LIMITED LIABILITY COMPANY AGREEMENT OF PNMAC MORTGAGE OPPORTUNITY FUND, LLC a Delaware Limited Liability Company Dated as of August 1, 2008
Exhibit
A
OF
a
Delaware Limited Liability Company
Dated
as of August 1, 2008
TABLE
OF CONTENTS
Page
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SECTION
1. DEFINED TERMS
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5
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SECTION
2. LIMITED LIABILITY COMPANY FORMATION AND IDENTIFICATION
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10
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2.1
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Formation
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10
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2.2
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Name
and Place of Business
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10
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2.3
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Tax
Treatment
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11
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2.4
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Records
of Members
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11
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2.5
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Limited
Liability Company
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11
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SECTION
3. PURPOSE, NATURE OF BUSINESS AND POWERS
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11
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SECTION
4. TERM
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12
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SECTION
5. SHARES OF MEMBERSHIP INTEREST
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12
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5.1
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Beneficial
Interest
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12
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5.2
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Classes
and Series
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12
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5.3
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Issuance
of Shares
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13
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5.4
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Rights
of Members
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13
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SECTION
6. REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS
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14
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SECTION
7. CAPITAL CONTRIBUTIONS
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14
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7.1
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Capital
Contributions of Members
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14
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7.2
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Withdrawal
of Capital
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18
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SECTION
8. DISTRIBUTIONS
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18
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8.1
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Distributions
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18
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SECTION
9. MANAGEMENT AND BOARD OF DIRECTORS
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20
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9.1
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Management
Generally
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20
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9.2
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Board
of Directors
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21
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9.3
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Expenses
of the Company
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23
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9.4
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Members’
Consent
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24
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9.5
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Exculpation
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25
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9.6
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Indemnification;
No Duty of Investigation; Reliance on Experts
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25
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9.7
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Director
Limited Liability
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27
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9.8
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Certain
Other Activities
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27
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SECTION
10. MEMBERS
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28
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10.1
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Identity,
Contributions and Common Share Commitments
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28
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10.2
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No
Management Power or Liability
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28
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10.3
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Amendments
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29
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10.4
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Merger,
Consolidation, Liquidation
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30
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10.5
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List
of Members
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30
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10.6
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Limitations
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31
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10.7
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Meetings.
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31
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10.8
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Action
Without a Meeting
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31
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10.9
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Procedures
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32
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10.10
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Voting
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32
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10.11
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Key
Person Event
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34
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SECTION
11. ADMISSION OF ADDITIONAL MEMBERS; ASSIGNMENTS OR TRANSFERS
OF SHARES
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34
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11.1
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Admission
of Additional Members
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34
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11.2
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Assignments
or Transfers of Shares
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34
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SECTION
12. POWER OF ATTORNEY
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37
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12.1
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Appointment
of Investment Manager
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37
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12.2
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Nature
of Special Power
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37
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SECTION
13. BOOKS, RECORDS AND REPORTS
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38
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13.1
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Books
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38
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13.2
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Reports
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39
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SECTION
14. VALUATION OF INTERESTS
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40
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SECTION
15. BANK ACCOUNTS; CUSTODIAN
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40
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15.1
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Bank
Accounts Generally
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40
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15.2
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Custodian
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40
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SECTION
16. DISSOLUTION AND TERMINATION OF THE COMPANY
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41
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16.1
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Dissolution
Generally
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41
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16.2
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Continuation
of Company
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41
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16.3
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Events
Causing Dissolution
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41
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16.4
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Distribution
of Assets on Liquidation
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41
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16.5
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Liquidation
Statement
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42
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16.6
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Director’s
Liability Upon Dissolution or Removal
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42
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SECTION
17. GENERAL PROVISIONS
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42
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17.1
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Notices
and Distributions
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42
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17.2
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Survival
of Rights
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43
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17.3
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Construction
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43
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17.4
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Section
Headings
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43
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17.5
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Agreement
in Counterparts
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43
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17.6
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Governing
Law
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43
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17.7
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Additional
Documents
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43
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17.8
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Severability
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44
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17.9
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Pronouns
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44
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17.10
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Entire
Agreement
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44
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17.11
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Arbitration
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44
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17.12
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Waiver
of Partition
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44
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2
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17.13
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Filing
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44
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Appendix
A
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Form
of Notice of Transfer
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▇-▇
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▇▇▇▇▇▇▇▇
▇
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Subscription
Agreement
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B-1
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Appendix
C
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Schedule
of Members
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C-1
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3
OF
This
Limited Liability Company Agreement, dated as of August 1, 2008 (this “Agreement”), has been
approved by a majority of the Board of Directors of the Company and the sole
Member of the Company in accordance with Section 10.3(b) of this Agreement and,
when executed by ▇▇▇▇ ▇▇▇▇▇▇, as Secretary of the Company, in accordance with
Section 17.13 of this Agreement, shall be the Limited Liability Agreement of the
Company.
Upon
the terms and subject to the conditions described below, the parties to this
Agreement, which shall include all Persons becoming Members at any time, as a
condition of becoming and for so long as they remain Members, agree as
follows:
SECTION
1.
DEFINED
TERMS
The
terms set forth below shall have the indicated meanings.
“Advisers Act” means the
Investment Advisers Act of 1940 and the rules and regulations promulgated
thereunder and applicable exemptions granted therefrom, as amended from time to
time.
“Advisory Agreement” means the
Investment Management Agreement between the Company and the Investment Manager,
dated on or about the Initial Closing, as such agreement may be amended,
modified, revised or restated, from time to time, in accordance with the terms
hereof and thereof, and any substantially similar agreement with a successor
Investment Manager permitted by the terms hereof and thereof.
“Advisory Fee” means the fee
payable to the Investment Manager under the Advisory Agreement.
“Affiliated Person” has the
meaning set forth in the Investment Company Act.
“Aggregate Capital
Contributions” means, with respect to any Member as of any date, the
aggregate amount of all Capital Contributions made by such Member on or prior to
such date.
“Agreement” or “Limited Liability Company
Agreement” means this Limited Liability Company Agreement, as originally
executed and as amended from time to time.
“Assets” means all cash,
securities, investments and other property and assets of any type of the
Company.
4
“Base Rate” means, on any
date, a variable rate per
annum equal to the rate of interest published from time to time by The Wall Street
Journal as the “prime rate” at large U.S. money center
banks.
“Board of Directors” means the
board of directors of the Company.
“Business Day” means any day
other than a Saturday, Sunday or any other day on which banks in New York, New
York are required by law to be closed. All references to Business Day
herein shall be based on the time in New York, New York.
“By-Laws” has the meaning set
forth in Section 9.2(g).
“Capital Contribution” means a
contribution to the Company in cash by a Member or by any predecessor holder of
the Shares held by such Member less, in the case of the initial capital call
with respect to an increase in a Member’s Common Share Commitment or the Common
Share Commitment of a new Member, any capital charge on such Common Share
Commitment.
“Certificate” means the
Certificate of Formation of the Company, filed with the Secretary of State on
April 15, 2008, and any and all amendments thereto and restatements thereof
filed with the Secretary of State.
“Code” means the Internal
Revenue Code of 1986, as amended from time to time, and any successor
thereto.
“Commitment Period” means the
period commencing on the Initial Closing and ending, subject to the occurrence
of a Key Person Event, on the earliest to occur of the following: (i) December
31, 2011, (ii) the decision of the Investment Manager, in its sole discretion
and (iii) the affirmative vote of Members who hold such percentage of the Shares
as constitutes at least 75% of the aggregate Common Share
Commitments.
“Common Member” means a Member
holding Common Shares of the Company.
“Common Share Commitment”
means, when referring to a dollar amount, an amount committed by a Common Member
or prospective Common Member for investment in the Common Shares of the Company
pursuant to (a) a Subscription Agreement and (b) an assumption by such
Member of any Common Share Commitment of a Defaulting Member pursuant to Section
7.1(d) or of a transferring Member.
“Common Shares” means the
common Shares of membership interests of the Company having the rights and other
terms set forth in this Agreement.
“Company” means PNMAC Mortgage
Opportunity Fund, LLC, a Delaware limited liability company, as it may from time
to time be constituted.
“Company Expenses” shall have
the meaning assigned to such term in Section 9.8.
5
“Consent Dividend” shall have
the meaning assigned to such term in Section 8.1(h).
“Custodial Account” means one
or more segregated trust accounts maintained pursuant to the requirements of the
Investment Company Act and other applicable law to hold the Assets.
“Custodian” means an entity
which maintains the Custodial Account pursuant to the requirements of the
Investment Company Act and other applicable law.
“Defaulting Member” shall have
the meaning assigned to such term in Section 7.1(d).
“Delaware Act” means the
Delaware Limited Liability Company Act (6 Del.C. § 18-101,
et seq.), as amended
from time to time and any successor thereto.
“Director” means each director
of the Company who at the time in question has been duly elected or appointed
and has qualified as a director in accordance with the provisions hereof and is
then in office.
“Disabling Conduct” shall have
the meaning set forth in Section 9.5.
“Disinterested Non-Party
Directors” shall have the meaning set forth in Section
9.6(a).
“Drawdown Date” means each
date that the Company draws down Common Share Commitments.
“Fiscal Quarter” means a three
calendar month period ending March 31, June 30, September 30 or
December 31 of a Fiscal Year.
“Fiscal Year” means the
Company’s fiscal year, which shall end on each December 31 unless otherwise
determined by the Board of Directors.
“Incapacity” or “Incapacitated” means, as to
any Person, the bankruptcy, insolvency, death, disability, adjudication of
incompetence or insanity, dissolution or termination, as the case may be, of
such Person.
“Indemnified Person” shall
have the meaning assigned to such term in Section 9.5.
“Independent Director” means a
Director that is not an Interested Person.
“Initial Closing” means the
date determined by the Investment Manager to be the initial closing in respect
of the Common Share Commitments.
“Initial Member” means ▇▇▇▇
▇▇▇▇▇▇, in his capacity as Initial Member of the Company.
6
“Interested Person” has the
meaning given to such term in the Investment Company Act.
“Investment Company Act” means
the Investment Company Act of 1940 and the rules and regulations promulgated
thereunder and applicable exemptions granted therefrom, as amended from time to
time.
“Investment Manager” means
PNMAC Capital Management, LLC, a Delaware limited liability company, in its
capacity as investment manager to the Company, and any successor thereto
selected in accordance with the Investment Company Act.
“Key Person Event” shall have
the meaning set forth in Section 10.11.
“Member” means any Person that
is admitted as a Common Member or Preferred Member of the Company in accordance
with the terms of this Agreement at the time of reference thereto.
“Mortgage Subsidiary” means
PNMAC Mortgage Co., LLC, a Delaware limited liability company.
“Net Asset Value” means the
value of the Assets less the liabilities of the Company, calculated pursuant to
Section 14 in accordance with generally accepted accounting principles and in
compliance with the Investment Company Act.
“Offering Memorandum” means
the Confidential Preliminary Private Placement Memorandum, dated April 23, 2008,
relating to the Common Shares, as amended or supplemented from time to
time.
“Other Accounts” shall have
the meaning set forth in Section 9.8.
“PennyMac” means Private
National Mortgage Acceptance Company, LLC, a Delaware limited liability
company.
“PennyMac Servicing” means
PennyMac Loan Services, LLC, a Delaware limited liability company.
“Person” means any human
being, partnership, limited liability company, corporation, trust or other
entity.
“Portfolio Partnership” means
PNMAC Mortgage Opportunity Fund, L.P., a Delaware limited partnership, as it may
from time to time be constituted.
“Preferred Member” means a
Member holding Preferred Shares of the Company.
“Preferred Shares” means the
preferred Shares of membership interests of the Company, if any, having the
rights and other terms set forth in the Statement of Preferences for the
applicable series thereof.
7
“Principal” shall have the
meaning set forth in Section 10.11.
“Replacement Principal” shall
have the meaning set forth in Section 10.11.
“Secretary of State” means the
Secretary of State of the State of Delaware.
“Securities Act” means the
Securities Act of 1933 and the rules and regulations promulgated thereunder and
applicable exemptions granted therefrom, as amended from time to
time.
“Shareholder Services Agreement”
means the Shareholder Services Agreement between the Company and the
Investment Manager, dated on or about the Initial Closing, as such agreement may
be amended, modified, revised or restated, from time to time, in accordance with
the terms hereof and thereof, and any substantially similar agreement with a
successor Investment Manager permitted by the terms hereof and
thereof.
“Shareholder Servicing Fee”
means the fee payable to the Investment Manager under the Shareholder
Services Agreement.
“Shares” means the units of
beneficial interest into which the membership interests of the Company shall be
divided from time to time and includes fractions of Shares as well as whole
Shares.
“Statement of Preferences”
means any statement of preferences setting forth the rights and other terms of
any Preferred Shares issued by the Company.
“Subscription Agreement” means
each subscription agreement and any related supplemental subscription agreement
executed by any existing or prospective Member relating to such Member’s
investment in the Company.
“Subscription Period” means
the period commencing on the Initial Closing and ending on or prior to January
2, 2009.
“Subsequent Closing” shall
have the meaning set forth in Section 7.1(a).
“Subsequent Drawdown Date” has
the meaning assigned to such term in Section 7.1(b).
“Substituted Member” means any
Person admitted as a Member pursuant to Section 11.2(b).
“Successor Funds” shall have
the meaning set forth in Section 9.8(a).
