TORREY MULTI-STRATEGY PARTNERS, LLC
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT of Torrey Multi-
Strategy Partners, LLC (the "Fund") is dated as of March 28, 2002
by and among ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the Organizational Member, Torrey
Associates, LLC as the Initial Manager, and those persons
hereinafter admitted as Members.
WHEREAS, the Fund has heretofore been formed as a limited
liability company under the Delaware Limited Liability Company
Act pursuant to an initial Certificate of Formation (the
"Certificate") dated and filed with the Secretary of State of
Delaware on March 25, 2002;
NOW, THEREFORE, for and in consideration of the foregoing and
the mutual covenants hereinafter set forth, it is hereby agreed
as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
Administrator The person who provides
administrative services, compliance
and operational support to the Fund
pursuant to an administrative
services agreement.
Advisor Torrey Associates, LLC, a limited
liability company organized under
Delaware law, or any person who may
hereafter serve as the investment
advisor to the Fund pursuant to an
Investment Advisory Agreement.
Advisers Act The Investment Advisers Act of 1940
and the rules, regulations and
orders thereunder, as amended from
time to time, or any successor law.
Affiliate An affiliated person of a person as
such term is defined in the 1940
Act.
Agreement This Limited Liability Company
Agreement, as amended from time to
time.
Board of Managers The Board of Managers established
pursuant to Section 2.6.
Capital Account With respect to each Member, the
capital account established and
maintained on behalf of each Member
pursuant to Section 5.3.
Certificate The Certificate of Formation of the
Fund and any amendments thereto as
filed with the office of the
Secretary of State of the State of
Delaware.
Closing Date The first date on or as of which a
person other than an Organizational
Member is admitted to the Fund as a
Member.
Code The United States Internal Revenue
Code of 1986, as amended, and as
hereafter amended from time to time,
or any successor law.
Delaware Act The Delaware Limited Liability
Company Act as in effect on the date
hereof and as amended from time to
time, or any successor law.
Fiscal Period The period commencing on the Closing
Date, 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 last day of a Taxable
Year;
(3) the day preceding any day as
of which a contribution to the
capital of the Fund is made
pursuant to Section 5.1; or
(4) any day on which the Fund
repurchases any Interest or
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portion of an Interest of any
Member;
(5) any day (other than one
specified in clause (2) above)
as of which this Agreement
provides for any amount to be
credited to or debited against
the Capital Account of any
Member, [other than an amount
to be credited to or debited
against the Capital Accounts
of all Members in accordance
with their respective
Investment Percentages.]
Fiscal Year The period commencing on the Closing
Date and ending on March 31, 2003,
and thereafter each period
commencing on April 1 of each year
and ending on March 31 of each year
(or on the date of a final
distribution pursuant to Section 6.2
hereof), unless and until the Board
of Managers shall elect another
fiscal year for the Fund.
Form N-2 The Fund's Registration Statement on
Form N-2 filed with the Securities
and Exchange Commission, as amended
from time to time.
Fund The limited liability company
governed hereby, as such limited
liability company may from time to
time be constituted.
Independent Managers Those Managers who are not
"interested persons" of the Fund as
such term is defined by the 1940
Act.
Initial Manager Torrey Associates, LLC, the person
who directed the formation of the
Fund and served as the sole initial
Manager.
Interest The entire ownership interest in the
Fund at any particular time of a
Member or other person to whom an
Interest of a Member or portion
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thereof has been transferred
pursuant to Section 4.34 hereof,
including the rights and obligations
of such Member or other person under
this Agreement and the Delaware Act.
Investment Advisory
Agreement A separate written agreement entered
into by the Fund pursuant to which
the Advisor provides investment
advisory services to the Fund.
Investment Percentage A percentage established for each
Member on the Fund's books as of the
first day of each Fiscal Period.
The Investment Percentage of a
Member for a Fiscal Period shall be
determined by dividing the balance
of the Member's Capital Account as
of the commencement of such Fiscal
Period by the sum of the Capital
Accounts of all of the Members as of
the commencement of such Fiscal
Period. The sum of the Investment
Percentages of all Members for each
Fiscal Period shall equal 100%.
Manager An individual designated as a
manager of the Fund pursuant to the
provisions of Section 2.6 of the
Agreement and who serves on the
Board of Managers of the Fund.
Member Any person who shall have been
admitted to the Fund as a member
(including any Manager in such
person's capacity as a member of the
Fund but excluding any Manager in
such person's capacity as a Manager
of the Fund) until the Fund
repurchases the entire Interest of
such person pursuant to Section 4.4
hereof or a substituted member or
members are admitted with respect to
any such person's entire Interest as
a member pursuant to Section 4.34
hereof; such term includes the
Advisor or an Affiliate of the
Advisor to the extent the Advisor
(or such Affiliate) makes a capital
contribution to the Fund and shall
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have been admitted to the Fund as a
member.
Net Assets The total value of all assets of the
Fund, less an amount equal to all
accrued debts, liabilities and
obligations of the Fund, calculated
before giving effect to any
repurchases of Interests.
Net Profit or Net Loss The amount by which the Net Assets
as of the close of business on the
last day of a Fiscal Period exceed
(in the case of Net Profit) or are
less than (in the case of Net Loss)
the Net Assets as of the
commencement of the same Fiscal
Period (or, with respect to the
initial Fiscal Period of the Fund,
as of the close of business on the
Closing Date), such amount to be
adjusted to exclude any items to be
allocated among the Capital Accounts
of the Members on a basis that is
not in accordance with the
respective Investment Percentages of
all Members as of the commencement
of such Fiscal Period pursuant to
Sections 5.5 hereof.
1940 Act The Investment Company Act of 1940
and the rules, regulations and
orders thereunder, as amended from
time to time, or any successor law.
Organizational Member The Advisor and any Affiliate of the
Advisor that contributes initial
capital to the Fund prior to the
Closing Date.
Placement Agent Any entity or person who may serve
as the placement agent of Interests
pursuant to a placement agent
agreement with the Fund.
Portfolio Funds Investment funds in which the Fund's
assets are invested.
Portfolio Managers The organizations that manage and
direct the investment activities of
Portfolio Funds or are retained to
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manage and invest directly
designated portions of the Fund's
assets.
Securities Securities (including, without
limitation, equities, debt
obligations, options, limited
partnership interests, limited
liability company interests and
other "securities" as that term is
defined in Section 2(a)(36) of the
▇▇▇▇ ▇▇▇) and any contracts for
forward or future delivery of any
security, debt obligation or
currency, or commodity, all types of
derivative instruments and financial
instruments and any contracts based
on any index or group of securities,
debt obligations or currencies, or
commodities, and any options
thereon.
Transfer The assignment, transfer, sale,
encumbrance, pledge or other
disposition of all or any portion of
an Interest, including any right to
receive any allocations and
distributions attributable to an
Interest, other than a repurchase in
accordance with Section 4.4 hereof.
Valuation Date The date as of which the Fund values
an Interest for purposes of
determining the price at which the
Interest is to be purchased by the
Fund pursuant to an offer made by
the Fund pursuant to Section 4.4
hereof.
ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS
Section 2.1 Formation of Limited Liability Company
The Fund has been formed as a limited liability company at
the direction of the Initial Manager who authorized the filing of
the Certificate, which actions are hereby ratified by the
execution of this Agreement. The Board of Managers shall execute
and file in accordance with the Delaware Act, any amendment to
the Certificate and shall execute and file with applicable
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governmental authorities any other instruments, documents and
certificates that, in the opinion of the Fund's legal counsel,
may from time to time be required by the laws of the United
States of America, the State of Delaware or any other
jurisdiction in which the Fund shall determine to do business, or
any political subdivision or agency thereof, or that such legal
counsel may deem necessary or appropriate to effectuate,
implement and continue the valid existence and business of the
Fund.
Section 2.2 Name
The name of the Fund shall be "Torrey Multi-Strategy
Partners, LLC" or such other name as the Board of Managers may
hereafter adopt upon (i) causing an appropriate amendment to the
Certificate to be filed in accordance with the Delaware Act and
(ii) taking such other actions as may be required by law.
Section 2.3 Principal and Registered Office
The Fund shall have its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place
designated from time to time by the Board of Managers.
