, but not limited to, amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties, and reasonable counsel fees,
incurred in connection with the defense or disposition of any action, suit,
investigation, or other proceeding, whether civil or criminal, before any
judicial, arbitral, administrative, or legislative body, in which such
indemnitee may be or may have been involved as a party or otherwise, or with
which such indemnitee may be or may have been threatened, while in office or
thereafter, by reason of being or having been a Manager, Investment Adviser, or
the Tax Matters Member, as the case may be, of the Fund or the past or present
performance of services to the Fund by such indemnitee, except to the extent
such loss, claim, damage, liability, cost, or expense shall have been finally
determined in a decision on the merits in any such action, suit, investigation,
or other proceeding to have been incurred or suffered by such indemnitee by
reason of willful misfeasance, bad faith, negligence, or reckless disregard of
the duties involved in the conduct of such indemnitee's office. The rights of
indemnification provided under this Section 3.7 shall not be construed so as to
provide for indemnification of an indemnitee for any liability (including
liability under federal securities laws which, under certain circumstances,
impose liability even on persons that act in good faith) to the extent (but only
to the extent) that such indemnification would be in violation of applicable
law, but shall be construed so as to effectuate the applicable provisions of
this Section 3.7 to the fullest extent permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred by any
such indemnitee (but excluding amounts paid in satisfaction of judgments, in
compromise, or as fines or penalties), may be paid from time to time by the Fund
in advance of the final disposition of any such action, suit, investigation, or
proceeding upon receipt of an undertaking by or on behalf of such indemnitee to
repay to the Fund amounts so paid if it shall ultimately be determined that
indemnification of such expenses is not authorized under Section 3.7(a) hereof;
provided, however, that (i) such indemnitee shall provide security for such
undertaking, (ii) the Fund shall be insured by or on behalf of such indemnitee
against losses arising by reason of such indemnitee's failure to fulfill his or
its undertaking, or (iii) a majority of the Managers (excluding any Manager who
is seeking advancement of expenses hereunder or is or has been a party to any
action, suit, investigation, or proceeding involving claims similar to those
involved in the action, suit, investigation, or proceeding giving rise to a
claim for advancement of expenses hereunder) or independent legal counsel in a
written opinion shall determine based on a review of readily available facts (as
opposed to a full trial-type inquiry) that there is reason to believe such
indemnitee ultimately will be entitled to indemnification.
(c) As to the disposition of any action, suit, investigation, or
proceeding (whether by a compromise payment, pursuant to a consent decree, or
otherwise) without an adjudication or a decision on the merits by a court of
competent jurisdiction, or by any other body before which the proceeding shall
have been brought, that an indemnitee is liable to the Fund or its Members by
reason of willful misfeasance, bad faith, negligence, or
10
reckless disregard of the duties involved in the conduct of such indemnitee's
office, indemnification shall be provided pursuant to Section 3.7(a) hereof if:
(i) approved as in the best interests of the Fund by vote of a majority of the
Managers (excluding any Manager who is seeking indemnification hereunder or is
or has been a party to any action, suit, investigation, or proceeding involving
claims similar to those involved in the action, suit, investigation, or
proceeding giving rise to a claim for advancement of expenses hereunder) upon a
determination based upon a review of readily available facts (as opposed to a
full trial-type inquiry) that such indemnitee acted in good faith and in the
reasonable belief that such actions were in the best interests of the Fund and
that such indemnitee is not liable to the Fund or its Members by reason of
willful misfeasance, bad faith, negligence, or reckless disregard of the duties
involved in the conduct of such indemnitee's office; or (ii) the Managers secure
a written opinion of independent legal counsel based upon a review of readily
available facts (as opposed to a full trial-type inquiry) to the effect that
such indemnitee acted in good faith and in the reasonable belief that such
actions were in the best interests of the Fund and that such indemnitee is not
liable to the Fund or its Members by reason of willful misfeasance, bad faith,
negligence, or reckless disregard of the duties involved in the conduct of such
indemnitee's office.
(d) Any indemnification or advancement of expenses made pursuant to
this Section 3.7 shall not prevent the recovery from any indemnitee of any such
amount if such indemnitee subsequently shall be determined in a final decision
on the merits in a court of competent jurisdiction in any action, suit,
investigation, or proceeding involving the liability or expense that gave rise
to such indemnification or advancement of expenses to be liable to the Fund or
its Members by reason of willful misfeasance, bad faith, negligence, or reckless
disregard of the duties involved in the conduct of such indemnitee's office. In
any suit brought by an indemnitee to enforce a right to indemnification under
this Section 3.7 it shall be a defense that, and in any suit in the name of the
Fund to recover any indemnification or advancement of expenses made pursuant to
this Section 3.7 the Fund shall be entitled to recover such expenses upon a
final adjudication that, the indemnitee has not met the applicable standard of
conduct set forth in this Section 3.7. In any such suit brought to enforce a
right to indemnification or to recover any indemnification or advancement of
expenses made pursuant to this Section 3.7, the burden of proving that the
indemnitee is not entitled to be indemnified, or to any indemnification or
advancement of expenses, under this Section 3.7 shall be on the Fund (or any
Member acting derivatively or otherwise on behalf of the Fund or its Members).
(e) An indemnitee may not satisfy any right of indemnification or
advancement of expenses granted in this Section 3.7 or to which he, she, or it
may otherwise be entitled except out of the assets of the Fund, and no Member
shall be personally liable with respect to any such claim for indemnification or
advancement of expenses.
(f) The rights of indemnification provided hereunder shall not be
exclusive of or affect any other rights to which any person may be entitled by
contract or otherwise under law. Nothing contained in this Section 3.7 shall
affect the power of the Fund to purchase and maintain liability insurance on
behalf of any Manager or other person.
3.8 FEES, EXPENSES, AND REIMBURSEMENT.
(a) So long as the Investment Adviser (or its affiliates) provides
investment advisory services to the Fund, it shall be entitled to receive fees
for such services as may be agreed to by the Investment Adviser and the Fund
pursuant to an Investment Advisory Agreement, provided however, the Board has
approved such agreement and fees. The Advisory Fee will be computed based on the
Capital Account of each Member as of the end of business on the last business
day of each month, after adjustment for any subscriptions effective on such date
and before giving effect to any repurchase of Units effective as of such date.
The Investment Adviser may waive or reduce the Advisory Fee calculated with
respect to, and deducted from, the Capital Account of any Member and may pay all
or part of the Advisory Fee to third parties for services rendered in connection
with the placement of Units.