“Suspension Period” shall have
the meaning assigned to such term in Section 10.11.
“Transfer” or “Transferred” means, with
respect to any legal or beneficial interest in the Company, a direct or indirect
sale, transfer, assignment, gift, pledge,
8
hypothecation
or other disposition or encumbrance of any nature of or on such interest,
whether by operation of law or otherwise (including a transfer as a result of a
merger or consolidation involving a Member or a sale of all or substantially all
of a Member’s assets).
“Transferee” means, with
respect to any legal or beneficial interest in the Company, the Person to whom
the Transferor of such interest desires to Transfer or has Transferred such
interest.
“Transferor” means, with
respect to any legal or beneficial interest in the Company, the Member or other
Person desiring to Transfer such interest.
“Treasury Regulations” means
the United States Treasury regulations promulgated under the Code.
“Unfunded Commitment” means,
with respect to any Common Member as of any date, the amount of such Common
Member’s Common Share Commitment minus such Common Member’s
Aggregate Capital Contributions previously made and not returned.
“Valuation Date” means (i) the
last Business Day of each Fiscal Quarter, (ii) a date selected by the Company or
the Investment Manager within 48 hours prior to each capital call or other
issuance (exclusive of Sundays and holidays) of Common Shares by the Company,
(iii) each distribution declaration date (after giving effect to the relevant
declaration), (iv) the date on which the Company terminates, and (v) such other
dates as determined by the Board of Directors, in accordance with the valuation
policies and guidelines approved from time to time by the Board of
Directors.
SECTION 2.
LIMITED
LIABILITY COMPANY FORMATION AND IDENTIFICATION
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2.1 Formation
|
|
The Company has been formed as a
limited liability company pursuant to the Delaware Act by the filing of the
Certificate with the Secretary of State, Division of Corporations, in accordance
with the Delaware Act on April 15, 2008. The Company is hereby
continued under, and its business and affairs shall be conducted in accordance
with, the Delaware Act, and this Agreement shall be governed by the laws of the
State of Delaware. Common Members shall be admitted as Members of the
Company upon the Investment Manager's execution of this Agreement as the
attorney-in-fact for such Common Members. Preferred Members shall be
admitted as Members of the Company pursuant to the provisions of the applicable
Statement of Preferences. In addition, any Member will be admitted as
a Member of the Company upon the execution of a counterpart of this Agreement by
such Member.
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2.2 Name and Place of
Business
|
|
9
The
name of the Company shall be “PNMAC Mortgage Opportunity Fund, LLC” or such
other name or names as may be selected by the Investment Manager from time to
time with written notice given to the Members of such change. The
principal office of the Company shall be at the principal place of business of
the Investment Manager at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, or other or additional places of business as may be selected from time to
time by the Company.
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2.3 Tax
Treatment
|
||
The
Company will elect on Internal Revenue Service Form 8832, effective as of a date
no later than the Initial Closing, to classify the Company as an association
subject to tax as a corporation for U.S. federal income tax purposes (as well as
for any analogous state or local income tax purposes).
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2.4 Records of
Members
|
||
The
addresses and schedules of capital accounts and other matters related to the
Members shall be those set forth in the Company records. A Member may
change its address by written notice to the Company, in care of the Investment
Manager, at the address set forth in Section 2.2.
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2.5 Limited Liability
Company
|
||
The
Company has been formed as a limited liability company under and pursuant to the
Delaware Act. The Board of Directors and the Members specifically
intend and agree that the Company shall, for purposes of the Code and state tax
laws, be classified as a corporation and as a regulated investment company and
none of them shall make any election or take any other action that would cause
their relationship under this Agreement to be excluded from the application of
all or any part of Subchapter M of the Code (or any successor provisions). The
Members specifically intend and agree that the Company shall not be a
partnership (including, but not necessarily limited to, a limited partnership)
or any other venture, but a limited liability company under and pursuant to the
Delaware Act. No Member shall be construed to be a partner in the
Company or a partner of any Member or other Person in the Company, and the
Certificate, this Agreement and the relationships created thereby and arising
therefrom shall not be construed to suggest otherwise. The Members
hereby acknowledge and agree that the Investment Manager and any persons that
may be appointed as such by the Board of Directors or the Investment Manager are
“authorized persons” within the meaning of Section 18-204 of the Delaware
Act.
SECTION
3.
PURPOSE,
NATURE OF BUSINESS AND POWERS
(a) The purposes of the Company and the
business to be carried on by it, subject to the limitations contained elsewhere
in this Agreement, are to engage in any business
10
lawful for a corporation or partnership formed under the laws of
the State of Delaware, including to act as an investment
company.
(b) The Company shall have the power to do
any and all acts necessary, appropriate, proper, advisable, incidental or
convenient to or for the furtherance of the purposes and business
described herein and for the protection and benefit of the Company, and shall
have, without limitation, any and all of the powers of a business corporation or
partnership organized under the laws of the State of
Delaware.
(c) All property owned by the Company, real
or personal, tangible or intangible, shall be deemed to be owned by the Company
as an entity, and no Member or Director, individually, shall have any ownership
of such property.
SECTION
4.
TERM
The
existence of the Company commenced on the date the Certificate was filed in the
Office of the Secretary of State and shall continue in full force and effect
until the fifth anniversary of the termination of the Commitment Period, provided that the Investment
Manager shall have the right, in its sole discretion, to extend the existence of
the Company for up to three consecutive one-year periods by notice to the Board
of Directors not less than 60 days prior to the date the Company’s existence
would otherwise terminate and provided further that any
additional extensions beyond the eighth anniversary of the termination of the
Commitment Period shall require the affirmative vote of a majority of
the outstanding Shares voting as a single class.
SECTION
5.
SHARES
OF MEMBERSHIP INTEREST
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5.1 Beneficial Interest
|
||
The
interest of the Members in the Company hereunder shall be divided into an
unlimited number of shares of membership interest, par value $.001 per
share. All Shares issued in accordance with the terms hereof,
including, without limitation, Shares issued in connection with a dividend in
Shares or a split of Shares, shall be fully paid and nonassessable when the
consideration determined by the Company (if any) therefor shall have been
received by the Company.
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5.2 Classes and
Series
|
||
The Directors shall have the authority,
without the approval of any Members of the Company, to classify and reclassify
both issued and outstanding and authorized but unissued Shares into one or more classes
and one or more series of any or all of such classes,
11
each of which classes and series thereof
shall have such designations, powers, preferences, voting, conversion and other
rights, limitations, qualifications and terms and conditions as the Directors
shall determine from time to time with respect to each such class or
series by amendment to this
Agreement without the approval of any Members of the Company; provided,
however, that no
reclassification of any issued and outstanding Shares and no modifications of
any of the designations, powers, preferences, voting, conversion
or other rights, limitations, qualifications and terms and conditions of any
issued and outstanding Shares may be made by the Directors without the
affirmative vote of the Shares specified in Section 10.3 to the extent required thereby and the satisfaction
of any conditions to such reclassification as set forth in the applicable
Statement of Preferences.
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5.3 Issuance of
Shares
|
||
The
Directors, in their discretion, may from time to time without the vote of the
Members issue Shares of any class or any series of any such class to such Person
or Persons and for such amount and type of consideration, including cash or
property, at such time or times, and on such terms as the Directors may
determine, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection with the assumption of,
liabilities) and businesses. The Directors may from time to time
divide or combine the Shares of any class or any series of any such class into a
greater or lesser number without thereby changing the proportionate beneficial
interest in such Shares. Issuances and repurchases of Shares may be
made in whole Shares and/or fractions as the Directors may
determine.
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5.4 Rights
of Members
|
||
The
Shares shall be personal property giving only the rights in this Agreement
specifically set forth. The ownership of the Assets of every
description is vested in the Company. The right to conduct and
supervise the conduct of the business of the Company is vested exclusively in
the Directors (subject to the right of the Board of Directors to delegate all or
any part of their authority to any person or group of persons, including,
without limitation, the Investment Manager), and the Members shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights or interests of the Company nor can they be called
upon to share or assume any losses of the Company or suffer an assessment of any
kind by virtue of their ownership of Shares. No Shares of any class
or series shall entitle the holder to preference, preemptive, appraisal,
conversion or exchange rights (except as otherwise specified in this Agreement
or as specified by the Directors in the designation or redesignation of any such
class or series).
12
SECTION
6.
REGISTERED
OFFICE AND AGENT FOR SERVICE OF PROCESS
The
Corporation Service Company is hereby designated, subject to change by the
Investment Manager, as the registered office of the Company and as the agent
upon whom process issued by authority of or under any law of the State of
Delaware may be served.
SECTION
7.
CAPITAL
CONTRIBUTIONS
|
7.1 Capital
Contributions of Members
|
||
(a) Each prospective subscribing Common Member, to be admitted as a
Member of the Company at the Initial Closing, must deliver to the Investment Manager
a completed, executed Subscription Agreement, which must be satisfactory to the
Investment Manager, and in
which, among other things, such prospective Common Member represents that it is
an “accredited
investor” as defined in
Rule 501(a) under the Securities Act and a “qualified client” within the meaning of Rule 205-3 of the
Advisers Act. The minimum Common Share Commitment to which a Common
Member may subscribe shall be $100,000,000; provided,
however, that the
Investment Manager may, in its sole discretion, waive this
requirement. The
Company may accept additional Common Share Commitments (each an “Additional Common
Share Commitment”) from existing and additional prospective
Common Members who satisfy the requirements set forth in the first two sentences
of this Section 7.1(a) until January 2, 2009. The Company shall hold
periodic initial closings for an initial drawdown of Additional Common
Share Commitments (each, a “Subsequent
Closing”), at which each existing or prospective
Common Member whose subscription for an Additional Common Share Commitment has
been accepted since the most recent closing shall contribute to the Company such portion of
such Additional Common Share Commitment as the Investment Manager shall have
determined and notified to such existing or prospective Members in order for the
drawdown in respect of such Additional Common Share Commitment shall equal the percentage of the
initial Common Share Commitment drawn through such date. On the date of original issuance of each
series of Preferred Shares,
if any, each Person who is
admitted as a Member holding Preferred Shares of such series in accordance with the applicable
Statement of Preferences shall, in connection therewith, contribute to the
Company an amount in cash equal to the purchase price for such Preferred
Shares.
(b) Subsequent to the Initial Closing, the Company will draw down
Common Share Commitments
and Additional Common Share
Commitments on multiple
Drawdown Dates (each, a “Subsequent
Drawdown Date”), which may coincide with Subsequent
Closings. On
each Drawdown Date, the Company will issue Common Shares at Net Asset Value
per Common Share as
calculated within 48 hours prior to issuance (exclusive of Sundays and holidays)
in an aggregate amount equal to the percentage of the Common Share Commitments
drawn down; provided,
however, that the Investment Manager may adjust
the price per Common Share for the initial
drawdown in respect of any Additional Common Share Commitment to be the Net
Asset
13
Value per Common Share as so calculated
plus an additional amount in order to ensure that the subscribers for Additional Common
Share Commitments
are responsible for
the appropriate portion of
the Company’s organizational, offering and
operational expenses (excluding interest and preferred dividends) through the relevant Subsequent Drawdown
Date. Furthermore, prospective Common Members
admitted to the Company
after October 1,
2008 may be required to pay a capital charge on the amount of
their Additional Common Share Commitment at a per
annum rate equal to an
amount approved by the Board of Directors calculated from the Initial Closing
until the date of the
applicable Subsequent Closing.
(c) Unfunded Commitments may be called by
the Company at any time during the Subscription Period in any amount on not less
than 10
calendar days’ prior written notice to the Common
Members; provided,
however, that (i) except as set forth in the proviso to
Section 7.1(b), all Capital
Contributions for Common Shares shall be on a pro rata basis in proportion to each Common
Member’s respective Unfunded Commitment and
(ii) all calls for Capital
Contributions shall be made
so that they are required to be funded on or prior to the end of the
Commitment Period.
(d) If any Common Member fails to make full
payment of any portion of its Common Share Commitment or any other payment
required hereunder when due (a “Defaulting
Member”), the Company shall give such
Defaulting Member written notice of its default in payment and in the event such
default shall continue beyond the tenth calendar day following such notice, the
Company may, in its sole discretion, take any one or more of the following
actions:
(i) The Company may assist the Defaulting
Member in finding a buyer for the Defaulting Member’s Common Shares which buyer will assume
the Defaulting Member’s obligations hereunder, subject to the
restrictions on transfer contained in Section 11.2 (in which case such
Person shall, as a condition of purchasing such Common Shares, become a party to
this Agreement and assume such Defaulting Member’s obligation to make both defaulted and
future Capital Contributions).
(ii) The Company may pursue and enforce all rights and
remedies the Company may have against the Defaulting Member, including a lawsuit
to collect the overdue amount and the costs (including
attorneys’ fees) and expenses of collecting such
overdue amount, with
interest calculated thereon
commencing on the date such
Capital Contribution was due at a rate equal to the lesser of the Base Rate plus five percent (5%) per
annum and the maximum rate per
annum permitted by
applicable law.
