EXHIBIT (2)(a)(3)
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▇.▇. ▇▇▇▇▇▇ MULTI-STRATEGY FUND, L.L.C.
Amended and Restated Limited Liability Company Agreement
Dated as of April 1, 2006
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................................ 1
ARTICLE II ORGANIZATION; ADMISSION OF MEMBERS; DIRECTORS......................................................... 6
2.1. FORMATION AND CONTINUATION OF LIMITED LIABILITY COMPANY............................................ 6
2.2. NAME............................................................................................... 6
2.3. PRINCIPAL AND REGISTERED OFFICE.................................................................... 7
2.4. DURATION........................................................................................... 7
2.5. BUSINESS OF THE FUND............................................................................... 7
2.6. MANAGING MEMBER.................................................................................... 8
2.7. MEMBERS............................................................................................ 8
2.8. ORGANIZATIONAL MEMBER.............................................................................. 9
2.9. LIMITED LIABILITY.................................................................................. 9
2.10. DIRECTORS......................................................................................... 9
ARTICLE III MANAGEMENT of the fund............................................................................... 10
3.1. MANAGEMENT AND CONTROL............................................................................. 10
3.2. POWERS RESERVED BY THE MANAGING MEMBER............................................................. 11
3.3. ACTIONS BY DIRECTORS............................................................................... 12
3.4. MEETINGS OF MEMBERS................................................................................ 12
3.5. APPOINTMENT OF INVESTMENT MANAGER.................................................................. 13
3.6. CUSTODY OF ASSETS OF THE FUND...................................................................... 14
3.7. OTHER ACTIVITIES................................................................................... 14
3.8. EXCULPATION........................................................................................ 15
3.9. INDEMNIFICATION.................................................................................... 16
3.10. FEES, EXPENSES AND REIMBURSEMENT.................................................................. 17
ARTICLE IV TERMINATION OF STATUS OF MANAGING MEMBER; REMOVAL OF MANAGING MEMBER; TRANSFERS AND REPURCHASES OF
INTERESTS................................................................................................... 20
4.1. TERMINATION OF STATUS OF MANAGING MEMBER........................................................... 20
4.2. REMOVAL OF MANAGING MEMBER......................................................................... 20
4.3. TRANSFER OF INTEREST OF MANAGING MEMBER............................................................ 21
4.4. TRANSFER OF INTERESTS OF MEMBERS................................................................... 21
4.5. REPURCHASE OF INTERESTS............................................................................ 23
ARTICLE V CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; ALLOCATIONS................................................... 27
5.1. CONTRIBUTIONS TO CAPITAL........................................................................... 27
5.2. RIGHTS OF MEMBERS TO CAPITAL....................................................................... 28
5.3. CAPITAL ACCOUNTS................................................................................... 28
5.4. ALLOCATION OF NET CAPITAL APPRECIATION AND DEPRECIATION; MANAGEMENT FEE AND MANAGER
ADMINISTRATIVE SERVICES FEE..................................................................... 29
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5.5. ALLOCATION OF CERTAIN WITHHOLDING TAXES, OTHER EXPENDITURES, AND RESERVES.......................... 29
5.6. PERFORMANCE ALLOCATION............................................................................. 31
5.7. TAX ALLOCATIONS AND OTHER TAX MATTERS.............................................................. 32
5.8. DISTRIBUTIONS...................................................................................... 33
ARTICLE VI DISSOLUTION AND LIQUIDATION........................................................................... 34
6.1. DISSOLUTION........................................................................................ 34
6.2. LIQUIDATION OF ASSETS.............................................................................. 35
ARTICLE VII ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS......................................................... 36
7.1. ACCOUNTING AND REPORTS............................................................................. 36
7.2. DETERMINATIONS BY MANAGING MEMBER.................................................................. 36
7.3. VALUATION OF ASSETS................................................................................ 37
ARTICLE VIII MISCELLANEOUS PROVISIONS............................................................................ 38
8.1. AMENDMENT OF THIS AGREEMENT........................................................................ 38
8.2. SPECIAL POWER OF ATTORNEY.......................................................................... 39
8.3. NOTICES............................................................................................ 40
8.4. AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS...................................................... 41
8.5. CHOICE OF LAW; WAIVER OF JURY TRIAL................................................................ 41
8.6. NO THIRD PARTY BENEFICIARIES....................................................................... 41
8.7. CONSENTS........................................................................................... 41
8.8. MERGER AND CONSOLIDATION........................................................................... 42
8.9. PRONOUNS........................................................................................... 42
8.10. CONFIDENTIALITY................................................................................... 42
8.11. SEVERABILITY...................................................................................... 43
8.12. ENTIRE AGREEMENT.................................................................................. 43
8.13. DISCRETION........................................................................................ 43
8.14. COUNTERPARTS...................................................................................... 44
8.15. HEADINGS.......................................................................................... 44
EXHIBITS
EXHIBIT A - Directors Agreement
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▇.▇. ▇▇▇▇▇▇ MULTI-STRATEGY FUND, L.L.C.
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of ▇.▇. ▇▇▇▇▇▇
MULTI-STRATEGY FUND, L.L.C. dated as of April 1, 2006 by and among ▇▇▇▇▇▇▇
Associates, L.L.C., as Managing Member, CMRCC, Inc., as Special Member, and
those Persons who are admitted to the Fund as Members in accordance with this
Agreement.
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
"1933 Act" means the Securities Act of 1933 and the rules, regulations and
orders under the 1933 Act, as amended from time to time, or any successor law.
"1940 Act" means the Investment Company Act of 1940 and the rules, regulations
and orders under the 1940 Act, as amended from time to time, or any successor
law.
"Action" has the meaning set out in Section 3.9(a) of this Agreement.
"Advisers Act" means the Investment Advisers Act of 1940 and the rules,
regulations and orders under the Advisers Act, as amended from time to time, or
any successor law.
"Affiliate" means "affiliated person" as that term is defined in Section 2(a)(3)
of the 1940 Act.
"Agreement" means this Amended and Restated Limited Liability Company Agreement,
as further amended and/or restated from time to time.
"Allocation Period" means a period beginning on the Initial Closing Date (or, in
the case of each subsequent Allocation Period, a period beginning immediately
after the close of the preceding Allocation Period) and closing on the first to
occur of (1) the last day of each month, (2) the date immediately prior to the
effective date of (a) the admission of a new Member or (b) an increase in a
Member's Capital Contribution, (3) the effective date of any repurchase of
Interests or (4) the date when the Fund dissolves.
"Associated Person" has the meaning set out in Section 3.8(a) of this Agreement.
"Board of Directors" means the Board of the Directors of the Fund who have been
delegated the authority described in this Agreement.
"Business Day" means any day on which banks in New York City are open for
business.
"Capital Account" means, with respect to each Member, the capital account
established and maintained on behalf of the Member in accordance with Section
5.3 of this Agreement.
"Capital Contribution" means the contribution, if any, made, or to be made, as
the context requires, to the capital of the Fund by a Member or former Member,
as the case may be.
"Certificate" means the Certificate of Formation of the Fund filed with the
office of the Secretary of State of the State of Delaware on April 6, 2004, and
any amendments to the Certificate and/or restatements of the Certificate as
filed with the office of the Secretary of State of the State of Delaware from
time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, or
any successor law.
"Commodity Exchange Act" means the Commodity Exchange Act of 1974 and the rules,
regulations and orders under the Commodity Exchange Act, as amended from time to
time, or any successor law.
"Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.C.
Sections 18-801, et seq., as amended from time to time, or any successor law.
"Directors" means those natural persons designated as "Directors" in accordance
with this Agreement (including Independent Directors) who are delegated the
authority provided for in this Agreement and any other natural persons who, from
time to time after the date of this Agreement, become Directors in accordance
with the terms and conditions of this Agreement.
"Disabling Conduct" has the meaning set out in Section 3.9(a) of this Agreement.
"Expense Limitation and Reimbursement Agreement" has the meaning set out in
Section 3.10(e) of this Agreement.
"Fiscal Year" means the period commencing on the Initial Closing Date and ending
on March 31, 2005, and thereafter each period commencing on April 1 of each year
and ending on March 31 of the following year (or on the date of a final
distribution made in accordance with Section 6.2 of this Agreement), unless the
Managing Member designates another Fiscal Year for the Fund.
"Form N-2" means the Fund's Registration Statement on Form N-2 filed with the
SEC, as amended from time to time.
"Fund" means ▇.▇. ▇▇▇▇▇▇ Multi-Strategy Fund, L.L.C., the limited liability
company governed by this Agreement and formed under the laws of the State of
Delaware, as the limited liability company may from time to time be constituted.
"Indemnitee" has the meaning set out in Section 3.9(a) of this Agreement.
"Independent Directors" mean those Directors who are not "interested persons" of
the Fund as that term is defined in Section 2(a)(19) of the 1940 Act, or any
other natural persons who, from time to time after the date of this Agreement,
become Independent Directors in accordance with the terms and conditions of this
Agreement.
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"Initial Agreement" has the meaning set out in Section 2.1 of this Agreement.
"Initial Closing Date" means August 1, 2004.
"Initial Payment" has the meaning set out in Section 4.5(d)(4) of this
Agreement.
"Interest" means the interest in the Fund at any particular time of a Member or
other Person to whom or which an Interest or portion of an Interest has been
Transferred in accordance with Sections 4.3 or 4.4 of this Agreement, including
the limited liability company interest and the rights and obligations of the
Member or other Person under this Agreement and the Delaware Act. References in
this Agreement to an "Interest" or the "Interests" (including references to the
repurchase of an Interest or Interests) include all or any portion of a Member's
Interest, as the context requires.
"Investment Fund" means an investment company, a general or limited partnership,
a limited liability company or other pooled investment vehicle in which the Fund
has invested and that is advised by a Portfolio Manager, whether or not, in each
case, the entity is registered under the 1940 Act, and includes entities that
may be formed by the Fund.
"Investment Management Agreement" has the meaning set out in Section 3.5(a) of
this Agreement.
"Investment Manager" means ▇.▇. ▇▇▇▇▇▇ Alternative Asset Management, Inc., a
corporation formed under the laws of the State of Delaware, and any other Person
or Persons subsequently engaged to provide investment management services to the
Fund in a similar capacity.
"Investment Percentage" means a percentage, established for each Member as of
the first day of each Allocation Period, that is determined by dividing the
balance of the Member's Capital Account as of the commencement of the Allocation
Period by the sum of the balances of all Capital Accounts of all Members as of
the commencement of the Allocation Period. The sum of the Investment Percentages
of all Members for each Allocation Period will equal 100%.
"JPMorgan Chase" means JPMorgan Chase & Co., a corporation formed under the laws
of the State of New York.
"Loss" or "Losses" has the meaning set out in Section 3.9(a) of this Agreement.
"Loss Carryforward" has the meaning set out in Section 5.6(b) of this Agreement.
"Management Fee" has the meaning set out in Section 3.10(a) of this Agreement.
"Manager Administrative Services Fee" has the meaning set out in Section 3.10(a)
of this Agreement.
"Managing Member" means the member of the Fund given the authority granted to
the Managing Member under this Agreement, and initially is designated ▇▇▇▇▇▇▇
Associates, L.L.C., a limited liability company formed under the laws of the
State of Delaware, and includes any
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substitute managing member of the Fund admitted in accordance with Section 2.6
of this Agreement.
"Members" means the Managing Member, the Special Member, and any other Person
admitted to the Fund as a member of the Fund in accordance with this Agreement,
in its capacity as a "member" (within the meaning of the Delaware Act) of the
Fund, that has not ceased to be a member of the Fund for any reason.
"Member Signature Page" means with respect to every Member (1) the pages
designated as Signature Pages in each Member's subscription agreement with
respect to the Fund or (2) any other instrument executed by the Member
evidencing the Member's agreement to be bound by the terms of this Agreement.
"Memorandum" means the Fund's private placement memorandum, as included in the
Form N-2, as amended or supplemented from time to time.
"Negative Basis" has the meaning set out in Section 5.7(d) of this Agreement.
"Negative Basis Member" has the meaning set out in Section 5.7(d) of this
Agreement.
"Net Assets" means the total value of all assets of the Fund, less an amount
equal to all accrued debts, liabilities and obligations of the Fund.
"Net Capital Appreciation" means any increase in the value of the Fund's Net
Assets, including unrealized gains, from the beginning of each Allocation Period
to the end of such Allocation Period (before giving effect to repurchases of
Interests, Management Fees and Manager Administrative Services Fees, but after
giving effect to expenses other than Management Fees and Manager Administrative
Services Fees), and with respect to any calendar year or other period used to
determine the Performance Allocation, refers to any aggregate Net Capital
Appreciation for such period in excess of the aggregate Net Capital Depreciation
for such period.
"Net Capital Depreciation" means any decrease in the value of the Fund's Net
Assets, including unrealized losses, from the beginning of each Allocation
Period to the end of such Allocation Period (before giving effect to repurchases
of Interests, Management Fees and Manager Administrative Services Fees, but
after giving effect to expenses other than Management Fees and Manager
Administrative Services Fees), and with respect to any calendar year or other
period used to determine the Performance Allocation, refers to any aggregate Net
Capital Depreciation for such period in excess of the aggregate Net Capital
Appreciation for such period.
"Notice Due Date" has the meaning set out in Section 4.5(c) of this Agreement.
"Officers" means those natural persons designated as officers of the Fund in
accordance with this Agreement.
"Organizational Member" means ▇▇▇▇ ▇▇▇▇▇▇▇ in his capacity as the initial member
of the Fund.
"Original Agreement" has the meaning set out in Section 2.1 of this Agreement.
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"Performance Allocation" has the meaning set out in Section 5.6(a) of this
Agreement.
"Person" means any individual, corporation, partnership, association, limited
liability company, joint-stock company, trust, estate, joint venture,
organization, unincorporated organization or other entity.
"Placement Agent" means any Person retained by the Fund or the Managing Member
to assist in the placement of Interests.
"Portfolio Manager" means any Person that manages (1) a portion of the assets of
the Fund through the investment by the Fund in an Investment Fund selected by
the Investment Manager or (2) a Subadviser (as defined in this Article I). Other
than when acting as a Subadviser, a Portfolio Manager will not be deemed to be a
subadviser of the Fund with the meaning of the 1940 Act.
"Positive Basis" has the meaning set out in Section 5.7(d) of this Agreement.
