<PAGE>
File No. 811-9104
As filed with the Securities and Exchange Commission on
December 29, 1995
U.S SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-2
(X) REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(Exact Name of Registrant as Specified in Charter)
700 N.E. Multnomah
Suite 1600
Portland, Oregon 97232-4116
(Address of Principal Executive Offices) (Zip Code)
(503) 731-2000
(Registrant's Telephone Number, including Area Code)
Lawrence J. Hass, Esq.
Paul, Hastings, Janofsky & Walker
1299 Pennsylvania Avenue, Tenth Floor
Washington, D.C. 20004
(Name and Address of Agent for Service)
Copies to:
John P. Grayken
c/o Brazos GenPar, Inc.
600 East Las Colinas Boulevard, Suite 460
Irving, Texas 75039
<PAGE>
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
FORM N-2
CROSS REFERENCE SHEET
Part A
Item No. Caption Prospectus Caption
1. Cover Page . . . . . . . . . . . . . . . . . Not
applicable
2. Inside Front and Outside Back
Cover Page . . . . . . . . . . . . . . . . .
Not applicable
3. Fee Table and Synopsis . . . . . . . . . . . Fee
Table and
Synopsis; Expense
Information
4. Financial Highlights . . . . . . . . . . . . Not
Applicable
5. Plan of Distribution . . . . . . . . . . . . Not
Applicable
6. Selling Shareholders . . . . . . . . . . . . Not
Applicable
7. Use of Proceeds . . . . . . . . . . . . . . Not
Applicable
8. General Description of the
Registrant . . . . . . . . . . . . . . . . .
General Description of the
Registrant; General;
Investment Objectives and
Policies; Risk Factors;
Other
Policies
9. Management . . . . . . . . . . . . . . . . .
Management; General
10. Capital Stock, Long-Term
Debt, and Other Securities . . . . . . . . .
Membership Units; Long-Term Debt; General;
Taxes;
Outstanding
Securities; Securities
Ratings
11. Defaults and Arrears on
Senior Securities . . . . . . . . . . . . . . Not
Applicable
12. Legal Proceedings . . . . . . . . . . . . . . Not
Applicable
<PAGE>
13. Table of Contents of
Statement of Additional
Information . . . . . . . . . . . . . . . . Not
Applicable
Part B
Item No. Statement of Additional
Information Caption
14. Cover Page . . . . . . . . . . . . . . . . Not
Applicable
15. Table of Contents . . . . . . . . . . . . . . Not
Applicable
16. General Information and
History . . . . . . . . . . . . . . . . . . .
General Description
of the Registrant
17. Investment Objective and
Policies . . . . . . . . . . . . . . . . . . .
Investment Objective and
Policies; Risk Factors
18. Management . . . . . . . . . . . . . . . . . .
Management
19. Control Persons and Principal
Holders of Securities . . . . . . . . . . . .
Control Persons and
Principal Holders of Units
20. Investment Advisory and Other
Services . . . . . . . . . . . . . . . . . . .
Management
21. Brokerage Allocation and Other
Practices . . . . . . . . . . . . . . . . . . .
Brokerage Allocation and
Other Practices
22. Tax Status . . . . . . . . . . . . . . . . . .
Tax Status
23. Financial Statements . . . . . . . . . . . . .
Not Applicable
Part C
Item No.
Information required to be included in Part C is set forth,
under the appropriate
item so numbered, in Part C of this registration statement.
<PAGE>
PART A
ITEM 1. COVER PAGE
Not Applicable.
ITEM 2. INSIDE FRONT AND OUTSIDE BACK COVER PAGE
Not Applicable.
ITEM 3. FEE TABLE AND SYNOPSIS
1. Expense Information
Shareholder Transaction Expenses0.00%
Annual Expenses
Management Fees* 0.15%
Interest Payments on Borrowed Funds 0.00%
Other Expenses**. . . . . . . . . . . . . . . . . .
. . . . . . . . . . 0.00%
Total Annual Expenses 0.15%
1 3 5 10
year year year year
Example
You would pay the following
expenses on a $1,000 investment, $1.58 $4.96
$8.68
$19.67
assuming a 5% annual return:
The purpose of the preceding table is to assist the
investor in
understanding the various costs and expenses that an investor
in WhiteRock
Portfolio Investors, L.L.C. (the "Company") will bear directly
or indirectly. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE
SHOWN.
<PAGE>
* The Company is internally managed and, therefore,
does not pay
any fee for investment advisory services provided to it. An
administrative fee
equal on an annual basis to 0.15% of the aggregate cost of
Company's assets,
reduced by any distributions of capital made with respect to
those assets, is paid
to the Company's Administrator for providing various services
to the Company.
This fee will be waived with respect to any investments made
by the Company in
entities affiliated with its Administrator (or entities
affiliated with affiliates of the
Administrator).
** The Company will not incur "Other Expenses" because
all expenses
in excess of the annual administrative fee of 0.15% will be
borne by the
Company's Administrator.
2. Not applicable.
3. Not applicable.
ITEM 4. FINANCIAL HIGHLIGHTS
Not applicable.
ITEM 5. PLAN OF DISTRIBUTION
Not applicable
ITEM 6. SELLING SHAREHOLDERS
Not applicable.
<PAGE>
ITEM 7. USE OF PROCEEDS
Not applicable.
ITEM 8. GENERAL DESCRIPTION OF THE REGISTRANT
8.1 General
The Company was formed as a limited liability
company under the
laws of the State of Delaware on September 29, 1995, and
registered as a non-diversified, closed-end management
investment company under the Investment
Company Act of 1940 ("Investment Company Act") on the same day
by the filing
of a notification of registration on Form N-8A (File No.
811-9104). Unless
terminated earlier in accordance with the requirements of the
Company's Limited
Liability Company Agreement ("Operating Agreement"), the
Company will cease
operations and terminate on August 31, 2002.
Units of membership in the Company are offered only
to certain
eligible persons in an offering conducted in reliance on
Section 4(2) of the
Securities Act of 1933 ("Securities Act"). To participate in
the offering, an
offeree must either be an "accredited investor" as that term
is defined in
Regulation D under the Securities Act, or a person (including
a purchaser
representative of such person) whom the Company has determined
to be
"sophisticated" within the meaning of Rule 506(b)(ii) of
Regulation D under the
Securities Act and who has access to all of the information
about the Company
that would be provided if the offering of units of membership
in the Company
were registered under the Securities Act.
<PAGE>
At time of formation, the Company had received
commitments to
contribute capital ("Capital Commitments") from 4 persons
(such persons and all
subsequent holders of Company units referred to hereafter as
"Members"), and
capital contributions from the initial Members equalling
approximately $115,200.
As of the date of this registration statement, there were 47
beneficial owners of
Company units (including the initial Members), for a total
value (including the
contributions from the initial Members) equal to approximately
$10,964,057.
Within 30 days of the filing date hereof, the Company expects
to have at least
another 53 beneficial owners of its units.
The Company expects to draw down capital from time
to time to
make investments in accordance with its investment objective
and policies. Each
capital call effected by the Company will be expressed as a
pro rata percentage of
each Member's undrawn Capital Commitment to the Company. Upon
settlement
of each such capital call and at each subsequent closing to
the extent that capital
has been drawn down on or prior to the date of such closing,
the Company will
issue membership units at a value per unit equal to the fair
market value of
Company assets, determined at a time within 48 hours before
the issuance of
such units, less any outstanding liabilities existing at that
time, and divided by
the total of all outstanding units determined at that time.
Unfunded Capital
Commitments may be called by the Company at any time on not
less than 10
days prior written notice in accordance with the terms
thereof.
If any Member fails to pay a capital call when due,
the Managers of
the Company (see definition of "Managers" in Item 9 under
"Management") will
give the Member immediate notice of default. If such Member
fails to cure such
default
<PAGE>
within three business days after receiving the notice of
default from the
Company, the Managers may take such action as may be
necessary, including
enforcing the Capital Commitment in any court of competent
jurisdiction. The
Managers may in their sole discretion elect instead to avail
the Company of any
other remedies afforded under Delaware law, including partial
or complete
forfeiture to the Company of the delinquent Member's units if
the Company
incurs damages as a result of the failure of such Member to
perform. Before
pursuing any such remedies, however, the other Members will be
given an
opportunity to contribute the amount of the defaulted Capital
Commitment in
proportion to their ownership percentages in the Company. Any
Members so
contributing will be entitled to treat the amounts contributed
as a loan. Until
they are fully repaid, such Members are entitled to all
distributions to which the
delinquent Member would have been entitled.
8.2. Investment Objectives and Policies
The investment objective of the Company is to seek
high total
returns by buying, selling, exchanging or otherwise acquiring,
holding, trading,
investing in, managing, and dealing in real estate-related
investments, including
investments in companies that deal in real estate. In
pursuing its objectives, the
Company will focus primarily on acquiring, either directly or
indirectly, and
managing (and selling) distressed mortgage loan and owned real
estate ("REO")
portfolios, and high yield commercial mortgage-backed
securities ("CMBS"). As a
non-diversified investment company, the Company may invest
substantially all of
its assets in one or more companies that invest directly in
the types of assets that
satisfy the Company's
<PAGE>
investment objective and policies. No assurance can be given
that the Company
will achieve its investment objective.
Initially, the Company will invest substantially all
of its assets in
Brazos Fund, L.P. ("Fund"), a real estate investment limited
partnership. The
Fund's investment objective is consistent with the investment
objective of the
Company. In this regard, the Fund pursues its investment
objective by investing
mainly in distressed mortgage loans and REO property, as well
as high-yield
CMBS.
Interests in the Fund are offered only to persons
who are
"accredited investors" within the meaning of Regulation D
under the Securities
Act, unless otherwise agreed to by the Fund's General Partner,
Brazos Principal
GenPar, L.P., a Delaware limited partnership. Brazos GenPar,
Inc., a Delaware
corporation which will serve as the Company's Administrator,
is the general
partner of Brazos Principal GenPar, L.P. The Fund is not
registered under the
Investment Company Act in reliance on Section 3(c)(1) of that
Act. The
Company will limit its holding of interests in the Fund to
less than 10% of the
value of partnership interests in the Fund.
8.3. Risk Factors
Investment in the Company may involve certain risks
and special
considerations, including those arising from the Company's
investment policies
and practices (including the nature of its investments), and
from the structure of
the Company and restrictions applicable to its units.
As noted, the Company intends to invest primarily,
either directly
or indirectly, in CMBS, including subordinated tranches of
such securities, and in
<PAGE>
distressed mortgage loans and REO property. As an investor
in such
subordinated CMBS, the Company will be the first in line among
the debtholders
of an issuer of CMBS having various tranches to bear the risk
of loss from
delinquencies and defaults experienced on the collateral. In
addition, the
Company may be exposed to prepayment risk to the extent that
the mortgage
loans underlying specific mortgage-backed securities are
prepayable. Generally,
the value of mortgage-backed securities held by an investor
could be significantly
affected when, in a declining interest rate environment, early
payments are made
on outstanding mortgage loans. Prepayment risk may not be so
significant in the
case of CMBS, however, because commercial mortgage loans
(which are the
assets underlying CMBS) typically are not prepayable or are
subject to
prepayment penalties.
The value of the Company's commercial mortgage loans
and CMBS
holdings will be affected by the rate of delinquencies and
defaults experienced on
the commercial mortgage loans and by the severity of loss
incurred as a result of
such defaults. The factors which may determine the rate of
delinquencies,
defaults and the resultant severity of loss include (i)
economic and real estate
market conditions, (ii) the term structure of the mortgage
loans, and (iii) any
limits to legal and financial recourse upon a default under
the terms of the
mortgage loan.
An investor in the Company should recognize that the
lower-rated
or non-rated CMBS in which the Company will invest, directly
or indirectly, have
speculative characteristics and, thus, involve substantial
financial risk. The prices
of lower credit quality securities, which are commonly
referred to as "junk
bonds," have been found to be less sensitive to interest rate
changes than more
highly-rated investments, but more sensitive to adverse
economic conditions or
individual issuer
<PAGE>
developments. Securities rated lower than B by the rating
organizations,
including securities rated as low as D, generally may be
regarded as having
extremely poor prospects of ever attaining any real investment
standing and may
be in default. Existing credit supports and the owner's
equity in the property
may be insufficient to protect the Company from loss with
respect to its holdings
of such securities.
An investor in the Company should be aware of the
risk that may
arise from holding illiquid assets of the types in which the
Company intends to
invest primarily. Such assets may be considered to be
illiquid because they are
subject to legal or contractual restrictions on disposition or
because they lack a
secondary trading market. Illiquid securities, such as
subordinated CMBS, may
be difficult, or require a substantial period of time, to sell
and generally may be
sold only at a discount from comparable investments that are
more liquid.
Illiquid securities may also be more difficult to value.
Finally, an investor in the Company should be aware
of the risk to
which the Company may be exposed by not having a diversified
portfolio of
assets. As noted, because it intends to concentrate its
investments in commercial
real estate debt, the Company will be a non-diversified
investment company and,
therefore, will be more susceptible than a more widely
diversified fund to any
single economic, political or regulatory occurrence. In
particular, developments
in the commercial real estate debt financing and mortgage
securitization
industries may affect the value of the Company's commercial
mortgage loan
holdings and the Company's CMBS investments, as well as the
ability of the
Company to conduct its operations in an efficient manner.
Because membership
interests in the Company may be transferred only with the
prior written consent
of the Board of Managers, a Member may be
<PAGE>
required to bear the economic risks of his or her investment
until termination of
the Company. The risks of diversification are further
compounded to the extent
the Company concentrates its investments in one or only a very
few real estate
investment companies, such as the Fund.
The risks described above apply generally to the
operations of both
the Company and the Fund. Additional risks associated with
the Fund include:
(1) operation on a significantly more leveraged basis than the
Company, which
will create additional exposure to increases in interest
rates; (2) investment of a
portion of its assets in mortgage loans that are in default or
require restructuring
before they can be repackaged into mortgage securities or
otherwise liquidated,
potentially requiring substantial time and expense or
additional equity
investments in the underlying property by third parties and
may result in
economic loss; (3) the Fund's ability to find sufficient
mortgage loans with
suitable investment characteristics in a competitive market;
(4) the ability of the
Fund to attract and retain qualified personnel; and (5) the
Fund's ability to
attract and retain qualified coinvestors.
8.4. Other Policies
Consistent with its investment objectives, policies
and restrictions,
the Company may also invest in the following types of assets:
(1) U.S.
Government securities that have an effective duration at the
time of purchase no
greater than the effective duration of the two-year U.S.
Treasury note, including
U.S. Treasury securities and securities issued by agencies or
instrumentalities of
the U.S. Government; (2) corporate debt securities that have
an effective
duration at the time of purchase no greater than the effective
duration of the
two-year U.S. Treasury note
<PAGE>
and that are rated in one of the four highest rating
categories by a nationally
recognized rating agency; and (3) short-term investments that
have a remaining
term to maturity at the time of purchase of no greater than
one year, including
commercial paper rated not lower than A-1 by Standard & Poor's
Corporation or
P-1 by Moody's Investors Services, Inc., and other money
market instruments of
similar credit standing, noncontingent interest bearing
deposits in banks
chartered by or within the United States with long-term
ratings at least A-, and
money market mutual funds.
The Company may engage in a very limited degree of
borrowing.
Specifically, the Company may borrow money only for the
following purposes:
(1) to effect its day-to-day operations using limited (under
$10,000) short-term
trade credit, (2) as needed to preserve the value of any
investment previously
made, as provided in the Operating Agreement, and (3) for any
other proper
purpose if authorized by a vote of a majority-in-interest of
the Members. In no
event, however, would any borrowing in the aggregate exceed 33
1/3% of the
Company's total assets (including the amount borrowed).
The Company generally may make any other type of
investment if
consistent with the Company's investment objective and
policies, but only to the
extent any such investment has been approved by a
majority-in-interest vote of
the Members.
8.5 Not applicable.
8.6 Not applicable.
<PAGE>
ITEM 9. MANAGEMENT
9.1. General.
(a) Board of Managers
The business and affairs of the Company will be
managed by a
board of managers consisting of five Members of the Company
("Managers"). No
more than 60% of the Managers at any time may be "interested
persons" of the
Company, as that term is defined in Section 2(a)(19) of the
Investment Company
Act. The Managers will be responsible for setting the general
policies of the
Company, but will not be required to conduct the day-to-day
business of the
Company.
The Managers have delegated their rights and powers
to manage
the Company to various officers of the Company ("Officers"),
subject to the
Managers' reservation of right with respect to certain major
Company actions
which an Officer generally may not undertake unless approved
by the Managers
or, in some cases, by majority-in-interest vote of the
Members. In particular, an
Officer may not invest Company assets in any investment that
exceeds in the
aggregate $10,000 without first obtaining the approval of the
Managers.
(b) Administration Agreement. Under an Administration
Agreement
with the Company, Brazos GenPar, Inc. ("Administrator"), 600
East Las Colinas
Boulevard, Suite 460, Irving, Texas 75039, will provide
administrative services
to the Company, subject to the supervision of the Managers.
The Administrator
will furnish the Company with certain office facilities and
provide ordinary
clerical and bookkeeping services. In addition to providing
basic administrative
services to the Company, the Administrator will also serve as
the Company's
transfer agent,
<PAGE>
dividend disbursing agent and registrar. In those capacities,
the Administrator
will maintain certain financial and accounting books and
records pursuant to the
Administration Agreement with the Company. Under the
Administration
Agreement, the Administrator has the discretion to enter into
arrangements with
other qualified persons to provide transfer agent, dividend
disbursing and
registrar functions for the Company.
For providing these services, the Administrator will
be paid an
annual fee equal to 0.15% of the aggregate cost of Company
assets, reduced by
any distributions of capital made to Members with respect to
such assets. This
fee is intended to cover all costs borne by the Administrator
in connection with
performing its duties under the Administration Agreement,
including the costs of
preparing and delivering on behalf of the Company all SEC,
state or other
regulatory, and tax filings required to be sent to such
bodies, as well as the costs
of preparing and mailing periodic reports required to be sent
to Company
Members. The administrative fee will be waived with respect
to any
investments the Company makes in entities affiliated with the
Administrator (or
entities affiliated with affiliates of the Administrator),
including any investments
made by the Company in the Fund.
(c) Custodian. The Company will maintain custody of its
assets in
accordance with the requirements of Rule 17f-2 under the
Investment Company
Act. Pursuant to this Rule, the Managers have adopted a
resolution designating
Robert H. Gidel and Ellis Short to be the Officers of the
Company who shall have
joint access to the Company's assets. Also in accordance
with Rule 17f-2, the
assets of the Company will be held in a segregated account at
a bank whose
functions and physical
<PAGE>
facilities are supervised by federal or state authority. As
required by the
Operating Agreement, such a bank will be selected by the
Company's
Administrator. An independent public accountant selected by
the Company will
verify by actual examination the assets of the Company held at
the bank three
times a year, two of which examinations will be conducted
without prior notice
to the Company. The accountant will prepare a certificate
stating that an
examination has been made (and further describing the nature
and extent of the
examination) and will send this certificate, along with a Form
N-17f-2, to the
SEC promptly after each examination.