11
(b) The Board may cause the Fund to compensate each Manager for his or
her services hereunder. In addition, the Fund shall reimburse the Managers for
reasonable out-of-pocket expenses incurred by them in performing their duties
under this Agreement.
(c) The Fund shall bear all of its own operating expenses incurred in
the business of the Fund other than those specifically required to be borne by
the Investment Adviser or another party pursuant to a separate written agreement
with the Fund as contemplated by Section 3.8(a) hereof. Expenses to be borne by
the Fund include, but are not limited to, the following:
(1) all costs and expenses related to portfolio
transactions and positions for the Fund's account,
including, but not limited to, brokerage commissions,
research fees, interest and commitment fees on loans
and debit balances, borrowing charges on Securities
sold short, dividends on Securities sold short but
not yet purchased, custodial fees, margin fees,
transfer taxes and premiums, and taxes withheld on
foreign dividends and indirect expenses from
investments in Investment Funds;
(2) all costs and expenses associated with the
organization, operation, and registration of the
Fund, offering costs, and the costs of compliance
with any applicable Federal or state laws;
(3) the costs and expenses of holding meetings of the
Board and any meetings of Members that are regularly
scheduled, permitted, or are required to be held by
this Agreement, the 1940 Act, or other applicable
law;
(4) fees and disbursements of any attorneys, accountants
(including tax preparation fees), auditors, and other
consultants and professionals engaged on behalf of
the Fund to assist in connection with its operations;
(5) the costs of a fidelity bond and any liability
insurance obtained on behalf of the Fund, the
Investment Adviser, or the Managers;
(6) any fees payable to the Investment Adviser;
(7) all costs and expenses associated with the
organization of any subsidiary vehicle deemed
necessary for the investment operations of the Fund,
or with the conversion of the Fund to a master-feeder
structure as contemplated by Section 8.10 hereof;
(8) all costs and expenses of preparing, printing, and
distributing reports and other communications to
Members;
(9) the fees of custodians, transfer agents, and other
persons providing administrative services to the
Fund;
(10) all expenses in computing the net asset value of the
Fund and the Units, including any equipment or
services obtained for such purposes;
(11) administrative and member service fees incurred by
the Fund will be allocated among its various classes
based on the net asset value of the Fund attributable
to each such class; and
12
(12) such other types of expenses as may be approved from
time to time by the Board.
The Investment Adviser shall be entitled to reimbursement from
the Fund for any of the above expenses that it pays on behalf of the Fund.
(d) Subject to procuring any required regulatory approvals, the Fund
from time to time, alone or in conjunction with other accounts for which the
Investment Adviser, or any Affiliate of the Investment Adviser, acts as general
partner, managing member, or investment Adviser, may purchase insurance in such
amounts, from such insurers and on such terms as the Board shall determine.
ARTICLE IV
TERMINATION OF STATUS OF INVESTMENT ADVISER AND MANAGERS;
TRANSFERS, REPURCHASES, AND REDEMPTIONS
4.1 TERMINATION OF STATUS OF THE INVESTMENT ADVISER. The status of the
Investment Adviser shall terminate if the Investment Advisory Agreement with the
Investment Adviser terminates and the Fund does not enter into a new Investment
Advisory Agreement with the Investment Adviser, effective as of the date of such
termination.
4.2 TERMINATION OF STATUS OF A MANAGER. The status of a Manager shall
terminate if the Manager (i) shall die; (ii) shall be adjudicated incompetent;
(iii) shall voluntarily withdraw as a Manager (upon not less than 90 days' prior
written notice to the other Managers, unless the other Managers waive such
notice); (iv) shall be removed; (v) shall be certified by a physician to be
mentally or physically unable to perform his or her duties hereunder; (vi) shall
be declared bankrupt by a court with appropriate jurisdiction, file a petition
commencing a voluntary case under any bankruptcy law, or make an assignment for
the benefit of creditors; or (vii) shall have a receiver appointed to administer
the property or affairs of such Manager.
4.3 REMOVAL OF THE MANAGERS. Any Manager may be removed by (i) the vote
or written consent of at least two-thirds (2/3) of the Managers not subject to
the removal or vote or (ii) the vote or written consent of Members holding not
less than two-thirds (2/3) of the total number of votes eligible to be cast by
all Members.
4.4 TRANSFER OF UNITS OF MEMBERS.
(a) Units held by a Member may be transferred only: (i) by operation of
law pursuant to the death, divorce, bankruptcy, insolvency, or dissolution of
such Member; or (ii) under extremely limited circumstances, with the written
consent of the Board (which may be withheld for any reason in its sole and
absolute discretion). If any transferee does not meet such investor eligibility
requirements, the Fund reserves the right to redeem its Units. If the Board does
not consent to a transfer by operation of law, the Fund shall redeem the Unit
from the Member's successor. Any transfer must comply with the Securities Act.
The Board generally will not consent to a transfer unless the transfer is: (i)
one in which the tax basis of the Units in the hands of the transferee is
determined, in whole or in part, by reference to its tax basis in the hands of
the transferring Member (e.g. certain gifts and contributions to family
entities); or (ii) to members of the transferring Member's immediate family
(siblings, spouse, parents, and children). The foregoing permitted transferees
will not be allowed to become substituted Members without the consent of the
Board, which may be withheld in its sole and absolute discretion.
Each transferring Member and transferee agree to pay all expenses,
including but not limited to attorneys' and accountants' fees, incurred by the
Fund in connection with any transfer.
13
(b) By subscribing for Units, each Member agrees to indemnify and hold
harmless the Fund, the Board, the Investment Adviser, or each other Member, and
any Affiliate of the foregoing against all losses, claims, damages, liabilities,
costs, and expenses (including legal or other expenses incurred in investigating
or defending against any losses, claims, damages, liabilities, costs, and
expenses or any judgments, fines, and amounts paid in settlement), joint or
several, to which such persons may become subject by reason of or arising from
any transfer made by that Member in violation of this Section 4.4 or any
misrepresentation made by that Member in connection with any such transfer.
(c) Each transferring Member shall indemnify and hold harmless the
Fund, the Board, the Investment Adviser, or each other Member and any Affiliate
of the foregoing against all losses, claims, damages, liabilities, costs, and
expenses (including legal or other expenses incurred in investigating or
defending against any such losses, claims, damages, liabilities, costs, and
expenses or any judgments, fines, and amounts paid in settlement), joint or
several, to which such persons may become subject by reason of or arising from
(i) any transfer made by such Member in violation of this Section 4.4 and (ii)
any misrepresentation by such Member in connection with any such transfer.