"Positive Basis Member" has the meaning set out in Section 5.7(d) of this
Agreement.
"Post-Audit Payment" has the meaning set out in Section 4.5(d)(5) of this
Agreement.
"Preferred Return" has the meaning set out in Section 5.6(a) of this Agreement.
"Promissory Note" has the meaning set out in Section 4.5(d)(2) of this
Agreement.
"Repurchase Fee" has the meaning set out in Section 4.5(k) of this Agreement.
"Repurchase Date" means (1) generally, any date determined by the Board of
Directors and notified to Members as a date on which Interests are to be
repurchased by the Fund in accordance with Section 4.5 of this Agreement, and
(2) specifically with respect to any Interest, the date on which the Interest is
repurchased by the Fund in accordance with Section 4.5 of this Agreement.
"SEC" means the Securities and Exchange Commission.
"Securities" means securities (including, without limitation, equity securities,
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, currency or commodity, all manner of
derivative instruments and any contracts based on any index or group of
securities, debt obligations, currencies or commodities, and any options on
those contracts.
"Separately Managed Account" means (1) any managed account with a Portfolio
Manager or (2) any Investment Fund of or in which the Fund and a Portfolio
Manager are the only members, partners or other interest holders, that, in the
case of both (1) and (2) above, is established specifically by the Fund or that
Portfolio Manager to facilitate the separate management of a portion of the
Fund's assets directly by that Portfolio Manager.
"Special Laws or Regulations" has the meaning set out in Section 4.5(g)(5) of
this Agreement.
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"Special Member" means CMRCC, Inc., a corporation formed under the laws of the
State of Delaware, and any substitute or successor Special Member admitted to
the Fund as such upon its execution of a counterpart of this Agreement or any
other instrument evidencing its agreement to be bound by the terms of this
Agreement, and such Person shall be listed on the books and records of the Fund
as the Special Member. The Special Member is a Member that also has the right to
receive the Performance Allocation.
"Subadviser" means a Portfolio Manager responsible for managing a Separately
Managed Account.
"Taxable Year" means the 12-month period ending December 31 of each year, unless
the Managing Member designates another Taxable Year for the Fund, or any other
taxable year as required by the Code.
"Transfer" means an assignment, transfer, sale or other disposition of an
Interest, including any right to receive any allocations and distributions
attributable to an Interest. Verbs, adverbs or adjectives such as "Transfer,"
"Transferred" and "Transferring" have correlative meanings.
ARTICLE II
ORGANIZATION; ADMISSION OF MEMBERS; DIRECTORS
2.1. FORMATION AND CONTINUATION OF LIMITED LIABILITY COMPANY
The Fund was formed as a limited liability company pursuant to the
Certificate and the Limited Liability Company Agreement dated as of April 6,
2004 and executed by the Organizational Member (the "Initial Agreement"). The
Initial Agreement was amended and restated and replaced in its entirety by the
Amended and Restated Limited Liability Company Agreement dated as of May 26,
2004 and executed by the Organizational Member and the Members (the "Original
Agreement"). This Agreement amends and restates and replaces the Original
Agreement in its entirety. The Members agree to continue the Fund as a limited
liability company pursuant to this Agreement and further agree that their
rights, duties and liabilities will be as provided in the Delaware Act, except
as otherwise provided in this Agreement. The Managing Member is designated an
"authorized person" within the meaning of the Delaware Act and will cause to be
executed and filed in accordance with the Delaware Act any amendment to the
Certificate and will cause to be executed and filed with applicable governmental
authorities any other instruments, documents and certificates that the Managing
Member concludes may from time to time be required by the laws of the United
States of America, the State of Delaware or any other jurisdiction in which the
Managing Member determines that the Fund should do business, or any political
subdivision or agency of any such jurisdiction, or that the Managing Member
determines is necessary or appropriate to effectuate, implement and continue the
valid existence and business of the Fund.
2.2. NAME
The name of the Fund is "▇.▇. ▇▇▇▇▇▇ Multi-Strategy Fund, L.L.C." or any
other name that the Managing Member may adopt after the date of this Agreement
upon (a) causing an
6
appropriate amendment to this Agreement to be executed in accordance with this
Agreement, (b) causing an appropriate amendment to the Certificate to be filed
in accordance with the Delaware Act, and (c) sending notice of the amendment to
each Member. ▇.▇. ▇▇▇▇▇▇ Alternative Asset Management, Inc. has granted to the
Fund a non-exclusive license to use the words "▇.▇. ▇▇▇▇▇▇" in its name for so
long as ▇.▇. ▇▇▇▇▇▇ Alternative Asset Management, Inc., or one of its
Affiliates, remains the Investment Manager. The Members acknowledge that, except
with respect to the foregoing limited license, the Fund has no legal right or
title in or to the words "▇.▇. ▇▇▇▇▇▇," and agree to change the Fund's name
immediately to a name that does not contain "▇.▇. ▇▇▇▇▇▇" or a derivative or
abbreviation thereof if ▇.▇. ▇▇▇▇▇▇ Alternative Asset Management, Inc., or one
of its Affiliates, ceases to be the Investment Manager.
2.3. PRINCIPAL AND REGISTERED OFFICE
The Fund will have its principal office at the principal office of the
Investment Manager, or at any other place designated from time to time by the
Managing Member. The Fund's registered office in the State of Delaware is c/o
The Corporation Trust Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and The Corporation Trust Company
is the Fund's registered agent for service of process at such address in the
State of Delaware, unless a different registered office or agent is designated
from time to time by the Managing Member in accordance with the Delaware Act.
2.4. DURATION
The term of the Fund commenced on the filing of the Certificate and will
continue until the Fund is dissolved and wound up in accordance with the
Delaware Act and Article VI of this Agreement and the Certificate is canceled in
accordance with the Delaware Act.
2.5. BUSINESS OF THE FUND
(a) The Fund was formed, and is hereby continued, for the object and purpose of
(and the nature of the business to be conducted by the Fund is) purchasing,
selling, investing and trading in Securities and engaging in any financial or
derivative transactions relating to Securities, engaging in any lawful activity
for which limited liability companies may be formed under the Delaware Act, and
engaging in any and all activities necessary or incidental to the foregoing.
Portions of the Fund's assets (which may constitute, in the aggregate, all of
the Fund's assets) may be invested in Investment Funds (including any Investment
Funds that are Separately Managed Accounts) that purchase, sell, invest, and
trade in Securities. The Fund may execute, deliver and perform all contracts,
agreements and other undertakings and engage in all activities and transactions
as the Managing Member, the Directors or the Investment Manager may deem
necessary or advisable to carry out its objective or business.
(b) The Fund will operate as a closed-end, management investment company in
accordance with the 1940 Act and subject to any fundamental policies and
investment restrictions described in the Form N-2.
(c) The Fund may designate from time to time Persons to act as signatories for
the Fund, including, without limitation, Persons authorized to execute and
deliver any filings with the SEC or applicable federal or state regulatory
authorities or self-regulatory organizations.
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(d) The Fund is hereby authorized to execute, deliver and perform, and the
Managing Member on behalf of the fund is hereby authorized to execute and
deliver, subject to the 1940 Act and any required approval of the Board of
Directors, (1) a subscription agreement with each Person being admitted to the
Fund as a Member, (2) a Custodian Services Agreement with PFPC Trust Company,
(3) an Administration Agreement with PFPC Inc., (4) an Escrow Agreement with
PFPC Inc., (5) an Investment Management Agreement with ▇.▇. ▇▇▇▇▇▇ Alternative
Asset Management, Inc., (6) an Expense Limitation and Reimbursement Agreement
with ▇.▇. ▇▇▇▇▇▇ Alternative Asset Management, Inc., and (7) all documents,
agreements, certificates or financing statements contemplated thereby or related
thereto, in each case without further act, vote or approval of any Member or
other Person notwithstanding any other provision of this Agreement. The
foregoing authorization shall not be deemed a restriction on the powers of the
Fund or the Managing Member on behalf of the Fund to enter into other
agreements.
2.6. MANAGING MEMBER
(a) ▇▇▇▇▇▇▇ Associates, L.L.C. was admitted to the Fund as the Managing Member
upon its execution of the Original Agreement. The Managing Member may admit to
the Fund as a substitute Managing Member any Person to which it has Transferred
its Interest as a Managing Member in accordance with Section 4.3 of this
Agreement. In the event the Managing Member ceases to be the managing member of
the Fund (other than by Transfer of its Interest in accordance with Section 4.3
of this Agreement), the Board of Directors (including a majority of the
Independent Directors, to the extent required by the ▇▇▇▇ ▇▇▇) shall be
authorized to appoint a substitute Managing Member of the Fund. The name and
mailing address of the Managing Member and the Capital Contribution of the
Managing Member will be reflected on the books and records of the Fund.
(b) The Managing Member will serve for the duration of the term of the Fund,
unless the Managing Member ceases to be the Managing Member in accordance with
Section 4.1 of this Agreement.
(c) Any substitute Managing Member will be admitted to the Fund as Managing
Member upon its execution of a counterpart of this Agreement or other instrument
evidencing the substitute Managing Member's agreement to be bound by the terms
of this Agreement.
2.7. MEMBERS
(a) CMRCC, Inc. was admitted to the Fund as the Special Member upon its
execution of the Original Agreement.
(b) The Managing Member may, at any time and without advance notice to or
consent from any other Member, admit to the Fund as an additional Member any
Person who agrees to be bound by all of the terms of this Agreement. The
Managing Member may in its absolute discretion reject subscriptions for
Interests and may suspend subscriptions for Interests at any time and from time
to time. The admission of any Person as an additional Member will be effective
upon the Managing Member's acceptance on behalf of the Fund of such Person's
subscription for an Interest and the execution and delivery by, or on behalf of,
such Person of a counterpart of this Agreement or an instrument evidencing such
Person's agreement to be bound
8
by the terms of this Agreement. The Managing Member will cause the books and
records of the Fund to reflect the name and the initial contribution to the
capital of the Fund of the additional Member.
(c) Subject to Sections 4.2(b) and 4.5(g) of this Agreement, the bankruptcy (as
defined in the Delaware Act) of a Member (including the Managing Member and the
Special Member) shall not cause such Member to cease to be a member of the Fund.
2.8. ORGANIZATIONAL MEMBER
(a) ▇▇▇▇ ▇▇▇▇▇▇▇ was admitted to the Fund as the Organizational Member upon his
execution of the Initial Agreement. Immediately following the admission of the
Managing Member and the Special Member as members of the Fund, the
Organizational Member withdrew from the Fund as the Organizational Member and,
upon such withdrawal, the Organizational Member ceased to be a member of the
Fund.
(b) The Organizational Member will not have any liability for the obligations or
liabilities of the Fund except to the extent required by the Delaware Act.
2.9. LIMITED LIABILITY
Except as otherwise expressly provided by the Delaware Act, the debts,
obligations and liabilities of the Fund, whether arising in contract, tort or
otherwise, shall be the debts, obligations and liabilities solely of the Fund,
and no Member, Officer or Director shall be obligated personally for any such
debt, obligation or liability of the Fund solely by reason of being a Member,
Officer or Director of the Fund. No Member (or former Member) shall be obligated
to make any additional contribution to the Fund, or, except as required by the
Delaware Act or other applicable law, have any liability for the repayment of
any amount paid to the Member by the Fund, except as required pursuant to
Section 5.5 of this Agreement and in no event in excess of the aggregate amount
of returns of capital and other amounts actually received by it from the Fund.
2.10. DIRECTORS
(a) The number of Directors at the date of this Agreement is fixed at four (4).
The number of Directors may be fixed from time to time by the Directors then in
office with the approval of the Managing Member, except that no reduction in the
number of Directors will serve to effect the removal of any Director. Each
Member approves the delegation by the Managing Member to the Board of Directors,
in accordance with Section 3.1 of this Agreement, of certain of the Managing
Member's rights and powers.
(b) Each Director will serve for the duration of the term of the Fund, unless
his or her status as a Director is terminated sooner in accordance with Section
2.10(d) of this Agreement. Except to the extent the 1940 Act requires election
by Members, if any vacancy in the position of a Director occurs, including by
reason of an increase in the number of Directors as contemplated by Section
2.10(a) of this Agreement, the remaining Directors may appoint an individual to
serve in that capacity in accordance with the provisions of the 1940 Act.
Independent Directors will at all times constitute at least a majority of the
Directors then serving. An Independent Director
9
will be replaced by another Independent Director selected and nominated by the
remaining Independent Directors, or in a manner otherwise permissible under the
1940 Act.
(c) In the event no Director remains, or less than a majority of Directors then
holding office have been elected by the Members, the Managing Member will
promptly call a meeting of the Members, to be held within 60 days after such
event, for the purpose of electing Directors to fill any existing vacancies in
the Board of Directors as required by the 1940 Act.
(d) The status of a Director will terminate (1) if the Director dies; (2) if the
Director resigns as a Director; or (3) if the Director is removed in accordance
with Section 2.10(e) of this Agreement.
(e) Any Director may be removed with or without cause by a vote of Members
holding not less than 80% of the total number of votes eligible to be cast by
all Members.
(f) The Directors may establish and maintain committees of the Board of
Directors, and the Directors may grant to such committees the authority to,
among other things: monitor the valuation policies of the Fund; select and
nominate to the Board of Directors the Independent Directors; recommend to the
Board of Directors the compensation to be paid to the Independent Directors;
oversee the Fund's accounting and financial reporting policies and practices,
its internal controls and, as deemed necessary or appropriate, the internal
controls of certain of the Fund's service providers; oversee the quality and
objectivity of the Fund's financial statements and the independent audit of
those statements; act as a liaison between the Fund's independent auditors and
the Board of Directors; and review the contracts between the Fund and its
independent auditors, and in this regard, to generally oversee the audit
engagement and make any necessary auditor independence determinations.
(g) The Directors may establish or designate committees of the Board of
Directors or the Fund, whose members may include the Directors and/or other
Persons who are not Directors, to provide advice and other services to the Fund,
which committees may include (but are not limited to) a committee that will
monitor the valuation policies of the Fund.
(h) The Independent Directors will receive compensation for their services as
Independent Directors, as determined by the Board of Directors.
(i) Each person elected as a Director shall accept his or her appointment by
executing a counterpart of the Directors Agreement in the form attached to this
Agreement as Exhibit A.