9.2. Not applicable.
9.3. Control Persons.
PacifiCorp Master Retirement Trust beneficially owns
more than
25% of the voting securities of the Company.
ITEM 10. MEMBERSHIP UNITS
10.1. A Member's ownership interest in the
Company will be
divided into Units. Each unit will have an initial value of
$20. The value of
each unit thereafter will be based on the fair market value of
the Company's
assets, determined at the time within 48 hours of the time a
Member makes a
Capital Contribution to the Company, less the then outstanding
liabilities of the
Company, and divided by the total number of units outstanding
at that time.
Each unit has equal voting, dividend,
<PAGE>
distribution and liquidation rights. A unit entitles each
Member to one vote per
share on all matters subject to Member approval. When issued
against payment
therefor, each unit will be fully paid and nonassessable. No
person has any
liability for Company obligations by reason of owning units
therein, although
each person that subscribes for units is liable for the full
amount of such
subscription in accordance with and subject to the terms of
the related Admission
Agreement.
10.2. Long-Term Debt.
None.
10.3. General.
None.
10.4. Taxes. The Company will use its best
efforts to ensure that
the Company qualifies each year for taxation as a partnership
for U.S. federal
income tax purposes. In order to so qualify, the Company must
satisfy certain
tests. See discussion in Item 22.
10.5. Outstanding Securities.
<TABLE>
<CAPTION>
<S>
Title of Class
Units of
Membership
Interest<S>
Amount
Authorized
No
authorized
amount<S>
Amount Held by
Registrant or
for its Account
None<S>
Amount
Outstanding
Exclusive of
Amount Shown
Under
Previous Column
548,203 units
</TABLE>
<PAGE>
10.6. Securities Ratings.
None.
ITEM 11. DEFAULTS AND ARREARS ON SENIOR SECURITIES
11.1. Not Applicable.
11.2. Not Applicable.
ITEM 12. LEGAL PROCEEDINGS
Not Applicable. The Company is not involved in any
pending legal
proceedings.
ITEM 13. TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL
INFORMATION
Not Applicable.
<PAGE>
PART B
ITEM 14. COVER PAGE
Not Applicable.
ITEM 15. TABLE OF CONTENTS
Not Applicable.
ITEM 16. GENERAL INFORMATION AND HISTORY
The Company has no history. See Item 8 - General
Description of
the Registrant, for general information about the Company.
ITEM 17. INVESTMENT OBJECTIVE AND POLICIES
See Item 8 - General Description of the Registrant
for additional
information.
ITEM 18. MANAGEMENT
The following individuals are the officers and
Managers of the
Company. A brief statement of their present positions and
principal occupations
during the past five years is also provided.
Name and Address Position with WhiteRock
1. J.T. Crandall Manager
201 Main Street, Suite 3100
Fort Worth, Texas 76102
<PAGE>
2. Robert F. Lanz Manager*
700 N.E. Multnomah, Ste. 1600
Portland, Oregon 97232-4116
3. Nori Gerardo Manager
514 N.W. 11th Avenue, No. 203
Portland, Oregon 97209
4. William E. Peressini Manager**
700 N.E. Multnomah, Ste. 1600
Portland, Oregon 97232-4116
5. Brian M. Wirkkala Manager**
2107 N.E. 136th Avenue
Vancouver, Washington 98684
6. John P. Grayken President and Treasurer
1819 Westover Square Drive
Fort Worth, Texas 76107
7. Chris W. Mahowald Vice President and
4200 Lorraine Avenue Assistant Treasurer
Dallas, Texas 75205
8. Ellis Short
9995 Hollow Way Vice President and
Dallas, Texas 75220 Assistant Treasurer
9. Robert H. Gidel Vice President and
5427 Edgehollow Place Secretary
Dallas, Texas 75287
* Denotes Managers who may be deemed to be "interested
persons"
of the Company.
** Messrs. Peressini and Wirkkala's recent election to
the Board of
Managers is still subject to their formal acceptance of
Membership.
Mr. Crandall, age 41, has served as Vice President
and Chief
Financial Officer of Keystone, Inc. since October, 1986.
<PAGE>
Mr. Lanz is currently the Chief Investment Officer
of the PacifiCorp
Master Retirement Trust. He has been a Vice President of
PacifiCorp since 1980.
Ms. Gerardo, age 39, has been an Investment
Consultant with
Pension Consulting Alliance, a firm based in Portland, Oregon,
since 1988.
Mr. Peressini is the Treasurer of PacifiCorp and the
Chief Financial
Officer of PacifiCorp Financial Services, Inc. He has held
various other positions
at PacifiCorp and its affiliates during the last five years.
Mr. Wirkkala is a Vice President and Treasurer of
Pacific Telecom,
Inc. He has held this position during the past five years.
Mr. Grayken, age 39, has been a principal of Brazos
Principal
GenPar, L.P. since March, 1995. He is also a principal of
Keystone, Inc., a
position he has held since July, 1990.
Mr. Mahowald, age 34, has been a principal of Brazos
Principal
GenPar, L.P. since March, 1995. He is also a principal of
Keystone, Inc., a
position he has held since July, 1990.
Mr. Short, age 35, has served in various capacities
with Brazos
Asset Management, Inc. and Brazos Principal GenPar, L.P. since
June, 1993.
Before that, he was employed by General Electric and/or
various of its affiliates
from August, 1983 to June, 1993.
Mr. Gidel, age 44, has been a principal at Brazos
Principal GenPar,
L.P. since March, 1995. Mr. Gidel is also the President of
Brazos Asset
Management, Inc., a position he has held since July, 1993.
From January, 1986
to June, 1993, Mr. Gidel served on the Board of Directors and
was a Managing
Director of Alex Brown Kleinwort Benson Realty Advisors in
Baltimore.
<PAGE>
Each Manager is entitled to one vote on each matter
requiring the
Managers to take any action or consent to the taking of any
action.
18.2. Not applicable.
18.3. Not applicable.
18.4. Manager and Officer Compensation
Neither the Managers nor any of the Officers will
receive
compensation from the Company for providing services to it.
ITEM 19. CONTROL PERSONS AND PRINCIPAL HOLDERS OF UNITS
19.1. The PacifiCorp Master Retirement Trust, a trust
established in
connection with one or more retirement plans maintained by
PacifiCorp or its
affiliates, currently owns approximately 98.9% of the
membership units in the
Company. The operations of the trust are governed by an
Investment Committee
and its Trustee is The Bank of New York. PacifiCorp is based
in Portland,
Oregon and directly or through its affiliates engages in a
variety of businesses,
including electric, telecommunications, natural resources, and
financial services.
19.2. See Item 19.1.
19.3. The Managers and Officers as a group hold in
the aggregate
approximately 1.1% of the outstanding units of membership in
the Company.
<PAGE>
ITEM 20. INVESTMENT ADVISORY AND OTHER SERVICES
20.1. Not applicable.
20.2. Not applicable.
20.3. Fees and Expenses Paid by Persons Other Than
the Investment
Adviser
See Item 9.
20.4. See Item 9.
20.5. Not applicable.
20.6 Not applicable.
20.7. KPMG Peat Marwick, 301 Commerce Street, Suite
2500, Fort
Worth, Texas, 76102, will serve as the Company's independent
public
accountant, providing audit services and other services
related to the self-custody
requirements of Rule 17f-2 under the Investment Company Act.
20.8. None.
ITEM 21. BROKERAGE ALLOCATION AND OTHER PRACTICES
21.1. The Managers or any authorized Officer of the
Company will,
subject to the investment limitations and restrictions set
forth herein, make all
decisions to buy and sell securities for the Company. In
selecting brokers or
dealers to execute portfolio transactions on behalf of the
Company, the Managers
or any authorized Officer will seek the best terms available.
In assessing the best
overall terms available for any transaction, such persons will
consider those
factors which they deem relevant, including the breadth of the
market in the
security, the price of the security, the reliability,
financial condition and
execution capability of the broker or
<PAGE>
dealer, the size of and difficulty in executing the
transaction, research services,
and the reasonableness of the commission for the specific
transaction.
In selecting brokers or dealers to execute
particular transactions,
and in evaluating the best overall terms available, the
Managers or any
authorized Officer will consider "brokerage and research
services" (as those terms
are defined in Section 28(e) of the Securities Exchange Act of
1934). In this
regard, the Managers or an authorized Officer may cause the
Company to pay to
a broker or dealer who provides such brokerage and research
services a
commission for executing a portfolio transaction which is in
excess of the amount
of commission another broker or dealer would have charged for
effecting that
transaction. The Managers or authorized Officer must
determine in good faith,
however, that such commission was reasonable in relating to
the value of the
brokerage and research services provided, viewed in terms of
that particular
transaction or in terms of all the accounts over which the
Managers or
authorized Officer may, in the future, exercise investment
discretion.
The Company has no obligation to deal with any
broker or group
of brokers in executing transactions in portfolio securities.
Although not
presently contemplated, the Company may, subject to any
applicable restrictions
under the Investment Company Act, engage affiliates of the
Managers or any
authorized Officer from time to time to act as a broker or
dealer in connection
with the execution of the Company's portfolio transactions.
Although the Operating Agreement contains no
restrictions on
portfolio turnover, it is not the Company's policy to engage
in transactions with
the objective of seeking profits from short-term trading. It
is expected that the
annual portfolio turnover rate of the Company will not exceed
400% excluding
securities having a
<PAGE>
maturity of one year or less. Because it is difficult to
predict accurately portfolio
turnover rates, actual turnover may be higher or lower.
21.2. None.
21.3. See response to Item 21.1.
21.4. None.
21.5. None.
ITEM 22. TAX STATUS
The following discussion, except as otherwise
indicated, reflects
provisions of the Internal Revenue Code of 1986, as amended
("Code") as of the
date of this registration statement. In addition, the
following discussion is a
general summary of certain of the current federal income tax
laws regarding the
Company and its Members, and does not purport to deal with all
of the federal
income tax consequences or any of the state or other tax
considerations
applicable to the Company or its Members. Prospective Members
should consult
their own tax advisors regarding the federal, state, local,
foreign and other tax
consequences to them of investing in the Company, including
the effects of any
changes or proposed changes in the tax laws.
Based on the advice of its legal counsel, the
Company believes that
it will be subject to taxation as a partnership under
Subchapter K of the Code.
The Company has not applied for, and does not intend to apply
for, a ruling from
the Internal Revenue Service ("IRS") as to its status as a
partnership for federal
income tax purposes, and the advice of its counsel is not
binding on the IRS. As
a limited
<PAGE>
liability company taxable as a partnership, the Company is not
directly liable for
federal income taxes. Rather, each Member is taxed on such
Member's
distributive share of any income and gains derived by the
Company as such
amounts are earned, without regard to whether any such amounts
are actually
distributed to the Member.
ITEM 23. FINANCIAL STATEMENTS
Not Applicable.
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) Not Applicable.
(2) (a) Limited Liability Agreement.
(b) Not applicable.
(c) None.
(d) Not Applicable.
(e) None.
(f) None.
(g) None.
(h) None.
(i) None.
(j) None.
(k) Form of Administration Agreement.
(l) Not Applicable.
(m) None.
(n) Not Applicable.
(o) Not Applicable.
(p) Form of Admission Agreement.
(q) None.
(r) None.
<PAGE>
ITEM 25. MARKETING ARRANGEMENTS
None.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not Applicable.
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
WITH REGISTRANT
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
Title of Class Number of Record Holders
Units of Membership Interest 47
ITEM 29. INDEMNIFICATION
Under the Company's Operating Agreement, the Company
has
agreed to indemnify the Managers, Officers, the "tax matters
partner", and each
manager, officer and employee of such persons, as well as any
person who is
deemed to control either the Company or a Manager (each such
person being an
"indemnitee") against any losses, claims, damages, liabilities
or actions to which
an Indemnitee may be subject by virtue of any act performed by
such person (or
omitted to be performed by such person), in connection with
the business of the
Company or its formation, including amounts paid in
satisfaction of judgments
and in compromise or as fines and penalties. In addition, the
Company will
reimburse an Indemnitee for any legal or other expenses
reasonably incurred by
such Indemnitee in connection with
<PAGE>
investigating, defending or preparing to defend any such loss,
claim, damage,
liability or action, except with respect to any matter as to
which an Indemnitee
will not have acted in good faith in the reasonable belief
that his or her action
was in the best interest of the Company or, in the case of any
criminal
proceeding, as to which such Indemnitee will have had
reasonable cause to
believe that the conduct was unlawful. In no event, however,
will the Company
be liable to an Indemnitee to the extent that in the final
judgment of a court of
competent jurisdiction, such loss, claim, damage, liability or
action is found to
arise from an Indemnitee's conduct that (i) constitutes
willful misfeasance, (ii) is
taken in bad faith, (iii) is grossly negligent, or (iv) is
done in reckless disregard
of the duties involved in the conduct of the Indemnitee's
position.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT
ADVISER
Not applicable.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The accounts and records of the Company will be
maintained at the
office of the Administrator, 600 East Las Colinas Boulevard,
Suite 460, Irving,
Texas 75039.
ITEM 32. MANAGEMENT SERVICES
Except as described above in Item 9 - Management,
the Company is
not a party to any management service related contract.
<PAGE>
ITEM 33. UNDERTAKINGS
Not Applicable.
SIGNATURES
Pursuant to the requirements of the Investment
Company Act of
1940, the Registrant has duly caused this registration
statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in
the City of Irving,
State of Texas, on the 29th day of December, 1995.
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
(Registrant)
By: /s/ Robert H. Gidel
Vice President and Secretary
<PAGE>
SCHEDULE OF EXHIBITS TO FORM N-2
Exhibit Page
Number Exhibit Number
Exhibit A Limited Liability Agreement
Exhibit B None
Exhibit C None
Exhibit D Not Applicable
Exhibit E None
Exhibit F None
Exhibit G None
Exhibit H None
Exhibit I None
Exhibit J None
Exhibit K Form of Administration Agreement
Exhibit L Not Applicable
Exhibit M None
Exhibit N Not Applicable
Exhibit O Not Applicable
Exhibit P Form of Admission Agreement
Exhibit Q None
Exhibit R None
<PAGE>
========================================
LIMITED LIABILITY COMPANY AGREEMENT
FOR
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
Dated as of
the Effective Date
stated herein.
[Restated with all Amendments
Made as of December 22, 1995]
========================================
<PAGE>
TABLE OF CONTENTSPage
ARTICLE I.
DEFINITIONS
1.1 Definitions. 1
ARTICLE II.
THE COMPANY
2.1 Formation of Company 12
2.2 Company Name and Office 12
2.3 Investment Objectives and Policies of the Company 12
2.4 Term of the Company 13
2.5 Legal Title to Company Assets 14
ARTICLE III.
CAPITAL CONTRIBUTIONS
3.1 Admission of Members to the Company. 14
3.2 Mandatory Capital Contributions; Issuance of
Units; No Pre-emptive Rights 15
3.3 Enforcement of Commitments 17
3.4 Voluntary Capital Contributions of the Members 18
3.5 No Further Contributions or Loans 19
ARTICLE IV.
MANAGEMENT AND OPERATIONS OF THE COMPANY
4.1 Management Generally 20
4.2 Election, Tenure, and Removal of Managers 21
4.3 Meetings of the Managers 22
4.4 Delegation of Authority and Management Power
to the Officers; Retained Authority and Status
Under the Act 22
4.5 Election, Tenure, and Removal of Officers 24
4.6 President 24
4.7 Vice-President(s) 25
4.8 Treasurer 25
4.9 Secretary 26
4.10 Subordinate Officers; Committees 27
4.11 Management Powers of the Company,
Managers and Officers 27
4.12 Legal and Regulatory Compliance by the Company. 29
4.13 Impermissible Acts and Transactions 30
Page
<PAGE>
4.14 Major Actions 30
ARTICLE V.
RIGHTS, OBLIGATIONS AND WARRANTIES OF THE MEMBERS
5.1 Management Rights of the Members 33
5.2 Proxies 33
5.3 Examination of Company Records 33
5.4 Member Representations and Warranties 33
5.5 Meetings of Members 34
5.6 Notice of Meeting and Record Date 35
5.7 Voting 36
ARTICLE VI.
COMPENSATION OF THE MANAGER AND OFFICERS
6.1 Compensation of the Managers and Officers 36
6.2 Expense Reimbursements 37
ARTICLE VII.
DISTRIBUTIONS
7.1 Distribution of Net Income Among Members 37
7.2 Establishment of Reserves 38
ARTICLE VIII.
MAINTENANCE OF CAPITAL ACCOUNTS; ALLOCATION OF
COMPANY NET INCOME, NET GAIN, NET LOSS, AND CREDIT
8.1 Capital Accounts 38
8.2 Allocation of Net Income, Gain, Loss,
Deduction and Credit; Qualified Income Offset 41
8.3 Code Section 704(c) Tax Allocations 42
8.4 Minimum Gain Chargeback 43
8.5 Adjustments 44
ARTICLE IX.
ACCOUNTING PROCEDURE
9.1 Fiscal Year 45
9.2 Books of Account 45
9.3 Financial Reports 46
9.4 Annual Report 47
Page
<PAGE>
9.4.1 Cost of Reports and Audits47
9.4.2 Preparation and Filing of Income Tax Returns
and Other Writings47
9.4.3 Controversies with the Internal Revenue Service48
ARTICLE X.
TRANSFERABILITY OF OWNERSHIP INTERESTS;
SUBSTITUTE MEMBERS AND ADDITIONAL MEMBERS
10.1 Limitation on Transfer of Ownership Interests 49
10.2 Transfers Not in Compliance with this
Article Void 50
10.3 Admission of Substituted Members 51
10.4 Admission of Additional Members 52
10.5 Certain Documents 52
10.6 Indemnification by Transferring Members and
Transferees 52
ARTICLE XI.
STANDARDS OF CONDUCT; CONFLICTS OF INTEREST;
LIMITATIONS ON LIABILITIES; INDEMNIFICATION;
11.1 Liability of Members; Absence of Duties;
Conflicts 53
11.2 Managers' and Officer's Standard of Care 54
11.3 Liability and Indemnification of the Managers
and Officers, and the Tax Matters Partner. 55
11.4 Board Action Regarding Indemnification. 58
11.5 Indemnification Rights Cumulative. 58
11.6 Rights of Managers and Officers to
Conduct Other Business. 59
ARTICLE XII.
POWER OF ATTORNEY
12.1 Authority to Execute Documents 59
12.2 Survival of Power 61
ARTICLE XIII.
AMENDMENT
13.1 Amendment 61
Page
<PAGE>
ARTICLE XIV.
DISSOCIATION OF A MEMBER
14.1 Dissociation 62
14.2 No Member Resignation 63
14.3 Rights to Distributions Upon Dissociation
or Merger 63
ARTICLE XV.
DISSOLUTION AND WINDING UP
15.1 Dissolution 64
15.2 Effect of Dissolution 64
15.3 Distributions Upon Dissolution 65
15.4 No Obligation to Restore Deficit
Capital Accounts 68
15.5 Certificate of Dissolution 69
ARTICLE XVI.
ADMINISTRATION OF THE COMPANY
16.1 Depositories. 69
16.2 Custodians. 69
16.3 Independent Public Accountants 70
16.4 Checks, Drafts, Etc. 70
16.5 Bonding 71
ARTICLE XVII.