(iii) The Company may offer a Defaulting
Member’s Common Shares to the Common Members
(other than any Defaulting Member), which offer shall be made pro rata in accordance with the non-defaulting
Members’ respective Common Share Commitments, at
a discount to the Net Asset Value of such Common Shares. The purchase price for such
Common Shares will be determined in the sole discretion of a majority of the
Independent Directors; provided, however, that such Defaulting Member shall
receive not less than 66% of the most recently determined Net Asset
Value of such Common
Shares. If a non-defaulting Member elects not to purchase all of the
Common Shares offered to it, such unpurchased Common Shares shall be reoffered
pro
rata to the
14
non-defaulting Members who have
purchased all of the Common Shares offered to them until either all of such Common
Shares are acquired or no non-defaulting Member wishes to make a further
investment. At the closing of such purchase (on a date and at a place
designated by the Company), each purchasing Member shall, as payment
in full for the Defaulting
Member’s Common Shares being purchased,
(A) deliver a non-interest bearing, non-recourse promissory note (in a form
approved by the Company) payable upon the earlier to occur of ten years after
delivery of the note or liquidation of the Company, secured only by the
Defaulting Member’s Common Shares being purchased by such
Member (excluding the portion of such Common Shares represented by contributions
made by such purchaser with respect to such Common Shares), payable to the
Defaulting Member in an amount equal to the
purchase price of the portion of the Defaulting Member’s Common Shares being purchased by such
Member, and (B) assume the portion of the Defaulting Member’s obligation to make both defaulted and
future Capital Contributions and other payments pursuant to its
Common Share Commitment and this Agreement which are commensurate with the
portion of the Defaulting Member’s Common Shares being purchased by such
Member. Upon the closing of such purchase, each purchasing Member
shall make a Capital Contribution in an
aggregate amount equal to that portion of the assumed Common Share Commitment
representing the defaulted Common Share Commitment of the Defaulting Member, and
the balance of the assumed Common Share Commitment shall be added to such purchasing
Member’s Common Share Commitment for all
purposes under this Agreement. The Company shall specify the
procedures for making and accepting the offers contemplated by this subparagraph
and shall, in its discretion, set time limits for acceptance. All Capital
Contributions made by the purchasing Members shall be “Capital Contributions” made under this Agreement and Common
Shares shall be issued to such Members accordingly. If all of the
Defaulting Member’s Common Shares are not purchased pursuant to the immediately
preceding provisions, the Company may offer any remaining Common Shares to any
other Person on the same terms as originally offered to the Members pursuant to
such provisions, subject to the restrictions on transfer contained in Section 11.2 (in which case
such Person shall, as a condition of purchasing such Common Shares, become a
Member party to this Agreement and assume such Defaulting Member’s obligation to make both defaulted and
future Capital Contributions).
(iv) The Company may repurchase, retire and
cancel such Defaulting Member’s Common Shares at a discount to the Net
Asset Value of such Common Shares. The consideration to be paid to
such Defaulting Member upon any repurchase, retirement or cancellation of
such Common Shares will be determined in the
sole discretion of a majority of the Independent Directors; provided, however, that such Defaulting Member shall
receive not less than 66% of the Net Asset Value of such Common
Shares.
(v) The Company may offer to the Common Members (other than such
Defaulting Member) for assumption by the non-defaulting Members such Defaulting
Member’s Common Share Commitment to make its
Capital Contribution which was not made (“Defaulted
Commitment”), which offer shall be made
pro
rata in accordance with the non-defaulting
Members’ respective Common Shares. If
a non-defaulting Member elects not to assume the entire portion of the Defaulted
Commitment offered to it, such unassumed Defaulted Commitment shall be reoffered
pro
rata to the
15
non-defaulting Members who have elected
to assume the entire portion of the Defaulted Commitment offered to them until
either all of such Defaulted Commitment is assumed or no non-defaulting Member
wishes to make a further assumption of the Defaulted Commitment. At the closing of
such offer (on a date and at a place designated by the Company), each assuming
Member shall make a Capital Contribution in an amount equal to that portion of
the Defaulted Commitment assumed by it in accordance with the provisions of this subparagraph which is then
due or past due. The Investment Manager shall specify the procedures
for making and accepting the offers contemplated by this subparagraph and shall,
in its discretion, set time limits for acceptance. If the
entire Defaulted Commitment is not assumed
pursuant to the preceding provisions, the Company may offer to any other Person
for assumption any remaining portion of the Defaulted Commitment, subject to the
restrictions on transfer contained in Section 11.2 (in which case such third party or parties shall
become a party to this Agreement). All Capital Contributions made by
the non-defaulting Members and other Persons pursuant to this subparagraph (v)
shall be “Capital
Contributions” made under
this Agreement, and the Common Shares of each of such Members
and other Persons shall be adjusted accordingly. Such Defaulting
Member’s Common Share Commitment shall be
reduced by the aggregate amount of Defaulted Commitment assumed by the
non-defaulting Members and such other Persons and for which payments have
been actually received by the Company.
(vi) The Company may reduce (effective on the
date of the default) the Defaulting Member’s Unfunded Commitment (to the extent it has not
been assumed by another Member or Person) to the amount of Capital Contributions
actually made by such Defaulting Member (net of distributions pursuant to
Section 8.1), and the aggregate Common Share Commitment of such Defaulting
Member shall be commensurately reduced; provided,
however, that the
Common Share Commitments of
the non-defaulting Members shall not be reduced.
(vii) If the Defaulting Member is an entity
formed for the purpose of investing in the Company and such Defaulting
Member’s failure to make any portion of a
Capital Contribution when
required is caused by the failure of one or more of such Defaulting
Member’s investors to either (i) make an equity
contribution or (ii) deliver payment in exchange for any notes issued to such
investor, to such Defaulting Member, the Company may, in its sole discretion, apply the
provisions of this Section 7.1(d) to such Defaulting Member’s Common Shares and/or Common Share
Commitments on a pro rata basis to appropriately reflect the effect of the
failure of such Defaulting Member’s defaulting equity investors in a manner which is equitable
to such Defaulting Member’s non-defaulting equity
investors.
(viii) The Company may require the non-defaulting Members to
make additional
Capital
Contributions, pro rata based on their respective Unfunded Commitments, in an aggregate amount equal to the
shortfall created by such Defaulted Commitment (but not, for any such non-defaulting Member, to exceed such non-defaulting Member’s Unfunded Commitment).
(ix) The Company may offer a Defaulting
Member’s Common Shares to any other Person at a value
determined by the Investment Manager in its sole discretion, subject to the
restrictions on transfer contained in Section 11.2 (in which case such Person
shall, as a condition of purchasing such Common Shares, become a
Member party to this Agreement and assume such
Defaulting Member’s obligation to make both defaulted and
future Capital Contributions).
(x) The Company may cause distributions that
would otherwise be made to the Defaulting Member pursuant to this Agreement to
be credited against the
amount of the Defaulted Commitment in a manner to be determined by the
Investment Manager.
(e) No consent of any Member shall be
required as a condition precedent to any transfer, assignment, assumption or
other disposition of a Defaulting Member’s Common Shares or Common Share
Commitment, as the case may be, pursuant to Section 7.1(d). If all of
the Defaulting Member’s Common Shares and its Common Share
Commitments are purchased in the manner set forth in Section 7.1(d), such
Defaulting Member shall cease to be a Common
Member in the Company and shall cease to have the power to exercise any rights
or powers of a Common
Member.
|
7.2 Withdrawal of
Capital
|
||
(a) No Member shall have any right to
withdraw from the Company except in connection with the admission of one or
more Transferees of all of such Member's Shares in the Company. No
Member shall have any right to require the Company to repurchase or redeem all
or any portion of its Shares except as provided in or pursuant to any
Statement of
Preferences. Further, no Common Member shall have any right to
withdraw its Common Share
Commitment.
(b) The Company may, at any time, cancel all or any
part of the Capital Commitment and/or repurchase all or any portion of the
Shares of any Member (or his or her permitted assignee, if
any) upon at least five (5) calendar days’ written notice at Net Asset Value per Share.
SECTION
8.
DISTRIBUTIONS
|
8.1 Distributions
|
||
(a) The Company shall from time to time
distribute among the Shares (or one or more classes or series thereof) such
portion of the net profits, surplus (including paid-in surplus), capital, or
assets held by the Company
(“Proceeds”) as the Directors or, if approved by the Board of
Directors, the Investment Manager may deem proper or as may otherwise be determined pursuant
to this Agreement or the Statement of Preferences therefor, which need not be
ratable with respect to distributions in respect of Shares of any other class or
series thereof of the Company, but must be ratable within each class or series of
Shares; provided that, all
16
amounts distributed to Members during the Commitment Period
may be recalled by the Company for reinvestment in accordance with the
requirements of the Investment Company Act and the provisions of the
Code applicable to
regulated investment companies, and such amounts will not reduce a Member’s Unfunded Commitment and, to the extent
such amounts are called by the Company, such amounts will be treated as Capital
Contributions. The Preferred Shares, if any, shall not be entitled to receive, and
the Directors shall be prohibited from declaring or distributing in respect of
any of the Preferred Shares, any amount in excess of the distributions specified
for such Preferred Shares in the applicable Statement of Preferences therefor. Such
distributions to Common
Members may be made in cash
or property (including without limitation any type of obligations of the Company
or any assets thereof) or any combination thereof to the extent permitted by applicable
law.
(b) Distributions may be made to the holders
of record of the Shares entitled to such distribution at the time such
distribution is declared or at such later date as shall be determined by the
Company prior to the date of payment.
(c) The Directors may always retain from any source such amount as they may
deem necessary to pay the debts or expenses of the Company or to meet
obligations of the Company, or as they otherwise may deem desirable to use in
the conduct of its affairs or to retain for future requirements or extensions of the business of
the Company.
(d) Any distribution by the Company pursuant
to the terms of this Section 8.1 or Section 16 to the Person shown on the
Company’s records as a Member or to its legal
representatives, or to the assignee of the right to receive such distributions
as provided herein, shall relieve the Company, the Directors and the Investment
Manager of all liability to any other Person who may be interested in such
distribution by reason of any Transfer of any interest in any of such Member’s Shares (including a Transfer thereof
by operation of law or by reason of death, incompetence, bankruptcy or
liquidation of such Member, as the case may be).
(e) Notwithstanding any provision to the
contrary contained in this Agreement, neither the Company, the Directors nor
the Investment Manager on behalf of the Company shall make any distribution to a
Member on account of its Shares if such distribution would violate Section
18-607 of the Delaware Act or other applicable law.
(f) Notwithstanding any other provision of this
Agreement, the Company may set aside reasonable reserves for anticipated
liabilities, obligations or commitments of the Company which it determines to be
reasonably necessary or desirable, in its sole judgment.
(g) Notwithstanding any other provision of this
Agreement, each Member hereby authorizes the Company to withhold and to pay
over, or otherwise pay, any withholding or other taxes required by law to be
paid by the Company with respect to such Member as a result of such Member’s participation in the
Company. If and to the extent that the Company shall be required to
withhold or pay any such taxes, such Member shall be deemed for all purposes of
this Agreement to have received a payment from the Company as of the
time such withholding or tax is paid,
which payment shall be deemed to be a distribution to such Member to the extent
that the Member (or any successor to such Member’s interest) is then entitled to receive
a distribution. To the extent that the aggregate of such payments to a Member pursuant to this Section
8.1(g) for
17
any period exceeds the distributions to
which such Member is entitled for such period, the amount of such excess shall
be considered a loan from the Company to such Member, with interest at 8%, which interest shall be treated as an
item of income to the Company, until discharged by such Member by repayment,
which may be made out of distributions to which such Member would otherwise be
subsequently entitled. Any withholdings authorized by
this Section 8.1(g) shall be made at the maximum applicable
statutory rate under the applicable tax law unless the Company shall have
received an opinion of counsel or other evidence, satisfactory to the Company,
to the effect that a lower rate is applicable, or that no withholding is
applicable.
(h) Each Common Member agrees, within ten
(10) calendar days following the receipt of each written request from the Company, in the event a
distribution restriction event shall have occurred and is
continuing so that the
Company is prevented from making distributions to the Common Members such that
its deduction for dividends paid during the taxable year does not equal at least
ninety-eight percent (98%) of each of (i) the Company's investment company
taxable income (as determined for purposes of Section 852
of the Code) and (ii) the amount described in Section 852(a)(1)(B) of the Code,
to execute and deliver to the Company, or an agent of the Company specified by
the Company, with respect to any such taxable year, a consent in accordance with Section 565 of
the Code and the Treasury Regulations promulgated thereunder, and any successor
provision, in the manner specified by the Company, to treat the amount specified
by the Company in such request as a dividend (the "Consent
Dividend") for United
States federal income tax purposes for the taxable year indicated by the
Company.
(i) After the determination of Net Asset
Value per Common Share in respect of any Subsequent Drawdown Date and
immediately prior to the issuance of additional Common Shares on such
Subsequent Drawdown Date, the Company may declare a distribution to the holders
of Common Shares at the time of such declaration to take into account amounts previously
paid on account of such Common Shares for organizational, offering and operating
expenses.
SECTION
9.
MANAGEMENT
AND BOARD OF DIRECTORS
|
9.1 Management
Generally
|
||
(a) Subject to the voting rights of the
Shares, the management of the Company shall be vested exclusively in the Board
of Directors, which shall have all of the power and authority of a
“manager” of the Company within the meaning of
the Delaware Act, including the authority to appoint officers and to
authorize persons to act on behalf of the Company and engage third parties to
provide services to the
Company and to perform any permissible activity and is further authorized to
delegate such power and authority to such officers or authorized Persons as it
determines to be appropriate, subject to the requirements of the Investment
Company Act. The Board of Directors may designate one or more
committees each of which shall have all or such lesser portion of the power and
authority of the entire Board of Directors as
18
the Directors shall determine from time
to time, except to the extent that action by the entire Board of Directors or particular
Directors is required by the Investment Company Act.
