<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Operating Agreement)
WENDELL M. FARIA, on behalf of Registrant
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
PRELIMINARY COPY FOR THE INFORMATION
OF THE SECURITIES AND EXCHANGE COMMISSION
FILE NO. 811-9104; RULE 14a-6
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
700 N.E. Multnomah, Suite 1600
Portland, Oregon 97232-4116
NOTICE OF SPECIAL MEETING OF MEMBERS
MEETING DATE: JANUARY 21, 1997
To the Members:
A Special Meeting (the "Meeting") of the Members of WhiteRock Portfolio
Investors, L.L.C. (the "Company") will be held on Tuesday, January 21, 1997 at
2:00 P.M., Central Prevailing Time, at the offices of Brazos GenPar, Inc., the
Company's Administrator, located at 600 N. Pearl Street, Suite 1500, Dallas,
Texas, 75201 for the following purposes:
1. To ratify various actions taken by the Board of Managers by unanimous
written consent in lieu of a meeting to elect two additional Managers, and at
the Company's initial organizational meeting to appoint an independent
accountant for the Company and other actions in furtherance of compliance with
the Investment Company Act of 1940;
2. To approve the following amendments to the Company's Limited Liability
Company Agreement ("Operating Agreement"):
(a) amendments with respect to approval of Unit transfers and admittance
of new Members directly by the Unitholders rather than the Board of
Managers, and changing those persons to whom various dissolution
events may apply, each of which amendment is designed to provide an
alternative method for the Company to obtain various desired
attributes respecting its entity classification as a partnership for
certain tax purposes, and corresponding amendments to delete certain
requirements previously applicable to the Managers as a group;
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<PAGE>
(b) amendments to clarify the quorum and other voting requirements for the
Board;
(c) an amendment to add a recusal procedure for Managers;
(d) amendments to clarify and specify the line of succession of the
Officers of the Company and the filling of vacancies on an interim
basis between meetings of the Board of Managers, and to allow for
appointment of certain subordinate officers;
(e) an amendment designed to match the ability of the Company to call
Capital Commitments from its Members more closely with the Company's
obligation to meet its own capital commitments with respect to its
portfolio investments;
(f) amendments designed to eliminate the obligation of the Company to send
all tax filings, returns and correspondence of the Company to each
Member automatically rather than upon request;
(g) an amendment to enable the Managers to make certain ministerial or
corrective amendments to the Operating Agreement, or those required by
law or otherwise advisable, without the vote of the Members, provided
various protections of those parties affected are in place;
(h) amendments to expand the definition of Qualified Investment and extend
the termination date of the Company designed to permit additional
flexibility in seeking to invest a portion of the Company's assets in
real estate related investments on a global basis;
(i) an amendment to create a Unit dividend reinvestment plan for the
Company's Unitholders;
(j) various amendments designed to clarify and expand the Company's
indemnification obligations with respect to its officers and managers;
and
(k) various amendments which add cross-references to terms previously
undefined in the Definitions section of the Operating Agreement, and
to update
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notice provisions and other factual matters referenced in the
Operating Agreement;
3. To elect Craig Longfield and Dan Rosborough as Managers to the
Company's Board; to reelect Nori Gerardo and William Peressini as Managers to
the Company's board, and to reduce the number of vacant Board positions by one
for a total of four;
4. To approve various Unit issuances, capital calls, transfers of Units
among certain Members and the admission of certain new Members of the Company;
and
5. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
THE BOARD OF MANAGERS HAS PREVIOUSLY CONSIDERED AND RECOMMENDS FOR APPROVAL
ALL OF THE FOREGOING PROPOSALS.
iii
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Members of record at the close of business on December 16, 1996 are
entitled to vote at the Meeting or any adjournment thereof. IT IS IMPORTANT
THAT YOU RETURN YOUR SIGNED PROXY PROMPTLY, REGARDLESS OF THE SIZE OF YOUR
HOLDINGS, SO THAT A QUORUM MAY BE ASSURED.