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
17.1 Notices. 71
17.2 Law Governing. 72
17.3 Entire Agreement; Rules of Construction 73
17.4 Severability. 73
17.5 Gender and Number 74
17.6 Captions. 74
17.7 Counterparts and Execution 74
17.8 Consents and Waivers 75
17.9 Rights and Remedies Cumulative 75
17.10 Waiver of Right to Partition 75
17.11 Successors and Assigns 76
17.12 No Partnership Intended for Nontax Purposes 76
17.13 Rights of Creditors and Third Parties under
this Agreement 76
Page
<PAGE>
SCHEDULE A - Initial Members and Capital Contributions A-1
SCHEDULE B - Investment Objectives and Policies B-1
SCHEDULE C - Initial Officers C-1
EXHIBIT A - Form of Admission Agreement Ex.-1
<PAGE>
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement")
is entered
into by and among the persons executing this Agreement as
Initial Members, and
thereafter among the Members and the Company, and shall be
effective as of the
Effective Date designated below, upon the following terms and
conditions.
WITNESSETH
The Members, intending to form a limited liability company
that will be
registered as an investment company and will invest primarily
in certain real estate
and related investments, hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. Whenever used in this Agreement, the
following words
and phrases, unless the context clearly indicates otherwise,
shall have the following
meanings:
"1933 Act" shall mean the Securities Act of 1933, as
amended from time
to time.
"1940 Act" shall mean the Investment Company Act of
1940, the rules and
regulations promulgated thereunder and any order applicable to
the Company
granted thereunder, in each case as amended from time to time.
"Act" shall mean the Limited Liability Company Act,
Delaware Code
Annotated, Title 6, ^^18-101 et seq., as amended from time to
time.
"Additional Member" shall mean a Member other than an
Initial Member
or a Substituted Member.
<PAGE>
"Admission Agreement" shall mean an Agreement between
a Person and
the Company in the form attached hereto as Exhibit A to allow
such Person to be
admitted as an Additional or Substituted Member of the
Company. Each Admission
Agreement shall indicate the number of such Member's Units and
its remaining
Capital Commitment, if any.
"Affiliate" with respect to any Person, shall mean any
Person directly or
indirectly controlling, controlled by, or under common control
with such Person.
"Affiliated Person" shall have the meaning given to it
in the 1940 Act.
"Agreement" shall mean this limited liability company
agreement, as
amended from time to time pursuant to the terms hereof. The
Agreement may also
be referred to herein or in Company documents as the "LLC
Agreement" or the
"Operating Agreement."
"Assets" shall mean any and all real or personal
property, whether tangible
or intangible, choate or inchoate, acquired by the Company on
or after the date of
this Agreement and held by it at any given time.
"Authorized Person" shall mean and refer to Gage R.
Johnson or other
authorized agent of the Members, who is authorized under this
Agreement to form
the Company under and pursuant to the Act by filing the
Certificate on behalf of the
Members, as set forth in Section 2.1(a).
"Bankrupt Member" shall mean a Member who: (1) has
become the subject
of an order for relief under the United States Bankruptcy
Code, (2) has initiated,
either in an original Proceeding or by way of answer in any
state insolvency or
receivership proceeding, an action for liquidation,
arrangement, composition,
readjustment,
<PAGE>
dissolution, or similar relief, or (3) has been the subject of
any other "Event of
Bankruptcy" as defined in Section 18-303 of the Act.
"Board of Managers" shall mean the board of managers
referenced in
Section 4.1 hereof.
"Brazos" shall mean Brazos Principal GenPar, L.P.
"Business Days" shall mean any day except Saturday,
Sunday or other day
on which commercial banks located in New York City are
authorized by law to be
closed for business.
"Capital Account" shall mean a tax account to be
established and
maintained by the Company for the Members as computed from
time to time in
accordance with Section 8.1 hereof.
"Capital Calls" shall mean requests to the Members for
a Capital
Contribution pursuant to the terms of Section 3.2 hereof.
"Capital Commitment" shall mean the amount each Member
has agreed to
contribute to the capital of the Company.
"Capital Contribution" shall mean, with respect to any
Member, a
contribution to the capital of the Company made by such Member
pursuant to this
Agreement. All Capital Contributions shall be in the form of
cash.
"Certificate" shall mean that certain Certificate of
Formation of the
Company to be filed with the office of the Secretary of State,
as the same may be
amended from time to time. The Certificate may also be
referred to herein or in
Company documents as the "Articles of Organization" or the
"Articles."
"Closing" shall have the meaning set forth in Section
3.2 hereof.
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as
amended from
time to time.
"Commission" shall mean the Securities and Exchange
Commission.
"Company" shall mean WhiteRock Portfolio Investors,
L.L.C., a limited
liability company formed pursuant to this Agreement under the
laws of the State.
"Contributing Members" shall mean those members making
contributions
as a result of the failure of a Delinquent Member to fund a
portion of its Capital
Commitment as described in Article III.
"Default Interest Rate" shall mean the lesser of the
legal rate or the then-current prime rate quoted by the
largest commercial bank in the jurisdiction of the
principal office of the Company, plus three percent.
"Delinquent Member" shall mean a Member who has failed
to fund a
portion of the Capital Commitment of that Member.
"Disabling Conduct" shall mean any act or failure to
act which (i)
constitutes willful misfeasance, (ii) is taken in bad faith,
(iii) is grossly negligent,
or (iv) is done in reckless disregard of the duties involved
in the conduct of one's
position.
"Dissociate" or "Dissociation" shall refer to any
action which causes a
Person to cease to be Member as described in Article XIV
hereof, or the result of
such action.
"Distribution" shall mean a transfer of cash or other
Company Assets
described in either Article VII (from net income) or Article
XV (at liquidation) that
is made to a Member (or former Member) on account of the Units
held by such
Member.
"Effective Date" shall have the meaning set forth in
Section 2.1 hereof.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974,
as amended from time to time.
<PAGE>
"Fair Market Value" shall mean the amount at which
property would
change hands between a willing buyer and a willing seller,
neither being under any
compulsion to buy or sell and when both parties are able, as
well as willing, to
engage in the transaction, and are well-informed about the
property and the market
for the property.
"Fiscal Year" shall have the meaning set forth in
Section 9.1 hereof.
"Indemnitee" or "Indemnitees" shall have the meaning
set forth in Section
11.3 hereof.
"Initial Members" shall mean those persons identified
on Schedule A
attached hereto and made a part hereof by this reference who
have executed the
Agreement.
"Interested Person" shall have the meaning given to it
in the 1940 Act.
"Majority" or "Majority Vote" shall mean, with respect
to a vote of the
Managers, a majority by number (i.e., per capita) of the
Managers. In cases in
which only two Managers are present to vote on a particular
matter, "Majority" or
"Majority Vote" shall mean the unanimous vote of both Managers.
"Majority-in-Interest Vote" shall mean the vote at any
meeting of the
Members duly called of (A) Members holding 67 percent or more
of the Units
present at such meeting, if a quorum consisting of the holders
of more than 50
percent of the outstanding Units of the Company are present at
such meeting or
represented by proxy, or (B) Members holding more than 50
percent of the
outstanding Units of the Company, whichever is less.
"Member" shall mean each of the Initial Members and any
Additional
Members or Substituted Members admitted to the Company
pursuant to Article III
or Article X of this Agreement, including unless the context
expressly indicates to
the
<PAGE>
contrary, a Manager who is also a Member. Reference to a
"Member" shall refer to
any one of the Members without distinction.
"Manager" shall mean any individual appointed and
qualified to serve on
the Board of Managers described in Section 4.1, who shall
pursuant to Article IV
serve as a "manager" of the Company as such term is defined in
the Act, and any
successor appointed in accordance with the provisions of this
Agreement.
"Notice" shall mean notification in writing as set
forth in Section 17.1.
"Officers" shall mean the President, the
Vice-President(s), Treasurer and
Secretary and any other officers appointed pursuant to Article
IV hereof.
"Organization" shall mean a Person other than a natural
person.
Organization includes, without limitation, corporations (both
non-profit and other
corporations), partnerships (both limited and general), joint
ventures, limited
liability companies, trusts, and unincorporated associations,
but the term does not
include joint tenancies and tenancies by the entirety.
"Organizational Expenses" shall mean those expenses
incurred in the
organization of the Company including the legal fees and other
costs of preparation
of this Agreement, the Certificate, and the filings needed to
register the Company
as an investment company pursuant to the 1940 Act and make any
other
organizational filings required thereunder with the
Commission, including but not
limited to the Form N-2.
"Ownership Interest" shall mean the ownership interest
of a Member in the
Company from time to time, including the right of such Member
to any and all
Distributions (liquidating and otherwise) and allocations of
the profits, losses, gains,
deductions, and credits of the Company to which such Member
may be entitled, as
provided in this Agreement and in the Act, together with the
management and
<PAGE>
participation rights devolving on such Member by virtue of its
status as a "member"
under the Act and as specifically set forth in this Agreement,
including the right to
vote on, consent to or approve certain actions of the Company
and to have access
to certain information and records of the Company, and the
obligations of such
Member to comply with all the terms and provisions of this
Agreement and of the
Act.
"Ownership Percentage" shall mean, with respect to any
Member, the
percentage Ownership Interest held by such Member, expressed
as the ratio of the
number of Units held by such Member to the number of all Units
outstanding at any
given time.
"Person" shall mean an individual, trust, estate, or
any incorporated or
unincorporated organization permitted to be a member of a
limited liability
company under the laws of the State, whether or not legal
entities.
"Proceeding" shall mean any judicial or administrative
trial, hearing or
other activity, civil, criminal or investigative, including,
without limitation,
litigation, arbitration, administrative adjudication, or
mediation, and appeals or
reviews of any of the foregoing, the result of which may be
that a court, arbitrator,
or governmental agency may enter a judgment, order, decree, or
other
determination which, if not appealed and reversed, would be
binding upon the
Company, a Member or other Person subject to the jurisdiction
of such court,
arbitrator, or governmental agency.
"President" shall mean the individual appointed by the
Managers to whom
various of their powers have been delegated pursuant to the
terms hereof, and who
shall act as the principal agent and chief executive officer
of the Company pursuant
to Article IV.
<PAGE>
"Qualified Investment" shall mean any investment in any
direct or indirect
interest (whether characterized as equity, debt, or otherwise)
in any of the
following: (i) any Real Property; (ii) any loan or other
obligation relating to any
Real Property (whether performing or non-performing); or (iii)
any Security issued
by, or any other interest in, any entity directly or
indirectly engaged primarily in the
business of acquiring, developing, constructing, managing,
operating, holding,
and/or disposing of any Real Property or any interests
referred to in (ii) above;
provided that, the Real Property comprising or relating to
each Qualified Investment
shall principally include Real Property located in the United
States and Canada (but
may include a minor amount of non-U.S. and non-Canadian Real
Property).
"Real Property" shall mean any real property, building,
structures or other
improvements or fixtures located thereon or therein and any
personal property used
in connection therewith, or any leasehold, license, right,
easement or any other
estate or interest (including, without limitation, any
partnership or joint venture
interest and any air or other development rights) or any
option with respect thereto.
"Regulation" shall mean the income tax regulations
promulgated under the
Code, as such regulations may be amended from time to time
(including
corresponding provisions of succeeding regulations).
"Remove" or "Removal" shall mean the act by which a
Manager is Removed
as a Manager but, absent Dissociation, continues to be a
Member.
"Resign" or "Resignation" shall mean the act of the
Manager by which such
Manager ceases to be a Manager but, absent Dissociation,
continues to be a
Member.
"Rev. Proc. 95-10 Member-Manager Requirements" shall
mean, with
respect to the Managers, the requirements set forth in Section
4.02 of Internal
Revenue
<PAGE>
Service Revenue Procedure 95-10, 1995-3 I.R.B. 20, that the
Member-Managers in
the aggregate must (i) own at least one percent (1%) of the
Ownership Interests
during the entire existence of the Company, unless such
percentage is not met due
to temporary allocations permitted by such Section 4.02, and
(ii) maintain
throughout the entire existence of the Company a minimum
Capital Account balance
equal to the lesser of one percent (1%) of total
capitalization or $500,000.
"Security" shall mean any securities of any type or
kind acquired by the
Company including, but not limited to, notes, common or
preferred stock,
partnership interests, certificates of beneficial interest, or
other evidences of
ownership or rights thereof.
"Secretary" shall mean the individual appointed by the
Managers to whom
various of their powers have been delegated pursuant to the
terms hereof, and who
shall perform the duties assigned him or her pursuant to
Article IV.
"Secretary of State" shall mean the Secretary of State
of the State of
Delaware.
"Substituted Member" shall have the meaning set forth
in Section10.3.
"State" shall mean Delaware.
"Taxable Year" shall mean the taxable year of the
Company as determined
pursuant to ^706 of the Code.
"Taxing Jurisdiction" shall mean any state, local, or
foreign government
that collects tax, interest or penalties, however designated,
on any Member's share
of the income or gain attributable to the Company.
"Termination Date" shall mean August 31, 2002.
<PAGE>
"Transfer" shall mean, except as otherwise provided in
Section 10.1 hereof,
any sale, assignment, transfer, exchange, mortgage, pledge,
grant, hypothecation,
or other transfer, absolute or as security or encumbrance
(including dispositions by
operation of law).
"Unit" shall mean the units into which the Ownership
Interests of the
Company are divided from time to time for ease of
administration, which units shall
be issued to the Members in exchange for Capital Contributions
based on the then
current total Fair Market Value of the Company's Assets minus
its liabilities, divided
by the total number of units outstanding, and which shall be
assigned an initial
value with respect to the Initial Members on the Effective
Date hereof of $20.00.
"Value" shall have the meaning set forth in Section
8.1(b).
"Vice President" shall mean any of the individuals
appointed by the
Managers pursuant to Article IV to whom various of their
powers may be delegated
pursuant to the terms hereof.
ARTICLE II.
THE COMPANY
2.1 Formation of Company
(a) The Initial Members hereby authorize the
Authorized Person to
act as organizer and to form the Company under and pursuant to
Section 18-201
of the Act by filing the Certificate on behalf of themselves
and any Additional or
Substituted Members. This Agreement shall not be deemed
delivered or effective
prior to the date of such filing (the "Effective Date").
<PAGE>
2.2 Company Name and Office.
(a) The name of the Company shall be "WhiteRock
Portfolio
Investors, L.L.C."
(b) The Company shall maintain a registered office
in the State, and
the name and address of the Company's registered agent in the
State shall be as
specified in the Certificate. Such office and such agent may
be changed from time
to time by the Managers.
(c) The principal office of the Company shall be
located at 700 N.E.
Multnomah, Suite 1600, Portland, Oregon 97232-4116. The
Company may
maintain such additional offices as may be designated from
time to time by the
Managers for the purpose of carrying out the business of the
Company.
2.3 Investment Objectives and Policies of the Company.
(a) The investment objective of the Company shall
be to seek high
total returns by buying, selling, exchanging or otherwise
acquiring, holding, trading,
investing in, managing, and dealing with Qualified
Investments, whether such assets
are acquired directly, or indirectly through partnerships,
joint ventures, or
otherwise. In pursuing its objectives, the Company shall
focus primarily on
acquiring, directly or indirectly, managing and disposing of
distressed mortgage loan
and owned real estate ("REO") portfolios, and high yield
commercial mortgage-backed Securities, including but not
limited to investing in entities organized or to
be organized by Brazos and its Affiliates. The investment
objectives and policies of
the Company are set forth in more detail in Schedule B hereof,
which is
incorporated herein by reference. Subject to the terms and
conditions of this
Agreement, the Company shall have the power and authority to
do all such other
acts and things as may be necessary, desirable, expedient,
convenient for, or
<PAGE>
incidental to, the furtherance and accomplishment of the
foregoing objectives and
policies and for the protection and benefit of the Company.
(b) The foregoing enumerated investment objectives
and policies
shall be in no way limited or restricted by reference to, or
inference from, the terms
of any other portion of this Agreement, and each shall be
regarded as independent;
and they are intended to be and shall be construed as powers
as well as purposes
and objects of the Company and shall be in addition to and not
in limitation of the
general powers of limited liability companies under the laws
of the State.
2.4 Term of the Company. The term of the Company (the
"Term") shall
commence on the Effective Date and shall continue until the
Termination Date or
any earlier dissolution as provided for in Article XV hereof.
Upon any dissolution
of the Company, the winding up of its affairs shall be
conducted in accordance with
the provisions of Article XV hereof.
2.5 Legal Title to Company Assets. Legal title to all
of the Company's
various Assets shall be taken and at all times held in the
name of the Company, or
in any other manner which the Managers determine to be in the
best interest of the
Company. Without limiting the foregoing grant of authority,
the Managers may
arrange to have title taken and held in the name of others, as
trustees or nominees
for and on behalf of the Company.
<PAGE>
ARTICLE III.
CAPITAL CONTRIBUTIONS
3.1 Admission of Members to the Company.
(a) The effective date of admission of the Initial
Members to the
Company shall be the Effective Date. On such date, the
Initial Members' respective
Capital Contributions, the number of Units issued to each with
respect to such
contributions, their Capital Commitments, and their status as
Members shall be
reflected on the books and records of the Company.
(b) The date of admission of any Additional or
Substituted Member
shall be the date on which the last of the following three
prerequisites to admission
occurs: (i) such Member executes and delivers to the Company
an Admission
Agreement which is duly accepted by the Managers by unanimous
vote, which
acceptance may be withheld in the sole and absolute discretion
of each Manager;
(ii) a Capital Contribution in respect of the number of Units
that the Admission
Agreement indicates will be issued initially to such Member
has been made to the
Company; and (iii) such Capital Contribution, the number of
Units issued with
respect thereto, the remaining Capital Commitment of such
Member, if any, and its
status as a Member, have been duly reflected on the books and
records of the
Company.
3.2 Mandatory Capital Contributions; Issuance of Units;
No Pre-emptive
Rights. (a) The Company shall not issue any certificates in
evidence of its Units,
but shall reflect each Member's Units on the books and records
of the Company.
All Units
<PAGE>
so reflected shall be fully paid and non-assessable upon their
issuance by the
Company as reflected on its books and records. The Company
may also issue
fractional Units.
(b) On the Effective Date, each of the Initial
Members shall
contribute capital to the Company in the amount set forth
opposite its name on
Schedule A hereof, and shall receive the number of Units set
forth on such schedule.
(c) On or prior to the date of admission of any
Additional or
Substituted Member, and prior to the issuance of any
additional Units to an existing
Member, each such Member agrees to and shall make a Capital
Contribution in the
amount, if any, and at the time or times (each, a "Closing")
set forth opposite its
name on Schedule A or its Admission Agreement or as may be
stated in any Capital
Call (as defined below) issued by the Company in accordance
with this Agreement;
provided, however, that any Additional Member or Substituted
Member for whom
the Company has previously received a Capital Contribution
with respect to any
Unit(s) to be registered on the books and records of the
Company in the name of
such Member pursuant to the terms hereof shall not be required
to make any
additional contribution at the time of such Member's
admission. The total amount
of capital that each Member or Person seeking admission as a
Member agrees to
contribute to purchase Units shall be set forth and designated
as its "Total Capital
Commitment" on Schedule A or its "Total Remaining Commitment"
on its Admission
Agreement, as the case may be, and any part of such commitment
that remains
unfulfilled at any time may be called by the Company upon ten
Business Days
Notice to such Member or potential Member (a "Capital Call").
