Exhibit 2(a)(ii)
BACAP ALTERNATIVE MULTI-STRATEGY FUND, LLC
FORM OF
LIMITED LIABILITY COMPANY AGREEMENT
AMENDED AND RESTATED AS OF
MARCH 24, 2003, AND
------------, ------
THIS LIMITED LIABILITY COMPANY AGREEMENT of BACAP Alternative
Multi-Strategy Fund, LLC (the "Fund") is by and among ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as the Managers, Banc of America Investment Advisors,
Inc. as the Special Advisory Member, and those persons hereinafter admitted as
Members.
WHEREAS, the Fund has heretofore been formed as a limited
liability company under the Delaware Limited Liability Company Act pursuant to
the Certificate of Formation (the "Certificate") dated and filed with the
Secretary of State of Delaware on October 3, 2002;
NOW, THEREFORE, for and in consideration of the foregoing and
the mutual covenants hereinafter set forth, it is hereby agreed as follows:
DEFINITIONS
For purposes of this Agreement:
Administrator The person who provides administrative services to
the Fund pursuant to an administrative services
agreement.
Adviser Banc of America Investment Advisors, Inc., a
corporation organized under Delaware law, or any
person who may hereinafter serve as the investment
adviser to the Fund pursuant to an Investment
Advisory Agreement.
Advisers Act The Investment Advisers Act of 1940 and the rules,
regulations and orders thereunder, as amended from
time to time, or any successor law.
Affiliate An affiliated person of a person as such term is
defined in the 1940 Act.
Agreement This Limited Liability Company Agreement, as
amended from time to time.
Board of Managers The Board of Managers established pursuant to
Section 1.6.
Capital Account With respect to each Member, the capital account
established and maintained on behalf of each
Member pursuant to Section 4.3.
Capital Percentage A percentage established for each member on the
Fund's books as of each Expense Allocation Date.
The Capital Percentage of a Member on an Expense
Allocation Date shall be determined by dividing
the amount of capital contributed to the Fund by
the Member pursuant to Section 4.1 hereof by the
sum of the capital contributed to the Fund by each
Member pursuant to Section 4.1 hereof on or prior
to such Expense Allocation Date. The sum of the
Capital Percentages of all members on each Expense
Allocation Date shall equal 100%.
Certificate The Certificate of Formation of the Fund and any
amendments thereto as filed with the office of the
Secretary of State of the State of Delaware.
Closing Date The first date on or as of which a person other
than an Organizational Member is admitted to the
Fund as a Member.
Code The United States Internal Revenue Code of 1986,
as amended, and as hereafter amended from time to
time, or any successor law.
Delaware Act The Delaware Limited Liability Company Act as in
effect on the date hereof and as amended from time
to time, or any successor law.
Distributor Columbia Management Distributors, Inc.
(successor-in-interest to BACAP Distributors,
LLC), or any person who may hereafter serve as the
distributor of Interests pursuant to a general
distributor's agreement with the Fund.
Expense Allocation Date The Closing Date, and thereafter each day on or
before one year following the Closing Date as of
which a contribution to the capital of the Fund is
made pursuant to Section 4.1 hereof.
Fiscal Period A Fiscal Period will commence on the first day of
each Fiscal Year, on each date of any capital
contribution to the Fund and on each date next
following the date of any withdrawal of capital
(i.e., repurchase of Interests by the Fund from
such Member pursuant to Section 3.6), and the
prior Fiscal Period will end on the date
immediately preceding such date of commencement of
a new Fiscal Period.
Fiscal Year The period commencing on the Closing Date and
ending on March 31, 2003, and thereafter each
period commencing on April 1 of each year and
ending on March 31 of each year (or on the date of
a final distribution pursuant to Section 5.2
hereof), unless and until the Board of Managers
shall elect another fiscal year for the Fund.
Form N-2 The Fund's Registration Statement on Form N-2
filed with the Securities and Exchange Commission,
as amended from time to time.
Fund The limited liability company governed hereby, as
such limited liability company may from time to
time be constituted.
Fund Managers Portfolio managers for the Underlying Funds in
which the Fund invests.
Independent Managers Those Managers who are not "interested persons" of
the Fund as such term is defined by the 1940 Act.
Initial Manager
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the person who directed the
formation of the Fund and served as the sole
initial Manager.
Interest The entire ownership interest in the Fund at any
particular time of a Member or the Special
Advisory Member, or other person to whom an
Interest of a Member or portion thereof has been
transferred pursuant to Section 3.4 hereof,
including the rights and obligations of such
Member or other person under this Agreement and
the Delaware Act.
Investment Advisory A separate written agreement entered into by the
Agreement Fund pursuant to which the Adviser provides
investment advisory services to the Fund.
Manager An individual designated as a manager of the Fund
pursuant to the provisions of Section 1.6 of the
Agreement and who serves on the Board of Managers
of the Fund.
Member Any person who shall have been admitted to the
Fund as a member (including any Manager in such
person's capacity as a member of the Fund but
excluding any Manager in such person's capacity as
a Manager of the Fund) until the Fund repurchases
the entire Interest of such person pursuant to
Section 3.6 hereof or a substituted member or
members are admitted with respect to any such
person's entire Interest as a member pursuant to
Section 3.4 hereof; such term includes the Adviser
to the extent the Adviser makes a capital
contribution to the Fund and shall have been
admitted to the Fund as a member, but shall not
include the Special Advisory Member in its
capacity as such.
Net Assets The total value of all assets of the Fund, less an
amount equal to all accrued debts, liabilities and
obligations of the Fund, calculated before giving
effect to any repurchases of Interests.
Net Profit or Net Loss The amount by which the Net Assets as of the close
of business on the last day of a Fiscal Period
exceed (in the case of Net Profit) or are less
than (in the case of Net Loss) the Net Assets as
of the commencement of the same Fiscal Period (or,
with respect to the initial Fiscal Period of the
Fund, as of the close of business on the Closing
Date).
1940 Act The Investment Company Act of 1940 and the rules,
regulations and orders thereunder, as amended from
time to time, or any successor law.
Organizational Expenses The expenses incurred by the Fund in connection
with its formation, its initial registration as an
investment company under the 1940 Act, and the
initial offering of Interests.
Organizational Member The Distributor, which contributed initial capital
to the Fund prior to the Closing Date.
Securities Securities (including, without limitation,
equities, debt obligations, options, and other
"securities" as that term is defined in Section
2(a)(36) of the ▇▇▇▇ ▇▇▇) and any contracts for
forward or future delivery of any security, debt
obligation or currency, or commodity, all types of
derivative instruments and financial instruments
and any contracts based on any index or group of
securities, debt obligations or currencies, or
commodities, and any options thereon.
Special Advisory Member The Adviser in its capacity as the investment
adviser to the Fund.
Transfer The assignment, transfer, sale, encumbrance,
pledge or other disposition of all or any portion
of an Interest, including any right to receive any
allocations and distributions attributable to an
Interest.
Underlying Funds Investment funds into which the Fund will allocate
its assets for investment.
Valuation Date The date as of which the Fund values an Interest
for purposes of determining the price at which the
Interest is to be purchased by the Fund pursuant
to an offer made by the Fund pursuant to Section
3.6 hereof.
ARTICLE I
ORGANIZATION; BOARD OF MANAGERS; ADMISSION OF MEMBERS
1.1 Formation of Limited Liability Company
The Fund has been formed as a limited liability company at the
direction of the Initial Manager who authorized the filing of the Certificate
and initial amendments, which actions are hereby ratified by the execution of
this Agreement. The Board of Managers shall execute and file in accordance with
the Delaware Act any future amendment to the Certificate and shall execute and
file with applicable governmental authorities any other instruments, documents
and certificates that, in the opinion of the Fund's legal counsel, may from time
to time be required by the laws of the United States of America, the State of
Delaware or any other jurisdiction in which the Fund shall determine to do
business, or any political subdivision or agency thereof, or that such legal
counsel may deem necessary or appropriate to effectuate, implement and continue
the valid existence and business of the Fund.
1.2 Name
The name of the Fund shall be "BACAP Alternative Multi-Strategy Fund,
LLC" or such other name as the Board of Managers may hereafter adopt upon (i)
causing an appropriate amendment to the Certificate to be filed in accordance
with the Delaware Act and (ii) taking such other actions as may be required by
law.
1.3 Principal and Registered Office
The Fund shall have its principal office at ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, or at such other place designated from time to time by
the Board of Managers.
The Fund shall have its registered office in Delaware at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and shall have The Corporation Trust Company as its
registered agent for service of process in Delaware, unless a different
registered office or agent is designated from time to time by the Board of
Managers.
1.4 Duration
The term of the Fund commenced on the filing of the Certificate with
the Secretary of State of Delaware and shall continue until the Fund is
dissolved pursuant to Section 5.1 hereof.
1.5 Business of the Fund
(a) The business of the Fund is to purchase, sell (including short
sales), invest and trade in Securities, on margin or otherwise, both directly
and through the purchase of limited partnerships, limited liability companies
and other interests in any Underlying Funds, to engage in any financial or
derivative transactions relating thereto or otherwise and to exercise such
rights and powers as permitted by limited liability companies under the Delaware
Act. The officers of the Fund may execute, deliver and perform all contracts,
agreements, subscription documents and other undertakings and engage in all
activities and transactions as may in the opinion of the Board of Managers be
necessary or advisable to carry out its objective or business.