By Order of the Board of Managers
/s/ Sharlene Snyder
Sharlene Snyder, Secretary
January 6, 1997
YOUR VOTE IS IMPORTANT! PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON
THE ENCLOSED PROXY, DATE AND SIGN IT, AND RETURN IT IN THE ACCOMPANYING POSTAGE
PREPAID ENVELOPE. IF YOU SIGN, DATE AND RETURN THE PROXY BUT GIVE NO VOTING
INSTRUCTIONS, YOUR UNITS WILL BE VOTED IN FAVOR OF ALL OTHER PROPOSALS NOTICED
ABOVE.
iv
<PAGE>
PRELIMINARY COPY FOR THE INFORMATION
OF THE SECURITIES AND EXCHANGE COMMISSION
FILE NO. 811-9104; RULE 14a-6
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
700 N.E. Multnomah, Suite 1600
Portland, Oregon 97232-4116
PROXY STATEMENT
Special Meeting of Members
January 21, 1997
This proxy statement is furnished in connection with the solicitation by
the Board of Managers of WhiteRock Portfolio Investors, L.L.C. (the "Company")
of proxies to be voted at a Special Meeting of Members to be held on Tuesday,
January 21, 1997, and any adjournment thereof. The purposes of the Meeting are
set forth in the accompanying Notice of Special Meeting of Members dated January
6, 1997. All capitalized terms used herein or in the Notice have the meanings
assigned to them in the Company's Limited Liability Company Agreement (the
"Operating Agreement").
This proxy solicitation will be made primarily by mailing this proxy
statement and the accompanying proxy card to Members commencing on January 6,
1997. Supplementary solicitations may be made by telephone, telegram or by
personal interview. Brazos GenPar, Inc. (the "Administrator"), 600 N. Pearl
Street, Suite 1500, LB 164, Dallas, Texas 75201, and Officers and Managers of
the
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Company who participate in such solicitations will receive no special
compensation for their services. The expenses of preparing and mailing this
proxy statement and its enclosures and all other solicitation expenses will be
paid by the Administrator.
If the enclosed proxy is executed properly and returned in time to be voted
at the Meeting, and is not revoked, the Units represented thereby will be voted
according to the instructions marked on the proxy. If no instructions are
marked on an otherwise properly executed proxy, the Units represented thereby
will be voted in favor of proposals 1 - 4 (and all subparts of each proposal) as
listed on the Notice of Special Meeting.
OUTSTANDING UNITS AND VOTING REQUIREMENTS
The Board of Managers has fixed the close of business on December 16, 1996
as the record date for purposes of determining Unitholders eligible to vote at
the Meeting and any adjournments thereof. As of December 16, 1996, there were
1,374,023 Units of the Company issued and outstanding. The PacifiCorp
Master Retirement Trust is the only record holder of the Company that has a
beneficial interest in 5% or more of the Company's outstanding Units. Only
Units of record at the close of business on that date
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are entitled to notice of and to vote at the Meeting. Each such Unitholder is
entitled to one vote for each full Unit of participation, and a proportionate
vote for each fractional Unit, of the Company held on the record date.
The holders of a majority of the outstanding Units of the Company must be
present in person or represented by proxy at the Meeting in order to constitute
a quorum for the transaction of any business. If a quorum is present at the
Meeting but sufficient votes to approve one or more of the items on the agenda
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies with
respect to those items. In so doing, the persons named as proxies will attempt
to determine if an adjournment and additional Unitholder solicitation are
reasonable and in the best interest of Members, and will vote for or against
adjournment accordingly. Any such adjournment will require the affirmative
vote of a majority of the Units present at the Meeting or represented by proxy.
If the enclosed proxy is executed properly and returned in time to be voted
at the Meeting, and is not revoked, the Units represented thereby will be voted
according to the instructions marked on the proxy. The persons voted as proxies
will use their best judgment in
vii
<PAGE>
voting in connection with the transaction of such other business as may properly
come before the Meeting or any adjournment thereof. A Member giving a proxy may
revoke it at any time before it is executed by a vote thereon by giving written
notice of its revocation to the Secretary of the Company at the address
indicated on the Notice of Special Meeting, by executing and delivering to the
Company another proxy dated subsequent to the proxy to be revoked, or by
attending the Meeting and voting in person.
Abstentions will not be counted for or against any proposal to which they
relate, but will be counted for purposes of determining the Units present at the
Meeting. Abstentions will therefore have the effect of a "no" vote for purposes
of obtaining the requisite approvals of the proposals before the Meeting.
The Company will promptly furnish a copy of its most recent annual report
and the most recent semi-annual report to any Member upon request. Such
requests should be directed to
Brazos GenPar, Inc.