(d) Each Member at the time of an admission or any
additional
Closing for the issuance of Units shall receive appropriate
credit to his or its Capital
Account for
<PAGE>
any Capital Contribution made by it or, as applicable, by its
predecessor in interest
with respect to Units Transferred to it in accordance with the
terms hereof.
(e) No Member or Person having signed an Admission
Agreement
that has been accepted by the Company shall have any
pre-emptive right or right
of preference or priority over any other Member or any other
Person with respect
to any additional Units to be issued by the Company according
to Schedule A or any
Admission Agreement; and the Company may accept additional
Capital
Commitments to the Company from, and issue additional Units
to, any existing
Member, or admit Additional Members and issue Units to such
Members on the
basis of newly accepted Capital Commitments and corresponding
contributions, or
issue Units to any Member having an unfulfilled Capital
Commitment to the
Company, on any basis, including on other than a pro rata
basis among all Members
or Persons having such unfulfilled Capital Commitments, so
long as any additional
Units to be issued are fully paid for in cash at the time of
their issuance.
3.3 Enforcement of Commitments. In the event any
Member fails to
perform all or any portion of such Member's Capital Commitment
when due, the
Managers shall give the Member (the "Delinquent Member")
immediate Notice of
its default hereunder. If the Delinquent Member fails to cure
such default within
three Business Days of such Notice (which cure shall include
the payment of any
costs incurred by the Company associated with the default and
interest on the
defaulted obligation at the Default Interest Rate), the
Managers may take such
action, including but not limited to enforcing the Capital
Commitment in any court
of appropriate jurisdiction in the state in which the
principal office of the Company
is located or the state of the Delinquent Member's address).
Each Member expressly
agrees to the jurisdiction of such courts,
<PAGE>
but only for the enforcement of its Capital Commitments. The
Managers may in
their sole discretion elect instead to avail the Company of
any other remedies
provided to it by the Act, including partial or complete
forfeiture to the Company
of the Delinquent Member's Units to the extent damages are
incurred by the
Company as a result of such failure to perform, but only after
allowing the other
Members an opportunity to contribute the amount of the
defaulted Capital
Commitment (which may be accelerated in the Managers'
discretion) in proportion
to such Members' Ownership Percentages, with those Members who
choose to
contribute ("Contributing Members") contributing additional
amounts equal to any
amount of the Delinquent Member's Capital Commitment not
contributed. The
Contributing Members shall be entitled to treat the amounts
contributed pursuant
to this section as a loan from the Contributing Members to the
Delinquent Member
bearing interest at the Default Interest Rate secured by the
Delinquent Member's
interest in the Company. Until they are fully repaid, the
Contributing Members
shall be entitled to all Distributions to which the Delinquent
Member would have
been entitled. Notwithstanding the foregoing, no Capital
Commitment or other
obligation to make an additional contribution may be enforced
by a creditor of the
Company or other Person other than the Company unless the
Member expressly
consents to such enforcement or to the assignment of the
obligation to such
creditor.
3.4 Voluntary Capital Contributions of the Members.
In the event that at any time there are no
remaining Capital
Commitments to the Company outstanding, but the Managers
determine that
additional funds are required by the Company to preserve the
value of any
investment previously made, then the Managers, acting for and
on behalf of, and in
the name of, the Company, shall have
<PAGE>
the right (but not the obligation) to cause the Company to
borrow such additional
funds, with interest payable at then-prevailing rates, from
commercial banks, savings
and loan associations and/or other lending institutions or
other Persons (including
Members). In the event that the Managers are unable or
unwilling to cause the
Company to borrow said additional funds in accordance with the
terms of this
Section 3.4, then the Members or any of them may, but shall
not be obligated to,
loan or contribute such additional funds to the Company,
subject to the approval
of the Managers by Majority Vote of any such loan or
contribution, pro rata in
proportion to the respective Ownership Percentages of those
participating (unless
they agree upon another proportion), to the extent permitted
by the 1940 Act and
other applicable law. Any additional Capital Contributions by
the Members made
pursuant to this subsection shall be credited as contributions
of capital to the
Company and become a part of the Capital Accounts of such
contributing Members
on the date of such contributions, and additional Units shall
be issued to them in
connection therewith. Any loans to the Company from the
Members under this
subsection shall bear interest and be repayable upon terms and
conditions
determined by the Managers in their sole discretion.
3.5 No Further Contributions or Loans. The liability
of each Member to
the Company is limited to its Capital Commitment as specified
in its Admission
Agreement or Schedule A hereof, as either may be amended from
time to time by
agreement of the Managers and such Member or to reflect the
Capital Commitments
made by Admission Agreements. Such Capital Commitments, at
the time they are
<PAGE>
called, constitute the only funds that the Members are
required to furnish to the
Company, whether by way of contribution of capital, loan, or
otherwise.
ARTICLE IV.
MANAGEMENT AND OPERATIONS
OF THE COMPANY
4.1 Management Generally. The business and affairs of
the Company
shall be managed under the direction of a board of managers
having no fewer than
three members at all times, and each of whom shall be an
individual Member over
21 years of age qualified to serve as a director under the
1940 Act (the "Managers"),
and no more than 60% of whom may be Interested Persons at any
time. At all
times the Managers shall also collectively satisfy the Rev.
Proc. 95-10 Member-Manager Requirements. No Manager in his or
her individual capacity as such shall
have the authority or capacity to bind the Company or conduct
its business. The
Managers shall act on behalf of the Company only as a body,
either by an
affirmative vote of a Majority of the Managers cast at a
meeting duly called and at
which a quorum of two is present, or alternately, by unanimous
written consent.
Similarly, no Member in its capacity as such shall have the
authority or capacity to
bind the Company or conduct its business, but shall have only
such voting and other
management and participation rights as are specifically set
forth herein.
4.2 Election, Tenure, and Removal of Managers.
(a) The Initial Members hereby unanimously elect
J.T. Crandall,
Robert F. Lanz and Nori Gerardo as the initial Managers of the
Company, each to
exercise the rights of a Manager under this Agreement until he
or she Resigns as a
<PAGE>
Manager, is Removed pursuant to the terms hereof, or
Dissociates as a Member of
the Company. No Manager shall have any contractual right to
such position.
(b) Upon any vacancy on the Board of Managers,
unless otherwise
required by law, the remaining Managers shall elect each
successor Manager by a
unanimous vote of the remaining Managers; provided, however,
that in the event
of any vacancy on the Board where the Managers cannot agree by
unanimous vote
within 10 days on a successor Manager qualified to serve
hereunder or whenever
at least one of the remaining Managers has been previously
elected by the
Managers, election of any new Manager, who shall be qualified
to serve hereunder,
shall instead be by Majority-in-Interest Vote of the Members.
(c) Any Manager may be Removed for cause by the
unanimous vote
of the other Managers, or for or without cause by a
Majority-in-Interest Vote of the
Members. For these purposes, "cause" shall mean any Disabling
Conduct. Any
Manager so Removed shall be paid all accrued but unreimbursed
expenses to which
such Manager is entitled pursuant to the terms of this
Agreement as of the effective
date of such Removal.
(d) The number of members of the Board of Managers
may be
increased by unanimous vote of the Managers serving at any
time to no more than
five, subject to any other applicable requirements of the 1940
Act.
4.3 Meetings of the Managers. Regular meetings of the
Board of
Managers shall be held at least annually at a time and place
to be designated by the
Managers. Special meetings of the Board of Managers may be
called by any of the
Managers or by any Member holding at least one percent (1%) of
the Units then
outstanding, by Notice to the Company as set forth in Section
17.1. Before a
regular meeting or upon the call
<PAGE>
of a special meeting, the Secretary shall give written Notice
of the time and place
of such meeting to each Manager at least three (3) and no more
than sixty (60)
days in advance of the meeting. Notice may be waived by any
Manager either
before or after a meeting and shall be deemed waived by any
Manager who actually
attends and does not protest the lack of Notice before the
meeting commences.
Meetings may be attended in person or by teleconference where
each of the
Managers can hear the others. Any adjourned meeting may be
held as adjourned
without further notice.
4.4 Delegation of Authority and Management Power to the
Officers;
Retained Authority and Status Under the Act.
(a) The Managers shall be responsible for the
general policies of
the Company and the management of its business and affairs,
but they shall not be
required to conduct the day-to-day business of the Company
personally, nor will any
individual Manager, acting alone in such capacity, have agency
authority to bind the
Company. Concurrently with the Effective Date, the initial
Members and Managers,
pursuant to Section 18-407 of the Act, hereby exercise their
power and authority
to delegate their rights and powers to manage the Company and
control its day-to-day business and affairs to the Officers
named on Schedule C hereto and their duly
elected successors then serving from time to time, each of
whom when properly
authorized pursuant to the terms hereof or the Act shall be an
agent for the
Company with the powers set forth herein or in any enabling
resolution of the
Board. The Officers shall have such powers and duties as are
set forth herein to
conduct the day-to-day business and affairs of the Company to,
by way of example
but not limitation, make Capital Calls of the Members and
invest and re-invest the
Company's Assets in furtherance of its purposes, policies and
objectives, subject only
to the terms of this Agreement and to the rights of approval
reserved herein
<PAGE>
to the Managers or the Members, as the case may be, and in
particular but not by
way of limitation, subject to the approvals set forth in
Section 4.14 hereof.
(b) Pursuant to the Act, the delegation effected
hereby shall not
cause the Members or Managers to cease to be "members" or
"managers," as the case
may be, within the meaning of the Act. All specific
references to the duties and
powers of the Company or the Managers as stated herein shall,
unless the Act, the
1940 Act or the context of this Agreement expressly requires
otherwise, be deemed
to refer to the duties and powers of the Officers exercising
their delegated powers,
and the Officers shall fulfill and exercise such powers in
furtherance of the
Company's purposes, policies and objectives, subject only to
the express approvals
required hereby or by applicable law.
4.5 Election, Tenure, and Removal of Officers. At all
times, the
Managers shall have elected by Majority Vote a President, one
or more Vice-Presidents, a Treasurer, and a Secretary to serve
as the Officers and authorized
agents of the Company. A person may hold more than one office
in the Company
except that no person may serve concurrently as both President
and Secretary of the
Company. Officers may but need not be Members or Managers.
Each Officer shall
hold office at the pleasure of the Board of Managers or until
his or her failure to
qualify for such position pursuant to the terms hereof, death,
resignation, or
removal with or without cause by a Majority Vote of the
Managers.
4.6 President. The President shall be an individual at
least 21 years of
age who is also a principal, employee or other approved
designee of Brazos. Unless
otherwise specified by the Board of Managers, the President
shall be the chief
executive officer of the Company and its principal agent and
shall perform the duties
customarily performed by chief executive officers. The
President may sign and
execute, in the name
<PAGE>
of the Company, all authorized deeds, mortgages, bonds,
contracts or other
instruments, except in cases in which the signing and
execution thereof shall have
been expressly delegated to another Officer or agent of the
Company. In general,
the President shall perform such other duties usually
performed by a president of
a corporation and such other duties as are from time to time
assigned to the
President by the Board of Managers. Subject to the direction
of the Board of
Managers and the terms of this Agreement, the President shall
have general
supervision of the business and affairs of the Company.
4.7 Vice-President(s). The Vice-President, at the
request of the President,
or in the President's absence or during his or her inability
to act, shall perform the
duties and exercise the functions of the President, and when
so acting shall have the
powers of the President. If there be more than one
Vice-President, the Board of
Managers may determine which one or more of the
Vice-Presidents shall perform
any of such duties or exercise any of such functions, or if
such determination is not
made by the Board of Managers, the President may make such
determination;
otherwise any of the Vice-Presidents may perform any of such
duties or exercise any
of such functions. Each Vice-President shall be an individual
who is fully qualified
to serve as President hereunder. The Vice-President or
Vice-Presidents shall have
such other powers and perform such other duties, and have such
additional
descriptive designations in their titles (if any), as are from
time to time assigned to
them by the Board of Managers or the President.
4.8 Treasurer. The Treasurer shall be an individual
who is fully qualified
to serve as President hereunder. The Treasurer, at the
request of the President or
any Vice President, or in their absence or during their
inability to act, shall perform
the duties and exercise the functions of the President, and
when so acting shall have
the
<PAGE>
powers of the President. The Treasurer shall also have charge
of and be responsible
for all funds, securities, receipts and disbursements of the
Company, and shall
deposit, or cause to be deposited, in the name of the Company,
all moneys or other
valuable effects in such banks, trust companies or other
depositories as shall, from
time to time, be selected by the Board of Managers; the
Treasurer shall render to
the President and to the Board of Managers, whenever
requested, an account of the
financial condition of the Company; and, in general, the
Treasurer shall perform all
of the duties that would generally be incident to the office
of a vice president of
finance and treasurer of a corporation as if the Company were
a corporation, and
such other duties as are from time to time assigned to the
Treasurer by the Board
of Managers or the President.
4.9 Secretary. The Secretary shall keep the minutes of
the meetings of
the Members, of the Board of Managers and of any committees
thereof, in books
provided for that purpose; the Secretary shall see that all
notices are duly given in
accordance with the provisions of this Agreement or as
required by law; the
Secretary shall be custodian of the records of the Company;
the Secretary may
witness any document on behalf of the Company, the execution
of which is duly
authorized; and, in general, the Secretary shall perform all
duties that would
typically be incident to the office of a secretary of a
corporation if the Company
were a corporation, and such other duties as are from time to
time assigned to the
Secretary by the Board of Managers, the President any
Vice-President, or the
Treasurer.
4.10 Subordinate Officers; Committees. The Board of
Managers may also
from time to time authorize any committee or Officer to
appoint assistant and
subordinate Officers. Election or appointment of an Officer,
employee or agent,
whether by action of the Managers or otherwise, shall not in
and of itself create
contract rights. As to any
<PAGE>
assistant or subordinate Officer, any committee or Officer
authorized by the Board
or which appointed such assistant or subordinate Officer in
the first place may
remove such Officer. The removal of an Officer does not
prejudice any of his or her
contract rights, if any.
4.11 Management Powers of the Company, Managers, and
Officers.
Without in any way limiting the generality of the foregoing,
but subject to the
express provisions of this Agreement, including without
limitation Sections 4.13 and
4.14 below and the provisions of the 1940 Act, the Board of
Managers shall have
on behalf of the Company all rights and powers that may be
possessed by a
manager under the Act, to the extent granted by this
Agreement, to manage and
administer the Company in accordance with the terms of this
Agreement and to
perform all acts which they may, in their discretion, deem
necessary or desirable
(which powers are hereby delegated to the Officers appointed
pursuant to this
Agreement), including but not limited to, the power to:
(a) carry out all of the transactions contemplated
hereunder;
(b) perform all acts, exercise all rights, and make
all decisions for
and on behalf of the Company required or permitted to be taken
by the Company,
including but not limited to those set forth in Section 4.12
hereof;
(c) acquire, manage and dispose of any and all
property, real or
personal, whether tangible or intangible, choate or inchoate,
on behalf of the
Company, including through foreclosure or otherwise;
(d) borrow money on behalf of the Company, and
sell, assign,
exchange, transfer, pledge, grant a security interest in, or
otherwise encumber or
dispose of any and all Company assets of any nature
whatsoever;
<PAGE>
(e) compromise, arbitrate or otherwise adjust
claims in favor of or
against the Company and initiate, prosecute and defend any
litigation relating to
any Company business;
(f) employ, engage, or subcontract with attorneys,
accountants,
bookkeepers, underwriters, administrators, custodians, escrow
agents, depositories,
agents for collection, banks, builders, and any other service
provider as they may
determine to be appropriate, and to terminate the services of
any such entities, all
at such time or times as they may determine;
(g) negotiate, execute, deliver and perform any and
all contracts
and other documents on behalf of the Company, including but
not limited to
promissory notes, security agreements, contracts of purchase
and sale, deeds and
assignments, and take any and all other action, as they deem
reasonably
appropriate, to effectuate any such transaction;
(h) acquire and enter into any contract of
insurance for the
Company that they deem necessary and proper for the protection
of the Company,
either for the conservation of its Assets or for any purpose
convenient or beneficial
to the Company;
(i) invest in obligations maturing or equity
investments whose
terms continue beyond the stated Termination Date of the
Company; and
(j) without limiting the generality of the
foregoing, take any and
all other actions relating to the Assets of the Company.
4.12 Legal and Regulatory Compliance by the Company.
(a) The Managers and Officers shall take all
reasonable action that
may be necessary or appropriate for the continuation of the
Company's valid
existence as a limited liability company under the laws of the
State of Delaware and
of each other
<PAGE>
jurisdiction in which such existence is necessary to protect
the limited liability of the
Members or to enable the Company to conduct the business in
which it is engaged.
(b) The Managers and Officers shall promptly cause
to be executed
and filed with the proper offices in each county, or other
appropriate subdivision,
in each jurisdiction in which the Company conducts business,
one or more
certificates as are required by any fictitious name statute or
assumed name statute
in effect as to each such jurisdiction.
(c) The Managers and Officers shall use their best
efforts to ensure
that the Company at all times is an "investment company" for
purposes of the 1940
Act and is duly registered as such under the 1940 Act.
(d) During any period in which the Company ceases
to be an
investment company, the Managers, the Officers, and the
Members shall use their
respective best efforts to ensure that the Assets of the
Company will not be deemed
to be the assets of any Member of the Company that is subject
to ERISA, and shall
take such other actions as may be necessary or advisable to
prevent the occurrence
of any "prohibited transactions" under ERISA.
4.13 Impermissible Acts and Transactions.
(a) Company funds and Assets shall not be
commingled with the
funds or property of any other natural person, partnership,
corporation, limited
liability company, association, or other legal entity.
(b) No Manager or Officer shall have any authority
to take any
action in contravention of this Agreement.
(c) No changes shall be effected in the nature of
the Company's
business that would cause it to cease to be an investment
company.
<PAGE>
(d) The Company shall not invest in any entity that
has indicated
to the Company that such entity is seeking to rely on Section
3(c)(1) of the 1940
Act if the Company's investment therein would constitute 10%
or more of the assets
of such entity at the time of the investment.
4.14 Major Actions. Notwithstanding the delegation
of management
powers and authority to the Officers pursuant to this Article,
the following actions
shall constitute "Major Actions" of the Company which shall
not be undertaken by
the Officers without obtaining the requisite approvals
reserved to the Managers or
the Members, as the case may be, as set forth below:
(a) Obligating the Company to any individual
investment or
investment course of action that exceeds in the aggregate
$10,000, without the
prior approval of the Managers;
(b) Causing the Company to make any Capital Call
with respect to
any outstanding Capital Commitment after the aggregate amount
of prior Capital
Contributions made to the Company exceeds $15 million, without
the prior approval
of the Managers; provided, however, that the President or any
other Officer
authorized by the President may make Capital Calls prior to
the time such limit is
exceeded without regard for further direction from the
Managers so long as such
Capital Calls are made to enable the Company to meet any legal
obligation that was
previously duly approved by the Managers.