ARTICLE III
MANAGEMENT OF THE FUND
3.1. MANAGEMENT AND CONTROL
(a) The Board of Directors has overall responsibility for monitoring and
overseeing the Fund's investment program and its management and operation and
has approved the Fund's investment program. The Managing Member, to the fullest
extent permitted by applicable law, irrevocably delegates to the Board of
Directors the Managing Member's rights and powers to
10
monitor and oversee the business affairs of the Fund. Rights and powers
delegated to the Directors include, without limitation, the authority as
Directors to oversee and to establish policies regarding the management, conduct
and operation of the Fund's business, and to do all things necessary and proper
as Directors to carry out the objective and business of the Fund, including,
without limitation, the power to engage the Investment Manager in accordance
with Section 3.5 of this Agreement and to remove the Investment Manager, as well
as to exercise any other rights and powers expressly given to the Directors
under this Agreement. During any period in which the Fund has no Directors, the
Managing Member will, subject to Section 2.10(c) of this Agreement, possess all
of the rights, powers and authority delegated to the Board of Directors of the
Fund under this Agreement. Each Director will be the agent of the Fund but will
not, for any purpose, be deemed a Managing Member. Notwithstanding the
delegation described in this Section 3.1(a), the Managing Member will not cease
to be the Managing Member and will retain the rights, powers and authority
described in Section 3.2 and in no event will a Director be considered a
Managing Member by agreement, estoppel or otherwise as a result of the
performance of his or her duties under this Agreement or otherwise. Directors
will not make Capital Contributions to the Fund in their capacity as Directors,
but may subscribe for Interests as Members, in accordance with Section 2.7 of
this Agreement.
(b) No Member, other than the Managing Member, will have any right to
participate in or take any part in the management or control of the Fund's
business in his, her or its capacity as a Member, and no Member, other than the
Managing Member, will have any right, power or authority to act for or bind the
Fund in his, her or its capacity as a Member. Members will 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 and
will have no right with respect to the Fund to exercise any other vote capable
of being granted to members under the Delaware Act, any such voting rights being
vested in the Managing Member and may be exercised without requiring the
approval of any other Member.
3.2. POWERS RESERVED BY THE MANAGING MEMBER
Notwithstanding anything in this Agreement to the contrary, the Managing
Member retains all rights, duties and powers to manage the affairs of the Fund
that are not otherwise delegated by the Managing Member to the Board of
Directors or assumed by the Investment Manager or any other Person under the
terms of any agreement between the Fund and the Investment Manager or any other
Person. Specifically, and without limitation, the Managing Member will retain
full power and authority on behalf of and in the name of the Fund to:
(1) approve the acceptance of initial and additional subscriptions from
investors on behalf of the Fund and making determinations as to the dates
on which the Fund will accept such subscriptions;
(2) make determinations as to the suspension of subscriptions;
(3) make determinations regarding the Transfer of Interests;
(4) determine appropriate reserves to be created for the contingent,
conditional or unmatured liabilities of the Fund;
11
(5) act as tax matters partner; and
(6) manage or oversee the general administrative and operational aspects
of the Fund.
3.3. ACTIONS BY DIRECTORS
(a) Unless provided otherwise in this Agreement, the Directors will act only:
(1) by the affirmative vote of a majority of the Directors (which majority will
include, if applicable, any requisite number of Independent Directors required
by the ▇▇▇▇ ▇▇▇) present at a meeting duly called at which a quorum of the
Directors is present either in person or, to the extent consistent with the
provisions of the 1940 Act, by conference telephone or other communications
equipment by means of which all Persons participating in the meeting can hear
each other; or (2) by unanimous written consent of all of the Directors without
a meeting, if permissible under the ▇▇▇▇ ▇▇▇.
(b) The Directors may designate from time to time a Director or an Officer of
the Fund or a representative of the Managing Member who will preside at all
meetings. Subject to the 1940 Act, a representative of the Managing Member may
attend any meeting of the Board of Directors as a non-voting observer. Meetings
of the Directors may be called by the Managing Member, the Chairman of the Board
of Directors or any two Directors, and may be held on any date and at any time
and place determined by the Directors. Each Director will be entitled to receive
written notice of the date, time and place of a meeting within a reasonable time
in advance of the meeting. Notice need not be given to any Director who attends
a meeting without objecting to the lack of notice or who executes a written
waiver of notice with respect to the meeting. A majority of the Directors then
in office will constitute a quorum at any meeting of Directors.
(c) The Directors may appoint from time to time Officers and agents of the Fund
who will have the same powers and duties on behalf of the Fund as are
customarily vested in officers of a corporation incorporated under Delaware law,
or such other powers and duties as may be designated by the Directors, in their
sole discretion, and designate them as Officers or agents of the Fund by
resolution of the Directors specifying their titles or functions.
3.4. 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 or by means of a
written consent. Meetings of the Members may be called by the Board of
Directors, the Managing Member, or by Members holding at least two-thirds of the
total number of votes eligible to be cast by all Members. Meetings may be held
at any time, date and place determined by the Managing Member, in the case of
meetings called by the Managing Member or the Members, and at any time, date and
place determined by the Directors, in the case of meetings called by the
Directors. In each case, the Managing Member will provide notice of the meeting,
stating the date, time and place of the meeting and the record date for the
meeting, to each Member entitled to vote at the meeting within a reasonable time
prior to the meeting. Failure to receive notice of a meeting on the part of any
Member will not affect the validity of any act or proceeding of the meeting, so
long as a quorum is present at the meeting. Except as otherwise required by
applicable law, only matters set out in the notice of a meeting may be voted on
by the Members at the meeting. The presence
12
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 will constitute a
quorum at any meeting of Members. In the absence of a quorum, a meeting may be
adjourned to the time or times as determined by the Managing Member and
communicated to the Directors in the manner described above in this Section
3.4(a). Except as otherwise required by any provision of this Agreement or of
the 1940 Act, (1) those candidates receiving a plurality of the votes cast at
any meeting of Members called in accordance with this Section 3.4(a) or elected
in accordance with the requirements of Section 2.10(b) of this Agreement will be
elected as Directors and (2) all other actions of the Members taken at a meeting
will require the affirmative vote of Members holding a majority of the total
number of votes eligible to be cast by those Members who are present in person
or by proxy at the meeting.
(b) Each Member will be entitled to cast at any meeting of Members or pursuant
to written consent a number of votes equivalent to the Member's Investment
Percentage as of the record date for the meeting or the written consent. The
Managing Member will establish a record date not less than 10 nor more than 60
days prior to the date of any meeting of Members or mailing (including by
electronic transmission) to the Members of any written consent, to determine
eligibility to vote at the meeting and the number of votes that each Member will
be entitled to cast at the meeting, and will maintain for each record date a
list setting out the name and Investment Percentage of each Member.
(c) A Member may vote at any meeting of Members by a properly executed proxy
transmitted to the Fund at any time at or before the time of the meeting by
telegram, telecopier or other means of electronic communication or other
readable reproduction as contemplated by the provisions relating to proxies
applicable to corporations incorporated under the laws of Delaware now or in the
future in effect. 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 is
present at the meeting and votes in person. Subject to the 1940 Act, 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 out the action to be
taken, are signed by Members holding a majority of the total number of votes
eligible to be cast or any greater percentage as may be required under this
Agreement to approve the action.
3.5. APPOINTMENT OF INVESTMENT MANAGER
(a) The Board of Directors will, among its powers, have the authority to cause
the Fund to engage the Investment Manager to provide investment advice,
management and other services to the Fund under the direction of the Board of
Directors, subject to any approval of such engagement by the Members that may be
required under the 1940 Act. As directed by the Board of Directors, the Fund and
the Managing Member, on behalf of the Fund, will have the authority to execute,
deliver and monitor the performance of any contract or agreement to provide
investment advice and management to the Fund (each, an "Investment Management
Agreement"). Any such Investment Management Agreement will require that the
Investment Manager acknowledge its obligations under this Agreement.
(b) So long as the Investment Manager has been and continues to be authorized to
provide services under an Investment Management Agreement, it will have, subject
to any policies and
13
restrictions described in the Memorandum or adopted from time to time by the
Directors and communicated in writing to the Investment Manager (in each case,
as more fully described in such Investment Management Agreement), full
discretion and authority on behalf of and in the name of the Fund (1) to manage
the assets and liabilities of the Fund, (2) to identify and evaluate Portfolio
Managers and Investment Funds and to determine the assets of the Fund to be
committed to each Portfolio Manager and Investment Fund from time to time, in
each case subject to the terms and conditions of the governing documents of each
Portfolio Manager and Investment Fund, and (3) to invest directly the assets of
the Fund in investments pending allocation or reallocation of the assets in
Investment Funds or to ensure the availability of cash as required by the Fund
in the ordinary course of its business.
(c) The Investment Manager, to the extent of its powers set out in this
Agreement or otherwise vested in it under any Investment Management Agreement,
is an agent of the Fund, and the actions of the Investment Manager taken or
refrained from being taken in accordance with such powers will bind the Fund.
3.6. CUSTODY OF ASSETS OF THE FUND
Notwithstanding anything to the contrary in this Agreement, the Managing
Member will not have any authority to hold or have possession or custody of any
funds, Securities or other property of the Fund. The physical possession of all
funds, Securities or other property of the Fund will at all times be held,
controlled and administered by one or more custodians retained by the Fund. The
Managing Member will have no responsibility, other than that associated with the
oversight and supervision of custodians retained by the Fund, with respect to
the collection of income or the physical acquisition or safekeeping of the
funds, Securities or other assets of the Fund, all duties of collection,
physical acquisition or safekeeping being the sole obligation of such
custodians.
3.7. OTHER ACTIVITIES
(a) Notwithstanding any duty otherwise existing at law or in equity, none of the
Managing Member, the Investment Manager and their principals, partners,
directors, officers, members, employees and beneficial owners nor the Directors
or Officers will be required to devote their full time to the affairs of the
Fund, but each will devote such time as each may reasonably be required to
perform its obligations under this Agreement and under the ▇▇▇▇ ▇▇▇.
(b) Notwithstanding any duty otherwise existing at law or in equity, (i) the
Investment Manager, the Directors, the Officers, any Member, and any Affiliate
of any Member may engage in or possess an interest in other business ventures or
commercial dealings of every kind and description, independently or with others,
including, but not limited to, acquisition and disposition of Securities,
provision of investment advisory or brokerage services, serving as directors,
officers, employees, advisors or agents of other companies, partners of any
partnership, members of any limited liability company, or trustees of any trust,
or entering into any other commercial arrangements, and (ii) no Member will have
any rights in or to such activities of any other Member, the Investment Manager,
the Directors, the Officers or any Affiliate of any Member or any profits
derived from these activities.
14
(c) Notwithstanding any duty otherwise existing at law or in equity, the
Managing Member, the Investment Manager and their principals, partners,
directors, officers, members, employees and beneficial owners and the Directors
and Officers, from time to time may acquire, possess, manage, hypothecate and
dispose of Securities or other investment assets, and engage in any other
investment transaction for any account over which they exercise discretionary
authority, including their own accounts, the accounts of their families, the
account of any entity in which they have a beneficial interest or the accounts
of others for whom or which they may provide investment advisory or other
services.
(d) The Members acknowledge and agree that, notwithstanding any duty otherwise
existing at law or in equity, the Managing Member, the Investment Manager and
their Affiliates may engage in activities (including, without limitation, those
activities described in the Memorandum) in which their respective interests or
the interests of their clients may conflict with the interests of the Fund or
the Members, and that the resolution of such conflicts may not always be
resolved by the Managing Member, the Investment Manager or their Affiliates in
favor of the Fund or the Members.
(e) To the extent that at law or in equity the Directors, the Officers, the
Investment Manager or the Managing Member has duties (including fiduciary
duties) and liabilities relating to those duties to the Fund or to any other
Member or other Person bound by this Agreement, any such Person acting under
this Agreement will not be liable to the Fund or to any other Member or other
Person bound by this Agreement for its good faith reliance on the provisions of
this Agreement. The provisions of this Agreement, to the extent that they
restrict the duties and liabilities of the Managing Member, the Investment
Manager or the Directors otherwise existing at law or in equity, are agreed by
the Members to replace the other duties and liabilities of the Managing Member,
the Investment Manager or the Directors.
3.8. EXCULPATION
(a) The Investment Manager and the Managing Member (including each officer,
director, member, partner, principal, employee or agent of, or any Person who
controls, is controlled by or is under common control with, a Managing Member or
Investment Manager or member or partner of a Managing Member or Investment
Manager, and their executors, heirs, assigns, successors or other legal
representatives (each, an "Associated Person")) and each Director and Officer
(and his or her executors, heirs, assigns, successors or other legal
representatives) will not be liable to the Fund or to any of its Members for any
loss or damage occasioned by any act or omission in the performance of the
Person's services under this Agreement, in the absence of a final judicial
decision on the merits from which no further right to appeal may be taken that
the loss is due to an act or omission of the Person constituting willful
misfeasance, bad faith, gross negligence (or, in the case of any Investment
Manager and its Associated Persons, in their capacity as such, negligence) or
reckless disregard of the Person's duties under this Agreement.
(b) Members not in breach of any obligation under this Agreement or under any
agreement under which the Member subscribed for Interests will be liable to the
Fund, any Member or third parties only as required by this Agreement or
applicable law.
15
3.9. INDEMNIFICATION
(a) To the fullest extent permitted by law, the Fund will, subject to Section
3.9(c) of this Agreement, indemnify each Managing Member and Investment Manager
(and their Associated Persons) and each Director and Officer (and his or her
executors, heirs, assigns, successors or other legal representatives) (each such
Person being referred to as an "Indemnitee") against all losses, claims,
damages, liabilities, costs and expenses ("Losses," and, individually, a "Loss")
arising by reason of being or having been a Managing Member, Investment Manager,
Director or Officer of the Fund, or the past or present performance of services
to the Fund by the Indemnitee, except to the extent that the Loss has been
determined in a final judicial decision on the merits from which no further
right of appeal may be taken in any action, suit, investigation or other
proceeding, whether civil or criminal ("Action"), to have been incurred or
suffered by the Indemnitee by reason of willful misfeasance, bad faith, gross
negligence (or, in the case of any Investment Manager and its Associated
Persons, in their capacity as such, negligence) or reckless disregard of the
duties involved in the conduct of the Indemnitee's office ("Disabling Conduct").