(b) The Fund shall operate as a closed-end, non-diversified, management
investment company in accordance with the 1940 Act and subject to any
fundamental policies and investment restrictions as may be adopted by the Board
of Managers and in accordance with the 1940 Act.
1.6 Board of Managers
(a) Prior to the Closing Date, the Initial Manager may designate such
persons who shall agree to be bound by all of the terms of this Agreement to
serve as Managers on the Board of Managers, subject to the election of such
persons prior to the Closing Date by the Organizational Member. By signing this
Agreement or signing an investor application or certification in connection with
the purchase of an Interest, a Member admitted on the Closing Date shall be
deemed to have voted for the election of each of the Managers so designated.
After the Closing Date, the Board of Managers may, subject to the provisions of
paragraphs (a) and (b) of this Section 1.6 with respect to the number of and
vacancies in the position of Manager and the provisions of Section 2.4 hereof
with respect to the election of Managers to the Board of Managers by Members,
designate any person who shall agree to be bound by all of the terms of this
Agreement as a Manager. The names and mailing addresses of the Managers shall be
set forth in the books and records of the Fund. The number of Managers shall be
fixed from time to time by the Board of Managers.
(b) Each Manager shall serve on the Board of Managers for the duration
of the term of the Fund, unless his or her status as a Manager shall be sooner
terminated pursuant to Section 3.2 hereof. In the event of any vacancy in the
position of manager, the remaining Managers may appoint an individual to serve
in such capacity, so long as immediately after such appointment at least
two-thirds (2/3) of the Managers then serving would have been elected by the
Members. The Board of Managers may call a meeting of Members to fill any vacancy
in the position of Manager, and shall do so within 60 days after any date on
which Managers who were elected by the Members cease to constitute a majority of
the Managers then serving on the Board of Managers.
(c) In the event that no Manager remains to continue the business of
the Fund, the Special Advisory Member shall promptly call a meeting of the
Members, to be held within 60 days after the date on which the last Manager
ceased to act in that capacity, for the purpose of determining whether to
continue the business of the Fund and, if the business shall be continued, of
electing the required number of Managers to the Board of Managers. If the
Members shall determine at such meeting not to continue the business of the Fund
or if the required number of Managers is not elected within 60 days after the
date on which the last Manager ceased to act in that capacity, then the Fund
shall be dissolved pursuant to Section 5.1 hereof and the assets of the Fund
shall be liquidated and distributed pursuant to Section 5.2 hereof.
1.7 Members
The Fund may offer Interests for purchase by investors in such manner
and at such times as may be determined by the Board of Managers. All
subscriptions for Interests are subject to the receipt by the Fund or its
custodian of cleared funds on or before the acceptance date for such
subscriptions in the full amount of the subscription. Subject to the foregoing,
a person may be admitted to the Fund as a Member subject to the condition that
such person shall execute an appropriate signature page of this Agreement or an
investor application or certification form pursuant to which such Member agrees
to be bound by all the terms and provisions of this Agreement. The Board of
Managers may in its sole discretion reject any subscription for an Interest. The
Board of Managers may, in its sole discretion, suspend the offering of the
Interests at any time. The admission of any person as a Member shall be
effective upon the revision of the books and records of the Fund to reflect the
name and the contribution to the capital of the Fund of such additional Member.
1.8 Special Advisory Member
The Adviser has been admitted to the Fund as the Special Advisory
Member, subject to approval in accordance with the requirements of the 1940 Act.
The interest in the Fund of the Special Advisory Member shall be non-voting and
shall have no participation in the net profit or net loss of the Fund. If at any
time the Investment Advisory Agreement between the Fund and the person then
serving as Adviser terminates, the Board of Managers shall admit as a substitute
Special Advisory Member, upon its signing this Agreement, such person as may be
retained by the Fund to provide investment advisory services pursuant to an
Investment Advisory Agreement, subject to the due approval of such Investment
Advisory Agreement with such person in accordance with the requirements of the
1940 Act. The Special Advisory Member may make, but shall not be required to
make, a contribution of capital to the Fund.
1.9 Organizational Member
The initial contribution of capital to the Fund by the Organizational
Member shall be represented by an Interest, which Interest shall have the same
rights as other Interests held by Members.
1.10 Both Managers and Members
A Member may at the same time be a Manager and a Member, or a Special
Advisory Member and a Member, in which event such Member's rights and
obligations in each capacity shall be determined separately in accordance with
the terms and provisions of this Agreement or as provided in the Delaware Act.
1.11 Limited Liability
Except as provided under applicable law, a Member and the Special
Advisory Member shall not be liable for the Fund's debts, obligations and
liabilities in any amount in excess of the Capital Account balance of such
Member, plus such Member's share of undistributed profits and assets. Except as
provided under applicable law, a Manager shall not be liable for the Fund's
debts, obligations and liabilities.
ARTICLE II
MANAGEMENT
2.1 Management and Control
(a) Management and control of the business of the Fund shall be vested
in the Board of Managers, which shall have the right, power and authority, on
behalf of the Fund and in its name, to exercise all rights, powers and authority
of Managers under the Delaware Act and to do all things necessary and proper to
carry out the objective and business of the Fund and their duties hereunder. No
Manager shall have the authority individually to act on behalf of or to bind the
Fund except within the scope of such Manager's authority as delegated by the
Board of Managers. The parties hereto intend that, except to the extent
otherwise expressly provided herein, (i) each Manager shall be vested with the
same powers, authority and responsibilities on behalf of the Fund as are
customarily vested in each director of a Delaware corporation and (ii) each
Independent Manager shall be vested with the same powers, authority and
responsibilities on behalf of the Fund as are customarily vested in each
director who is not an "interested person" of such company, as such term is
defined by the 1940 Act, of a closed-end management investment company
registered under the 1940 Act that is organized as a Delaware corporation.
During any period in which the Fund shall have no Managers, the Adviser shall
continue to serve as the Adviser to the Fund and shall have, as the Special
Advisory Member, the authority to manage the business and affairs of the Fund,
but only until such time as one or more Managers is elected by the Members or
the Fund is dissolved in accordance with Section 5.1 hereof.
(b) Members shall have no right to participate in and shall take no
part in the management or control of the Fund's business and shall have no
right, power or authority to act for or bind the Fund. Members shall have the
right to vote on any matters only as provided in this Agreement or on any
matters that require the approval of the holders of voting securities under the
1940 Act or as otherwise required in the Delaware Act.
(c) The Initial Manager or the Board of Managers (as applicable) may
delegate to any other person any rights, power and authority vested by this
Agreement in the Board of Managers to the extent permissible under applicable
law, and may appoint persons to serve as officers of the Fund, with such titles
and authority as may be determined by the Board of Managers consistent with
applicable law.
2.2 Actions by the Board of Managers
(a) Unless provided otherwise in this Agreement, the Board of Managers
shall act only: (i) by the affirmative vote of a majority of the Managers
(including the vote of a majority of the Independent Managers if required by the
▇▇▇▇ ▇▇▇) present at a meeting duly called at which a quorum of the Managers
shall be present (in person or, if in-person attendance is not required by the
1940 Act, by telephone) or (ii) by unanimous written consent of all of the
Managers without a meeting, if permissible under the ▇▇▇▇ ▇▇▇.
(b) The Board of Managers may designate from time to time a Principal
Manager who shall preside at all meetings of the Board of Managers. Meetings of
the Board of Managers may be called by the Principal Manager or by any two
Managers, and may be held on such date and at such time and place as the Board
of Managers shall determine. Each Manager shall be entitled to receive written
notice of the date, time and place of such meeting within a reasonable time in
advance of the meeting. Except as otherwise required by the 1940 Act, notice
need not be given to any Manager who shall attend a meeting without objecting to
the lack of notice or who shall execute a written waiver of notice with respect
to the meeting. Managers may attend and participate in any meeting by telephone
except where in-person attendance at a meeting is required by the 1940 Act. A
majority of the Managers shall constitute a quorum at any meeting.
2.3 Officers
(a) The executive Officers of the Fund shall be a President, a
Treasurer and a Secretary. If the Board of Managers has designated a Principal
Manager pursuant to Section 2.2(b) hereof, then the Principal Manager shall also
be an executive Officer. The Board of Managers may elect one or more
Vice-Presidents, and each such Vice-President shall be an executive Officer. The
President shall be the chief executive officer of the Fund. The Principal
Manager, if there be one, shall be elected from among the persons serving as
Managers, but no other Officer need be a Manager. The Board of Managers may also
elect, or may delegate to the President authority to appoint, remove, or fix the
duties, compensation or terms of office of, one or more other officers as the
Board of Managers shall at any time and from time to time deem to be advisable.
Any two or more positions of Officer, except those of President and
Vice-President, may be held by the same person. A person holding more than one
office may not act in more than one capacity to execute, acknowledge or verify
on behalf of the Fund an instrument required by law to be executed, acknowledged
and verified by more than one Officer.