(c) Causing the Company to borrow funds or incur
indebtedness
(with the exception of normal trade credit not to exceed
$10,000 in the aggregate
at any one time), except as specifically allowed by Section
3.4 hereof or upon a
Majority-in-Interest Vote of the Members and to the extent
consistent with the 1940
Act;
<PAGE>
(d) Entering into any investment advisory contract
without
approval by Majority-in-Interest Vote of the Members in a
manner that is consistent
with Section 15(a) of the 1940 Act, provided, however, that
such contract may
provide for its continuance for a period that is more than two
years from the date
of its execution only so long as such continuance is
specifically approved annually
by Majority Vote of the Managers or Majority-in-Interest Vote
of the Members;
(e) Removing the independent accountants for the
Company or
appointing new accountants, except upon a Majority-in-Interest
Vote;
(f) Effecting any change in the subclassification
of the Company
for purposes of the 1940 Act--for example, from a closed-end
to an open-end
management company, or from a non-diversified to a diversified
company, without
approval by a Majority-in-Interest Vote;
(g) Adopting or changing any Company policy
involving the
borrowing of money, the issuance of senior securities, the
underwriting of securities
issued by other Persons, the purchasing or selling of real
estate or commodities, or
the making of loans, without approval by a
Majority-in-Interest Vote;
(h) Effecting any change in a Company policy
involving the
concentration of investments in any particular industry or
group of industries if
different from that set forth in Schedule B hereof and
reflected in any registration
statement filed by the Company with the Commission, unless
approved by a
Majority-in-Interest Vote;
(i) Effecting any change in a Company investment
policy which the
registration statement filed by the Company with the
Commission indicates will be
changeable only by a vote of the Members, unless approved by
the vote indicated
or, if none, a Majority-in-Interest Vote; and
<PAGE>
(j) Effecting any change in a Company investment
policy which the
registration statement indicates is "fundamental," unless
approved by a Majority-in-Interest Vote.
ARTICLE V.
RIGHTS, OBLIGATIONS AND WARRANTIES OF THE MEMBERS
5.1 Management Rights of the Members. Except as
expressly provided
in this Agreement or the Act, the Members shall take no part
in the management
of the business or transact any business for the Company and
shall have no power
to sign for or bind the Company.
5.2 Proxies. The voting or consent rights given each
Member under this
Agreement may be exercised pursuant to a duly authorized
written proxy that has
not been revoked prior to the time such voting or consent
rights are exercised by
the proxyholder.
5.3 Examination of Company Records. Each Member or its
representative may, during regular business hours, examine and
copy the records
(where such records are maintained) of the Company and
otherwise make
reasonable inquiry as to the affairs of the Company as
consistent with the 1940 Act.
5.4 Member Representations and Warranties. Each Member
hereby
represents and warrants to the Company and each other Member
that: (a) if such
Member is an Organization, it is duly organized, validly
existing, and in good
standing under the law of its state of organization and has
full organizational power
and authority to execute and agree to the Agreement and to
perform its obligations
hereunder; (b) it is acquiring its Units in the Company for
its own account as an
investment and without an intent to
<PAGE>
resell such Units; (c) it acknowledges that the Units have not
been registered under
the 1933 Act or any state securities laws, and may not be
resold or Transferred by
the Member without appropriate registration or the
availability of an exemption
from such requirements; (d) Transfer of the Units is further
subject to the
discretionary approval of the Managers pursuant to the terms
hereof; (e) it meets
one or more of the following requirements: (i) it is an
"accredited investor" within
the meaning of Section 501(a) of Regulation D promulgated
under the 1933 Act;
or (ii) it or its authorized representative (A) has sufficient
knowledge or experience
in financial and business matters to enable an evaluation of
the merits and risks of
owning one or more Units in the Company, and (B) has access to
all of the
information that would otherwise be available to it if the
offering of the Units were
registered under the 1933 Act; (f) it or its authorized
representative has provided
to the Managers all of the information requested by the
Managers to make a
reasonable determination that the Member or, where applicable,
its authorized
representative, satisfies the requirements set forth in (e)
above.
5.5 Meetings of Members. Annual meetings of the
Members shall not be
required. A meeting of the Members may be called at any time
by any of the
Managers and shall be called by the President for any proper
purpose upon written
request of Members of the Company holding in the aggregate:
with respect to
matters requiring voting by the Members, not less than 10% of
the outstanding
Units, such request specifying the purpose or purposes for
which such meeting is to
be called; or, in the case of a meeting for the purpose of
voting on the question of
Removal of any Manager upon written request of the Members
entitled to vote on
the Removal of such Managers holding in the aggregate not less
than 10% of the
outstanding Units; or, in the case of a meeting for the
purpose of voting on the
question of removal of the independent public
<PAGE>
accountants of the Company, upon written request of Members
holding in the
aggregate not less than 10% of the outstanding Units. Any
Meeting shall be held
within or without the State of Delaware on such day and at
such time as the
Managers shall designate and, in the case of any meeting
called by the President as
a result of a Member's written request, within sixty (60) days
of such written
request or such longer period as is approved by the Managers.
5.6 Notice of Meeting and Record Date. Notice of all
meetings of
Members stating the time, place and purposes of the meeting,
shall be given by the
Managers by mail to each Member entitled to vote thereat at
his registered address,
mailed at least ten Business Days and not more than 90 days
before the meeting.
Any adjourned meeting may be held as adjourned without further
notice. For the
purposes of determining the Members who are entitled to notice
of and to vote at
any meeting, the Managers may, without closing the transfer
books, fix a date not
more than 90 days prior to the date of such meeting of Members
as a record date
for the determination of the Persons to be treated as Members
of record for such
purposes.
5.7 Voting. Members shall have no power to vote on any
matter except
matters on which a vote of Members is required by applicable
law, the Certificate,
this Agreement or resolution of the Managers. Voting by the
Company's Members
shall be in accordance with any provisions set forth in this
Agreement. Subject to
any provisions of the 1940 Act, this Agreement or (to the
extent authorized) a
resolution of the Managers specifying a greater or lesser vote
requirement for the
transaction of any item of business at any meeting of Members,
the affirmative vote
of a Majority-in-Interest of the Members entitled to vote on
the subject matter shall
be the act of the Members with respect to such matter.
<PAGE>
ARTICLE VI.
COMPENSATION OF THE MANAGER
S AND OFFICERS
6.1 Compensation of the Managers and Officers.
Neither the Managers nor the Officers shall receive any
compensation from
the Company for their services to the Company; provided,
however, that nothing
herein shall prevent the Company from paying compensation to
the Managers or
Officers in the future if it is consistent with the 1940 Act
and is approved by a
Majority-in-Interest Vote of the Members. An Officer or
Manager who holds any
position with Brazos or any Affiliate thereof may also be
compensated by Brazos or
such Affiliate in such separate capacity.
6.2 Expense Reimbursements
(a) Brazos shall pay for all Organizational
Expenses incurred on
behalf of the Company, without reimbursement therefor from the
Company.
(b) Subsequent to the Effective Date, Brazos shall
pay the
reasonable ongoing operational expenses of the Company,
including but not limited
to the costs of hiring attorneys, accountants, administrators
and custodians for the
Company's Assets, complying with the Act and the 1940 Act, and
the preparation
and making of all filings required in connection therewith.
The Managers and
Officers shall be entitled to reimbursement from Brazos for
all such expenses
reasonably incurred on the Company's behalf.
<PAGE>
ARTICLE VII.
DISTRIBUTIONS
7.1 Distribution of Net Income Among Members.
Net income received
by the Company, after the establishment of reserves under
Section 7.2, shall be
distributed from time to time among the Members pro rata in
accordance with their
respective Ownership Percentages. Notwithstanding anything in
this Agreement to
the contrary, the Company shall make no Distributions except
to the extent
permitted under the Act.
7.2 Establishment of Reserves. Notwithstanding
anything to the contrary
in Section 7.1 hereof, the Company may retain an amount of
cash it deems
reasonably necessary to satisfy the obligations of the Company
on an annual net
operating basis including, without limitation, debt payments,
replacements and
unforeseen contingencies. Other Company funds that the
Managers or Officers
determine are not needed for Company reserves or operations
shall be distributed
to the Members from time to time in the Managers' sole
discretion in accordance
with Section 7.1 hereof.
ARTICLE VIII.
MAINTENANCE OF CAPITAL ACCOUNTS
;
ALLOCATION OF COMPANY NET
INCOME, NET GAIN, NET LOSS, AND CREDIT
8.1 Capital Accounts.
(a) There shall be established for each of the
Members, on the books
and records of the Company, an account (a "Capital Account"),
which shall initially
be zero and which shall be maintained in accordance with the
following provisions:
(i) Each Member's Capital Account shall be
increased by the
amount of such Member's (A) initial Capital Contribution, (B)
additional
contributions
<PAGE>
of capital, (C) allocable share of net income and net gain,
including income and
gain exempt from tax and gain described in Regulation Section
1.704-1(1)(2)(iv)(g), and (D) any items in the nature of
income or gain that are specially
allocated pursuant to this Article VIII.
(ii) Each Member's Capital Account shall be
decreased by the
amount of (A) money and the Fair Market Value of any Company
property (net of
liabilities secured by such property that such Member is
considered to assume or
take subject to under Section 752 of the Code, as determined
by the Managers
pursuant to this Article VIII) distributed to such Member in
accordance with the
terms of this Agreement pursuant to any provision of this
Agreement, (B) such
Member's allocable share of net losses and deductions of the
Company, including
items of loss and deduction described in Regulation Section
1.704-1(b)(2)(iv)(g),
(C) any items in the nature of expenses or losses that are
specially allocated under
this Article VIII, (D) such Member's share of (1) the
Company's expenditures
described in Section 705(a)(2)(B) of the Code, if any, and (2)
such expenditures of
the Company as are to be treated as Section 705(a)(2)(B)
expenditures by virtue
of Regulation Section 1.704-1(b)(2)(iv)(i), and (E) the amount
of any liabilities of
such Member that are assumed by the Company.
(iii) In the event that any Unit in the
Company is Transferred
in accordance with the terms of this Agreement, the transferee
shall succeed to the
Capital Account of the transferor to the extent it relates to
the transferred interest.
(iv) In the event that the Value of any
Company Asset is
adjusted pursuant to Section 8.1(b) hereof, the Capital
Accounts of all Members
shall be adjusted in accordance with Regulation Sections
1.704-1(b)(2)(iv)(f),
1.704-1(b)(2)(iv)(g), or Regulation Section
1.704-1(b)(2)(iv)(m), as applicable, to
reflect such adjustment.
<PAGE>
(v) The foregoing provisions and the other
provisions of this
Agreement relating to the maintenance of Capital Accounts are
intended to comply
with Regulation Section 1.704-l(b), and shall be interpreted
and applied in a
manner consistent with such Regulation. Moreover, the amount
of any liability for
purposes hereof shall be determined under Code Section 752 and
the Regulations
thereunder. In the event that the Managers shall determine
that it is prudent to
modify the manner in which the Capital Accounts, or any debits
or credits thereto,
are computed in order to comply with such Regulation, the
Managers may make
such modification. The Managers also shall make any
appropriate modifications (A)
as necessary to comply with Regulation Section
1.704-1(b)(2)(iv)(q), and (B) in the
event unanticipated events might otherwise cause this
Agreement not to comply
with Regulation Section 1.704-1(b).
(b) The "Value" of a Company Asset shall be its
adjusted basis for
Federal income tax purposes. The Value of the Company's
Assets shall be adjusted
to equal the gross Fair Market Value of such Assets as of the
following times: (i)
the acquisition of an additional interest in the Company by
any new or existing
Member in exchange for more than a de minimis amount (as that
term is used in
Regulation Section 1.704-1(b)(2)(iv)(f)) contribution of
capital; (ii) the distribution
by the Company to a Member of more than a de minimis amount of
Company Assets
or money if the Managers reasonably determine that such
adjustment is necessary
or appropriate to reflect the economic interests of the
Members in the Company;
and (iii) the liquidation of the Company for Federal income
tax purposes within the
meaning of Regulation Section 1.704-1(b)(2)(ii). The Value of
Company Assets
shall also be increased (or decreased) to the extent that
adjustments to the adjusted
basis of such Assets pursuant to Code Section 734(b) or Code
Section 743(b) have
been taken into account for purposes of
<PAGE>
determining Capital Accounts in accordance with Regulation
Section 1.704-1(b)(2)(iv)(m), unless such adjustments have
already been accounted for pursuant
to the preceding sentence of this Section 8.1(b). If the
Value of an Asset has been
determined or adjusted pursuant to this Section 8.1(b), such
Value shall thereafter
be adjusted by the depreciation taken into account with
respect to such Asset for
purposes of computing net income and net losses. Moreover,
notwithstanding the
foregoing, the Value of any Company Asset, if any, distributed
to any Member shall
be the gross Fair Market Value of such asset on the date of
distribution.
8.2 Allocation of Net Income, Gain, Loss, Deduction and
Credit; Qualified
Income Offset.
(a) Net profits, net losses and other items of
income, gain, loss,
deduction and credit for each Fiscal Year shall be determined
pursuant to the
method of accounting used by the Company for Federal income
tax purposes, and
except as otherwise provided in this Article VIII, shall be
allocated among the
Members in proportion with their respective Ownership
Percentages.
(b) In the event that any Member unexpectedly
receives any
adjustment, allocation or distribution described in Regulation
Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6), such Member shall be
specially allocated items
of Company income and gain in an amount and manner sufficient
to eliminate as
quickly as possible (as required by the Regulations) any
deficit in its Capital
Account; provided that an allocation pursuant to this Section
8.2(b) shall be made
only if and to the extent that such Member would have a
Capital Account deficit
(determined after the adjustments set forth in Regulation
Section 1.704-1(b)(2)(ii)(d) and after adjusting such Member's
Capital Account upward for any
amounts such Member is obligated to restore or is deemed
obligated to restore
pursuant
<PAGE>
to Regulation Sections 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1),
and 1.704-2(i)(5), after
all other allocations provided for in this Article VIII have
been tentatively made as
if this Section 8.2(b) were not in this Agreement. This
Section 8.2(b) is intended
to satisfy the provisions of a qualified income offset under
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted consistently therewith.
8.3 Code Section 704(c) Tax Allocations. In accordance
with Code
Section 704(c) and the Regulations thereunder, income, gain,
loss, and deduction
with respect to any property contributed to the capital of the
Company shall, solely
for tax purposes, be allocated among the Members so as to take
account of any
variation between the adjusted basis of such property to the
Company for Federal
income tax purposes and its initial Value. In the event the
Value of a Company
Asset is adjusted pursuant to Section 8.1(b) of this
Agreement, subsequent
allocations of income, gain, loss, and deduction with respect
to such Asset shall take
account of any variation between the adjusted basis of such
Asset for Federal
income tax purposes and its Value in the same manner as under
Code Section
704(c) and the Regulations thereunder. Any elections or other
decisions relating
to such allocation shall be made by the Managers in any manner
that reasonably
reflects the purpose and intention of this Agreement.
Allocations pursuant to this
Section 8.3 are solely for purposes of Federal, state, and
local taxes and shall not
affect, or in any way be taken into account in computing, any
Member's Capital
Account or share of profits, losses, other items, or
Distributions pursuant to any
provision of the Agreement.
8.4 Minimum Gain Chargeback. Except as otherwise
provided in
Regulations Section 1.704-2(f), notwithstanding any other
provision of this
Agreement, if there is a net decrease in partnership minimum
gain (within the
meaning of Regulations Section 1.704-2(b)(2) and 1.704-2(d))
during any year,
each Member shall be specially
<PAGE>
allocated items of Company income and gain for such year (and,
if necessary,
subsequent years) in an amount equal to such Member's share of
the net decrease
in partnership minimum gain, determined in accordance with
Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence
shall be made in
proportion to the respective amounts required to be allocated
to each Member
pursuant thereto. The items to be so allocated shall be
determined in accordance
with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2).
This Section is intended
to comply with the minimum gain charge-back requirement in
Regulations Section
1.704-2(f) and shall be interpreted consistently therewith.
8.5 Adjustments.
(a) Except as otherwise provided in this
Agreement, all items of
Company income, gain, loss, deduction, and any other
allocations not otherwise
provided for shall be divided among the Members in the same
proportions as they
share net income or net losses, as the case may be, for the
year.
(b) If any Unit in the Company is Transferred
during any Fiscal
Year, the net income, net gain, net loss and other tax items
attributable to such Unit
for such Fiscal Year will be divided and allocated
proportionately between the
transferor and the transferee by taking account of their
varying interests in the
Company during such Fiscal Year on a daily, monthly, or other
basis, as determined
by the Managers, using any method permitted by Section 706 of
the Code and the
Regulations promulgated thereunder. Distributions made on or
after the effective
date of such transfer shall be made to the transferee,
regardless of when such
Distributions accrued on the books of the Company. The
effective date of the
Transfer shall be (a) in the case of a voluntary
<PAGE>
Transfer, the date on which the Company receives notice of the
Transfer, or (b) in
the case of an involuntary transfer, the date of the operative
event.
(c) Upon a Transfer of a Unit, or upon the death
of a Member, or
upon the death of a member of a pass-through entity that is a
Member, or, as
provided in Section 8.1(b), the Company shall elect in a
timely manner pursuant to
Section 754 of the Code and pursuant to corresponding
provisions of applicable
state and local tax laws, to adjust the basis of the Assets of
the Company pursuant
to Sections 734 and 743 of the Code.
(d) Notwithstanding any other provision of this
Agreement, the
Managers are specifically authorized, upon the advice of the
accountants or legal
counsel for the Company, to amend this Article VIII to comply
with any Regulations
with respect to the distributions and allocations of the
Company and any such
amendment shall become effective without the approval of any
other Member.
ARTICLE IX.
ACCOUNTING PROCEDURE
9.1 Fiscal Year. The fiscal year of the Company
("Fiscal Year") shall
begin on January 1 and shall end on December 31 of each year;
provided, however,
that the first Fiscal Year of the Company shall begin on the
Effective Date.
9.2 Books of Account. At all times during the
existence and continuance
of the Company, the Managers shall cause to be kept accurate,
complete, and proper
books, records, and accounts pertaining to the Company's
affairs, including: (a) a
list of all Members, Capital Contributions, Units outstanding,
Ownership
Percentages, and Capital Accounts; (b) a copy of the
Certificate and all amendments
thereto and all powers of attorney pursuant to which the
Certificate or any
amendment thereto has been
<PAGE>
executed; (c) an original copy of the Agreement and all
amendments thereto; (d)
copies of the Company's Federal and state tax returns and
financial statements; (e)
the Company's books and records; and (f) such other records as
are required by law
to be kept. Such books and records shall be kept on the
accrual basis of accounting
in conformity with generally accepted accounting principles
consistently applied
("GAAP"). The method of accounting followed by the Company
for Federal income
tax purposes shall be the accrual method. All books, records,
and accounts of the
Company shall be kept at its principal office or at such other
office as the Managers
may designate for such purpose.