4.5 REPURCHASE OF UNITS.
(a) GENERAL. Except as otherwise provided in this Agreement, no Member
or other person holding Units or portion thereof shall have the right to require
the Fund to redeem its Units. The Board of the Fund, from time to time, and in
its sole and absolute discretion, may determine to cause the Fund to offer to
repurchase Units from Members, including the Investment Adviser, on such terms
and conditions as set forth in this Agreement. However, the Fund shall not offer
to repurchase Units on more than four occasions during any one Fiscal Year
unless it has been advised by counsel to the Fund to the effect that more
frequent offers would not cause any adverse tax consequences to the Fund or its
Members. In accordance with the terms and conditions as are set forth in this
Agreement, in determining whether to cause the Fund to repurchase Units pursuant
to written requests by Members, the Board shall consider, among other things,
the recommendation of the Investment Adviser and shall also consider the
following factors, among others, in making such determination:
(1) whether any Members have requested that the Fund
repurchase their Units;
(2) the liquidity of the Fund's assets;
(3) the investment plans and working capital requirements
of the Fund;
(4) the relative economies of scale with respect to the
size of the Fund;
(5) the history of the Fund in repurchasing Units;
(6) the economic condition of the securities markets; or
(7) the anticipated tax consequences of any proposed
repurchases of Units.
(b) DISCRETIONARY REPURCHASES. The Board shall cause the Fund to
repurchase Units on terms fair to the Fund and to all Members or one or more
classes of Members (including persons holding Units acquired from Members), as
applicable, in the following manner:
14
(1) The Board will provide written notice to Members when it
has determined, in its sole and absolute discretion, that the Fund will
repurchase Units. Such notice will describe the terms of the repurchase
offer, including:
(i) the commencement date of the repurchase offer;
(ii) the date on which repurchase requests must be
received by the Fund (the "Repurchase Request Deadline"); and
(iii) other information that Members should consider
in deciding whether and how to participate in such repurchase
opportunity.
(2) Members must submit, in writing, requests for repurchase
to the Fund or its designated agent. The Repurchase Request Deadline
will be a date set by the Board occurring no sooner than 20 business
days after the commencement date of the repurchase offer and such
Repurchase Request Deadline may be extended by the Board in its sole
and absolute discretion. The Fund will not accept any repurchase
request received by it or its designated agent after the Repurchase
Request Deadline.
(3) Payment for Units accepted by the Fund for repurchase will
be made in whole or in part in cash or Securities of equivalent value.
The amount due to any Member whose Units are repurchased will be equal
to the value of the Member's Capital Account or portion thereof based
on the net asset value of the Fund's assets as of the effective date of
repurchase (the "Repurchase Valuation Date"), after giving effect to
all allocations to be made to the Member's Capital Account as of such
date. The Repurchase Valuation Date is the last business day of the
quarter in which the Repurchase Request Deadline occurs, which will be
approximately 65 days after the Repurchase Request Deadline. Payment
amounts shall ordinarily be calculated within 10 business days after
the Repurchase Valuation Date in accordance with the Fund's valuation
procedures as adopted by the Fund's Board.
(4) Payment for Units accepted by the Fund for repurchase will
generally be made within 30 days of the Repurchase Valuation Date.
(5) The Fund may suspend or postpone any repurchase offer, by
a majority of the Board, including a majority of the Independent
Managers, including but not limited to:
(i) any period during which an emergency exists as a
result of which it is not reasonably practicable for the Fund
to dispose of securities it owns or to determine the value of
the Fund's nets assets;
(ii) for any other periods that the SEC permits by
order for the protection of Members; or
(iii) other unusual circumstances as the Board deems
advisable for the benefit of the Fund and its Members.
(6) The Board, in its sole and absolute discretion, shall
determine the amount of Units to be repurchased, if any. If a greater
number of Units is submitted for repurchase by Members as of the
Repurchase Request Deadline than the repurchase offer amount, as
determined by the Board in its sole and absolute discretion, the Fund
may repurchase an additional amount of Units not to exceed 2% of the
Units outstanding on the Repurchase Request Deadline. If the Board
determines not to repurchase more than the repurchase offer amount or
if Members submit for repurchase Units in an amount exceeding the
15
repurchase offer amount plus 2% of the Units outstanding on the
Repurchase Request Deadline, the Fund shall repurchase the Units
submitted for repurchase on a pro rata basis, disregarding fractions,
according to the number of Units submitted for repurchase by each
Member as of the Repurchase Request Deadline; provided, however, that
this provision shall not prohibit the Fund from:
(i) accepting all Units submitted for repurchase by
Members who own, beneficially or of record, an aggregate of
not more than a specified percentage of such Units and who
submit for repurchase all their Units, before prorating Units
submitted for repurchase by other Members; or
(ii) accepting by lot Units submitted for repurchase
by Members who offer all Units held by them or who, when
submitting for repurchase their Units, elect to have either
all or none or at least a minimum amount or none accepted, if
the Fund first accepts all Units submitted for repurchase by
Members who do not so elect.
(7) The Board may, in its sole and absolute discretion, elect
to impose charges on Members or other persons who submit their Units
for repurchase. The Board may also, in its sole and absolute
discretion, allocate to tendering Members withdrawal or similar charges
imposed by Investment Funds if the Fund has requested withdrawal of its
capital from any Investment Funds in order to fund the repurchase of
Units and such charges were imposed on the Fund.
(8) A Member who submits for repurchase only a portion of such
Member's Units shall be required to maintain a Capital Account balance
at least equal to $100,000.
(9) The Investment Adviser may submit for repurchase its
Unit(s) as a Member under Section 4.5 hereof.
(c) MANDATORY REDEMPTIONS. The Board may cause the Fund to redeem Units
of a Member or any person acquiring Units thereof from or through a Member in
the event that the Board determines or has reason to believe that, among other
things:
(1) such Units have been transferred or such Units have vested
in any person by operation of law as a result of the death,
dissolution, bankruptcy, or incompetency of a Member;
(2) ownership of such Unit by a Member or other person will
cause the Fund to be in violation of, or require registration of any
Units, or subject the Fund or the Investment Adviser to additional
registration or regulation under, the securities, commodities, or other
laws of the United States or any other relevant jurisdiction;
(3) continued ownership of such Units may be harmful or
injurious to the business or reputation of the Fund or the Investment
Adviser, or may subject the Fund or any of its Members to an undue risk
of adverse tax or other fiscal consequences;
(4) for any period during which an emergency exists as a
result of which it is not reasonably practicable for the Fund to
dispose of securities it owns or to determine the value of the Fund's
net assets;
(5) any representation or warranty made by a Member in
connection with the acquisition of Units was not true when made or has
ceased to be true; or
16
(6) it would be in the best interests of the Fund, as
determined by the Board in its sole and absolute discretion, for the
Fund to redeem such a Unit.
