Exhibit 99.2(a)(ii)
ASA MARKET NEUTRAL EQUITY FUND LLC
(An Illinois Limited Liability Company)
--------------------------------
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
Dated as of June 30, 2003
--------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS........................................................................1
ARTICLE II ORGANIZATION; ADMISSION OF MEMBERS................................................5
2.1 Formation of Limited Liability Company...............................................5
2.2 Name.................................................................................5
2.3 Principal and Registered Office......................................................5
2.4 Duration.............................................................................5
2.5 Business of the Fund.................................................................5
2.6 Board of Directors...................................................................6
2.7 Members..............................................................................7
2.8 Organizational Member................................................................7
2.9 Both Directors and Members...........................................................7
2.10 Limited Liability....................................................................7
ARTICLE III MANAGEMENT.......................................................................8
3.1 Management and Control...............................................................8
3.2 Actions by the Board of Directors....................................................9
3.3 Audit Committee......................................................................9
3.4 Officers............................................................................10
3.5 Meetings of Members.................................................................10
3.6 Custody of Assets of the Fund.......................................................11
3.7 Other Activities of Members and Directors...........................................11
3.8 Duty of Care........................................................................12
3.9 Indemnification.....................................................................12
3.10 Fees, Expenses and Reimbursement....................................................14
ARTICLE IV TERMINATION OF STATUS OF THE DIRECTORS, TRANSFERS AND REPURCHASES................15
4.1 Termination of Status of a Director.................................................15
4.2 Removal of the Directors............................................................16
4.3 Transfer of Interests of Members....................................................16
4.4 Repurchase of Interests.............................................................17
ARTICLE V CAPITAL...........................................................................19
5.1 Contributions to Capital............................................................19
5.2 Rights of Members to Capital........................................................19
5.3 Capital Accounts....................................................................19
i
5.4 Allocation of Net Profit and Net Loss; Allocation of Offering Costs.................20
5.5 Allocation of Certain Expenditures..................................................20
5.6 Reserves............................................................................20
5.7 Tax Allocations.....................................................................21
5.8 Distributions.......................................................................22
5.9 Allocation of Organizational Expenses...............................................22
5.10 Withholding.........................................................................23
ARTICLE VI DISSOLUTION AND LIQUIDATION......................................................23
6.1 Dissolution.........................................................................23
6.2 Liquidation of Assets...............................................................24
ARTICLE VII ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS....................................25
7.1 Accounting and Reports..............................................................25
7.2 Determinations by the Board of Directors............................................25
7.3 Valuation of Assets.................................................................26
ARTICLE VIII MISCELLANEOUS PROVISIONS.......................................................26
8.1 Amendment of Limited Liability Company Agreement....................................26
8.2 Special Power of Attorney...........................................................27
8.3 Notices.............................................................................28
8.4 Agreement Binding Upon Successors and Assigns.......................................28
8.5 Applicability of 1940 Act and Form N-2..............................................28
8.6 Choice of Law.......................................................................29
8.7 Not for Benefit of Creditors........................................................29
8.8 Consents............................................................................29
8.9 Merger and Consolidation............................................................29
8.10 Pronouns............................................................................29
8.11 Confidentiality.....................................................................29
8.12 Certification of Non-Foreign Status.................................................30
8.13 Severability........................................................................30
8.14 Filing of Returns...................................................................30
8.15 Tax Matters Partner.................................................................30
8.16 Section 754 Election................................................................31
8.17 Reliance............................................................................31
8.18 Registration of Assets..............................................................31
8.19 Limitation on Duties................................................................31
8.20 Contractual Statute of Limitations..................................................32
8.21 Matters Not Provided For; Compliance With Law.......................................32
ii
ASA MARKET NEUTRAL EQUITY FUND LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT of ASA Market Neutral
Equity Fund LLC (the "Fund") is dated as of June 30, 2003 by and among Aspen
Strategic Alliance LLC, a Delaware limited liability company, as the Adviser
and Organizational Member and those persons hereinafter admitted as Members.
WHEREAS, the Fund has heretofore been formed as a limited liability
company under the laws of the State of Illinois pursuant to its initial
Articles of Incorporation (the "Articles") dated and filed with the Secretary
of State of Illinois on June 30, 2003;
NOW, THEREFORE, for and in consideration of the foregoing and the mutual
covenants hereinafter set forth, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
ADVISER Aspen Strategic Alliance LLC, or any
person who may hereafter serve as the
investment adviser of the Fund pursuant
to an Investment Advisory Agreement.
ADVISERS ACT The Investment Advisers Act of 1940
and the rules, regulations and orders
thereunder, as amended from time to
time, or any successor law.
AFFILIATE An affiliated person of a person as such
term is defined in the 1940 Act.
AGREEMENT This Limited Liability Company Operating
Agreement, as amended from time to time.
ARTICLES The Articles of Incorporation of the
Fund and any amendments thereto, as
filed with the office of the Secretary
of State of the State of Illinois.
BOARD OF DIRECTORS The Board of Directors established
pursuant to Section 2.6.
CAPITAL ACCOUNT With respect to each Member, the
capital account established and
maintained on behalf of the Member
pursuant to Section 5.3.
CAPITAL PERCENTAGE A percentage established for each Member
on the Fund's books as of each Expense
Allocation Date. The Capital Percentage
of a Member on an Expense Allocation
Date shall be determined by dividing the
amount of capital contributed to the
Fund by the Member pursuant to Section
5.1 hereof by the sum of the capital
contributed to the Fund by each Member
pursuant to Section 5.1 hereof on or
prior to such Expense Allocation Date.
The sum of the Capital Percentages of
all Members on each Expense Allocation
Date shall equal 100%.
CLOSING DATE The first date on or as of which a
person other than an Organizational
Member is admitted to the Fund as a
Member.
CODE The United States Internal Revenue Code
of 1986, as amended, and as hereafter
amended from time to time, or any
successor law.
DIRECTOR An individual designated as a director
of the Fund pursuant to the provisions
of Section 2.6 of the Agreement and who
serves on the Board of Directors of the
Fund.
EXPENSE ALLOCATION DATE The Closing Date, and thereafter each
day on or before the expiration of one
year following the Closing Date as of
which a contribution to the capital of
the Fund is made pursuant to Section 5.1
hereof.
FISCAL PERIOD The period commencing on the Closing
Date, and thereafter each period
commencing on the day immediately
following the last day of the preceding
Fiscal Period, and ending at the close
of business on the first to occur of the
following dates:
(1) the last day of a Fiscal Year;
(2) the last day of a Taxable Year;
(3) the day preceding the date as of
which a contribution to the
capital of the Fund is made
pursuant to Section 5.1;
(4) any day on which the Fund
repurchases any Interest or portion
of an Interest of any Member; or
(5) any day (other than one specified
in clause (2) above) as of which
this Agreement provides for any
amount to be credited to or debited
against the Capital Account of any
Member, other than an amount to be
credited to or debited against the
Capital Accounts of all Members in
accordance with their respective
Investment Percentages.
FISCAL YEAR Each period commencing on April 1 of each
year and ending on March 31 of each year
(or on the date of a final distribution
pursuant to Section 6.2 hereof), unless
and until the Board of Directors shall
elect another fiscal year for the Fund;
provided that, the period commencing on
the Closing Date and ending on March 31,
2003 shall be considered a Fiscal Year
for purposes of this Agreement.
2
FORM N-2 The Fund's Registration Statement on
Form N-2 filed with the Securities and
Exchange Commission, as amended from
time to time.
FUND The limited liability company governed
hereby, as such limited liability
company may from time to time be
constituted.
INDEPENDENT DIRECTORS Those Directors who are not
"interested persons," as such term is
defined by the 1940 Act, of the Fund.
INITIAL DIRECTOR ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the person who
directed the formation of the Fund and
served as the sole initial Director.
INTEREST The entire ownership interest in the Fund
at any particular time of a Member or
other person to whom an Interest of a
Member or portion thereof has been
transferred pursuant to Section 4.3
hereof, including the rights and
obligations of such Member or other
person under this Agreement and the laws
of the State of Illinois.
INVESTMENT FUNDS Investment funds in which the Fund's
assets are invested.
INVESTMENT A separate written agreement entered into
ADVISORY AGREEMENT by the Fund pursuant to which the Adviser
provides investment advisory services to
the Fund.
INVESTMENT PERCENTAGE A percentage established for each Member
on the Fund's books as of the first day
of each Fiscal Period. The Investment
Percentage of a Member for a Fiscal
Period shall be determined by dividing
the balance of the Member's Capital
Account as of the beginning of such
Fiscal Period by the sum of the Capital
Accounts of all of the Members as of the
beginning of such Fiscal Period. The sum
of the Investment Percentages of all
Members for each Fiscal Period shall
equal 100%.
MEMBER Any person who shall have been admitted
to the Fund as a member (including any
Director in such person's capacity as a
member of the Fund but excluding any
Director in such person's capacity as a
Director of the Fund) until the Fund
repurchases the entire Interest of such
person pursuant to Section 4.4 hereof or
a substituted member or members are
admitted with respect to any such
person's entire Interest as a member
pursuant to Section 4.4 hereof; such
term includes the Adviser or an
Affiliate of the Adviser to the extent
the Adviser (or such Affiliate) makes a
capital contribution to the Fund and
shall have been admitted to the Fund as
a member.
NET ASSETS The total value of all assets of
the Fund, less an amount equal to all
accrued debts, liabilities and
obligations of the Fund, calculated
before giving effect to any repurchases
of Interests to
3
be effected as of the date such value is
determined.
NET PROFIT OR NET LOSS The amount by which the Net Assets as
of the close of business on the last day
of a Fiscal Period exceed (in the case
of Net Profit) or are less than (in the
case of Net Loss) the Net Assets as of
the commencement of the same Fiscal
Period (or, with respect to the initial
Fiscal Period of the Fund, as of the
close of business on the Closing Date),
such amount to be adjusted to exclude
any items to be allocated among the
Capital Accounts of the Members on a
basis that is not in accordance with the
respective Investment Percentages of all
Members as of the commencement of such
Fiscal Period pursuant to Sections 5.5
and 5.6 hereof.
1940 ACT The Investment Company Act of 1940 and
the rules, regulations and orders
thereunder, as amended from time to
time, or any successor law.
OFFICER An individual designated as an officer
of the Fund pursuant to the provisions
of Section 3.3 of the Agreement and who
serves as an officer of the Fund.
ORGANIZATION EXPENSES The expenses incurred by the Fund in
connection with its formation, its
initial registration as an investment
company under the 1940 Act, and the
initial offering of Interests.
ORGANIZATIONAL MEMBER Aspen Strategic Alliance LLC.