9.3 Financial Reports. The Managers shall, within
sixty (60) days after
the end of each calendar quarter of Company operations
beginning in 1995, cause
to be prepared and furnished to each Member, (a) the balance
sheet of the
Company as of the end of the calendar quarter then ended and a
list of investments
held by the Company during such quarter, (b) a related
statement of cash flow and
income or loss for the Company for the same period, and (c)
such other information
as is required under the 1940 Act. These financial statements
shall be certified by
the Treasurer to have been prepared in accordance with GAAP
and to present fairly,
in all material respects, the consolidated financial position
and results of operations
of the Company and its subsidiaries, if any. The above
financial statements will
contain the same level of detail of assets and liabilities and
revenues and expenses
that is supplied to the Managers and Officers.
9.4 Annual Report. Within sixty (60) days after the
end of each
Company Fiscal Year, the Managers shall cause to be prepared
and furnished to each
Member (a) the balance sheet of the Company dated as of the
end of the Fiscal Year
then ended; (b)
<PAGE>
a related statement of cash flow and income or loss for the
Company for the same
year, together with a report thereon by a firm of independent
certified public
accountants selected in accordance with this Agreement and the
1940 Act with
respect to the audit of such financial statements by such
firm; (c) a statement of
change in net assets and liabilities of the Company for the
same year; and (d) a list
of investments held by the Company during such Fiscal Year;
and (e) such other
information as is required by the 1940 Act. The Company shall
also supply each
Member with copies of all tax filings made by the Company as
soon as they are
filed.
9.4.1 Cost of Reports and Audits. The expenses
incurred in
furnishing the reports and information, as well as the annual
audit of the books and
records of the Company, as required by this Article IX, shall
be borne by Brazos.
9.4.2 Preparation and Filing of Income Tax
Returns and Other
Writings. The Managers shall cause the preparation and timely
filing of all
Company tax returns, shall on behalf of the Company make such
tax elections,
determinations, and allocations as appear to be appropriate,
and shall timely make
all other filings required by any governmental authority
having jurisdiction to
require such filing, the cost of which shall be borne by the
Company. The Managers
will furnish copies of such returns to each Member. The
Managers shall also cause
to be delivered to the Members, within ninety (90) days after
the expiration of each
tax year of the Company, a Form K-1 prepared by the Company's
accountant. This
form shall show the allocation of profit or loss of the
Company for Federal income
tax purposes, including all separately stated items, to each
Member. No election
shall be made by the Company or any Member to be excluded from
the application
of the provisions of subchapter K of the Code or from any
similar provision of state
tax laws. Upon the distribution of any Asset of the
<PAGE>
Company to any party hereto, the Company, at the Managers'
option, may file an
election in accordance with applicable Treasury Regulations to
cause the basis of
any Asset to be adjusted for federal income tax purposes as
provided in sections
734, 743, and 754 of the Code.
9.4.3 Controversies with the Internal Revenue
Service. In the
event of any controversy with the Internal Revenue Service or
any other taxing
authority involving the Company or any individual Member or
Members, the
outcome of which may adversely affect the Company, directly or
indirectly, or the
amount of the allocation of income, gain, loss, deduction, or
credit of the Company
to such Member, the Company may, at its option, incur expenses
it deems necessary
or advisable in the interest of the Company in connection with
any such
controversy, including, without limitation, reasonable
attorneys' and accountants'
fees. Brazos is hereby designated by the Members as the "tax
matters partner" of
the Company as defined in Section 6231(a)(7) of the Code and
in such capacity
shall represent the Company in any disputes, controversies or
proceedings with the
Internal Revenue Service. The Company will promptly send to
each Member a copy
of all correspondence sent to or received from the Internal
Revenue Service by the
Company.
ARTICLE X.
TRANSFERABILITY OF OWNERSHIP INTERESTS;
SUBSTITUTE MEMBERS AND ADDITIONAL MEMBERS
10.1 Limitation on Transfer of Ownership Interests.
(a) No Member may Transfer all or any part of its
Ownership
Interest in the Company or substitute the transferee as a new
Member without
obtaining the prior written unanimous consent of the Managers,
which consent may
be withheld in each
<PAGE>
Manager's sole and absolute discretion; provided, however,
that in connection with
the financing of his Capital Contributions (or any portion
thereof) by any Person,
J.T. Crandall may grant a security interest in Distributions
to be made with respect
to his Units, and such grant shall not be considered a
"Transfer" for purposes of this
Agreement nor shall any transfer made to the grantee in
connection with such a
security interest make the grantee or transferee a Member of
the Company unless
the consents otherwise required by this Agreement are received.
(b) In any event, no such Transfer shall be
allowed:
(1) if alone or when combined with other
transactions, it
would (A) cause the Company to be treated as an association
taxable as a
corporation for Federal income tax purposes, or (B) result in
a termination of the
partnership status of the Company within the meaning of
Section 708 of the Code;
(2) unless (A) prior to the consummation
thereof, all
transferees with respect thereto shall have made to the
Company in writing all of
the representations required, in the sole judgment of the
Managers, to ensure
compliance with applicable securities laws, including those
referenced in Section 5.4
hereof, and (B) if required in the sound discretion of the
Managers, the Company
is provided with an opinion of its legal counsel, or other
legal counsel satisfactory
to the Company's counsel, stating that such Transfer is exempt
from the 1933 Act,
and is permissible under all other applicable Federal and
state securities laws
without registration or qualification of any Security or any
Person;
(3) unless and until the Company receives from
the transferee
the information and agreements that the Managers may
reasonably require,
including but not
<PAGE>
limited to any taxpayer identification number and any
agreement that may be
required by any Taxing Jurisdiction.
10.2 Transfers Not in Compliance with this Article
Void. In the event that
a Member no longer is or claims to be no longer the sole owner
of its entire
Ownership Interest, it shall immediately deliver to the
Company (i) a statement
signed by the Member and the other interested parties setting
forth the nature and
the extent of the interest of each, the nature of the
agreement between them, if
oral, and a copy of the agreement, if written, and (ii) such
other information, statements, and grants of power of attorney
as may be requested by the Company. Any
attempted Transfer of an Ownership Interest, or any part
thereof, or any document
purporting to admit a transferee as a Member that is not in
compliance with Article
III and this Article X, however, shall be, and is declared to
be, null and void ab
initio. In the absence of a Transfer in accordance with this
Article X, any payment
to a Member or to his or its legal representatives shall
acquit the Company and the
Managers of all liability to any other Persons who or which
may be interested in
such payment by reason of a Transfer by, or the death or
termination of, such
Member.
10.3 Admission of Substituted Members. A transferee
of an Ownership
Interest (or any portion thereof) shall be admitted as a
Member (a "Substituted
Member") and admitted to all the rights of the Member who
initially assigned the
Ownership Interest, only with the unanimous approval of the
Managers, which may
be withheld in their sole and absolute discretion. If so
admitted pursuant to the
terms of Article III hereof, the Substituted Member shall have
all the rights and
powers and is subject to all the restrictions and liabilities
of the Member originally
having the Ownership Interest. The admission of a Substituted
Member, without
more, shall not release the Member
<PAGE>
originally assigning the Ownership Interest from any liability
to the Company that
may have existed prior to the approval.
10.4 Admission of Additional Members. The Managers
acting by
unanimous consent may from time to time permit the admission
of Additional
Members and, consistent with the terms hereof, determine the
Capital Contributions
and Capital Commitments of such Additional Members; provided,
however, that no
Person subject to ERISA shall be admitted as an Additional
Member until the
Company has registered as an "investment company" under the
1940 Act.
10.5 Certain Documents. Each transferee or
potential transferee desiring
to become a Substituted Member and each potential Additional
Member, as a
condition to its admission as a Member, shall execute and
acknowledge such
instruments (including, without limitation, an Admission
Agreement and/or a power
of attorney), in form and substance satisfactory to the
Managers, as the Managers
shall reasonably deem necessary or desirable to effectuate
such admission and to
confirm the agreement of the transferee as an Additional
Member or Substituted
Member, as the case may be, to be bound by all the terms and
provisions of this
Agreement with respect to the Ownership Interest (or portion
thereof) acquired.
Except in connection with the admission of the first 100
Members of the Company,
the cost of which shall be borne by Brazos, all reasonable
expenses, including
attorneys' fees incurred by the Company in connection with the
admission or
substitution of new Members, shall be borne by such Members.
10.6 Indemnification by Transferring Members and
Transferees. To the
fullest extent permitted by applicable law, each Member
Transferring and each
transferee of, any Ownership Interest (or portion thereof)
shall indemnify and hold
harmless the Company, every Manager, Member or Officer who was
or is a party
or is threatened to
<PAGE>
be made a party to any threatened, pending or completed
action, suit or proceeding,
whether civil, criminal, administrative or investigative by
reason of or arising from
any misrepresentation, misstatement of facts or omission to
state facts made (or
omitted to be made) by such Member or transferee in connection
with any Transfer
of all or any part of any Ownership Interest in the Company,
against expenses for
which the Company or such other person has not otherwise been
reimbursed
(including attorneys' fees, judgments, fines and amounts paid
in settlement) actually
and reasonably incurred by it in connection with such action,
suit or proceeding;
provided, however, that the foregoing indemnification shall
not be valid as to any
Member who supplied the information which gave rise to any
actual
misrepresentation, misstatement of facts or omission to state
facts.
ARTICLE XI.
STANDARDS OF CONDUCT; CONFLICTS OF INTEREST;
LIMITATIONS ON LIABILITIES; INDEMNIFICATION;
11.1 Liability of Members; Absence of Duties;
Conflicts.
(a) The Members shall have no personal liability
for the obligations
of the Company. Except as may otherwise be required by the
Act, no Member shall
be liable for a return of the Assets of the Company delivered
to such Member.
(b) To the full extent allowed by applicable law,
the failure of the
Company to observe any formalities or requirements relating to
the exercise of its
powers or management of its business or affairs under the
Agreement or the Act
shall not be grounds for imposing personal liability on the
Members for liabilities
of the Company.
(c) To the fullest extent permitted by law, the
Members shall have
no duties (including but not limited to fiduciary duties) to
each other.
<PAGE>
(d) Subject to the requirements of Section 17 of
the 1940 Act and
except as otherwise prohibited by law, a Member, including a
Member that is also
a Manager, shall be entitled to enter into transactions that
may be considered to be
competitive with, or a business opportunity that may be
beneficial to, the Company,
it being expressly understood that some of the Members may
enter into transactions
that are similar to the transactions into which the Company
may enter.
(e) A Member, including a Member that is also a
Manager, does not
violate a duty or obligation to the Company merely because the
Member's conduct
furthers the Member's own interest.
11.2 Managers' and Officer's Standard of Care.
Each Manager's and
Officer's duty of care in the discharge of his or her duties
to the Company and the
other Members is limited to refraining from engaging in acts
of Disabling Conduct.
In discharging its duties, each Manager and Officer shall be
fully protected in relying
in good faith upon the records required to be maintained under
Article IX hereof
and upon such information, opinions, reports or statements by
any of its other
Managers, of Officers, or other agents, or by any other
Person, as to matters the
Manager reasonably believes are within such other Person's
professional or expert
competence and who has been selected with reasonable care by
or on behalf of the
Company, including information, opinions, reports or
statements as to the value and
amount of the Assets, liabilities, profits or losses of the
Company or any other facts
pertinent to the existence and amount of Assets from which
Distributions to
Members might properly be paid.
<PAGE>
11.3 Liability and Indemnification of the Managers
and Officers, and the
Tax Matters Partner.
(a) Except to the extent required by applicable
law, including
specifically but not limited to the limitations imposed with
respect to Disabling
Conduct in the 1940 Act, no Person acting in his capacity as a
Manager or an
Officer of this Company shall be personally liable to the
Company or its Members
for money damages. No amendment of this Agreement or repeal
of any of its
provisions shall limit or eliminate the benefits provided to
the Managers and Officers
under this article with respect to any act or omission which
occurred prior to such
amendment or repeal.
(b) The Company shall, to the fullest extent
permitted by applicable
law, indemnify and hold harmless the Officers of the Company,
the Managers, the
Authorized Person, the "tax matters partner," and each
director, manager, officer
and employee thereof or Person who is deemed to control either
the Company or
a Manager (hereinafter collectively referred to as
"Indemnitees") from and against
any losses, claims, damages, liabilities or actions, joint or
several, to which such
Indemnitees may be subject by virtue of any act performed by
such Indemnitee, or
omitted to be performed by any such Indemnitee, in connection
with the business
of the Company or its formation, including amounts paid in
satisfaction of
judgments, in compromise or as fines and penalties, and shall
reimburse each such
Indemnitee for any legal or other expenses reasonably incurred
by such Person in
connection with investigating, defending or preparing to
defend any such loss,
claim, damage, liability or action, except with respect to any
matter as to which
such Indemnitee shall not have acted in good faith in the
reasonable belief that his
or her action was in the best interest of the Company or, in
the case of any criminal
proceeding, as to which he or she shall have had reasonable
<PAGE>
cause to believe that the conduct was unlawful; provided,
however, that the
Company shall not be liable to any Indemnitee to the extent
that in the final
judgment of a court of competent jurisdiction such loss,
claim, damage, liability or
action is found to arise from such Indemnitee's Disabling
Conduct. Notwithstanding
the foregoing, with respect to any action, suit or other
Proceeding voluntarily
prosecuted by any Indemnitee as plaintiff, indemnification
shall be mandatory only
if the prosecution of such action, suit or other proceeding by
such indemnitee was
authorized by Majority Vote of the Managers.
(c) Notwithstanding the foregoing, no
indemnification shall be
made hereunder unless there has been a determination (1) by a
final decision on the
merits by a court or other body of competent jurisdiction
before whom the issue of
entitlement to indemnification hereunder was brought that such
Indemnitee is
entitled to indemnification hereunder or, (2) in the absence
of such a decision, by
(i) a Majority Vote of those Managers who are neither
Interested Persons of the
Company nor parties to the Proceeding ("Disinterested
Non-Party Managers") that
the Indemnitee is entitled to indemnification hereunder, or
(ii) if such vote is not
obtainable because of the lack of Disinterested Non-Party
Managers, or even if
obtainable, if such Majority so directs, independent legal
counsel, in a written
opinion, concludes that the Indemnitee should be entitled to
indemnification
hereunder. All determinations to make advance payments in
connection with the
expense of defending any Proceeding shall be authorized and
made in accordance
with paragraph (d) of this section.
(d) Subject to any limitations provided by the 1940
Act and this
Agreement, the Company shall have the power and authority to
advance expenses
to any Indemnitee, and shall advance such expenses to the
fullest extent permitted
by law, and
<PAGE>
may indemnify other Persons providing services to the Company
or any of its
Affiliates to the full extent provided by law as if the
Company were a corporation
organized under the Delaware General Corporation Law, provided
in either event
that such advance or indemnification has been approved by a
Majority of the
Managers.
(e) Notwithstanding any other provision of this
Section 11.3 to the
contrary, the indemnification obligations of the Company
stated in this section shall
be discharged by Brazos to the extent expressly agreed in
writing by Brazos, with
full rights of subrogation in Brazos in connection therewith.
11.4 Board Action Regarding Indemnification. The
Board of Managers
may take such action as is necessary to carry out these
indemnification provisions
and is expressly empowered to adopt, approve and amend from
time to time such
resolutions or contracts implementing such provisions or such
further
indemnification arrangements as may be permitted by law. No
amendment of this
Agreement shall limit or eliminate the right to
indemnification provided hereunder
with respect to acts or omissions occurring prior to such
amendment or repeal. The
Company may carry insurance protecting it and potential
Indemnitees from liabilities
to third parties, to the extent practicable.
11.5 Indemnification Rights Cumulative. The
indemnification rights
contained in this ArticleXI shall be cumulative of, and in
addition to, any and all
rights, remedies and recourses to which the Indemnitee shall
be entitled, whether
pursuant to the provisions of this Agreement, at law, or in
equity. Except as
otherwise provided in Section 11.3(e), indemnifications shall
be made solely and
entirely from the Assets, and no Member shall be personally
liable to the
Indemnitees under this ArticleXI.
<PAGE>
11.6 Rights of Managers and Officers to Conduct
Other Business. Subject
to the requirements of Section 17 of the 1940 Act and the
provisions of any
Company Code of Ethics adopted pursuant to Rule 17j-1 under
the 1940 Act,
nothing contained in this Agreement shall be deemed to
restrict in any way the
freedom of each Member, Manager, or Officer, Brazos and each
of their Affiliates,
including any director, manager, officer, or employee of such
Person, to conduct any
other business or any other activity whatsoever, including
without limitation, the
acquisition, holding and disposing of real estate, Securities
or assets of any entity
whether or not such activities would also have been
appropriate for the Company,
and without having or incurring any obligation to offer any
interest therein to the
Company or any Member. No Manager or Officer shall be deemed
to have a conflict
of interest by virtue of any such activity or by virtue of its
employment by or
relationship to Brazos or any of its Affiliates or the
activities undertaken by them.
ARTICLE XII.
POWER OF ATTORNEY
12.1 Authority to Execute Documents. During the
Term of the
Company and (to the extent any Manager remains) during any
additional period
authorized in accordance with this Agreement to dissolve,
liquidate and wind up its
affairs of the Company, each of the undersigned Members hereby
irrevocably
designates and appoints the Managers, and any successors of
each Manager, and any
duly appointed agent of any Manager, with full power of
substitution, to be the
Member's true and lawful attorney-in-fact with the power from
time to time in the
name, place, and stead of the Member to do any ministerial act
necessary to qualify
the Company to do business
<PAGE>
under the laws of any jurisdiction in which it is necessary to
file any instrument in
writing in connection with such qualification, and to make,
execute, swear to and
acknowledge, amend, file, record, deliver, and publish in
conformance with the
provisions of this Agreement (i) the Certificate; (ii) a
counterpart of this Agreement
or of any amendment hereto for the purpose of filing or
recording such counterpart
in any jurisdiction in which the Company may own property or
transact business;
(iii) all certificates and other instruments necessary to
qualify or continue the
Company as a limited liability company in Delaware or in any
jurisdiction where the
Company may own property or be doing business; (iv) any
fictitious or assumed
name certificate required or permitted to be filed by or on
behalf of the Company;
(v) any other instrument that is now or may hereafter be
required by law to be filed
for or on behalf of the Company; (vi) any other instruments or
documents that the
Managers deem necessary to conduct the operations of the
Company; provided that
such instrument or document is not inconsistent with the terms
of this Agreement
in effect at that time; (vii) any amendment to this Agreement
pursuant to Section
13.1 hereof; and (viii) a certificate or other instrument
evidencing the dissolution
or termination of the Company when such shall be appropriate
in each jurisdiction
in which the Company shall own property or do business.
12.2 Survival of Power. The existence of this Power
of Attorney shall not
preclude execution of any such instrument by a Member
individually on any such
matter. This limited Power of Attorney shall not be revoked
and shall survive the
Transfer by a Member of all or part of its Ownership Interest
in the Company and,
being coupled with an interest, shall survive the death,
incapacity, or dissolution of
the Member to the extent that it may legally contract for such
survival. Any person
dealing with the
<PAGE>
Company may conclusively presume and rely upon the fact that
any such instrument
executed by such agent and attorney-in-fact is authorized,
regular, and binding
without further inquiry. This Power of Attorney may be
exercised for each Member
by a signature of the Managers or their designee(s) or by
listing the names of all the
Members and executing any instrument with the signatures of
the Managers or their
designee(s) acting as attorney-in-fact for all of them.