Losses include, but are not limited to, amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties, and counsel fees and
expenses incurred in connection with the defense or disposition of any Action
before any judicial, arbitral, administrative or legislative body, in which the
Indemnitee may be or may have been involved as a party or otherwise, or with
which the Indemnitee may be or may have been threatened, while in office or
thereafter. The rights of indemnification provided under this Section 3.9 are
not to be construed so as to provide for indemnification of an Indemnitee for
any liability (including liability under U.S. federal securities laws that,
under certain circumstances, impose liability even on Persons that act in good
faith) to the extent (but only to the extent) that indemnification would be in
violation of applicable law, but will be construed so as to effectuate the
applicable provisions of this Section 3.9.
(b) Expenses, including counsel fees and expenses, incurred by any 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 Action upon receipt of an undertaking by or on behalf
of the Indemnitee to repay to the Fund amounts paid if a determination is made
that indemnification of the expenses is not authorized under Section 3.9(a) of
this Agreement, so long as (1) the Indemnitee provides security for the
undertaking, (2) the Fund is insured by or on behalf of the Indemnitee against
Losses arising by reason of the Indemnitee's failure to fulfill his, her or its
undertaking, or (3) a majority of the Independent Directors (excluding any
Director who is either seeking advancement of expenses under this Agreement or
is or has been a party to any other Action involving claims similar to those
involved in the Action giving rise to a claim for advancement of expenses under
this Agreement) or independent legal counsel in a written opinion determines,
based on a review of readily available facts (as opposed to a full trial-type
inquiry), that reason exists to believe that the Indemnitee ultimately will be
entitled to indemnification.
(c) With respect to the disposition of any Action (whether by a compromise
payment, pursuant to a consent decree or otherwise) without a final decision on
the merits by a court, or by any other body before which the Action has been
brought, that an Indemnitee was liable to the Fund or its Members by reason of
Disabling Conduct, indemnification will be provided in accordance with Section
3.9(a) of this Agreement if (1) the indemnification is approved as in the
16
best interests of the Fund by a majority of the Independent Directors (excluding
any Director who is either seeking indemnification under this Agreement or is or
has been a party to any other Action involving claims similar to those involved
in the Action giving rise to a claim for indemnification under this Agreement)
upon a determination, based upon a review of readily available facts (as opposed
to a full trial-type inquiry), that the Indemnitee acted in good faith and in
the reasonable belief that the actions were in the best interests of the Fund
and that the Indemnitee is not liable to the Fund or its Members by reason of
Disabling Conduct, or (2) the Directors secure a written opinion of independent
legal counsel, based upon a review of readily available facts (as opposed to a
full trial-type inquiry), to the effect that indemnification would not protect
the Indemnitee against any liability to the Fund or its Members to which the
Indemnitee would otherwise be subject by reason of Disabling Conduct.
(d) Any indemnification or advancement of expenses made in accordance with this
Section 3.9 will not prevent the recovery from any Indemnitee of any amount if
the Indemnitee subsequently is determined in a final judicial decision on the
merits in any Action involving the liability or expense that gave rise to the
indemnification or advancement of expenses to be liable to the Fund or its
Members by reason of Disabling Conduct. In any suit brought by an Indemnitee to
enforce a right to indemnification under this Section 3.9, it will be a defense
that the Indemnitee has not met the applicable standard of conduct described in
this Section 3.9. In any suit in the name of the Fund to recover any
indemnification or advancement of expenses made in accordance with this Section
3.9, the Fund will be entitled to recover the expenses upon a final adjudication
from which no further right of appeal may be taken. In any suit brought to
enforce a right to indemnification or to recover any indemnification or
advancement of expenses made in accordance with this Section 3.9, the burden of
proving that the Indemnitee is not entitled to be indemnified, or to any
indemnification or advancement of expenses, under this Section 3.9 will be on
the Fund (or on 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 he, she or it may otherwise be
entitled except out of the assets of the Fund, and no Member will be personally
liable with respect to any such claim for indemnification or advancement of
expenses.
(f) The rights of indemnification provided in this Section 3.9 will 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 will
affect the power of the Fund to purchase and maintain liability insurance on
behalf of any Managing Member, any Director, any Officer, the Investment Manager
or other Person.
(g) The Managing Member may enter into agreements indemnifying Persons providing
services to the Fund to the same, lesser or greater extent as set out in this
Section 3.9.
3.10. FEES, EXPENSES AND REIMBURSEMENT
(a) As consideration for providing services under an Investment Management
Agreement, and for so long as the Investment Manager provides such services to
the Fund under an Investment Management Agreement, the Fund will pay the
Investment Manager a monthly
17
management fee of 0.1042% per month (the "Management Fee") plus an additional
administrative services fee of 0.0125% per month (the "Manager Administrative
Services Fee") of the month-end Capital Account balance of each Member. The
Management Fee and the Manager Administrative Services Fee will be computed
based on the Capital Account of each Member as of the end of business on the
last day of each month, before giving effect to repurchases, Repurchase Fees or
the Performance Allocation, and after giving effect to other expenses. The
Management Fee and the Manager Administrative Services Fee will be an expense
paid out of the Fund's assets, and will be allocated to and debited against each
Member's Capital Account (including the Capital Accounts of the Investment
Manager, the Managing Member, the Special Member and any of their respective
Affiliates to the extent any of them holds an Interest). The Management Fee and
the Manager Administrative Services Fee will be paid monthly in arrears within
20 days after the end of each month. Subject to the 1940 Act, the Investment
Manager, in its discretion, may remit to any Member all or a portion of its past
profits earned with respect to the Capital Account of that Member.
(b) The Fund will compensate each Independent Director for his or her services
rendered in connection with the Fund as may be agreed to by the Directors and
the Managing Member, and as described in the Memorandum. The Fund will reimburse
all Directors for reasonable out-of-pocket expenses incurred by them in
attending meetings of the Board of Directors and committees of the Board of
Directors. In addition, if a representative of the Managing Member elects to
attend a meeting of the Board of Directors pursuant Section 3.3(b) of this
Agreement, the Fund will reimburse such representative of the Managing Member
for reasonable out-of-pocket expenses incurred in attending the meeting of the
Board of Directors.
(c) Placement Agents, which may include the Investment Manager and its
Affiliates, may be retained by the Fund or the Managing Member to assist in the
placement of Interests. Any placement fee will be payable by a prospective
investor in addition to the investor's subscription amount and will not
constitute a capital contribution made by the investor to the Fund nor part of
the assets of the Fund.
(d) The Fund will pay or assume all operating expenses of the Fund, other than
the expenses assumed by the Investment Manager under the terms of the applicable
Investment Management Agreement. Expenses to be borne by the Fund include,
without limitation:
(1) all expenses related to its investment program, including, but not
limited to, fees paid and expenses reimbursed directly or indirectly to
Investment Funds or Portfolio Managers (including management fees,
performance or incentive fees or allocations and redemption or withdrawal
fees, however titled or structured), all costs and expenses directly
related to portfolio transactions and positions for the Fund's account
such as direct and indirect expenses associated with the Fund's
investments, including its investments in Investment Funds or Separately
Managed Accounts (whether or not consummated), and enforcing the Fund's
rights in respect of such investments, transfer taxes and premiums, taxes
withheld on non-U.S. dividends, fees for data and software providers,
third-party research expenses, professional fees (including, without
limitation, the fees and expenses of consultants, attorneys (including
JPMorgan Chase internal legal counsel) and experts for advice relating to
the Fund) and, if applicable in the event the Fund invests through a
Separately Managed Account (or in connection with its temporary
18
or cash management investments), brokerage commissions, interest and
commitment fees on loans and debit balances, borrowing charges on
securities sold short, dividends on securities sold but not yet purchased
and margin fees;
(2) all costs and expenses associated with the establishment of Separately
Managed Accounts (whether or not consummated);
(3) any non-investment related interest expense;
(4) attorneys' fees and disbursements associated with preparing and
updating the Form N-2, including the Memorandum, agreements between the
Fund and its service providers, subscription documents and other
Fund-related documents, and with qualifying prospective investors;
(5) expenses, including attorneys' fees and disbursements, relating to
litigation or proceedings or examinations brought in state or federal
courts, including, but not limited to, those by the Internal Revenue
Service or other governmental bodies or self-regulatory organizations;
(6) fees and disbursements of any accountants engaged by the Fund, and
expenses related to the annual audit of the Fund;
(7) fees paid and out-of-pocket expenses reimbursed to the Fund's
administrator;
(8) fees paid and out-of-pocket expenses reimbursed to the Fund's
custodian;
(9) escrow and other recordkeeping fees and expenses;
(10) the costs of directors' and officers' errors and omissions insurance
and a fidelity bond;
(11) the fees of the Independent Directors and out-of-pocket expenses of
all Directors in attending meetings of the Board of Directors and
committees of the Board of Directors;
(12) the out-of-pocket expenses of any representative of the Managing
Member in attending meetings of the Board of Directors;
(13) the Management Fee;
(14) the Manager Administrative Services Fee;
(15) the costs of preparing and mailing reports and other communications,
including proxy, tender offer correspondence or similar materials, to
Members;
(16) all expenses relating to meetings of the Members, including travel
and other out-of-pocket expenses of all Directors and any representative
of the Managing Member in attending such meetings;
19
(17) all costs and charges for equipment or services used in communicating
information regarding the Fund's transactions among the Investment Manager
and any custodian or other agent engaged by the Fund; and
(18) any extraordinary expenses, including indemnification expenses as
provided for in Section 3.9 of this Agreement.
(e) The Fund may enter into an Expense Limitation and Reimbursement Agreement
with the Investment Manager (the "Expense Limitation and Reimbursement
Agreement") under which the Investment Manager will waive its fees and, if
necessary, reimburse expenses in respect of the Fund for each fiscal year that
the Expense Limitation and Reimbursement Agreement is in place.
(f) Subject to any Expense Limitation and Reimbursement Agreement, the
Investment Manager and the Managing Member will be repaid by the Fund for any of
the expenses set out in Section 3.9(d) of this Agreement that they pay on behalf
of the Fund, except as otherwise set out in this Agreement. Each of the
Investment Manager and the Managing Member may in its discretion from time to
time elect to bear certain expenses usually borne by the Fund.
(g) The Fund's organizational expenses were borne and recognized as expenses by
the Fund on the Initial Closing Date, subject to any obligation of the
Investment Manager to reimburse those expenses under the Expense Limitation and
Reimbursement Agreement. Costs incurred in connection with the initial offering
of Interests under the Form N-2 were deferred and amortized by the Fund over the
period of benefit not exceeding 12 months from the Initial Closing Date.
ARTICLE IV
TERMINATION OF STATUS OF MANAGING MEMBER; REMOVAL OF MANAGING
MEMBER; TRANSFERS AND REPURCHASES OF INTERESTS
4.1. TERMINATION OF STATUS OF MANAGING MEMBER
The Managing Member will cease to be the managing member of the Fund if
the Managing Member (a) is dissolved or otherwise terminates its existence; (b)
is removed in accordance with Section 4.2 of this Agreement; (c) Transfers its
entire Interest as Managing Member as permitted under Section 4.3 of this
Agreement and the Person to which the Interest is Transferred is admitted as a
substitute Managing Member under Section 2.6(a) of this Agreement; or (d)
otherwise ceases to be a member of the Fund under the Delaware Act. In addition,
▇▇▇▇▇▇▇ Associates, L.L.C. shall cease to be the managing member of the Fund
upon the death, disability or incapacity of ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
4.2. REMOVAL OF MANAGING MEMBER
(a) The Managing Member may be removed from its position as managing member of
the Fund by the vote or written consent of Members holding not less than 80% of
the total number of votes eligible to be cast by all Members.
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(b) The Managing Member may be removed from its position as managing member of
the Fund by the Board of Directors upon the bankruptcy (as defined in the
Delaware Act) of the Managing Member.
4.3. TRANSFER OF INTEREST OF MANAGING MEMBER
A Managing Member may not Transfer its Interest as the Managing Member
except with the consent of the Board of Directors and only to a Person who has
agreed to be bound as a Managing Member of the Fund by all of the terms of this
Agreement and applicable law. If a Managing Member Transfers its entire Interest
as Managing Member, it will not cease to be a Managing Member unless and until
the transferee is admitted to the Fund as a substitute Managing Member in
accordance with Section 2.6 of this Agreement. In executing this Agreement, each
Member is deemed to have consented to any Transfer contemplated by this Section
4.3.
4.4. TRANSFER OF INTERESTS OF MEMBERS
(a) An Interest or portion of an Interest held by a Member may be Transferred
only (1) by operation of law as a result of (i) the death, divorce, bankruptcy,
insolvency, adjudicated incompetence or dissolution of the Member or (ii) the
enforcement of any pledge or other security interest with respect to the
Interest; or (2) with the written consent of the Managing Member, which may be
withheld in its sole discretion and is expected to be granted, if at all, only
under limited circumstances. No Member may grant a pledge or other security
interest on an Interest or portion of an Interest without the written consent of
the Managing Member, which consent may be withheld in the Managing Member's sole
discretion. Any Transfer or pledge or other grant of any security interest not
made in accordance with this Section 4.4(a) shall be void.
(b) Unless the Fund consults with legal counsel to the Fund and counsel confirms
that the Transfer will not cause the Fund to be treated as a "publicly traded
partnership" taxable as a corporation, the Managing Member generally will not
consent to a Transfer unless the following conditions are met: (i) the
Transferring Member has been a Member for at least six months; (ii) the proposed
Transfer is to be made effective as of a Repurchase Date; and (iii) the Transfer
is (A) one in which the tax basis of the Interest in the hands of the transferee
is determined, in whole or in part, by reference to its tax basis in the hands
of the Transferring Member (for example, certain Transfers to Affiliates, gifts
and contributions to family entities), (B) to members of the Transferring
Member's immediate family (siblings, spouse, parents and children) or (C) a
distribution from a qualified retirement plan or an individual retirement
account.
(c) The Managing Member may not consent to a Transfer unless the Person to whom
or which an Interest or portion of an Interest is Transferred (or each of the
Person's equity owners if the Person is a "private investment company" as
defined in Rule 205-3(d)(3) under the Advisers Act, an investment company
registered under the 1940 Act, or a business development company as defined
under the Advisers Act) is a Person whom or that the Managing Member believes is
an "accredited investor" as defined in Regulation D under the 1933 Act, and
meets the requirements of paragraph (d)(1) of Rule 205-3 under the Advisers Act
or successor provision of any of those rules, or is otherwise exempt from the
requirements of those rules. In the event that
21
other investor eligibility requirements are established by the Fund, the Person
to whom or which an Interest or portion of an Interest is Transferred must
satisfy these other requirements.