(b) Except as expressly set forth herein,
the Members, in their capacity as such, shall have no part in the management of
the Company, and shall have no authority or right to act on behalf of the
Company in connection with any matter. Employees, officers,
authorized Persons and agents of the Company shall have authority to act on
behalf and in the name of the Company to the extent authorized by the Board of
Directors or pursuant to authority granted by
it. It is contemplated that the Board of Directors will delegate
substantially all of its power and authority with respect to the operations of
the Company to the Investment Manager and other authorized
Persons.
|
9.2 Board of
Directors
|
||
(a) Subject to the terms of each Statement
of Preferences, the number of Directors shall be such number, not less than
three, as shall be approved from time to time by a majority of Directors then in
office. No reduction in the number of Directors shall have the effect
of removing any Director from office prior to the expiration of his or her
term. An individual nominated as a Director shall be at least 21
years of age and not older than such age as shall be approved from time
to time by not less than two-thirds of the
Directors then in office and shall not be under legal
disability. Directors need not own Shares and may succeed themselves
in office. The names and addresses of the Directors shall be set
forth in the records of the Company.
(b) Any Director may resign as a Director
(without need for prior or subsequent accounting) by an instrument in writing
signed by him and delivered or mailed to the Chairman, if any, the President or
the Secretary and such resignation shall be effective upon such delivery, or at a
later date provided in such instrument. Subject to the rights of the
Preferred Shares with respect to Directors elected solely by the Preferred
Shares pursuant to the Investment Company Act, any Director may be
removed (provided that the aggregate number of
Directors after such removal shall not be less than the minimum number specified
in Section 9.2(a) hereof) for cause at any time by the act of a majority of the
remaining Directors, specifying the date when such removal shall become
effective. Subject to the rights of the Preferred Shares with respect
to Directors elected solely by the Preferred Shares pursuant to the Investment
Company Act, any Independent Director may be removed (provided that the
aggregate number of Directors after such removal shall
not be less than the minimum number Section 9.2(a) hereof) without cause at any
time by the act of two-thirds of the remaining Directors, and any Director can
be removed without cause by vote of not less than two-thirds of the aggregate number of Shares
entitled to vote in the election of such Director, specifying the date when such
removal shall become effective.
(c) The term of office of a Director shall
terminate and a vacancy shall occur in the event of the removal, resignation, incompetence or other
incapacity to perform the duties of the office, or death, of a
Director. Subject to the rights of the Preferred Shares with respect
to Directors elected solely by the Preferred Shares pursuant to the Investment
Company Act and pursuant to any Statement of
Preferences, whenever a vacancy in the Board of Directors shall occur, the
remaining Directors may fill such vacancy by appointing an individual having the
19
qualifications described in this
Agreement by a written instrument signed or adopted by a majority
of the Directors then in office or by election of the holders of Shares, or may
leave such vacancy unfilled, or may reduce the number of Directors (provided
that the aggregate number of Directors after such removal shall not be less than the minimum number
specified in Section 9.2(a) hereof). Any vacancy created by an
increase in Directors may be filled by the appointment of an individual having
the qualifications described in this Agreement by a majority of the
Directors then in office or by election of
the holders of Shares. No vacancy shall operate to annul this
Agreement or to revoke any existing agency created pursuant to the terms of this
Agreement. Whenever a vacancy in the number of Directors shall occur,
until such vacancy is filled as provided
herein, the Directors in office, regardless of their number, shall have all the
powers granted to the Directors and shall discharge all the duties imposed upon
the Directors by this Agreement.
(d) Meetings of the Directors shall be held from time to time
upon the call of the Chairman, if any, the Chief Executive Officer,
the President, the
Secretary or any two Directors. Regular meetings of the Directors may
be held without call or notice at a time and place fixed by resolution of the
Directors. Notice of any other meeting shall be mailed via overnight
courier not less than 48 hours before the meeting or otherwise actually
delivered orally or in writing not less than 24 hours before the meeting, but
may be waived in writing by any Director either before or
after such meeting. The attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting except where a Director attends a
meeting for the express purpose of objecting to the transaction of any business on the ground that the
meeting has not been lawfully called or convened. The Directors may
act with or without a meeting. A quorum for all meetings of the
Directors shall be one-third of the Directors then in office. Unless
provided otherwise in this Agreement, any action of the
Directors may be taken at a meeting by vote of a majority of the Directors
present (a quorum being present) or without a meeting by written consent of a
majority of the Directors or such other proportion as shall be specified herein for action at a meeting
at which all Directors then in office are present.
(i) Any committee of the Directors may act
with or without a meeting. A quorum for all meetings of any such
committee shall be one third of the members thereof. Unless provided otherwise in this
Agreement, any action of any such committee may be taken at a meeting by vote of
a majority of the members of such committee present (a quorum being present) or
without a meeting by written consent of a majority of the members of such committee or such other
proportion as shall be specified herein for action at a meeting at which all
committee members are present.
(ii) With respect to actions of the Directors
and any committee of the Directors, Directors who are Interested Persons in any action to be taken may be
counted for quorum purposes under this Section and shall be entitled to vote to
the extent not prohibited by the Investment Company Act.
(iii) All or any one or more Directors may
participate in a meeting of the Directors or any committee thereof by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other; participation in a
meeting pursuant to any such communications
20
system shall constitute presence in person at such
meeting except as otherwise provided by the Investment Company
Act.
(iv) The Directors may, but shall not be
required to, elect a Chairman of the Board of Directors, who shall not, in his
or her capacity as such, be an officer of the Company and who shall
serve at the pleasure of the Board of Directors. Any Chairman of the
Board of Directors elected by the Directors need not be an Independent Director,
unless otherwise required by applicable law.
(e) The Directors shall elect a Chief Executive Officer, a
Secretary, a Chief Financial Officer and any other authorized
Persons the Directors consider appropriate, each
of whom shall serve at the pleasure of the
Board of Directors or until their successors are elected. The
Directors may elect or
appoint or may authorize the Chairman, if any, or Chief Executive Officer to
appoint such other officers
or agents or other authorized Persons with such other titles and powers
as the Board of Directors may deem to be advisable. Any Chairman shall, and the Chief Executive
Officer, Secretary and Chief Financial Officer may, but need not, be a
Director.
(f) The Directors and officers shall owe to
the Company and the holders of Shares the same fiduciary duties as owed by
directors and officers of
corporations to such corporations and their stockholders under the general
corporation law of the State of Delaware. Directors elected by the holders of
Preferred Shares shall have no special duties to the holders of Preferred
Shares. The Directors shall have exclusive and absolute
control over the Assets and over the business of the Company to the same extent
as if the Directors were the sole owners of the property and business in their
own right, but with such powers of delegation as may be permitted by this Agreement. The
Directors shall have power to engage in any activity not prohibited by Delaware
law. The enumeration of any specific power herein shall not be
construed as limiting the aforesaid power. The Directors may perform
such acts as in their sole discretion are proper for
conducting the business of the Company. The powers of the Directors
may be exercised without order of or resort to any court. No Director
shall be obligated to give any bond or other security for the performance
of any of his duties or powers
hereunder.
(g) The Board of Directors may adopt and
from time to time amend or repeal By-Laws (“By-Laws”) for the conduct of the business of the
Company. Such By-Laws shall be binding on the Company and the Members
unless inconsistent with
the provisions of this Agreement. The Members shall not have
authority to adopt, amend or repeal By-Laws.
(h) Any determination as to what is in the
interests of the Company made by the Directors in good faith shall be
conclusive. In construing the provisions of this
Agreement, the presumption shall be in favor of a grant of power to the
Directors.
|
9.3 Expenses of the
Company
|
||
(a) The Company shall have power to incur
and pay out of the Assets or income of the Company any expenses necessary or appropriate to carry out any of
the purposes of this Agreement, and the business of the Company. The
Directors may pay themselves such compensation as they in good faith may deem
reasonable and may be reimbursed for expenses reasonably incurred by themselves on behalf of the
Company.
21
(b) The Company shall pay all, and shall
reimburse the Investment
Manager and each of
its Affiliates for, any costs and expenses
that, in the good faith judgment of the Board of Directors, are incurred in the
formation, financing or
operation of the Company, including, without limitation, the Advisory
Fees, the Shareholder
Servicing Fees and other
costs and expenses specified herein or in the Advisory Agreement or the Shareholder Services Agreement
to be paid by the
Company; fees and expenses
of offering Shares or debt instruments and enhancing or assuring the credit
quality thereof; fees,
costs and expenses related to the purchase, holding, transfer and sale of
Assets, to the extent not reimbursed;
brokerage commissions;
clearing and settlement charges; custodial fees; licensing fees and expenses;
appraisal expenses; interest expenses; borrowing charges on assets sold short;
expenses related to organizing entities, investment vehicles or accounts through
or in which investments by the Company may be made; due diligence expenses
incurred in connection with the acquisition of Assets (including, but not
limited to, reasonable travel related expense), and expenses relating to
consultants, attorneys, brokers or other professionals or advisors who provide advice or
due diligence services with regard to investments (whether or not the potential
investment is acquired) and third-party investment banking expenses related to
the purchase and sale of
assets); loan servicing fees; appropriate fees for loan origination
and/or modification; directors’ fees and expenses; costs of reporting
to Members, creditors and others; costs and expenses relating to any
meeting of Members; legal (including litigation) fees and
expenses; accounting, auditing and tax preparation fees and
expenses; fees and expenses relating to the Company’s administrator and auditor; fees and
expenses relating to third-party valuation firms; third-party expenses and fees
incurred in connection with transactions not consummated; taxes, governmental charges
and other duties payable by the Company; investment-related travel expenses;
costs related to issuing, transferring and repurchasing Shares, or portions
thereof, and paying dividends or making other distributions thereon; expenses related to liability insurance for the
Company, including the
costs of directors and officers and errors and omissions insurance premiums;
organizational expenses (including all reasonable costs and expenses incurred in
connection with the formation and organization of, and offer,
marketing and sale of Shares in, the Company, as determined by the Investment
Manager, including all placement fees and all out-of-pocket legal, accounting,
printing, travel and filing fees and expenses); costs, expenses and liabilities resulting from the
Company’s indemnification obligations; costs of
winding up and liquidating the Company; expenses incurred in connection with a
Member that defaults in respect of a Capital Contribution or any payment due to
the Company; other
indebtedness incurred by the Company and the Shares; and extraordinary expenses and other similar
expenses related to the Company as the Investment Manager
determines in its sole
discretion (collectively,
“Company
Expenses”).
(c) The Company shall pay, and shall reimburse the Investment Manager, and each of its Affiliates for, all legal, tax,
accounting and other expenses (including organizational expenses) incurred in
connection with the Preferred Shares, if any, and the formation of the Company
and related entities, and
all fees payable to any
agents, lenders, arrangers or other Persons in connection with the
placement and sale of the
Preferred Shares, if
any.
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9.4 Members’ Consent
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To
the fullest extent permitted by law, each Member hereby consents to the exercise
by the Board of Directors and the Investment Manager of the powers conferred on
them by this Agreement.
22
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9.5 Exculpation
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No
Member shall be subject in such capacity to any personal liability whatsoever to
any Person in connection with the Assets or the acts, obligations or affairs of
the Company. Members shall have the same limitation of personal
liability as is extended to stockholders of a private corporation for profit
incorporated under the general corporation law of the State of
Delaware. Except as otherwise required by law, the Directors,
PennyMac Servicing, the Investment Manager, and its Affiliated Persons, or any
officer, director, member, manager, partner, shareholder, employee, consultant
or agent of any such Person (each an “Indemnified Person”,
and collectively, the “Indemnified Persons”)
shall not be liable, responsible or accountable in damages or otherwise to the
Company, any Member or any other Person for any loss, liability, damage,
settlement cost, or other expense (including reasonable attorneys’ fees)
incurred by reason of any act or omission or any alleged act or omission
performed or omitted by such Indemnified Person (other than solely in such
Indemnified Person’s capacity as a Member, if applicable) in connection with the
establishment, management or operations of the Company or the management of the
Assets, except that the foregoing exculpation shall not protect any Person to
the extent that such act or failure to act arises out of the bad faith, willful
misfeasance, gross negligence or reckless disregard of such Person’s duty to the
Company or such Member, as the case may be (such conduct, “Disabling
Conduct”). Subject to the foregoing, all such Persons shall
look solely to the Assets (including, without limitation, the Unfunded
Commitments) for satisfaction of claims of any nature arising in connection with
the affairs of the Company. If any Indemnified Person is made a party
to any suit or proceeding to enforce any such liability, subject to the
foregoing exception, such Indemnified Person shall not, on account thereof, be
held to any personal liability.