ARTICLE XIII.
AMENDMENT
13.1 Amendment.
(a) Any provision of this Agreement may be
amended by
Majority-in-Interest Vote of the Members, provided that no
amendment of this
Agreement shall, without the consent of the affected Member
(i) increase the
liability of a Member beyond the liability of such Member
expressly set forth in this
Agreement or as applicable, its Admission Agreement, or
otherwise modify or affect
the limited liability of such Member; (ii) change the maximum
Capital Contribution
required of any Member (other than as provided in this
Agreement or its Admission
Agreement); or (iii)change the method of allocations made
under the provisions of
Articles VII, VIII, and XV hereto to any Member (except as
allowed by this
Agreement).
(b) For any amendment the Managers shall deliver to
each Member,
as provided for in Section 13.1, written notice requesting if
necessary such
Member's consent and upon receipt of the required consents and
execution of the
documents setting forth the amendment, such amendment shall
become effective.
Any alleged amendment hereto that is not so documented shall
be
ineffective.
<PAGE>
ARTICLE XIV.
DISSOCIATION OF A MEMBER
14.1 Dissociation. A Person shall cease to be a
Member upon the
happening of any of the following events:
(a) the expulsion of a Member prior to the
expiration of the Term,
which may be effected only by the unanimous vote of the
Managers and upon a
finding of Disabling Conduct by such Member that has a
material adverse effect on
the Company;
(b) the Member's becoming a Bankrupt Member;
(c) in the case of a Member who is a natural
person, the death of
the Member or the entry of an order by a court of competent
jurisdiction
adjudicating the Member insane or incompetent to manage the
Member's personal
estate;
(d) in the case of a Member who is acting as a
Member by virtue
of being a trustee of a trust, the termination of the trust
(but not merely the
substitution of a new trustee);
(e) in the case of a Member that is a separate
Organization other
than a corporation, the dissolution and commencement of
winding up of the
Organization;
(f) in the case of a Member that is a corporation,
the filing of a
certificate of dissolution, or its equivalent, for the
corporation or the revocation of
its charter; or
(g) in the case of an estate, the distribution by
the fiduciary of the
estate's entire interest in the Company.
<PAGE>
14.2 No Member Resignation. No Member may resign or
withdraw
voluntarily, nor shall any Member have the right to have its
Units redeemed by the
Company, prior to the expiration of the Term.
14.3 Rights to Distributions Upon Dissociation or
Merger.
(a) Upon its Dissociation, a Member shall not be
entitled to any
Distribution prior to the end of the Term or the earlier
dissolution of the Company
without the prior unanimous consent of the Managers which may
be withheld in
their sole and absolute discretion.
(b) Upon any merger or consolidation of the
Company with any
other Organization in accordance with the Act, no Member shall
have any rights of
appraisal in connection with its Units except to the extent
expressly set forth in any
plan of merger or consolidation duly adopted in accordance
with the Act.
ARTICLE XV.
DISSOLUTION AND WINDING UP
15.1 Dissolution. The Company shall be dissolved
and its affairs wound
up, upon the first to occur of the following events:
(a) the Termination Date;
(b) the unanimous written consent of all of the
Members or all of
the Managers;
(c) the Dissociation of any Manager (or of any
Member at any time
that the Managers do not meet the Rev. Proc. 95-10
Member-Manager
Requirements), unless the business of the Company is continued
with the consent
of those remaining Members holding a majority of the Units
held by all of the
remaining Members;
(d) judicial dissolution of the Company as provided
for in the Act;
or
<PAGE>
(e) the occurrence of any other event causing the
dissolution of a
limited liability company under the laws of the State.
15.2 Effect of Dissolution. Upon dissolution, the
Company shall cease
carrying on (as distinguished from the winding up of) the
Company business, but
the Company is not terminated and will continue until the
winding up of the affairs
of the Company is completed and the certificate of
dissolution has been issued by
the Secretary of State. The Managers or their designee shall
give written notice of
such termination to the Members which shall state that the
Assets of the Company
are to be liquidated in an orderly fashion with appropriate
reserves maintained for
then existing and potential obligations and contingent
liabilities of the Company.
Upon termination for any reason whatsoever, the Company shall
thereafter engage
in no further business other than that necessary to wind up
the business and to
distribute the Company's Assets.
15.3 Distributions Upon Dissolution.
(a) Upon dissolution of the Company, the Managers
or their
designee shall act as liquidating trustee(s) regarding the
disposition of the Assets for
cash and the winding up of its affairs, to pay and discharge
all liabilities and
obligations of the Company, and to distribute all cash
remaining and any Assets
which cannot be disposed of to the Members as described below.
The liquidating
trustees shall be under no liability with respect to the
Assets held by the Company
upon dissolution except to hold and maintain the same in the
Company until
disposed of in accordance with the terms of this Agreement.
Every reasonable effort
shall be made to dispose of the Assets so that the liquidating
distributions to the
Members shall be made in cash. If any non-cash Assets must be
distributed in kind,
the liquidating trustees shall ascertain the Fair Market Value
by appraisal or other
reasonable means of such Assets remaining unsold, and each
<PAGE>
Member's Capital Account shall be charged or credited, as the
case may be, as if
such Assets had been sold at such Fair Market Value and the
net gain or net loss
realized thereby had been allocated to and among the Members
in accordance with
Section 8.3 above. All of the Assets of the Company,
including, without limitation,
all cash and property, if any, then on hand in the Company,
shall be applied and
distributed, with reference to the Fair Market Value thereof,
by the liquidating
trustee(s). A reasonable time shall be allowed for the
orderly liquidation of the
Assets and the discharge of liabilities to creditors so as to
minimize any losses
attendant upon a liquidation. The cash proceeds from the
liquidation, to the extent
sufficient therefor, shall first be applied and distributed in
the following order:
(i) to the creditors of the Company, including
Members who
are creditors to the extent permitted by law, in satisfaction
of Company liabilities;
(ii) to setting up the reserves that the
liquidating trustee(s)
may deem necessary for contingent or unforeseen liabilities or
obligations of the
Company or of the liquidating trustees arising out of or in
connection with the
Company or its liquidation; provided that such withheld
amounts shall be
distributed to the Members as soon as the liquidating
trustee(s) determine, in their
discretion, that such amounts are no longer necessary to be
retained; and
(iii) to the Members in an amount equal to the
credit balances
of their respective Capital Accounts in the ratio that the
positive balance of each
Capital Account bears to the sum of the positive balances of
all Capital Accounts.
(b) The remaining Assets shall be distributed to
the Members in kind
on the basis of the ratio which each Member's Capital
Contributions made to the
Company pursuant to Article III (adjusted, where applicable,
as provided in Article
III) bears to
<PAGE>
the aggregate Capital Contributions made to the Company by all
Members, as such
ratio may be adjusted pursuant to this Agreement. It is the
intent of the Members
that the distribution of assets to and among the Members
pursuant to this Section
15.3(b) be identical in amount to that which would have
occurred had the
distribution pursuant to this Section 15.3(b) been made in
accordance with the
respective positive Capital Account balances of the Members,
following the
adjustment of such Capital Accounts for (i) the Members' prior
contributions,
distributions, allocations of income, gain, loss and deduction
(including allocations
of any hypothetical gain or loss attributable to Company
property previously
distributed in kind to the Members), and any other adjustments
required by Section
704(b) of the Code and the Treasury Regulations thereunder,
and (ii) any
allocations of gain or loss (including allocations of any
hypothetical gain or loss
attributable to Company Assets that will be distributed in
kind to the Members)
required to be made in connection with the dissolution and
liquidation of the
Company but prior to the distribution contemplated by this
Section 15.3(b). In the
event that the amount that would be distributable to and among
the Members
pursuant to the first sentence of this Section 15.3(b) differs
from the amount that
would have been distributable pursuant to the immediately
preceding sentence
hereof, income and/or loss shall be allocated to and among
those Members with
respect to whom any such disparity exists to the least extent
necessary to cause the
amount such Members would receive upon a liquidating
distribution in accordance
with positive balances in their respective Capital Accounts,
as adjusted pursuant to
this sentence, to equal the amount such Members receive as a
liquidating
distribution pursuant to the first sentence of this Section
15.3(b).
(c) The liquidating trustees shall comply with any
requirements of
the Act or other applicable law, except as permitted thereby
to be modified by this
<PAGE>
Agreement, pertaining to the winding up of a limited liability
company, at which
time the Company shall stand liquidated.
(d) The liquidating trustees shall be under no
liability with respect
to the Assets held by the Company upon termination except to
hold and maintain
the same in the Company until disposed of in accordance with
the terms of this
Agreement. The Members shall look solely to the Assets of the
Company for the
return of their respective Capital Contributions and, if the
Company Assets
remaining after the payment or discharge of the debts and
liabilities of the Company
are insufficient to return their Capital Contributions, they
shall have no recourse
against the liquidating trustees or any Member for that
purpose.
15.4 No Obligation to Restore Deficit Capital
Accounts. No Member with
a deficit balance in its Capital Account shall have any
obligation to the Company or
any other Member to restore said deficit balance. In
addition, no venturer or
partner in any Member shall have any liability to the Company
or any other
Member for any deficit balance in such venturer's or partner's
capital account in the
Member in which it is a partner or venturer. Furthermore, a
deficit Capital Account
balance of a Member (or a capital account of a partner or
venturer in a Member)
shall not be deemed to be a liability of such Member (or of
such venturer or partner
in such Member) or a Company Asset.
15.5 Certificate of Dissolution. The winding up of
the Company shall be
completed when all debts, liabilities, and obligations of the
Company have been paid
and discharged or reasonably adequate provision therefor has
been made, and all
of the remaining Assets of the Company have been distributed
to the Members in
accordance with the terms hereof. Upon the completion of
winding up of the
Company, a certificate
<PAGE>
of dissolution shall be delivered by the President or, in his
absence, any Manager,
or, in their absence, any Member, to the Secretary of State
for filing. The certificate
of dissolution shall set forth the information required by the
Act.
ARTICLE XVI.
ADMINISTRATION OF THE COMPANY
16.1 Depositories. The funds of the Company shall
be deposited with such
banks or other depositories as the Board of Managers of the
Company may from
time to time determine.
16.2 Custodians. All securities and other
investments shall be deposited
in the safe keeping of such banks or other companies as the
Board of Managers may
from time to time determine. Every arrangement entered into
with any bank or
other company for the safe keeping of the securities and
investments of the
Company shall contain provisions complying with the 1940 Act.
16.3 Independent Public Accountants. The firm of
independent public
accountants which shall sign or certify the financial
statements of the Company
which are filed with the Commission shall be selected annually
by the Board of
Managers and ratified by the Members in accordance with and to
the extent
required by the provisions of the 1940 Act. The initial
accountants shall be KPMG
Peat Marwick.
16.4 Checks, Drafts, Etc.
(a) All checks, notes, drafts, acceptances, bills
of exchange and
orders for the payment of money and other evidences of
indebtedness, issued in the
name of the Company, shall, unless otherwise provided by
resolution of the Board
of Managers, be signed by the President, any Vice-President,
or the Treasurer.
<PAGE>
(b) Stock certificates, bonds or other securities
at any time owned
by the Company may be held on behalf of the Company or sold,
transferred or
otherwise disposed of subject to any limits imposed by this
Agreement and pursuant
to authorization by the Board of Managers and, when so
authorized to be held on
behalf of the Company or sold, transferred or otherwise
disposed of, may be
transferred from the name of the Company by the signature of
the President, any
Vice President or the Treasurer or pursuant to any procedure
approved by the Board
of Managers, subject to applicable law.
16.5 Bonding. The Board of Managers shall
provide and maintain
on behalf of the Company and at the expense of Brazos a bond
which shall be
issued by a reputable fidelity insurance company in accordance
with the 1940 Act
to cover the Company's Managers, Officers and agents, as
applicable, and may
require any other agent or employee of the Company to give a
bond to the
Company, conditioned upon the faithful discharge of his or her
duties, with one or
more sureties and in such amount as may be satisfactory to the
Managers.
ARTICLE XVII.
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
17.1 Notices. All notices, reports and other
communications given
pursuant to this Agreement shall be in writing and shall
either be mailed by first
class mail, postage prepaid, certified or registered with
return receipt requested,
delivered in person or by nationally recognized overnight
courier, or sent by
telecopier or prepaid telegram followed by confirmatory
letter. Notice sent by mail
in the foregoing manner shall be deemed served or given two
(2) Business Days
after deposit in the United States Postal Service. Notice
delivered by nationally
recognized overnight courier shall be deemed
<PAGE>
served or given one (1) Business Day after delivery to the
courier, charges prepaid.
Notice given by telecopier shall be deemed given twelve (12)
hours after being
telecopied and receipt has been confirmed either
electronically or otherwise. Notice
given to the Company, a Manager or a Member in any other
manner shall be
effective only if and when received by the addressee. For
purposes of notice, the
address of each Member shall be the address as stated opposite
the Member's name
on the signature page of this Agreement or any Admission
Agreement; provided,
however, that each Member shall have the continuing right to
change its address for
notice hereunder to any other location by giving thirty (30)
days' prior notice of
such change to the Company in the manner set forth above. For
the purposes of all
notices to the Company, its address shall be 700 N.E.
Multnomah, Suite 1600,
Portland, Oregon 97232-4116, and copies of all such notices
shall also be sent to
the attention of Robert H. Gidel, 600 E. Las Colinas
Boulevard, Suite 460, Irving,
Texas 75039, telephone (214)831-2000. For purposes of notice
to the Managers,
each of their addresses shall be as follows:
J.T. Crandall c/o Brazos Principal GenPar, L.P.
600 E. Las Colinas Blvd., Suite 460
Irving, Texas 75039
Robert F. Lanz c/o PacifiCorp
700 N.E. Multnomah, Suite 1600
Portland, Oregon 97232-4116
Nori Gerardo c/o Pension Consulting Alliance
514 N.W. 11th Avenue, No. 203
Portland, Oregon 97209
provided, however, that each Manager listed above (and any
successor Manager
appointed pursuant to the terms hereof) shall have the
continuing right to change
its address for notice hereunder to any other location by
giving thirty (30) days'
prior notice of such change to the Company in the manner set
forth above.
<PAGE>
17.2 Law Governing. THIS AGREEMENT IS MADE PURSUANT
TO AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE EXCLUSIVE OF ITS LAWS REGARDING THE CONFLICT OF LAWS,
EXCEPT TO THE EXTENT SUCH STATE'S LAW MAY BE PREEMPTED BY
APPLICABLE FEDERAL LAWS.
17.3 Entire Agreement; Rules of Construction. (a)
This Agreement,
together with the exhibits hereto, contains the entire
agreement among the
Members relating to the subject matter hereof and there are no
other or further
agreements outstanding not specifically mentioned herein;
provided, however, that
this Agreement may be amended and supplemented in writing from
time to time as
provided in Section 13.1 hereof.
(b) The Members hereby agree that each Member shall
be entitled
to rely on the provisions of this Agreement, and no Member
shall be liable to the
Company or to any Member for any action or refusal to act
taken in good faith
reliance on the terms of this Agreement. The Members and the
Company hereby
agree that the duties and obligations imposed on the Members
of the Company as
such shall be those set forth in this Agreement, which is
intended to govern, to the
fullest extent permitted by law, the relationship among the
Company, the Members,
and the Managers.
(c) All references to days in this Agreement mean
calendar days
unless otherwise provided. Any day or deadline or time period
hereunder which
falls on a non-Business Day shall be deemed to refer to the
first Business Day
following.
17.4 Severability.
(a) The provisions of this Agreement are severable,
and if the
Managers shall determine, with the advice of counsel, that any
of such provisions
are in
<PAGE>
conflict with applicable law, the conflicting provision shall
be revised to the
minimum extent necessary to bring it into compliance with
applicable law and with
a view toward preserving to the maximum extent possible the
original bargain of
the parties hereto, and provided, also, that such
determination shall not affect any
of the remaining provisions of this Agreement.
(b) If any provision of this Agreement shall be
held invalid or
unenforceable in any jurisdiction, such invalidity or
unenforceability shall apply only
to such provision in such jurisdiction and shall not in any
manner affect such
provision in any other jurisdiction or any other provision of
this Agreement in any
jurisdiction.
17.5 Gender and Number. Whenever required by the
context, as used in
this Agreement, the singular number shall include the plural,
the neuter shall
include the masculine or the feminine gender, and the
masculine gender shall
include the neuter or the feminine gender.
17.6 Captions. The Article and Section headings
appearing in this
Agreement are for convenience of reference only and are not
intended, to any extent
and for any purpose, to limit or define the text of any
Article or Section hereof.
17.7 Counterparts and Execution. This Agreement may
be executed in
multiple counterparts, each of which shall be deemed an
original Agreement for all
purposes, and all of which when taken together shall
constitute one Agreement
among each of the parties hereto on the dates respectively
indicated in the
signatures of the parties, notwithstanding that all of the
parties are not signatories
to the original or the same counterpart, such Agreement to be
effective as of the
Effective Date first set forth above. Executed signature
pages to any counterpart
instrument may be detached and affixed to a single
counterpart, with such single
counterpart with multiple executed
<PAGE>
signature pages affixed thereto constituting the original
counterpart instrument. All
of those counterpart pages shall be read as though one, and
they shall have the
same force and effect as if all the signers had executed a
single signature page.
17.8 Consents and Waivers.
A Member's or Manager's waiver, consent, failure to
object, failure
to seek redress, course of conduct, or failure to insist upon
the strict performance
of any covenant or condition of this Agreement shall not be
considered or construed
as a waiver or consent for subsequent matters or other
obligations or rights of the
Member.
17.9 Rights and Remedies Cumulative. The rights and
remedies provided
by this Agreement are cumulative and the use of any one right
or remedy by any
party shall not preclude or waive its right to use any or all
other remedies. Such
rights and remedies are given in addition to any other rights
the parties may have
by law, statute, ordinance, or otherwise.
17.10 Waiver of Right to Partition. Each of the
parties hereto irrevocably
waives during the term of the Company any right that it may
have to maintain any
action for partition with respect to a Company Asset.
17.11 Successors and Assigns. Each and all of the
covenants, terms,
provisions, and agreements herein contained shall be binding
upon and inure to the
benefit of the parties hereto and, to the extent permitted by
this Agreement, their
respective successors and assigns.
17.12 No Partnership Intended for Nontax Purposes.
The Members
have formed the Company under the Act, and expressly do not
intend hereby to
form a partnership under either the Delaware Uniform
Partnership Law or the
Delaware Revised Uniform Limited Partnership Act. The Members
do not intend to
be partners one to
<PAGE>
another, or partners as to any third party for any purpose
other than federal, state,
local and foreign tax purposes. To the extent any Member, by
word or action,
represents to another person that any other Member is a
partner or that the
Company is a partnership for any other purpose, the Member
making such wrongful
representation shall be liable to any other Member who incurs
personal liability by
reason of such wrongful representation.
17.13 Rights of Creditors and Third Parties under
this Agreement.