600 N. Pearl Street, Suite 1500, LB 164
Dallas, Texas 75201
Attn: Sharlene Snyder
viii
<PAGE>
PROPOSAL 1
RATIFICATION OF CERTAIN ACTIONS
TAKEN BY UNANIMOUS CONSENT OR AT ORGANIZATIONAL MEETING OF
BOARD OF MANAGERS OF THE COMPANY
Previous Expansion of the Board from Three to Five and Election of
------------------------------------------------------------------
Messrs. Peressini and Wirkkala to the Board
-------------------------------------------
By a unanimous written consent dated as of December 22, 1995, the Board of
Managers of the Company agreed to expand the Board of Managers from three to
five, as permitted by Section 4.2(d) of the Operating Agreement, and to elect
Mr. William E. Peressini and Mr. Brian M. Wirkkala to fill the newly created
vacancies on the Board. Members are being asked to ratify the actions taken by
the Board by such consent at that meeting in approving the nomination and
election of Messrs. Peressini and Wirkkala to the Company's Board.
Information on the business experience during the past five years of
Messrs. Peressini and Wirkkala is set forth below:
<TABLE>
<CAPTION>
==============================================================================
NAME AND ADDRESS OF AGE PRINCIPAL UNITS
NOMINEE OCCUPATION OWNED
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
William E. Peressini 40 Vice President 5
700 N.E. Multnomah St., and Treasurer,
Ste. 1600 PacifiCorp;
Portland, OR 97232 Chief Financial
Officer,
PacifiCorp
Financial
Services, Inc.
- -------------------------------------------------------------------------------
</TABLE>
ix
<PAGE>
<TABLE>
<CAPTION>
==============================================================================
NAME AND ADDRESS OF AGE PRINCIPAL UNITS
NOMINEE OCCUPATION OWNED
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Brian M. Wirkkala __ Vice President 5
2107 N.E. 136th Ave. and Treasurer,
Vancouver, WA 98684 Pacific Telecom,
Inc.
==============================================================================
</TABLE>
The Company's Board of Managers has no separate nominating, compensation or
audit committee, or any committee performing similar functions, although Mr.
Wirkkala was designated in April, 1996 to serve as liaison for the Board in
connection with the services to be provided by the Company's independent
accountant. The Board as a whole acts in these capacities.
As of December 16, 1996, all Managers and Officers of the Company as a
group owned approximately 0.29% of the Company's outstanding securities.
No per meeting attendance fees have been authorized for any of the
Managers. For fiscal 1995, no compensation was paid to any "disinterested"
Board member for attendance at any regularly scheduled meeting of the Board.
The Company has no bonus, profit-sharing, pension or retirement plan.
Ratification of Selection of Auditors
-------------------------------------
At a meeting of the Board of Managers held April 3, 1996, a majority of the
Board, including a majority of
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Managers who are not "interested persons" of the Company, selected KPMG Peat
Marwick to serve as independent certified public accountants for the Company for
the fiscal years ending December 31, 1995 and December 31, 1996. Under the
Investment Company Act of 1940 ("Investment Company Act"), such a designation
remains subject to the right of the Company, by a Majority-in-Interest Vote of
the Unitholders at any meeting called for the purpose, to terminate such
employment immediately without penalty. KPMG Peat Marwick has no direct or
material indirect ownership interest in the Company. The Investment Company Act
requires the Board's selection to be submitted to Unitholders for ratification
or rejection at the next annual meeting of the Unitholders. Insofar as the
Company's Operating Agreement does not require regular annual meetings, the
Company is taking the opportunity to secure ratification by the Unitholders at
the Meeting of such appointment of KPMG Peat Marwick.
A representative of KPMG Peat Marwick is expected to attend the Meeting.
The representative will be given an opportunity to make a statement and will be
expected to respond to any appropriate questions from Unitholders.
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PROPOSAL 2
APPROVAL OF AMENDMENTS TO
THE COMPANY'S OPERATING AGREEMENT
The Company's Unitholders are being asked to approve certain amendments to
the Company's Operating Agreement described below. A copy of the form of each
of the proposed amendments is set forth below.
Amendments Designed to Relax the Unit Ownership Requirements Imposed on the
---------------------------------------------------------------------------
Managers While Enabling the Company to Continue to Have Certain Attributes
--------------------------------------------------------------------------
Necessary for Partnership Tax Status
------------------------------------
Proposed Amendments: The definition of "Rev. Proc. 95-10 Member-Manager
-------------------
Requirements" shall be deleted as indicated below, and Sections 3.1(b), 3.2(e),
3.5, 4.1, 5.4, 10.1(a), 10.3, 10.4, 10.5 and 15.1(c) of the Operating Agreement
shall be amended to read in relevant part as follows:
. . . .