The Fund shall have its registered office in Delaware at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and
shall have Corporation Services Company as its registered agent
for service of process in Delaware, unless a different registered
office or agent is designated from time to time by the Board of
Managers.
Section 2.4 Duration
The term of the Fund commenced on the filing of the
Certificate with the Secretary of State of Delaware and shall
continue until the Fund is dissolved pursuant to Section 6.1
hereof.
Section 2.5 Business of the Fund
(a) The business of the Fund is to purchase, sell (including
short sales), invest and trade in Securities, on margin or
otherwise, and to engage in any financial or derivative
transactions relating thereto or otherwise. The Fund may
execute, deliver and perform all contracts, agreements,
subscription documents and other undertakings and engage in all
activities and transactions as may, in the opinion of the Board
of Managers, be necessary or advisable to carry out its objective
or business.
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(b) The Fund shall operate as a closed-end, non-diversified,
management investment company in accordance with the 1940 Act and
subject to any fundamental policies and investment restrictions
as may be adopted by the Board of Managers and in accordance with
the 1940 Act.
Section 2.6 Board of Managers
(a) Prior to the Closing Date, the Initial Manager may
designate such persons who shall agree to be bound by all of the
terms of this Agreement to serve as Managers on the Board of
Managers, subject to the election of such persons prior to the
Closing Date by the Organizational Member. By signing this
Agreement or signing a subscription agreement in connection with
the purchase of an Interest, a Member admitted on the Closing
Date shall be deemed to have voted for the election of each of
the Managers so designated. After the Closing Date, the Board of
Managers may, subject to the provisions of paragraphs (a) and (b)
of this Section 2.6 with respect to the number of and vacancies
in the position of Manager and the provisions of Section 3.3
hereof with respect to the election of Managers to the Board of
Managers by Members, designate any person who shall agree to be
bound by all of the terms of this Agreement as a Manager. The
names and mailing addresses of the Managers shall be set forth in
the books and records of the Fund. The number of Managers shall
be fixed from time to time by the Board of Managers.
(b) Each Manager shall serve on the Board of Managers for
the duration of the term of the Fund, unless his or her status as
a Manager shall be sooner terminated pursuant to Section 4.2
hereof. In the event of any vacancy in the position of Manager,
the remaining Managers may appoint an individual to serve in such
capacity, so long as immediately after such appointment at least
two-thirds (2/3) of the Managers then serving would have been
elected by the Members. The Board of Managers may call a meeting
of Members to fill any vacancy in the position of Manager, and
shall do so within 60 days after any date on which Managers who
were elected by the Members cease to constitute a majority of the
Managers then serving on the Board of Managers.
(c) In the event that no Manager remains to continue the
business of the Fund, the Advisor shall promptly call a meeting
of the Members, to be held within 60 days after the date on which
the last Manager ceased to act in that capacity, for the purpose
of determining whether to continue the business of the Fund and,
if the business shall be continued, of electing the required
number of Managers to the Board of Managers. If the Members
shall determine at such meeting not to continue the business of
the Fund or if the required number of Managers is not elected
within 60 days after the date on which the last Manager ceased to
act in that capacity, then the Fund shall be dissolved pursuant
8
to Section 6.1 hereof and the assets of the Fund shall be
liquidated and distributed pursuant to Section 6.2 hereof.
Section 2.7 Members
The Fund may offer Interests for purchase by investors in
such manner and at such times as may be determined by the Board
of Managers. All subscriptions for Interests are subject to the
receipt by the Fund or its custodian of cleared funds on or
before the acceptance date for such subscriptions in the full
amount of the subscription. Subject to the foregoing, a person
may be admitted to the Fund as a Member subject to the condition
that such person shall execute an appropriate signature page of
this Agreement or a subscription agreement pursuant to which such
Member agrees to be bound by all the terms and provisions of this
Agreement. The Board of Managers may in its sole discretion
reject any subscription for an Interest. The Board of Managers
may, in its sole discretion, suspend the offering of the
Interests at any time. The admission of any person as a Member
shall be effective upon the revision of the books and records of
the Fund to reflect the name and the contribution to the capital
of the Fund of such additional Member.
Section 2.8 Organizational Member
The initial contribution of capital to the Fund by the
Organizational Member shall be represented by an Interest, which
Interest shall have the same rights as other Interests held by
Members.
Section 2.9 Both Managers and Members
A Member may at the same time be a Manager and a Member, in
which event such Member's rights and obligations in each capacity
shall be determined separately in accordance with the terms and
provisions of this Agreement or as provided in the Delaware Act.
Section 2.10 Limited Liability
Except as provided under applicable law, a Member shall not
be liable for the Fund's debts, obligations and liabilities in
any amount in excess of the capital account balance of such
Member, plus such Member's share of undistributed profits and
assets. Except as provided under applicable law, a Manager shall
not be liable for the Fund's debts, obligations and liabilities.
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ARTICLE III
MANAGEMENT
Section 3.1 Management and Control
(a) Management and control of the business of the Fund shall
be vested in the Board of Managers, which shall have the right,
power and authority, on behalf of the Fund and in its name, to
exercise all rights, powers and authority of Managers under the
Delaware Act and to do all things necessary and proper to carry
out the objective and business of the Fund and their duties
hereunder. No Manager shall have the authority individually to
act on behalf of or to bind the Fund except within the scope of
such Manager's authority as delegated by the Board of Managers.
The parties hereto intend that, except to the extent otherwise
expressly provided herein, (i) each Manager shall be vested with
the same powers, authority and responsibilities on behalf of the
Fund as are customarily vested in each director of a Delaware
corporation and (ii) each Independent Manager shall be vested
with the same powers, authority and responsibilities on behalf of
the Fund as are customarily vested in each director of a closed-
end management investment company registered under the 1940 Act
that is organized as a Delaware business trust who is not an
"interested person" of such company, as such term is defined by
the 1940 Act. During any period in which the Fund shall have no
Managers, the Advisor shall continue to serve as the Advisor to
the Fund and shall have the authority to manage the business and
affairs of the Fund.
(b) Members shall have no right to participate in and shall
take no part in the management or control of the Fund's business
and shall have no right, power or authority to act for or bind
the Fund. Members shall have the right to vote on any matters
only as provided in this Agreement or on any matters that require
the approval of the holders of voting securities under the 1940
Act or as otherwise required in the Delaware Act.
(c) The Board of Managers may delegate to any other person
any rights, power and authority vested by this Agreement in the
Board of Managers to the extent permissible under applicable law,
and may appoint persons to serve as officers of the Fund, with
such titles and authority as may be determined by the Board of
Managers consistent with applicable law.
Section 3.2 Actions by the Board of Managers
(a) Unless provided otherwise in this Agreement, the Board
of Managers shall act only: (i) by the affirmative vote of a
majority of the Managers (including the vote of a majority of the
Independent Managers if required by the ▇▇▇▇ ▇▇▇) present at a
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meeting duly called at which a quorum of the Managers shall be
present (in person or, if in person attendance is not required by
the 1940 Act, by telephone) or (ii) by unanimous written consent
of all of the Managers without a meeting, if permissible under
the ▇▇▇▇ ▇▇▇.
(b) The Board of Managers may designate from time to time a
Principal Manager who shall preside at all meetings of the Board
of Managers. Meetings of the Board of Managers may be called by
the Principal Manager or by any two Managers, and may be held on
such date and at such time and place as the Board of Managers
shall determine. Each Manager shall be entitled to receive
written notice of the date, time and place of such meeting within
a reasonable time in advance of the meeting. Except as otherwise
required by the 1940 Act, notice need not be given to any Manager
who shall attend a meeting without objecting to the lack of
notice or who shall execute a written waiver of notice with
respect to the meeting. Managers may attend and participate in
any meeting by telephone except where in-person attendance at a
meeting is required by the 1940 Act. A majority of the Managers
shall constitute a quorum at any meeting.