(b) The Officers shall be elected annually at a meeting of the Board of
Managers. Each Officer shall hold office until his successor is elected or
appointed or until his earlier displacement from office by resignation, removal
or otherwise; provided, that if the term of office of any Officer shall have
been fixed by the Board of Managers, or by the President acting under authority
delegated by the Board of Managers, such Officer shall cease to hold such office
no later than the date of expiration of such term, regardless of whether any
other person shall have been elected or appointed to succeed him. Any Officer
may resign at any time by written notice to the Fund. Any Officer may be removed
at any time by the Board of Managers or by the President acting under authority
delegated by the Board of Managers if in its or his judgment the best interest
of the Fund would be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or
appointment of an Officer shall not of itself create contract rights between the
Fund and such Officer.
(c) If the office of any Officer becomes vacant for any reason, the
vacancy may be filled by the Board of Managers or by the President acting under
authority delegated by the Board of Managers. Each Officer elected or appointed
to fill a vacancy shall hold office for the balance of the term for which his
predecessor was elected or appointed.
All Officers as between themselves and the Fund shall have such powers,
perform such duties and be subject to such restrictions, if any, in the
management of the Fund as may be provided in this Agreement or, to the extent
not so provided, as may be prescribed by the Board of Managers or by the
President acting under authority delegated by the Board of Managers.
2.4 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. Meetings of the
Members may be called by the Board of Managers or by Members holding 25% or more
of the total number of votes eligible to be cast by all Members, and may be held
at such time, date and place as the Board of Managers shall determine. The Board
of Managers shall arrange to provide written notice of the meeting, stating the
date, time and place of the meeting and the record date therefor, to each Member
entitled to vote at the meeting within a reasonable time prior thereto. Failure
to receive notice of a meeting on the part of any Member shall not affect the
validity of any act or proceeding of the meeting, so long as a quorum shall be
present at the meeting, except as otherwise required by applicable law. Only
matters set forth in the notice of a meeting may be voted on by the Members at a
meeting. The presence in person or by proxy of Members holding a majority of the
total number of votes eligible to be cast by all Members as of the record date
shall constitute a quorum at any meeting. In the absence of a quorum, a meeting
of the Members may be adjourned by action of a majority of the Members present
in person or by proxy without additional notice to the Members. Except as
otherwise required by any provision of this Agreement or of the 1940 Act, (i)
those candidates receiving a plurality of the votes cast at any meeting of
Members shall be elected as Managers and (ii) all other actions of the Members
taken at a meeting shall require the affirmative vote of Members holding a
majority of the total number of votes eligible to be cast by those Members who
are present in person or by proxy at such meeting.
(b) Each Member shall be entitled to cast at any meeting of Members a
number of votes equivalent to the pro rata share of such Member's Capital
Account with respect to all the Capital Accounts in the Fund as of the record
date for such meeting. The Board of Managers shall establish a record date not
less than 10 days nor more than 60 days prior to the date of any meeting of
Members to determine eligibility to vote at such meeting and the number of votes
that each Member will be entitled to cast at the meeting, and shall maintain for
each such record date a list setting forth the name of each Member and the
number of votes that each Member will be entitled to cast at the meeting.
(c) A Member may vote at any meeting of Members by a proxy properly
executed in writing by the Member and filed with the Fund before or at the time
of the meeting. A proxy may be suspended or revoked, as the case may be, by the
Member executing the proxy by a later writing delivered to the Fund at any time
prior to exercise of the proxy or if the Member executing the proxy shall be
present at the meeting and decide to vote in person. Any action of the Members
that is permitted to be taken at a meeting of the Members may be taken without a
meeting if consents in writing, setting forth the action taken, are signed by
Members holding a majority of the total number of votes eligible to be cast or
such greater percentage as may be required in order to approve such action.
2.5 Custody of Assets of the Fund
The physical possession of all funds, Securities or other properties of
the Fund shall at all times be held, controlled and administered by one or more
custodians retained by the Fund in accordance with the requirements of the 1940
Act and the rules thereunder.
2.6 Other Activities of Members and Managers
(a) The Managers shall not be required to devote all of their time to
the affairs of the Fund, but shall devote such time as may reasonably be
required to perform their obligations under this Agreement.
(b) Any Member or Manager, and any Affiliate of any Member or Manager,
may engage in or possess an interest in other business ventures or commercial
dealings of every kind and description, independently or with others, including,
but not limited to, acquisition and disposition of Securities, provision of
investment advisory or brokerage services, serving as directors, officers,
employees, advisors or agents of other companies, partners of any partnership,
members of any limited liability company, or trustees of any trust, or entering
into any other commercial arrangements. No Member or Manager shall have any
rights in or to such activities of any other Member or Manager, or any profits
derived therefrom.
2.7 Duty of Care
(a) No Manager, Adviser, Fund Manager or their Affiliates shall be
liable to the Fund or to any of its Members for any loss or damage occasioned by
any act or omission in the performance of their services under this Agreement,
unless it shall be determined by final judicial decision on the merits from
which there is no further right to appeal that such loss is due to an act or
omission of such Manager, Adviser, Fund Manager or their Affiliates,
constituting willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the performance of their services to the
Fund.
(b) Members not in breach of any obligation hereunder or under any
agreement pursuant to which the Member subscribed for an Interest shall be
liable to the Fund, any Member or third parties only as provided under the
Delaware Act.
2.8 Indemnification
(a) To the fullest extent permitted by law, the Fund shall, subject to
Section 2.8(b) hereof, indemnify each Manager (including for this purpose his or
her respective executors, heirs, assigns, successors or other legal
representatives), against all losses, claims, damages, liabilities, costs and
expenses, including, but not limited to, amounts paid in satisfaction of
judgments, in compromise, or as fines or penalties, and reasonable counsel fees,
incurred in connection with the defense or disposition of any action, suit,
investigation or other proceeding, whether civil or criminal, before any
judicial, arbitral, administrative or legislative body, in which such indemnitee
may be or may have been involved as a party or otherwise, or with which such
indemnitee may be or may have been threatened, while in office or thereafter, by
reason of being or having been a Manager of the Fund or the past or present
performance of services to the Fund by such indemnitee, except to the extent
such loss, claim, damage, liability, cost or expense shall have been finally
determined in a decision on the merits in any such action, suit, investigation
or other proceeding to have been incurred or suffered by such indemnitee by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of such indemnitee's office. The
rights of indemnification provided under this Section 2.8 shall not be construed
so as to provide for indemnification of a Manager for any liability (including
liability under federal securities laws which, under certain circumstances,
impose liability even on persons that act in good faith) to the extent (but only
to the extent) that such indemnification would be in violation of applicable
law, but shall be construed so as to effectuate the applicable provisions of
this Section 2.8 to the fullest extent permitted by law.
(b) Expenses, including reasonable counsel fees, so incurred by any
such indemnitee (but excluding amounts paid in satisfaction of judgments, in
compromise, or as fines or penalties), may be paid from time to time by the Fund
in advance of the final disposition of any such action, suit, investigation or
proceeding upon receipt of an undertaking by or on behalf of such indemnitee to
repay to the Fund amounts so paid if it shall ultimately be determined that
indemnification of such expenses is not authorized under Section 2.8(a) hereof;
provided, however, that (i) such indemnitee shall provide security for such
undertaking, (ii) the Fund shall be insured by or on behalf of such indemnitee
against losses arising by reason of such indemnitee's failure to fulfill such
undertaking, or (iii) a majority of the Managers (excluding any Manager who is
either seeking advancement of expenses hereunder or is or has been a party to
any other action, suit, investigation or proceeding involving claims similar to
those involved in the action, suit, investigation or proceeding giving rise to a
claim for advancement of expenses hereunder) or independent legal counsel in a
written opinion shall determine based on a review of readily available facts (as
opposed to a full trial-type inquiry) that there is reason to believe such
indemnitee ultimately will be entitled to indemnification.
(c) As to the disposition of any action, suit, investigation or
proceeding (whether by a compromise payment, pursuant to a consent decree or
otherwise) without an adjudication or a decision on the merits by a court, or by
any other body before which the proceeding shall have been brought, that an
indemnitee is liable to the Fund or its Members by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of such indemnitee's office, indemnification shall be
provided pursuant to Section 2.8(a) hereof if (i) approved as in the best
interests of the Fund by a majority of the Managers (excluding any manager who
is either seeking indemnification hereunder or is or has been a party to any
other action, suit, investigation or proceeding involving claims similar to
those involved in the action, suit, investigation or proceeding giving rise to a
claim for indemnification hereunder) upon a determination based upon a review of
readily available facts (as opposed to a full trial-type inquiry) that such
indemnitee acted in good faith and in the reasonable belief that such actions
were in the best interests of the Fund and that such indemnitee is not liable to
the Fund or its Members by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of such
indemnitee's office, or (ii) the Board of Managers secures a written opinion of
independent legal counsel based upon a review of readily available facts (as
opposed to a full trial-type inquiry) to the effect that such indemnification
would not protect such indemnitee against any liability to the Fund or its
Members to which such indemnitee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of such indemnitee's office.