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9.6 Indemnification; No
Duty of Investigation; Reliance on Experts
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(a) To the fullest extent permitted by
applicable law, each of the Indemnified Persons shall be held harmless and
indemnified by the Company (out of the Assets (including, without limitation,
the Unfunded Commitments) and not out of the separate assets of any Member)
against any liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as
fines and penalties, and reasonable counsel fees reasonably incurred by such
Indemnified Person in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or administrative or
investigative body in which such Indemnified Person may be or may have been
involved as a party or otherwise (other than as authorized by the Directors, as
the plaintiff or complainant) or with which such Indemnified Person may be or may have been threatened, while
acting in such Person’s capacity as an Indemnified Person,
except with respect to any matter as to which such Indemnified Person shall not
have acted in good faith in the reasonable belief that such Person’s action was in the best interest of the Company
or, in the case of any criminal proceeding, as to which such Indemnified Person
shall have had reasonable cause to believe that the conduct was unlawful,
provided, however, that an Indemnified Person shall only
be indemnified hereunder if
(i) such Indemnified Person’s activities do not constitute Disabling
Conduct and (ii) there has been a determination (a) by a final decision on the
merits by a court or other body of competent jurisdiction before whom the issue
of entitlement to indemnification was brought
that such Indemnified Person is entitled to indemnification or, (b) in the
absence of such a decision, by (1) a majority vote of a quorum of those
Directors who are neither “interested persons” of the
23
Company (as defined in Section 2(a)(19) of the
Investment Company Act) nor parties to the proceeding, that the Indemnified
Person is entitled to indemnification (the “Disinterested
Non-Party Directors”), or (2) if such quorum is not
obtainable or even if obtainable, if such majority so directs, independent
legal counsel in a written opinion that concludes that the Indemnified Person
should be entitled to indemnification. Notwithstanding the foregoing,
with respect to any action, suit or other proceeding voluntarily prosecuted by any Indemnified Person as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such Indemnified Person was authorized by a
majority of the Directors. All determinations to make advance payments in connection with the expense
of defending any proceeding shall be authorized and made in accordance with the
immediately succeeding paragraph (b) below.
(b) The Company shall make advance payments
in connection with the expenses of defending any action with respect to which
indemnification might be sought hereunder if the Company receives a written
affirmation by the Indemnified Person of the Indemnified Person's good faith
belief that the standards of conduct necessary for indemnification have
been met and a written undertaking to
reimburse the Company unless it is subsequently determined that he is entitled
to such indemnification and if a majority of the Directors determine that the
applicable standards of conduct necessary for indemnification appear to have been met. In
addition, at least one of the following conditions must be met: (1)
the Indemnified Person shall provide adequate security for his undertaking, (2)
the Company shall be insured against losses arising by reason of any lawful
advances, or (3) a majority of a quorum of
the Disinterested Non-Party Directors, or if a majority vote of such quorum so
direct, independent legal counsel in a written opinion, shall conclude, based on
a review of readily available facts (as opposed to a full trial-type inquiry), that there is
substantial reason to believe that the Indemnified Person ultimately will be
found entitled to indemnification.
(c) The rights accruing to any Indemnified
Person under these provisions shall not exclude any other right to which he may be lawfully
entitled.
(d) Notwithstanding the foregoing, subject
to any limitations provided by the Investment Company Act and this Agreement,
the Company shall have the power and authority to indemnify Persons providing
services to the Company or its subsidiaries to the full extent provided by law as
if the Company or its
subsidiaries were a
corporation organized under the Delaware General Corporation Law provided that
such indemnification has been approved by a majority of the Directors
or, with respect to
agreements to which the Investment Manager is not a party, by the Investment
Manager.
(e) No purchaser, lender, transfer agent or
other person dealing with the Directors or with any officer, employee or agent
of the Company shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Directors or by said
officer, employee or agent or be liable for the application of money or property
paid, loaned, or delivered to or on the order of the Directors or of said officer, employee or
agent. Every obligation, contract, undertaking, instrument,
certificate, Share and other security of the Company, and every other act or
thing whatsoever executed in connection with the Company shall be conclusively
taken to have been executed or done by the
executors thereof only in their capacity as Directors under this Agreement or in
their capacity as officers, employees or agents
24
of the Company. The Company
may maintain insurance for the protection of the Assets, its Members, Directors, officers,
employees or agents in such amounts as the Directors shall deem adequate to
cover possible liability, and such other insurance as the Directors in their
sole judgment shall deem advisable or is required by the Investment
Company Act.
(f) Each Indemnified Person shall, in the
performance of its duties, be fully and completely justified and protected with
regard to any act or any failure to act resulting from reliance in good faith
upon the books of account or other records of the Company, upon an opinion of counsel,
or upon reports made to the Company by any of the Company’s officers or employees or by any
advisor, administrator, manager, distributor, selected dealer, accountant,
appraiser or other expert or consultant selected with reasonable care by the Directors,
officers or employees of the Company, regardless of whether such counsel or
other person may also be a Director.
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9.7 Director Limited
Liability
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Except
as otherwise provided by law, the Directors shall not be obligated personally
for any debt, obligation or liability of the Company solely by reason of being
the manager of the Company, and the debt, obligations and liabilities of the
Company, whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the Company.
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9.8 Certain Other
Activities
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(a) The Investment
Manager may manage one or more additional investment
vehicles or client accounts other than the Company (“Other
Accounts”) that invest in assets eligible
for purchase by the
Company or the Portfolio
Partnership, provided that during the Commitment
Period, all investment opportunities are allocated as provided in the Offering
Memorandum and the Principals continue to provide sufficient time and attention
to managing the investments
of the Company. In addition to Other Accounts, after January 2, 2009 and until the earlier of (i) the termination
of the Commitment Period and (ii) such time that at least 75% of the aggregate Common Share
Commitments of the
Company have been funded or reserved for
investments in process at the end of the Commitment Period or
Company Expenses, including the Advisory Fee and Shareholder Servicing
Fee, none of PennyMac, the
Investment Manager or the
general partner of the Portfolio Partnership may form a new investment fund or
account (collectively, “Successor
Funds”) with investment objectives that are substantially similar to those of the
Company. Notwithstanding the foregoing, PennyMac,
the Investment Manager or the general partner of the Portfolio Partnership may form one or more Successor Funds for the purpose of investing in one or
more investment opportunities where the capital necessary to acquire
such assets exceeds the available capital of the Company and its other clients, or where the Investment Manager determines
that acquiring the entire interest in such assets would not be in the best
interest of the Company and such other clients, taking into account diversification
and Company investment goals. If a
Successor Fund is formed to
invest in specific investment opportunities under such circumstances, in addition
to any investment that may be made by the Company, the Investment Manager will offer
Members and other direct and indirect investors
in the Company and the Other Accounts the opportunity to invest in such
Successor Fund. Any
25
amounts contributed by a
Member in respect of such
Successor Fund will not
reduce the Unfunded
Commitment of such Member.
(b) Subject to the requirements of the
Investment Company Act and the Advisers Act, the Manager Affiliates are in
no way prohibited from spending, and may spend, substantial business time in
connection with other businesses or activities, including, but not limited to,
managing Other Accounts,
managing investments, participating in actual or potential investments of
the Company or any Member, providing consulting, structuring or financial
advisory services, including with respect to actual, contemplated or potential
investments of the Company, or acting as a director, officer, manager, member or creditors’ committee member of, or adviser to, or
participant in, any corporation, company, limited liability company, trust or
other Person. Subject to the requirements of the Investment Company
Act and the Advisers Act, the Manager Affiliates are in no way prohibited from
receiving, and may receive, fees or other compensation from third parties for
any of these activities, which fees will be for their own account and not for
the account of the Company. Such fees may relate to actual,
contemplated or potential investments of
the Company and may be payable by entities in which the Company directly or
indirectly has invested or contemplates investing. Neither the
Company nor any Member shall, by virtue of this Agreement, have any right,
title or interest in or to the businesses
or activities permitted by this Section 9.8 or in or to any fees or
consideration derived therefrom. Allocation of investments or
opportunities among the Company and Other Accounts will be made as described in
the Offering Memorandum or as otherwise
approved by the Board of Directors in accordance with the Investment Company Act and the Advisers Act.
SECTION
10.
MEMBERS
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10.1 Identity,
Contributions and Common Share Commitments
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The
names and addresses of the Members, the Shares owned by each Member and the
Capital Contributions, Common Share Commitments and Unfunded Commitments of each
will be set forth in the Company’s records.
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10.2 No Management
Power or Liability
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Subject
to the requirements of the Investment Company Act, except as otherwise provided
herein, the Members as such shall have no right or power to, and shall not, take
part in the management of or transact any business for the Company, including
but not limited to, any acts or decisions relating to investment activities of
the Company, and shall have no power to sign for or bind the
Company. Except as otherwise required by law, no Member, in its
capacity as such, shall be personally liable for any debt, loss, obligation or
liability of the Company in excess of its Unfunded Commitment (if
applicable). Except to the extent expressly provided in the preceding
sentence, the Company shall indemnify and hold harmless each Member (in its
capacity as such) in the event such Member becomes liable for any debt, loss,
obligation or liability of the Company unless such Member has engaged in fraud,
willful
26
misconduct,
gross negligence or criminal conduct constituting a felony with respect to such
debt, loss, obligation or liability.
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10.3 Amendments
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(a) If a vote of the holders of Shares is required by
applicable law or this Agreement to amend this Agreement, or if the Directors
determine to submit an amendment to a vote of the holders of Shares, then, other
than with respect to Sections of this Agreement where a different affirmative vote is
specifically required, this Agreement may be amended, after a majority of the
Directors then in office have approved a resolution therefor, by the affirmative
vote set forth in Section 10.10. Section 10.10 may only be
amended, after a majority of Directors then in
office have approved a resolution therefor, by the affirmative vote of the
holders of not less than 75% of the affected Shares then
outstanding. Notwithstanding the foregoing, without the unanimous
approval of all of the Members affected thereby, no such
amendment may:
(i) require any Common Member to make
Capital Contributions
(other than of returned capital during the
Commitment Period) in
excess of its Common Share Commitment, require any Member that is not a
Common Member to make
additional Capital Contributions (other than of returned capital during the
Commitment Period) in excess of its contractual commitment
or otherwise increase the liability of any Member hereunder;
or
(ii) adversely affect such Members' rights to distributions; or
(iii) modify this Section
10.3(a).
(b) Subject to the requirements of the
Investment Company Act and other applicable law, notwithstanding the foregoing
provisions of this Section 10.3, the Board of Directors may amend this
Agreement, without the
consent of any Member, (i) to change the name of the Company or any class
or series of Shares, (ii) to make any change that does not adversely affect the
relative rights or preferences of any class or series of Shares in relation to any Member, (iii) to conform this Agreement to the
requirements of the Investment Company Act or any other applicable
law; (iv) in connection with qualifying the Company to permit limited
liability under the laws of any state; (v) to prevent any material and
adverse effect to any
Member or the Company arising from the application of legal restrictions to any
Member, the Investment
Manager or the Company,
subject to the requirement that the Members not be materially and adversely
affected; (vi) to make any change that is necessary or desirable to cure
any ambiguity or inconsistency, subject to the requirement that the Members not
be materially and adversely affected; (vii) to change the names of the
Principals under Section 10.11 upon the approval of one or more Replacement Principals; or (viii) to make any other changes similar to the
foregoing, subject to the requirement that the
Members not be materially and adversely affected. Prior to entering into any
amendment pursuant to this Section 10.3(b), the Board of Directors shall notify the Members in
writing of the material terms of such amendment. The Board of Directors may
reflect in its records changes made in the composition of the Members and their
respective Capital Contributions and Shares in accordance with the provisions of this Agreement
without the consent of the Members.
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(c) After any amendment to this Agreement
becomes effective, the Company shall send to the Members a copy of such
amendment.
(d) Nothing contained in this Agreement
shall permit the amendment
of this Agreement to impair the exemption from personal liability of the
Members, Directors, officers, employees and agents of the Company and their
respective Affiliates, to permit assessments upon Members in excess of their
Unfunded Commitments or to permit the Company to be converted at
any time from a “closed-end
investment company” to an
“open-end investment
company” as those terms are
defined by the Investment Company Act or a company obligated to repurchase
shares under Rule 23c-3 of the Investment Company Act.
(e) An amendment duly adopted by the
requisite vote of the Board of Directors and, if required, Members as aforesaid,
shall become effective at the time of such adoption or at such other time as may
be designated by the Board of Directors or Members, as the case may
be. A certification signed by a majority of the Directors or the
Secretary setting forth an amendment and reciting that it was duly adopted by
the Directors and, if required, Members as aforesaid, or a copy of the
Agreement, as amended, and executed by a majority of
the Directors or the Secretary, shall be conclusive evidence of such amendment
when lodged among the records of the Company or at such other time designated by
the Directors.
(f) Notwithstanding any other provision
hereof, until such time as
Shares are issued and outstanding, this Agreement may be terminated or amended
in any respect by the affirmative vote of a majority of the Directors or by an
instrument signed by a majority of the Directors then in
office.
(g) Notwithstanding anything to the contrary
contained herein, no holder of Shares of any class or series, other than to the
extent expressly determined by the Directors with respect to Shares qualifying
as preferred stock pursuant to Section 18(a) of the Investment Company Act, shall have any right
to require the Company or any person controlled by the Company to purchase any
of such holder’s Shares.
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10.4 Merger,
Consolidation, Liquidation
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Subject
to the provisions of the Investment Company Act and other applicable law, the
Company may merge or consolidate with any other entity, or sell, lease or
exchange all or substantially all of the Assets upon approval by two-thirds of
the Directors then in office and the affirmative vote of not less than
two-thirds of the outstanding Shares.