(d) Notice to the Fund of any proposed Transfer of an Interest or portion of an
Interest must include evidence satisfactory to the Managing Member that the
proposed Transfer is exempt from registration under the 1933 Act and that the
proposed transferee meets any requirements imposed by the Fund or applicable law
with respect to investor eligibility and suitability, including the requirements
set out in Section 4.4(c) of this Agreement. Notice of a proposed Transfer of an
Interest must also be accompanied by a properly completed subscription agreement
in respect of the proposed transferee. The Managing Member generally will not
consent to a Transfer of a portion of an Interest by a Member unless the
Transfer is to a single transferee and, after the Transfer of such portion of
the Member's Interest, the balance of the Capital Account of each of the
transferee and transferor is not less than $50,000. A Member Transferring an
Interest or portion of an Interest may be charged reasonable expenses, including
attorneys' and accountants' fees, incurred by the Fund in connection with the
Transfer. In connection with any request to Transfer an Interest or portion of
an Interest, the Managing Member may require the Member requesting the Transfer
to obtain, at the Member's expense, an opinion of counsel selected by the
Managing Member as to such matters as the Managing Member may reasonably
request.
(e) Any transferee acquiring an Interest or portion of an Interest by operation
of law as the result of the death, divorce, bankruptcy, insolvency, adjudicated
incompetence or dissolution of a Member, the enforcement of any pledge or other
security interest with respect to the Interest, or otherwise, will be entitled
to the allocations and distributions allocable to the Interest so acquired, to
Transfer the Interest or portion of the Interest in accordance with the terms of
this Agreement and to tender the Interest or portion of the Interest for
repurchase by the Fund, but will not be entitled to the other rights of a Member
unless and until the transferee becomes a substituted Member as specified in
this Agreement. No Person may become a substituted Member without the written
consent of the Managing Member, which consent may be withheld for any reason in
its sole discretion.
(f) If a Member Transfers an Interest or portion of an Interest with the
approval of the Managing Member, the Fund will promptly take all necessary
actions so that each transferee or successor to whom the Interest or portion of
the Interest is transferred is admitted to the Fund as a Member. The admission
of any transferee as a substituted Member will be effective upon the execution
and delivery by, or on behalf of, the transferee of a counterpart of this
Agreement or any other instrument evidencing the transferee's agreement to be
bound by the terms of this Agreement. If a Member Transfers its entire Interest
as a Member, it will not cease to be a Member unless and until the transferee is
admitted to the Fund as a substituted Member in accordance with this Section
4.4(f).
(g) In subscribing for an Interest or becoming a substituted Member, a Member
agrees to indemnify and hold harmless the Managing Member and the Investment
Manager and any of their respective employees and Affiliates, the Fund, the
Board of Directors, the Special Member and each other Member against all losses,
claims, damages, liabilities, costs and expenses (including legal or other
expenses incurred in investigating or defending against any losses, claims,
damages, liabilities, costs and expenses or any judgments, fines and amounts
paid in
22
settlement), joint or several, to which those Persons may become subject by
reason of or arising from any Transfer made by that Member in violation of these
provisions or any misrepresentation made by that Member or a substituted Member
in connection with any such Transfer.
(h) The Fund shall maintain books for the purpose of registering Transfers of
Interests. The Fund shall not register a Transfer of an Interest or portion of
an Interest unless the transferee has executed a counterpart of this Agreement
or another instrument evidencing the transferee's agreement to be bound by the
terms of this Agreement.
4.5. REPURCHASE OF INTERESTS
(a) No Member or other Person holding an Interest acquired from a Member will
have the right to require the Fund to redeem or otherwise repurchase the
Interest.
(b) The Fund may from time to time repurchase Interests from Members in
accordance with written tenders by Members at those times, in those amounts, and
on terms and conditions as the Board of Directors may determine in its sole
discretion. The Fund will not offer to repurchase Interests on more than four
occasions during any one Fiscal Year, unless the Fund has been advised by legal
counsel to the Fund to the effect that more frequent offers would not cause any
adverse tax consequences to the Fund or the Members. The Investment Manager and
the Managing Member expect that they will recommend to the Board of Directors
that the Fund offer to repurchase Interests from Members approximately six
months after the Initial Closing Date (or, if such date is not the last day of a
calendar quarter, the last day of that calendar quarter), and, after that date,
quarterly, effective as of the last day of March, June, September and December.
In determining whether to accept such a recommendation, the Board of Directors
will consider the following factors, among others:
(1) whether any Members have requested to tender Interests to the Fund;
(2) the liquidity of the Fund's assets (including fees and costs
associated with withdrawing from Investment Funds and/or disposing of
assets managed by Subadvisers);
(3) the investment plans and working capital and reserve requirements of
the Fund;
(4) the relative economies of scale of the tenders with respect to the
size of the Fund;
(5) the history of the Fund in repurchasing Interests;
(6) the availability of information as to the value of the Fund's
interests in Investment Funds;
(7) the existing conditions of the securities markets and the economy
generally, as well as political, national or international developments or
current affairs;
(8) any anticipated tax consequences to the Fund of any proposed
repurchases of Interests; and
23
(9) the recommendations of the Managing Member and/or the Investment
Manager.
(c) The Fund will repurchase Interests from Members at net asset value in
accordance with written tenders on terms and conditions that the Board of
Directors determines to be fair to the Fund and to all Members or Persons
holding Interests acquired from Members. The net asset value of a Member's
Interest will be calculated in accordance with the Fund's procedures as of the
relevant Repurchase Date, after giving effect to all allocations that are made
as of that date (including any Performance Allocation to the Special Member in
respect of the Interest (or portion of the Interest) being repurchased). When
the Board of Directors determines that the Fund will repurchase Interests,
notice will be provided to Members, specifying the date on which repurchase
requests must be received by the Fund (the "Notice Due Date"), describing the
terms of the offer, containing information Members should consider in deciding
whether to participate in the repurchase opportunity and containing information
on how to participate. The Notice Due Date will be a date set by the Board of
Directors occurring no sooner than 20 Business Days after the commencement of
the repurchase offer and such date may be extended by the Board of Directors in
its absolute discretion. Members deciding whether to tender their Interests
during the period that a repurchase offer is open may obtain the most recently
calculated net asset value of their Interests by contacting the Investment
Manager during the period.
(d) The Fund expects to employ the following repurchase procedures, which
procedures may be deviated from, varied or amended by the Board of Directors in
their sole discretion upon notice to the Members:
(1) A Member choosing to tender an Interest for repurchase must do so by
the Notice Due Date, which generally will be the 25th calendar day of the
second month prior to the month in which the Repurchase Date falls (or, if
such date is not a Business Day, the preceding Business Day).
(2) Promptly after the Notice Due Date, the Fund will give to each Member
whose Interest has been accepted for repurchase a promissory note (the
"Promissory Note") entitling the Member to be paid an amount equal to the
net asset value, as of the Repurchase Date, of the repurchased Interest.
The determination of the value of Interests as of the Repurchase Date is
subject to adjustment based upon the results of the next annual audit of
the Fund's financial statements.
(3) The Promissory Note, which will be non-interest-bearing and
non-transferable, is expected to contain terms providing for payment at
two separate times.
(4) The initial payment in respect of the Promissory Note (the "Initial
Payment") will be in an amount equal to at least 95% of the net asset
value of the repurchased Interest as of the Repurchase Date less any
Repurchase Fee due to the Fund in connection with the repurchase. The
Initial Payment will be made on or before the later of (i) 30 days after
the Repurchase Date, or (ii) if the Fund has requested withdrawals of its
capital from any Investment Funds in order to fund the repurchase of
Interests, ten Business Days after the Fund has received at least 95% of
the aggregate amount withdrawn by the Fund from the Investment Funds.
24
(5) The second and final payment in respect of the Promissory Note (the
"Post-Audit Payment") is expected to be in an amount equal to the excess,
if any, of (i) the net asset value of the repurchased Interest as of the
Repurchase Date and based upon the results of the annual audit of the
Fund's financial statements for the year in which the Repurchase Date
occurs, less any Repurchase Fee due to the Fund in connection with the
repurchase, over (ii) the Initial Payment. The Managing Member anticipates
that the annual audit of the Fund's financial statements will be completed
within 60 days after the end of each Fiscal Year of the Fund and that the
Post-Audit Payment will be made promptly after the completion of the
audit.
(e) In the event that the Managing Member, the Special Member, the Investment
Manager or any of their respective Affiliates holds an Interest in his, her or
its capacity as a Member, the Interest may be tendered for repurchase in
connection with any repurchase offer made by the Fund.
(f) If the Managing Member ceases to serve in that capacity under Section 4.1 of
this Agreement (other than under Section 4.1(c) of this Agreement), the Board of
Directors may, by written notice to the former Managing Member (or its trustee
or other legal representative) within 60 days of the former Managing Member
ceasing to serve as managing member of the Fund, require the former Managing
Member to tender to the Fund its entire Interest on a date set out in the
notice. On such date, the Board of Directors will cause the Interest to be
repurchased by the Fund for cash at a valuation determined by the Board of
Directors in accordance with Section 4.5(c) of this Agreement, and the former
Managing Member will thereupon cease to be a Member.
(g) The Fund may repurchase an Interest of a Member or any Person acquiring an
Interest from or through a Member without consent or other action by the Member
or other Person if the Managing Member in its sole discretion determines that:
(1) the Interest has been Transferred or has vested in any Person other
than with the consent of the Managing Member or by operation of law as the
result of the death, divorce, bankruptcy, insolvency, adjudicated
incompetence or dissolution of the Member;
(2) ownership of the Interest by a Member or other Person is likely to
cause the Fund to be in violation of, or require registration of any
Interest under, 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;
(3) continued ownership of the Interest may be harmful or injurious to the
business or reputation of the Fund, the Board of Directors, the Managing
Member, the Special Member, the Investment Manager or any of their
Affiliates, or may subject the Fund or any of the Members to an undue risk
of adverse tax or other fiscal or regulatory consequences;
(4) any of the representations and warranties made by a Member or other
Person in connection with the acquisition of the Interest was not true
when made or has ceased to be true;
25
(5) with respect to a Member subject to special regulatory or compliance
requirements, such as those imposed by Employee Retirement Income Security
Act of 1974, the Bank Holding Company Act of 1956 or certain Federal
Communication Commission regulations (collectively, "Special Laws or
Regulations"), such Member will likely be subject to additional regulatory
or compliance requirements under these Special Laws or Regulations by
virtue of continuing to hold an Interest; or
(6) it would be in the best interests of the Fund for the Fund to
repurchase the Interest.
(h) A Member (other than the Managing Member or the Special Member) tendering
for repurchase only a portion of the Member's Interest will be required to
maintain a Capital Account balance of at least $50,000 after giving effect to
the repurchase. If a Member (other than the Managing Member or the Special
Member) tenders an amount that would cause the Member's Capital Account balance
to fall below the required minimum, the Managing Member shall have the right to
either (1) reduce the amount to be repurchased from the Member so that the
required minimum balance is maintained or (2) repurchase the remainder of the
Member's Interest in the Fund. The Managing Member may, in its sole discretion,
cause the Fund to repurchase the entire Interest held by a Member (other than
the Managing Member or Special Member) if the Member's Capital Account balance
in the Fund, as a result of repurchase or Transfer by the Member, is less than
$50,000. If the entire Interest of a Member (other than the Managing Member or
Special Member) is repurchased, that Member will cease to be a Member.
(i) Repurchases of Interests from Members by the Fund may be paid, in the
discretion of the Managing Member, in cash, or by the distribution of Securities
in-kind or partly in cash and partly in-kind. The Fund, however, expects not to
distribute Securities in-kind, except in the unlikely event that making a cash
payment would result in a material adverse effect on the Fund or on Members not
tendering Interests for repurchase. Any Securities distributed will be valued in
accordance with this Agreement and will be distributed to all tendering Members
on a proportional basis.
(j) The Fund may suspend or postpone a repurchase offer in certain limited
circumstances, and only by a vote of a majority of the Board of Directors,
including a majority of the Independent Directors. These circumstances include
the following:
(1) for any period during which circumstances exist as a result of which
it is not reasonably practicable for the Fund to dispose of Securities it
owns or to determine the value of the Fund's net assets;
(2) for any other periods that the SEC permits by order for the protection
of Members; or
(3) other unusual circumstances as the Board of Directors in its
discretion deems advisable to the Fund and its Members.
(k) A fee (a "Repurchase Fee") will be charged by the Fund on any repurchase of
an Interest from a Member at any time prior to the day immediately preceding the
one-year anniversary of the Member's purchase of the Interest. Partial Interests
will be repurchased on a "first in - first out" basis (in other words, the
portion of the Interest repurchased will be deemed to have been taken from the
earliest Capital Contribution made by such Member (adjusted for subsequent
26
appreciation and depreciation) until that Capital Contribution is decreased to
zero, and then from each subsequent Capital Contribution made by such Member (as
adjusted) until such Capital Contribution is decreased to zero). Other than any
Repurchase Fee, the Fund will not impose any charges in connection with
repurchases of Interests. At the Managing Member's discretion, no Repurchase Fee
will be charged by the Fund in connection with any repurchase of a Member's
Interest under Section 4.5(g).
(l) A repurchase of a Member's Interest under Sections 4.5(g) or (h) shall be on
terms and conditions as the Managing Member may determine in its sole
discretion, provided that (1) valuation of the Interest shall be determined in
accordance with Section 4.5(c), and (2) payment for the Interest shall be made
no later than as provided under the Fund's then-current tender offer procedures.
(m) Notwithstanding any provision to the contrary contained in this Agreement,
the Fund and the Managing Member on behalf of the Fund will not repurchase any
Interest or make a distribution to any Member on account of the Member's
Interest, if such repurchase or distribution would violate the Delaware Act or
other applicable law.