(d) Any indemnification or advancement of expenses made pursuant to
this Section 2.8 shall not prevent the recovery from any indemnitee of any such
amount if such indemnitee subsequently shall be determined in a decision on the
merits in any action, suit, investigation or proceeding involving the liability
or expense that gave rise to such indemnification or advancement of expenses to
be liable to the Fund or its Members by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of such indemnitee's office. In (i) any suit brought by a Manager (or
other person entitled to indemnification hereunder) to enforce a right to
indemnification under this Section 2.8 it shall be a defense that, and (ii) in
any suit in the name of the Fund to recover any indemnification or advancement
of expenses made pursuant to this Section 2.8, the Fund shall be entitled to
recover such expenses upon a final adjudication that the Manager or other person
claiming a right to indemnification under this Section 2.8 has not met the
applicable standard of conduct set forth in this Section 2.8. In any such suit
brought to enforce a right to indemnification or to recover any indemnification
or advancement of expenses made pursuant to this Section 2.8, the burden of
proving that the Manager or other person claiming a right to indemnification is
not entitled to be indemnified, or to any indemnification or advancement of
expenses, under this Section 2.8 shall be on the Fund (or any Member acting
derivatively or otherwise on behalf of the Fund or its Members).
(e) An indemnitee may not satisfy any right of indemnification or
advancement of expenses granted in this Section 2.8 or to which such indemnitee
may otherwise be entitled except out of the assets of the Fund, and no Member
shall be personally liable with respect to any such claim for indemnification or
advancement of expenses.
(f) The rights of indemnification provided hereunder shall not be
exclusive of or affect any other rights to which any person may be entitled by
contract or otherwise under law. Nothing contained in this Section 2.8 shall
affect the power of the Fund to purchase and maintain liability insurance on
behalf of any Manager or other person.
2.9 Fees, Expenses and Reimbursement
(a) The Adviser shall be entitled to receive such fees for services
provided to the Fund as may be agreed to by the Adviser and the Fund pursuant to
the Investment Advisory Agreement or other applicable agreement relating to such
services.
(b) The Board of Managers may cause the Fund to compensate each Manager
who is not an officer or employee of the Adviser for his or her services as
such, and such Manager shall be reimbursed by the Fund for reasonable travel and
out-of-pocket expenses incurred by him in performing his duties under this
Agreement.
(c) The Fund shall bear all costs and expenses incurred in its business
and operations, other than those specifically required to be borne by the
Adviser pursuant to the Investment Advisory Agreement. Costs and expenses to be
borne by the Fund include, but are not limited to, the following:
(1) all costs and expenses directly related to investment
transactions and positions for the Fund's account, including,
but not limited to, brokerage commissions, research expenses
and professional fees (including, without limitation, expenses
of consultants and experts relating to investments),
reasonable out of pocket expenses incurred in monitoring and
evaluating Underlying Funds and Fund Managers (E.G., security
background inquiries regarding existing and prospective Fund
Managers), interest and commitment fees on loans and debit
balances, borrowing charges on Securities sold short,
dividends on Securities sold but not yet purchased, custodial
fees, margin fees, transfer taxes and premiums, taxes withheld
on foreign dividends and indirect expenses from investments in
investment funds;
(2) all costs and expenses associated with the operation and
registration of the Fund, offering costs and the costs of
compliance with applicable Federal and state laws;
(3) the costs and expenses of holding meetings of the Board of
Managers and any meetings of Members, including costs
associated with the preparation and dissemination of proxy
materials;
(4) the fees and disbursements of Fund legal counsel, legal
counsel to the Independent Managers, independent accountants
for the Fund and other consultants and professionals engaged
on behalf of the Fund;
(5) the management fee payable to the Adviser pursuant to the
Investment Advisory Agreement;
(6) the fees payable to custodians, fund accountant, transfer
agent and other persons providing administrative services to
the Fund;
(7) the costs of a fidelity bond and any liability insurance
obtained on behalf of the Fund or the Board of Managers;
(8) all costs and expenses of preparing, setting in type, printing
and distributing reports and other communications to Members;
and
(9) such other types of expenses as may be approved from time to
time by the Board of Managers.
The Adviser shall be entitled to reimbursement from the Fund for any of
the above costs and expenses that it pays on behalf of the Fund.
(d) Subject to procuring any required regulatory approvals, from time
to time the Fund may, alone or in conjunction with other registered or
unregistered investment funds or other accounts for which the Adviser, or any
Affiliate of the Adviser, acts as general partner, manager or investment
adviser, purchase insurance in such amounts, from such insurers and on such
terms as the Board of Managers shall determine.
ARTICLE III
TERMINATION OF STATUS OF ADVISER AND MANAGERS,
TRANSFERS AND REPURCHASES
3.1 Termination of Status of the Adviser
The status of the Adviser as the Special Advisory Member shall
terminate if the Investment Advisory Agreement with the Adviser terminates and
the Fund does not enter into a new Investment Advisory Agreement with the
Adviser, effective as of the date of such termination.
3.2 Termination of Status of a Manager
The status of a Manager shall terminate if the Manager (i) shall die;
(ii) shall be adjudicated incompetent; (iii) shall voluntarily withdraw as a
Manager (upon not less than 90 days' prior written notice to the other
Managers); (iv) shall be removed; (v) shall be certified by a physician to be
mentally or physically unable to perform his or her duties hereunder; (vi) shall
be declared bankrupt by a court with appropriate jurisdiction, file a petition
commencing a voluntary case under any bankruptcy law or make an assignment for
the benefit of creditors; (vii) shall have a receiver appointed to administer
the property or affairs of such Manager; or (viii) shall otherwise cease to be a
Manager of the Fund under the Delaware Act.
3.3 Removal of the Managers
Any Manager may be removed either by (a) the vote or written consent of
at least two-thirds (2/3) of the Managers not subject to the removal vote or (b)
the vote or written consent of Members holding not less than two-thirds (2/3) of
the total number of votes eligible to be cast by all Members.
3.4 Transfer of Interests of Members
(a) An Interest of a Member may be Transferred only (i) by operation of
law pursuant to the death, divorce, bankruptcy, insolvency, dissolution or
incompetency of such Member or (ii) with the written consent of the Fund (which
may be withheld in its sole discretion); provided, however, that the Fund may
not consent to any Transfer other than a Transfer (i) in which the tax basis of
the Interest in the hands of the transferee is determined, in whole or in part,
by reference to its tax basis in the hands of the transferor (E.G., certain
Transfers to affiliates, gifts and contributions to family partnerships), (ii)
to members of the member's immediate family (parents, brothers, sisters, spouse
and children), (iii) as a distribution from a qualified retirement plan or an
individual retirement account, or (iv) a Transfer to which the Fund may consent
pursuant to the following sentence. The Fund may consent to other Transfers
under such other circumstances and conditions as it, in its sole discretion,
deems appropriate. In no event, however, will any transferee or assignee be
admitted as a Member without the consent of the Fund, which may be withheld in
its sole discretion. Any Transfer not made in accordance with this Section 3.4
shall be void.
(b) The Fund may not consent to a Transfer of an Interest or a portion
thereof of a Member unless: (i) the person to whom the Interest is transferred
(or each of the person's beneficial owners if such a person is a "private
investment company" as defined in paragraph (d)(3) of Rule 205-3 under the
Advisers Act) is a person whom the Fund believes meets the requirements of
paragraph (d)(1) of Rule 205-3 under the Advisers Act or any successor rule
thereto; and (ii) the entire Interest of the Member is transferred to a single
transferee or, after the Transfer of a portion of an Interest, the balance of
the Capital Account of each of the transferee and transferor is not less than
$10,000. Any transferee that acquires an Interest by operation of law as the
result of the death, divorce, bankruptcy, insolvency, dissolution or
adjudication of incompetence of a Member or otherwise, shall be entitled to the
allocations and distributions allocable to the Interest so acquired and to
transfer such Interest in accordance with the terms of this Agreement, but shall
not be entitled to the other rights of a Member unless and until such transferee
becomes a substituted Member. If a Member transfers an Interest with the
approval of the Fund, the Fund shall promptly take all necessary actions so that
the transferee to which such Interest is transferred is admitted to the Fund as
a Member. Each Member effecting a Transfer and its transferee agree to pay all
expenses, including attorneys' and accountants' fees, incurred by the Fund in
connection with such Transfer.
(c) Each Member shall indemnify and hold harmless the Fund, the
Managers, the Adviser, each other Member and any Affiliate of the foregoing
against all losses, claims, damages, liabilities, costs and expenses (including
legal or other expenses incurred in investigating or defending against any such
losses, claims, damages, liabilities, costs and expenses or any judgments, fines
and amounts paid in settlement), joint or several, to which such persons may
become subject by reason of or arising from (i) any Transfer made by such Member
in violation of this Section 3.4 and (ii) any misrepresentation by such Member
in connection with any such Transfer.
3.5 Transfer of Interests of Special Advisory Member
The Adviser may not transfer its Interest as the Special Advisory
Member, except to an Affiliate of the Adviser. Any such Transfer shall be
subject to approval by the Board of Managers.