Section 3.3 Meetings of Members
(a) Actions requiring the vote of the Members may be taken
at any duly constituted meeting of the Members at which a quorum
is present. Meetings of the Members may be called by the Board
of Managers 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 of Managers shall
determine. The Board of Managers shall arrange to provide
written notice of the meeting, stating the date, time and place
of the meeting and the record date therefor, to each Member
entitled to vote at the meeting within a reasonable time prior
thereto. Failure to receive notice of a meeting on the part of
any Member shall not affect the validity of any act or proceeding
of the meeting, so long as a quorum shall be present at the
meeting, except as otherwise required by applicable law. Only
matters set forth in the notice of a meeting may be voted on by
the Members at a meeting. The presence in person or by proxy of
Members holding a majority of the total number of votes eligible
to be cast by all Members as of the record date shall constitute
a quorum at any meeting. In the absence of a quorum, a meeting
of the Members may be adjourned by action of a majority of the
Members present in person or by proxy without additional notice
to the Members. Except as otherwise required by any provision of
this Agreement or of the 1940 Act, (i) those candidates receiving
a plurality of the votes cast at any meeting of Members shall be
elected as Managers and (ii) all other actions of the Members
taken at a meeting shall require the affirmative vote of Members
holding a majority of the total number of votes eligible to be
11
cast by those Members who are present in person or by proxy at
such meeting.
(b) Each Member shall be entitled to cast at any meeting of
Members a number of votes equivalent to such Member's Investment
Percentage as of the record date for such meeting. The Board of
Managers shall establish a record date not less than 10 days nor
more than 60 days prior to the date of any meeting of Members to
determine eligibility to vote at such meeting and the number of
votes that each Member will be entitled to cast at the meeting,
and shall maintain for each such record date a list setting forth
the name of each Member and the number of votes that each Member
will be entitled to cast at the meeting.
(c) A Member may vote at any meeting of Members by a proxy
properly executed in writing by the Member and filed with the
Fund before or at the time of the meeting. A proxy may be
suspended or revoked, as the case may be, by the Member executing
the proxy by a later writing delivered to the Fund at any time
prior to exercise of the proxy or if the Member executing the
proxy shall be present at the meeting and decide to vote in
person. Any action of the Members that is permitted to be taken
at a meeting of the Members may be taken without a meeting if
consents in writing, setting forth the action taken, are signed
by Members holding a majority of the total number of votes
eligible to be cast or such greater percentage as may be required
in order to approve such action.
Section 3.4 Custody of Assets of the Fund
The physical possession of all funds, Securities or other
properties of the Fund shall at all times, be held, controlled
and administered by one or more custodians retained by the Fund
in accordance with the requirements of the 1940 Act and the rules
thereunder.
Section 3.5 Other Activities of Members and Managers
(a) The Managers shall not be required to devote all of
their time to the affairs of the Fund, but shall devote such time
as may reasonably be required to perform their obligations under
this Agreement.
(b) Any Member or Manager, and any Affiliate of any Member
or Manager, may engage in or possess an interest in other
business ventures or commercial dealings of every kind and
description, independently or with others, including, but not
limited to, acquisition and disposition of Securities, provision
of investment advisory or brokerage services, serving as
directors, officers, employees, advisors or agents of other
companies, partners of any partnership, members of any limited
12
liability company, or trustees of any trust, or entering into any
other commercial arrangements. No Member or Manager shall have
any rights in or to such activities of any other Member or
Manager, or any profits derived therefrom.
Section 3.6 Duty of Care
(a) Neither a Manager nor the Advisor shall be liable to the
Fund or to any of its Members for any loss or damage occasioned
by any act or omission in the performance of their services
pursuant to any agreement, including this Agreement, between a
Manager or the Advisor and the Fund for the provision of services
to the Fund unless it shall be determined by final judicial
decision on the merits from which there is no further right to
appeal that such loss is due to an act or omission of the Manager
or the Advisor, as applicable, constituting willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the performance of their services to the Fund.
(b) Members not in breach of any obligation hereunder or
under any agreement pursuant to which the Member subscribed for
an Interest shall be liable to the Fund, any Member or third
parties only as provided under the Delaware Act.
Section 3.7 Indemnification
(a) To the fullest extent permitted by law, the Fund shall,
subject to Section 3.7(b) hereof, indemnify each Manager
(including for this purpose his or her respective executors,
heirs, assigns, successors or other legal representatives),
against all losses, claims, damages, liabilities, costs and
expenses, including, but not limited to, amounts paid in
satisfaction of judgments, in compromise, or as fines or
penalties, and reasonable counsel fees, incurred in connection
with the defense or disposition of any action, suit,
investigation or other proceeding, whether civil or criminal,
before any judicial, arbitral, administrative or legislative
body, in which such indemnitee may be or may have been involved
as a party or otherwise, or with which such indemnitee may be or
may have been threatened, while in office or thereafter, by
reason of being or having been a Manager of the Fund or the past
or present performance of services to the Fund by such
indemnitee, except to the extent such loss, claim, damage,
liability, cost or expense shall have been finally determined in
a decision on the merits in any such action, suit, investigation
or other proceeding to have been incurred or suffered by such
indemnitee by reason of willful misfeasance, bad faith, 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 a Manager for
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any liability (including liability under federal securities laws
which, under certain circumstances, impose liability even on
persons that act in good faith) to the extent (but only to the
extent) that such indemnification would be in violation of
applicable law, but shall be construed so as to effectuate the
applicable provisions of this Section 3.7 to the fullest extent
permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred
by any such indemnitee (but excluding amounts paid in
satisfaction of judgments, in compromise, or as fines or
penalties), may be paid from time to time by the Fund in advance
of the final disposition of any such action, suit, investigation
or proceeding upon receipt of an undertaking by or on behalf of
such indemnitee to repay to the Fund amounts so paid if it shall
ultimately be determined that indemnification of such expenses is
not authorized under Section 3.7(a) hereof; provided, however,
that (i) such indemnitee shall provide security for such
undertaking, (ii) the Fund shall be insured by or on behalf of
such indemnitee against losses arising by reason of such
indemnitee's failure to fulfill such undertaking, or (iii) a
majority of the Managers (excluding any Manager who is either
seeking advancement of expenses hereunder or is or has been a
party to any other action, suit, investigation or proceeding
involving claims similar to those involved in the action, suit,
investigation or proceeding giving rise to a claim for
advancement of expenses hereunder) or independent legal counsel
in a written opinion shall determine based on a review of readily
available facts (as opposed to a full trial-type inquiry) that
there is reason to believe such indemnitee ultimately will be
entitled to indemnification.
(c) As to the disposition of any action, suit, investigation
or proceeding (whether by a compromise payment, pursuant to a
consent decree or otherwise) without an adjudication or a
decision on the merits by a court, or by any other body before
which the proceeding shall have been brought, that an indemnitee
is liable to the Fund or its Members by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard
of the duties involved in the conduct of such indemnitee's
office, indemnification shall be provided pursuant to Section
3.7(a) hereof if (i) approved as in the best interests of the
Fund by a majority of the Managers (excluding any Manager who is
either seeking indemnification hereunder or is or has been a
party to any other action, suit, investigation or proceeding
involving claims similar to those involved in the action, suit,
investigation or proceeding giving rise to a claim for
indemnification hereunder) upon a determination based upon a
review of readily available facts (as opposed to a full trial-
type inquiry) that such indemnitee is not liable to the Fund or
its Members by reason of willful misfeasance, bad faith, gross
14
negligence, or reckless disregard of the duties involved in the
conduct of such indemnitee's office, or (ii) the Board of
Managers secures a written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a
full trial-type inquiry) to the effect that such indemnification
would not protect such indemnitee against any liability to the
Fund or its Members to which such indemnitee would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the
conduct of such indemnitee's office.
(d) Any indemnification or advancement of expenses made
pursuant to this Section 3.7 shall not prevent the recovery from
any indemnitee of any such amount if such indemnitee subsequently
shall be determined in a decision on the merits in any action,
suit, investigation or proceeding involving the liability or
expense that gave rise to such indemnification or advancement of
expenses to be liable to the Fund or its Members by reason of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of such
indemnitee's office. In (i) any suit brought by a Manager (or
other person entitled to indemnification hereunder) to enforce a
right to indemnification under this Section 3.7 it shall be a
defense that, and (ii) in any suit in the name of the Fund to
recover any indemnification or advancement of expenses made
pursuant to this Section 3.7 the Fund shall be entitled to
recover such expenses upon a final adjudication that, the Manager
or other person claiming a right to indemnification under this
Section 3.7 has not met the applicable standard of conduct set
forth in this Section 3.7. In any such suit brought to enforce a
right to indemnification or to recover any indemnification or
advancement of expenses made pursuant to this Section 3.7, the
burden of proving that the Manager or other person claiming a
right to indemnification is not entitled to be indemnified, or to
any indemnification or advancement of expenses, under this
Section 3.7 shall be on the Fund (or any Member acting
derivatively or otherwise on behalf of the Fund or its Members).