ARTICLE V
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; ALLOCATIONS
5.1. CONTRIBUTIONS TO CAPITAL
(a) The minimum initial Capital Contribution of each Member (other than the
Managing Member and the Special Member) will be $50,000 or such other amount as
the Managing Member determines from time to time. The amount of the initial
Capital Contribution of each Member will be recorded by the Fund upon acceptance
as a contribution to the capital of the Fund. Any amounts received in advance of
a closing with respect to the Fund will be placed in an interest-bearing escrow
account with the Fund's escrow agent prior to their investment in the Fund. Each
Member's entire initial Capital Contribution will be paid to the Fund
immediately prior to the Fund's acceptance of the Member's subscription for
Interests, unless otherwise agreed by the Fund and such Member. Cleared funds
received prior to the due date set out in the subscription agreement will earn
interest until such due date, and any such interest will be added to the amount
of the Member's subscription and invested in the Fund.
(b) A Member may make additional Capital Contributions effective as of those
times and in amounts as the Managing Member may permit, but no Member will be
obligated to make any additional Capital Contribution except to the extent
provided in Sections 5.5 and 5.7 of this Agreement. Each additional Capital
Contribution made by a Member (other than a contribution made in accordance with
Section 5.5 or Section 5.7 of this Agreement) will be in the minimum amount of
$25,000 or such other amount as the Managing Member determines from time to
time.
(c) The minimum initial and additional contributions set out in Sections 5.1(a)
and (b) of this Agreement may be increased or reduced by the Managing Member
from time to time. Reductions may be applied to all investors, individual
investors or to classes of investors, in each case in the sole discretion of the
Managing Member.
27
(d) Subject to the provisions of the 1940 Act, and except as otherwise permitted
by the Managing Member, (1) initial and any additional Capital Contributions by
any Member will be payable in cash or in Securities that the Managing Member, in
its absolute discretion, causes the Fund to accept, and (2) initial and any
additional Capital Contributions in cash will be payable in readily available
funds on the due date set forth in the subscription agreement or agreements
executed with respect to such Capital Contributions. The Fund will charge each
Member making a Capital Contribution in Securities to the capital of the Fund
such amount as may be determined by the Managing Member to reimburse the Fund
for any costs incurred by the Fund by reason of accepting the Securities, and
any charge will be due and payable by the contributing Member in full at the
time the Capital Contribution to which the charges relate is due. The value of
contributed Securities will be determined in accordance with Section 7.3 of this
Agreement as of the date of contribution.
(e) The Investment Manager may make Capital Contributions and own an Interest in
the Fund and, in so doing, upon compliance with Section 2.7(b), will, to the
extent not already a Member, become a Member with respect to the Interest.
5.2. RIGHTS OF MEMBERS TO CAPITAL
No Member will be entitled to interest on the Member's Capital
Contribution. No Member will be entitled to the return of any capital of the
Fund except (a) upon the repurchase by the Fund of the Member's Interest in
accordance with Section 4.5 of this Agreement, (b) in accordance with the
provisions of Section 5.7 of this Agreement or (c) upon the liquidation of the
Fund's assets in accordance with Section 6.2 of this Agreement. To the fullest
extent permitted by applicable law, no Member will 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 will maintain a separate Capital Account for each Member (including
the Investment Manager, the Managing Member, the Special Member and any of their
respective Affiliates to the extent any of them holds an Interest).
(b) Each Member's Capital Account will have an initial balance equal to the
amount of cash and the value of any Securities (determined in accordance with
Section 7.3 of this Agreement) constituting the Member's initial Capital
Contribution.
(c) Each Member's Capital Account will be increased by the sum of (1) the amount
of cash and the value of any Securities (determined in accordance with Section
7.3 of this Agreement) constituting additional Capital Contributions by the
Member permitted under Section 5.1 of this Agreement, plus (2) any amount
credited to the Member's Capital Account under Sections 5.4 through 5.7 of this
Agreement.
(d) Each Member's Capital Account will be reduced by the sum of (1) the amount
of any repurchase with respect to the Member's Interest or distributions to the
Member under Section 4.5, 5.8 or 6.2 of this Agreement, plus (2) any amounts
debited against the Member's Capital Account under Sections 5.4 through 5.7 of
this Agreement.
28
(e) In the event the Interest of a Member is Transferred in accordance with the
terms of this Agreement, the transferee will succeed to the Capital Account of
the transferor to the extent of the Transferred Interest.
(f) Subject to Section 5.5 of this Agreement, no Member will be required to pay
to the Fund or any other Member or Person any deficit in such Member's Capital
Account upon dissolution of the Fund or otherwise.
5.4. ALLOCATION OF NET CAPITAL APPRECIATION AND DEPRECIATION; MANAGEMENT FEE AND
MANAGER ADMINISTRATIVE SERVICES FEE
(a) At the end of each Allocation Period of the Fund, the Capital Account of
each Member (including the Investment Manager, the Managing Member, the Special
Member and any of their respective Affiliates to the extent any of them holds an
Interest) shall be adjusted by crediting (in the case of Net Capital
Appreciation) or debiting (in the case of Net Capital Depreciation) the Net
Capital Appreciation or Net Capital Depreciation, as the case may be, to the
Capital Accounts of all the Members (including the Investment Manager, the
Managing Member, the Special Member and any of their respective Affiliates to
the extent any of them holds an Interest) in proportion to their respective
Investment Percentages for such Allocation Period.
(b) At the end of each month, the Capital Account of each Member (including the
Investment Manager, the Managing Member, the Special Member and any of their
respective Affiliates to the extent any of them holds an Interest) shall be
decreased by the amount of the Management Fee and the Manager Administrative
Services Fee calculated in respect of such Capital Account in accordance with
Section 3.10(a).
5.5. ALLOCATION OF CERTAIN WITHHOLDING TAXES, OTHER EXPENDITURES, AND RESERVES
(a) If the Fund incurs a withholding tax or other tax obligation with respect to
the share of Fund income allocable to any Member, then the Managing Member,
without limitation of any other rights of the Fund or the Managing Member, will
cause the amount of the obligation to be debited against the Capital Account of
the Member when the Fund pays the obligation, and any amounts then or in the
future distributable to the Member will be reduced by the amount of the taxes.
If the amount of the taxes is greater than any distributable amounts, then the
Member and any successor to the Member's Interest will pay to the Fund as a
Capital Contribution, upon demand by the Managing Member, the amount of the
excess. The Managing Member will 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 the reduction or exemption, except that, in the event that the
Managing Member determines that a Member is eligible for a refund of any
withholding tax, the Managing Member may, at the request and expense of the
Member, assist the Member in applying for such refund.
(b) Except as otherwise provided for in this Agreement and unless prohibited by
the 1940 Act, any expenditures payable by the Fund, to the extent determined by
the Managing Member 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, will be charged only to those Members on
29
whose behalf the payments are made or whose particular circumstances gave rise
to such payments. The charges will be debited from the Capital Accounts of the
Members as of the close of the Allocation Period during which the items were
paid or accrued by the Fund.
(c) The Managing Member may cause appropriate reserves to be created, accrued
and charged by the Fund against Net Assets and proportionately against the
Capital Accounts of the Members for contingent, conditional or unmatured
liabilities, if any, as of the date any contingent, conditional or unmatured
liability becomes known to the Managing Member and accruable under accounting
principles generally accepted in the United States. The reserves shall be in the
amounts that the Managing Member in its sole discretion deems necessary or
appropriate. The Managing Member may increase or reduce any reserves from time
to time by such amounts as it in its sole discretion deems necessary or
appropriate. The amount of any reserve, or any increase or decrease in a
reserve, will be charged or credited, as appropriate, to the Capital Accounts of
the Members in proportion to their Investment Percentages at the time the
reserve is created, or increased or decreased, except that if any individual
reserve item, or any increase or decrease in a reserve item, is deemed by the
Managing Member, in its sole discretion, to be material, the amount of the
reserve item or increase or decrease in the reserve item may instead, at the
discretion of the Managing Member, be charged or credited to the Capital
Accounts of those Persons who were Members at the time, as determined by the
Managing Member in its sole discretion, of the act or omission giving rise to
the liability for which the reserve was established, increased or decreased in
proportion to their Investment Percentages as at that time.
(d) In the event that the Fund borrows money in order to fund the payment of any
withholding taxes, expenditures or other amounts described in this Section 5.5,
expenses associated with such borrowing shall be specially allocated in the same
proportions to the Capital Accounts of those Members against whom the expense
giving rise to such payment is debited or charged pursuant to this Section 5.5.
(e) Members and former Members shall be liable to the Fund, upon the demand of
the Managing Member, which demand the Managing Member may make or refrain from
making in its absolute discretion, in an amount equal to any expenses or
liabilities of the Fund allocated to their respective Capital Accounts in
accordance with this Section 5.5, provided, however, that in no event will such
amount with respect to any Member or former Member exceed the aggregate amount
of returns of capital and other amounts actually received by the Member or
former Member from the Fund. To the extent that a former Member fails to repay
to the Fund in full, upon the demand of the Managing Member, any amount required
to be charged to the former Member under this Section 5.5, the deficiency will
be charged to the Capital Accounts of the Members in proportion to their
Investment Percentages at the time of the act or omission giving rise to the
charge to the extent feasible, and otherwise to the Capital Accounts of the
current Members in proportion to their Investment Percentages. The provisions of
this Section 5.5(e) are intended solely to benefit the Fund and, to the fullest
extent permitted by law, shall not be construed as conferring any benefit upon
any Member (other than the Managing Member) or creditor of the Fund. No Member
other than the Managing Member shall have any right to demand payment from any
other Member pursuant to this Section 5.5(e), and the Managing Member shall not
have any duty or obligation to any other Member or creditor of the Fund to make
any demand for payment pursuant to this Section 5.5(e).
30
5.6. PERFORMANCE ALLOCATION
(a) At the end of each calendar year, each Member's return on investment for the
year will be determined and a portion of the Net Capital Appreciation allocated
to the Member's Capital Account during the year (the "Performance Allocation),
net of the Member's allocable share of the Management Fee and the Manager
Administrative Services Fee, equal to 10% of the portion of such Net Capital
Appreciation that exceeds the Preferred Return (as defined below) will be
reallocated to the Capital Account of the Special Member. The "Preferred Return"
is equal to the 3-month U.S. Treasury ▇▇▇▇ yield (as defined below) for each
month during the relevant calendar year (or any shorter period of calculation).
The "3-Month U.S. Treasury ▇▇▇▇ yield" for any month shall equal one-twelfth of
the annual yield for the 3-Month U.S. Treasury ▇▇▇▇ for the first business day
of the then current calendar quarter as set forth in the U.S. Federal Reserve
Statistical Release H.15(519) under the caption "Treasury constant maturities",
or if such measurement is not available, such other source as the Managing
Member may determine appropriate in its discretion.
(b) No Performance Allocation will be made with respect to a Member's Capital
Account until any cumulative Net Capital Depreciation previously allocated to
such Member's Capital Account plus any Management Fees and Manager
Administrative Services Fees charged to such Capital Account (collectively, the
"Loss Carryforward") have been recovered. Any Loss Carryforward of a Member will
be reduced proportionately to reflect the repurchase of any portion of that
Member's Interest.
(c) The performance of each Capital Contribution made by a Member during a
calendar year will be separately tracked, and the Performance Allocation, the
Preferred Return and any Loss Carryforward for a Member will be determined
separately with respect to each such Capital Contribution as if it were a
separate Capital Account.
(d) Upon a repurchase of an Interest (other than at the end of a calendar year)
from a Member in accordance with Section 4.5, a Performance Allocation will be
determined and allocated to the Special Member, and, in the case of any
repurchase of a portion of an Interest, as follows: the portion of the Interest
being repurchased (and the amount with respect to which the Performance
Allocation is calculated) will be deemed to have been taken from the first
Capital Contribution of such Member (as such Capital Contribution has been
adjusted for Net Capital Appreciation and Net Capital Depreciation, Management
Fees, Manager Administrative Services Fees and other expenses) until it is
decreased to zero and from each subsequent Capital Contribution until such
Capital Contribution (as adjusted) is decreased to zero.
(e) A Performance Allocation will be determined in respect of each Member and
allocated to the Special Member at the time of liquidation of the Fund.
(f) Within 30 days after the close of each calendar year, the Special Member may
withdraw up to 100% of the Performance Allocation (computed on the basis of
unaudited data) that was credited to the Capital Account of the Special Member
and debited from the Member's Capital Account with respect to the calendar year.
Such withdrawal will not cause the Special Member to cease to be the Special
Member.
31
(g) The Special Member may assign its right to receive all or any part of the
Performance Allocation to one or more entities that are owned by JPMorgan Chase
or its Affiliates and/or certain employees of JPMorgan Chase, and any such
entity may, with the consent of the Managing Member, be admitted to the Fund as
an additional or substitute Special Member by executing a counterpart of this
Agreement or any other instrument evidencing its agreement to be bound by the
terms of this Agreement.
(h) Subject to the 1940 Act, the Special Member may, in its sole discretion,
elect to remit to a Member a portion of the Performance Allocation made with
respect to such Member's Capital Account.
(i) The Managing Member has the right to amend, without the consent of the
Members, this Agreement so that the Performance Allocation provided in the
Agreement conforms to any applicable requirements of the SEC and other
regulatory authorities; provided that such amendment does not increase the
Performance Allocation or otherwise have an adverse economic effect on the
Members (other than the Special Member).
5.7. TAX ALLOCATIONS AND OTHER TAX MATTERS
(a) For each Taxable Year of the Fund, items of income, deduction, gain, loss or
credit will be allocated for federal income tax purposes among the Members in a
manner so as to reflect equitably amounts credited or debited to each Member's
Capital Account for the current and prior Taxable Years (or relevant portions of
those years). Allocations under this Section 5.7 will be made in accordance with
the principles of sections 704(b) and 704(c) of the Code, and in conformity with
Treasury Regulations promulgated under these sections, or the successor
provisions to such sections and Treasury Regulations. Notwithstanding anything
to the contrary in this Agreement, the Fund will allocate to the Members those
gains or income necessary to satisfy the "qualified income offset" requirement
of Treasury Regulations Section 1.704-1(b)(2)(ii)(d).
(b) If the Fund realizes capital gains (including short-term capital gains) or
ordinary income for U.S. federal income tax purposes for any Taxable Year during
or as of the end of which one or more Positive Basis Members (as defined in this
Section 5.7) withdraw from the Fund under Articles IV or VI of this Agreement,
the Managing Member, in its sole discretion, may elect to allocate such gains or
income as follows: (i) to such Positive Basis Members, in proportion to the
respective Positive Basis (as defined in this Section 5.7) of each such Positive
Basis Member, until either the full amount of such gains or income has been so
allocated or the Positive Basis of each such Positive Basis Member has been
eliminated, and (ii) to allocate any gains or income not so allocated to
Positive Basis Members to the other Members in a manner that reflects equitably
the amounts credited to the Members' Capital Accounts under Section 5.4.