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10.5 List
of Members
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A
list of the names and addresses of all Members (to the extent known to the
Company) shall be made available to any Member or its representative for
inspection and, at the Member’s cost, copying upon written request and at
reasonable times to the extent required by the Investment Company Act with
respect to trusts for any purpose.
28
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10.6 Limitations
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No
Member shall have the right or power to (i) bring an action for partition
against the Company; (ii) cause the termination or dissolution of the
Company, except as set forth in this Agreement; or (iii) demand property
other than cash with respect to any distribution and then only in accordance
with the terms of this Agreement. For the avoidance of doubt, Members
shall not have the power provided for in Section 18-801(a)(3) of the Delaware
Act, and the Company may only be dissolved pursuant to the terms of this
Agreement. Except to the extent required for a Delaware business
corporation, the Members shall have no power to vote as to whether or not a
court action, legal proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Company or the
Members.
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10.7 Meetings.
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(a) The Company may, but shall not
be required to, hold annual
meetings of the holders of any class or series of Shares. An annual
or special meeting of Members may be called at any time only by the Directors or
by Members in accordance with the requirements of the Investment Company Act
applicable to trusts; provided, however, that a meeting of the outstanding
voting securities of the Company may also be called at the written request of
the holders of not less than 10% of the outstanding voting securities of the
Company for the purpose of adding an additional director and if at
such meeting (which shall be held within 30 days after such written request is
received by the Company) a majority of the voting securities entitled to vote
thereat vote in favor of such proposition and one or more qualified persons has been nominated for
such vacancy, the nominee for whom a plurality of the votes are cast shall be
elected to fill such vacancy. Any meeting of Members shall be held
within or without the State of Delaware on such day and at such time
as the Directors shall
designate.
(b) Notice of all meetings of Members,
stating the time, place and purposes of the meeting, shall be given by the
Directors by mail to each Member of record entitled to vote thereat at its
registered address, mailed at least 10 days before the meeting or
otherwise in compliance with applicable law. Except with respect to
an annual meeting, at which any business required by the Investment Company Act
may be conducted, only the business stated in the notice of the meeting
shall be considered at such
meeting. Any adjourned meeting may be held as adjourned one or more
times without further notice not later than 130 days after the record
date. For the purposes of determining the Members who are entitled to
notice of and to vote at any meeting the Directors may,
without closing the transfer books, fix a date not more than 100 days prior to
the date of such meeting of Members as a record date for the determination of
the Persons to be treated as Members of record for such purposes.
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10.8 Action
Without a Meeting
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Any
action that may be taken at a meeting of the Members may be taken without a
meeting if a consent in writing setting forth the action to be taken is signed
by Members owning not less than the minimum percentage of the Shares of the
Members that would be necessary to authorize or take such action at a meeting at
which all the Members were present and voted, and notice of the action taken is
provided to each Member. Any such written consent must be filed with
the records of the meetings of the Members.
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10.9 Procedures
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A
Member shall be entitled to cast votes: (i) at a meeting, in person,
by written proxy or by a signed writing directing the manner in which its vote
is to be cast, which writing must be received by the Company at or prior to the
commencement of the meeting, or (ii) without a meeting, by a signed writing
directing the manner in which its vote is to be cast, which writing must be
received by the Company at or prior to the time and date on which the votes are
to be counted. Except as otherwise herein specifically provided, all procedural
matters relating to the holding of meetings of Members or taking action by
written consent, whether noticed or solicited by the Company or others,
including, without limitation, matters relating to the date for the meeting or
the counting of votes by written consent, the time period during which written
consents may be solicited, minimum or maximum notice periods, record dates,
proxy requirements and rules relating to the conduct of meetings or the
tabulation of votes, shall be as reasonably established by the
Directors. To the extent not otherwise provided by the Board of
Directors pursuant to Section 10.10 or otherwise, the laws of the State of
Delaware pertaining to the validity and use of proxies regarding the shares of
business corporations shall govern the validity and use of proxies given by
Members.
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10.10 Voting
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(a) Members shall have no power to vote on
any matter except matters on which a vote of Shares is required by or pursuant to the Investment
Company Act, a Statement of Preferences, this Agreement, the By-Laws or any
resolution of the Directors. Any matter required to be submitted for
approval of any of the Shares and affecting one or more classes or
series shall require approval by the required
vote of Shares of the affected class or classes and series voting together as a
single class and, if such matter affects one or more classes or series thereof
differently from one or more other classes or series thereof or from one or more series of the
same class, approval by the required vote of Shares of such other class or
classes or series or series voting as a separate class shall be required in
order to be approved with respect to such other class or classes or series or series; provided,
however, that except to the
extent required by the Investment Company Act and any Statement of Preferences,
there shall be no separate class votes on the election or removal of Directors
or the selection of auditors for the Company. Members of a particular
class or series thereof shall not be entitled to vote on any matter that affects
the rights or interests of only one or more other classes or series of such
other class or classes or only one or more other series of the same class. There shall be no
cumulative voting in the election or removal of Directors. The Company will submit to a
vote by its Members any matter submitted by the Portfolio Partnership to a vote
of its partners and will vote all of its interests in the Portfolio Partnership on any such matter in
the same proportions as the votes cast by the Members.
(b) The holders of one-third of the
outstanding Shares of the Company on the record date present in person or by
proxy shall constitute a quorum at any meeting of the holders for purposes of
conducting business on which a vote of all Members of the Company is being
taken. The holders of one-third of the outstanding Shares of a class
or classes on the record date present in person or by proxy shall constitute a
quorum at any meeting of the holders of
such class or classes for purposes of conducting business on which a vote of
holders of such class or classes is being taken. The holders of
one-third of the outstanding Shares of a series or series on
30
the record date present in person or by proxy shall
constitute a quorum at any meeting of the holders of such series or series for
purposes of conducting business on which a vote of holders of such series or
series is being taken. Shares underlying a proxy as to
which a broker or other intermediary states
its absence of authority to vote with respect to one or more matters shall be
treated as present for purposes of establishing a quorum for taking action on
any such matter only to the extent so determined by the Directors at or prior to the meeting of
holders of Shares at which such matter is to be considered and shall not be
treated as present for purposes of voting or any other purpose except as
determined by the Directors.
(c) Subject to any provision of the
Investment Company Act, any
Statement of Preferences or this Agreement specifying or requiring a greater or
lesser vote requirement for the transaction of any matter of business at any
meeting of Members or, in the absence of any such provision of the Investment
Company Act, any Statement of Preferences
or this Agreement, subject to any provision of the By-Laws or resolution of the
Directors specifying or requiring a greater or lesser vote requirement, (i) the
affirmative vote of a plurality (or, if provided by the By-Laws, a majority) of the Shares
present in person or represented by proxy and entitled to vote for the election
of any Director or Directors shall be the act of such Members with respect to
the election of such Director or Directors, (ii) the affirmative vote of a majority of the Shares
present in person or represented by proxy and entitled to vote on any other
matter who vote on such matter shall be the act of the Members with respect to
such matter, and (iii) where a separate vote of one or more classes or series is required on any matter,
the affirmative vote of a majority of the Shares of such class or classes or
series or series present in person or represented by proxy and entitled to vote
on such matter who vote on such matter shall be the act of the Members of such class or classes or
series or series with respect to such matter.
(d) At any meeting of Members, any holder of
Shares entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the Secretary,
or with such other officer or agent of the Company as the Secretary may direct,
for verification prior to the time at which such vote shall be
taken. Pursuant to a resolution of a majority of the Directors,
proxies may be solicited in the name of one or
more Directors or one or more of the officers or employees of the
Company. Only Members of record shall be entitled to
vote. Each full Share shall be entitled to one vote and each
fractional Share shall be entitled to a vote equal to its fraction of a
full Share. When any Share is held jointly by several persons, any
one of them may vote at any meeting in person or by proxy in respect of such
Share, but if more than one of them shall be present at such meeting in
person or by proxy, and such joint owners
or their proxies so present disagree as to any vote to be cast, such vote shall
not be received in respect of such Share. A proxy purporting to be
given by or on behalf of a Shareholder of record on the record date for a meeting shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such
Share is a minor or a person of unsound mind, and subject to guardianship or
to the legal control of any other person
as regards the charge or management of such Share, he may vote by his guardian
or such other person appointed or having such control, and such vote may be
given in person or by proxy. The Directors shall have the
authority to make and modify from time to
time regulations regarding the validity of proxies. In addition to
signed proxies, such regulations may authorize facsimile, telephonic,
internet and other methods
of appointing a proxy that are subject to such supervision by or under the direction of the
Directors as the Directors shall determine.
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10.11 Key
Person Event
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A
“Key Person Event” will
occur if fewer than three Principals remain involved in the management and
decision making of the Investment Manager at any time during the Commitment
Period. Upon the occurrence of a Key Person Event, the Investment
Manager will promptly notify the Board of Directors and the Members and the
Commitment Period shall be suspended (the “Suspension
Period”). The Investment Manager will seek to promptly present
to the Board of Directors in writing for its consideration the name of one or
more persons the Investment Manager believes possess skills reasonably
comparable to the departed Principal (or Principals) and should replace the
departed Principal (or Principals) (a person having such skills being a “Replacement
Principal”). Upon approval of the Replacement Principal (or
Replacement Principals) by a majority of the independent Directors of the
Company, any Suspension Period will immediately terminate. In the
event that a majority of the independent Directors do not approve the
Replacement Principal (or Replacement Principals), any Suspension Period will
continue and, if the number of remaining initial and approved Replacement
Principals is not at least three on or prior to 90 days after the occurrence of
the Key Person Event, the independent Directors will appoint a liquidator, which
may be the Investment Manager, to liquidate the Company and its subsidiaries in
such a manner, and over such reasonable period of time, so as to maximize
returns to the Company and its Members. Such person will have the
exclusive power and authority to wind up the affairs of the Company and commence
the orderly liquidation and distribution (including distributions in kind) of
their assets in accordance with the terms of this Agreement. For
purposes of the foregoing, a “Principal” means ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and any other person approved by the Board of Directors, as described
above.
SECTION 11.
ADMISSION
OF ADDITIONAL MEMBERS;
ASSIGNMENTS
OR TRANSFERS OF SHARES
|
11.1 Admission
of Additional Members
|
|
No
additional Members will be admitted after the Initial Closing, except as
provided in Sections 7.1 and 11.2.
|
11.2 Assignments
or Transfers of Shares
|
|
(a) In no event shall all or any part of a
Member's Preferred Shares be Transferred, and any such purported Transfer shall
be void and shall not be recognized by the Company, unless all of the conditions set forth
in the applicable Statement of Preferences with respect thereto have been
satisfied. In no event shall all or any part of a Member’s Common Shares or Common Share
Commitments be Transferred, and any such purported Transfer shall be void and shall not be
recognized by the Company or the Members, unless all of the following conditions
are satisfied:
32
(i) The Transferor, if requested by the
Company in its sole discretion, has delivered to the Company an opinion of
counsel reasonably
acceptable to the Company that such Transfer (A) would not violate the
Securities Act or any state blue sky laws (including any investor suitability
standards) and, (B) would not result in the breach of any agreement to
which the Company is a party or by which it or any of the Assets
is bound;
(ii) The Transferor has demonstrated to the
reasonable satisfaction of the Company that the Transferee is both an
“accredited
investor” as defined in
Rule 501(a) under the Securities Act and a “qualified client” within the meaning of Rule 205-3 of the
Advisers Act;
(iii) The Company has received a notice of
Transfer signed by both the Transferor and Transferee, such notice to be
substantially in the form
of Appendix A attached hereto (or such other
document specified in the
applicable Statement of Preferences); and
(iv) the Company consents in writing to such
Transfer (which consent may be withheld in the Company’s reasonable
discretion).
(b) Provided the foregoing conditions are
met, the Transferee may become a Substituted Member if and only if,
with respect to Preferred Shares, any requirements set forth in the relevant
Statement of Preferences are satisfied and, with respect to Common Shares, each
of the following conditions is satisfied:
(i) The Company has consented in writing to the
substitution (which consent may be withheld in the Company’s reasonable discretion with respect to
Transfers of Common Share Commitments and may be withheld in the Company's
reasonable discretion with respect to Transfers of Common Shares only if the transfer
conditions described above have not been met or have not been
waived);
(ii) The Transferor and Transferee execute,
acknowledge and deliver such instruments as the Company deems necessary,
appropriate or desirable to effect such substitution, including the
written acceptance and adoption by the Transferee of this Agreement and the
execution, acknowledgment and delivery to the Company of a power of attorney,
the substance of which shall be consistent with Section 13;
and
(iii) The Transferee agrees to bear all of the
Company’s expenses and costs incurred in
connection with the Transfer and substitution, including legal fees and filing
fees.
Upon
the satisfaction of the conditions set forth in this Section 11.2(b), the
Company shall record on the books and records of the Company the Substituted
Member as a Member of the Company.
(c) A Transferee, legal representative or
successor in interest of a Member shall be subject to all of the restrictions
upon a Member provided in this Agreement.
33
(d) A Transferee of Shares or Common Share
Commitments who desires to make a further Transfer shall be subject to all of
the provisions of this Section 11 to the same extent and in the same manner as a
Member making the initial Transfer.
(e) Notwithstanding anything to the contrary
in this Agreement, the Company may elect (in the Company’s sole discretion) to treat a Transferee
who has not become a Substituted Member as a Member in the place of the
Transferor should it determine such treatment to be in the best interests of the
Company.