ARTICLE V
CAPITAL
5.1 CONTRIBUTIONS TO CAPITAL.
(a) The minimum Capital Contribution of each Member to the capital of
the Fund shall be such amount as the Board in its sole and absolute discretion
may determine from time to time. The amount of the initial Capital Contribution
of each Member shall be recorded on the books and records of the Fund upon
acceptance as a contribution to the capital of the Fund. The Managers shall not
be entitled to make voluntary contributions of capital to the Fund as Managers
of the Fund, but may make voluntary contributions to the capital of the Fund as
Members. The Investment Adviser may make voluntary contributions to the capital
of the Fund as a Member.
(b) If permitted by the Board, a Member and the Investment Adviser, as
a Member, may make additional Capital Contributions of the Fund, effective as of
such times as the Board in its discretion may permit, subject to the limitations
applicable to the admission of Members pursuant to this Agreement. No Member
shall be obligated to make any additional Capital Contribution except to the
extent provided in this Agreement.
(c) Except as otherwise permitted by the Board, initial and any
additional contributions to the capital of the Fund by any Member shall be
payable in cash.
(d) The minimum initial and additional Capital Contributions may be
increased or reduced by the Board.
(e) The Fund shall issue additional Units to Members making additional
Capital Contributions. The number of Units shall be determined by dividing the
amount of the additional Capital Contribution by the net asset value per Unit as
of the date the contribution is accepted.
5.2 RIGHTS OF MEMBERS TO CAPITAL.
No Member shall be entitled to interest on his or its contribution to
the capital of the Fund, nor shall any Member be entitled to the return of any
capital of the Fund except as otherwise specifically provided herein. No Member
shall be liable for the return of any such amounts. No Member shall have the
right to require partition of the Fund's property or to compel any sale or
appraisal of the Fund's assets.
5.3 CAPITAL ACCOUNTS.
(a) The Fund shall maintain a separate Capital Account for each Member.
(b) Each Member's Capital Account shall have an initial balance equal
to the amount of cash constituting such Member's Net Capital Contribution.
(c) Each Member's Capital Account shall be increased by the sum of (i)
the amount of cash constituting additional contributions by such Member to the
capital of the Fund permitted pursuant to Section 5.1, plus (ii) any amount
credited to such Member's Capital Account pursuant to this Article V.
17
(d) Each Member's Capital Account shall be reduced by the sum of (i)
the amount of any repurchase of the Units, or portion thereof, of such Member or
distributions to such Member pursuant to this Agreement plus (ii) any amounts
debited against such Member's Capital Account pursuant to this Article V.
(e) If all or a portion of the Units of a Member is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it relates to the transferred
Units.
(f) Increases or reductions pursuant to paragraphs (c) and (d) may be
made through adjustments to the number of Units of each Member.
5.4 ALLOCATION OF NET PROFIT AND LOSS.
As of the last day of each Fiscal Period, any Net Profit or Net Loss
for the Fiscal Period shall be allocated among and credited to or debited
against the Capital Accounts of the Members in accordance with their respective
Fund Percentages for such Fiscal Period.
5.5 ALLOCATION OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES.
(a) If the Fund incurs a withholding tax or other tax obligation with
respect to the share of Fund income allocable to any Member, then the Board,
without limitation of any other rights of the Fund or the Board, shall cause the
amount of such obligation to be debited against the Capital Account of such
Member when the Fund pays such obligation, and any amounts then or thereafter
distributable to such Member shall be reduced by the amount of such taxes. If
the amount of such taxes is greater than any such distributable amounts, then
such Member and any successor to such Member's Interest shall pay to the Fund as
a contribution to the capital of the Fund, upon demand of the Fund, the amount
of such excess. The Fund shall not be obligated to apply for or obtain a
reduction of or exemption from withholding tax on behalf of any Member that may
be eligible for such reduction or exemption; provided, that in the event that
the Fund determines that a Member is eligible for a refund of any withholding
tax, the Fund may, at the request and expense of such Member, assist such Member
in applying for such refund.
(b) Except as otherwise provided for in this Agreement and unless
prohibited by the 1940 Act, any expenditures payable by the Fund, to the extent
determined by the Board to have been paid or withheld on behalf of, or by reason
of particular circumstances applicable to, one or more but fewer than all of the
Members, shall be charged to only those Members on whose behalf such payments
are made or whose particular circumstances gave rise to such payments. Such
charges shall be debited from the Capital Accounts of such Members as of the
close of the Fiscal Period during which any such items were paid or accrued by
the Fund.
5.6 RESERVES.
(a) Appropriate reserves may be created, accrued, and charged against
Net Assets and proportionately against the Capital Accounts of the Members for
contingent liabilities, if any, as of the date any such contingent liability
becomes known to the Investment Adviser or the Board, such reserves to be in the
amounts which the Board in its sole and absolute discretion deem necessary or
appropriate. The Board may increase or reduce any such reserves from time to
time by such amounts as it in its sole and absolute discretion deems necessary
or appropriate. The amount of any such reserve, or any increase or decrease
therein, may be proportionately charged or credited, as appropriate, to the
Members' Capital Accounts. The amount of any such reserve, or any increase or
decrease therein, may be proportionately charged or credited, as appropriate, to
the Capital Accounts of those parties who are Members at the time when such
reserve is created, increased ,or decreased, as the case may be; provided,
however, that if any such individual reserve item, adjusted by any increase
therein, exceeds the lesser of
18
$500,000 or 1% of the aggregate value of the Capital Accounts of all such
Members, the amount of such reserve, increase, or decrease shall instead be
charged or credited to those parties who were Members at the time, as determined
by the Board in its sole and absolute discretion, of the act or omission giving
rise to the contingent liability for which the reserve was established,
increased, or decreased in proportion to their Capital Accounts at that time.
(b) To the extent permitted under applicable law, if at any time an
amount is paid or received by the Fund (other than contributions to the capital
of the Fund, distributions, or repurchases of Units or portions thereof) and
such amount exceeds the lesser of $500,000 or 1% of the aggregate value of the
Capital Accounts of all Members at the time of payment or receipt and such
amount was not accrued or reserved for but would nevertheless, in accordance
with the Fund's accounting practices, be treated as applicable to one or more
prior Fiscal Periods, then such amount shall be proportionately charged or
credited, as appropriate, to those parties who were Members during such prior
Fiscal Period or Periods.