3.1 ADMISSION OF MEMBERS TO THE COMPANY.
-----------------------------------
(b) The date of admission of any Additional or Substituted Member
shall be the date on which
xii
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the last of the following three prerequisites to admission occurs: (i) such
Member executes and delivers to the Company an Admission Agreement
acceptance of which by the President or his designee is duly approved by
written consent or vote held at a meeting by Members holding more than 50
percent of the outstanding Units, which approval may be withheld
in the sole and absolute discretion of each Member; (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.
--------------
(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. Except
in connection with Unit purchases effected in connection with the Unit
dividend reinvestment plan of the Company established by Section 3.4(a)
hereof, to the extent an existing Member desires to increase its Capital
Commitment, it shall submit to the Company a new Admission Agreement with
the amount of the additional Capital Commitment indicated therein. The
President may accept such additional Capital Commitment on behalf of the
Company, but only after consulting with and receiving no objection from
either a Majority of the Managers or a Majority-in-Interest of the Members.
. . . .
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 Company and such Member or to reflect
the Capital Commitments made by Admission Agreements. Such Capital
Commitments, at the time they are
xiii
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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.
. . . .
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. 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 and, except as required by the 1940 Act or the rules
issued thereunder, such action shall be carried either by an affirmative
vote of a Majority of the Managers cast at a meeting duly called and at
which a quorum of one third of all Managers is present, or alternatively,
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.
. . . .
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
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 President
and the Members 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
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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.
. . . .
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 approval of the President and approval by
written consent or vote held at a meeting by those Members
holding more than 50 percent of the outstanding Units (calculated without
regard to the Units held by the Transferring Member in either the
numerator or the denominator), which approval may be withheld in the sole
and absolute discretion of the President and each Member; provided,
--------
however, that in connection with the financing of his Capital
--------
Contributions (or any portion thereof) by any Person, J.T. Crandall (or any
successor-in-interest to Mr. Crandall's Unit position who has agreed to
maintain a one percent Ownership Interest in the Company for tax purposes)
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.
. . . .
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 prior approval of
the President and by written consent or vote held at a meeting by those
non-Transferring Members holding more than 50 percent of the outstanding
Units (calculated without regard to the Units held by the Transferring
Member in either the numerator or the denominator), which approval may be
withheld in their the sole and absolute discretion of the President and
each Member. 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 originally assigning the Ownership Interest
from any liability to the Company that may have existed prior to the
approval.
xv
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. . . .
10.4 ADMISSION OF ADDITIONAL MEMBERS. The Members,
-------------------------------
acting by written consent of or vote held at a meeting of those
Members holding more than 50 percent of the outstanding Units, which
consent or vote may be withheld in the sole and absolute discretion of each
Member, may from time to time and with the concurrence of the President
permit the President or any other Officer designated by the
President to admit 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 new Members.
===
15.1 DISSOLUTION. The Company shall be dissolved and its
-----------
affairs wound up, upon the first to occur of the following events:
. . .
(c) the Dissociation of any Member, unless the business of the
Company is continued with the approval of the President and by written
consent or vote held at a meeting by those Members holding more than 50
percent of the outstanding Units (calculated without regard to the Units
held by the Dissociating Member in either the numerator or the
denominator), which approval may be withheld in the sole and absolute
discretion of the President and each Member;
xvi
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In addition, the definition of "Admission Agreement" and Exhibit A to the
Operating Agreement shall be amended to read as follows in relevant part:
"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
or, with respect to existing Members, to increase its Capital Commitment.
Each Admission Agreement shall indicate the number of such Member's Units
to be issued on the date of the initial Capital Call, if any,
relating to such admission, and such Member's remaining Capital Commitment,
if any.
. . . .
EXHIBIT A - AMENDED FORM OF ADMISSION AGREEMENT
[Date]
WhiteRock Portfolio Investors, L.L.C.
c/o Administrator
[Insert Address]
Attention: [President] and [Secretary]
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, or, to the
extent the undersigned is currently a Member, hereby requests to increase
its Capital Commitment in the amount stated below. The undersigned
acknowledges that the undersigned has read and understands the Limited
Liability Company Agreement for the Company, dated September 29, 1995
(the "Operating Agreement"), as amended, and, if admitted or allowed
to increase its Capital Commitment, 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 or as a Member desiring to purchase additional Units requires it to
meet certain qualifications specified in the Operating Agreement. In this
regard, the undersigned hereby represents that:
xvii
<PAGE>
. . . .