(e) An indemnitee may not satisfy any right of
indemnification or advancement of expenses granted in this
Section 3.7 or to which such indemnitee may otherwise be entitled
except out of the assets of the Fund, and no Member shall be
personally liable with respect to any such claim for
indemnification or advancement of expenses.
(f) The rights of indemnification provided hereunder shall
not be exclusive of or affect any other rights to which any
person may be entitled by contract or otherwise under law.
Nothing contained in this Section 3.7 shall affect the power of
the Fund to purchase and maintain liability insurance on behalf
of any Manager or other person.
15
Section 3.8 Fees, Expenses and Reimbursement
(a) The Advisor and its Affiliates shall be entitled to
receive such fees for services provided to the Fund as may be
agreed to by the Advisor (or its Affiliate) and the Fund pursuant
to the Investment Advisory Agreement or other applicable
agreement relating to such services.
(b) The Board of Managers may cause the Fund to compensate
each Manager who is not an officer or employee of the Advisor or
the Placement Agent (or of any Affiliate of the Advisor or of the
Placement Agent) for his or her services as such, and such
Manager shall be reimbursed by the Fund for reasonable travel and
out-of-pocket expenses incurred by him in performing his duties
under this Agreement.
(c) The Fund shall bear all expenses incurred in its
business and operations, other than those specifically required
to be borne by the Advisor pursuant to the Investment Advisory
Agreement. Expenses to be borne by the Fund include, but are not
limited to, the following:
(1) all costs and expenses directly related to
portfolio transactions and positions for the Fund's account,
including, but not limited to, brokerage commissions, research
fees, interest and commitment fees on loans and debit balances,
borrowing charges on securities sold short, dividends on
securities sold but not yet purchased, custodial fees, margin
fees, transfer taxes and premiums, taxes withheld on foreign
dividends and indirect expenses from investments in Portfolio
Funds;
(2) all costs and expenses associated with the
registration of the Fund under, and costs of compliance with, any
applicable Federal or state laws;
(3) all costs and expenses associated with the
organization of separate investment funds managed by Portfolio
Managers retained by the Fund;
(4) attorneys' fees and disbursements associated
with updating the Fund's registration statement, prospectus and
other offering related documents (the "Offering Materials"); the
costs of printing the Offering Materials; the costs of
distributing the Offering Materials to prospective investors; and
attorneys' fees and disbursements associated with the preparation
and review thereof;
(5) the costs and expenses of holding meetings of
the Board of Managers and any meetings of Members, including
16
legal costs associated with the preparation and filing of proxy
materials;
(6) the fees and disbursements of Fund counsel,
legal counsel to the Independent Managers, if any, independent
accountants for the Fund and other consultants and professionals
engaged on behalf of the Fund;
(7) the Management Fee payable to the Advisor
pursuant to the Investment Advisory Agreement;
(8) the fees payable to ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Fund
Services, LLC pursuant to the Administrative, Compliance and
Operational Support Services Agreement;
(9) the costs of a fidelity bond and any
liability insurance obtained on behalf of the Fund or the Board
of Managers;
(10) all costs and expenses of preparing, setting
in type, printing and distributing reports and other
communications to Members;
(11) all expenses of computing the Fund's net
asset value, including any equipment or services obtained for
these purposes;
(12) all charges for equipment or services used in
communicating information regarding the Fund's transactions among
the Advisor and any custodian or other agent engaged by the Fund;
and
(13) such other types of expenses as may be
approved from time to time by the Board of Managers.
The Advisor shall be entitled to reimbursement from the Fund
for any of the above expenses that it pays on behalf of the Fund.
(d) Subject to procuring any required regulatory approvals,
from time to time the Fund may, alone or in conjunction with
other registered or unregistered investment funds or other
accounts for which the Advisor, or any Affiliate of the Advisor,
acts as general partner or investment advisor, purchase insurance
in such amounts, from such insurers and on such terms as the
Board of Managers shall determine.
17
ARTICLE IV
TERMINATION OF STATUS OF MANAGERS,
TRANSFERS AND REPURCHASES
Section 4.1 Termination of Status of a Manager
The status of a Manager shall terminate if the Manager
(i) shall die; (ii) shall be adjudicated incompetent; (iii) shall
voluntarily withdraw as a Manager (upon not less than 90 days'
prior written notice to the other Managers); (iv) shall be
removed (as described below); (v) shall be certified by a
physician to be mentally or physically unable to perform his or
her duties hereunder; (vi) shall be declared bankrupt by a court
with appropriate jurisdiction, file a petition commencing a
voluntary case under any bankruptcy law or make an assignment for
the benefit of creditors; (vii) shall have a receiver appointed
to administer the property or affairs of such Manager; or (viii)
shall otherwise cease to be a Manager of the Fund under the
Delaware Act.
Section 4.2 Removal of the Managers
Any Manager may be removed either by (a) the vote or written
consent of at least two-thirds (2/3) of the Managers not subject
to the removal vote or (b) the vote or written consent of Members
holding not less than two-thirds (2/3) of the total number of
votes eligible to be cast by all Members.
Section 4.3 Transfer of Interests of Members
(a) An Interest of a Member may be Transferred only (i) by
operation of law pursuant to the death, divorce, bankruptcy,
insolvency, dissolution or incompetency of such Member or (ii)
with the written consent of the Board of Managers (which may be
withheld in its sole discretion); provided, however, that the
Board of Managers may not consent to any Transfer other than a
Transfer (i) 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 transferor (e.g.,
certain Transfers to affiliates, gifts and contributions to
family partnerships), (ii) to members of the Member's immediate
family (brothers, sisters, spouse, parents and children), (iii)
as a distribution from a qualified retirement plan or an
individual retirement account, or (iv) a Transfer to which the
Board of Managers may consent pursuant to the following sentence.
The Board of Managers may consent to other pledges, transfers, or
assignments under such other circumstances and conditions as it,
in its sole discretion, deems appropriate; provided, however,
that prior to any such pledge, transfer, or assignment, the Board
of Managers shall consult with counsel to the Fund to ensure that
18
such pledge, transfer, or assignment will not cause the Fund to
be treated as a "publicly traded partnership" taxable as a
corporation. In no event, however, will any transferee or
assignee be admitted as a Member without the consent of the Board
of Managers which may be withheld in its sole discretion. Any
pledge, transfer, or assignment not made in accordance with this
Section 4.4 shall be void.
(b) The Board of Managers may not consent to a Transfer of
an Interest or a portion thereof of a Member unless; (i) the
person to whom the Interest is Transferred (or each of the
person's beneficial owners if such a person is a "private
investment company" as defined in paragraph (d)(3) of Rule 205-3
under the Advisers Act) is a person whom the Board of Managers
believes meets the requirements of paragraph (d)(1) of Rule 205-3
under the Advisers Act or any successor rule thereto and any
other requirements that the Board of Managers deems necessary or
appropriate; and (ii) the entire Interest of the Member is
Transferred to a single transferee or, after the Transfer of a
portion of an Interest, the balance of the Capital Account of
each of the transferee and transferor is not less than $25,000.
Any transferee that acquires an Interest by operation of law as
the result of the death, divorce, bankruptcy, insolvency,
dissolution or incompetency of a Member or otherwise, shall be
entitled to the allocations and distributions allocable to the
Interest so acquired and to Transfer such Interest in accordance
with the terms of this Agreement, but shall not be entitled to
the other rights of a Member unless and until such transferee
becomes a substituted Member. If a Member transfers an Interest
with the approval of the Board of Managers, the Board of Managers
shall promptly take all necessary actions so that the transferee
to whom such Interest is transferred is admitted to the Fund as a
Member. Each Member effecting a Transfer and its transferee
agree to pay all expenses, including attorneys' and accountants'
fees, incurred by the Fund in connection with such Transfer.
(c) Each Member shall indemnify and hold harmless the Fund,
the Managers, the Advisor, 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 4.3 and
(ii) any misrepresentation by such Member in connection with any
such Transfer.
