FEG ABSOLUTE ACCESS FUND LLC LIMITED LIABILITY COMPANY OPERATING AGREEMENT
THIS
LIMITED LIABILITY COMPANY OPERATING AGREEMENT of FEG Absolute Access Fund LLC
(the “Company”) is made effective as of January 18, 2008 by and among each
Director, whether a signatory hereto or who otherwise agrees to be bound by the
terms hereof and serve as Director, the Investment Manager as “Initial Member”,
and each person hereinafter admitted to the Company and reflected on the books
of the Company as a Member.
WITNESSETH:
WHEREAS,
the Company heretofore has been formed as a limited liability company under the
Delaware Act;
NOW,
THEREFORE, for and in consideration of the foregoing and the mutual covenants
hereinafter set forth, it is hereby agreed as follows:
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ARTICLE
I
DEFINITIONS
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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 AFFILIATE
of another person means:
(1) any
person directly or indirectly owning, controlling, or holding with power to
vote, 5 per centum or more of the outstanding voting securities of such other
person;
(2)
any person 5 per centum or
more of whose outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote, by such other person;
(3) any
person directly or indirectly controlling, controlled by, or under common
control with, such other person;
(4) any
officer, director, partner, copartner, or employee of such other
person;
(5) if
such other person is an investment company, any investment adviser thereof or
any member of an advisory board thereof; and
(6) if
such other person is an unincorporated investment company not having a board of
directors, the depositor thereof.
1.3 AGREEMENT
means this Limited Liability Company Operating Agreement, as amended and/or
restated from time to time.
1.4 BOARD
means the Board of Directors established pursuant to Section 2.6 and each
Director on the Board shall be deemed a “Manager” of the Company within the
meaning of the Delaware Act, as hereinafter defined.
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1.5 CAPITAL
ACCOUNT means, with respect to each Member, the capital account established and
maintained on behalf of each Member pursuant to Section 5.3.
1.6 CAPITAL
CONTRIBUTION means the contribution, if any, made, or to be made, as the context
requires, to the capital of the Company by a Member.
1.7 CERTIFICATE
means the Certificate of Formation of the Company and any amendments thereto as
filed with the office of the Secretary of State of the State of
Delaware.
1.8 CLOSING
means the closing of a subscription to purchase an Interest.
1.9 CODE
means the United States Internal Revenue Code of 1986, as amended and as
hereafter amended from time to time, or any successor law.
1.10 COMPANY
means the limited liability company governed hereby, as such limited liability
company may from time to time be constituted.
1.11 COMPANY
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.
1.12 CONFIDENTIAL
INFORMATION shall have the meaning as set forth in Section 8.10(a).
1.13 DELAWARE
ACT means the Delaware Limited Liability Company Act (6 DEL.C. §§ 18-101,
et seq.) as in effect on the date hereof and as amended from time to time, or
any successor law.
1.14 DIRECTOR
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 Company. Each Director shall be deemed a
“Manager” of the Company within the meaning of the Delaware Act.
1.15 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 Company
is made pursuant to Section 5.1;
(3) the
day as of which a Member withdraws any portion of such Member’s Capital Account
or the Company repurchases any portion of the Interest 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;
(6) the
date as of which the Company terminates; or
(7) any
other date as established by the Board.
1.16 FISCAL
YEAR, for accounting purposes, means the period commencing on the initial
Closing and ending on March 31 and thereafter each period commencing on April 1
of each year and ending on March 31 of each year (or on the date of a final
distribution pursuant to Section 6.2 hereof), unless the Board shall designate
another fiscal year for the Company. For tax purposes, the 12-month period
ending December 31 of each year will be the Company’s taxable
year.
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1.17 INDEPENDENT
DIRECTORS means those Directors who are not Affiliates of the Company, the
Investment Manager or its members.
1.18 INTEREST
means the entire ownership interest in the Company 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 such Member’s, or other
person’s, share of the Company’s profits and losses, right to receive
distributions of Company assets and such other rights and obligations of such
Member or other person under this Agreement and the Delaware Act.
1.19 INVESTMENT
MANAGEMENT AGREEMENT means the separate written agreement between the Company
and the Investment Manager pursuant to which the Investment Manager performs
certain investment advisory and supervisory services to the
Company.
1.20 INVESTMENT
MANAGER means the person who at any particular time serves as the investment
adviser to the Company pursuant to a written agreement with the Company.
The Company’s initial Investment Manager is FEG Investors, LLC.
1.21 MANAGEMENT
FEE means the management fee paid to the Investment Manager out of the Company’s
assets pursuant to the Investment Management Agreement and as described in
Section 3.8(b) hereof.
1.22 MEMBER
means any person who shall have been admitted to the Company as a member or a
substitute Member who is admitted to the Company pursuant to this Agreement, in
such person’s capacity as a Member until the Member withdraws its entire Capital
Account pursuant to Section 4.5, the Company repurchases the entire Interest of
such person as a Member pursuant to Section 4.6 hereof or a substituted Member
or Members are admitted with respect to any such person’s Interest as a Member
pursuant to Section 4.4 hereof.
1.23 MEMBERSHIP
PERCENTAGE means a percentage established for each Member on the Company’s books
as of the first day of each Fiscal Period. The Membership Percentage of a
Member for a Fiscal Period shall be determined by dividing the balance of the
Member’s Capital Account as of the beginning of such period by the sum of the
Capital Accounts of all Members as of the beginning of such period. The
sum of the Membership Percentages of all Members shall equal 100%.
1.24 NEGATIVE
BASIS shall have the meaning set forth in Section 5.7.
1.25 NEGATIVE
BASIS MEMBER shall have the meaning as set forth in Section 5.7.
1.26 NET
ASSET VALUE means the total value of all assets of the Company as valued
pursuant to Section 7.3, less an amount equal to all accrued debts, liabilities,
and obligations of the Company, calculated before giving effect to any
withdrawal of capital or repurchase of Interests.
1.27 NET
PROFIT OR NET LOSS means the amount by which the Net Asset Value of the Company
as of the close of business on the last day of a Fiscal Period exceeds (in the
case of Net Profit) or is less than (in the case of Net Loss) the Net Asset
Value of the Company 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 a Member’s
Membership Percentage as of the commencement of such Fiscal Period pursuant to
this Agreement.
1.28 PERSON
means any individual, entity, corporation, partnership, association, limited
liability company, joint-stock company, trust, estate, joint venture,
organization, or unincorporated organization.
1.29 PORTFOLIO
FUNDS means pooled investment vehicles and/or managed accounts.
1.30 PORTFOLIO
MANAGERS mean independent investment advisers.
1.31 POSITIVE
BASIS shall have the meaning as set forth in Section 5.7.
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1.32 POSITIVE
BASIS MEMBER shall have the meaning as set forth in Section 5.7.
1.33 SEC
means the Securities and Exchange Commission.
1.34 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 Company Act) 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.
1.35 SECURITIES
ACT means the Securities Act of 1933, as amended and any regulations promulgated
thereunder.
1.36 SERIES
means any series of Interests established by the Board from time to
time.
1.37 TAX
MATTERS MEMBER means the Member designated as “tax matters member” of the
Company pursuant to Section 8.15 hereof.
1.38 TRANSFER
means the assignment, transfer, sale, or other disposition of all or any portion
of a Member’s Interest, including any right to receive any allocations and
distributions attributable to the Interest.
1.39 VALUATION
DATE means any date in which the Net Asset Value of the Company is
computed.