(c) To the extent permitted under applicable law, if any amount is
required by paragraph (a) or (b) of this Section 5.6 to be charged or credited
to a party who is no longer a Member, such amount shall be paid by or to such
party, as the case may be, in cash, with interest from the date on which the
Board determines that such charge or credit is required. In the case of a
charge, the former Member shall be obligated to pay the amount of the charge,
plus interest as provided above, to the Fund on demand; provided, however, that
(i) in no event shall a former Member be obligated to make a payment exceeding
the amount of such Member's Capital Account at the time to which the charge
relates; and (ii) no such demand shall be made after the expiration of three
years since the date on which such party ceased to be a Member. To the extent
that a former Member fails to pay to the Fund, in full, any amount required to
be charged to such former Member pursuant to paragraph (a) or (b), whether due
to the expiration of the applicable limitation period or for any other reason
whatsoever, the deficiency shall be charged proportionately to the Capital
Accounts of the Members at the time of the act or omission giving rise to the
charge to the extent feasible, and otherwise proportionately to the Capital
Accounts of the current Members.
5.7 TAX ALLOCATIONS. For each Fiscal Year, items of income, deduction,
gain, loss, or credit shall be allocated for income tax purposes among the
Members in such a manner as to reflect equitably amounts credited or debited to
each Member's Capital Account for the current and prior Fiscal Years (or
relevant portions thereof). Allocations under this Section 5.7 shall be made
pursuant to the principles of Sections 704(b) and 704(c) of the Code, and in
conformity with Treasury Regulations Sections 1.704-1(b)(2)(iv)(f),
1.704-1(b)(4)(i), and 1.704-3(e) promulgated thereunder, as applicable, or the
successor provisions to such Section and Regulations. Notwithstanding anything
to the contrary in this Agreement, there shall be allocated to the Members such
gains or income as shall be necessary to satisfy the "qualified income offset"
requirement of Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
If the Fund realizes capital gains (including short-term capital gains)
for Federal income tax purposes for any Fiscal Year during or as of the end of
which one or more Positive Basis Members (as hereinafter defined) withdraw from
the Fund pursuant to Articles IV or VI hereof, the Board, in its sole and
absolute discretion, may elect to allocate such gains as follows: (i) to
allocate such gains among such Positive Basis Members, pro rata in proportion to
the respective Positive Basis (as hereinafter defined) of each such Positive
Basis Member, until either the full amount of such gains shall have been so
allocated or the Positive Basis of each such Positive Basis Member shall have
been eliminated and (ii) to allocate any gains not so allocated to Positive
Basis Members to the other Members in such manner as shall equitably reflect the
amounts credited to such Members' Capital Accounts pursuant to this Agreement.
As used herein, (i) the term "Positive Basis" shall mean, with respect
to any Member and as of any time of calculation, the amount by which the total
of such Member's Capital Account as of such time exceeds its "adjusted tax
basis," for Federal income tax purposes, in its Interest as of such time
(determined without regard to
19
any adjustments made to such "adjusted tax basis" by reason of any transfer or
assignment of such Interest, including by reason of death and without regard to
such Member's share of the liabilities of the Fund under Section 752 of the
Code), and (ii) the term "Positive Basis Member" shall mean any Member who
withdraws from the Fund and who has a Positive Basis as of the effective date of
its withdrawal but such Member shall cease to be a Positive Basis Member at such
time as it shall have received allocations pursuant to clause (i) of the
preceding sentence equal to its Positive Basis as of the effective date of its
withdrawal.
5.8 DISTRIBUTIONS.
(a) The Board, in its sole and absolute discretion, may authorize the
Fund to make distributions in cash at any time to all of the Members on a pro
rata basis in accordance with the Members' Fund Percentage.
(b) The Board may withhold and pay over to the Internal Revenue Service
(or any other relevant taxing authority) taxes from any distribution to any
Member to the extent required by the Code or any other applicable law. For
purposes of this Agreement, any taxes so withheld by the Fund with respect to
any amount distributed by the Fund to any Member shall be deemed to be a
distribution or payment to such Member, reducing the amount otherwise
distributable to such Member pursuant to this Agreement and, if appropriate,
reducing the Capital Account of such Member. If the amount of such taxes is
greater than any such distributable amounts, then such Member and any successor
to such Member's Interest shall pay to the Fund as a contribution to the capital
of the Fund, upon demand of the Board, the amount of such excess.
(c) The Board shall not be obligated to apply for or obtain a reduction
of or exemption from withholding tax on behalf of any Member that may be
eligible for such reduction or exemption. To the extent that a Member claims to
be entitled to a reduced rate of, or exemption from, a withholding tax pursuant
to an applicable income tax treaty, or otherwise, the Member shall furnish the
Board with such information and forms as such Member may be required to complete
where necessary to comply with any and all laws and regulations governing the
obligations of withholding tax agents. Each Member represents and warrants that
any such information and forms furnished by such Member shall be true and
accurate and agrees to indemnify the Fund and each of the Members from any and
all damages, costs, and expenses resulting from the filing of inaccurate or
incomplete information or forms relating to such withholding taxes.
(d) Notwithstanding anything to the contrary contained herein, none of
the Managers or the Members, nor any other person on behalf of the Fund, shall
make a distribution to the Members on account of their interest in the Fund if
such distribution would violate the Delaware Act or other applicable law.
(e) The amount and times of any distributions will be determined in the
sole and absolute discretion of the Board.
5.9 ALLOCATION OF ORGANIZATIONAL EXPENSES.
Organizational Expenses and any other expenses in connection with
offering Units of the Fund and/or any expenses related to or in connection with
any transfer of Units and/or repurchasing Units pursuant to Section 4.5, shall
generally be treated as expenses of the Fund included in the computation of Net
Profit and/or Net Loss (except to the extent that the Investment Adviser or
another party determines in its discretion that it will assume, reimburse,
and/or waive such expense). The Board may alternatively choose to amortize such
expenses over a period of time to be determined by the Board. The Board may also
allocate organizational and offering expenses (on an Expense Allocation Date or
on such other date chosen by the Board) among the Members in a manner that
allocates such expenses to Members purchasing Units in one or more offerings of
Units. The Board may also allocate expenses of any transfer of Units to either
the transferor and/or transferee and expenses of any repurchase of Units may be
allocated to the Members whose Units are repurchased.