PORTFOLIO MANAGERS The organizations that manage and direct
the investment activities of Investment
Funds or are retained to manage and
invest designated portions of the Fund's
assets.
SECURITIES Securities (including, without limitation,
equities, debt obligations, options, and
other "securities" as that term is
defined in Section 2(a)(36) of the ▇▇▇▇
▇▇▇) and any contracts for forward or
future delivery of any security, debt
obligation or currency, or commodity,
all types of derivative instruments and
financial instruments and any contracts
based on any index or group of
securities, debt obligations or
currencies, or commodities, and any
options thereon.
SUB-ADVISER Guidance Capital LLC, or any person who
may hereafter serve as an investment
sub-adviser to the Fund pursuant to a
Sub-Advisory Agreement.
SUB-ADVISORY AGREEMENT A separate written agreement entered
into by the Fund, the Adviser and the
Sub-Adviser pursuant to which the
Adviser delegates all or a portion of
its investment advisory obligations
under the Advisory Agreement to the
Sub-Adviser.
TRANSFER The assignment, transfer, sale,
encumbrance, pledge or other
4
disposition of all or any portion of an
Interest, including any right to receive
any allocations and distributions
attributable to an Interest.
ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS
2.1 Formation of Limited Liability Company
The Fund has been formed as a limited liability company at the direction
of the Initial Director who authorized the filing of the Articles, which
actions are hereby ratified by the execution of this Agreement. The Board of
Directors shall execute and file in accordance with the laws of the State of
Illinois any amendment to the Articles and shall execute and file with
applicable governmental authorities any other instruments, documents and
certificates that, in the opinion of the Fund's legal counsel, may from time
to time be required by the laws of the United States of America, the State of
Illinois or any other jurisdiction in which the Fund shall determine to do
business, or any political subdivision or agency thereof, or that such legal
counsel may deem necessary or appropriate to effectuate, implement and
continue the valid existence and business of the Fund.
2.2 Name
The name of the Fund shall be "ASA Market Neutral Equity Fund LLC" or
such other name as the Board of Directors may hereafter adopt upon (i) causing
an appropriate amendment to the Articles to be filed in accordance with the
laws of the State of Illinois and (ii) taking such other actions as may be
required by law.
2.3 Principal and Registered Office
The Fund shall have its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other place
designated from time to time by the Board of Directors.
The Fund shall have its registered office in Illinois at c/o CT
Corporation System, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇, and shall have CT Corporation System as its registered agent for
service of process in Illinois, unless and until a different registered office
or agent is designated by the Board of Directors.
2.4 Duration
The term of the Fund commenced on the filing of the Articles with the
Secretary of State of Illinois and shall continue until the Fund is dissolved
pursuant to Section 6.1 hereof.
2.5 Business of the Fund
(a) The business of the Fund is to purchase, sell (including short
sales), invest and trade in Securities, on margin or otherwise, and to
engage in any financial or derivative transactions relating thereto or
otherwise, and to engage in such activities and transactions as the Board
of Directors may deem necessary or advisable in connection therewith,
including:
(1) To engage in any other activities for which limited liability
companies may be organized under Illinois law;
5
(2) To enter into, make and perform all contracts and other
undertakings, and engage in all activities and transactions as
may be necessary or advisable to effectuate the foregoing
purpose, including without limitation:
(i) To purchase, transfer, pledge and otherwise acquire
and dispose of and exercise all rights, powers, privileges
and other incidents of ownership or possession with
respect to the assets of the Fund;
(ii) To acquire, purchase, hold and sell Securities,
increasing, decreasing or liquidating such positions in
such Securities without any limitation as to the frequency
or the fluctuation in such positions;
(iii) To borrow money, on a secured or unsecured basis,
from banks or brokers, and to secure the payment of any
obligations of the Fund by hypothecation or pledge of all
or part of the Fund's assets;
(iv) To open, maintain and close bank, brokerage and other
accounts with any broker-dealer and to effect transactions
through such accounts; and
(v) To take such actions as may be necessary or advisable
in connection with the foregoing, including the hiring of
personnel, the retention of investment advisers or
sub-advisers, agents, independent contractors, legal and
accounting counselors, and the preparation and filing of
all Fund tax returns.
(b) The Fund shall operate as a closed-end, non-diversified,
management investment company in accordance with the 1940 Act and subject
to such fundamental policies and investment restrictions as may be
adopted by the Board of Directors and in accordance with the 1940 Act.
2.6 Board of Directors
(a) Prior to the Closing Date, the Initial Director may designate
such persons who shall agree to be bound by all of the terms of this
Agreement to serve as Directors on the Board of Directors, subject to the
election of such persons prior to the Closing Date by the Organizational
Member. By signing this Agreement or signing an investor application or
certification in connection with the purchase of an Interest, a Member
admitted on the Closing Date shall be deemed to have voted for the
election of each of the Directors so designated. After the Closing Date,
the Board of Directors may, subject to the provisions of paragraphs (a)
and (b) of this Section 2.6 with respect to the number of and vacancies
in the position of Director and subject to the requirements of the 1940
Act with respect to the election of Directors by Members, designate any
person who shall agree to be bound by all of the terms of this Agreement
as a Director. The names and mailing addresses of the Directors shall be
set forth in the books and records of the Fund. The number of Directors
shall be fixed from time to time by the Board of Directors.
(b) Each Director shall serve on the Board of Directors for the
duration of the term of the Fund, unless his or her status as a Director
shall be sooner terminated pursuant to Section 4.1 hereof. In the event
of any vacancy in the position of Director, the remaining Directors may
appoint an individual to serve in such capacity, so long as immediately
after such appointment at
6
least two-thirds (2/3) of the Directors then serving would have been
elected by the Members. The Board of Directors may call a meeting of
Members to fill any vacancy in the position of Director, and shall do so
within 60 days after any date on which Directors who were elected by the
Members cease to constitute a majority of the Directors then serving on
the Board of Directors.
(c) In the event that no Director remains to continue the business
of the Fund, the Adviser shall promptly call a meeting of the Members, to
be held within 60 days after the date on which the last Director ceased
to act in that capacity, for the purpose of determining whether to
continue the business of the Fund and, if the business shall be
continued, of electing the required number of Directors to the Board of
Directors. If the Members shall determine at such meeting not to continue
the business of the Fund or if the required number of Directors is not
elected within 60 days after the date on which the last Director ceased
to act in that capacity, then the Fund shall be dissolved pursuant to
Section 6.1 hereof and the assets of the Fund shall be liquidated and
distributed pursuant to Section 6.2 hereof.
2.7 Members
The Fund may offer Interests for purchase by investors on the first day
of each calendar month or at such other times as may be determined from time
to time by the Board of Directors in such manner as may be determined by the
Board of Directors. All subscriptions for Interests are subject to the receipt
by the Fund or its custodian of cleared funds on or before the acceptance date
for such subscriptions in the full amount of the subscription. Subject to the
foregoing, a person may be admitted to the Fund as a Member subject to the
condition that such person shall execute an appropriate signature page of this
Agreement or an investor application or certification form pursuant to which
such Member agrees to be bound by all the terms and provisions of this
Agreement. No person shall be admitted as a Member unless the Board of
Directors reasonably believes, based on information furnished by such person,
that such person satisfies the suitability standards established by the Board
of Directors from time to time. The Board of Directors may in its sole
discretion reject any subscription for an Interest. The Board of Directors
may, in its sole discretion, suspend the offering of the Interests at any
time. The admission of any person as a Member shall be effective upon the
revision of the books and records of the Fund to reflect the name and the
contribution to the capital of the Fund of such additional Member. The
admission of new Members shall not require the unanimous consent of the
then-current Members of the Fund.
2.8 Organizational Member
The initial contribution of capital to the Fund by the Organizational
Member shall be represented by an Interest, which Interest shall have the same
rights as other Interests held by Members.
2.9 Both Directors and Members
A Member may at the same time be a Director and a Member in which event
such Member's rights and obligations in each capacity shall be determined
separately in accordance with the terms and provisions of this Agreement or as
provided by the laws of the State of Illinois.
2.10 Limited Liability
Except as provided under applicable law, a Member shall not be liable for
the Fund's debts, obligations and liabilities in any amount in excess of the
capital account balance of such Member, plus
7
such Member's share of undistributed profits and assets. Except as provided
under applicable law, a Director shall not be liable for the Fund's debts,
obligations and liabilities.
ARTICLE III
MANAGEMENT
3.1 Management and Control
(a) Management and control of the business of the Fund shall be vested in
the Board of Directors, which shall have the right, power and authority, on
behalf of the Fund and in its name, to exercise all rights, powers and
authority of Directors under the laws of the State of Illinois and to do all
things necessary and proper to carry out the objective and business of the
Fund and their duties hereunder. No Director shall have the authority
individually to act on behalf of or to bind the Fund except within the scope
of such Director's authority as delegated by the Board of Directors. The
parties hereto intend that, except to the extent otherwise expressly provided
herein, (i) each Director shall be vested with the same powers, authority and
responsibilities on behalf of the Fund as are customarily vested in each
director of an Illinois corporation and (ii) each Independent Director shall
be vested with the same powers, authority and responsibilities on behalf of
the Fund as are customarily vested in each director of a closed-end management
investment company registered under the 1940 Act that is organized as an
Illinois corporation who is not an "interested person," as such term is
defined by the 1940 Act, of such company. During any period in which the Fund
shall have no Directors, the Adviser shall have the authority to manage the
business and affairs of the Fund.
(b) The Board of Directors is hereby authorized and empowered to carry
out and implement any and all of the purposes of the Fund, including, without
limiting the generality of the foregoing:
(1) to engage personnel and to do such other acts and incur such other
expenses on behalf of the Fund in accordance with the terms of this
Agreement as the Board of Directors may deem necessary or advisable
in connection with the conduct of the Fund's affairs;
(2) to engage independent attorneys, accountants, investment advisers,
agents or such other persons as it may deem necessary or advisable;
(3) to receive, buy, sell, exchange and otherwise trade and deal in
Securities of the Fund;
(4) to open, conduct and close accounts, including margin and
discretionary accounts, with brokers, investment advisers, or other
persons and to pay the fees and charges for transactions in such
accounts;
(5) to open, maintain and close bank, brokerage and other depository
accounts;
(6) to execute, deliver and perform such other contracts, agreements and
such other undertakings as it may deem necessary or advisable for
the conduct of the business of the Fund; and
(7) to file, if advisable, various tax elections for the Fund.
8
(c) Members shall have no right to participate in and shall take no
part in the management or control of the Fund's business and shall have
no right, power or authority to act for or bind the Fund. Members shall
have the right to vote on any matters only as provided in this Agreement
or on any matters that require the approval of the holders of voting
securities under the 1940 Act or as otherwise required by the laws of the
State of Illinois.