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ARTICLE
II
ORGANIZATION;
ADMISSION OF MEMBERS; BOARD
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2.1 FORMATION
OF LIMITED LIABILITY COMPANY. Any persons 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
legal counsel, may from time to time be required by the laws of the United
States of America, the State of Delaware, or any other jurisdiction in which the
Company shall determine to do business, or any political subdivision or agency
thereof, or which such legal counsel may deem necessary or appropriate to
effectuate, implement, and continue the valid existence and business of the
Company. Upon the admission of an additional member, the “Initial Member”
shall be automatically withdrawn from the Company as the “Initial Member”
(although the Investment Manager may be simultaneously admitted as a
Member).
2.2 NAME.
The name of the Company shall be FEG Absolute Access Fund LLC, pursuant to the
Certificate dated as of January 17, 2008 and filed with the Secretary of State
of the State of Delaware on January 18, 2008, 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 Company’s business
may be conducted under the name of the Company 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 Company shall have its principal office at the
principal office of the Investment Manager, or at such other place designated
from time to time by the Board.
The
Company shall have its registered office in the State of Delaware at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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.
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2.4 DURATION.
The term of the Company shall commence on the filing of the Certificate with the
Secretary of State of the State of Delaware and shall continue perpetually
unless and until the Company is dissolved pursuant to Section 6.1
hereof.
2.5 BUSINESS
OF THE COMPANY. The business of the Company is, without limitation, either
directly or indirectly through one or more pooled investment vehicles, to
purchase, sell, invest, and trade in Securities on margin or otherwise, 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 Company, the officers of the Company may execute, deliver, and perform
all contracts, agreements, and other undertakings and engage in all activities
and transactions as may in the opinion of the Board be necessary or advisable to
carry out the Company’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
Board may, subject to the provisions of paragraphs (a) and (b) of this
Section 2.6 with respect to the number of and vacancies in the position of
Director and the provisions of Section 3.3 hereof with respect to the
election of Directors by Members, designate any person who shall agree to be
bound by all of the terms of this Agreement as a Director. The names and
mailing addresses of the Directors shall be set forth in the books and records
of the Company. The number of Directors shall be fixed from time to time
by 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 Directors shall at all times be at least one and no more than ten
as determined, from time to time, by the Directors pursuant to this
Agreement.
(b) Each
Director shall serve as a Director for the duration of the term of the Company,
unless his or her status as a Director shall be sooner terminated pursuant to
Section 4.2 hereof. If any vacancy in the position of a Director
occurs, the remaining Directors may appoint a person to serve in such capacity,
provided that, at any time the Company is registered under the
Company Act, such appointment is in accordance with the Company Act. The
Directors may call a meeting of Members to fill any vacancy in the position of
Director, and shall do so at any time the Company is registered under the
Company Act and such meeting is required by the Company Act.
(c) In
the event that no Director remains to continue the business of the Company, the
Investment Manager shall promptly call a meeting of the Members, to be held
within 60 days after the date on which the last Director ceased to act in that
capacity, for the purpose of determining whether to continue the business of the
Company and, if the business shall be continued, of electing the required number
of Directors to the Board. If the Members shall determine at such meeting
not to continue the business of the Company or if the required number of
Directors is not elected within 60 days after the date on which the last
Director ceased to act in that capacity, then the Company shall be dissolved
pursuant to Section 6.1 hereof and the assets of the Company shall be liquidated
and distributed pursuant to Section 6.2 hereof.
2.7 MEMBERS.
The Board may admit one or more Members at such times as the Board may
determine. Members may be admitted to the Company subject to the condition
that each such Member execute an appropriate signature page of this Agreement
and the Company’s subscription agreement. 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 Interests in the Company. The
admission of any person as a Member shall be effective upon the revision of the
books and records of the Company to reflect the name and the contribution to the
capital of the Company of such additional Member.
2.8 BOTH
DIRECTORS AND MEMBERS. A Member may, at the same time, be a Director in
which event such person’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, at any time the Company is registered under
the Company Act, the Company Act. A Director need not be a
Member.
2.9 LIMITED
LIABILITY. To the fullest extent permitted under applicable law, a Member
shall not be liable for the Company’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 Manager and
Directors shall not be liable for the Company’s debts, obligations, or
liabilities.
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2.10 SERIES.
(a)
In the Board's discretion, Interests will be issued in multiple Series, which
may differ in terms of management fees, redemption fees and rights and in other
respects, including participation in gains and losses from “new
issues.”
(b) The
Board hereby creates Series A Interests, which will participate fully in profits
and losses associated with “new issues” as defined in National Association of
Securities Dealers, Inc. Rule 2790, and Series B Interests, which will not
participate fully or at all in profits and losses associated with “new
issues.”
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ARTICLE
III
MANAGEMENT
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3.1 MANAGEMENT
AND CONTROL.
(a) Management
and control of the business of the Company shall be vested in the Board, which
shall have the right, power, and authority, on behalf of the Company and in its
name, to exercise all rights, powers, and authority of “managers” under the
Delaware Act and to do all things necessary and proper to carry out the
objective and business of the Company and its duties hereunder. No
Director shall have the authority individually to act on behalf of or to bind
the Company except within the scope of such Director’s authority as delegated by
the Board. The parties hereto intend that, except to the extent otherwise
expressly provided herein: (i) each Director shall be vested
with the same powers, authority, and responsibilities on behalf of the Company
as are customarily vested in each director of a Delaware corporation; and
(ii) each Independent Director shall be vested with the same powers,
authority, and responsibilities on behalf of the Company as are customarily
vested in each director of a closed-end management investment company registered
under the Company Act that is organized as a Delaware corporation. During
any period in which the Company shall have no Directors, the Investment Manager
shall continue to have the authority to manage the business and affairs of the
Company.
(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 Company. The
Board shall have the exclusive authority and discretion to make any elections
required or permitted to be made by the Company 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 Company’s business, except to the extent specifically provided
herein, and shall have no right, power, or authority to act for or bind the
Company. Members shall have the right to vote on any matters only as
provided in this Agreement or, at any time during which the Company is
registered under the Company Act, on any matters that require the approval of
the holders of voting securities under the Company Act, or as otherwise required
in the Delaware Act.
(d) The
Board may delegate to any person, including officers of the Company, 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 Directors
(which majority shall include any requisite number of Independent Directors
required by the Company Act if the Company is registered as an “investment
company” under the Company Act) present at a meeting duly called at which a
quorum of the Directors shall be present (in person, which may include any means
of communication that allows all Directors participating to hear each other
simultaneously during the meeting); or (ii) by unanimous written consent of
all of the Directors without a meeting (including, if permissible under the
Company Act, at any time the Company is registered as an “investment company”
under the Company Act).
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(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 Directors, and may be held on such date and at such time and place as the
Board shall determine. Each Director shall be entitled to receive written
notice of the date, time, and place of such meeting within a reasonable time in
advance of the meeting. Notice need not be given to any Director who shall
attend a meeting without objecting to the lack of notice or who shall execute a
written waiver of notice with respect to the meeting. Directors may attend
and participate in any meeting by telephone, except where in person attendance
at a meeting is required by the Company Act if the Company is registered as an
“investment company” under the Company Act. A majority of the Directors
then in office shall constitute a quorum at any meeting.
(c) The
Board may designate from time to time agents and employees of the Company,
including without limitation employees of the Investment Manager and its
members, who shall have the same powers and duties on behalf of the Company
(including the power to bind the Company) as are customarily vested in officers
of a Delaware corporation, and designate them as officers of the
Company.
3.3 MEETINGS
OF MEMBERS.