19
Section 4.4 Repurchase of Interests
(a) Except as otherwise provided in this Agreement, no
Member or other person holding an Interest or portion thereof
shall have the right to withdraw or tender to the Fund for
repurchase such Interest or portion thereof. The Board of
Managers from time to time, in its sole discretion and on such
terms and conditions as it may determine, may cause the Fund to
repurchase Interests or portions thereof pursuant to written
tenders. However, the Fund shall not offer to repurchase
Interests on more than [two] occasions during any one Fiscal Year
[unless it has received an opinion of counsel to the effect that
such more frequent offers would not cause any adverse tax
consequences to the Fund or the Members]. In determining whether
to cause the Fund to repurchase Interests or portions thereof
pursuant to written tenders, the Board of Managers shall consider
the recommendation of the Advisor, and shall also consider the
following factors, among others:
(1) whether any Members have requested to tender
Interests or portions thereof to the Fund;
(2) the liquidity of the Fund's assets;
(3) the investment plans and working capital
requirements of the Fund;
(4) the relative economies of scale with respect
to the size of the Fund;
(5) the history of the Fund in repurchasing
Interests or portions thereof;
(6) the economic condition of the securities
markets; and
(7) the anticipated tax consequences of any
proposed repurchases of Interests or portions thereof.
The Board of Managers shall cause the Fund to repurchase
Interests or portions thereof pursuant to written tenders only on
terms determined by the Board of Managers to be fair to the Fund
and to all Members (including persons holding Interests acquired
from Members), as applicable.
(b) A Member who tenders for repurchase only a portion of
the Member's Interest will be required to maintain a capital
account balance equal to $25,000. If a Member tenders an amount
that would cause the Member's capital account balance to fall
below the required minimum, the Fund reserves the right to reduce
20
the amount to be purchased from the Member so that the required
minimum balance is maintained.
(c) The Advisor may tender any Interest or a portion thereof
that it holds as a Member.
(d) The Board of Managers may cause the Fund to repurchase
an Interest or portion thereof of a Member or any person
acquiring an Interest or portion thereof from or through a Member
in the event that the Board of Managers determines or has reason
to believe that:
(1) such an Interest or portion thereof has been
transferred in violation of Section 4.3 hereof, or such an
Interest or portion thereof has vested in any person by operation
of law as the result of the death, divorce, bankruptcy,
insolvency, dissolution or incompetency of a Member;
(2) ownership of such an Interest by a Member or
other person will cause the Fund to be in violation of, or
subject the Fund to additional registration or regulation under,
the securities laws of the United States or any other relevant
jurisdiction;
(3) continued ownership of such an Interest may
be harmful or injurious to the business or reputation of the
Fund, the Managers or the Advisor, or may subject the Fund or any
of the Members to an undue risk of adverse tax or other fiscal
consequences;
(4) such Member's continued participation in the
Fund may cause the Fund to be classified as a "publicly traded
partnership" within the meaning of Section 7704 of the Code and
the Treasury Regulations thereunder;
(5) any of the representations and warranties
made by a Member in connection with the acquisition of an
Interest or portion thereof was not true when made or has ceased
to be true; or
(6) it would be in the best interests of the
Fund, as determined by the Board of Managers in its sole
discretion, for the Fund to repurchase such an Interest or
portion thereof.
(e) Repurchases of Interests or portions thereof by the Fund
shall be payable promptly after the date of each such repurchase
or, in the case of an offer by the Fund to repurchase Interests,
promptly 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 consist of: (i)
21
cash or a promissory note, which need not bear interest, in an
amount equal to such percentage, as may be determined by the
Board of Managers, of the estimated unaudited net asset value of
the Interest (or portion thereof) repurchased by the Fund
determined as of the date of such repurchase (the "Initial
Payment"); and, if determined to be appropriate by the Board of
Managers or if the Initial Payment is less than 100% of the
estimated unaudited net asset value, (ii) a promissory note
entitling the holder thereof to a contingent payment equal to the
excess, if any, of (x) the net asset value of the Interest (or
portion thereof) repurchased by the Fund as of the date of such
repurchase, determined based on the audited financial statements
of the Fund for the Fiscal Year in which such repurchase was
effective, over (y) the Initial Payment. Notwithstanding
anything in the foregoing to the contrary, the Board of Managers,
in its discretion, may pay any portion of the repurchase price in
marketable Securities (or any combination of marketable
Securities and cash) having a value, determined as of the date of
repurchase, equal to the amount to be repurchased. Any
promissory note given to satisfy the Initial Payment shall be due
and payable not more than 45 days after the date of repurchase
or, if the Fund has requested withdrawal of its capital from any
Portfolio Funds in order to fund the repurchase of Interests, 10
business days after the Fund has received at least 90% of the
aggregate amount withdrawn by the Fund from such Portfolio Funds.
(f) Subject to the approval of the Board of Managers and
compliance with the 1940 Act, the Fund may impose a redemption
fee in connection with repurchases of Interests, including a fee
applicable to repurchases of Interests (or portions thereof)
effected prior to expiration of a specified period subsequent to
a Member's admission to the Fund.
(g) A Member may at any time submit to the Fund a written
request that the Fund repurchase the entire Interest of such
Member, as contemplated by Section 6.1(iii) hereof. Any such
request shall be sent to the Fund by registered or certified
mail, return receipt requested, and shall be deemed valid only if
the Member has received a letter from the Fund acknowledging its
receipt of the request. The Fund shall send such letter to the
Member promptly upon its receipt of the Member's request.
ARTICLE V
CAPITAL
Section 5.1 Contributions to Capital
(a) The minimum initial contribution of each Member to the
capital of the Fund shall be such amount as the Board of
Managers, in its discretion, may determine from time to time.
22
The amount of the initial contribution of each Member shall be
recorded on the books and records of the Fund upon acceptance as
a contribution to the capital of the Fund. The Managers shall
not be entitled to make contributions of capital to the Fund as
Managers of the Fund, but may make contributions to the capital
of the Fund as a Member. The Advisor may make contributions to
the capital of the Fund as a Member.
(b) Members may make additional contributions to the capital
of the Fund effective as of such times as the Board of Managers,
in its discretion, may permit, subject to Section 2.7 hereof, but
no Member shall be obligated to make any additional contribution
to the capital of the Fund except to the extent provided in
Section 5.6 hereof. The minimum initial capital contribution of
a Member to the capital of the Fund shall be such amount as the
Board of Managers, in its sole discretion, may determine from
time to time.
(c) Initial and any additional contributions to the capital
of the Fund by any Member shall be payable in cash, payable in
readily available funds at the date of the proposed acceptance of
the contribution.
Section 5.2 Rights of Members to Capital
No Member shall be entitled to interest on any contribution
to the capital of the Fund, nor shall any Member be entitled to
the return of any capital of the Fund except (i) upon the
repurchase by the Fund of a part or all of such Member's Interest
pursuant to Section 4.4 hereof, (ii) pursuant to the provisions
of Section 5.6 hereof or (iii) upon the liquidation of the Fund's
assets pursuant to Section 6.2 hereof. No Member shall be liable
for the return of any such amounts. No Member shall have the
right to require partition of the Fund's property or to compel
any sale or appraisal of the Fund's assets.
Section 5.3 Capital Accounts
(a) The Fund shall maintain a separate Capital Account for
each Member.
(b) Each Member's Capital Account shall have an initial
balance equal to the amount of cash constituting such Member's
initial contribution to the capital of the Fund.
(c) Each Member's Capital Account shall be increased by the
sum of (i) the amount of cash constituting additional
contributions by such Member to the capital of the Fund permitted
pursuant to Section 5.1 hereof, plus (ii) all amounts credited to
such Member's Capital Account pursuant to Sections 5.4 through
5.6 hereof.
23
(d) Each Member's Capital Account shall be reduced by the
sum of (i) the amount of any repurchase of the Interest, or
portion thereof, of such Member pursuant to Section 4.4 hereof or
distributions to such Member pursuant to Section 5.7, 5.9 or 6.2
hereof which are not reinvested (net of any liabilities secured
by any asset distributed that such Member is deemed to assume or
take subject to under Section 752 of the Code), plus (ii) any
amounts debited against such Capital Account pursuant to Sections
5.4 through 5.6 hereof.