3.6 Repurchase of Interests
(a) Except as otherwise provided in this Agreement, no member or other
person holding an Interest or portion thereof shall have the right to withdraw
or tender to the Fund for repurchase that Interest or portion thereof. The Board
of Managers from time to time, in its sole discretion and on such terms and
conditions as it may determine, may cause the Fund to repurchase Interests or
portions thereof pursuant to written tenders. However, the Fund shall not offer
to repurchase Interests on more than two occasions during any one Fiscal Year
unless it has received an opinion of Fund legal counsel to the effect that such
more frequent offers would not cause any adverse tax consequences to the Fund or
the Members. In determining whether to cause the Fund to repurchase Interests or
portions thereof pursuant to written tenders, the Board of Managers shall
consider the recommendation of the Adviser, and shall also consider the
following factors, among others:
(1) whether any Members have requested to tender Interests or
portions thereof to the Fund;
(2) the liquidity of the Fund's assets;
(3) the investment plans and working capital requirements of the
Fund;
(4) the relative economies of scale with respect to the size of
the Fund;
(5) the history of the Fund in repurchasing Interests or portions
thereof;
(6) the economic condition of the securities markets; and
(7) the anticipated tax consequences to the Fund or its Members of
any proposed repurchases of Interests or portions thereof.
The Board of Managers shall cause the Fund to repurchase Interests or
portions thereof pursuant to written tenders only on terms determined by the
Board of Managers to be fair to the Fund and to all Members (including persons
holding Interests acquired from Members), as applicable.
(b) A Member who tenders for repurchase only a portion of the Member's
Interest will be required to maintain a Capital Account balance of at least
$25,000. If a Member tenders a portion of an Interest that would cause the
Member's Capital Account balance to fall below this required minimum the Fund
reserves the right to reduce the portion of the Interest to be purchased from
the Member so that the required minimum balance is maintained. If a repurchase
offer is oversubscribed by Members, the Fund shall repurchase only a pro rata
portion of the Interests tendered by each Member.
(c) The Adviser may tender any Interest or a portion thereof that it
holds as a Member under Section 3.6(a) hereof.
(d) The Board of Managers may cause the Fund to repurchase an Interest
or portion thereof of a Member or any person acquiring an Interest or portion
thereof from or through a Member in the event that the Board of Managers
determines or has reason to believe that:
(1) such an Interest or portion thereof has been transferred in
violation of Section 3.4 hereof, or such an Interest or
portion thereof has vested in any person by operation of law
as the result of the death, divorce, bankruptcy, insolvency,
dissolution or adjudication of incompetence of a Member;
(2) ownership of such an Interest by a Member or other person will
cause the Fund to be in violation of, or subject the Fund to
additional registration or regulation under, the securities
laws of the United States or any other relevant jurisdiction;
(3) continued ownership of the Interest may cause the Fund to be
treated as a "publicly traded partnership" taxable as a
corporation under the Internal Revenue Code;
(4) any of the representations and warranties made by a Member in
connection with the acquisition of an Interest or portion
thereof was not true when made or has ceased to be true; or
(5) an Interest was purchased using funds derived from, or
intended for money laundering or any activity which
facilitates money laundering or the funding of terrorist or
criminal activities.
(e) Repurchases of Interests or portions thereof by the Fund shall be
payable promptly after the expiration date of such repurchase in accordance with
the terms of the Fund's repurchase offer. Payment of the purchase price for an
Interest (or portion thereof) shall consist of: (i) cash or a promissory note,
which need not bear interest, in an aggregate amount equal to at least 95% of
the estimated unaudited net asset value of the Interests tendered, determined as
of the Valuation Date (the "Initial Payment"); and, if determined to be
appropriate by the Board of Managers, (ii) a promissory note entitling the
holder thereof to a contingent payment equal to the excess, if any, of (x) the
net asset value of the Interests (or portion thereof) tendered as of the
Valuation Date, taking into account any adjustments to net asset value
identified as a result of the audit for the Fund for the Fiscal Year in which
such repurchase was effective, over (y) the Initial Payment. Notwithstanding
anything in the foregoing to the contrary, the Board of Managers, in its
discretion, may pay any portion of the repurchase price in marketable Securities
(or any combination of marketable Securities and cash) having a value,
determined as of the date of repurchase, equal to the amount to be repurchased.
Any promissory note given to satisfy the Initial Payment shall be due and
payable not more than 60 days after the date of repurchase.
(f) A Member may at any time submit to the Fund a written request that
the Fund repurchase the entire Interest of such Member, as contemplated by
Section 5.1(3) hereof. Any such request shall be sent to the Fund by registered
or certified mail, return receipt requested, and shall be deemed valid only if
the Member has received a letter from the Fund acknowledging its receipt of the
request. The Fund shall send such letter to the Member promptly upon its receipt
of the Member's request.
(g) The Fund may suspend or postpone any repurchase offer by a majority
of the Board, including a majority of the Independent Managers, including but
not limited to:
(1) any period during which an emergency exists as a result of
which it is not reasonably practicable for the Fund to dispose
of Securities it owns or determine the value of the Fund's Net
Assets;
(2) for any other periods that the Securities and Exchange Act of
1934 permits by order for the protection of Members; or
(3) other unusual circumstances as the Board of Managers deems
advisable to the Fund and its Members.
ARTICLE IV
CAPITAL
4.1 Contributions to Capital
(a) The minimum initial contribution of each Member to the capital of
the Fund shall be such amount as the Board of Managers, in its discretion, may
determine from time to time, but in no event shall be less than $50,000. The
amount of the initial contribution of each Member shall be recorded on the books
and records of the Fund upon acceptance as a contribution to the capital of the
Fund. The Managers shall not be entitled to make contributions of capital to the
Fund as Managers of the Fund, but may make contributions to the capital of the
Fund as Members. The Adviser may make contributions to the capital of the Fund
as a Member.
(b) Members may make additional contributions to the capital of the
Fund effective as of such times as the Board of Managers, in its discretion, may
permit, subject to Section 1.7 hereof, but no Member shall be obligated to make
any additional contribution to the capital of the Fund except to the extent
provided in Section 4.6 hereof. The minimum initial capital contribution of a
Member to the capital of the Fund shall be such amount as the Board of Managers,
in its sole discretion, may determine from time to time. (c) Initial and any
additional contributions to the capital of the Fund by any Member shall be
payable in cash or payable in readily available funds at the date of the
proposed acceptance of the contribution.
4.2 Rights of Members to Capital
No Member shall be entitled to interest on any contribution to the
capital of the Fund, nor shall any Member be entitled to the return of any
capital of the Fund except (i) upon the repurchase by the Fund of a part or all
of such Member's Interest pursuant to Section 3.6 hereof, (ii) pursuant to the
provisions of Section 4.6(c) hereof or (iii) upon the liquidation of the Fund's
assets pursuant to Section 5.2 hereof. No Member shall be liable for the return
of any such amounts. No Member shall have the right to require partition of the
Fund's property or to compel any sale or appraisal of the Fund's assets.
4.3 Capital Accounts
(a) The Fund shall maintain a separate Capital Account for each Member.
(b) Each Member's Capital Account shall have an initial balance equal
to the amount of cash constituting such Member's initial contribution to the
capital of the Fund.
(c) Each Member's Capital Account shall be increased by the sum of (i)
the amount of cash constituting additional contributions by such Member to the
capital of the Fund permitted pursuant to Section 4.1 hereof, plus (ii) all
amounts credited to such Member's Capital Account pursuant to Sections 4.4
through 4.7 hereof.
(d) Each Member's Capital Account shall be reduced by the sum of (i)
the amount of any repurchase of the Interest, or portion thereof, of such Member
or distributions to such Member pursuant to Sections 3.6, 4.9, 4.10 or 5.2
hereof which are not reinvested (net of any liabilities secured by any asset
distributed that such Member is deemed to assume or take subject to under
Section 752 of the Code), plus (ii) any amounts debited against such Capital
Account pursuant to Sections 4.4 through 4.7 hereof.
4.4 Allocation of Net Profit and Net Loss; Allocation of Ongoing
Offering Costs
Except as otherwise provided in Section 4.5 and 4.6, as of the last day
of each Fiscal Period, any Net Profit or Net Loss for the Fiscal Period, and any
offering costs required by applicable accounting principles to be charged to
capital that are paid or accrued during the Fiscal Period, shall be allocated
among and credited to or debited against the Capital Accounts of the Members in
accordance with their respective Capital Account balances for such Fiscal
Period.
4.5 Allocation of Certain Expenditures
Except as otherwise provided for in this Agreement and unless
prohibited by the 1940 Act, any expenditures payable by the Fund, to the extent
determined by the Board of Managers to have been paid or withheld on behalf of,
or by reason of particular circumstances applicable to, one or more but fewer
than all of the Members, shall be charged to only those Members on whose behalf
such payments are made or whose particular circumstances gave rise to such
payments. Such charges shall be debited from the Capital Accounts of such
Members as of the close of the Fiscal Period during which any such items were
paid or accrued by the Fund.