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ARTICLE VI
DISSOLUTION AND LIQUIDATION
6.1 DISSOLUTION.
(a) The Fund shall be dissolved at any time there are no Members,
unless the Fund is continued in accordance with the Delaware Act, or upon the
occurrence of any of the following events:
(1) upon the affirmative vote to dissolve the Fund by (i)
the Board or (ii) Members holding at least two-thirds
(2/3) of the total number of votes eligible to be
cast by all Members;
(2) upon the failure of Members to elect a successor
Board member at a meeting called by the Investment
Adviser in accordance with this Agreement when no
Board member remains to continue the business of the
Fund;
(3) if any Member that has submitted a written request,
in accordance with the terms of the Operating
Agreement, to tender all of such Member's Units for
repurchase by the Fund has not been given the
opportunity to so tender within a period of two years
after the request (whether in a single repurchase
offer or multiple consecutive offers within the
two-year period), provided, however, that a Member
who intends to cause the Fund to be dissolved must so
indicate in a separate written request submitted
within the applicable two-year period;
(4) as required by operation of law.
Dissolution of the Fund shall be effective on the day on which
the event giving rise to the dissolution shall occur or the conclusion of any
applicable 60 day period during which the Board and Members may elect to
continue the business of the Fund as provided herein, but the Fund shall not
terminate until the assets of the Fund have been liquidated in accordance with
Section 6.2 hereof and the Certificate has been canceled.
6.2 LIQUIDATION OF ASSETS.
(a) Upon the dissolution of the Fund as provided in Section 6.1 hereof,
the Board, acting directly or through a liquidator it selects, shall promptly
liquidate the business and administrative affairs of the Fund, except that if
the Board is unable to perform this function, a liquidator elected by Members
holding a majority of the total number of votes eligible to be cast by all
Members shall promptly liquidate the business and administrative affairs of the
Fund. Net Profit and Net Loss during the period of liquidation shall be
allocated pursuant to Article V. The proceeds from liquidation (after
establishment of appropriate reserves for contingencies in such amount as the
Board or liquidator shall deem appropriate in its sole and absolute discretion
as applicable) shall, subject to the Delaware Act, be distributed in the
following manner:
(1) in satisfaction (whether by payment or the making of
reasonable provision for payment thereof) of the
debts and liabilities of the Fund, including the
expenses of liquidation (including legal and
accounting expenses incurred in connection
therewith), but not including debt and liabilities to
Members, up to and including the date that
distribution of the Fund's assets to the Members has
been completed, shall first be paid on a pro rata
basis;
(2) such debts, liabilities, or obligations as are owing
to the Members shall be paid next in their order of
seniority and on a pro rata basis; and
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(3) the Members shall be paid next on a pro rata basis
the positive balances of their respective Capital
Accounts after giving effect to all allocations to be
made to such Members' Capital Accounts for the Fiscal
Period ending on the date of the distributions under
this Section 6.2(a)(3).
(b) Anything in this Section 6.2 to the contrary notwithstanding, but
subject to the priorities set forth in Section 6.2(a) above, upon dissolution of
the Fund, the Board or other liquidator may distribute ratably in kind any
assets of the Fund; provided, however, that if any in-kind distribution is to be
made (i) the assets distributed in kind shall be valued pursuant to Section 7.3
as of the actual date of their distribution and charged as so valued and
distributed against amounts to be paid under Section 6.2(a) above, and (ii) any
profit or loss attributable to property distributed in-kind shall be included in
the Net Profit or Net Loss for the Fiscal Period ending on the date of such
distribution.
ARTICLE VII
ACCOUNTING, VALUATIONS, AND BOOKS AND RECORDS
7.1 ACCOUNTING AND REPORTS.
(a) The Fund shall adopt for tax accounting purposes any accounting
method that the Board shall decide in its sole and absolute discretion is in the
best interests of the Fund. The Fund's accounts shall be maintained in U.S.
currency.
(b) After the end of each taxable year, the Fund shall furnish to each
Member such information regarding the operation of the Fund and such Member's
Interest as is necessary for Members to complete Federal and state income tax or
information returns and any other tax information required by federal, state, or
local law.
(c) Except as otherwise required by the 1940 Act or as may otherwise be
permitted by rule, regulation, or order, within 60 days after the close of the
period for which a report required under this Section 7.1(c) is being made, the
Fund shall furnish to each Member a semi-annual report containing the
information required by the 1940 Act and an annual report containing the
information required by the 1940 Act. The Fund shall cause financial statements
contained in each annual report furnished hereunder to be accompanied by a
certificate of independent public accountants based upon an audit performed in
accordance with generally accepted accounting principles. The Fund may also
furnish to each Member such other periodic reports as it deems necessary or
appropriate in its discretion.
7.2 DETERMINATIONS BY THE BOARD.
(a) All matters concerning the determination and allocation among the
Members of the amounts to be determined and allocated pursuant to Article V
hereof, including any taxes thereon and accounting procedures applicable
thereto, shall be determined by the Board (either directly or by the Investment
Adviser pursuant to delegated authority) unless specifically and expressly
otherwise provided for by the provisions of this Agreement or as required by
law, and such determinations and allocations shall be final and binding on all
the Members.
(b) The Board may make such adjustments to the computation of Net
Profit or Net Loss or any components (withholding any items of income, gain,
loss, or deduction) comprising any of the foregoing as it considers appropriate
to reflect fairly and accurately the financial results of the Fund and the
intended allocation thereof among the Members.
22
7.3 VALUATION OF ASSETS.
(a) Valuation of Securities and other assets shall be made by the Board
in accordance with the requirements of the 1940 Act and the valuation procedures
adopted by the Board.
(b) The net asset value of each Unit as of any date shall equal the Net
asset value of the Fund, determined as provided in Section 7.3(a), divided by
the number of outstanding Units on such date.
(c) The value of Securities and other assets of the Fund and the net
worth of the Fund as a whole and the Units determined pursuant to this Section
7.3 shall be conclusive and binding on all of the Members and all parties
claiming through or under them.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 AMENDMENT OF LIMITED LIABILITY COMPANY OPERATING AGREEMENT.
(a) Except as otherwise provided in this Section 8.1, this Agreement
may be amended, in whole or in part, with the approval of (i) the Board
(including the vote of a majority of the Independent Managers, if required by
the 0000 Xxx) or (ii) a majority (as defined in the 0000 Xxx) of the outstanding
voting securities of the Fund.