(c) If the Fund realizes capital losses (including short-term capital losses) or
ordinary losses for U.S. federal income tax purposes for any Taxable Year during
or as of the end of which one or more Negative Basis Members (as defined in this
Section 5.7) withdraw from the Fund under Articles IV or VI of this Agreement,
the Managing Member, in its sole discretion, may elect to allocate such losses
as follows: (i) to such Negative Basis Members, in proportion to the respective
Negative Basis (as defined in this Section 5.7) of each such Negative Basis
Member,
32
until either the full amount of such losses has been so allocated or the
Negative Basis of each Negative Basis Member has been eliminated, and (ii) to
allocate any losses not so allocated to Negative Basis Members, to the other
Members in a manner that reflects equitably the amounts debited against the
Members' Capital Accounts under Section 5.4.
(d) As used in this Section 5.7, the term "Positive Basis" means, with respect
to any Member and as of any time of calculation, the amount by which such
Member's Capital Account as of that time exceeds such Member's "adjusted tax
basis," for U.S. federal income tax purposes, in such Member's Interest as of
that time (determined without regard to any adjustments made to the "adjusted
tax basis" by reason of any Transfer of the 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). As used in this Section 5.7, the term "Positive
Basis Member" means any Member who withdraws from the Fund and who has a
Positive Basis as of the effective date of such Member's withdrawal. As used in
this Section 5.7, the term "Negative Basis" means, with respect to any Member
and as of any time of calculation, the amount by which such Member's "adjusted
tax basis," for U.S. federal income tax purposes, in such Member's Interest as
of that time (determined without regard to any adjustments made to the "adjusted
tax basis" by reason of any Transfer of the 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) exceeds the Member's Capital Account as of such
time. As used in this Section 5.7, the term "Negative Basis Member" means any
Member who withdraws from the Fund and who has a Negative Basis as of the
effective date of such Member's withdrawal.
(e) Allocations under this Section 5.7 may be adjusted at any time by the
Managing Member to the extent the Managing Member determines in good faith that
such adjustments (i) would more equitably reflect the economic allocations
hereunder or (ii) would otherwise be in the overall best interests of the
Members.
(f) The Fund will file a tax return as a partnership for U.S. federal income tax
purposes. All decisions for the Fund relating to tax matters, including, without
limitation, whether to make any tax elections (including the election under
section 754 of the Code), the positions to be taken on the Fund's tax returns
and the settlement or further contest or litigation of any audit matters raised
by the Internal Revenue Service or any other taxing authority, will be made by
the Managing Member in its sole discretion. The Managing Member will be the
designated "tax matters partner" for purposes of the Code.
(g) Each Member agrees not to treat, on his, her or its income tax return or in
any claim for a refund, any item of income, gain, loss, deduction or credit in a
manner inconsistent with the treatment of such item by the Fund.
5.8. DISTRIBUTIONS
(a) Subject to the 1940 Act, the Managing Member may, in its sole discretion,
cause the Fund to make distributions in cash or in kind at any time to all of
the Members on a proportionate basis in accordance with the Members' Investment
Percentages.
33
(b) The Managing Member may withhold taxes from any distribution to any Member
to the extent required by the Code or any other applicable law. For purposes of
this Agreement, any taxes so withheld by the Fund with respect to any amount
distributed by the Fund to any Member will be deemed to be a distribution or
payment to the Member, reducing the amount otherwise distributable to the Member
under this Agreement and reducing the Capital Account of the Member. Neither the
Managing Member nor the Directors will 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 reduction or exemption. To the extent that a Member claims to be
entitled to a reduced rate of, or exemption from, a withholding tax under an
applicable income tax treaty, or otherwise, the Member will furnish the Fund
with any information and forms that the Member may be required to complete if
necessary to comply with any and all laws and regulations governing the
obligations of withholding tax agents. Each Member represents and warrants that
any information and forms furnished by the Member will be true and accurate and
agrees to indemnify the Fund and each of the other Members from any and all
losses, claims, damages, liabilities, costs and expenses resulting from the
filing of inaccurate or incomplete information or forms relating to the
withholding taxes (including legal or other expenses incurred in investigating
or defending against any such losses, claims, damages, liabilities, costs and
expenses).
ARTICLE VI
DISSOLUTION AND LIQUIDATION
6.1. DISSOLUTION
(a) The Fund will be dissolved if at any time it has no members (unless it is
continued without dissolution in accordance with the Delaware Act) or upon the
occurrence of any of the following events:
(1) upon the affirmative vote to dissolve the Fund by either (A) a
majority of the Board of Directors (including a majority of the
Independent Directors) or (B) Members holding at least 80% of the total
number of votes eligible to be cast by all Members;
(2) upon an election by the Managing Member to dissolve the Fund;
(3) upon the failure of Members to approve successor Directors at a
meeting called by the Managing Member in accordance with Section 2.10(c)
of this Agreement when no Director remains to continue the Fund;
(4) upon the expiration of any two-year period that commences on the date
on which any Member has submitted a written notice to the Fund requesting
to tender the Member's entire Interest for repurchase by the Fund
(provided the Member indicates its intention to dissolve the Fund in a
separate written request to the Fund that specifically refers to this
Section 6.1(a)(4)), unless the Member has been given the opportunity to so
tender in accordance with the procedures described in Section 4.5 of this
Agreement (whether in a single repurchase offer or multiple consecutive
offers within the two-year period); or
34
(5) as otherwise required by Section 18-802 of the Delaware Act or
operation of law.
Dissolution of the Fund will be effective on the day on which the event
giving rise to the dissolution occurs, provided, that the Fund will not
terminate until the assets of the Fund have been liquidated and distributed in
accordance with Section 6.2 of this Agreement and the Certificate has been
canceled in accordance with the Delaware Act.
(b) Except as provided in Section 6.1(a) of this Agreement or in the Delaware
Act, the death, adjudicated incompetence, dissolution, divorce, termination,
liquidation, bankruptcy (as defined in the Delaware Act), reorganization,
merger, sale of substantially all of the stock or assets of, or other change in
the ownership or nature of a Member, the admission to the Fund of a new Member,
the withdrawal of a Member from the Fund, or the Transfer by a Member of the
Member's Interest to a third party will not cause the Fund to dissolve.
6.2. LIQUIDATION OF ASSETS
(a) Upon the dissolution of the Fund as provided in Section 6.1 of this
Agreement, the Managing Member, acting as liquidator (or if the Managing Member
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 and
whose fees will be paid by the Fund) will promptly wind up the affairs of the
Fund and liquidate its assets. Net Capital Appreciation and Net Capital
Depreciation for any Allocation Period during the period of liquidation will be
allocated in accordance with Article V of this Agreement. Subject to the
Delaware Act, the proceeds from liquidation will be distributed in the following
order and manner:
(1) first, to satisfy (whether by payment or the making of a reasonable
provision for payment) the debts, liabilities and obligations of the Fund,
and the expenses of liquidation (including legal and accounting fees and
expenses incurred in connection with the liquidation), up to and including
the date on which distribution of the Fund's assets to the Members has
been completed, other than debts, liabilities or obligations to Members;
(2) second, to satisfy on a proportionate basis the debts, liabilities and
obligations owing to the Members; and
(3) third, to the Members on a proportionate basis the positive balances
of their Capital Accounts after giving effect to all allocations to be
made to the Members' Capital Accounts for the Allocation Period ending on
the date of the distributions under this Section 6.2(a)(3).
(b) Notwithstanding the provisions of this Section 6.2, upon dissolution of the
Fund, subject to the Delaware Act and the priorities set out in Section 6.2(a)
of this Agreement, the Managing Member or liquidator may distribute ratably
in-kind any assets of the Fund, if the Board of Directors, Managing Member or
liquidator determines that the distribution of assets in-kind would be in the
interests of the Members in facilitating an orderly liquidation. If any in-kind
distribution is to be made under this Section 6.2(b), (1) the assets distributed
in-kind will be valued in accordance with Section 7.3 of this Agreement as of
the actual date of their distribution and charged as so valued and distributed
against amounts to be paid under Section 6.2(a) of this Agreement, and (2) any
profit or loss attributable to property distributed in-kind will be included
35
in the Net Capital Appreciation or Net Capital Depreciation for the Allocation
Period ending on the date of the distribution. Notwithstanding any provision of
this Agreement to the contrary, a Member may be required to accept a
distribution of any asset in-kind from the Fund even if the percentage of the
asset distributed to the Member exceeds a percentage of the asset that is equal
to the percentage in which the Member shares in distributions from the Fund.
ARTICLE VII
ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS
7.1. ACCOUNTING AND REPORTS
(a) The Fund will adopt for tax accounting purposes the accrual method of
accounting. The Fund's accounts will be maintained in U.S. currency.
(b) The Fund will furnish to Members, as soon as practicable after the end of
each Taxable Year, such information as is necessary for Members to complete U.S.
federal and state income tax or information returns and any other tax
information required by U.S. federal or state law.
(c) The Managing Member anticipates sending to each Member an unaudited
semiannual and an audited annual report within 60 days after the close of the
period covered by the report, or as otherwise required by the 1940 Act. The Fund
will cause financial statements contained in each annual report furnished under
this Section 7.1 to be accompanied by a certificate of independent public
accountants based upon an audit performed in accordance with U.S. generally
accepted auditing standards. All such financial statements will be prepared in
accordance with U.S. generally accepted accounting principles. The Fund will
also send to each Member quarterly reports regarding the Fund's operations
during each quarter as well as monthly updates. Such quarterly reports and
monthly updates shall contain information deemed appropriate by the Managing
Member, in its sole discretion. The Fund may furnish to each Member any other
periodic reports the Managing Member deems necessary or appropriate in its sole
discretion. Certain additional information regarding the Fund's operations may
be available to Members from time to time on written request.
7.2. DETERMINATIONS BY MANAGING MEMBER
(a) All matters concerning the determination and allocation among the Members of
the amounts to be determined and allocated under Article V of this Agreement,
including any taxes on those amounts and accounting procedures applicable with
respect to those amounts, will be determined by the Managing Member unless
specifically and expressly otherwise provided for by the provisions of this
Agreement or as required by law. Any such determinations and allocations will be
final and binding on all of the Members.
(b) The Managing Member may make any adjustments to the computation of Net
Capital Appreciation and/or Net Capital Depreciation, or any components
(including withholding any items of income, gain, loss or deduction)
constituting Net Capital Appreciation and/or Net Capital Depreciation as the
Managing Member deems appropriate to reflect fairly and accurately
36
the financial results of the Fund and the intended allocation of Net Capital
Appreciation and/or Net Capital Depreciation among the Members.
7.3. VALUATION OF ASSETS
(a) Except as may be required by the 1940 Act, the Board of Directors will value
or cause to have valued any Securities or other assets and liabilities of the
Fund as of the close of business on the last day of each Allocation Period in
accordance with valuation procedures established from time to time by the Board
of Directors and as described in the Memorandum. In accordance with these
procedures, the Fund will value its investments in Investment Funds at fair
value and the fair value as of each month-end ordinarily will be the value most
recently determined and reported to the Fund by each Investment Fund in
accordance with the Investment Fund's valuation policies.
(b) In determining the value of the assets of the Fund, no value will 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. 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 under agreements entered into prior to the valuation date will,
however, be taken into account in determining the value of the Fund's assets.
(c) Subject to the provisions of the 1940 Act, the value of Securities and other
assets of the Fund and the net asset value of the Fund as a whole determined in
accordance with this Section 7.3 will be conclusive and binding on all of the
Partners and all Persons claiming through or under them.
(d) Each Member acknowledges that, although the procedures approved by the Board
of Directors provide that the Investment Manager will review the valuations
provided by the Portfolio Managers or administrators to the Investment Funds,
none of the Investment Manager, Managing Member or Board of Directors will be
able to confirm independently the accuracy of valuations provided by such
Portfolio Managers or administrators. As a result, the valuations reported by
the Portfolio Managers or administrators of the Investment Funds, upon which the
Fund calculates its month-end net asset value and net asset value for each
Interest, may be subject to later adjustment, based on information reasonably
available at that time. Each Member acknowledges that situations involving
uncertainties as to the valuation of Investment Funds could have an adverse
effect on the Fund's net assets if the Board of Directors' or the Investment
Manager's judgments regarding appropriate valuations should prove incorrect.
37
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1. AMENDMENT OF THIS AGREEMENT
(a) Except as otherwise provided in this Section 8.1 and Section 5.6(i), this
Agreement may be amended, in whole or in part, with the approval of a majority
of the Board of Directors (including a majority of the Independent Directors, to
the extent required by the 1940 Act). Any amendment also must be approved by a
majority (as defined in the ▇▇▇▇ ▇▇▇) of the outstanding voting securities of
the Fund, to the extent such vote is required by the ▇▇▇▇ ▇▇▇.
(b) Any amendment that would:
(1) increase the obligation of a Member to make any Capital Contribution;
or
(2) reduce the Capital Account of a Member other than in accordance with
Article V of this Agreement,
may be made only if (A) the written consent of each Member adversely affected by
the proposed amendment is obtained prior to the effectiveness of the amendment
or (B) the proposed amendment does not become effective until (i) each Member
adversely affected by the proposed amendment has received written notice of the
proposed amendment and (ii) any Member adversely affected by the proposed
amendment that objects to the proposed amendment has been afforded a reasonable
opportunity (under procedures adopted by the Managing Member in its sole
discretion) to tender the Member's entire Interest for repurchase by the Fund.
(c) The following amendments may be made only with the unanimous consent of the
Members and, to the extent required by the 1940 Act, approval of a majority of
the Board of Directors (including a majority of the Independent Directors, to
the extent required by the 1940 Act):
(1) any amendment that would alter the provisions of Section 5.6 of this
Agreement relating to the Special Member's Performance Allocation to the
extent such amendment would increase the Performance Allocation or
otherwise have an adverse economic effect on the Members (other than the
Special Member);
(2) any material amendment that would alter the provisions of this Section
8.1(b) or (c) relating to the amendment of this Agreement; and
(3) any amendment that would alter the provisions of Section 3.9 of this
Agreement relating to indemnification.