(a) Actions
requiring the vote of the Members may be taken at any duly constituted meeting
of the Members at which a quorum is present. Meetings of the Members may
be called by the Board or by Members holding a majority of the total number of
votes eligible to be cast by all Members, and may be held at such time, date,
and place as the Board shall determine. The Board shall arrange to provide
written notice of the meeting, stating the date, time, and place of the meeting
and the record date therefor, to each Member entitled to vote at the meeting
within a reasonable time prior thereto. Failure to receive notice of a
meeting on the part of any Member shall not affect the validity of any act or
proceeding of the meeting, so long as a quorum shall be present at the
meeting. 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 Company Act if the Company is registered as an
“investment company” under the Company Act): (i) those
candidates receiving a plurality of the votes cast at any meeting of Members
shall be elected as Directors; and (ii) all other actions of the Members
taken at a meeting shall require the affirmative vote of Members holding a
majority of the total number of votes eligible to be cast by those Members who
are present in person or by proxy at such meeting.
(b) Each
Member shall be entitled to cast at any meeting of Members a number of votes
equivalent to such Member’s Membership 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 Company before or at the time of the
meeting. A proxy may be suspended or revoked, as the case may be, by the
Member executing the proxy by a later writing delivered to the Company at any
time prior to exercise of the proxy or if the Member executing the proxy shall
be present at the meeting and decide to vote in person. Any action of the
Members that is permitted to be taken at a meeting of the Members may be taken
without a meeting if consents in writing, setting forth the action taken, are
signed by Members holding a majority of the total number of votes eligible to be
cast or such greater percentage as may be required in order to approve such
action.
3.4 CUSTODY
OF ASSETS OF THE COMPANY. The physical possession of all funds,
Securities, or other property of the Company shall at all times, be held,
controlled, and administered by one or more custodians retained by the Company
in accordance with the requirements of the Advisers Act (and the Company Act if
the Company is registered as an “investment company” under the Company
Act).
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3.5 OTHER
ACTIVITIES OF MEMBERS AND DIRECTORS.
(a) The
Directors shall not be required to devote their full business time to the
affairs of the Company, but shall devote such time as may reasonably be required
to perform their obligations under this Agreement.
(b) Any
Member, Director, 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 Director, or any profits derived
therefrom.
3.6 DUTY
OF CARE.
(a) A
Director (including for this purpose their executors, heirs, assigns,
successors, or other legal representatives), the Investment Manager, and the Tax
Matters Member (including for this purpose each affiliate, shareholder, partner,
member, officer, director, principal, employee, or agent of the Investment
Manager and the Tax Matters Member) shall not be liable to the Company or to any
of its Members for any loss or damage occasioned by any act or omission in the
performance of such Person’s services to the Company, 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, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of such Person’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 an Interest shall be liable to the Company,
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 Company shall, subject to Section
3.7(b) hereof, indemnify each Director (including for this purpose their
executors, heirs, assigns, successors, or other legal representatives), the
Investment Manager, and the Tax Matters Member (including for this purpose each
affiliate, shareholder, partner, member, officer, director, principal, employee,
or agent of the Investment Manager 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 Manager or the Tax Matters Member (and
their executors, heirs, assigns, successors, or other legal representatives)
(each, an “indemnitee”) against all losses, claims, damages, liabilities, costs,
and expenses, including, but not limited to, amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties, and reasonable counsel fees,
incurred in connection with the defense or disposition of any action, suit,
investigation, or other proceeding, whether civil or criminal, before any
judicial, arbitral, administrative, or legislative body, in which such
indemnitee may be or may have been involved as a party or otherwise, or with
which such indemnitee may be or may have been threatened, while in office or
thereafter, by reason of being or having been a Director, the Investment
Manager, or the Tax Matters Member, as the case may be, of the Company or the
past or present performance of services to the Company 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, gross 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.
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(b) Expenses,
including reasonable counsel fees, so incurred by any such indemnitee (but
excluding amounts paid in satisfaction of judgments, in compromise, or as fines
or penalties), may be paid from time to time by the Company in advance of the
final disposition of any such action, suit, investigation, or proceeding upon
receipt of an undertaking by or on behalf of such indemnitee to repay to the
Company amounts so paid if it shall ultimately be determined that
indemnification of such expenses is not authorized under Section 3.7(a) hereof;
provided, however, that a majority of the Directors (excluding any Director 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) An
indemnitee may not satisfy any right of indemnification or advancement of
expenses granted in this Section 3.7 as to which he, she, or it may otherwise be
entitled except out of the assets of the Company, and no Member shall be
personally liable with respect to any such claim for indemnification or
advancement of expenses.
(d) The
rights of indemnification provided hereunder shall not be exclusive of or affect
any other rights to which any person may be entitled by contract or otherwise
under law. Nothing contained in this Section 3.7 shall affect the power of the
Company to purchase and maintain liability insurance on behalf of any Director
or other person.
3.8 FEES;
MANAGEMENT FEE; EXPENSES; AND REIMBURSEMENT.
(a) The
Board may cause the Company to compensate each Director for his or her services
hereunder. In addition, the Company shall reimburse the Directors for
reasonable out-of-pocket expenses incurred by them in performing their duties
under this Agreement.
(b) The
Investment Manager will
receive from the Company a quarterly management
fee (“Management Fee”) equal to 0.2125% of the Company’s quarter-end Net Asset
Value, prior to reduction for the Management Fee then being calculated (a 0.85%
annual rate). The Management Fee will be paid quarterly in arrears and will be
prorated with respect to investments in the Company made other than at the
beginning of a calendar quarter. The Investment Manager may waive, reduce
or rebate the Management Fee with respect to any Member, including affiliates of
the Investment Manager, without entitling any other Member to a similar waiver,
reduction or rebate.
(c) The
Company will bear all of its own expenses, including, but not limited to, the
Management Fee payable to the Investment Manager; all expenses that the Board
reasonably determines to be incurred in connection with the Company’s investment
activities including, but not limited to, due diligence costs, Portfolio Manager
background checks, systems and travel costs (or a portion thereof) incurred by
the Investment Manager (or its members) in connection with the Company’s
investment activities, any taxes to which the Company is subject; the Portfolio
Fund and Portfolio Manager fees and expenses; regulatory fees; and interest
charges. In addition, except as described below, the Company will bear all
of its own ordinary operating and administrative expenses, which include, but
are not limited to, administration fees; amounts due to persons not affiliated
with the Investment Manager for providing operating and administrative services,
custody, legal, accounting, audit and tax services to the Company or to the
Investment Manager with respect to the activities of the Company; registration
and filing fees; licensing fees, insurance expenses, costs of preparing,
printing and mailing reports and other documents (including, if the Company is
registered as an “investment company” under the Company Act, proxy materials)
and the cost of the ongoing offering of the Interests. The Company will
bear all of its extraordinary expenses, if any. Expenses incurred by the
Company by reason of circumstances applicable to one or more, but fewer than
all, Members shall be allocated, to the extent possible, to such Members’
capital account. Any expenses incurred in connection with the Company’s
registration under the Company Act, if so registered in the future, will be born
by the Investment Manager. Once so registered, expenses incurred in
connection with the Company’s status as a registered investment company, such as
travel-related expenses and fees of members of the Board of Directors who are
not affiliated with the Investment Manager, and reporting and filing costs will
be borne by the Company.
9
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ARTICLE
IV
TERMINATION
OF STATUS OF INVESTMENT MANAGER AND DIRECTORS;
TRANSFERS,
WITHDRAWALS , WITHDRAWAL FEE, REPURCHASES, WITHDRAWAL GATE, MANDATORY
WITHDRAWALS, PAYMENT OF PROCEEDS
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4.1 TERMINATION
OF STATUS OF THE INVESTMENT MANAGER. The status of the Investment Manager
shall terminate if the Investment Management Agreement with the Investment
Manager terminates and the Company does not enter into a new Investment
Management Agreement with the Investment Manager, effective as of the date of
such termination.