(d) The Board of Directors shall devote to the Fund such of its
efforts as the Board of Directors shall deem necessary for the management
of the affairs of the Fund, it being understood that nothing hereto shall
require the Board of Directors to devote its full time to the business
and affairs of the Company. Nothing contained in this Agreement shall
preclude any of the Directors from acting as a director, stockholder,
officer or employee of any corporation, a trustee of a trust, a partner
of any partnership, a member of any other limited liability company or an
administrative official of any governmental entity, from receiving
compensation for services rendered in connection with the foregoing, from
acting as a principal or employee of any firm, corporation or person with
whom the Fund may contract for services or otherwise, or participating in
profits derived from investments in any such corporation, company, trust,
partnership or other governmental entity or from investing in any
securities or other property for his or her own account.
(e) The Board of Directors may delegate to any other person any
rights, power and authority vested by this Agreement in the Board of
Directors to the extent permissible under applicable law, and may appoint
persons to serve as officers of the Fund, with such titles and authority
as may be determined by the Board of Directors consistent with applicable
law.
3.2 Actions by the Board of Directors
(a) Unless provided otherwise in this Agreement, the Board of
Directors shall act only: (i) by the affirmative vote of a majority of
the Directors (including the vote of a majority of the Independent
Directors if required by the ▇▇▇▇ ▇▇▇) present at a meeting duly called
at which a quorum of the Directors shall be present (in person or, if in
person attendance is not required by the 1940 Act, by telephone) or (ii)
by unanimous written consent of all of the Directors without a meeting,
if permissible under the ▇▇▇▇ ▇▇▇.
(b) The Board of Directors may designate from time to time a
Principal Director who shall preside at all meetings of the Board of
Directors. Meetings of the Board of Directors may be called by the
Principal Director or by any two Directors, and may be held on such date
and at such time and place as the Board of Directors shall determine.
Each Director shall be entitled to receive written notice of the date,
time and place of such meeting within a reasonable time in advance of the
meeting. Except as otherwise required by the 1940 Act, notice need not be
given to any Director who shall attend a meeting without objecting to the
lack of notice or who shall execute a written waiver of notice with
respect to the meeting. Directors may attend and participate in any
meeting by telephone except where in-person attendance at a meeting is
required by the 1940 Act. A majority of the Directors shall constitute a
quorum at any meeting, except with respect to matters which require
unanimous consent under the laws of the State of Illinois.
3.3 Audit Committee
The Board of Directors shall establish an Audit Committee, which shall
have primary responsibility to (i) recommend to the Board of Directors the
appointment of the Fund's independent
9
auditors, (ii) meet separately with the independent auditors and review the
scope and anticipated costs of the audit, and (iii) receive and consider a
report from the independent auditors concerning the conduct of the audit. The
Audit Committee shall be comprised of the Independent Directors.
3.4 Officers
(a) The executive Officers of the Fund shall be a President, a
Treasurer and a Secretary. If the Board of Directors has designated a
Principal Director pursuant to Section 3.2(b) hereof, then the Principal
Director shall also be an executive Officer. The Board of Directors may
elect one or more Vice-Presidents, and each such Vice-President shall be
an executive Officer. The President shall be the chief executive officer
of the Fund. The Principal Director, if there be one, shall be elected
from among the persons serving as Directors, but no other Officer need be
a Director. The Board of Directors may also elect, or may delegate to the
President authority to appoint, remove, or fix the duties, compensation
or terms of office of, one or more other Officers as the Board of
Directors shall at any time and from time to time deem to be advisable.
Any two or more positions of Officer, except those of President and
Vice-President, may be held by the same person. A person holding more
than one office may not act in more than one capacity to execute,
acknowledge or verify on behalf of the Fund an instrument required by law
to be executed, acknowledged and verified by more than one Officer.
(b) The Officers shall be elected annually at a meeting of the Board
of Directors. Each Officer shall hold office until his successor is
elected or appointed or until his earlier displacement from office by
resignation, removal or otherwise; provided, that if the term of office
of any Officer shall have been fixed by the Board of Directors, or by the
President acting under authority delegated by the Board of Directors,
such Officer shall cease to hold such office no later than the date of
expiration of such term, regardless of whether any other person shall
have been elected or appointed to succeed him. Any Officer may resign at
any time by written notice to the Fund. Any Officer may be removed at any
time by the Board of Directors or by the President acting under authority
delegated by the Board of Directors if in its or his judgment the best
interest of the Fund would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an Officer shall not of itself create
contract rights between the Fund and such Officer.
(c) If the office of any Officer becomes vacant for any reason, the
vacancy may be filled by the Board of Directors or by the President
acting under authority delegated by the Board of Directors. Each Officer
elected or appointed to fill a vacancy shall hold office for the balance
of the term for which his predecessor was elected or appointed.
(d) All Officers as between themselves and the Fund shall have such
powers, perform such duties and be subject to such restrictions, if any,
in the management of the Fund as may be provided in this Agreement or, to
the extent not so provided, as may be prescribed by the Board of
Directors or by the President acting under authority delegated by the
Board of Directors.
3.5 Meetings of Members
(a) Actions requiring the vote of the Members may be taken at any
duly constituted meeting of the Members at which a quorum is present.
Meetings of the Members may be called by the Board of Directors or by
Members holding 25% or more of the total number of votes eligible to be
cast by all Members, and may be held at such time, date and place as the
Board of Directors shall determine. The Board of Directors shall arrange
to provide written notice of the
10
meeting, stating the date, time and place of the meeting and the record
date therefor, to each Member entitled to vote at the meeting within a
reasonable time prior thereto. Failure to receive notice of a meeting on
the part of any Member shall not affect the validity of any act or
proceeding of the meeting, so long as a quorum shall be present at the
meeting, except as otherwise required by applicable law. Only matters set
forth in the notice of a meeting, and matters incidental thereto, may be
voted on by the Members at a meeting. The presence in person or by proxy
of Members holding a majority of the total number of votes eligible to be
cast by all Members as of the record date shall constitute a quorum at
any meeting. In the absence of a quorum, a meeting of the Members may be
adjourned by action of a majority of the Members present in person or by
proxy without additional notice to the Members. Except as otherwise
required by any provision of this Agreement or of the 1940 Act, (i) those
candidates receiving a plurality of the votes cast at any meeting of
Members shall be elected as Directors and (ii) all other actions of the
Members taken at a meeting shall require the affirmative vote of Members
holding a majority of the total number of votes at such meeting.
(b) Each Member shall be entitled to cast at any meeting of Members
a number of votes equivalent to such Member's Investment Percentage as of
the record date for such meeting. The Board of Directors shall establish
a record date not less than 10 days nor more than 60 days prior to the
date of any meeting of Members to determine eligibility to vote at such
meeting and the number of votes that each Member will be entitled to cast
at the meeting, and shall maintain for each such record date a list
setting forth the name of each Member and the number of votes that each
Member will be entitled to cast at the meeting.
(c) A Member may vote at any meeting of Members by a proxy properly
executed in writing by the Member and filed with the Fund before or at
the time of the meeting. A proxy may be suspended or revoked, as the case
may be, by the Member executing the proxy by a later writing delivered to
the Fund at any time prior to exercise of the proxy or if the Member
executing the proxy shall be present at the meeting and decide to vote in
person. Any action of the Members that is permitted to be taken at a
meeting of the Members may be taken without a meeting if consents in
writing, setting forth the action taken, are signed by Members holding a
majority of the total number of votes eligible to be cast or such greater
percentage as may be required in order to approve such action.
3.6 Custody of Assets of the Fund
The physical possession of all funds, Securities and other properties of
the Fund shall at all times, be held, controlled and administered by one or
more custodians retained by the Fund in accordance with the requirements of
the 1940 Act and the rules thereunder.
3.7 Other Activities of Members and Directors
(a) The Directors shall not be required to devote all of their time
to the affairs of the Fund, but shall devote such time as may reasonably
be required to perform their obligations under this Agreement.
(b) Any Member or Director, and any Affiliate of any Member or
Director, may engage in or possess an interest in other business ventures
or commercial dealings of every kind and description, independently or
with others, including, but not limited to, acquisition and disposition
of Securities, provision of investment advisory or brokerage services,
serving as directors, officers, employees, advisors or agents of other
companies, partners of any partnership,
11
members of any limited liability company, or trustees of any trust, or
entering into any other commercial arrangements. No Member or Director
shall have any rights in or to such activities of any other Member or
Director, or any profits derived therefrom.
3.8 Duty of Care
(a) None of the Directors, the Adviser or any Sub-Adviser shall be
liable for the return or payment of all or any portion of the capital or
profits allocable to any Member, it being expressly agreed that any
return of capital or payment of profits made pursuant to this Agreement
shall be made solely from the assets of the Fund (which shall not include
any right of contribution from any Director, the Adviser or any
Sub-Adviser).
(b) None of the Directors, the Adviser or any Sub-Adviser shall be
liable to the Fund, any Member or any former Member for: (i) any act
performed, or the omission to perform any act, within the scope of the
power and authority conferred on the relevant party by this Agreement
and/or under the laws of the State of Illinois, except by reason of acts
or omissions of the relevant party finally determined by a court or
tribunal having proper jurisdiction to constitute fraud, bad faith, gross
negligence or reckless or intentional misconduct; (ii) the termination of
the Fund and this Agreement pursuant to the terms hereof; (iii) the
performance by a Director, the Adviser or any Sub-Adviser of, or the
omission by any of them to perform, any act which such party reasonably
believed to be consistent with the advice of attorneys, accountants or
other professional advisers to the Fund or to such party with respect to
matters relating to the Fund; (iv) the conduct of any person selected or
engaged by such party other than in bad faith; or (v) any tax imposed on
the Fund or the Members in any jurisdiction, or any costs incurred in
respect of a tax audit or similar procedure.
(c) Members not in breach of any obligation hereunder or under any
agreement pursuant to which the Member subscribed for an Interest shall
be liable to the Fund, any Member or third parties only as provided under
the laws of the State of Illinois.