(f) Upon the Incapacity of an individual
Member, such Member’s personal representative or other
successor in interest shall have such rights as the Incapacitated Member
possessed to constitute a successor as a Transferee of its Shares or Common Share
Commitment and to join with such Transferee in making application to substitute
such Transferee as a Member, all as provided in Sections 11.2(a) and
(b).
(g) Upon the Incapacity of a Member other
than an individual, the
authorized representative of such entity shall have such rights as such entity
possessed to constitute a successor as a Transferee of its Shares or Common
Share Commitment and to join with such Transferee in making application to
substitute such Transferee as a Member, all as provided in
Sections 11.2(a) and (b).
(h) A Person who acquires Shares or an
interest therein but is not admitted to the Company as a Substituted Member
pursuant to Section 11.2(b) shall (i) in the case of a Person acquiring
Common Shares or an
interest therein who does not satisfy Section 11.2(a)(ii), obtain no rights
whatsoever in the Company, such Transfer shall be void as between such Person
and the Company and the Company shall have the absolute right in its sole
discretion to Transfer such Common Shares to any
Person who does satisfy Section 11.2(a)(ii) for such consideration as the
Company deems sufficient in the circumstances and to remit to such Person who
acquired such Common Shares in violation of this Agreement such portion of such consideration not in excess
of 75% thereof as the Company receives in complete satisfaction of such
Person’s interest in the Company and (ii) in
the case of a Person acquiring Preferred Shares or an interest therein, be
entitled only to the allocations and distributions with respect
to such Shares in accordance with this Agreement or relevant Statement of
Preferences but shall have no right to any information or accounting of the
affairs of the Company and shall not have any voting or other rights of a Member under this Agreement or
relevant Statement of Preferences; provided,
however, that such Person
described in this clause (ii) shall be entitled to receive such information and
accountings as shall be consented to by the Company, which consent shall not be unreasonably
withheld. A Substituted Member who qualifies pursuant to the
provisions hereof shall succeed to all the rights and be subject to all the
obligations of the Transferor Member in respect of the Shares or other interest
as to which it was substituted.
34
SECTION
12.
POWER
OF ATTORNEY
|
12.1 Appointment
of Investment Manager
|
|
Each
Member, by becoming a Member, makes, constitutes and appoints the Investment
Manager as its true and lawful attorney-in-fact, in its name, place and stead,
with full power to do any of the following:
(a) Execute on its behalf, file and record
this Agreement and all amendments to this Agreement made and otherwise approved
in accordance with Section 10.3 or otherwise made in accordance with the terms
of this Agreement;
(b) Prepare, execute on its behalf, verify,
file and record amendments to this Agreement made in accordance with the terms
of this Agreement or to the books and records of the Company reflecting (i)
a change of the name or
location of the principal
place of business of the
Company, (ii) a change of
the name or address of any Member, (iii) the addition of Members, (iv)
the disposal by a Member of
its Shares or Common Share
Commitment in any manner, (v) a Person becoming or ceasing to
be a Member of
the Company, (vi)
the exercise by any Person
of any right or rights
hereunder, (vii) the
correction of typographical
or similar errors, (viii) any amendments made in
accordance with Section
10.3, and (ix) any
amendment and restatement of this Agreement reflecting such
amendments;
(c) Prepare, execute on its behalf and
record any amendments to the Certificate that the Investment Manager may deem
advisable or necessary;
(d) Prepare, execute on its behalf, file and
record any other agreements, certificates, instruments and other documents required to
continue the Company, to admit Substituted Members, to liquidate and dissolve
the Company in accordance with Section 16, to comply with applicable law, and to
carry out the purposes of
clauses (a) and (b) above,
to the extent consistent
with this Agreement; and
(e) Take any further action that the
Investment Manager shall consider advisable in connection with the exercise of
the authority granted in this Section 12.1.
|
12.2 Nature
of Special Power
|
|
The
power of attorney granted under this Section 12 is a special power of attorney
coupled with an interest, is irrevocable and may be exercised by the Investment
Manager by listing all of the Members executing any agreement, certificate,
instrument or document with a single signature of such attorney-in-fact acting
as attorney-in-fact for all of them. The power of attorney shall
survive and not be affected by the Incapacity of a Member and shall survive and
not be affected by the Transfer by a Member of the whole or a portion of its
Shares or Common Share Commitment, as the case may be, except where the Transfer
is of all of the Shares or Common Share Commitment and the Transferee thereof
with the consent of the Company is admitted as a Substituted Member; provided, however, that this
power of attorney shall survive such Transfer for the sole purpose of enabling
any such attorney-in-fact to
35
effect
such substitution. This power of attorney does not supersede any part
of this Agreement, nor is it to be used to deprive any Member of its rights
hereunder. It is intended only to facilitate the execution of
documents and the carrying out of other procedural or ministerial
functions.
SECTION
13.
BOOKS,
RECORDS AND REPORTS
|
13.1 Books
|
|
(a) The Company shall maintain books and
records required by law for
the Company at its principal office, which shall be in the United States, and
each Member shall have the right to inspect, examine and copy such books and
records at reasonable times and upon reasonable notice for the purposes
required by the Investment Company Act
relating to trusts or as authorized by the Directors or their
delegate. All such books and records may be in electronic format,
including the register of Members and all capital account and accounting
records. Upon the request of a Member, the Company shall
promptly deliver to the requesting Member, at the expense of the Company, a copy
of any information which the Company is required by law to so provide in paper
or electronic format. Notwithstanding the foregoing inspection rights or any other provision of
this Section 13, the Company shall be entitled to keep confidential from the
Members certain information as and to the extent permitted by Section 18-305(c)
of the Delaware Act and the Investment Company Act.
(b) A register shall be kept at the Company or
any transfer agent duly appointed by or under the direction of the Directors
which shall contain the names and addresses of the Members and the number of
Shares held by them respectively and a record of all transfers thereof. Separate registers
shall be established and maintained for each class and each series of each
class. Each such register shall be conclusive as to who are the
holders of the Shares of the applicable class and series and who shall be
entitled to receive dividends or distributions or
otherwise to exercise or enjoy the rights of Members. No Member shall
be entitled to receive payment of any dividend or distribution, nor to have
notice given to him as herein provided, until he has given his
address to a transfer agent or such other
officer or agent of the Directors as shall keep the register for entry
thereon. Except as otherwise provided in any Statement of
Preferences, it is not contemplated that certificates will be issued for the
Shares; however, the Company may authorize the issuance
of share certificates and promulgate appropriate fees therefore and rules and
regulations as to their use.
(c) The Company shall have power to employ a
transfer agent or transfer agents, and a registrar or registrars, with respect to the
Shares. The transfer agent or transfer agents may keep the applicable
register and record therein, the original issues and transfers, if any, of the
said Shares.
(d) Shares shall be transferable on the
records of the Company only by the record holder thereof or by its
agent thereto duly authorized in writing, upon delivery to the Company or a
transfer agent of the Company of a duly executed instrument of transfer,
together with such evidence of the genuineness of each such
execution and authorization and of other matters
as
36
may reasonably be
required. Upon such delivery the transfer shall be recorded on the
applicable register of the Company. Until such record is made, the
Member of record shall be deemed to be the holder of such Shares for all purposes hereof and neither
the Directors nor any transfer agent or registrar nor any officer, employee or
agent of the Company shall be affected by any notice of the proposed
transfer.
Any
person becoming entitled to any Shares in consequence of the death, bankruptcy,
or incompetence of any Member, or otherwise by operation of law, shall be
recorded on the applicable register of Shares as the holder of such Shares upon
production of the proper evidence thereof to the Directors or a transfer agent
of the Company, but until such record is made, the Member of record shall be
deemed to be the holder of such for all purposes hereof, and neither the
Directors nor any transfer agent or registrar nor any officer or agent of the
Company shall be affected by any notice of such death, bankruptcy or
incompetence, or other operation of law.
|
13.2 Reports
|
|
(a) The Company shall prepare and send to
Members to the extent and in the form required by the Investment Company Act and
other applicable law or any exchange on which Shares are listed a
report of operations
containing financial
statements of the Company prepared in conformity with generally accepted
accounting principles and applicable law. Common Members shall
receive quarterly unaudited
performance statements and
status reports.
(b) Within 60 days after the end of each
Fiscal Year, the Company shall communicate in writing to each Member (i) such
information as is necessary to complete such Member's United States federal and
state income tax or information returns and (ii) annual financial
statements audited by an accounting firm of national
reputation.
(c) Further, the Directors may, in their
sole and absolute discretion, cause to be prepared (i) such reports or other
information as may be necessary with respect to any Member’s qualification for the benefit of any
income tax treaty or provision of law reducing or eliminating any withholding or
other tax or governmental charge with respect to any Assets and (ii) such other
reports and financial statements of the Company as the Directors deem
appropriate for informing the Members about the operations of the
Company.
(d) To the extent that the Company has
access thereto and in recognition of the various Members’ obligations to comply with certain
regulatory requirements,
the Company will also provide to each Member, with reasonable promptness, such
other data and information concerning the Company or Company activities in
response to a request by any applicable governmental or regulatory agency as
from time to time a Member may reasonably
request. If the Company is bound by confidentiality obligations with
respect to any information so requested, then the Company shall not be obligated
to provide such information. A Member shall, at the request of the
Company, enter into a confidentiality
agreement relating to such information.
37
SECTION 14.
VALUATION
OF INTERESTS.
The
value of the Assets of the Company, the amount of liabilities of the Company,
the Net Asset Value, and the Net Asset Value of each outstanding Common Share of
the Company shall be determined on each Valuation Date in accordance with
generally accepted accounting principles and the Investment Company
Act. The method of determination of Net Asset Value shall be
determined by or under the supervision of the Board of Directors. The
making of Net Asset Value determinations and calculations may be delegated by
the Board of Directors.
SECTION
15.
BANK
ACCOUNTS; CUSTODIAN
|
15.1 Bank
Accounts Generally
|
|
Subject
to the requirements of the Investment Company Act, all funds received by the
Company may be deposited in one or more Custodial Accounts in the name of the
Company at the Custodian. Subject to Section 15.2, disbursements
therefrom may be made by the Company in conformity with the purposes of this
Agreement and the requirements of the Investment Company Act. The
Company may designate from time to time those Persons authorized to execute
checks and other items on the Company bank accounts. The funds of the
Company shall not be commingled with the funds of any other Person.
|
15.2 Custodian
|
|
(a) The Company shall appoint one or more
Custodians to hold the Assets of the Company in one or more separately
identified Custodial Accounts or multiparty arrangements in accordance with the
Advisory Agreement, any
Statement of Preferences,
the Custodial Agreement and
in compliance with the requirements of the Investment Company Act and other
applicable law. The Custodian shall at all times be responsible for
the physical custody of the Assets of the Company and for the collection of interest,
dividends and other income attributable to the Assets of the
Company. The Company will direct the Custodian to accept settlement
instructions issued by the Investment Manager and authorized
Persons.
(b) Nothing contained in this Agreement shall be construed
to authorize or require the Board of Directors or the Investment Manager to take
or receive physical possession of any Asset of the Company or to take any action
in violation of law, it being understood that the Custodian shall solely be responsible for the
safekeeping of the Assets and the consummation of all such purchases, sales and
deliveries of the Assets in accordance with this Agreement and the Advisory
Agreement, any Statement of
Preferences, the Custodial Agreement and in compliance with the
requirements of the Investment Company Act and other applicable
law.
SECTION
16.
DISSOLUTION
AND TERMINATION OF THE COMPANY
|
16.1 Dissolution
Generally
|
||
Except
as provided in this Agreement, no Member shall have the right to cause any
dissolution of the Company before expiration of its term.
|
16.2 Continuation of
Company
|
||
The
Company shall not be dissolved or terminated by the Incapacity of any Member as
such, the Transfer by any Member of its Shares or Common Share Commitment or the
admission of a new or substituted Director or Member, and the existence and
business of the Company shall be continued notwithstanding the occurrence of any
such event.
|
16.3 Events Causing
Dissolution
|
||
The
Company may be dissolved prior to the time set forth in Article 4 after
two-thirds of the Directors then in office have approved a resolution therefor,
upon approval by Shares having at least 75% of the votes of all of the Shares
outstanding on the record date for such meeting, voting as a single class except
to the extent required by the Investment Company Act.
|
16.4 Distribution of
Assets on Liquidation
|
||
(a) In liquidating the Company, the Company
will make distributions in cash, in kind, or partly in cash and partly in kind
as the Investment Manager,
under the supervision of the Board of Directors, may, in its sole discretion,
determine; provided,
however, that any
distribution made partly in cash and partly in kind shall be pro rata among the Members in proportion to
their interests to the
extent reasonably practicable and if not reasonably practicable, in such non-pro
rata manner as is determined by the Investment Manager, under the supervision of
the Board of Directors, to be fair and equitable; provided,
further, that the
Investment Manager will use
reasonable efforts to make all distributions in kind, if any, in the form of
freely tradable securities. The Investment Manager need not distribute all of
the Assets at once, but may make partial distributions and shall not be required
to redeem the Preferred Shares prior to
making any liquidating distribution in respect of the Common Shares so long as
the Company has set aside liquid assets in excess of liabilities sufficient to
pay the liquidation preference and all accumulated and unpaid distributions of the Preferred
Shares.