[__] (d) a Manager (or Manager elect) or executive Officer of the
Company;
. . . .
(3) the undersigned has provided to the Managers of the Company
(or their designees) 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 the undersigned, if
accepted, 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 by the President or his designee at the direction of the
Members, acting in their sole and absolute discretion; or
(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 President of the Company or his designee, after
obtaining all requisite approvals of such admittance, accepts on behalf of
the Company the request for admission made herein, he or she 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:
_______ (_________________)
xviii
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[ ] 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 (INCLUDING THE BALANCE OF ANY PRIOR
COMMITMENTS ACCEPTED BUT NOT YET CALLED BY THE COMPANY), 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: __________________
__________________
ACCEPTED AND AGREED:
I hereby certify that I have sought and received the requisite
approval of the Members of WhiteRock Portfolio Investors, L.L.C. to accept
the signatory above as a Member of the Company pursuant to the terms set
forth above and in the Operating Agreement. In deciding to accept such
signatory as a Member, the Members and I have reasonably relied on the
representations contained in this Letter Agreement, among others contained
in the Operating Agreement, and I have made all reasonable efforts to
ensure their accuracy. A copy of all applicable consents will be kept on
file with the Company.
_________, ____ By: _________________
Date Its: President
Explanation: Under Internal Revenue Service ("IRS") authorities existing
-----------
at the time the Company was organized, whether an entity had at least three of
the "corporate"
xix
<PAGE>
characteristics of limited liability, continuity of life, centralized management
and free transferability of interests determined whether the entity will be
considered by the IRS as an association taxable as a corporation or,
alternatively, a partnership with essentially "pass-through" tax status for
Federal tax purposes. In appropriate circumstances, these requirements could be
satisfied by reference solely to the designated managers of a limited liability
company rather than the members generally. The Operating Agreement currently
takes this approach, requiring the Managers (who approve the admission or
substitution of new Members and to whom certain of the dissolution events apply
exclusively) collectively to satisfy certain requirements set forth in IRS
Revenue Procedure 95-10, 1995-3 I.R.B. 20 ("Rev. Proc. 95-10"), which procedure
addresses the tax classification of limited liability companies generally.
Specifically, Section 4.1, by reference to the "Rev. Proc. 95-10 Member-Manager
Requirements" proposed for deletion above, requires the Managers collectively to
maintain one percent ownership of the Company's outstanding Units as suggested
by Rev. Proc. 95-10 with respect to member-managed limited liability companies.
(Although Rev. Proc. 95-10 provides a safe harbor for those entities
seeking rulings from the IRS as to their classifications,
xx
<PAGE>
the Company has not sought, nor does it currently intend to seek such a
ruling.)
On December 17, 1996, the Internal Revenue Service promulgated new
regulations (the "check-the-box" regulations) simplifying the Federal entity tax
classification rules applicable to limited liability companies such as the
Company, and which provide additional flexibility to the Company for purposes of
its Federal tax classification. See Treasury Regulation (S) 301.7701-1 et seq.
--- -- ---
Some, but not all of the states, are expected to follow the new Federal
classification rules, in whole or in part.
In any event, it is no longer anticipated that the Managers will maintain
the necessary ownership to ensure pass-through tax classification for all state
and Federal purposes simply by virtue of satisfying the Rev. Proc. 95-10
requirements. In this regard, however, requiring the Managers to comply with
the one percent ownership requirement set forth in Rev. Proc. 95-10 is not the
exclusive method by which the Company may be deemed to have the attributes
needed for classification as a partnership. In Rev. Proc. 95-10, the IRS
recognizes that a limited liability company also may satisfy the requirements
for pass-through tax treatment by applying the four
xxi
<PAGE>
characteristics discussed above to the members as a whole. Moreover, it is
expected that, at least in the near term, this "four factor" approach may
continue to be followed in a number of states notwithstanding the promulgation
by the IRS of the new Federal tax regulations. Therefore, pending counsel's
review of the position taken by the various states with regard to the new
Federal classification regulations, the amendments listed above are designed to
enable the Company to continue to be classified as a partnership for most state
tax purposes without regard to the provisions affecting solely the Managers, by
appropriately limiting the transferability of Units and admission of new
Members, as well as the continuation of the Company upon certain dissolution
events, by (1) vesting power to approve certain admissions and substitutions
directly in the Members (acting through a majority vote of the outstanding
Units), and (2) applying dissociation events to all of the Members rather than
just the Managers. The amendments to the form of Admission Agreement are largely
conforming changes.