3.9 Indemnification
(a) To the fullest extent permitted by law, the Fund shall, subject
to Section 3.9(b) hereof, indemnify each Director (including for this
purpose his or her respective executors, heirs, assigns, successors or
other legal representatives), against all losses, claims, damages,
liabilities, costs and expenses, including, but not limited to, amounts
paid in satisfaction of judgments, in compromise, or as fines or
penalties, and reasonable counsel fees, incurred in connection with the
defense or disposition of any action, suit, investigation or other
proceeding, whether civil or criminal, before any judicial, arbitral,
administrative or legislative body, in which such indemnitee may be or
may have been involved as a party or otherwise, or with which such
indemnitee may be or may have been threatened, while in office or
thereafter, by reason of being or having been a Director of the Fund or
the past or present performance of services to the Fund by such
indemnitee, except to the extent such loss, claim, damage, liability,
cost or expense shall have been finally determined in a decision on the
merits in any such action, suit, investigation or other proceeding to
have been incurred or suffered by such indemnitee by reason of fraud, bad
faith, gross negligence or reckless or intentional misconduct involved in
the conduct of such indemnitee's office. The rights of indemnification
provided under this Section 3.9 shall not be construed so as to provide
for indemnification of a Director for any liability (including liability
under federal securities laws which, under certain circumstances, impose
liability even on persons that act in good faith) to the extent (but only
to the extent) that such indemnification would be in
12
violation of applicable law, but shall be construed so as to effectuate
the applicable provisions of this Section 3.9 to the fullest extent
permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred by any
such indemnitee (but excluding amounts paid in satisfaction of judgments,
in compromise, or as fines or penalties), may be paid from time to time
by the Fund in advance of the final disposition of any such action, suit,
investigation or proceeding upon receipt of an undertaking by or on
behalf of such indemnitee to repay to the Fund amounts so paid if it
shall ultimately be determined that indemnification of such expenses is
not authorized under Section 3.9(a) hereof; provided, however, that (i)
such indemnitee shall provide security for such undertaking, (ii) the
Fund shall be insured by or on behalf of such indemnitee against losses
arising by reason of such indemnitee's failure to fulfill such
undertaking, or (iii) a majority of the Directors (excluding any Director
who is either seeking advancement of expenses hereunder or is or has been
a party to any other action, suit, investigation or proceeding involving
claims similar to those involved in the action, suit, investigation or
proceeding giving rise to a claim for advancement of expenses hereunder)
or independent legal counsel in a written opinion shall determine based
on a review of readily available facts (as opposed to a full trial-type
inquiry) that there is reason to believe such indemnitee ultimately will
be entitled to indemnification.
(c) As to the disposition of any action, suit, investigation or
proceeding (whether by a compromise payment, pursuant to a consent decree
or otherwise) without an adjudication or a decision on the merits by a
court, or by any other body before which the proceeding shall have been
brought, that an indemnitee is liable to the Fund or its Members by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of such indemnitee's
office, indemnification shall be provided pursuant to Section 3.9(a)
hereof if (i) approved as being in the best interests of the Fund by a
majority of the Directors (excluding any Director who is either seeking
indemnification hereunder or is or has been a party to any other action,
suit, investigation or proceeding involving claims similar to those
involved in the action, suit, investigation or proceeding giving rise to
a claim for indemnification hereunder) upon a determination based upon a
review of readily available facts (as opposed to a full trial-type
inquiry) that such indemnitee acted in good faith and in the reasonable
belief that such actions were in the best interests of the Fund and that
such indemnitee is not liable to the Fund or its Members by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard
of the duties involved in the conduct of such indemnitee's office, or
(ii) the Board of Directors secures a written opinion of independent
legal counsel based upon a review of readily available facts (as opposed
to a full trial-type inquiry) to the effect that such indemnification
would not protect such indemnitee against any liability to the Fund or
its Members to which such indemnitee would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of such indemnitee's
office.
(d) Any indemnification or advancement of expenses made pursuant to
this Section 3.9 shall not prevent the recovery from any indemnitee of
any such amount if such indemnitee subsequently shall be determined in a
decision on the merits in any action, suit, investigation or proceeding
involving the liability or expense that gave rise to such indemnification
or advancement of expenses to be liable to the Fund or its Members by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of such indemnitee's
office. In (i) any suit brought by a Director (or other person entitled
to indemnification hereunder) to enforce a right to indemnification under
this Section 3.9 it shall be a defense that, and (ii) in any suit in the
name of the Fund to recover any indemnification or
13
advancement of expenses made pursuant to this Section 3.9 the Fund shall
be entitled to recover such expenses upon a final adjudication that, the
Director or other person claiming a right to indemnification under this
Section 3.9 has not met the applicable standard of conduct set forth in
this Section 3.9. In any such suit brought to enforce a right to
indemnification or to recover any indemnification or advancement of
expenses made pursuant to this Section 3.9, the burden of proving that
the Director or other person claiming a right to indemnification is not
entitled to be indemnified, or to any indemnification or advancement of
expenses, under this Section 3.9 shall be on the Fund (or any Member
acting derivatively or otherwise on behalf of the Fund or its Members).
(e) An indemnitee may not satisfy any right of indemnification or
advancement of expenses granted in this Section 3.9 or to which such
indemnitee may otherwise be entitled except out of the assets of the
Fund, and no Member shall be personally liable with respect to any such
claim for indemnification or advancement of expenses.
(f) The rights of indemnification provided hereunder shall not be
exclusive of or affect any other rights to which any person may be
entitled by contract or otherwise under law. Nothing contained in this
Section 3.9 shall affect the power of the Fund to purchase and maintain
liability insurance on behalf of any Director or other person.
3.10 Fees, Expenses and Reimbursement
(a) The Adviser and its Affiliates shall be entitled to receive such
fees for services provided to the Fund as may be agreed to by the Adviser
(or its Affiliate) and the Fund pursuant to the Investment Management
Agreement or other applicable agreement relating to such services.
(b) The Board of Directors may cause the Fund to compensate each
Director who is not an officer or employee of the Adviser (or of any
Affiliate of the Adviser) for his or her services as such, and such
Director shall be reimbursed by the Fund for reasonable travel and
out-of-pocket expenses incurred by him in performing his duties under
this Agreement.
(c) The Fund shall bear all costs and expenses incurred in its
business and operations, other than those specifically required to be
borne by the Adviser pursuant to the Investment Management Agreement.
Costs and expenses to be borne by the Fund include, but are not limited
to, the following:
(1) all costs and expenses directly related to investment
transactions and positions for the Fund's account, including,
but not limited to, brokerage commissions, research fees,
interest and commitment fees on loans and debit balances,
borrowing charges on securities sold short, dividends on
securities sold but not yet purchased, custodial fees, margin
fees, transfer taxes and premiums, taxes withheld on foreign
dividends and indirect expenses from investments in Investment
Funds;
(2) all costs and expenses associated with the operation and
registration of the Fund, offering costs and the costs of
compliance with applicable Federal and state laws;
(3) all costs and expenses associated with the organization and
operation of any separate account or separate investment
vehicle established by the Fund and managed by Portfolio
Managers retained by the Fund;
14
(4) the costs and expenses of holding meetings of the Board and any
meetings of Members, including reasonable travel and
out-of-pocket expenses of the Directors and costs associated
with the preparation and dissemination of proxy materials;
(5) the fees and disbursements of Fund counsel, any legal counsel
retained to represent the Independent Directors, independent
accountants for the Fund and other consultants and
professionals engaged on behalf of the Fund;
(6) the management fee payable to the Adviser pursuant to the
Investment Management Agreement;
(7) the investor servicing fee payable to the placement agent of
the Fund to reimburse it for payments made to brokers, dealers
and certain financial institutions that have agreed to provide
ongoing investor services and account maintenance services to
investors in the Fund that are their customers;
(8) the fees payable to custodians and other persons providing
administrative services to the Fund;
(9) the costs of a fidelity bond and any liability insurance
obtained on behalf of the Fund or the Board;
(10) all costs and expenses of preparing, setting in type, printing
and distributing reports and other communications to Members;
and
(11) such other types of expenses as may be approved from time to
time by the Board of Directors,
provided, however, that any costs and expenses related directly
to the organization and offering of the Fund shall be borne by the Adviser in
accordance with the terms of the Investment Management Agreement.
(d) Subject to such limitations as may be imposed by the 1940 Act or
other applicable laws, from time to time the Fund may, alone or in
conjunction with the Adviser, any Affiliate of the Adviser or other
registered or unregistered investment funds or other accounts for which
the Adviser or any Affiliate of the Adviser acts as general partner or
investment adviser, purchase insurance in such amounts, from such
insurers and on such terms as the Board of Directors shall determine.
ARTICLE IV
TERMINATION OF STATUS OF THE DIRECTORS,
TRANSFERS AND REPURCHASES
4.1 Termination of Status of a Director
The status of a Director shall terminate if the Director (i) shall die;
(ii) shall be adjudicated incompetent; (iii) shall voluntarily withdraw as a
Director; (iv) shall be removed; (v) shall be certified by a physician to be
mentally or physically unable to perform his or her duties hereunder; (vi)
shall be declared bankrupt by a court with appropriate jurisdiction, file a
petition commencing a voluntary case under any bankruptcy law or make an
assignment for the benefit of creditors; (vii) shall have a receiver
15
appointed to administer the property or affairs of such Director; or (viii)
shall otherwise cease to be a Director of the Fund under the laws of the State
of Illinois.
4.2 Removal of the Directors
Any Director may be removed either by (i) the vote or written consent of
at least two-thirds (2/3) of the Directors not subject to the removal vote or
(ii) the vote or written consent of Members holding not less than two-thirds
(2/3) of the total number of votes eligible to be cast by all Members.
4.3 Transfer of Interests of Members
(a) An Interest of a Member may be Transferred only (i) by operation
of law pursuant to the death, divorce, bankruptcy, insolvency,
dissolution or adjudication of incompetency of such Member or (ii) with
the written consent of the Board of Directors (which may be withheld in
its sole discretion); provided, however, that the Board of Directors may
not consent to any Transfer other than a Transfer (i) in which the tax
basis of the Interest in the hands of the transferee is determined, in
whole or in part, by reference to its tax basis in the hands of the
transferor (e.g., certain Transfers to affiliates, gifts and
contributions to family partnerships), (ii) to members of the Member's
immediate family (brothers, sisters, spouse, parents and children), (iii)
as a distribution from a qualified retirement plan or an individual
retirement account, or (iv) a Transfer to which the Board of Directors
may consent pursuant to the following sentence. The Board of Directors
may consent to other pledges, transfers, or assignments under such other
circumstances and conditions as it, in its sole discretion, deems
appropriate; PROVIDED, HOWEVER, that prior to any such pledge, transfer,
or assignment, the Board of Directors shall consult with counsel to the
Fund to ensure that such pledge, transfer, or assignment will not cause
the Fund to be treated as a "publicly traded partnership" taxable as a
corporation. In no event, however, will any transferee or assignee be
admitted as a Member without the consent of the Board of Directors which
may be withheld in its sole discretion. Any pledge, transfer, or
assignment not made in accordance with this Section 4.3 shall be void.