(b) Any amendment that would:
(1) increase the obligation of a Member to make any
contribution to the capital of the Fund;
(2) reduce the Capital Account of a Member other than in
accordance with Article V; or
(3) modify the events causing the dissolution of the
Fund; may be made only if (i) the written consent of
each Member adversely affected thereby is obtained
prior to the effectiveness thereof or (ii) such
amendment does not become effective until (A) each
Member has received written notice of such amendment
and (B) any Member objecting to such amendment has
been afforded a reasonable opportunity (pursuant to
such procedures as may be prescribed by the Board) to
offer his or her entire Interest for repurchase by
the Fund.
(c) The power of the Board to amend this Agreement at any time without
the consent of the Members may include, but is not limited to:
(1) restate this Agreement together with any amendments
hereto that have been duly adopted in accordance with
this Agreement to incorporate such amendments in a
single, integrated document;
(2) amend this Agreement (other than with respect to the
matters set forth in Section 8.1(b) hereof) to effect
compliance with any applicable law or regulation or
to cure any ambiguity or to correct or supplement any
provision hereof that may be inconsistent with any
other provision hereof, provided that such action
does not adversely affect the rights of any Member in
any material respect; and
23
(3) amend this Agreement to make such changes as may be
necessary or desirable, based on advice of legal
counsel to the Fund, to assure the Fund's continuing
eligibility to be classified for U.S. Federal income
tax purposes as a partnership that is not treated as
a corporation under Section 7704(a) of the Code.
(d) The Board shall give written notice of any proposed amendment to
this Agreement (other than any amendment of the type contemplated by clause (i)
of Section 8.1(a) hereof) to each Member, which notice shall set forth (i) the
text of the proposed amendment or (ii) a summary thereof and a statement that
the text thereof will be furnished to any Member upon request.
8.2 SPECIAL POWER OF ATTORNEY.
(a) Each Member hereby irrevocably makes, constitutes, and appoints
each Manager, acting severally, and any liquidator of the Fund's assets
appointed pursuant to Section 6.2 with full power of substitution, the true and
lawful representatives and attorneys-in-fact of, and in the name, place, and
stead of, such Member, with the power from time to time to make, execute, sign,
acknowledge, swear to, verify, deliver, record, file, and/or publish:
(1) any amendment to this Agreement that complies with
the provisions of this Agreement (including the
provisions of Section 8.1 hereof);
(2) any amendment to the Certificate required because
this Agreement is amended or as otherwise required by
the Delaware Act; and
(3) all other such instruments, documents, and
certificates that, in the opinion of legal counsel to
the Fund, from time to time may be required by the
laws of the United States of America, the State of
Delaware, or any other jurisdiction in which the Fund
shall determine to do business, or any political
subdivision or agency thereof, or that such legal
counsel may deem necessary or appropriate to
effectuate, implement, and continue the valid
existence and business of the Fund as a limited
liability company under the Delaware Act.
(b) Each Member is aware that the terms of this Agreement permit
certain amendments to this Agreement to be effected and certain other actions to
be taken or omitted by or with respect to the Fund without such Member's
consent. If an amendment to the Certificate or this Agreement or any action by
or with respect to the Fund is taken in the manner contemplated by this
Agreement, each Member agrees that, notwithstanding any objection that such
Member may assert with respect to such action, the attorneys-in-fact appointed
hereby are authorized and empowered, with full power of substitution, to
exercise the authority granted above in any manner which may be necessary or
appropriate to permit such amendment to be made or action lawfully taken or
omitted. Each Member is fully aware that each Member will rely on the
effectiveness of this special power-of-attorney with a view to the orderly
administration of the affairs of the Fund.
(c) This power-of-attorney is a special power-of-attorney and is
coupled with an interest in favor of each Manager, acting severally, and any
liquidator of the Fund's assets, appointed pursuant to Section 6.2 hereof, and
as such:
(1) shall be irrevocable and continue in full force and
effect notwithstanding the subsequent death or
incapacity of any party granting this
power-of-attorney, regardless of whether the Fund,
the Board, or any liquidator shall have had notice
thereof; and
24
(2) shall survive the delivery of a Transfer by a Member
of the whole or any portion of such Member's
Interest, except that where the transferee thereof
has been approved by the Board for admission to the
Fund as a substituted Member, this power-of-attorney
given by the transferor shall survive the delivery of
such assignment for the sole purpose of enabling the
Board or any liquidator to execute, acknowledge, and
file any instrument necessary to effect such
substitution.
8.3 NOTICES. Notices that may be or are required to be provided under
this Agreement shall be made, if to a Member, by regular postal mail, hand
delivery, registered or certified mail return receipt requested, commercial
courier service, telex, or telecopier, electronic mail, the internet, computer
interface, or any other electronic method or device of document transfer or
telegraphic or other written communication, or, if to the Fund, by regular
postal mail, hand delivery, registered or certified mail return receipt
requested, commercial courier service, telex, or telecopier, electronic mail,
the internet, computer interface, or any other electronic method or device of
document transfer or telegraphic or other written communication, and shall be
addressed to the respective parties hereto at their addresses as set forth on
the books and records of the Fund (or to such other addresses as may be
designated by any party hereto by notice addressed to the Fund in the case of
notice given to any Member, and to each of the Members in the case of notice
given to the Fund). Notices shall be deemed to have been provided when delivered
by hand, on the date indicated as the date of receipt on a return receipt or
when received if sent by regular mail, commercial courier service, telex,
telecopier, telegraphic, electronic, or other means of written communication. A
document that is not a notice and that is required to be provided under this
Agreement by any party to another party may be delivered by any reasonable
means.
If any notice addressed to a Member at the address of that Member
appearing on the books and records of the Fund is returned to the Fund marked to
indicate that such notice is unable to be delivered to the Member at that
address, all future notices or reports shall be deemed to have been duly given
without further mailing if such future notices or reports shall be kept
available to the Member, upon written demand of the Member, at the principal
executive office of the Fund for a period of one year from the date of the
giving of the notice.
8.4 AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, successors, assigns, executors, trustees, or other legal
representatives, but the rights and obligations of the parties hereunder may not
be Transferred or delegated except as provided in this Agreement and any
attempted Transfer or delegation thereof that is not made pursuant to the terms
of this Agreement shall be void.
8.5 APPLICABILITY OF 1940 ACT AND FORM N-2. The parties hereto
acknowledge that this Agreement is not intended to, and does not set forth the
substantive provisions contained in the 1940 Act and the Form N-2 which affect
numerous aspects of the conduct of the Fund's business and of the rights,
privileges, and obligations of the Members. Each provision of this Agreement
shall be subject to and interpreted in a manner consistent with the applicable
provisions of the 1940 Act and the Form N-2 subject to any exemptive relief
obtained thereunder relating to the Fund.