Section 5.4 Allocation of Net Profit and Net Loss
As of the last day of each Fiscal Period, any Net Profit or
Net Loss for the Fiscal Period shall be allocated among and
credited to or debited against the Capital Accounts of the
Members in accordance with their respective Investment
Percentages for such Fiscal Period.
Section 5.5 Allocation of Certain Expenditures
Except as otherwise provided for in this Agreement and unless
prohibited by the 1940 Act, any expenditures payable by the Fund,
to the extent determined by the Board of Managers to have been
paid or withheld on behalf of, or by reason of particular
circumstances applicable to, one or more but fewer than all of
the Members, shall be charged to only those Members on whose
behalf such payments are made or whose particular circumstances
gave rise to such payments. Such charges shall be debited from
the Capital Accounts of such Members as of the close of the
Fiscal Period during which any such items were paid or accrued by
the Fund.
Section 5.6 Reserves
Appropriate reserves may be created, accrued and charged
against Net Assets and proportionately against the Capital
Accounts of the Members for contingent liabilities, if any, as of
the date any such contingent liability becomes known to the
Advisor or the Board of Managers, such reserves to be in the
amounts that the Board of Managers, in its sole discretion, deems
necessary or appropriate. The Board of Managers may increase or
reduce any such reserves from time to time by such amounts as the
Board of Managers, in its sole discretion, deems necessary or
appropriate. The amount of any such reserve, or any increase or
decrease therein, shall be proportionately charged or credited,
as appropriate, to the Capital Accounts of Members.
24
Section 5.7 Tax Allocations
For each fiscal year, items of income, deduction, gain, loss
or credit shall be allocated for income tax purposes among the
Members in such 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
Regulations Sections l.704-l(b)(2)(iv)(f) and (g), l.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 l.704-1(b)(2)(ii)(d).
If the Fund realizes capital gains (including short-term
capital gains) for Federal income tax purposes ("gains") for any
fiscal year during or as of the end of which the Interests of one
or more Positive Basis Members (as hereinafter defined) are
repurchased by the Fund pursuant to Article IV, the Board of
Managers, unless otherwise determined by the Board of Managers,
in its sole discretion, shall allocate such gains as follows:
(i) to allocate such gains among such Positive Basis Members, pro
rata in proportion to the respective Positive Basis (as
hereinafter defined) of each such Positive Basis Member, until
either the full amount of such gains shall have been so allocated
or the Positive Basis of each such Positive Basis Member shall
have been eliminated and (ii) to allocate any gains not so
allocated to Positive Basis Members to the other Members in such
manner as shall equitably reflect the amounts allocated to such
Members' Capital Accounts pursuant to Section 5.4.
If the Fund realizes capital losses (including long-term
capital losses) for Federal income tax purposes ("losses") for
any fiscal year during or as of the end of which the Interests of
one or more Negative Basis Members (as hereinafter defined) are
repurchased by the Fund pursuant to Article IV, the Board of
Managers, unless otherwise determined by the Board of Managers,
in its sole discretion, shall allocate such losses as follows:
(i) to allocate such 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 shall have been so
allocated or the Negative Basis of each such Negative Basis
Member shall have been eliminated and (ii) to allocate any losses
not so allocated to Negative Basis Members to the other Members
in such manner as shall equitably reflect the amounts allocated
to such Members' Capital Accounts pursuant to Section 5.4.
25
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 its Interest 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 Fund under Section 752 of the Code) and (ii)
the term "Positive Basis Member" shall mean any Member whose
Interest is repurchased by the Fund and who has Positive Basis as
of the effective date of the repurchase, but such Member shall
cease to be a Positive Basis Member at such time as it shall have
received allocations pursuant to clause (i) of the second
paragraph of this Section 5.7 equal to its Positive Basis as of
the effective date of such repurchase.
As used herein, (i) the term "Negative Basis" shall mean,
with respect to any Member and as of any time of calculation, the
amount by which its Interest 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 Fund under Section 752 of the Code), and (ii)
the term "Negative Basis Member" shall mean any Member whose
Interest is repurchased by the Fund and who has Negative Basis as
of the effective date of such 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 the third
paragraph of this Section 5.7 equal to its Negative Basis as of
the effective date of such repurchase.
Section 5.8 Distributions
The Board of Managers, in its sole discretion, may authorize
the Fund to make distributions in cash or in kind at any time to
all of the Members on a pro rata basis in accordance with the
Members' Investment Percentages.
Section 5.9 Withholding
(a) The Board of Managers may withhold and pay over to the
Internal Revenue Service (or any other relevant taxing authority)
taxes with respect to any Member to the extent required by the
Code or any other applicable law.
(b) For purposes of this Agreement, any taxes so withheld by
the Fund with respect to any Member shall be deemed to be a
distribution or payment to such Member, reducing the amount
26
otherwise distributable to such Member pursuant to this Agreement
and reducing the Capital Account of such Member. If the amount
of such taxes is greater than any such distributable amounts,
then such Member and any successor to such Member's Interest
shall pay to the Fund as a contribution to the capital of the
Fund, upon demand of the Board of Managers, the amount of such
excess.
(c) The Board of Managers 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 of Managers with such information and
forms as such Member may be required to complete where necessary
to comply with any and all laws and regulations governing the
obligations of withholding tax agents. Each Member represents
and warrants that any such information and forms furnished by
such Member shall be true and accurate and agrees to indemnify
the Fund and each of the Members from any and all damages, costs
and expenses resulting from the filing of inaccurate or
incomplete information or forms relating to such withholding
taxes.
ARTICLE VI
DISSOLUTION AND LIQUIDATION
Section 6.1 Dissolution
The Fund shall be dissolved:
(i) upon the affirmative vote to dissolve the Fund by both:
(i) the Board of Managers and (ii) Members holding at least two-
thirds (2/3) of the total number of votes eligible to be cast by
all Members;
(ii) upon the failure of Members to elect a successor
Manager at a meeting called by the Advisor in accordance with
Section 2.6(c) hereof when no Manager remains to continue the
business of the Fund;
(iii) upon the expiration of any two year period that
commences on the date on which any Member has submitted, in
accordance with the procedure specified in Section 4.4(g) hereof,
a written notice to the Fund requesting the repurchase of its
entire Interest by the Fund (which notice has not been
subsequently withdrawn by such Member), if such Interest has not
been repurchased by the Fund; or
27
(iv) as required by operation of law.
Dissolution of the Fund shall be effective on the day on
which the event giving rise to the dissolution shall occur, but
the Fund shall not terminate until the assets of the Fund have
been liquidated in accordance with Section 6.2 hereof and the
Certificate has been canceled.
Section 6.2 Liquidation of Assets
(a) Upon the dissolution of the Fund as provided in Section
6.1 hereof, the Board of Managers, acting directly or through a
liquidator it selects, shall liquidate the business and
administrative affairs of the Fund, except that if the Board of
Managers is unable to perform this function, a liquidator elected
by Members holding a majority of the total number of votes
eligible to be cast by all Members shall promptly liquidate the
business and administrative affairs of the Fund. Net Profit and
Net Loss during the period of liquidation shall be allocated
pursuant to Section 5.4 hereof. The proceeds from liquidation
(after establishment of appropriate reserves for contingencies in
such amount as the Board of Managers or liquidator shall deem
appropriate in its sole discretion as applicable) shall be
distributed in the following manner:
(1) the debts of the Fund, other than debts,
liabilities or obligations to Members, and the expenses of
liquidation (including legal and accounting expenses incurred in
connection therewith), up to and including the date that
distribution of the Fund's assets to the Members has been
completed, shall first be paid on a pro rata basis;
(2) such debts, liabilities or obligations as are
owing to the Members shall next be paid in their order of
seniority and on a pro rata basis;
(3) the Members shall next be paid 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.
(b) Anything in this Section 6.2 to the contrary
notwithstanding, upon dissolution of the Fund, the Board of
Managers or other liquidator may distribute ratably in kind any
assets of the Fund; provided, however, that if any in-kind
distribution is to be made (i) the assets distributed in kind
shall be valued pursuant to Section 7.3 hereof as of the actual
date of their distribution and charged as so valued and
distributed against amounts to be paid under Section 6.2(a)
above, and (ii) any profit or loss attributable to property
28
distributed in-kind shall be included in the Net Profit or Net
Loss for the Fiscal Period ending on the date of such
distribution.