(b) The Board of Directors may not consent to a Transfer of an
Interest or a portion thereof of a Member unless: (i) the person to whom
the Interest is Transferred (or each of the person's beneficial owners if
such a person is a "private investment company" as defined in paragraph
(d)(3) of Rule 205-3 under the Advisers Act) is a person whom the Board
of Directors believes is an "Accredited Investor" as that term is defined
at Rule 501 of Regulation D of the Securities Act of 1933; and (ii) the
entire Interest of the Member is Transferred to a single transferee or,
after the Transfer of a portion of an Interest, the balance of the
Capital Account of each of the transferee and transferor is not less than
$5,000, or such lesser amount as may be established by the Board of
Directors. Any transferee that acquires an Interest by operation of law
as the result of the death, divorce, bankruptcy, insolvency, dissolution
or adjudication of incompetency of a Member or otherwise, shall be
entitled to the allocations and distributions allocable to the Interest
so acquired and to Transfer such Interest in accordance with the terms of
this Agreement, but shall not be entitled to the other rights of a Member
unless and until such transferee becomes a substituted Member. If a
Member transfers an Interest with the approval of the Board of Directors,
the Board of Directors shall promptly take all necessary actions so that
the transferee to whom such Interest is transferred is admitted to the
Fund as a Member. Each Member effecting a Transfer and its transferee
agree to pay all expenses, including attorneys' and accountants' fees,
incurred by the Fund in connection with such Transfer.
16
(c) Each Member shall indemnify and hold harmless the Fund, the
Directors, the Adviser, each other Member and any Affiliate of the
foregoing against all losses, claims, damages, liabilities, costs and
expenses (including legal or other expenses incurred in investigating or
defending against any such losses, claims, damages, liabilities, costs
and expenses or any judgments, fines and amounts paid in settlement),
joint or several, to which such persons may become subject by reason of
or arising from (i) any Transfer made by such Member in violation of this
Section 4.3 and (ii) any misrepresentation by such Member in connection
with any such Transfer.
4.4 Repurchase of Interests
(a) Except as otherwise provided in this Agreement, no Member or
other person holding an Interest or portion thereof shall have the right
to withdraw or tender to the Fund for repurchase that Interest or portion
thereof. The Board of Directors from time to time, in its sole discretion
and on such terms and conditions as it may determine, may cause the Fund
to repurchase Interests or portions thereof pursuant to written tenders.
However, the Fund shall not offer to repurchase Interests on more than
two occasions during any one Fiscal Year unless it has received an
opinion of counsel to the effect that such more frequent offers would not
cause any adverse tax consequences to the Fund or the Members. In
determining whether to cause the Fund to repurchase Interests or portions
thereof pursuant to written tenders, the Board of Directors shall
consider, among other things, the recommendation of the Adviser. The
Board of Directors shall cause the Fund to repurchase Interests or
portions thereof pursuant to written tenders only on terms determined by
the Board of Directors to be fair to the Fund and to all Members
(including persons holding Interests acquired from Members), as
applicable.
(b) A Member who tenders for repurchase only a portion of the
Member's Interest will be required to maintain a capital account balance
equal to $5,000, or such lesser amount as may be established by the Board
of Directors. If a Member tenders an amount that would cause the Member's
capital account balance to fall below the required minimum, the Fund
reserves the right to reduce the amount to be purchased from the Member
so that the required minimum balance is maintained or to cause the Fund
to repurchase all of the Interests held by such Member.
(c) The Adviser and any Affiliate of the Adviser may tender any
Interest or a portion thereof that it holds as a Member under Section
4.4(a) hereof.
(d) The Board of Directors may, in its discretion, cause the Fund to
repurchase an Interest or portion thereof of a Member or any person
acquiring an Interest or portion thereof from or through a Member in the
event that the Board of Directors determines or has reason to believe
that:
(1) such an Interest or portion thereof has been transferred in
violation of Section 4.3 hereof, or such an Interest or portion
thereof has vested in any person by operation of law as the
result of the death, divorce, bankruptcy, insolvency,
dissolution or adjudication of incompetency of a Member;
(2) ownership of such an Interest by a Member or other person will
cause the Fund, the Adviser or any person retained as a
Sub-Adviser to the Fund to be in violation of, or subject the
Fund to additional registration or regulation under, the
securities, commodities or other laws, of the United States or
any other relevant jurisdiction;
17
(3) such Member's continued participation in the Fund may cause the
Fund to be classified as a "publicly traded partnership" within
the meaning of Section 7704 of the Code and the Treasury
Regulations thereunder;
(4) such Member's capital account balance, as a result of transfers
or repurchases of Interests, is less than $5,000;
(5) any of the representations and warranties made by a Member in
connection with the acquisition of an Interest or portion
thereof was not true when made or has ceased to be true; or
(6) it would be in the best interests of the Company, as determined
by the Board of Directors in its sole discretion, for the
Company to repurchase such an Interest or portion thereof.
(e) Repurchases of Interests or portions thereof by the Fund shall
be payable promptly after the date of each such repurchase or, in the
case of an offer by the Fund to repurchase Interests, promptly after the
expiration date of such repurchase offer in accordance with the terms of
such offer. Payment of the purchase price for an Interest (or portion
thereof) shall consist of: (i) cash or a promissory note, which need not
bear interest, in an amount equal to such percentage, as may be
determined by the Board of Directors, of the estimated unaudited net
asset value of the Interest (or portion thereof) repurchased by the Fund
determined as of the date of such repurchase (the "Initial Payment");
and, if determined to be appropriate by the Board of Directors or if the
Initial Payment is less than 100% of the estimated unaudited net asset
value, (ii) a promissory note entitling the holder thereof to a
contingent payment equal to the excess, if any, of (x) the net asset
value of the Interest (or portion thereof) repurchased by the Fund as of
the date of such repurchase, determined based on the audited financial
statements of the Fund for the Fiscal Year in which such repurchase was
effective, over (y) the Initial Payment. Notwithstanding anything in the
foregoing to the contrary, the Board of Directors, in its discretion, may
pay any portion of the repurchase price in Securities (or any combination
of Securities and cash) having a value, determined as of the date of
repurchase, equal to the amount to be repurchased; provided that the
Board of Directors, in its discretion, may make payment of the purchase
price for an Interest by in-kind distribution of Securities held by the
Fund. The purchase price of an Interest will be determined approximately
one month after the date a Member submits a request for repurchase (the
"Valuation Date"), and the Fund will endeavor to pay such purchase price
approximately one month after the applicable Valuation Date.
(f) Subject to the approval of the Board of Directors and compliance
with the 1940 Act, the Fund may impose a fee or charge in connection with
repurchases of Interests, including a fee or charge applicable to
repurchases of Interests (or portions thereof) effected prior to the
expiration of a specified period subsequent to a Member's admission to
the Fund.
(g) A Member may at any time submit to the Fund a written request
that the Fund repurchase the entire Interest of such Member, as
contemplated by Section 6.1(4) hereof. Any such request shall be sent to
the Fund by registered or certified mail, return receipt requested, and
shall be deemed valid upon receipt by the Member of a letter from the
Fund acknowledging its receipt of the request. The Fund shall send such
letter to the Member promptly upon its receipt of the Member's request.
18
ARTICLE V
CAPITAL
5.1 Contributions to Capital
(a) The minimum initial contribution of each Member to the capital
of the Fund shall be such amount as the Board of Directors, in its
discretion, may determine from time to time. The amount of the initial
contribution of each Member shall be recorded on the books and records of
the Fund upon acceptance as a contribution to the capital of the Fund.
The Directors shall not be entitled to make contributions of capital to
the Fund as Directors of the Fund, but may make contributions to the
capital of the Fund as Members. The Adviser may make contributions to the
capital of the Fund as a Member.
(b) Members may make additional contributions to the capital of the
Fund effective as of such times as the Board of Directors, in its
discretion, may permit, subject to Section 2.7 hereof, but no Member
shall be obligated to make any additional contribution to the capital of
the Fund except to the extent provided in Section 5.6 hereof. The minimum
additional capital contribution of a Member to the capital of the Fund
shall be such amount as the Board of Directors, in its sole discretion,
may determine from time to time.
(c) Initial and any additional contributions to the capital of the
Fund by any Member shall be payable in cash or readily available funds on
or before the date of the proposed contribution.
5.2 Rights of Members to Capital
No Member shall be entitled to interest on any contribution to the
capital of the Fund, nor shall any Member be entitled to the return of any
capital of the Fund except (i) upon the repurchase by the Fund of a part or
all of such Member's Interest pursuant to Section 4.4 hereof, (ii) pursuant to
the provisions of Section 5.6(c) hereof or (iii) upon the liquidation of the
Fund's assets pursuant to Section 6.2 hereof. No Member shall be liable for
the return of any such amounts. No Member shall have the right to require
partition of the Fund's property or to compel any sale or appraisal of the
Fund's assets.
5.3 Capital Accounts
(a) The Fund shall establish a separate Capital Account for each
Member.
(b) Each Member's Capital Account shall have an initial balance
equal to the amount of such Member's initial contribution to the capital
of the Fund.
(c) Each Member's Capital Account shall be increased by the sum of
(i) the amount of additional contributions by such Member to the capital
of the Fund permitted pursuant to Section 5.1 hereof, plus (ii) all
amounts credited to such Member's Capital Account pursuant to Sections
5.4 through 5.6 hereof, and such Member's Investment Percentage shall be
correspondingly increased.
(d) Each Member's Capital Account shall be reduced by the sum of (i)
the amount of any repurchase of the Interest, or portion thereof, of such
Member or distributions to such Member pursuant to Sections 4.4, 5.9 or
6.2 hereof which are not reinvested (net of any liabilities secured by
any asset distributed that such Member is deemed to assume or take
under Section
19
752 of the Code), plus (ii) any amounts debited against such Capital
Account pursuant to Sections 5.4 through 5.7 hereof, and such Member's
Investment Percentage shall be correspondingly decreased.
(e) Each Member's Capital Account shall be adjusted at the close of
business on the last day of each Fiscal Period.
5.4 Allocation of Net Profit and Net Loss; Allocation of Offering Costs.
As of the last day of each Fiscal Period, any Net Profit or Net Loss for
the Fiscal Period, and any offering costs required by applicable accounting
principles to be charged to capital that are paid or accrued during the Fiscal
Period, shall be allocated among and credited to or debited against the
Capital Accounts of the Members in accordance with their respective Investment
Percentages for such Fiscal Period.
5.5 Allocation of Certain Expenditures
Except as otherwise provided for in this Agreement and unless prohibited
by the 1940 Act, any expenditures payable by the Fund, to the extent
determined by the Board of Directors to have been paid or withheld on behalf
of, or by reason of particular circumstances applicable to, one or more but
fewer than all of the Members, shall be charged to only those Members on whose
behalf such payments are made or whose particular circumstances gave rise to
such payments. Such charges shall be debited from the Capital Accounts of such
Members as of the close of the Fiscal Period during which any such items were
paid or accrued by the Fund.