4.2 TERMINATION
OF STATUS OF A DIRECTOR. The status of a Director shall terminate if the
Director: (a) shall die; (b) shall be adjudicated
incompetent; (c) shall voluntarily withdraw as a Director (upon not less
than 90 days’ prior written notice to the other Directors, unless the other
Directors waive such notice); (d) shall be removed; (e) shall be certified
by a physician to be mentally or physically unable to perform his or her duties
hereunder; (f) 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 (g) shall have a
receiver appointed to administer the property or affairs of such
Director.
4.3 REMOVAL
OF THE DIRECTORS. Any Director may be removed by: (a) the vote
or written consent of at least two-thirds (2/3) of the Directors not subject to
the removal or vote; or (b) the vote or written consent of Members constituting
not less than two-thirds (2/3) of the total Membership Percentage.
4.4 TRANSFER
OF INTERESTS OF MEMBERS.
(a) A
Member may transfer such Member’s Interest in whole or in part
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 as may be
required by the Board, the Company reserves the right to redeem its
Interest. If the Board does not consent to a transfer by operation of law,
the Company shall redeem the Interest 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: (x) one in which the
tax basis of the Interest in the hands of the transferee is determined, in whole
or in part, by reference to its tax basis in the hands of the transferring
Member (e.g.,. certain
gifts and contributions to family entities); or (y) 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 agrees to pay all expenses, including, but not limited to, attorneys’
and accountants’ fees, incurred by the Company in connection with any
transfer.
(b) By
subscribing for an Interest, each Member agrees to indemnify and hold harmless
the Company, the Board, the Investment Manager, 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.
10
(c) Each
transferring Member shall indemnify and hold harmless the Company, the Board,
the Investment Manager, 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 WITHDRAWALS
OF CAPITAL. For so long as the Company is not registered as an “investment
company” under the Company Act, a Member may, upon not less than 95 days’ prior
written notice to the Board, withdraw all or any portion of such
Member’s Capital Account balance as of each June 30th and
December 31st falling
after the end of the twelfth month end following the date of such contribution
to such Member’s capital account. For example, a Member that makes an
investment on April 1, 2008 may first withdraw such investment from its capital
account as of June 30, 2009. Capital Contributions will be treated on a
first in, first out basis and will be separately tracked for purposes of
permitted withdrawals. The Board, in its sole discretion, may accept less
than 95 calendar days’ notice of withdrawal if the Company as a whole would not
be disadvantaged by the Board doing so. Subject to the Board’s discretion
and after consultation with the Investment Manager regarding the liquidity of
the Company’s investments in Portfolio Funds, a Member may be permitted to
withdraw from such Member’s capital account on a June 30th or
December 31st prior
to the twelfth month-end following the date of such contribution, subject to a
5% withdrawal fee payable to the Company. The Board may waive such withdrawal
fee in its discretion, but does not expect to grant waivers. If the
Company is not able to liquidate investments to fund withdrawals, the Company
may delay honoring requests, in whole or in part, until it is able to do
so. The Board may suspend withdrawals at any time there exists, in its
opinion, a state of affairs where disposal of the Company’s assets, including
withdrawal or redemption from any Portfolio Fund(s), or the determination of the
Company’s Net Asset Value, would not be reasonably practicable or would be
seriously prejudicial to non-withdrawing Members. The Board, by written
notice to any Member, may suspend the payment of withdrawal proceeds of such
Member if the Board reasonably deems it necessary to do so to comply with
anti-money laundering regulations applicable to the Company, the Investment
Manager or any of the Company’s other service providers.
4.6 REPURCHASE
OF INTERESTS.
(a) General. This
Section 4.6 shall apply only if and when the Company is registered as an
“investment company” under the Company Act. Upon the Company’s
registration as an “investment company” under the Company Act, no Member or
other person holding an Interest or portion thereof shall have the right to
require the Company to redeem its Interest. The Board of the Company, from
time to time, and in its sole and absolute discretion, may determine to cause
the Company to offer to repurchase Interests from Members, including the
Investment Manager, on such terms and conditions as set forth in this
Agreement. However, the Company shall not offer to repurchase Interests on
more than two occasions during any one Fiscal Year unless it has been advised by
counsel to the Company to the effect that more frequent offers would not cause
any adverse tax consequences to the Company or its Members. In accordance
with the terms and conditions as are set forth in this Agreement, in determining
whether to cause the Company to repurchase Interests pursuant to written
requests by Members, the Board shall consider, among other things, the
recommendation of the Investment Manager and shall also consider the following
factors, among others, in making such determination:
(1) whether
any Members have requested that the Company repurchase their
Interests;
(2) the
liquidity of the Company’s assets;
(3) the
investment plans and working capital requirements of the Company;
(4) the
relative economies of scale with respect to the size of the
Company;
(5) the
history of the Company in repurchasing Interests;
(6) the
conditions in the securities markets and economic conditions generally;
or
(7) the
anticipated tax consequences of any proposed repurchases of
Interests.
(b) Discretionary
Repurchases. The Board shall cause the Company to repurchase
Interests on terms fair to the Company and to all Members (or one or more
classes of Members, including persons holding Interests acquired from Members),
as applicable, in the following manner:
11
(1) The
Board will provide written notice to Members when it has determined, in its sole
and absolute discretion, that the Company will repurchase Interests. 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 Company (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 Company 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 Company will not accept
any repurchase request received by it or its designated agent after the
Repurchase Request Deadline.
(3) Payment
for Interests, accepted by the Company for repurchase will be made in whole or
in part in accordance with Section 4.6(b)(6). The amount due to any Member
tendering all of its Interest in the Company will be equal to the value of the
Member’s Capital Account based on the estimated unaudited net asset value of the
Company’s assets as of the effective date of repurchase (the “Full Repurchase
Valuation Date”), after giving effect to all allocations to be made to the
Member’s Capital Account as of such date. The Full Repurchase Valuation
Date will be approximately 95 days after the Repurchase Request Deadline.
Members who tender a portion of their Interests in the Company (defined as a
specific dollar value) in their repurchase request, and which portion is
accepted for repurchase by the Company, shall receive such specified dollar
amount.
(4) The
Company may suspend or postpone any repurchase offer, by vote of a majority of
the Board, including a majority of the Independent Directors, including but not
limited to:
(i) for
any period during which an emergency exists as a result of which it is not
reasonably practicable for the Company to dispose of securities it owns or to
determine the value of the Company’s nets assets;
(ii) for
any other periods that the SEC permits by order for the protection of Members;
or
(iii) under
such other unusual circumstances as the Board deems advisable for the benefit of
the Company and its Members.
(5) The
Board, in its sole and absolute discretion, shall determine the amount of
Interests to be repurchased, if any. If a greater amount of Interests 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 Company shall repurchase the Interests submitted for repurchase
on a pro rata basis, disregarding fractions, according to the amount of
Interests submitted for repurchase by each Member as of the Repurchase Request
Deadline; provided, however, that this provision shall not prohibit the Company
from:
(i) accepting
all Interests submitted for repurchase by Members who own, beneficially or of
record, an aggregate of not more than a specified percentage of such Interest
and who submit for repurchase all their Interest, before prorating Interests
submitted for repurchase by other Members; or
(ii) accepting
by lot Interests submitted for repurchase by Members who offer all the Interest
held by them or who, when submitting for repurchase their Interest, elect to
have either all or none or at least a minimum amount or none accepted, if the
Company first accepts all Interests submitted for repurchase by Members who do
not so elect.