ARTICLE VII
ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS
Section 7.1 Accounting and Reports
(a) The Fund shall adopt for tax accounting purposes any
accounting method that the Board of Managers shall decide in its
sole discretion is in the best interests of the Fund. The Fund's
accounts shall be maintained in U.S. currency.
(b) After the end of each taxable year, the Fund shall
furnish to each Member such information regarding the operation
of the Fund and such Member's Interest as is necessary for
Members to complete Federal, state and local income tax or
information returns and any other tax information required by
Federal, state or local law.
(c) Except as otherwise required by the 1940 Act, or as may
otherwise be permitted by rule, regulation or order, within 60
days after the close of the period for which a report required
under this Section 7.1(c) is being made, the Fund shall furnish
to each Member a semi-annual report and an annual report
containing the information required by such Act. The Fund shall
cause financial statements contained in each annual report
furnished hereunder to be accompanied by a certificate of
independent public accountants based upon an audit performed in
accordance with generally accepted accounting principles. The
Fund may furnish to each Member such other periodic reports as it
deems necessary or appropriate in its discretion.
Section 7.2 Determinations by the Board of Managers
(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 of Managers unless specifically and expressly otherwise
provided for by the provisions of this Agreement or required by
law, and such determinations and allocations shall be final and
binding on all the Members.
(b) The Board of Managers may make such adjustments to the
computation of Net Profit or Net Loss, or any components
comprising Net Profit or Net Loss as it considers appropriate to
reflect fairly and accurately the financial results of the Fund
and the intended allocation thereof among the Members.
29
Section 7.3 Valuation of Assets
(a) Except as may be required by the 1940 Act, the Board of
Managers shall value or have valued any Securities or other
assets and liabilities of the Fund as of the close of business on
the last day of each Fiscal Period in accordance with such
valuation procedures as shall be established from time to time by
the Board of Managers and which conform to the requirements of
the 1940 Act. In determining the value of the assets of the
Fund, no value shall be placed on the goodwill or name of the
Fund, or the office records, files, statistical data or any
similar intangible assets of the Fund not normally reflected in
the Fund's accounting records, but there shall be taken into
consideration any items of income earned but not received,
expenses incurred but not yet paid, liabilities, fixed or
contingent, and any other prepaid expenses to the extent not
otherwise reflected in the books of account, and the value of
options or commitments to purchase or sell Securities or
commodities pursuant to agreements entered into prior to such
valuation date.
(b) The Fund will value interests in Portfolio Funds at
their "fair value," as determined in good faith by the Board of
Managers, which value ordinarily will be the value of an interest
in a Portfolio Fund determined by the Portfolio Manager of the
Portfolio Fund in accordance with the policies established by the
Portfolio Fund, absent information indicating that such value
does not represent the fair value of the interest.
(c) The value of Securities and other assets of the Fund
and the net worth of the Fund as a whole determined pursuant to
this Section 7.3 shall be conclusive and binding on all of the
Members and all parties claiming through or under them.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1 Amendment of Limited Liability Company Agreement
(a) Except as otherwise provided in this Section 8.1, this
Agreement may be amended, in whole or in part, with (i) the
approval of the Board of Managers (including the vote of a
majority of the Independent Managers, if required by the ▇▇▇▇
▇▇▇) and (ii) if required by the 1940 Act, the approval of the
Members by such vote as is required by the ▇▇▇▇ ▇▇▇.
(b) Any amendment that would:
(1) increase the obligation of a Member to make
any contribution to the capital of the Fund;
30
(2) reduce the Capital Account of a Member other
than in accordance with Article V; or
(3) modify the events causing the dissolution of
the Fund;
may be made only if (i) the written consent of each Member
adversely affected thereby is obtained prior to the effectiveness
thereof or (ii) such amendment does not become effective until
(A) each Member has received written notice of such amendment and
(B) any Member objecting to such amendment has been afforded a
reasonable opportunity (pursuant to such procedures as may be
prescribed by the Board of Managers) to tender its entire
Interest for repurchase by the Fund.
(c) By way of example only, the Board of Managers at any
time without the consent of the Members may:
(1) restate this Agreement together with any
amendments hereto that have been duly adopted in accordance
herewith to incorporate such amendments in a single, integrated
document;
(2) amend this Agreement (other than with respect
to the matters set forth in Section 8.1(b) hereof) to effect
compliance with any applicable law or regulation or to cure any
ambiguity or to correct or supplement any provision hereof that
may be inconsistent with any other provision hereof, provided
that such action does not adversely affect the right of any
Member in any material respect; and
(3) amend this Agreement to make such changes as
may be necessary or advisable to ensure that the Fund will not be
treated as an association or a publicly traded partnership
taxable as a corporation as defined in Section 7704(b) of the
Code.
(d) The Board of Managers shall cause written notice to be
given of any amendment to this Agreement (other than any
amendment of the type contemplated by clause (1) of Section
8.1(c) hereof) to each Member, which notice shall set forth (i)
the text of the amendment or (ii) a summary thereof and a
statement that the text thereof will be furnished to any Member
upon request.
Section 8.2 Special Power of Attorney
(a) Each Member hereby irrevocably makes, constitutes and
appoints each Manager, acting severally, and any liquidator of
the Fund's assets appointed pursuant to Section 6.2 hereof with
full power of substitution, the true and lawful representatives
31
and attorneys-in-fact of, and in the name, place and stead of,
such Member, with the power from time to time to make, execute,
sign, acknowledge, swear to, verify, deliver, record, file and/or
publish:
(1) any amendment to this Agreement that complies
with the provisions of this Agreement (including the provisions
of Section 8.1 hereof);
(2) any amendment to the Certificate required
because this Agreement is amended, including, without limitation,
an amendment to effectuate any change in the membership of the
Fund; and
(3) all such other instruments, documents and
certificates that, in the opinion of legal counsel to the Fund,
may from time to time be required by the laws of the United
States of America, the State of Delaware or any other
jurisdiction in which the Fund shall determine to do business, or
any political subdivision or agency thereof, or that such legal
counsel may deem necessary or appropriate to effectuate,
implement and continue the valid existence and business of the
Fund as a limited liability company under the Delaware Act.
(b) Each Member is aware that the terms of this Agreement
permit certain amendments to this Agreement to be effected and
certain other actions to be taken or omitted by or with respect
to the Fund without such Member's consent. If an amendment to
the Certificate or this Agreement or any action by or with
respect to the Fund is taken in the manner contemplated by this
Agreement, each Member agrees that, notwithstanding any objection
that such Member may assert with respect to such action, the
attorneys-in-fact appointed hereby are authorized and empowered,
with full power of substitution, to exercise the authority
granted above in any manner that may be necessary or appropriate
to permit such amendment to be made or action lawfully taken or
omitted. Each Member is fully aware that each Member will rely
on the effectiveness of this special power-of-attorney with a
view to the orderly administration of the affairs of the Fund.
(c) This power-of-attorney is a special power-of-attorney
and is coupled with an interest in favor of each of the Managers
and as such:
(1) shall be irrevocable and continue in full
force and effect notwithstanding the subsequent death or
incapacity of any party granting this power-of-attorney,
regardless of whether the Fund or Board of Managers shall have
had notice thereof; and
32
(2) shall survive the delivery of a Transfer by a
Member of the whole or any portion of such Member's Interest,
except that where the transferee thereof has been approved by the
Board of Managers for admission to the Fund as a substituted
Member, this power-of-attorney given by the transferor shall
survive the delivery of such assignment for the sole purpose of
enabling the Board of Managers to execute, acknowledge and file
any instrument necessary to effect such substitution.
Section 8.3 Notices
Except as otherwise set forth in this Agreement, notices that
may or are required to be provided under this Agreement shall be
made, if to a Member, by regular mail, or if to the Fund, the
Board of Managers or the Advisor, by hand delivery, registered or
certified mail, return receipt requested, commercial courier
service, telex or telecopier, and shall be addressed to the
respective parties hereto at their addresses as set forth in the
books and records of the Fund. Notices shall be deemed to have
been provided when delivered by hand, on the date indicated as
the date of receipt on a return receipt or when received if sent
by regular mail, commercial courier service, telex or telecopier.