5.6 Reserves
(a) The Board of Directors may, in consultation with the Adviser or
on its own initiative, establish appropriate reserves ("Reserves") which
shall be accrued and charged against Net Assets and proportionately
against the Capital Accounts of the Members for contingent liabilities,
if any, as of the date any such contingent liability becomes known to the
Adviser or the Board of Directors, such reserves to be in the amounts
that the Board of Directors, in its sole discretion, deems necessary or
appropriate. The Board of Directors may increase or reduce any such
reserves from time to time by such amounts as the Board of Directors, in
its sole discretion, deems necessary or appropriate. The amount of any
such reserve, or any increase or decrease therein, may be proportionately
charged or credited, as applicable, to the Capital Accounts of those
parties who are Members at the time when such reserve is created,
increased or decreased, as the case may be; provided that if any such
individual reserve item, adjusted by any increase therein, exceed the
lesser of $500,000 or 1% of the aggregate value of the Capital Accounts
of all such Members, the amount of such reserve, increase or decrease
shall instead be charged or credited to those persons who were Members at
the time, as determined by the Board of Directors in its sole discretion,
of the act or omission giving rise to the contingent liability for which
the reserve was established, increased or decreased (in proportion to
their Capital Accounts at that time).
(b) To the extent permitted under applicable law, if at any time an
amount is paid or received by the Fund (other than contributions to the
capital of the Fund, distributions or repurchases of Interests or
portions thereof) and such amount exceeds the lesser of $500,000 or 1% of
the aggregate value of the Capital Accounts of all Members at the time of
payment or receipt, and such amount was not accrued or reserved for but
would
20
nevertheless, in accordance with the Fund's accounting principles, be
treated as applicable to one or more prior Fiscal Periods, then such
amount shall be proportionately charged or credited, as appropriate, to
those persons who were Members during such prior Fiscal Period or
Periods.
(c) To the extent permitted under applicable law or if the Board of
Directors so determines, if any amount is required by paragraph (a) or
(b) of this Section 5.6 to be charged or credited to a person who is no
longer a Member, such amount shall be paid by or to such person, as the
case may be, in cash, with interest from the date on which the Board of
Directors determines that such charge or credit is required. In the case
of a charge, the former Member shall be obligated to pay the amount of
the charge, plus interest as provided above, to the Fund on demand;
provided, however, that (i) in no event shall a former Member be
obligated to make a payment exceeding the amount of such Member's Capital
Account at the time to which the charge relates; and (ii) no such demand
shall be made after the expiration of three years since the date on which
such person ceased to be a Member. To the extent that a former Member
fails to pay to the Fund, in full, any amount required to be charged to
such former Member pursuant to paragraph (a) or (b), whether due to the
expiration of the applicable limitation period or for any other reason
whatsoever, the deficiency shall be charged proportionately to the
Capital Accounts of the Members at the time of the act or omission giving
rise to the charge to the extent feasible, and otherwise proportionately
to the Capital Accounts of the current Members.
5.7 Tax Allocations
For each fiscal year, items of income, deduction, gain, loss or credit
shall be allocated for income tax purposes among the Members in such manner as
to reflect equitably amounts credited or debited to each Member's Capital
Account for the current and prior fiscal years (or relevant portions thereof).
Allocations under this Section 5.8 shall be made pursuant to the principles of
Sections 704(b) and 704(c) of the Code, and in conformity with Regulations
Sections 1.704-1(b)(2)(iv)(f) and (g), 1.704-1(b)(4)(i) and 1.704-3(e)
promulgated thereunder, as applicable, or the successor provisions to such
Section and Regulations. Notwithstanding anything to the contrary in this
Agreement, there shall be allocated to the Members such gains or income as
shall be necessary to satisfy the "qualified income offset" requirement of
Treasury Regulation ss. 1.704-1(b)(2)(ii)(d). Notwithstanding anything to the
contrary in this Agreement, the Board of Directors may, in its discretion,
make a special allocation of an amount of the Fund's capital gains (including
short-term capital gains) for Federal income tax purposes to a Member
withdrawing its Interest in the Fund, to the extent that the Capital Account
balance of such withdrawing Member exceeds the Federal income tax basis in its
interest.
If the Fund realizes capital gains (including short-term capital
gains) for Federal income tax purposes ("gains") for any fiscal year during or
as of the end of which the Interests of one or more Positive Basis Members (as
hereinafter defined) are repurchased by the Fund pursuant to Article IV, the
Board of Directors, unless otherwise determined by the Board of Directors, in
its sole discretion, shall allocate such gains as follows: (i) to allocate
such gains among such Positive Basis Members, pro rata in proportion to the
respective Positive Basis (as hereinafter defined) of each such Positive Basis
Member, until either the full amount of such gains shall have been so
allocated or the Positive Basis of each such Positive Basis Member shall have
been eliminated and (ii) to allocate any gains not so allocated to Positive
Basis Members to the other Members in such manner as shall equitably reflect
the amounts allocated to such Members' Capital Accounts pursuant to Section
5.4.
If the Fund realizes capital losses (including long-term capital
losses) for Federal income tax purposes ("losses") for any fiscal year during
or as of the end of which the Interests of one or more
21
Negative Basis Members (as hereinafter defined) are repurchased by the Fund
pursuant to Article IV, the Board of Directors, unless otherwise determined by
the Board of Directors, in its sole discretion, shall allocate such losses as
follows: (i) to allocate such losses among such Negative Basis Members, pro
rata in proportion to the respective Negative Basis (as hereinafter defined)
of each such Negative Basis Member, until either the full amount of such
losses shall have been so allocated or the Negative Basis of each such
Negative Basis Member shall have been eliminated and (ii) to allocate any
losses not so allocated to Negative Basis Members to the other Members in such
manner as shall equitably reflect the amounts allocated to such Members'
Capital Accounts pursuant to Section 5.4.
As used herein, (i) the term "Positive Basis" shall mean, with respect to
any Member and as of any time of calculation, the amount by which its Interest
as of such time exceeds its "adjusted tax basis," for Federal income tax
purposes, in its Interest as of such time (determined without regard to any
adjustments made to such "adjusted tax basis" by reason of any transfer or
assignment of such Interest, including by reason of death, and without regard
to such Member's share of the liabilities of the Fund under Section 752 of the
Code), and (ii) the term "Positive Basis Member" shall mean any Member whose
Interest is repurchased by the Fund and who has Positive Basis as of the
effective date of the repurchase, but such Member shall cease to be a Positive
Basis Member at such time as it shall have received allocations pursuant to
clause (i) of the second paragraph of this Section 5.8 equal to its Positive
Basis as of the effective date of such repurchase.
As used herein, (i) the term "Negative Basis" shall mean, with respect to
any Member and as of any time of calculation, the amount by which its Interest
as of such time is less than its "adjusted tax basis," for Federal income tax
purposes, in its Interest as of such time (determined without regard to any
adjustments made to such "adjusted tax basis" by reason of any transfer or
assignment of such Interest, including by reason of death, and without regard
to such Member's share of the liabilities of the Fund under Section 752 of the
Code), and (ii) the term "Negative Basis Member" shall mean any Member whose
Interest is repurchased by the Fund and who has Negative Basis as of the
effective date of such repurchase, but such Member shall cease to be a
Negative Basis Member at such time as it shall have received allocations
pursuant to clause (i) of the third paragraph of this Section 5.8 equal to its
Negative Basis as of the effective date of such repurchase.
5.8 Distributions
The Board of Directors, in its sole discretion, may authorize the Fund to
make distributions in cash or in kind at any time to all of the Members on a
pro rata basis in accordance with the Members' Investment Percentages.
5.9 Allocation of Organizational Expenses
(a) As of the first Expense Allocation Date, Organization Expenses
shall be allocated among and debited against the Capital Accounts of the
Members in accordance with their respective Investment Percentages on
such Expense Allocation Date.
(b) As of the Expense Allocation Date following the first Expense
Allocation Date, all amounts previously debited against the Capital
Account of a Member pursuant to this Section 5.9 on the preceding Expense
Allocation Date will be credited to the Capital Account of such Member,
and Organization Expenses shall then be reallocated among and debited
against the Capital Accounts of all Members in accordance with their
respective Investment Percentages.
22
5.10 Withholding
(a) The Board of Directors may withhold and pay over to the Internal
Revenue Service (or any other relevant taxing authority) taxes from any
distribution to any Member to the extent required by the Code or any
other applicable law.
(b) For purposes of this Agreement, any taxes so withheld by the
Fund with respect to any amount distributed by the Fund to any Member
shall be deemed to be a distribution or payment to such Member, reducing
the amount otherwise distributable to such Member pursuant to this
Agreement and reducing the Capital Account of such Member. If the amount
of such taxes is greater than any such distributable amounts, then such
Member and any successor to such Member's Interest shall pay to the Fund
as a contribution to the capital of the Fund, upon demand of the Board of
Directors, the amount of such excess.
(c) The Board of Directors shall not be obligated to apply for or
obtain a reduction of or exemption from withholding tax on behalf of any
Member that may be eligible for such reduction or exemption. To the
extent that a Member claims to be entitled to a reduced rate of, or
exemption from, a withholding tax pursuant to an applicable income tax
treaty, or otherwise, the Member shall furnish the Board of Directors
with such information and forms as such Member may be required to
complete where necessary to comply with any and all laws and regulations
governing the obligations of withholding tax agents. Each Member
represents and warrants that any such information and forms furnished by
such Member shall be true and accurate and agrees to indemnify the Fund
and each of the other Members from any and all damages, costs and
expenses resulting from the filing of inaccurate or incomplete
information or forms relating to such withholding taxes.
ARTICLE VI
DISSOLUTION AND LIQUIDATION
6.1 Dissolution
The Fund shall be dissolved:
(a) upon the affirmative vote to dissolve the Fund by: (i) the Board
of Directors or (ii) Members holding at least two-thirds (2/3) of the
total number of votes eligible to be cast by all Members;
(b) upon the expiration of any two year period that commences on the
date on which any Member has submitted, in accordance with the procedure
specified in Section 4.4(g) hereof, a written notice to the Fund
requesting the repurchase of its entire Interest by the Fund, if such
Interest has not been repurchased by the Fund, except as otherwise
prohibited by the 1940 Act; or
(c) upon the failure of Members to elect a successor Director at a
meeting called by the Adviser in accordance with Section 2.6(c) hereof
when no Director remains to continue the business of the Fund;
(d) at any time at the election of the Board of Directors; or
(e) as required by operation of law.
23
Dissolution of the Fund shall be effective on the later of the day on
which the event giving rise to the dissolution shall occur or the conclusion
of any applicable 60 day period during which the Board of Directors and
Members may elect to continue the business of the Fund as provided above, but
the Fund shall not terminate until the assets of the Fund have been liquidated
in accordance with Section 6.2 hereof and the Articles have been canceled.