12
(6) Repurchases
of Interests or portions thereof by the Company shall be payable after the date
of each such repurchase or, in the case of an offer by the Company to repurchase
Interests, after the expiration date of such repurchase offer in accordance with
the terms of such offer. Payment of the purchase price for an Interest (or
portion thereof) shall be made within five days of the relevant Repurchase
Request Deadline, and shall consist of cash or a promissory note, which need not
bear interest, in an amount equal to 100% of the unaudited net asset value of
the portion of the Interest redeemed. Notwithstanding the foregoing, if a
Member has requested the repurchase of 90% or more of the Interest held by such
Member, such Member shall receive: (i) cash or a promissory note, which need not
bear interest, in an amount equal to 90% of the estimated unaudited net asset
value of the Interest (or portion thereof) repurchased by the Company determined
as of the Full Repurchase Valuation Date (the “Initial Payment”); (ii) a
promissory note entitling the holder thereof to the balance of the proceeds, to
be paid within 30 days of the completion of the Company’s next annual
audit. Notwithstanding anything in the foregoing to the contrary, the
Board of Directors, in its discretion, may pay any portion of the repurchase
price in Securities (or any combination of Securities and cash) having a value,
determined as of the Full Repurchase Valuation Date, equal to the amount to be
repurchased; provided that the Board of Directors, in its discretion, may make
payment of the purchase price for an Interest by in-kind distribution of
Securities held by the Company. The purchase price of an Interest will be
determined as of the Full Repurchase Valuation Date.
(7) The
Board may, in its sole and absolute discretion, elect to impose charges on
Members or other persons who submit their Interests for repurchase. In the event
that a Member requests the repurchase of Interests that had been acquired within
18 months of the date of the most recent Repurchase Offer, the Board may require
payment of a repurchase fee payable to the Company in an amount equal to 5% of
the repurchase price for such Interests, which fee is intended to compensate the
Company for expenses related to such repurchase. Interests shall be
repurchased by treating the Interests first acquired by a Member as being
repurchased prior to Interests acquired by such Member thereafter. The
Board may also, in its sole and absolute discretion, allocate to tendering
Members withdrawal or similar charges imposed by Portfolio Funds if the Company
has requested withdrawal of its capital from any Portfolio Funds in order to
fund the repurchase of Interests and such charges were imposed on the
Company.
(8) A
Member who submits for repurchase only a portion of such Member’s Interest shall
be required to maintain a Capital Account balance at least equal to
$250,000.
(9) The
Investment Manager may submit for repurchase its Interest as a Member under
Section 4.6 hereof.
(c) Mandatory Redemptions.
The Board may cause the Company to redeem the Interest of a Member or of any
person acquiring such an Interest from or through a Member in the event that the
Board determines or has reason to believe that, among other things:
(1) such
Interest has been transferred or such Interest has 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 Interest by a Member or other person will cause the Company to be in
violation of, or require registration of any Interests, or subject the Company
or the Investment Manager to additional registration or regulation under, the
securities, commodities, or other laws of the United States or any other
relevant jurisdiction;
(3) continued
ownership of such Interest may be harmful or injurious to the business or
reputation of the Company or the Investment Manager, or may subject the Company
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 Company to dispose of securities it owns or to
determine the value of the Company’s net assets;
13
(5) any
representation or warranty made by a Member in connection with the acquisition
of such Interest was not true when made or has ceased to be true;
or
(6) it
would be in the best interests of the Company, as determined by the Board in its
sole and absolute discretion, for the Company to redeem such
Interest.
4.7 WITHDRAWAL
GATE.
(a) For
so long as the Company is not registered as an “investment company” under the
Company Act, if withdrawal requests exceed 25% of the Company’s Net Asset Value
as of the Valuation Date immediately following the date upon which such
withdrawal requests are due for the immediately following withdrawal date, the
Board may, but is not required to, reduce the requested withdrawals on a
pro-rata basis, based on the amount of each withdrawal request (the
“Gate”). If, due to the Gate, any amount requested to be withdrawn is not
permitted to be withdrawn on a particular withdrawal date, it will be carried
forward for withdrawal on the next-following withdrawal date unless the Member
requesting the withdrawal revokes its withdrawal request at least 95 days prior
to such following withdrawal date. Withdrawal requests carried over from a
previous withdrawal date will have priority over new withdrawal
requests.
(b) However,
notwithstanding the foregoing, if a Member requests to make a withdrawal of such
Member’s entire Interest as of each of three consecutive withdrawal dates, but
such Member’s requests have been pro rated down at each such withdrawal date
pursuant to Section 4.7(a), such Member shall be permitted to withdraw all of
its remaining Capital Account balance as of the fourth such withdrawal date
without regard to the Section 4.7(a) limitation (and, in such event the excess
withdrawn over the amount such Member would have been able to withdraw shall not
reduce the amount available to be withdrawn under the Gate by other
Members).
(c) The
Board may in its sole discretion modify or waive the Section 4.7(a) limitation
with respect to the Company as a whole.
4.8 PAYMENT
OF PROCEEDS.
(a) Subject
to the liquidity provisions of the Portfolio Funds and the other factors deemed
relevant by the Board, Members withdrawing 90% or more of their Interests will
generally receive 90% of their estimated withdrawal proceeds within 30 calendar
days of the effective date of withdrawal, and the remaining proceeds within 30
days after the completion of the Company’s audit for the fiscal year of the
withdrawal.
(b) Subject
to the liquidity provisions of the Portfolio Funds and the other factors deemed
relevant by the Board, Members requesting a withdrawal of less than 90% of such
Members’ Capital Account will generally receive full payment of the withdrawal
proceeds within 30 calendar days of the effective date of
withdrawal.
(c) Notwithstanding
the foregoing, the Company will pay out withdrawal proceeds to Members only as
the corresponding withdrawal and redemption proceeds from the Portfolio Funds
are received.
(d) The
Board expects to pay withdrawal proceeds in cash but may do so in kind rather
than in cash if the Board determines that it is not feasible to make cash
payments or that doing so would be detrimental to the Company and not
withdrawing Members.
(e) Withdrawals
may be reduced by legal, accounting or administrative costs associated with
withdrawals from the Portfolio Funds. Such costs are, however, expected to
be minimal.
4.9 MANDATORY
WITHDRAWALS. The Board may, in its discretion, require any Member to
withdraw its capital account at any time and without prior
notice.
14
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ARTICLE
V
CAPITAL
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5.1 CONTRIBUTIONS
TO CAPITAL.
(a) The
minimum Capital Contribution of each Member to the capital of the Company 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 Company upon acceptance
as a contribution to the capital of the Company. The Directors shall not
be entitled to make voluntary contributions of capital to the Company as
Directors of the Company, but may make voluntary contributions to the capital of
the Company as Members. The Investment Manager may make voluntary
contributions to the capital of the Company as a Member.
(b) If
permitted by the Board, a Member and the Investment Manager, as a Member, may
make additional Capital Contributions to the Company, 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 Company 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
Company shall issue the Interests to any Member making an additional Capital
Contribution.
5.2 RIGHTS
OF MEMBERS TO CAPITAL.
No Member
shall be entitled to interest on his or its contribution to the capital of the
Company, nor shall any Member be entitled to the return of any capital of the
Company 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 Company’s property or to compel any sale or
appraisal of the Company’s assets.
5.3 CAPITAL
ACCOUNTS.
(a) The
Company 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 initial 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 Company permitted pursuant to Section 5.1;
plus (ii) any amount credited to such Member’s Capital Account pursuant to this
Article V.
(d) Each
Member’s Capital Account shall be reduced by the sum of: (i) the
amount of any withdrawal or repurchase of the Interest, 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
the Interest, or a portion thereof, of a Member is transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the Capital
Account, or portion thereof, of the transferor to the extent it relates to the
transferred Interest or portion thereof.