4.6 Reserves
(a) Appropriate reserves may be created, accrued and charged against
Net Assets and proportionately against the Capital Accounts of the Members for
contingent liabilities, if any, as of the date any such contingent liability
becomes known to the Adviser or the Board of Managers, such reserves to be in
the amounts that the Board of Managers, in its sole discretion, deems necessary
or appropriate. The Board of Managers may increase or reduce any such reserves
from time to time by such amounts as the Board of Managers, in its sole
discretion, deems necessary or appropriate. The amount of any such reserve, or
any increase or decrease therein, shall be proportionately charged or credited,
as appropriate, to the Capital Accounts of those parties who are Members at the
time when such reserve is created, increased or decreased, as the case may be;
provided, however, that if any such individual reserve item, adjusted by any
increase therein, exceeds the lesser of $500,000 or 1% of the aggregate value of
the Capital Accounts of all such Members, the amount of such reserve, increase,
or decrease shall instead be charged or credited to those parties who were
Members at the time, as determined by the Board of Managers, in its sole
discretion, of the act or omission giving rise to the contingent liability for
which the reserve was established, increased or decreased in proportion to their
Capital Accounts at that time.
(b) If at any time an amount is paid or received by the Fund (other
than contributions to the capital of the Fund, distributions or repurchases of
Interests or portions thereof) and such amount exceeds the lesser of $500,000 or
1% of the aggregate value of the Capital Accounts of all Members at the time of
payment or receipt and such amount was not accrued or reserved for but would
nevertheless, in accordance with the Fund's accounting practices, be treated as
applicable to one or more prior Fiscal Periods, then such amount shall be
proportionately charged or credited, as appropriate, to those parties who were
Members during such prior Fiscal Period or Periods.
(c) If any amount is required by paragraph (a) or (b) of this Section
4.6 to be charged or credited to a party who is no longer a Member, such amount
shall be paid by or to such party, as the case may be, in cash, with interest
from the date on which the Board of Managers determines that such charge or
credit is required. In the case of a charge, the former Member shall be
obligated to pay the amount of the charge, plus interest as provided above, to
the Fund on demand; provided, however, that (i) in no event shall a former
Member be obligated to make a payment exceeding the amount of such Member's
Capital Account at the time to which the charge relates; and (ii) no such demand
shall be made after the expiration of three years since the date on which such
party ceased to be a Member. To the extent that a former Member fails to pay to
the Fund, in full, any amount required to be charged to such former Member
pursuant to paragraph (a) or (b) of this Section 4.6, whether due to the
expiration of the applicable limitation period or for any other reason
whatsoever, the deficiency shall be charged proportionately to the Capital
Accounts of the Members at the time of the act or omission giving rise to the
charge to the extent feasible, and otherwise proportionately to the Capital
Accounts of the current Members.
4.7 Allocation of Organizational Expenses
(a) As of the first Expense Allocation Date, Organizational Expenses
shall be allocated among and debited against the Capital Accounts of the Members
in accordance with their respective Capital Percentages on such Expense
Allocation Date.
(b) As of each Expense Allocation Date following the first Expense
Allocation Date, all amounts previously debited against the Capital Account of a
Member pursuant to this Section 4.7 on the preceding Expense Allocation Date
will be credited to the Capital Account of such Member, and Organizational
Expenses shall then be reallocated among and debited against the Capital
Accounts of all Members in accordance with their respective Capital Percentages
on such Expense Allocation Date.
4.8 Tax Allocations
For each Fiscal Year, items of income, deduction, gain, loss or credit
shall be allocated for income tax purposes among the Members in such manner as
to reflect equitably amounts credited or debited to each Member's Capital
Account for the current and prior Fiscal Years (or relevant portions thereof).
Allocations under this Section 4.8 shall be made pursuant to the principles of
Sections 704(b) and 704(c) of the Code, and Treasury Regulation Sections
1.704-1(b)(2)(iv)(f) and (g), 1.704-1(b)(4)(i) and 1.704-3(e) promulgated
thereunder, as applicable, or the successor provisions to such Sections of the
Code and Treasury Regulations. Notwithstanding anything to the contrary in this
Agreement, there shall be allocated to the Members such gains or income as shall
be necessary to satisfy the "qualified income offset" requirement of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d).
If the Fund realizes capital gains (including short-term capital gains)
for Federal income tax purposes ("gains") for any Fiscal Year during or as of
the end of which the Interests of one or more Positive Basis members (as
hereinafter defined) are repurchased by the Fund pursuant to Article III, unless
otherwise determined by the Board of Managers, in its sole discretion, shall
allocate such gains shall be allocated as follows: (i) to allocate such gains
among such Positive Basis Members, pro rata in proportion to the respective
Positive Basis (as hereinafter defined) of each such Positive Basis Member,
until either the full amount of such gains shall have been so allocated or the
Positive Basis of each such Positive Basis Member shall have been eliminated and
(ii) to allocate any gains not so allocated to Positive Basis Members to the
other Members in such manner as shall equitably reflect the amounts allocated to
such Members' Capital Accounts pursuant to Section 4.4.
As used herein, (i) the term "Positive Basis" shall mean, with respect
to any Member and as of any time of calculation, the amount by which its
Interest as of such time exceeds its "adjusted tax basis," for Federal income
tax purposes, in its Interest as of such time (determined without regard to any
adjustments made to such "adjusted tax basis" by reason of any transfer or
assignment of such Interest, including by reason of death, and without regard to
such Member's share of the liabilities of the Fund under Section 752 of the
Code), and (ii) the term "Positive Basis Member" shall mean any Member whose
Interest is repurchased by the Fund and who has Positive Basis as of the
effective date of the repurchase, but such Member shall cease to be a Positive
Basis Member at such time as it shall have received allocations pursuant to
clause of the second paragraph of this Section 4.8 equal to its Positive Basis
as of the effective date of such repurchase.
4.9 Distributions
The Board of Managers, in its sole discretion, may authorize the Fund
to make distributions in cash or in kind at any time to all of the Members on a
pro rata basis in accordance with the Members' Capital Account balances.
4.10 Withholding
(a) The Board of Managers may withhold and pay over to the Internal
Revenue Service (or any other relevant taxing authority) taxes from any
distribution to any Member to the extent required by the Code or any other
applicable law.
(b) For purposes of this Agreement, any taxes so withheld by the Fund
with respect to any amount distributed by the Fund to any Member shall be deemed
to be a distribution or payment to such Member, reducing the amount otherwise
distributable to such Member pursuant to this Agreement and reducing the Capital
Account of such Member. If the amount of such taxes is greater than any such
distributable amounts, then such Member and any successor to such Member's
Interest shall pay to the Fund as a contribution to the capital of the Fund,
upon demand of the Board of Managers, the amount of such excess.
(c) The Board of Managers shall not be obligated to apply for or obtain
a reduction of or exemption from withholding tax on behalf of any Member that
may be eligible for such reduction or exemption. To the extent that a Member
claims to be entitled to a reduced rate of, or exemption from, a withholding tax
pursuant to an applicable income tax treaty, or otherwise, the Member shall
furnish the Board of Managers with such information and forms as such Member may
be required to complete where necessary to comply with any and all laws and
regulations governing the obligations of withholding tax agents. Each Member
represents and warrants that any such information and forms furnished by such
Member shall be true and accurate and agrees to indemnify the Fund and each of
the Members from any and all damages, costs and expenses resulting from the
filing of inaccurate or incomplete information or forms relating to such
withholding taxes.
ARTICLE V
DISSOLUTION AND LIQUIDATION
5.1 Dissolution
The Fund shall be dissolved:
(1) upon the affirmative vote to dissolve the Fund by: (i) the
Board of Managers or (ii) Members holding at least two-thirds
(2/3) of the total number of votes eligible to be cast by all
Members;
(2) upon the failure of Members to elect a successor Manager at a
meeting called by the Special Advisory Member in accordance
with Section 1.6(c) hereof when no Manager remains to continue
the business of the Fund;
(3) upon the expiration of any two-year period that commences on
the date on which any Member has submitted, in accordance with
the procedure specified in Section 3.6(f) hereof, a written
notice to the Fund requesting the repurchase of its entire
Interest by the Fund, if such Interest has not been
repurchased by the Fund; or
(4) as required by operation of law.
Dissolution of the Fund shall be effective on the later of the day on
which the event giving rise to the dissolution shall occur or the conclusion of
any applicable 60-day period during which the Board of Managers and Members may
elect to continue the business of the Fund as provided above, but the Fund shall
not terminate until the assets of the Fund have been liquidated in accordance
with Section 5.2 hereof and the Certificate has been canceled.