6.2 Liquidation of Assets
(a) Upon the dissolution of the Fund as provided in Section 6.1
hereof, the Board of Directors shall promptly appoint the Board of
Directors or the Adviser as the liquidator (the "Liquidator") and the
Liquidator shall liquidate the business and administrative affairs of the
Fund, except that if the Board of Directors does not appoint the Board of
Directors or the Adviser as the liquidator or the Board of Directors or
the Adviser is unable to perform this function, a liquidator elected by
Members holding a majority of the total number of votes eligible to be
cast by all Members shall promptly liquidate the business and
administrative affairs of the Fund. Net Profit and Net Loss during the
period of liquidation shall be allocated pursuant to Section 5.4 hereof.
The proceeds from liquidation (after establishment of appropriate
reserves for contingencies in such amount as the Board of Directors or
Liquidator shall deem appropriate in its sole discretion as applicable)
shall be distributed in the following manner:
(1) to satisfy the debts of the Fund, other than debts, liabilities
or obligations to Members, and the expenses of liquidation
(including legal and accounting expenses incurred in connection
therewith), up to and including the date that distribution of
the Fund's assets to the Members has been completed, shall
first be paid on a pro rata basis;
(2) to satisfy such debts, liabilities or obligations as are owing
to the Members shall next be paid in their order of seniority
and on a pro rata basis; and
(3) to the payment of the Members on a pro rata basis of the
positive balances of their respective Capital Accounts after
giving effect to all allocations to be made to such Members'
Capital Accounts for the Fiscal Period ending on the date of
the distributions under this Section 6.2(a)(3).
(b) If the Fund shall be wound up (whether the liquidation is
altogether voluntary or by or under the supervision of the courts), the
Liquidator may divide among the Members in kind the whole or any part of
the assets of the Fund, and may for such purposes set such value as the
Liquidator deems fair upon any one or more class or classes of property,
and may determine how such division shall be carried out as between the
Members. The Liquidator may vest any part of such assets in trustees upon
such trust (a "liquidating trust") for the benefit of such Members as the
Liquidator may determine. The date of any such transfer to a liquidating
trust shall constitute the end of the Fund's final accounting period with
respect to the assets contributed thereto, irrespective of when the
liquidating trust is itself dissolved, and the Liquidator shall be
entitled to continue to be reimbursed for the expenses incurred by it in
managing the liquidating trust as well as to receive expense payments
with respect thereto.
(c) In the event that the Liquidator intends to make a distribution
to a Member in whole or in part, in kind rather than in cash, the
Liquidator shall give such Member at least 10 days' notice of the
proposed in-kind payment (generally describing the assets to be
distributed and any associated liabilities to be assumed). If the Member
notifies the Liquidator within 5 days of
24
receipt of such notice from the Liquidator that receipt of the assets
(or associated liabilities) intended to be paid out to such Member could
reasonably be expected to cause such Member to be in violation of law, the
Liquidator shall cause the Fund to sell the assets intended to be
distributed - which sale may be made as the Liquidator may determine. In
such case, the Liquidator need make no representation as to how long a
delay there might be before such sale will be effected and whether there
will be a single sale for the entirety of such assets or more than one
sale. No interest shall accrue on any amounts due to the affected Member
pending such sale(s); provided, that the Liquidator shall cause the Fund
to distribute the proceeds of such sale(s) promptly following receipt.
The amount received upon any such distribution shall constitute full
discharge of any and all amounts due to the affected Member in respect of
such distribution.
ARTICLE VII
ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS
7.1 Accounting and Reports
(a) The Fund shall adopt for tax accounting purposes any accounting
method that the Board of Directors shall decide in its sole discretion is
in the best interests of the Fund. The Fund's accounts shall be
maintained in U.S. currency.
(b) After the end of each taxable year, the Fund shall furnish to
each Member such information regarding the operation of the Fund and such
Member's Interest as is necessary for Members to complete Federal, state
and local income tax or information returns and any other tax information
required by Federal, state or local law.
(c) Except as otherwise required by the 1940 Act, or as may
otherwise be permitted by rule, regulation or order, within 60 days after
the close of the period for which a report required under this Section
7.1(c) is being made, the Fund shall furnish to each Member a semi-annual
report and an annual report containing the information required by such
Act. The Fund shall cause financial statements contained in each annual
report furnished hereunder to be accompanied by a certificate of
independent public accountants based upon an audit performed in
accordance with generally accepted auditing standards. The Fund may
furnish to each Member such other periodic reports as it deems necessary
or appropriate in its discretion.
7.2 Determinations by the Board of Directors
(a) All matters concerning the determination and allocation among
the Members of the amounts to be determined and allocated pursuant to
Article V hereof, including any taxes thereon and accounting procedures
applicable thereto, shall be determined by the Board of Directors unless
specifically and expressly otherwise provided for by the provisions of
this Agreement or required by law, and such determinations and
allocations shall be final and binding on all the Members.
(b) The Board of Directors may make such adjustments to the
computation of Net Profit or Net Loss or any components comprising the
foregoing as it considers appropriate to reflect fairly and accurately
the financial results of the Fund and the intended allocation thereof
among the Members.
25
7.3 Valuation of Assets
(a) Except as may be required by the 1940 Act, the Board of
Directors shall value or have valued any Securities or other assets and
liabilities of the Fund as of the close of business on the last day of
each Fiscal Period in accordance with such valuation policies and
procedures (the "Valuation Procedures") as shall be established or
amended from time to time by the Board of Directors and which conform to
the requirements of the 1940 Act and which are appended hereto as Exhibit
A. In determining the value of the assets of the Fund, no value shall be
placed on the goodwill or name of the Fund, or the office records, files,
statistical data or any similar intangible assets of the Fund not
normally reflected in the Fund's accounting records, but there shall be
taken into consideration any items of income earned but not received,
expenses incurred but not yet paid, liabilities, fixed or contingent, and
any other prepaid expenses to the extent not otherwise reflected in the
books of account, and the value of options or commitments to purchase or
sell Securities or commodities pursuant to agreements entered into prior
to such valuation date.
(b) The Fund will value interests in Investment Funds at their "fair
value," as determined in good faith by the Board of Directors pursuant to
the Valuation Procedures.
(c) The value of Securities and other assets of the Fund and the net
worth of the Fund as a whole determined pursuant to this Section 7.3
shall be conclusive and binding on all of the Members and all parties
claiming through or under them.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 Amendment of Limited Liability Company Agreement
(a) Except as otherwise provided in this Section 8.1, this Agreement
may be amended, in whole or in part, with: (i) the approval of the Board
of Directors (including the vote of a majority of the Independent
Directors, if required by the ▇▇▇▇ ▇▇▇) and (ii) if required by the 1940
Act, the approval of Members by such vote as is required by the ▇▇▇▇ ▇▇▇.
(b) Any amendment that would:
(1) increase the obligation of a Member to make any contribution to
the capital of the Fund;
(2) reduce the Capital Account of a Member other than in accordance
with Article V; or
(3) modify the events causing the dissolution of the Fund; may be
made only if (i) the written consent of each Member adversely
affected thereby is obtained prior to the effectiveness thereof
or (ii) such amendment does not become effective until (A) each
Member has received written notice of such amendment and (B)
any Member objecting to such amendment has been afforded a
reasonable opportunity (pursuant to such procedures as may be
prescribed by the Board of Directors) to have its entire
Interest repurchased by the Fund.
(c) The power of the Board of Directors to amend this Agreement at
any time without the consent of the other Members as set forth in
paragraph (a) of this Section 8.1 shall specifically include the power
to:
26
(1) restate this Agreement together with any amendments hereto that
have been duly adopted in accordance herewith to incorporate
such amendments in a single, integrated document;
(2) amend this Agreement (other than with respect to the matters
set forth in Section 8.1(a) hereof) to effect compliance with
any applicable law or regulation or to cure any ambiguity
or to correct or supplement any provision hereof that may be
inconsistent with any other provision hereof; and
(3) amend this Agreement to make such changes as may be necessary
or advisable to ensure that the Fund will not be treated as an
association or a publicly traded partnership taxable as a
corporation as defined in Section 7704(b) of the Code.
(d) The Board of Directors shall cause written notice to be given of
any amendment to this Agreement (other than any amendment of the type
contemplated by clause (1) of Section 8.1(c) hereof) to each Member,
which notice shall set forth (i) the text of the amendment or (ii) a
summary thereof and a statement that the text thereof will be furnished
to any Member upon request.
8.2 Special Power of Attorney
(a) Each Member hereby irrevocably makes, constitutes and appoints
the Adviser and each Director, acting severally, and any liquidator of
the Fund's assets appointed pursuant to Section 6.2 hereof with full
power of substitution, the true and lawful representatives and
attorneys-in-fact of, and in the name, place and stead of, such Member,
with the power from time to time to make, execute, sign, acknowledge,
swear to, verify, deliver, record, file and/or publish:
(1) any amendment to this Agreement that complies with the
provisions of this Agreement (including the provisions of
Section 8.1 hereof);
(2) any amendment to the Articles required because this Agreement
is amended, including, without limitation, an amendment to
effectuate any change in the membership of the Fund; and
(3) all such other instruments, documents and certificates that, in
the opinion of legal counsel to the Fund, may from time to time
be required by the laws of the United States of America, the
State of Illinois or any other jurisdiction in which the Fund
shall determine to do business, or any political subdivision or
agency thereof, or that such legal counsel may deem necessary
or appropriate to effectuate, implement and continue the valid
existence and business of the Fund as a limited liability
company under the laws of the State of Illinois.
(b) Each Member is aware that the terms of this Agreement permit
certain amendments to this Agreement to be effected and certain other
actions to be taken or omitted by or with respect to the Fund without
such Member's consent. If an amendment to the Articles or this Agreement
or any action by or with respect to the Fund is taken in the manner
contemplated by this Agreement, each Member agrees that, notwithstanding
any objection that such Member may assert with respect to such action,
the attorneys-in-fact appointed hereby are authorized and empowered, with
full power of substitution, to exercise the authority granted above in
any manner that may be necessary or appropriate to permit such amendment
to be made or action
27
lawfully taken or omitted. Each Member is fully aware that each Member
will rely on the effectiveness of this special power-of-attorney with a
view to the orderly administration of the affairs of the Fund.