In addition to the tax related amendments discussed above, the amendment of
the quorum language in Section 4.1 noted above is discussed in the following
section.
xxii
<PAGE>
Clarification of Various Quorum and Voting Percentages
------------------------------------------------------
Proposed Amendments: In addition to the proposed amendment of Section 4.1
-------------------
noted above which would change the quorum requirement for the Board from "two"
Board members to "one third," a corresponding change to Section 4.2(b) is
proposed as follows:
4.2 ELECTION, TENURE, AND REMOVAL OF MANAGERS
-----------------------------------------
. . . .
(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 third of the remaining Managers have
been previously elected by the Managers without subsequent ratification by
the Members, election of any new Manager, who shall be qualified to serve
hereunder, shall instead be by Majority-in-Interest Vote of the Members,
who may either vote to fill such vacancy at that time or, alternatively, to
reduce the number of Managers then serving to the number then remaining in
office if not less than three; and provided, further, that the Managers may
thereafter vote to again increase such number to not more than five at any
later time pursuant to and subject to the requirements of Section 4.2(d)
hereof.
Explanation: The amendments to Sections 4.1 and 4.2 clarify the quorum
-----------
requirements and conform them with the Investment Company Act by stating the
number of Managers constituting a quorum as a fraction of the total Board (one
third) rather than an absolute number. These amendments are made necessary by
the increase in the number of Managers from three to five shortly after the
Company was formed.
xxiii
<PAGE>
(In connection with Proposal no. 3, however, the Unitholdersare being asked to
approved a reduction in the number of Managers to four on a going forward
basis.) The use of a portion of the Board, stated as a fraction, will also be
self-correcting in the event the number of Board members changes again in the
future.
Recusal Procedure for Managers
------------------------------
Proposed Amendment: Section 11.6 shall be amended in relevant part as
------------------
follows:
11.6 RIGHTS OF MANAGERS AND OFFICERS TO CONDUCT OTHER BUSINESS;
----------------------------------------------------------
CONFLICTS OF INTEREST. 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. To the extent any
Manager believes that he or she may have a conflict of interest with
respect to any matter to be considered by the Managers, such Manager shall
promptly disclose such conflict to the other Managers, and thereafter shall
recuse himself or herself from further consideration of such matter. To
the fullest extent allowed by applicable law, any action taken by the other
Managers with respect to such matter may be taken if approved or ratified
by the requisite percentage or written consent of the Managers pursuant to
the terms hereof without counting for these purposes the recused Manager or
Managers in either the numerator or denominator, and any action that could
otherwise be taken or ratified by unanimous written consent may be effected
instead by the unanimous written consent of the non-recused Managers. Any
such action may also be taken or ratified pursuant to the Majority-in-
Interest Vote of the Members.
xxiv
<PAGE>
Explanation: This amendment provides a procedure whereby a Manager may
-----------
recuse itself in the event of a conflict of interest.
Officer Succession and Vacancies
--------------------------------
Proposed Amendment: Sections 4.5 and 4.10 of the Operating Agreement shall
------------------
be amended in relevant part to read as follows:
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. Any vacancy in a Board
of Managers-appointed Officer position other than the President shall be
filled on an interim basis prior to the next meeting of the Managers as
provided herein, or, if not provided herein, at the direction of the
President. Any vacancy in the position of President shall be filled on an
interim basis by the Treasurer, and if both positions are vacant, then by
that Vice President previously designated to fill such role, if any, by the
President or the Board of Managers, and if none, then by the Vice President
with the longest length of service with the Company or, to the extent two
or more Vice Presidents have the same length of service, by the one whose
last name appears first alphabetically. In the event only one Officer
shall remain at any time, then regardless of his or her position such
Officer shall exercise the powers of the President on an interim basis
until election of one or more replacements by the Managers. In the absence
of any Officers, authority to operate the Company shall reside solely in
the Managers or any other duly authorized designee of the Managers.
. . . .
4.10 SUBORDINATE OFFICERS; COMMITTEES. By notice to the
--------------------------------
Managers, the Treasurer may appoint an Assistant Treasurer and the
Secretary may appoint up to two
xxv
<PAGE>
Assistant Secretaries, each of whom shall be fully qualified to serve
as the Treasurer or Secretary, respectively. 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 assistant or
subordinate Officer, any committee or Officer authorized hereby or by the
Managers 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.