8.6 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, including the Delaware Act, without regard to the conflict of law
principles of the State of Delaware.
8.7 NOT FOR BENEFIT OF CREDITORS. The provisions of this Agreement are
intended only for the regulation of relations among past, present, and future
Members (including the Investment Adviser), Managers, and the Fund. This
Agreement is not intended for the benefit of non-Member creditors and no rights
are granted to non-Member creditors under this Agreement.
25
8.8 CONSENTS. Any and all consents, agreements, or approvals provided
for or permitted by this Agreement shall be in writing and a signed copy thereof
shall be filed and kept with the books of the Fund.
8.9 MERGER AND CONSOLIDATION.
(a) The Fund may merge or consolidate with or into one or more limited
liability companies formed under the Delaware Act or other business entities (as
defined in Section 18-209(a) of the Delaware Act) pursuant to an agreement of
merger or consolidation which has been approved in the manner contemplated by
Section 18-209(b) of the Delaware Act.
(b) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, an agreement of merger or consolidation approved in accordance
with Section 18-209(b) of the Delaware Act may, to the extent permitted by
Section 18-209(b) of the Delaware Act, (i) effect any amendment to this
Agreement, (ii) effect the adoption of a new limited liability company operating
agreement for the Fund if it is the surviving or resulting limited liability
company in the merger or consolidation, or (iii) provide that the limited
liability company operating agreement of any other constituent limited liability
company to the merger or consolidation (including a limited liability company
formed for the purpose of consummating the merger or consolidation) shall be the
limited liability company operating agreement of the surviving or resulting
limited liability company.
8.10 MASTER-FEEDER STRUCTURE. The Fund may, at the discretion of the
Board, as may be permitted by the 1940 Act, and upon the resolution of a
majority of the then Managers, convert to a master-feeder structure, in which
the feeder fund invests all of its assets into a master fund, rather than making
investments in securities directly. Existing Series of the Fund may either
become feeders into a master fund, or themselves become master funds into which
other funds may be feeders.
8.11 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.
8.12 CONFIDENTIALITY.
(a) A Member may obtain from the Fund, for any purpose reasonably
related to the Member's Interest, certain confidential information regarding the
business affairs or assets of the Fund as is just and reasonable under the
Delaware Act, subject to reasonable standards (including standards governing
what information and documents are to be furnished, at what time and location,
and at whose expense) established by the Board (the "Confidential Information").
(b) Each Member covenants that, except as required by applicable law or
any regulatory body, it will not divulge, furnish, or make accessible to any
other person the name or address (whether business, residence, or mailing) of
any Member or any other Confidential Information without the prior written
consent of the Board, which consent may be withheld in its sole and absolute
discretion.
(c) Each Member recognizes that in the event that this Section 8.12 is
breached by any Member or any of its principals, partners, members, trustees,
officers, directors, employees, or agents or any of its affiliates, including
any of such affiliates' principals, partners, members, trustees, officers,
directors, employees, or agents, irreparable injury may result to the
non-breaching Members and the Fund. Accordingly, in addition to any and all
other remedies at law or in equity to which the non-breaching Members and the
Fund may be entitled, such Members also shall have the right to obtain equitable
relief, including, without limitation, injunctive relief, to prevent any
disclosure of Confidential Information, plus reasonable attorneys' fees and
other litigation expenses incurred in connection therewith. In the event that
any non-breaching Member or the Fund determines that any of the other Members or
any of its principals, partners, members, trustees, officers, directors,
employees, or agents or
26
any of its affiliates, including any of such affiliates' principals, partners,
members, directors, officers, employees, or agents should be enjoined from or
required to take any action to prevent the disclosure of Confidential
Information, each of the other non-breaching Members agrees to pursue in a court
of appropriate jurisdiction such injunctive relief.
(d) The Fund shall have the right to keep confidential from the Members
for such period of time as it deems reasonable any information that the Board
reasonably believes to be in the nature of trade secrets or other information
the disclosure of which the Board in good faith believes is not in the best
interest of the Fund or could damage the Fund or its business or that the Fund
is required by law or by agreement with a third party to keep confidential.
8.13 CERTIFICATION OF NON-FOREIGN STATUS.
Each Member or transferee of an Interest from a Member that is admitted
to the Fund in accordance with this Agreement shall certify, upon admission to
the Fund and at such other time thereafter as the Board may request, whether he
or she is a "United States Person" within the meaning of Section 7701(a)(30) of
the Code on forms to be provided by the Fund, and shall notify the Fund within
30 days of any change in such Member's status. Any Member who shall fail to
provide such certification when requested to do so by the Board may be treated
as a non-United States Person for purposes of U.S. Federal tax withholding.
8.14 SEVERABILITY.
If any provision of this Agreement is determined by a court of
competent jurisdiction not to be enforceable in the manner set forth in this
Agreement, each Member agrees that it is the intention of the Members that such
provision should be enforceable to the maximum extent possible under applicable
law. If any provisions of this Agreement are held to be invalid or
unenforceable, such invalidation or unenforceability shall not affect the
validity or enforceability of any other provision of this Agreement (or portion
thereof).
8.15 ENTIRE AGREEMENT.
This Agreement (including the Schedule attached hereto which is
incorporated herein) constitutes the entire agreement among the parties hereto
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings pertaining thereto.
8.16 DISCRETION.
To the fullest extent permitted by law, whenever in this Agreement, a
person is permitted or required to make a decision (i) in its "sole discretion"
or "discretion" or under a grant of similar authority or latitude, such person
shall be entitled to consider only such interests and factors as it desires,
including its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Fund or the Members,
or (ii) in its "good faith" or under another express standard, then such person
shall act under such express standard and shall not be subject to any other or
different standards imposed by this Agreement or any other agreement
contemplated herein or by relevant provisions of law or in equity or otherwise.
8.17 COUNTERPARTS.
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the same counterpart.
27
8.18 TAX MATTERS MEMBER.
The Investment Adviser will be the "tax matters member" under the Code
for the Fund or such other Member as may be designated by the Board.
THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY
BEFORE SIGNING, INCLUDING THE CONFIDENTIALITY CLAUSES SET FORTH IN SECTION 8.12.
28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
By: Date:
--------------------------------------- -----------------
Xxxx X. Sabre, as Organizational Member
Mount Yale Asset Management, LLC
By: Date:
--------------------------------------- -----------------
Xxxx X. Sabre
Managing Partner
ADDITIONAL MEMBERS:
Each person who has signed or has had signed on its behalf a Member
Signature Page, which shall constitute a counterpart hereof.
29