(c) This power-of-attorney is a special power-of-attorney and is
coupled with an interest in favor of each of the Directors and the
Adviser and as such:
(1) shall be irrevocable and continue in full force and effect
notwithstanding the subsequent death or incapacity of any party
granting this power-of-attorney, regardless of whether the Fund
or Board of Directors shall have had notice thereof; and
(2) shall survive the delivery of a Transfer by a Member of the
whole or any portion of such Member's Interest, except that
where the transferee thereof has been approved by the Board of
Directors for admission to the Fund as a substituted Member,
this power-of-attorney given by the transferor shall survive
the delivery of such assignment for the sole purpose of
enabling the Board of Directors to execute, acknowledge and
file any instrument necessary to effect such substitution.
8.3 Notices
Except as otherwise set forth in this Agreement, notices that may or are
required to be provided under this Agreement shall be made, if to a Member, by
regular mail, or if to the Fund, the Board of Directors or the Adviser, by
hand delivery, registered or certified mail return receipt requested,
commercial courier service, telex or telecopier, and shall be addressed to the
respective parties at their addresses as set forth in the books and records of
the Fund. Notices shall be deemed to have been provided when delivered by
hand, on the date indicated as the date of receipt on a return receipt or when
received if sent by regular mail, commercial courier service, telex or
telecopier. A document that is not a notice and that is required to be
provided under this Agreement by any party to another party may be delivered
by any reasonable means.
8.4 Agreement Binding Upon Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, assigns, executors,
trustees or other legal representatives, but the rights and obligations of the
parties hereunder may not be Transferred or delegated except as provided in
this Agreement and any attempted Transfer or delegation thereof that is not
made pursuant to the terms of this Agreement shall be void.
8.5 Applicability of 1940 Act and Form N-2
The parties hereto acknowledge that this Agreement is not intended to,
and does not, set forth the substantive provisions contained in the 1940 Act
and the Form N-2 that affect numerous aspects of the conduct of the Fund's
business and of the rights, privileges and obligations of the Members.
Each provision of this Agreement shall be subject to and interpreted in a
manner consistent with the applicable provisions of the 1940 Act and the Form
N-2.
28
8.6 Choice of Law
Notwithstanding the place where this Agreement may be executed by any of
the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed under the laws of the State of Illinois
without regard to the conflict of law principles of such State.
8.7 Not for Benefit of Creditors
The provisions of this Agreement are intended only for the regulation of
relations among past, present and future Members, Directors and the Fund. This
Agreement is not intended for the benefit of non-Member creditors and no
rights are granted to non-Member creditors under this Agreement.
8.8 Consents
Any and all consents, agreements or approvals provided for or permitted by
this Agreement shall be in writing and a signed copy thereof shall be filed
and kept with the books of the Fund.
8.9 Merger and Consolidation
(a) The Fund may merge or consolidate with or into one or more
limited liability companies formed in accordance with the laws of the
State of Illinois or other business entities pursuant to an agreement of
merger or consolidation that has been approved in accordance with the
laws of the State of Illinois.
(b) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, an agreement of merger or consolidation approved in
accordance with the laws of the State of Illinois may (i) effect any
amendment to this Agreement, (ii) effect the adoption of a new operating
agreement for the Fund if it is the surviving or resulting limited
liability Fund in the merger or consolidation, or (iii) provide that the
limited liability Fund agreement of any other constituent limited
liability Fund to the merger or consolidation (including a limited
liability Fund formed for the purpose of consummating the merger or
consolidation) shall be the limited liability Fund agreement of the
surviving or resulting limited liability Fund.
8.10 Pronouns
All pronouns shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as entity of the person or persons, firm or corporation
may require in the context thereof.
8.11 Confidentiality
(a) A Member may obtain from the Fund such information regarding the
affairs of the Fund as is just and reasonable under the laws of the State
of Illinois, subject to reasonable standards (including standards
governing what information and documents are to be furnished, at what
time and location and at whose expense) established by the Board of
Directors.
(b) Each Member covenants that, except as required by applicable law
or any regulatory body, it will not divulge, furnish or make accessible
to any other person the name and/or address (whether business, residence
or mailing) of any Member (collectively, "Confidential Information")
without the prior written consent of the Board of Directors, which
consent may be withheld in its sole discretion.
29
(c) Each Member recognizes that in the event that this Section 8.11
is breached by any Member or any of its principals, partners, members,
directors, officers, employees or agents or any of its Affiliates,
including any of such Affiliates' principals, partners, members,
directors, officers, employees or agents, irreparable injury may result
to the non-breaching Members and the Fund. Accordingly, in addition to
any and all other remedies at law or in equity to which the non-breaching
Members and the Fund may be entitled, such Members shall also have the
right to obtain equitable relief, including, without limitation,
injunctive relief, to prevent any disclosure of Confidential Information,
plus reasonable attorneys' fees and other litigation expenses incurred in
connection therewith. In the event that any non-breaching Member or the
Fund determines that any of the other Members or any of its principals,
partners, members, directors, officers, employees or agents or any of its
Affiliates, including any of such Affiliates' principals, partners,
members, directors, officers, employees or agents should be enjoined from
or required to take any action to prevent the disclosure of Confidential
Information, each of the other non-breaching Members agrees to pursue in
a court of appropriate jurisdiction such injunctive relief.
8.12 Certification of Non-Foreign Status
Each Member or transferee of an Interest from a Member shall certify,
upon admission to the Fund and at such other times thereafter as the Board of
Directors may request, whether such Member is a "United States Person" within
the meaning of Section 7701(a)(30) of the Code on forms to be provided by the
Fund, and shall notify the Fund within 60 days of any change in such Member's
status.
8.13 Severability
If any provision of this Agreement is determined by a court of competent
jurisdiction not to be enforceable in the manner set forth in this Agreement,
each Member agrees that it is the intention of the Members that such provision
should be enforceable to the maximum extent possible under applicable law. If
any provisions of this Agreement are held to be invalid or unenforceable, such
invalidation or unenforceability shall not affect the validity or
enforceability of any other provision of this Agreement (or portion thereof).
8.14 Filing of Returns
The Board of Directors or its designated agent shall prepare and file, or
cause the accountants of the Fund to prepare and file, a Federal information
tax return in compliance with Section 6031 of the Code and any required state
and local income tax and information returns for each tax year of the Fund.
8.15 Tax Matters Partner
(a) A Director who is a Member shall be designated on the Fund's
annual Federal income tax return, and have full powers and
responsibilities, as the Tax Matters Partner of the Fund for purposes of
Section 6231(a)(7) of the Code. In the event that no Director is a
Member, a Member shall be so designated. Should any Member be designated
as the Tax Matters Partner for the Fund pursuant to Section 6231(a)(7) of
the Code, it shall, and each Member hereby does, to the fullest extent
permitted by law, delegate to a Director selected by the Board of
Directors all of its rights, powers and authority to act as such Tax
Matters Partner and hereby constitutes and appoints such Director as its
true and lawful attorney-in-fact, with power to act in its name and on
its behalf, including the power to act through such agents or attorneys
as it shall elect or appoint, to receive notices, to make, execute and
deliver, swear to, acknowledge and file any and all reports, responses
and notices, and to do any and all things required or advisable, in the
Director's
30
judgment, to be done by such a Tax Matters Partner. Any Member designated
as the Tax Matters Partner for the Fund under Section 6231(a)(7) of the
Code shall be indemnified and held harmless by the Fund from any and all
liabilities and obligations that arise from or by reason of such
designation.
(b) Each person (for purposes of this Section 8.15, called a
"Pass-Thru Member") that holds or controls an interest as a Member on
behalf of, or for the benefit of, another person or persons, or which
Pass-Thru Member is beneficially owned (directly or indirectly) by
another person or persons, shall, within 30 days following receipt from
the Tax Matters Partner of any notice, demand, request for information or
similar document, convey such notice or other document in writing to all
holders of beneficial interests in the Fund holding such interests
through such Pass-Thru Member. In the event the Fund shall be the subject
of an income tax audit by any Federal, state or local authority, to the
extent the Fund is treated as an entity for purposes of such audit,
including administrative settlement and judicial review, the Tax Matters
Partner shall be authorized to act for, and its decision shall be final
and binding upon, the Fund and each Member thereof. All expenses incurred
in connection with any such audit, investigation, settlement or review
shall be borne by the Fund.
8.16 Section 754 Election
In the event of a distribution of Fund property to a Member or an
assignment or other transfer (including by reason of death) of all or part of
the interest of a Member in the Fund, at the request of a Member, the Board of
Directors, in its discretion, may cause the Fund to elect, pursuant to Section
754 of the Code, or the corresponding provision of subsequent law, to adjust
the basis of the Fund property as provided by Sections 734 and 743 of the
Code.
8.17 Reliance. In dealing with the Board of Directors acting on behalf of
the Fund, no person shall be required to inquire into the authority of the
Board of Directors to bind the Fund. Persons dealing with the Fund shall be
entitled to rely on a certification by the Board of Directors with regard to
the authority of any other person to act on behalf of the Fund in any manner.
8.18 Registration of Assets. Any assets owned by the Fund may be
registered in the Fund name, or in the name of a nominee, or a "street name."
Any corporation, brokerage firm or transfer agent called upon to transfer any
assets to or from the name of the Fund shall be entitled to rely upon
instructions or assignments signed by a Director or an agent of the Board of
Directors without inquiry as to the authority of the person signing or
purporting to sign such instructions or assignments or as to the validity of
any transfer to or from the name of the Fund; provided, that any corporation,
brokerage firm or transfer agent holding cash or assets of the Fund shall be
expected to comply with any special instructions concerning payment and
delivery given to it in writing by a Director.
8.19 Limitation on Duties. Pursuant to the laws of the State of Illinois,
the Members' duties to other Members and the Fund are limited to those
expressly provided herein.
31
8.20 Contractual Statute of Limitations. Any claim brought against any
Director, the Adviser or any Sub-Adviser, the Fund or any related party that
arises out of or is connected with or related to the Fund or such party's
involvement with the Fund or its business affairs in any way, including any
claim resulting from or relating to the offer or sale of the Interests shall,
unless otherwise previously barred by any provision of law, be barred unless
such claim is initiated within one year of the discovery of the event which is
the subject of such claim or within one year of the date that such event
reasonably should have been discovered (whichever is sooner).
8.21 Matters Not Provided For; Compliance With Law. The Board of
Directors shall be empowered to decide any question arising with respect to
the Fund or this Agreement, and to make such provisions as the Board of
Directors deems to be in, or not opposed to, the interests of the Fund, but
which are not specifically set forth herein.
EACH OF THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS
ENTIRETY BEFORE SIGNING, INCLUDING THE CONFIDENTIALITY CLAUSE SET FORTH IN
SECTION 8.11.
32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
ORGANIZATIONAL MEMBER:
Aspen Strategic Alliance LLC
By:
________________________________________
MEMBERS:
Each person who shall sign an investor application
or certification and who shall be accepted by the
Board of Directors to the Fund as a Member.
33