(d) Notwithstanding the provisions of Sections 8.1(a), 8.1(b) and 8.1(c) of this
Agreement, the Managing Member, at any time without the consent of any other
Member or (except as otherwise provided in this Section 8.1(d)) the Board of
Directors, may:
38
(1) amend the provisions relating to the Performance Allocation so that
the provisions conform to any applicable requirements of the SEC and other
regulatory authorities; provided that such amendment does not increase the
Performance Allocation or otherwise have an adverse economic effect on the
Members (other than the Special Member);
(2) restate this Agreement, together with any amendments to this Agreement
that have been duly adopted in accordance with the provisions of this
Agreement to incorporate the amendments in a single, integrated document;
(3) amend this Agreement (other than with respect to the matters described
in Section 8.1(b) of this Agreement) to change the name of the Fund in
accordance with Section 2.2 hereof, or to effect compliance with any
applicable law or regulation, including, but not limited to, to satisfy
the requirements of applicable U.S. securities or banking law or
regulation or tax law, or to clarify any ambiguity or to correct or
supplement any provision of this Agreement that may be inconsistent with
any other provision of this Agreement, so long as the amendment does not
adversely affect the rights of any Member in any material respect; and
(4) amend this Agreement to make any changes necessary or desirable, based
on advice of legal counsel to the Fund, to assure the Fund's continuing
eligibility to be classified as a partnership for U.S. federal income tax
purposes;
subject, however, to the limitation that any material amendment to this
Agreement under Section 8.1(d)(3) or (4) of this Agreement will be valid only if
approved by a majority of the Directors (including a majority of the Independent
Directors, to the extent required by the 1940 Act).
(e) The Managing Member will give prior written notice of any proposed amendment
to this Agreement (other than any amendment of the type contemplated by Section
8.1(d)(2) of this Agreement) to each Member, which notice sets out (1) the text
of the proposed amendment or (2) a summary of the amendment and a statement that
the text of the amendment will be furnished to any Member upon request.
8.2. SPECIAL POWER OF ATTORNEY
(a) Each Member irrevocably makes, constitutes and appoints the Managing Member
and each of the Officers and Directors, acting severally, and any liquidator of
the Fund's assets appointed under Section 6.2 of this Agreement, with full power
of substitution, the true and lawful representatives and attorneys-in-fact of,
and in the name, place and stead of, the 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;
(2) any amendment to the Certificate, including, without limitation, any
such amendment required to reflect any amendments to this Agreement, and
including, without limitation, an amendment to effectuate any change in
the membership of the Fund; and
39
(3) all other such instruments, documents and certificates that, in the
view of legal counsel to the Fund, from time to time may be required by
the laws of the United States of America, the State of Delaware or any
other jurisdiction in which the Managing Member determines that the Fund
should do business, or any political subdivision or agency of any such
jurisdiction, or that legal counsel may deem necessary or appropriate to
effectuate, implement and continue the valid existence and business of the
Fund as a limited liability company under the Delaware Act.
(b) Each Member is aware that the terms of this Agreement permit certain
amendments to this Agreement to be effected and certain other actions to be
taken or omitted by or with respect to the Fund without the Member's consent.
Each Member agrees that if an amendment to the Certificate or this Agreement or
any action by or with respect to the Fund is taken in the manner contemplated by
this Agreement, notwithstanding any objection that the Member may assert with
respect to the amendment or action, the attorneys-in-fact appointed under this
Agreement are authorized and empowered, with full power of substitution, to
exercise the authority granted in this Section 8.2 in any manner that may be
necessary or appropriate to permit the amendment to be made or the action to be
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) The power of attorney contemplated by this Section 8.2 is a special power of
attorney and is coupled with an interest in favor of the Managing Member and
each of the Officers and Directors, acting severally, and any liquidator of the
Fund's assets appointed under Section 6.2 of this Agreement, and as such the
power of attorney:
(1) will be irrevocable and continue in full force and effect
notwithstanding the subsequent death or incapacity of any Person granting
the power of attorney, regardless of whether the Fund, the Managing
Member, the Officers, the Directors or any liquidator has had notice of
the death or incapacity; and
(2) will survive the Transfer by a Member of all or any part of its
Interest, except that, when the transferee of an Interest has been
approved by the Managing Member for admission to the Fund as a substituted
Member, or upon the withdrawal of Member from the Fund in accordance with
a periodic tender or otherwise, the power of attorney given by the
transferor will survive the delivery of the assignment for the sole
purpose of enabling the Managing Member, the Officers, the Directors or
any liquidator to execute, acknowledge and file any instrument necessary
to effect the substitution and, upon completion of such substitution, will
terminate (but, in the case of any transfer of a portion of an Interest,
with respect to that portion of the Interest only).
8.3. NOTICES
Notices that may or are required to be provided under this Agreement will
be made to a Member by hand delivery, regular mail (registered or certified mail
return receipt requested in the case of notice to the Managing Member),
commercial courier service, facsimile, or electronic mail (with a confirmation
copy by registered or certified mail in the case of notices to the Managing
Member by telecopier or electronic mail), and will be addressed to the Member at
his,
40
her or its address as set out in the books and records of the Fund (or to any
other address as may be designated by any Member by notice addressed to the
Managing Member in the case of notice given to any Member, and to each of the
Members in the case of notice given to the Managing Member). Notices will be
deemed to have been provided when delivered by hand, on the date indicated as
the date of receipt on a return receipt or when received if sent by regular
mail, commercial courier service, facsimile or electronic mail. 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 will be binding upon and inure to the benefit of the
Members and their respective heirs, successors, assigns, executors, trustees or
other legal representatives, but the rights and obligations of the Members may
not be transferred or delegated except as provided in this Agreement, and any
attempted transfer or delegation of those rights and obligations that is not
made in accordance with the terms of this Agreement will be void.
8.5. CHOICE OF LAW; WAIVER OF JURY TRIAL
(a) Notwithstanding the location at which this Agreement is executed by any of
the Members, the Members expressly agree that all the terms and provisions of
this Agreement are governed by and will be construed under the laws of the State
of Delaware, including the Delaware Act, without regard to the conflict of law
principles of the State of Delaware.
(b) Each Member knowingly, voluntarily and intentionally waives any rights he,
she or it may have to a trial by jury in respect of any litigation based on this
Agreement, or arising out of, under, or in connection with, this Agreement, or
any course of conduct, course of dealing, statements (whether oral or written)
or actions of the Members. Each Member acknowledges and agrees that it has
received full and sufficient consideration for this provision and that this
provision is a material inducement for it to enter into this Agreement.
8.6. NO THIRD PARTY BENEFICIARIES
The provisions of this Agreement are intended only for the regulation of
relations among past, existing and future Members, their permitted successors
and assignees, and the Fund. This Agreement is not intended for the benefit of
non-Member creditors or other third parties and, except to the extent
specifically provided in Section 3.9 of this Agreement, nothing in this
Agreement, express or implied, shall or is intended to confer any rights upon
any Person other than the Fund, the parties to this Agreement, or their
respective successors or assigns, and no Person shall be considered a third
party beneficiary of any provision of this Agreement.
8.7. CONSENTS
Any and all consents, agreements or approvals provided for or permitted by
this Agreement must, to the extent not given or obtained at a duly called
meeting of the Board of
41
Directors or the Members, be in writing and a signed copy of any such consent,
agreement or approval will be filed and kept with the books of the Fund.
8.8. MERGER AND CONSOLIDATION
(a) The Fund may merge or consolidate with or into one or more limited liability
companies or other business entities under an agreement of merger or
consolidation that has been approved in the manner contemplated by the Delaware
Act.
(b) Notwithstanding anything to the contrary in this Agreement, an agreement of
merger or consolidation approved in accordance with the Delaware Act may, to the
extent permitted by the Delaware Act, (1) effect any amendment to this
Agreement, (2) effect the adoption of a new limited liability company agreement
for the Fund if it is the surviving or resulting limited liability company in
the merger or consolidation, or (3) provide that the limited liability company
agreement of any other constituent limited liability company to the merger or
consolidation (including a limited liability company formed for the purpose of
consummating the merger or consolidation) will be the limited liability company
agreement of the surviving or resulting limited liability company.
(c) The Fund may convert to another Delaware business entity in accordance with
the Delaware Act upon the approval of the Members representing a majority (as
defined in the ▇▇▇▇ ▇▇▇) of the outstanding voting securities of the Fund.
8.9. PRONOUNS
All pronouns used in this Agreement will be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Person
or Persons, firm or entity may require in the context in which they are used.
8.10. CONFIDENTIALITY
(a) The Managing Member will have the right to keep confidential from the
Members, for such period of time as the Managing Member deems reasonable in its
sole discretion, any information that the Managing Member reasonably believes to
be in the nature of trade secrets or other information the disclosure of which
the Managing Member in good faith believes is not in the best interest of the
Fund or could damage the Fund or its business or that the Fund is required by
law or by agreement with a third party to keep confidential.
(b) Notwithstanding anything to the contrary in this Agreement, authorization is
hereby expressly granted permitting each Member (and each employee,
representative, or other agent of such Member) to disclose to any and all
Persons, without limitation of any kind, the tax treatment and tax structure of
the Fund, and all materials of any kind (including opinions or other tax
analyses) that are provided to the Member related to tax treatment and tax
structure. The Fund acknowledges and agrees that a Member's disclosure of the
structure or tax aspects of the Fund is not limited in any way by an express or
implied understanding or agreement, oral or written (whether or not such
understanding or agreement is legally binding). In this regard, any aspects of
the Fund pertaining to its tax treatment and tax structure that would result in
an investment in the Fund being made under "conditions of confidentiality," as
such term is used in
42
the Code or in Treasury Regulations issued under the Code is specifically
excluded from the provisions of Section 8.10(a) of this Agreement.
8.11. SEVERABILITY
Each Member agrees that the Member intends that, if any provision of this
Agreement is determined by a court of competent jurisdiction or regulatory
authority with jurisdiction over the Fund, the Managing Member or the Investment
Manager to not be enforceable in the manner set out in this Agreement, then the
provision should be enforceable to the maximum extent possible under applicable
law. If any provision of this Agreement is held to be invalid or unenforceable,
the invalidation or unenforceability will not affect the validity or
enforceability of any other provision of this Agreement (or portion of the
provision).
8.12. ENTIRE AGREEMENT
(a) Subject to Section 8.12(b), this Agreement, together with each Member's
subscription agreement executed with respect to each Interest, constitute the
entire agreement among the Members and the Fund pertaining to the subject matter
of this Agreement and the subscription agreement and supersedes all prior
agreements and understandings pertaining to that subject matter.
(b) Notwithstanding any other provision of this Agreement, including Section
8.1, or any subscription agreement, each Member acknowledges and agrees that the
Investment Manager and/or the Managing Member, on its own behalf or, to the
extent permitted by applicable law, on behalf of the Fund, without the approval
of the Members or any other Person, may enter into a written agreement or
agreements with any other Member affecting or modifying the terms of, or
establishing rights under, this Agreement or any subscription agreement. Each
Member agrees that any terms contained in any such other agreement with another
Member will govern with respect to the other Member notwithstanding the
provisions of this Agreement or any subscription agreement, and that the Member
will have no rights in respect of those granted in favor of such other Member.
8.13. DISCRETION
To the fullest extent permitted by law, and notwithstanding any other
provision of this Agreement or in any agreement contemplated by this Agreement
or applicable provisions of law or equity or otherwise, whenever in this
Agreement a Person is permitted or required to make a decision (a) in its "sole
discretion" or "discretion" or under a grant of similar authority or latitude,
the Person will be entitled to consider only those interests and factors as he,
she or it desires, including his, her or its own interests, and will have no
duty or obligation to give any consideration to any interest of or factors
affecting the Fund or the Members, or (b) in its "good faith" or under another
express standard, then the Person will act under the express standard and will
not be subject to any other or different standards.
43
8.14. COUNTERPARTS
This Agreement may be executed in several counterparts, all of which
together will constitute one agreement binding on all Members, notwithstanding
that all the Members have not signed the same counterpart.
8.15. HEADINGS
The headings in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions of this Agreement or
otherwise affect their construction or effect.
[Remainder of Page Intentionally Left Blank]
44
EACH MEMBER ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS ENTIRETY BEFORE
SIGNING OR OTHERWISE BECOMING BOUND HEREBY, INCLUDING THE WAIVER OF JURY TRIAL
CLAUSE SET OUT IN SECTION 8.5(B) AND THE CONFIDENTIALITY CLAUSES SET OUT IN
SECTION 8.10.
The Undersigned have executed this Agreement as of the day and year first
above written.
▇▇▇▇▇▇▇ ASSOCIATES, L.L.C.,
as Managing Member
By: /s/ ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Sole Member
CMRCC, INC.
as Special Member
By: /s/ ▇▇▇▇▇ Case
---------------------------------
Name: ▇▇▇▇▇ Case
Title: Director
MEMBERS:
Each Person who or that has signed, or
has had signed on the Person's behalf,
a Member Signature Page, which will
constitute a counterpart of this
Agreement.
45
EXHIBIT A
Directors Agreement
________ _, 200_
▇.▇. ▇▇▇▇▇▇ Multi-Strategy Fund, L.L.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Directors Agreement -- ▇.▇. ▇▇▇▇▇▇ Multi-Strategy Fund, L.L.C.
Ladies and Gentlemen:
For good and valuable consideration, each of the undersigned Persons, who
have been appointed as Directors of ▇.▇. ▇▇▇▇▇▇ Multi-Strategy Fund, L.L.C., a
Delaware limited liability company (the "Company"), in accordance with the
Amended and Restated Limited Liability Company Agreement of the Company, dated
as of April 1, 2006, as it may be amended or restated from time to time (the
"LLC Agreement"), hereby agree as follows:
1. Each of the undersigned accepts such Person's rights and authority as a
Director under the LLC Agreement and agrees to perform and discharge such
Person's duties and obligations as a Director under the LLC Agreement, and
further agrees that such rights, authorities, duties and obligations under
the LLC Agreement shall continue until such Person ceases to be a Director
in accordance with the LLC Agreement.
2. THIS DIRECTORS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND
REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.
Initially capitalized terms used and not otherwise defined herein have the
meanings set forth in the LLC Agreement.
This Directors Agreement may be executed in any number of counterparts,
each of which shall be deemed an original of this Directors Agreement and all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Directors Agreement
as of the day and year first above written.
____________________________________
____________________________________
____________________________________
47