The Agreement is entered into among the Company and the
Members for the
exclusive benefit of the Company, its Members, and their
successors and assignees.
The Agreement is expressly not intended for the benefit of any
creditor of the
Company or any other Person. Except and only to the extent
provided by applicable
statute, no such creditor or third party shall have any rights
under the Agreement,
any Admission Agreement or any agreement between the Company
and any Member
with respect to any Capital Contribution or otherwise.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement
as the Initial Members as of the day and year first above
written, and also to
acknowledge their appointment hereunder as Managers of the
Company and as
attorneys-in-fact of the Members and to signify their
understanding and acceptance
of the terms and provisions of this Agreement.
<TABLE>
ADDRESSES:INITIAL MEMBERS:
Name: J.T. Crandall
Name: Robert F. Lanz
Name: Nori Gerardo
BRAZOS PRINCIPAL GENPAR, L.P.,
a Delaware Limited Partnership
By:
Its:
</TABLE>
<PAGE>
<TABLE>
ACKNOWLEDGED AND APPOINTMENT ACCEPTED:
INITIAL MANAGERS:
Name: J.T. Crandall
Name: Robert F. Lanz
Name: Nori Gerardo
</TABLE>
<PAGE>
<TABLE>
SCHEDULE A - Initial Members and
Capital Contributions
<CAPTION>
INITIAL MEMBERSINITIAL CAPITAL
CONTRIBUTIONS
INITIAL
UNITSTOTAL CAPITAL
COMMITMENT
TOTAL
UNITS<S>
J.T. Crandall
Robert F. Lanz
Nori Gerardo
Brazos Principal GenPar, L.P.
<C>
$110,000
$ 100
$ 100
$ 5,000<C>
5500.0
5.0
5.0
250.0<C>
$187,500
$ 100
$ 100
$ 10,000<C>
9,375.0
5.0
5.0
500.0
</TABLE>
<PAGE>
SCHEDULE B - Investment Objectives
and Policies
All capitalized terms have the meanings assigned to them
in the Operating
Agreement.
(a) Investment Objective
The investment objective of the Company shall be to seek
high total returns by
buying, selling, exchanging or otherwise acquiring, holding,
trading, investing in,
managing, and dealing with Qualified Investments, whether such
assets are acquired
directly, or indirectly through partnerships, joint ventures, or
otherwise.
(b) Investment Policies
In pursuing its objective, the Company shall focus
primarily on acquiring, directly
or indirectly, managing and disposing of distressed mortgage loan
and owner real estate
portfolios, and high yield commercial mortgage-backed Securities,
including but not limited
to investing in entities organized or to be organized by Brazos
and its Affiliates.
The Company reserves the right to engage in, and
intends, with respect to each
of the following categories:
Classification
to ensure that the Company at all times is an
investment company for
purposes of the 1940 Act and is duly registered as such under the
1940 Act, and to exercise
all of the powers necessary or appropriate to the conduct of such
operations;
to operate as and carry on the business of a
closed end, non-diversified
investment company, and exercise all of the powers necessary or
appropriate to the conduct
of such operations;
Other Loans
to invest also in:
(A) U.S. Government debt Securities that have an
effective duration
at the time of purchase no greater than the effective duration of
the two-year U.S. Treasury
note, including U.S. Treasury Securities and Securities issued by
agencies or
instrumentalities of the U.S. Government;
(B) corporate debt Securities that have an
effective duration at the
time of purchase no greater than the effective duration of the
two-year U.S. Treasury note
and that are rated in one of the four highest rating categories by
a nationally recognized
rating agency; and
<PAGE>
(C) short-term debt investments that have a
remaining term to
maturity at the time of purchase of no greater than one year,
including commercial paper
rated not lower than A-1 by Standard & Poor's Corporation ("S&P")
or P-1 by Moody's
Investors Services, Inc. ("Moody's") and other money market
instruments of similar credit
standing, non-contingent interest bearing deposits in banks
chartered by or within the
United States with long-term ratings at least A- and money market
mutual funds
Borrowing
to borrow money, to the extent consistent with
the 1940 Act, only
(1) to effect its day-to-day operations using limited (under
$10,000) short-term trade
credit; (2) as needed to preserve the value of any investment
previously made, as provided
in Section 3.4 of the Operating Agreement, or (3) for any other
proper purposes upon a
Majority-in-Interest Vote of the Members;
Issuance of Senior Securities
not to engage in the issuance of Senior
Securities;
Underwriting Activities
not to engage in the business of underwriting
Securities issued by any
other Person;
Commodities Investments
not to engage in commodities investments;
Other Investment and Activities
to engage in any other type of asset investment
which is made in
furtherance of the Company's objectives, policies and purposes as
stated in Section 2.3 of
the Operating Agreement and as stated herein and, where required,
a Majority-in-Interest
Vote of the Members after having received approval by a Majority
Vote of the Managers;
to exercise all rights, powers and privileges of
ownership or interest
in all Securities included in the Company's Assets, including the
right to vote thereon and
otherwise act with respect thereto and to do all acts for the
preservation, protection,
improvement and enhancement in value of all such Securities;
to carry on any other business in connection with
or incidental to any
of the foregoing powers, to do everything necessary, suitable or
proper for the
accomplishment of any purpose or the attainment of any object or
the furtherance of any
power hereinbefore set forth, and to do every other act or thing
incidental or appurtenant
to or connected with the aforesaid purposes, objects or powers;
<PAGE>
to invest in obligations maturing after the
Termination Date of the
Company, and to invest in any and all investments without being
limited by laws limiting
investments which may be made by fiduciaries; and
not to engage in any investment prohibited by
Section 4.13 of the
Operating Agreement.
Investment Approval Limits
not to become obligated to any investment course
of action that would
commit over $10,000 of the Company's funds without express prior
approval thereof by
the Managers by Majority Vote.
<PAGE>
SCHEDULE C - Initial Officers
John P. Grayken President and Treasurer
Chris W. Mahowald Vice President and Assistant
Secretary
Ellis Short Vice President and Assistant Secretary
Robert H. Gidel Vice President and Secretary
<PAGE>
EXHIBIT K
FORM OF ADMINISTRATION AGREEMENT
WHITEROCK PORFOLIO INVESTORS, L.L.C.
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT made as of the 22nd day of
December,
1995 between WhiteRock Porfolio Investors, L.L.C., a Delaware
limited liability
company ("Company"), and Brazos GenPar, Inc., a Delaware
corporation
("Administrator").
W I T N E S S E T H:
WHEREAS the Company was formed as a limited liability
company on
September 29, 1995;
WHEREAS, the Company is registered as a
non-diversified, closed-end
investment company under the Investment Company Act of 1940,
as amended (the
"Investment Company Act");
WHEREAS, the Company desires to retain the
Administrator to perform
administrative and other services for the Company;
NOW, THEREFORE, in consideration of the promises and
covenants set
forth herein, the parties hereto agree as follows:
1. The Company hereby appoints the Administrator to provide
the services set
forth below, subject to the overall supervision of the
Board of Managers of the
Company ("Managers"), for the period and on the terms set
forth in this
Agreement. The Administrator hereby accepts such
appointment and agrees
during such period to render the services herein described
and to assume the
obligations herein set forth.
2. Subject to the supervision of the Managers and Officers of
the Company, the
Administrator shall provide the following services with
respect to the Company:
a. Maintain the books and records of the Company in a
manner that is fully
consistent with the provisions of the Investment
Company Act;
b. Prepare the Company's federal, state and local income
tax returns for
review by the Company's independent accountants and for
filing by the
Company;
c. On behalf of the Company, prepare and make all filings
required to be
sent to the Securities and Exchange Commission, to any
state or other
regulatory authorities, and to members of the Company;
d. Make such reports and recommendations to the Managers
concerning the
performance of the Company's independent accountants as
the Managers
may reasonably request or deem appropriate;
<PAGE>
e. Perform transfer agent, dividend disbursement agent,
and registrar
functions for the Company. The Administrator shall,
pursuant to Section
16.1 and 16.2 of the Company's Limited Liability
Agreement ("Operating
Agreement"), name and engage the depository bank for
the Company;
f. Arrange for the bond referenced in Section 16.5 of the
Operating
Agreement, to the extent required by the Investment
Company Act;
g. Appoint any agent to the perform some or all of the
foregoing functions
as the Administrator may deem necessary or appropriate.
All services are to be furnished through the medium of any
officers or
employees of the Administrator as the Administrator deems
appropriate in order
to fulfill its obligations hereunder. Certain details of
the scope of the
Administrator's services hereunder shall be documented in
the Company's
Compliance Manual, which will outline the Company's
administrative
requirements as consistent with this Agreement and the
Operating Agreement.
The Administrator shall be responsible for the performance
of only such duties
as are set forth in this Agreement and in no event shall be
responsible for
providing investment advice to the Company.
3. For performing the services described in this Agreement,
the Administrator shall
receive an annual fee equal to 0.15% of the aggregate cost
of Company assets
being administered, reduced by any distributions of capital
made with respect
to such assets). Such fee, however, will be waived with
respect to any
investments the Company makes in entities affiliated with
the Administrator (or
entities affiliated with such affiliates of the
Administrator), including any
investments the Company makes or has made in Brazos Fund,
L.P.
4. a. The Administrator shall not be liable for any loss or
damage resulting
from the performance or non-performance of its duties
hereunder unless
directly caused by or resulting from willful
misfeasance, bad faith or gross
negligence of the Administrator, its officers or
employees or from the
reckless disregard by any such persons of the
administrative duties
described in this Agreement.
b. The Administrator shall not be liable for any error of
judgment or mistake
of law or for any loss suffered by the Company or its
members in
connection with the performance of its duties under
this Agreement,
except as provided in subparagraph (a) of Section 4 of
this Agreement.
5. Subject to the provisions of Article 11 of the Operating
Agreement, the
Company shall indemnify and hold harmless the Administrator
from all loss,
cost, damage and expense, including expenses for counsel,
reasonably incurred
by it resulting from any claim, demand, action or suit
brought as a result of its
acting upon any instructions from the Board of Managers of
the Company.
<PAGE>
6. a. This Agreement shall continue in effect unless
terminated as herein
provided.
b. This Agreement may be terminated by either party hereto
without penalty
at any time upon not less than 90 days prior written
notice to the other
party.
7. The services the Administrator shall provide to the Company
under this
Agreement are not exclusive to the Company. Accordingly,
the Administrator,
consistent with its duties hereunder, may engage in any
other business or
render services of any kind to any other corporation, firm,
individual or
association.
8. This Agreement may be amended by mutual written consent.
9. Any notice or other communication required to be given
pursuant to this
Agreement shall be deemed to be given if delivered or
mailed by registered mail,
postage prepaid, to the following addresses:
a. Administrator
600 East Las Colinas Boulevard,
Suite 460
Irving, Texas 75039
b. Company
700 N.E. Multnomah
Suite 1600
Portland, Oregon 97232-4116
10. This Agreement sets forth the entire agreement and
understanding of the parties
hereto with respect to the services to be provided by
the Administrator
hereunder.
11. This Agreement shall be governed by and construed in
accordance with the laws
of the State of Texas without reference to choice of
law principles and in
accordance with the Investment Company Act. In the
case of any conflict, the
Investment Company Act shall control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
instrument
to be executed by their officers designated below as of the
day and year first written
above.
WHITEROCK PORFOLIO INVESTORS, L.L.C.
By:__________________________
Robert H. Gidel
Its: Vice President
BRAZOS GENPAR, INC.
By: __________________________
John P. Grayken
Its: President
<PAGE>
EXHIBIT P
Form of Admission Agreement
[Date]
WhiteRock Portfolio Investors, L.L.C.
600 East Las Colinas Boulevard, Suite 460
Irving, Texas 75039
Dear [ ]:
The undersigned, ______________, hereby requests
admission as a Member
of WhiteRock Portfolio Investors, L.L.C., a limited liability
company (the "Company")
pursuant to the terms stated herein. The undersigned
acknowledges that the
undersigned has read and understands the Limited Liability
Company Agreement for
the Company, dated _______, 1995 (the "Operating Agreement")
and, if admitted,
agrees to abide by its terms and conditions. (All capitalized
terms used but not
otherwise defined in this letter shall have the meanings
assigned to them in the
Operating Agreement.)
The undersigned understands that acceptance as a Member
of the
Company requires it to meet certain qualifications specified
in the Operating
Agreement. In this regard, the undersigned hereby represents
that:
(1) the undersigned is an "accredited investor" within
the meaning of Section
501(a) of Regulation D under the Securities Act of
1933, as amended (the
"1933 Act"), because the undersigned is:
(Check all boxes in ^ (1) that apply, if any.)
[__] (a) a bank as defined in Section 3(a)(2) of the
1933 Act, or a savings
and loan association or other institution as
defined in Section
3(a)(5)(A) of the 1933 Act whether acting in
its individual or
fiduciary capacity; a broker or dealer
registered pursuant to Section
15 of the Securities Exchange Act of 1934; an
insurance company as
defined in Section 2(a)(13) of the 1933 Act; an
investment company
registered under the Investment Company Act of
1940 (the "1940
Act") or a business development company as
defined in Section
2(a)(48) of that Act; a Small Business
Investment Company licensed
by the U.S. Small Business Administration under
Section 301(c) or
(d) of the Small Business Investment Act of
1958; a plan established
and maintained by a state, its political
subdivisions, or an agency or
instrumentality of a state or its political
subdivisions, for the benefit
of its employees, if such plan has total assets
in excess of $5 million;
an employee benefit plan within the meaning of
the Employee
Retirement Income Security Act of 1974 if the
investment decision
is made by a plan fiduciary, as defined in
Section
<PAGE>
3(21) of that Act, which is either a bank, savings
and loan
association, insurance company, or registered
investment adviser, or
if the employee benefit plan has total assets in
excess of $5 million,
or, if a self-directed plan, with investment
decisions made solely by
persons that are accredited investors;
[__] (b) a private business development company as
defined in Section
202(a)(22) of the Investment Advisers Act of
1940;
[__] (c) an organization described in Section 501(c)(3)
of the Internal
Revenue Code, a corporation, Massachusetts
business trust, or
partnership, not formed for the specific
purpose of acquiring the
securities offered, with total assets in excess
of $5 million;
[__] (d) a Manager or executive Officer of the Company;
[__] (e) a natural person whose individual net worth, or
joint net worth with
[his][her] spouse, at the time of purchase
exceeds $1 million;
[__] (f) a natural person who had an individual income
in excess of
$200,000 in each of the two most recent years
or joint income with
[his][her] spouse in excess of $300,000 in each
of those years and
has a reasonable expectation of reaching the
same income level in
the current year;
[__] (g) a trust, with total assets in excess of $5
million, not formed for the
specific purpose of acquiring the securities
offered, whose purchase
is directed by a sophisticated person as
described in Section
506(b)(2)(ii) of Regulation D under the 1933
Act; or
<PAGE>
[__] (h) an entity in which all of the equity owners are
accredited investors;
OR
(You must be able to check box (2) if none of the subsections
in ^ (1) were applicable
to you.)
[__] (2) the undersigned is not an "accredited investor"
within the meaning
of Section 501(a) of Regulation D under the 1933
Act but the
undersigned or his or her authorized
representative: (a) has the
degree of knowledge or experience in financial and
business matters
needed to enable him or her or, as applicable, his
or her
representative, to evaluate the merits and risks of
owning an interest
in the Company, and (b) has access to all of the
information that
would otherwise be available to such person if the
offering of
interests in the Company were registered under the
1933 Act;
AND
(3) the undersigned has provided to the Managers of the
Company all of the
information requested to determine whether the
undersigned or such
person's authorized representative satisfies the
conditions stated in (1) or
(2) above.
The undersigned further understands that as a Member,
the undersigned
must comply with all of the terms and conditions of the
Operating Agreement,
including the following:
(1) An undertaking not to resell or otherwise Transfer the
undersigned's
interest in the Company unless such resale or Transfer
has first been
approved unanimously by the Board of Managers of the
Company;
(2) An acknowledgment that the offering of Ownership
Interests in the
Company has not been registered under the 1933 Act, and
that the
undersigned will be deemed to have made certain
representations as a
Member as set forth in more detail in Section 5.4 of
the Operating
Agreement;
(3) An acknowledgement that pursuant to Article XII of the
Agreement, each
Member irrevocably grants a limited Power of Attorney
to the Managers
for various purposes set forth therein.
The undersigned further understands that the
undersigned, if accepted by
the Managers, will become a Member of the Company upon the
latest to occur of
the following:
(1) The date of acceptance of this Letter Agreement, which
may be withheld
in the sole and absolute discretion of the Managers; or
<PAGE>
(2) The date a Capital Contribution is made with respect to
the undersigned's
Ownership Interest in the Company; or
(3) The date the Capital Contribution, the number of
ownership Units issued
with respect thereto, the remaining Capital Commitment
(if applicable),
and the undersigned's status as a Member, have been
duly reflected on the
books and records of the Company.
The undersigned understands and agrees that this
request to be admitted
as a Member pursuant to the terms hereof and of the Operating
Agreement shall be
irrevocable for a period of 60 days from the date of this
letter. If the Managers of
the Company on its behalf accept the request for admission
made herein, they shall
promptly return one copy of this letter to the undersigned or
its representative, but
the undersigned shall not become a Member until all of the
terms and conditions
stated herein and in the Operating Agreement have been
complied with.
(Check any additional boxes that apply and fill in the
amounts of the blanks
below.)
NUMBER OF UNITS, IF ANY, TO BE REGISTERED IMMEDIATELY IN THE
NAME
OF THE UNDERSIGNED BY TRANSFER FROM AN EXISTING MEMBER, WITHOUT
ADDITIONAL CAPITAL CONTRIBUTIONS IN RESPECT THEREOF:
_______ (_________________)
[ ] If the blank above is filled in, a true and correct
copy of the
documentation evidencing the gift or transfer of the number of
Units indicated is
attached.
REMAINING CAPITAL COMMITMENT, IF ANY, OF THE UNDERSIGNED TO
PURCHASE ADDITIONAL UNITS, WHICH CAPITAL COMMITMENT SHALL BE
SATISFIED ON THE CLOSING DATES SPECIFIED BELOW OR REMAIN
SUBJECT
TO CAPITAL CALL BY THE COMPANY ON ONE OR MORE ADDITIONAL DATES
PRIOR TO THE END OF THE TERM OF THE COMPANY TO BE SPECIFIED
PURSUANT TO THE TERMS OF THE OPERATING AGREEMENT:
TOTAL REMAINING COMMITMENT $____________.
AMOUNT INITIALLY DUE ON ____, 19_: $_____________.
Sincerely,
_________________
Address: __________________
__________________
<PAGE>
ACCEPTED AND AGREED:
The Board of Managers of WhiteRock Portfolio Investors,
L.L.C. have voted
unanimously to accept the signatory above as a Member of the
Company pursuant
to the terms set forth above. In deciding to accept such
signatory as a Member, the
Managers have reasonably relied on the representations
contained in this Letter
Agreement, among others contained in the Operating Agreement,
and have made
all reasonable efforts to ensure their accuracy.
By: _________________
Its: Manager
By: _________________
Its: Manager
By: _________________
Its: Manager