5.2 Liquidation of Assets
(a) Upon the dissolution of the Fund as provided in Section 5.1 hereof,
the Board of Managers shall promptly appoint the Board of Managers or the
Adviser as the liquidator and the Board of Managers or the Adviser shall
liquidate the business and administrative affairs of the Fund, except that if
the Board of Managers does not appoint the Board of Managers or the Adviser as
the liquidator or the Board of Managers or the Adviser is unable to perform this
function, a liquidator elected by Members holding a majority of the total number
of votes eligible to be cast by all Members shall promptly liquidate the
business and administrative affairs of the Fund. Net Profit and Net Loss during
the period of liquidation shall be allocated pursuant to Section 4.4 hereof. The
proceeds from liquidation (after establishment of appropriate reserves for
contingencies in such amount as the Board of Managers or liquidator shall deem
appropriate in its sole discretion as applicable) shall be distributed in the
following manner:
(1) the debts of the Fund, other than debts, liabilities or
obligations to Members, and the expenses of liquidation
(including legal and accounting expenses incurred in
connection therewith), up to and including the date that
distribution of the Fund's assets to the Members has been
completed, shall first be paid on a pro rata basis;
(2) such debts, liabilities or obligations as are owing to the
Members shall next be paid in their order of seniority and on
a pro rata basis; and
(3) the Members shall next be paid on a pro rata basis the
positive balances of their respective Capital Accounts after
giving effect to all allocations to be made to such Members'
Capital Accounts for the Fiscal Period ending on the date of
the distributions under this Section 5.2(a).
(b) Anything in this Section 5.2 to the contrary notwithstanding, upon
dissolution of the Fund, the Board of Managers, the Adviser or other liquidator
may distribute ratably in kind any assets of the Fund; provided, however, that
if any in-kind distribution is to be made (i) the assets distributed in kind
shall be valued pursuant to Section 6.3 hereof as of the actual date of their
distribution and charged as so valued and distributed against amounts to be paid
under Section 5.2(a) above, and (ii) any profit or loss attributable to property
distributed in kind shall be included in the Net Profit or Net Loss for the
Fiscal Period ending on the date of such distribution.
ARTICLE VI
ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS
6.1 Accounting and Reports
(a) The Fund shall adopt for tax accounting purposes any accounting
method that the Board of Managers shall decide in its sole discretion is in the
best interests of the Fund. The Fund's accounts shall be maintained in U.S.
currency.
(b) After the end of each taxable year, the Fund shall furnish to each
Member such information regarding the operation of the Fund and such Member's
Interest as is necessary for Members to complete Federal, state and local income
tax or information returns and any other tax information required by Federal,
state or local law.
(c) Except as otherwise required by the 1940 Act, or as may otherwise
be permitted by rule, regulation or order, within 60 days after the close of the
period for which a report required under this Section 6.1(c) is being made, the
Fund shall furnish to each Member a semi-annual report and an annual report
containing the information required by the 1940 Act. The Fund shall cause
financial statements contained in each annual report furnished hereunder to be
accompanied by a certificate of independent public accountants based upon an
audit performed in accordance with generally accepted auditing standards. The
Fund may furnish to each Member such other periodic reports as it deems
necessary or appropriate in its discretion.
6.2 Determinations by the Board of Managers
(a) All matters concerning the determination and allocation among the
Members of the amounts to be determined and allocated pursuant to Article IV
hereof, including any taxes thereon and accounting procedures applicable
thereto, shall be determined by the Board of Managers unless specifically and
expressly otherwise provided for by the provisions of this Agreement or required
by law, and such determinations and allocations shall be final and binding on
all the Members.
(b) The Board of Managers may make such adjustments to the computation
of Net Profit or Net Loss, the allocation of Net Profit or Net Loss with respect
to any Member, or any components comprising any of the foregoing as it considers
appropriate to reflect fairly and accurately the financial results of the Fund
and the intended allocation thereof among the Members.
6.3 Valuation of Assets
(a) Except as may be required by the 1940 Act, the Board of Managers
shall value or have valued any Securities or other assets and liabilities of the
Fund as of the close of business on the last day of each Fiscal Period in
accordance with such valuation procedures as shall be established from time to
time by the Board of Managers and that conform to the requirements of the 1940
Act. In determining the value of the assets of the Fund, no value shall be
placed on the goodwill or name of the Fund, or the office records, files,
statistical data or any similar intangible assets of the Fund not normally
reflected in the Fund's accounting records, but there shall be taken into
consideration any items of income earned but not received, expenses incurred but
not yet paid, liabilities, fixed or contingent, and any other prepaid expenses
to the extent not otherwise reflected in the books of account, and the value of
options or commitments to purchase or sell Securities or commodities pursuant to
agreements entered into prior to such valuation date.
(b) The value of Securities and other assets of the Fund and the net
worth of the Fund as a whole determined pursuant to this Section 6.3 shall be
conclusive and binding on all of the Members and all parties claiming through or
under them.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 Amendment of Limited Liability Company Agreement
(a) Except as otherwise provided in this Section 7.1, this Agreement
may be amended, in whole or in part, with: (i) the approval of the Board of
Managers (including the vote of a majority of the Independent Managers, if
required by the ▇▇▇▇ ▇▇▇) and (ii) if required by the 1940 Act, the approval of
the Members by such vote as is required by the ▇▇▇▇ ▇▇▇.
(b) Any amendment that would:
(1) increase the obligation of a Member to make any contribution
to the capital of the Fund;
(2) reduce the Capital Account of a Member other than in
accordance with Article IV; or
(3) modify the events causing the dissolution of the Fund;
may be made only if (i) the written consent of each Member adversely affected
thereby is obtained prior to the effectiveness thereof or (ii) such amendment
does not become effective until (A) each Member has received written notice of
such amendment and (B) any Member objecting to such amendment has been afforded
a reasonable opportunity (pursuant to such procedures as may be prescribed by
the Board of Managers) to tender its entire Interest for repurchase by the Fund.
(c) The power of the Board of Managers to amend this Agreement at any
time without the consent of the other Members as set forth in paragraph (a) of
this Section 7.1 shall specifically include the power to:
(1) restate this Agreement together with any amendments hereto
that have been duly adopted in accordance herewith to
incorporate such amendments in a single, integrated document;
(2) amend this Agreement (other than with respect to the matters
set forth in Section 7.1(b) hereof) to effect compliance with
or reflect any relaxation in the future of any applicable law,
regulation, policy, interpretation or guideline of any
applicable regulatory agency, or to cure any ambiguity or to
correct or supplement any provision hereof that may be
inconsistent with any other provision hereof; and
(3) amend this Agreement to make such changes as may be necessary
or advisable to ensure that the Fund will not be treated as an
association or a publicly traded partnership taxable as a
corporation for Federal income tax purposes.
(d) The Board of Managers shall cause written notice to be given of any
amendment to this Agreement (other than any amendment of the type contemplated
by clause (1) of Section 7.1(c) hereof) to each Member, which notice shall set
forth (i) the text of the amendment or (ii) a summary thereof and a statement
that the text thereof will be furnished to any Member upon request.
7.2 Special Power of Attorney
(a) Each Member hereby irrevocably makes, constitutes and appoints each
Manager and the Adviser, acting severally, and any liquidator of the Fund's
assets appointed pursuant to Section 5.2 hereof with full power of substitution,
the true and lawful representatives and attorneys-in-fact of, and in the name,
place and stead of, such Member, with the power from time to time to make,
execute, sign, acknowledge, swear to, verify, deliver, record, file and/or
publish:
(1) any amendment to this Agreement that complies with the
provisions of this Agreement (including the provisions of
Section 7.1 hereof);
(2) any amendment to the Certificate required because this
Agreement is amended, including, without limitation, an
amendment to effectuate any change in the membership of the
Fund; and
(3) all such other instruments, documents and certificates that,
in the opinion of legal counsel to the Fund, may from time to
time be required by the laws of the United States of America,
the State of Delaware or any other jurisdiction in which the
Fund shall determine to do business, or any political
subdivision or agency thereof, or that such legal counsel may
deem necessary or appropriate to effectuate, implement and
continue the valid existence and business of the Fund as a
limited liability company under the Delaware Act (including
any such conveyances and other instruments deemed necessary to
effect the authorized dissolution or termination of the Fund).
(b) Each Member is aware that the terms of this Agreement permit
certain amendments to this Agreement to be effected and certain other actions to
be taken or omitted by or with respect to the Fund without such Member's
consent. If an amendment to the Certificate or this Agreement or any action by
or with respect to the Fund is taken in the manner contemplated by this
Agreement, each Member agrees that, notwithstanding any objection that such
Member may assert with respect to such action, the attorneys-in-fact appointed
hereby are authorized and empowered, with full power of substitution, to
exercise the authority granted above in any manner that may be necessary or
appropriate to permit such amendment to be made or action lawfully taken or
omitted. Each Member is fully aware that each Member will rely on the
effectiveness of this special power-of-attorney with a view to the orderly
administration of the affairs of the Fund.
(c) This power-of-attorney is a special power-of-attorney and is
coupled with an interest in favor of each Manager and the Adviser and as such:
(1) shall be irrevocable and continue in full force and effect
notwithstanding the subsequent death or incapacity of any
party granting this power-of-attorney, regardless of whether
the Fund or Board of Managers shall have had notice thereof;
and
(2) shall survive the delivery of a Transfer by a Member of the
whole or any portion of such Member's Interest, except that
where the transferee thereof has been approved by the Board of
Managers for admission to the Fund as a substituted Member,
this power-of-attorney given by the transferor shall survive
the delivery of such assignment for the sole purpose of
enabling the Board of Managers to execute, acknowledge and
file any instrument necessary to effect such substitution.