15
(f)
The Company
shall establish a special Company account (the “New Issues Account”) to which
all securities and income which constitute “new issues” within the meaning of
the National Association of Securities Dealers, Inc. Rule 2790 shall be
allocated in accordance with applicable policies established from time to time
by the Financial Industry Regulatory Authority. Members who are
“restricted persons” under such Rule will not participate in such account (or
may participate, as determined by the Board, only to the extent permitted under
Rule 2790), without compensating adjustments for the Company’s use of its funds
to acquire “new issues” in which such Members are not permitted to
participate.
(g) With
the consent of the relevant Member, separate Capital Accounts may be established
and maintained for such Member in respect of separate Capital Contributions of
such Member, or portions of any Capital Contribution of such Member, as
indicated by such Member, and accounting determinations otherwise made on a
Member by Member basis shall be made in respect of each separate Capital Account
for such Member as if each separate Capital Account was the Capital Account of a
separate 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 each Member’s Membership Percentage for such
Fiscal Period.
5.5 ALLOCATION
OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES.
(a) If
the Company incurs a withholding tax or other tax obligation with respect to the
share of Company income allocable to any Member, then the Board, without
limitation of any other rights of the Company or the Board, shall cause the
amount of such obligation to be debited against the Capital Account of such
Member when the Company 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 Company
as a contribution to the capital of the Company, upon demand of the Company, the
amount of such excess. The Company 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 Company determines that a Member is eligible for a refund of any
withholding tax, the Company 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 Company
Act at any time the Company is registered as an “investment company” thereunder,
any expenditures payable by the Company, to the extent determined by the Board
to have been paid or withheld on behalf of, or by reason of particular
circumstances applicable to, one or more but fewer than all of the Members,
shall be charged to only those Members on whose behalf such payments are made or
whose particular circumstances gave rise to such payments. Such charges shall be
debited from the Capital Accounts of such Members as of the close of the Fiscal
Period during which any such items were paid or accrued by the
Company.
5.6 RESERVES.
(a) Appropriate
reserves may be created, accrued, and charged against the Company’s Net Asset
Value 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 Manager or the Board, such reserves to be in the
amounts which the Board in its sole and absolute discretion deems 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
or, in the sole and absolute discretion of the Board, to those Persons 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.
16
(b) To
the extent permitted under applicable law and in the sole and absolute
discretion of the Board, if at any time an amount is paid or received by the
Company (other than contributions to the capital of the Company, distributions,
withdrawals (or repurchases) of Interests or portions thereof) and such amount
was not accrued or reserved for but would nevertheless, in accordance with the
Company’s accounting practices, be treated as applicable to one or more prior
Fiscal Periods, then such amount may be proportionately charged or credited, as
appropriate, to those parties who were Members during such prior Fiscal Period
or Periods. To the extent permitted under applicable law, if any amount is to be
charged or credited to a Person who is no longer a Member pursuant to this
Section 5.6, such amount shall be paid by or to such Person, 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 Company on demand; provided, however, that: (i) in no event shall
a former Member be obligated to make a payment exceeding the amount of such
Member’s Capital Account at the time to which the charge relates; and (ii) no
such demand shall be made after the expiration of three years since the date on
which such Person ceased to be a Member. To the extent that a former
Member fails to pay to the Company, in full, any amount required to be charged
to such former Member pursuant to paragraph (a), 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.
(a) For
each Fiscal Year, items of income, deduction, gain, loss, or credit shall be
allocated for income tax purposes among the Members in such 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).
(b) If
the Company realizes 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) withdraws capital from the Company or has its Interest, or
a portion thereof, repurchased by the Company 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
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.
(c) If
the Company realizes losses for Federal income tax purposes for any Fiscal Year
during or as of the end of which one or more Negative Basis Members (as
hereinafter defined) withdraws capital from the Company or has its Interest, or
a portion thereof, repurchased by the Company pursuant to Articles IV or VI
hereof, the Board, in its sole and absolute discretion, may elect to allocate
such losses as follows: (i) to allocate losses among such Negative Basis
Members, pro rata in proportion to the respective Negative Basis (as hereinafter
defined) of each such Negative Basis Member, until either the full amount of
such losses have been so allocated or the Negative Basis of each such Negative
Basis Member shall have been eliminated; and (ii) to allocate losses not so
allocated to Negative 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.
17
(d) As
used herein: (i) the term “Positive Basis” shall mean, with respect
to any Member and as of any time of calculation, the amount by which the 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 any adjustments made to such “adjusted tax basis”
by reason of any transfer or assignment of such Interest, including by reason of
death and without regard to such Member’s share of the liabilities of the
Company under Section 752 of the Code); (ii) the term “Positive Basis
Member” shall mean any Member who withdraws capital from the Company or has its
Interest, or a portion thereof, repurchased by the Company and who has a
Positive Basis as of the effective date of such withdrawal or repurchase, but
such Member shall cease to be a Positive Basis Member at such time as it shall
have received allocations pursuant to clause (i) of the Section 5.7(b)
above equal to its Positive Basis as of the effective date of such withdrawal or
repurchase; (iii) the term “Negative 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 is less than its “adjusted tax basis,”
for federal income tax purposes, in its Interest as of such time (determined
without regard to any adjustments made to such “adjusted tax basis” by reason of
any transfer or assignment of such Interest, including by reason of death and
without regard to such Member’s share of the liabilities of the Company under
Section 752 of the Code); and (iv) the term “Negative Basis Member” shall
mean any Member who withdraws capital from the Company or has its Interest, or a
portion thereof, repurchased by the Company, and who has a Negative Basis as of
the effective date of such withdrawal or repurchase but such Member
shall cease to be a Negative Basis Member at such time as it shall have received
allocations pursuant to clause (i) of Section 5.7(c) above equal to its Negative
Basis as of the effective date of such withdrawal or repurchase.
5.8 DISTRIBUTIONS.
(a) The
Board, in its sole and absolute discretion, may authorize the Company to make
distributions in cash or in kind at any time to all of the Members on a pro rata
basis in accordance with each Member’s Membership 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 Company with respect to any amount
distributed by the Company to any Member shall be deemed to be a distribution or
payment to such Member, 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
Interests shall pay to the Company as a contribution to the capital of the
Company, upon demand of the Board, the amount of such excess.
(c) The
Board shall not be obligated to apply for or obtain a reduction of or exemption
from withholding tax on behalf of any Member that may be eligible for such
reduction or exemption. To the extent that a Member claims to be entitled
to a reduced rate of, or exemption from, a withholding tax pursuant to an
applicable income tax treaty, or otherwise, the Member shall furnish the Board
with such information and forms as such Member may be required to complete where
necessary to comply with any and all laws and regulations governing the
obligations of withholding tax agents. Each Member represents and warrants
that any such information and forms furnished by such Member shall be true and
accurate and agrees to indemnify the Company and each of the Members from any
and all damages, costs, and expenses resulting from the filing of inaccurate or
incomplete information or forms relating to such withholding taxes.
(d) Notwithstanding
anything to the contrary contained herein, none of the Directors or the Members,
nor any other person on behalf of the Company, shall make a distribution to the
Members on account of their Interests in the Company 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.
18
5.9 ORGANIZATIONAL
EXPENSES, COMPANY ACT REGISTRATION EXPENSES.
(a) The
Investment Manager will bear the fees and expenses incurred in connection with
the organization of the Company and the initial offering of the
Interests.
(b) Any
expenses incurred in connection with the Company’s registration under the
Company Act, if so registered in the future, will be born by the Investment
Manager and/or an Affiliate(s).