A document that is not a notice and that is required to be
provided under this Agreement by any party to another party may
be delivered by any reasonable means.
Section 8.4 Agreement Binding Upon Successors and Assigns
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, successors,
assigns, executors, trustees or other legal representatives, but
the rights and obligations of the parties hereunder may not be
Transferred or delegated except as provided in this Agreement and
any attempted Transfer or delegation thereof that is not made
pursuant to the terms of this Agreement shall be void.
Section 8.5 Applicability of 1940 Act and Form N-2
The parties hereto acknowledge that this Agreement is not
intended to, and does not, set forth the substantive provisions
contained in the 1940 Act and the Form N-2 that affect numerous
aspects of the conduct of the Fund's business and of the rights,
privileges and obligations of the Members. Each provision of
this Agreement shall be subject to and interpreted in a manner
consistent with the applicable provisions of the 1940 Act and the
Form N-2.
33
Section 8.6 Choice of Law
Notwithstanding the place where this Agreement may be
executed by any of the parties hereto, the parties expressly
agree that all the terms and provisions hereof shall be construed
under the laws of the State of Delaware, including the Delaware
Act without regard to the conflict of law principles of such
State.
Section 8.7 Not for Benefit of Creditors
The provisions of this Agreement are intended only for the
regulation of relations among past, present and future Members,
Managers, and the Fund. This Agreement is not intended for the
benefit of non-Member creditors and no rights are granted to non-
Member creditors under this Agreement.
Section 8.8 Consents
Any and all consents, agreements or approvals provided for or
permitted by this Agreement shall be in writing and a signed copy
thereof shall be filed and kept with the books of the Fund.
Section 8.9 Merger and Consolidation
(a) The Fund may merge or consolidate with or into one or
more limited liability companies formed under the Delaware Act or
other business entities pursuant to an agreement of merger or
consolidation that has been approved in the manner contemplated
by Section 18-209(b) of the Delaware Act.
(b) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, an agreement of merger or
consolidation approved in accordance with Section 18-209(b) of
the Delaware Act may, to the extent permitted by Section 18-
209(f) of the Delaware Act, (i) effect any amendment to this
Agreement, (ii) effect the adoption of a new limited liability
company agreement for the Fund if it is the surviving or
resulting limited liability company in the merger or
consolidation, or (iii) provide that the limited liability
company agreement of any other constituent limited liability
company to the merger or consolidation (including a limited
liability company formed for the purpose of consummating the
merger or consolidation) shall be the limited liability company
agreement of the surviving or resulting limited liability Fund.
Section 8.10 Pronouns
All pronouns shall be deemed to refer to the masculine,
feminine, neuter, singular or plural, as the identity of the
34
person or persons, firm or corporation may require in the context
thereof.
Section 8.11 Confidentiality
(a) A Member may obtain from the Fund such information
regarding the affairs of the Fund as is just and reasonable under
the Delaware Act, subject to reasonable standards (including
standards governing what information and documents are to be
furnished, at what time and location and at whose expense)
established by the Board of Managers.
(b) Each Member covenants that, except as required by
applicable law or any regulatory body, it will not divulge,
furnish or make accessible to any other person the name and/or
address (whether business, residence or mailing) of any Member
(collectively, "Confidential Information") without the prior
written consent of the Board of Managers, which consent may be
withheld in its sole discretion.
(c) Each Member recognizes that in the event that this
Section 8.11 is breached by any Member or any of its principals,
partners, members, directors, officers, employees or agents or
any of its Affiliates, including any of such Affiliates'
principals, partners, members, directors, officers, employees or
agents, irreparable injury may result to the non-breaching
Members and the Fund. Accordingly, in addition to any and all
other remedies at law or in equity to which the non-breaching
Members and the Fund may be entitled, such Members shall also
have the right to obtain equitable relief, including, without
limitation, injunctive relief, to prevent any disclosure of
Confidential Information, plus reasonable attorneys' fees and
other litigation expenses incurred in connection therewith. In
the event that any non-breaching Member or the Fund determines
that any of the other Members or any of its principals, partners,
members, directors, officers, employees or agents or any of its
Affiliates, including any of such Affiliates' principals,
partners, members, directors, officers, employees or agents
should be enjoined from or required to take any action to prevent
the disclosure of Confidential Information, each of the other
non-breaching Members agrees to pursue in a court of appropriate
jurisdiction such injunctive relief.
Section 8.12 Certification of Non-Foreign Status
Each Member or transferee of an Interest from a Member shall
certify, upon admission to the Fund and at such other times
thereafter as the Board of Managers may request, whether such
Member is a "United States Person" within the meaning of Section
7701(a)(30) of the Code on forms to be provided by the Fund, and
35
shall notify the Fund within 60 days of any change in such
Member's status.
Section 8.13 Severability
If any provision of this Agreement is determined by a court
of competent jurisdiction not to be enforceable in the manner set
forth in this Agreement, each Member agrees that it is the
intention of the Members that such provision should be
enforceable to the maximum extent possible under applicable law.
If any provisions of this Agreement are held to be invalid or
unenforceable, such invalidation or unenforceability shall not
affect the validity or enforceability of any other provision of
this Agreement (or portion thereof).
Section 8.14 Filing of Returns
The Board of Managers or its designated agent shall prepare
and file, or cause the accountants of the Fund to prepare and
file, a Federal information tax return in compliance with Section
6031 of the Code and any required state and local income tax and
information returns for each tax year of the Fund.
Section 8.15 Tax Matters Partner
(a) The Advisor shall be designated on the Fund's annual
Federal income tax return, and have full powers and
responsibilities, as the Tax Matters Partner of the Fund for
purposes of Section 6231(a)(7) of the Code. In the event that no
Manager is a Member, a Member shall be so designated. Each
Member hereby does, to the fullest extent permitted by law,
delegate to the Advisor all of its rights, powers and authority
to act as such Tax Matters Partner and hereby constitutes and
appoints the Advisor as its true and lawful attorney-in-fact,
with power to act in its name and on its behalf, including the
power to act through such agents or attorneys as it shall elect
or appoint, to receive notices, to make, execute and deliver,
swear to, acknowledge and file any and all reports, responses and
notices, and to do any and all things required or advisable, in
the Manager's judgment, to be done by such a Tax Matters Partner.
The Advisor shall be indemnified and held harmless by the Fund
from any and all liabilities and obligations that arise from or
by reason of such designation.
(b) Each person (for purposes of this Section 8.15, called a
"Pass-Thru Member") that holds or controls an interest as a
Member on behalf of, or for the benefit of, another person or
persons, or which Pass-Thru Member is beneficially owned
(directly or indirectly) by another person or persons, shall,
within 30 days following receipt from the Tax Matters Partner of
any notice, demand, request for information or similar document,
36
convey such notice or other document in writing to all holders of
beneficial interests in the Fund holding such interests through
such Pass-Thru Member. In the event the Fund shall be the
subject of an income tax audit by any Federal, state or local
authority, to the extent the Fund is treated as an entity for
purposes of such audit, including administrative settlement and
judicial review, the Tax Matters Partner shall be authorized to
act for, and its decision shall be final and binding upon, the
Fund and each Member thereof. All expenses incurred in
connection with any such audit, investigation, settlement or
review shall be borne by the Fund.
Section 8.16 Section 754 Election
In the event of a distribution of Fund property to a Member
or an assignment or other transfer (including by reason of death)
of all or part of the interest of a Member in the Fund, at the
request of a Member, the Board of Managers, in its discretion,
may cause the Fund to elect, pursuant to Section 754 of the Code,
or the corresponding provision of subsequent law, to adjust the
basis of the Fund property as provided by Sections 734 and 743 of
the Code.
37
EACH OF THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS
AGREEMENT IN ITS ENTIRETY BEFORE SIGNING, INCLUDING THE
CONFIDENTIALITY CLAUSE SET FORTH IN SECTION 8.11.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
INITIAL MANAGER:
Torrey Associates, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
ORGANIZATIONAL MEMBER:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
MEMBERS:
Each person who shall sign a subscription agreement and who shall
be accepted by the Board of Managers to the Fund as a Member.
38
80350020.AB1