Explanation: The proposed amendment is designed to clarify the line of
-----------
succession should vacancies in the Company's primary Officer positions arise, as
recently occurred, and to provide for the appointment of certain subordinate
Officers in the Operating Agreement itself rather than requiring a subsequent
Board resolution. The clarification is needed because in the past, the Company
has had several Vice-Presidents at one time. Under the amendment, these would
succeed the President and Treasurer in clear order of priority. The President
would also be able to appoint replacements to fill vacancies on an interim basis
between Board meetings.
Reinstatement of Original Capital Commitment Obligations
--------------------------------------------------------
to the Extent of Refunds Distributed to the Members
---------------------------------------------------
Proposed Amendments: Section 3.2(c) shall be amended to read as follows:
-------------------
(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
xxvi
<PAGE>
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").
For these purposes, to the extent the Company receives any refund
attributable to an investment made by the Company that does not reduce the
original capital commitment made by the Company with respect to such
investment, then the amount of any distribution made to the Members on
account of the Company's receipt of such refund (excluding, however, any
amount attributable to interest on such refund) shall be added back, on a
pro rata basis, to the amount of any previously reduced remaining Capital
Commitment of the Members so as to remain available to be redrawn by the
Company as part of each Members' Total Capital Commitment. All such
refunded amounts shall be accounted for by the Company to the Members.
A corresponding change shall be made to Section
4.14 ("Major Actions") as follows:
(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 and not subsequently refunded
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.
Explanation: This amendment is designed to enable the Company to meet its
-----------
capital commitments with respect to
xxvii
<PAGE>
investments it has made. For example, the Company's initial investment was in
Brazos Fund, L.P. Pursuant to the Amended and Restated Limited Partnership
Agreement governing Brazos Fund, L.P. (the "Brazos LPA"), however, as a limited
partner in Brazos Fund, L.P. the Company has received various distributions in
the nature of refunds of its original capital contributions to Brazos Fund,
L.P., together with interest thereon, each time that an additional limited
partner has been admitted to Brazos Fund, L.P. subsequent to the date of the
Company's own admission as a partner therein. (Each of these admissions also
effectively lowered the overall percentage interest of the Company as a partner
in Brazos Fund, L.P.) The Brazos LPA, however, provides that the amount of such
refunds increases the remaining capital commitment of the limited partners
receiving the refunds (for example, the Company), so that such amounts
effectively remain available to be redrawn by Brazos Fund, L.P. as originally
agreed with the affected limited partner. The Company's Operating Agreement
currently does not have a similar "redraw" provision, and thus, to the extent
the Company desires to distribute to its own Members such refunds received from
Brazos Fund, L.P. or with respect to other past or future investments that may
also be structured in this manner (e.g., the Company's recent investment in the
xxviii
<PAGE>
Lone Star Opportunity Fund, L.P.), rather than retaining them for immediate
reinvestment, the Company could either find itself obligated on such investments
without the ability to draw already contributed and refunded capital from its
own Members, or, to prevent such shortfalls, the Company could be forced to
retain a greater share of such distributions in anticipation of additional calls
from Brazos Fund, L.P. or similarly structured investments of the Company.
Automatic Remittance of Tax Returns
-----------------------------------
and Correspondence to All Members
---------------------------------
Proposed Amendment: Section 9.4 of the Operating Agreement shall be
------------------
amended as follows:
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) 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.
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,
xxix
<PAGE>
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 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 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 that requests it a copy of all correspondence sent to or received
from the Internal Revenue Service by the Company during the one year
period prior to receipt of the request.
Explanation: The Operating Agreement currently provides that all tax
-----------
returns and related correspondence will be transmitted to all of the Members
automatically. Insofar as the Members will at all times number at least 100,
and each has the right to inspect and copy all such returns and correspondence
at the offices of the
xxx
<PAGE>
Administrator, the amendments are designed to eliminate the more burdensome
requirements of automatic distribution to all Members while still affording them
reasonable access to the information.