(b) In connection with the liquidation of
the Company, the Assets (after paying or otherwise providing for the claims of
creditors of the Company, the Advisory Fees, the Shareholder Servicing
Fees, claims by the
Board of Directors, the
Investment Manager, or its Affiliated Persons for expenses of the
Company paid by any of them, any other liabilities of the Company and reasonable
reserves for any anticipated or contingent liabilities or obligations and all
accumulated and unpaid
distributions on Preferred Shares) shall be distributed to the Members in
accordance with Section 8.1.
38
|
16.5 Liquidation
Statement
|
||
(a) Upon compliance by the Company with all
applicable requirements for dissolution, the Members shall cease to be such and the Company shall
execute, acknowledge and cause to be filed a Certificate of Cancellation of the
Company or other appropriate documents evidencing its dissolution and winding
up.
(b) Notwithstanding anything to the contrary
contained herein, if the
Board of Directors has been removed and the Company has been dissolved, any
Member or other Person appointed by the Members may act as liquidating trustee
for the Company during the winding up period, and receive reasonable
compensation for such activity, all as approved by the Members
holding Shares that represent a majority of the outstanding Shares (which in
this case shall exclude any Shares held by the Investment
Manager).
|
16.6 Director’s Liability Upon Dissolution or
Removal
|
||
None
of the Directors shall be personally liable for the return of all or any part of
the contributions of the Members to the Company or for any other distributions
to be made by the Company. Any such return or distributions shall be
made solely from the Assets.
SECTION
17.
GENERAL
PROVISIONS
|
17.1 Notices and
Distributions
|
||
Except
as otherwise provided herein, any notice, distribution, offer or other
communication which may be given to any Member in connection with the Company or
this Agreement shall be duly given if reduced to writing and:
(a) if to any Member, when personally
delivered, or if sent by mail, postage prepaid, overnight courier or facsimile
transmission, when actually received at the last address furnished by
such Member pursuant to
Section 2.4 for
notice purposes at the time
of such mailing, overnight courier or facsimile transmission;
and
(b) if to the Company or the Board of
Directors, sent to ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Chief Compliance
Officer, with a copy to the
Investment Manager, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, Attention: General Counsel, personally delivered or if sent by
mail, overnight courier or facsimile transmission when actually received at the
address of the Company or
the Board of Directors, respectively, set forth above or at such other address
as the Company or the Board of Directors, respectively, may then have specified
pursuant to the terms of this Agreement.
All
distributions to the Members shall be made by wire transfer to the accounts
specified by the Members, which accounts may be changed from time to time by
written notice to the Company.
39
|
17.2 Survival of
Rights
|
||
This
Agreement shall be binding upon and, as to permitted or accepted successors,
Transferees and assigns, inure to the benefit of the Members and the Company and
their respective heirs, legatees, legal representatives, successors, Transferees
and permitted assigns, in all cases whether by the laws of descent and
distribution, merger, consolidation, sale of assets, operation of law, or
otherwise.
|
17.3 Construction
|
||
The
language in all parts of this Agreement shall be in all cases construed simply
according to its fair meaning and not strictly for or against any
Person.
|
17.4 Section
Headings
|
||
The
captions of the sections in this Agreement are for convenience only and shall
not be used in construing or interpreting this Agreement.
|
17.5 Agreement in
Counterparts
|
||
This
Agreement and any amendments hereto may be executed and delivered by facsimile
and in multiple counterparts, each of which shall be deemed an original
agreement and all of which shall constitute one and the same agreement,
notwithstanding the fact that all Members are not signatories to the original or
the same counterpart.
|
17.6 Governing
Law
|
||
This
Agreement has been executed by or on authority of a majority of the Directors
and the rights of all parties and the validity and construction of every
provision hereof shall be subject to and construed according to the internal
laws, and not the laws pertaining to choice or conflict of laws, of the State of
Delaware, and reference shall be specifically made to the general corporation
law of the State of Delaware as to the construction of matters not specifically
covered herein or as to which an ambiguity exists, although such law shall not
be viewed as limiting the powers otherwise granted to the Directors hereunder
and any ambiguity shall be viewed in favor of such powers.
|
17.7 Additional
Documents
|
||
(a) Each Member, upon the request of the Company, agrees to perform
all further acts and execute, acknowledge and deliver all further documents
which may be reasonably necessary, appropriate or desirable to carry out the
provisions of this Agreement, including but not limited to, acknowledging before a Notary Public any
signature heretofore or hereafter made by a Member.
(b) Express authorization was given to ▇▇▇▇ ▇. ▇▇▇▇▇ for the exclusive purpose of executing
the Certificate of Formation of the Company which has been filed in the Office of the Secretary of State of the
State of Delaware.
40
|
17.8 Severability
|
||
Should
any portion or provision of this Agreement be declared illegal, invalid or
unenforceable in any jurisdiction, then such portion or provision shall be
deemed to be severable from this Agreement to the extent practicable while
preserving the economic intention of the parties and, in any event, such
illegality, invalidity or unenforceability shall not affect the remainder
hereof.
|
17.9 Pronouns
|
||
All
pronouns and defined terms and any variations thereof shall be deemed to refer
to the masculine, feminine or neuter, singular or plural, as the identity of the
Persons referred to may require.
|
17.10 Entire
Agreement
|
||
This
Agreement, the Statement of Preferences adopted pursuant hereto, if any, and the
Subscription Agreements executed and delivered by the Members
(i) constitute the entire Agreement of the Members with respect to the
Company and (ii) supersede all prior or contemporaneous written or oral
agreements, understandings or negotiations with respect to the Company. The
parties hereto acknowledge that the ability of the Members and of the Company to
take certain of the actions contemplated hereby may be limited by the terms of
the Statement of Preferences, if any, to the extent provided
therein.
|
17.11 Arbitration
|
||
To the extent permitted by law, any
dispute relating to this Agreement or the Company which cannot be amicably
resolved among the parties to such dispute shall be resolved by binding
arbitration conducted in Calabasas, California or Los Angeles, California in
accordance with the rules of the American Arbitration Association then
prevailing, and the decisions of the arbitrators shall be final and binding on
all the parties. The costs of the arbitration (other than fees and
expenses of counsel, which shall be the responsibility of the parties retaining
such counsel) shall be allocated among the parties as determined by the
arbitrator.
|
17.12 Waiver of
Partition
|
||
Each
Member hereby irrevocably waives and forfeits any and all rights that it may
have, whether arising under contract or statute or by operation of law, to
maintain an action for partition of the Company or any of the
Assets.
|
17.13 Filing
|
||
This
Agreement and any amendment (including any supplement) hereto shall be filed in
such places as may be required or as the Company deem
appropriate. Each amendment shall be accompanied by a certificate
signed and acknowledged by an authorized Person stating that such action was
duly taken in a manner provided herein, and shall, upon insertion in the
Company’s minute book, be conclusive evidence of all amendments contained
41
therein. A
restated Agreement, containing the original Agreement as amended by all
amendments theretofore made, may be executed from time to time by an authorized
Person and shall, upon insertion in the Company’s minute book, be conclusive
evidence of all amendments contained therein and may thereafter be referred to
in lieu of the original Agreement and the various amendments
thereto.
42
IN WITNESS WHEREOF, the
Secretary of the Company has hereunto set his hands as of the date first written
above.
|
SECRETARY:
|
|||
|
▇▇▇▇
▇▇▇▇▇▇
|
S-1
|
COMMON
MEMBERS:
|
|||
|
Those
Persons subscribing for Common Shares and
admitted
as Members by the Investment Manager:
|
|||
|
By: PNMAC
Capital Management, LLC
|
|||
|
By:
|
|||
|
Name:
|
|||
|
Title:
|
|||
S-2
APPENDIX
A
Form
of Notice of Transfer
[Date]
▇/▇
▇▇▇▇▇ Capital Management, LLC
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
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Attention: ▇▇▇▇
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Tel:
(▇▇▇) ▇▇▇-▇▇▇▇
Ladies
and Gentlemen:
This
is to advise you that [_______________] (the “Purchaser”) will purchase
(contingent only upon the approval of such purchase by PNMAC Mortgage
Opportunity Fund, LLC, a Delaware limited liability company (the “Company”)) in
a private resale (the “Purchase”) from [___________________] (the “Seller”)
[insert number or
amount] of [Common Shares (the “Shares”) or Seller's Common Share
Commitment (the "Commitment")] issued pursuant to the Limited Liability Company
Agreement of the Company dated as of
[ ]
(as amended, modified or supplemented from time to time, the “Limited Liability
Company Agreement”). Capitalized terms used herein and not defined
have the respective meanings assigned to them in the Limited Liability Company
Agreement, a copy of which has been provided to the undersigned by the
Seller. Seller has also provided to the Purchaser the Confidential
Preliminary Private Placement Memorandum, dated
[ ],
relating to the Common Shares of the Company, together with any supplements
thereto (the “Confidential Preliminary Private Placement Memorandum”); the
Subscription Agreement, dated as of [________], 2008, by and between the Company
and the initial purchaser of the Shares (the “Subscription Agreement”); and any
other written materials furnished or made available to the Seller by or on
behalf of the Company and relating to the purchase of the Shares (collectively,
the “Offering Materials”).
The
undersigned hereby irrevocably agrees, represents and warrants on behalf of the
Purchaser that:
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1.
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The
Purchaser has been provided with and has truthfully and accurately
completed and returned to the Investment Manager a subscription agreement,
which is attached hereto, and the representations and warranties made by
the Purchaser in such subscription agreement, including, without
limitation, the representations and warranties relating to the Purchaser’s
status as an “accredited investor” within the meaning of Regulation D
promulgated under the Securities Act and as a “qualified client” within
the meaning of Rule 205-3 under the Investment Advisers Act of 1940,
accurately describe the status of the Purchaser. The Purchaser
understands that the Company and the Investment Manager will rely on the
representations and warranties made by the Purchaser in the subscription
agreement in determining the eligibility of the Purchaser to purchase the
Shares.
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2.
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If
the Purchaser resells or transfers all or any portion of the Shares, the
Purchaser will obtain from each purchaser or transferee a letter
containing the same representations and agreements as set forth herein and
will have such purchaser or transferee complete a subscription
agreement.
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3.
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The
Purchaser (i) hereby agrees that this Transfer Certificate may be attached
to the Limited Liability Company Agreement and (ii) by executing and
delivering this Transfer Certificate, with the consent of the Company,
hereby becomes a Substituted Member under the Limited Liability Company
Agreement and agrees to be bound by all the terms
thereof.
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4.
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The
Purchaser hereby constitutes and appoints the Investment Manager its true
and lawful attorney-in-fact and agent with full power of substitution and
resubstitution for the Purchaser and in its name, place and stead, in any
and all capacities, to take any and all actions as are authorized by the
power of attorney contained in the Limited Liability Company
Agreement.
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The
power of attorney granted hereby shall be deemed an irrevocable special
power of attorney, coupled with an interest, which the Investment Manager
may exercise for the Purchaser by the signature of the Company or by
listing the Purchaser as a Member, and executing any instrument with the
signature of the Company as attorney-in-fact for the
Purchaser. This grant of authority shall survive the assignment
by the Purchaser of all or any portion of its Shares or Common Share
Commitment, except where the assignment is of the Purchaser's entire
interest in the Company and the assignee thereof with the consent of the
Board of Directors is admitted as a Substituted Member; provided, however, that this
power of attorney shall survive the delivery of such assignment for the
sole purpose of enabling the Board of Directors to effect such
substitution.
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5.
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The
Purchaser agrees to bear all of the Company’s expenses and costs incurred
in connection with the Transfer and substitution, including all legal fees
and filing fees.
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6.
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If
the Purchaser acquires the obligations of the Transferor under the
Transferor's Common Share Commitment with respect to all or any portion of
such Common Share Commitment, the Purchaser hereby agrees to assume and
timely and faithfully complete all of the Transferor's obligations with
respect to such common Share
Commitment.
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Very
truly yours,
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By: _______________________________
Name:
Title:
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Address:
_____________________________________
_____________________________________
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This
Transfer Certificate shall constitute (i) the notice of Transfer required under
subsection 11.2(a)(iii) of the Limited Liability Company Agreement and (ii) the
instrument of transfer required under subsection 13.1(d) of the Limited
Liability Company Agreement.
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By: _______________________________
Name:
Title:
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Address:
_____________________________________
_____________________________________
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The
undersigned, on behalf of the Company, hereby acknowledges receipt of this
Transfer Certificate and acknowledges and agrees that this Transfer Certificate
shall constitute the notice of Transfer required under subsection 11.2(a)(iii)
of the Limited Liability Company Agreement and the instrument of transfer
required under subsection 13.1(d) of the Limited Liability Company
Agreement. The undersigned, on behalf of the Company, hereby consents
to the Transfer which is the subject of this notice of Transfer pursuant to
subsections 11.2(a)(iv) and 11.2(b)(i) of the Limited Liability Company
Agreement and hereby acknowledges and agrees that the Purchaser shall become a
Substituted Member under the Limited Liability Company Agreement pursuant to
subsection 11.2(b) of the Limited Liability Company Agreement. The
proper authorized Person -of the Company will record on the books and records of
the Company the Purchaser as a Member of the Company.
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By:
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PNMAC
Capital Management, LLC,
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Investment
Manager of PNMAC Mortgage
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Opportunity
Fund, LLC
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By:
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Name:
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Title:
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Appendix
B
Subscription
Agreement
APPENDIX
C
Schedule
of Members