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ARTICLE
VI
DISSOLUTION
AND LIQUIDATION
------------------------------------------------------------------------------
6.1 DISSOLUTION.
(a) The
Company shall be dissolved at any time there are no Members, unless the Company
is continued in accordance with the Delaware Act, or upon the occurrence of any
of the following events:
(i) upon
the affirmative vote to dissolve the Company by: (i) the Board; or
(ii) Members holding in excess of 50% of the Membership Percentage in the
Company;
(ii) upon
the failure of Members to elect a successor Board member at a meeting called by
the Investment Manager in accordance with this Agreement when no Board member
remains to continue the business of the Company;
(iii) as
required by operation of law; or
(iv) if
any Member that has submitted a written request, in accordance with the terms of
this Agreement, to tender all of such Member’s Interest for repurchase by the
Company 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 Company to be dissolved must so indicate in a separate
written request submitted within the applicable two-year period; provided,
further, that this Section 6.1(a)(iv) shall apply only if and when the Company
is registered as an “investment company” under the Company Act.
(b) Dissolution
of the Company 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
Company as provided herein, but the Company shall not terminate until the assets
of the Company have been liquidated in accordance with Section 6.2 hereof and
the Certificate has been canceled.
6.2 LIQUIDATION
OF ASSETS.
(a) Upon
the dissolution of the Company 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 Company, except that if the Board is
unable to perform this function, a liquidator elected by Members holding a
majority of the Membership Percentage shall promptly liquidate the business and
administrative affairs of the Company. 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:
19
(i) in
satisfaction (whether by payment or the making of reasonable provision for
payment thereof) of the debts and liabilities of the Company, 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 Company’s assets to the Members
has been completed, shall first be paid on a pro rata basis;
(ii) 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
(iii) 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)(iii).
(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 Company,
the Board or other liquidator may distribute ratably in kind any assets of the
Company; provided, however, that if any in-kind distribution is to be made:
(i) the assets distributed in kind shall be valued pursuant to Section 7.3
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.
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ARTICLE
VII
ACCOUNTING,
VALUATIONS, AND BOOKS AND RECORDS
------------------------------------------------------------------------------
7.1 ACCOUNTING
AND REPORTS.
(a) The
Company shall adopt for tax accounting purposes any accounting method that the
Board shall decide in its sole and absolute discretion is in the best interests
of the Company. The Company’s accounts shall be maintained in U.S.
currency.
(b) After
the end of each taxable year, the Company shall furnish to each Member such
information regarding the operation of the Company and such Member’s Interest as
are 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. Members will be required to obtain extensions, at both the
state and federal levels, for the filing of their tax returns, because tax
information will not be available for Members prior to April 15.
(c) Members
will receive monthly Capital Account statements with estimated balances,
quarterly performance commentary, annual audited financial statements and such
reports as may be required by law or regulation.
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 Manager
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 Company and the intended allocation
thereof among the Members.
20
7.3 VALUATION
OF ASSETS.
(a) Assets
of the Company that are invested in Portfolio Funds shall be valued in
accordance with the terms and conditions of the constituent documents of such
Portfolio Funds.
(b) If
the Board determines that the valuation of any Securities or other property
pursuant to 7.3(a) does not fairly represent market value or if the relevant
constituent documents of the Portfolio Fund do not contain valuation principles,
the Board shall value such Securities or other property as it reasonably
determines and shall set forth the basis of such valuation in writing in the
Company’s records.
(c) All
other assets of the Company (except goodwill, which shall not be taken into
account) shall be assigned such value as the Board may reasonably determine in
accordance with generally accepted accounting principles.
(d) The
value of Securities and other assets of the Company and the net worth of the
Company as a whole and the Interests 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.
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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 Directors, if the Company
is registered as an “investment company” under the Company Act and such majority
is required by the Company Act); or (ii) a majority of the Membership
Percentage of the Company.
(b) Any
amendment that would:
(i) increase
the obligation of a Member to make any contribution to the capital of the
Company;
(ii) reduce
the Capital Account of a Member other than in accordance with Article V;
or
(iii) modify
the events causing the dissolution of the Company,
may be
made only if: (i) the written consent of each Member adversely
affected thereby is obtained prior to the effectiveness thereof; or
(ii) such amendment does not become effective until (A) each Member
has received written notice of such amendment and (B) any Member objecting
to such amendment has been afforded a reasonable opportunity (pursuant to such
procedures as may be prescribed by the Board) to withdraw from the Company or
offer his or her entire Interest for repurchase by the Company.
(c) The
power of the Board to amend this Agreement at any time without the consent of
the Members may include, but is not limited to:
21
(i) 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;
(ii) amend
this Agreement (other than with respect to the matters set forth in Section
8.1(b) hereof) to effect compliance with any applicable law or regulation
(including, for the avoidance of doubt, amendments required, or appropriate in
the discretion of the Board, to register the Company as an “investment company”
under the Company Act) 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;
(iii) amend
this Agreement to make such changes as may be necessary or desirable, based on
advice of legal counsel to the Company, to assure the Company’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; and
(iv) amend
this Agreement to make such changes as may be necessary or appropriate to avoid
the assets of the Company being treated for any purpose of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) or
Section 4975 of the Code as assets of any “employee benefit plan” as
defined in and subject to ERISA or of any “plan” as defined in and subject to
Section 4975 of the Code (or any corresponding provisions of succeeding law) or
to avoid the Company’s engaging in a prohibited transaction as defined in
Section 406 of ERISA or Section 4975(c) 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 Director, acting
severally, and any liquidator of the Company’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:
(i) any
amendment to this Agreement that complies with the provisions of this Agreement
(including the provisions of Section 8.1 hereof);
(ii) any
amendment to the Certificate required because this Agreement is amended or as
otherwise required by the Delaware Act; and
(iii) all
other such instruments, documents, and certificates that, in the opinion of
legal counsel, 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
Company shall determine to do business, or any political subdivision or agency
thereof, or that such legal counsel may deem necessary or appropriate to
effectuate, implement, and continue the valid existence and business of the
Company as a limited liability company under the Delaware Act.
(b) Each
Member is aware that the terms of this Agreement permit certain amendments to
this Agreement to be effected and certain other actions to be taken or omitted
by or with respect to the Company without such Member’s consent. If an
amendment to the Certificate or this Agreement or any action by or with respect
to the Company is taken in the manner contemplated by this Agreement, each
Member agrees that, notwithstanding any objection that such Member may assert
with respect to such action, the attorneys-in-fact appointed hereby are
authorized and empowered, with full power of substitution, to exercise the
authority granted above in any manner 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 Company.
22
(c) This
power-of-attorney is a special power-of-attorney and is coupled with an interest
in favor of each Director, acting severally, and any liquidator of the Company’s
assets, appointed pursuant to Section 6.2 hereof, and as such:
(i) shall
be irrevocable and continue in full force and effect notwithstanding the
subsequent death or incapacity of any party granting this power-of-attorney,
regardless of whether the Company, the Board, or any liquidator shall have had
notice thereof; and
(ii) shall
survive the delivery of a transfer by a Member of the whole or any portion of
such Member’s Interest, except that where the transferee thereof has been
approved by the Board for admission to the Company as a substituted Member, this
power-of-attorney given by the transferor shall survive the delivery of such
assignment for the sole purpose of enabling the Board or any liquidator to
execute, acknowledge, and file any instrument necessary to effect such
substitution.