7.3 Notices
Except as otherwise set forth in this Agreement, notices that may or
are required to be provided under this Agreement shall be made, if to a Member,
by regular mail, or if to the Fund, the Board of Managers or the Adviser, by
hand delivery, registered or certified mail return receipt requested, commercial
courier service, telex or telecopier, and shall be addressed to the respective
parties hereto at their addresses as set forth in the books and records of the
Fund. Notices shall be deemed to have been provided when delivered by hand, on
the date indicated as the date of receipt on a return receipt or when received
if sent by regular mail, commercial courier service, telex or telecopier. A
document that is not a notice and that is required to be provided under this
Agreement by any party to another party may be delivered by any reasonable
means.
7.4 Agreement Binding Upon Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, assigns, executors,
trustees or other legal representatives, but the rights and obligations of the
parties hereunder may not be transferred or delegated except as provided in this
Agreement and any attempted transfer or delegation thereof that is not made
pursuant to the terms of this Agreement shall be void.
7.5 Applicability of 1940 Act and Form N-2
The parties hereto acknowledge that this Agreement is not intended to,
and does not, set forth the substantive provisions contained in the 1940 Act and
the Form N-2 that affect numerous aspects of the conduct of the Fund's business
and of the rights, privileges and obligations of the Members. Each provision of
this Agreement shall be subject to and interpreted in a manner consistent with
the applicable provisions of the 1940 Act and the Form N-2.
7.6 Choice of Law
Notwithstanding the place where this Agreement may be executed by any
of the parties hereto, the parties expressly agree that all the terms and
provisions hereof shall be construed under the laws of the State of Delaware,
including the Delaware Act without regard to the conflict of law principles of
such State.
7.7 Not for Benefit of Creditors
The provisions of this Agreement are intended only for the regulation
of relations among past, present and future Members, Managers, the Special
Advisory Member and the Fund. This Agreement is not intended for the benefit of
non-Member creditors and no rights are granted to non-Member creditors under
this Agreement.
7.8 Consents
Any and all consents, agreements or approvals provided for or permitted
by this Agreement shall be in writing and a signed copy thereof shall be filed
and kept with the books of the Fund.
7.9 Merger and Consolidation
(a) The Fund may merge or consolidate with or into one or more limited
liability companies formed under the Delaware Act or other business entities
pursuant to an agreement of merger or consolidation that has been approved in
the manner contemplated by Section 18-209(b) of the Delaware Act.
(b) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, an agreement of merger or consolidation approved in accordance
with Section 18-209(b) of the Delaware Act may, to the extent permitted by
Section 18-209(f) of the Delaware Act, (i) effect any amendment to this
Agreement, (ii) effect the adoption of a new limited liability company agreement
for the Fund if it is the surviving or resulting limited liability company in
the merger or consolidation, or (iii) provide that the limited liability company
agreement of any other constituent limited liability company to the merger or
consolidation (including a limited liability company formed for the purpose of
consummating the merger or consolidation) shall be the limited liability company
agreement of the surviving or resulting limited liability company.
7.10 Pronouns
All pronouns shall be deemed to refer to the masculine, feminine,
neuter, singular or plural, as the identity of the person or persons, firm or
corporation may require in the context thereof.
7.11 Confidentiality
(a) A Member may obtain from the Fund such information regarding the
affairs of the Fund as is just and reasonable under the Delaware Act, subject to
reasonable standards (including standards governing what information and
documents are to be furnished, at what time and location and at whose expense)
established by the Board of Managers.
(b) Each member covenants that, except as required by applicable law or
any regulatory body, it will not divulge, furnish or make accessible to any
other person the name and/or address (whether business, residence or mailing) of
any Member (collectively, "Confidential Information") without the prior written
consent of the Board of Managers, which consent may be withheld in its sole
discretion.
(c) Each Member recognizes that in the event that this Section 7.11 is
breached by any Member or any of its principals, partners, members, directors,
officers, employees or agents or any of its Affiliates, including any of such
Affiliates, principals, partners, members, directors, officers, employees or
agents, irreparable injury may result to the non-breaching Members and the Fund.
Accordingly, in addition to any and all other remedies at law or in equity to
which the non-breaching Members and the Fund may be entitled, such Members shall
also have the right to obtain equitable relief, including, without limitation,
injunctive relief, to prevent any disclosure of Confidential Information, plus
reasonable attorneys, fees and other litigation expenses incurred in connection
therewith. In the event that any non-breaching Member or the Fund determines
that any of the other Members or any of its principals, partners, members,
directors, officers, employees or agents or any of its Affiliates, including any
of such Affiliates, principals, partners, members, directors, officers,
employees or agents should be enjoined from or required to take any action to
prevent the disclosure of Confidential Information, each of the other
non-breaching Members agrees to pursue in a court of appropriate jurisdiction
such injunctive relief.
7.12 Certification of Non-Foreign Status
Each Member or transferee of an Interest from a Member shall certify,
upon admission to the Fund and at such other times thereafter as the Board of
Managers may request, whether such Member is a "United States Person" within the
meaning of Section 7701(a)(30) of the Code on forms to be provided by the Fund,
and shall notify the Fund within 60 days of any change in such Member's status.
7.13 Severability
If any provision of this Agreement is determined by a court of
competent jurisdiction not to be enforceable in the manner set forth in this
Agreement, each Member agrees that it is the intention of the Members that such
provision should be enforceable to the maximum extent possible under applicable
law. If any provisions of this Agreement are held to be invalid or
unenforceable, such invalidation or unenforceability shall not affect the
validity or enforceability of any other provision of this Agreement (or portion
thereof).
7.14 Filing of Returns
The Board of Managers or its designated agent shall prepare and file,
or cause the accountants of the Fund to prepare and file, a Federal information
tax return in compliance with Section 6031 of the Code and any required state
and local income tax and information returns for each tax year of the Fund.
7.15 Tax Matters Member
(a) A Manager who is a Member shall be designated on the Fund's annual
Federal information tax return, and have full powers and responsibilities, as
the Tax Matters Member of the Fund for purposes of Section 6231(a)(7) of the
Code. In the event that no Manager is a Member, a member shall be so designated.
Should any Member be designated as the Tax Matters Member for the Fund pursuant
to Section 6231(a)(7) of the Code, it shall, and each Member hereby does, to the
fullest extent permitted by law, delegate to a Manager selected by the Board of
Managers all of its rights, powers and authority to act as such Tax Matters
Member and hereby constitutes and appoints such Manager as its true and lawful
attorney-in-fact, with power to act in its name and on its behalf, including the
power to act through such agents or attorneys as it shall elect or appoint, to
receive notices, to make, execute and deliver, swear to, acknowledge and file
any and all reports, responses and notices, and to do any and all things
required or advisable, in the Manager's judgment, to be done by such a Tax
Matters Member. Any Member designated as the Tax Matters Member for the Fund
under Section 6231(a)(7) of the Code shall be indemnified and held harmless by
the Fund from any and all liabilities and obligations that arise from or by
reason of such designation.
(b) Each person (for purposes of this Section 7.15, called a "Pass-Thru
Member") that holds or controls an interest as a Member on behalf of, or for the
benefit of, another person or persons, or which Pass-Thru Member is beneficially
owned (directly or indirectly) by another person or persons, shall, within 30
days following receipt from the Tax Matters Member of any notice, demand,
request for information or similar document, convey such notice or other
document in writing to all holders of beneficial interests in the Fund holding
such interests through such Pass-Thru Member. In the event the Fund shall be the
subject of an income tax audit by any Federal, state or local authority, to the
extent the Fund is treated as an entity for purposes of such audit, including
administrative settlement and judicial review, the Tax Matters Member shall be
authorized to act for and its decision shall be final and binding upon, the Fund
and each Member thereof. All expenses incurred in connection with any such
audit, investigation, settlement or review shall be borne by the Fund.
7.16 Section 754 Election
In the event of a distribution of Fund property to a Member or an
assignment or other transfer (including by reason of death) of all or part of
the interest of a Member in the Fund, at the request of a Member, the Board of
Managers, in its discretion, may cause the Fund to elect, pursuant to Section
754 of the Code, or the corresponding provision of subsequent law, to adjust the
basis of the Fund property as provided by Sections 734 and 743 of the Code.
EACH OF THE UNDERSIGNED ACKNOWLEDGES HAVING READ THIS AGREEMENT IN ITS
ENTIRETY BEFORE SIGNING, INCLUDING THE CONFIDENTIALITY CLAUSE SET FORTH IN
SECTION 7.11.
[SIGNATURE PAGE FOLLOWS.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MANAGERS:
By:
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By:
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
By:
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ORGANIZATIONAL MEMBER:
COLUMBIA MANAGEMENT DISTRIBUTORS, INC.
By:
---------------------------
Name:
ADVISER AND SPECIAL ADVISORY MEMBER:
BANC OF AMERICA INVESTMENT ADVISORS, INC.
By:
---------------------------
Name:
Title:
MEMBERS:
Each person who shall sign an investor application or certification and who
shall be accepted by the Board of Managers to the Fund as a Member.