8.3 NOTICES.
(a)
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, facsimile, 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 Company, by regular postal mail, hand
delivery, registered or certified mail return receipt requested, commercial
courier service, facsimile, 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 Company
(or to such other addresses as may be designated by any party hereto by notice
addressed to the Company in the case of notice given to any Member, and to each
of the Members in the case of notice given to the Company). Notices shall
be deemed to have been provided when delivered by hand, on the date indicated as
the date of receipt on a return receipt or when received if sent by regular
mail, commercial courier service, facsimile, 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.
(b)
If any notice addressed to a Member at the address
of that Member appearing on the books and records of the Company is returned to
the Company 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 Company 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 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.
23
8.6 NOT
FOR BENEFIT OF CREDITORS. The provisions of this Agreement are intended
only for the regulation of relations among past, present, and future Members,
Directors, and the Company. This Agreement is not intended for the benefit
of non-Member creditors and no rights are granted to non-Member creditors under
this Agreement.
8.7 CONSENTS.
Any and all consents, agreements, or approvals provided for or permitted by this
Agreement shall be in writing and a signed copy thereof shall be filed and kept
with the books of the Company.
8.8 MERGER
AND CONSOLIDATION.
(a) The
Company (if permitted by the Company Act and the Company is registered as an
“investment company” thereunder) 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 Company 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.
8.9 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.
8.10 CONFIDENTIALITY.
(a) 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. The
term “Confidential Information” includes all information furnished to a Person
who becomes a Member (regardless of whether such information is furnished
before, during or after such Person is admitted as a Member of the Company or
whether such Person remains a Member of the Company) in writing, in electronic
form, orally, or otherwise by the Board, the Investment Manager or their agents
or representatives, including but not limited to, the names of Portfolio Funds
and Portfolio Managers, and all analyses, compilations, studies or other
material prepared by such Member containing or based in whole or in part upon
such information furnished to such Member, but does not include information
which (i) is or becomes generally available to the public other than as a result
of a disclosure by such Member; (ii) was available to such Member on a
non-confidential basis prior to its disclosure to such Member by the Board, the
Investment Manager or their agents or representatives; or (iii) becomes
available to such Member on a non-confidential basis from a source other than
the Board, the Investment Manager or their agents or representatives, provided
that such source is not bound by a confidentiality agreement with the Company,
the Board, the Investment Manager or their agents or
representatives.
(b) Each
Member recognizes that in the event that this Section 8.10 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 Company, the Board
and the Investment Manager. Accordingly, in addition to any and all other
remedies at law or in equity to which the Company, the Board and the Investment
Manager may be entitled, the Company, the Board and the Investment Manager 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.
24
(c) The
Company 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 Company or could damage the Company or its business or that the Company
is required by law or by agreement with a third party to keep
confidential.
8.11 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).
8.12 ENTIRE
AGREEMENT. This Agreement constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
8.13 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 Company 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.
8.14 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.
8.15 TAX
MATTERS MEMBER. The Investment Manager shall be the “tax matters member”
under the Code for the Company unless another Member is so designated by the
Board, and shall have the authority to make any tax elections the Investment
Manager deems advisable including the election under Section 754 of the
Code.
8.16 INVESTMENT
IN ACCORDANCE WITH LAW. Each Member that is, or is investing assets on
behalf of, an “employee benefit plan,” as defined in, and subject to the
fiduciary responsibility provisions of, the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), or a “plan,” as defined in and subject to
Section 4975 of the Code (each such employee benefit plan and plan, a “Plan”),
and each fiduciary thereof who has caused the Plan to become a Member (a “Plan
Fiduciary”), represents and warrants that (a) the Plan Fiduciary has considered
an investment in the Company for such Plan in light of the risks relating
thereto; (b) the Plan Fiduciary has determined that, in view of such
considerations, the investment in the Company for such Plan is consistent with
the Plan Fiduciary’s responsibilities under ERISA; (c) the investment in the
Company by the Plan does not violate and is not otherwise inconsistent with the
terms of any legal document constituting the Plan or any trust agreement
thereunder; (d) the Plan’s investment in the Company has been duly authorized
and approved by all necessary parties; (e) none of the Investment Manager, any
Portfolio Manager, any administrator (the “Administrator”), any custodians, any
member of the committee responsible for approving all Portfolio Manager
allocation decisions (the “Investment Policy Committee”), any selling agent, any
of their respective affiliates or any of their respective agents or
employees: (i) has investment discretion with respect to the
investment of assets of the Plan used to purchase Interests; (ii) has authority
or responsibility to or regularly gives investment advice with respect to the
assets of the Plan used to purchase Interests for a fee and pursuant to an
agreement or understanding that such advice will serve as a primary basis for
investment decisions with respect to the Plan and that such advice will be based
on the particular investment needs of the Plan; or (iii) is an employer
maintaining or contributing to the Plan; and (f) the Plan Fiduciary (i) is
authorized to make, and is responsible for, the decision for the Plan to invest
in the Company, including the determination that such investment is consistent
with the requirement imposed by Section 404 of ERISA that Plan investments be
diversified so as to minimize the risks of large losses; (ii) is independent of
the Investment Manager, each Portfolio Manager, the Administrator, any
custodians, each member of the Investment Policy Committee, each selling agent,
and each of their respective affiliates, and (iii) is qualified to make such
investment decision.
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8.17 DISCLOSURES
AND RESTRICTIONS REGARDING BENEFIT PLAN INVESTORS. Each Member that is a
“benefit plan investor” (defined as any Plan and any entity (“Plan Assets
Entity”) deemed for any purpose of ERISA or Section 4975 of the Code to hold
assets of any Plan) represents that the individual signing the Subscription
Agreement and Power of Attorney on behalf of such Member has disclosed such
Member’s status as a benefit plan investor by accurately responding to the
applicable questions in the Subscription Agreement and Power of Attorney.
Each Member that is not a “benefit plan investor” represents and agrees that if
at a later date such Member becomes a benefit plan investor, such Member will
immediately notify the Investment Manager of such change of status. In
addition, each Plan Assets Entity agrees to promptly provide information to the
Investment Manager, upon the Investment Manager’s reasonable request, regarding
the percentage of the Plan Assets Entity’s equity interests held by benefit plan
investors. Notwithstanding anything herein to the contrary, the Investment
Manager, on behalf of the Company, may take any and all action including, but
not limited to, refusing to admit persons as Members or refusing to accept
additional capital contributions, and requiring the withdrawal of the Interests
of any Member in accordance with Section 4.9 hereof, as may be necessary or
desirable to assure that at all times less than twenty-five percent (25%) of the
total value of each “class of equity interests in the Company”, as determined
pursuant to United States Department of Labor Regulation Section 2510.3-101 and
Section 3(42) of ERISA, is held by benefit plan investors (not including the
investments of the Investment Manager, any Portfolio Manager, any member of the
Investment Policy Committee, any person who provides investment advice for a fee
(direct or indirect) with respect to the Company and individuals and entities
(other than benefit plan investors) that are “affiliates,” as such term is
defined in the applicable regulation promulgated under ERISA, of any such
person) or to otherwise prevent the Company from holding “plan assets” under
Section 3(42) of ERISA.
THE
UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY BEFORE
SIGNING, INCLUDING THE CONFIDENTIALITY CLAUSES SET FORTH IN SECTION
8.10.
26
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of
the day and year first above written.
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As
Directors
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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/s/ J. ▇▇▇▇ ▇▇▇▇▇▇▇
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J.
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/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Initial
Member:
FEG
Investors, LLC
By: Fund
Evaluation Group, LLC, member
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By
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/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇
▇. ▇▇▇▇▇, President
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ADDITIONAL
MEMBERS:
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Each
person who has signed or has had signed on its behalf a Member Signature Page,
which shall constitute a counterpart hereof.
27