Procedure for Amending the Operating Agreement
----------------------------------------------
Proposed Amendment: Section 13.1 shall be amended to read as follows:
------------------
13.1 AMENDMENT.
---------
(a) Any provision of this Agreement may be amended by Majority-
in-Interest Vote of the Members, or by the Managers as they deem necessary
or desirable without the vote of the Members if needed to supply any
omission, to cure, correct or supplement any ambiguous, defective, or
inconsistent provision hereof or provision containing factual information
no longer current, to conform this Agreement to the requirements of the
Act, the Code, the 1933 Act, the 1940 Act, ERISA, or any other applicable
laws or regulations, and in such instances upon a vote of two-thirds in
number of all Managers then serving at a meeting of the Managers duly held
or by their unanimous written consent in lieu of a meeting, but neither the
Members nor the Managers shall be liable for failing to do so, and provided
further that no amendment of this Agreement shall, without the consent of
----
the affected Member or Manager, as the case may be (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 or the
liability of any Manager or agent of the Company; (ii) change the maximum
Capital Contribution required of any Member (other than as provided in this
Agreement or its Admission Agreement); (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); or (iv) change any
rights with respect to any Unit in the Company by reducing the amount
payable thereon upon liquidation of the Company or by diminishing or
eliminating any voting rights pertaining thereto, without a two-thirds in
interest approval of the Members and, to the extent such amendment
materially and adversely affects the rights and obligations of a Manager or
Member hereunder, the affirmative consent of any affected Manager or Member
or alternatively with respect to such Member, granting it the right to
immediate redemption of its Units.
xxxi
<PAGE>
(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.
(c) Notwithstanding any other provision of this Agreement, the
Managers are also specifically authorized, upon the advice of legal counsel
for the Company that doing so will not adversely affect the pass-through
tax status of the Company, to amend any or all of Sections 3.1(b), 10.1(a),
10.3, 10.4, and 15.1(c) of this Agreement to require approval of transfers,
substitutions, admissions, and continuation of the Company upon the
happening of a dissolution event in a manner other than by vote of the
Members holding more than 50 percent of the outstanding Units, and any such
amendment shall become effective without the approval of any other Member.
All such amendments shall be provided promptly to the Members.
Explanation: This amendment will accomplish two purposes. First, it will
-----------
make it easier for management to update the Operating Agreement to correct
errors, clarify ambiguities, and take other necessary or advisable actions
without calling a meeting of the Members, given the substantial expense that is
incurred in doing so.
Second, the amendment adding subsection "(c)" is designed to give the
Managers of the Company the flexibility, without the need for further approval
by the Members, to revise sections of the Operating Agreement imposing
restrictions on the Company designed to satisfy the rules on partnership tax
classification discussed in subsection 2(a) above. The amendment would make it
easier to take advantage of the increased flexibility if the check-the-box
procedures recently adopted by the Internal Revenue
xxxii
<PAGE>
Service are followed in the states where the Company does business. Any changes
in the current requirements, however, would only be made with advice of legal
counsel.
Qualified Investment Definition; Termination Date
-------------------------------------------------
Proposed Amendments: The definition of "Qualified Investment" and Section
-------------------
2.3 shall be amended to read as follows, and the Termination Date shall be
extended as indicated:
"QUALIFIED INVESTMENT" shall mean any real estate related investment
of any kind or type, including 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, however,
--------
that the Real Property and other real estate related investments
comprising or relating to each Qualified Investment shall, over
the life of the Company, be targeted to include Real Property and other
real estate related investments not less than 50% of which are located in
the United States and Canada, not more than 33% of which are located in
Europe, and not more than 33% of which are located elsewhere.
. . . .
"TERMINATION DATE" shall mean June 31, 2007.
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
xxxiii
<PAGE>
partnerships, joint ventures, or otherwise. In pursuing its objectives, the
Company shall focus primarily on acquiring, directly or indirectly,
managing and disposing of distressed debt (including mortgage loans) and
owned real estate ("REO") portfolios, single asset acquisitions, operating
companies, development opportunities, tax exempt bonds, limited partnership
interests, 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 incidental to, the furtherance and accomplishment of the
foregoing objectives and policies and for the protection and benefit of the
Company, including investing in any other types of incidental non-real
estate related assets that are part of a Qualified Investment.
Explanation: These amendments clarify and broaden the definition of real
-----------
estate related investments in which the Company may invest to enable the Company
to be less constrained in its international focus both with respect to
geographic limits and time limits.
Adoption of a Dividend Reinvestment Plan
----------------------------------------
Proposed Amendment: Section 3.4 shall be redesignated 3.4(b) and a new
------------------
subsection (a) shall be added as follows:
3.4 VOLUNTARY CAPITAL CONTRIBUTIONS OF THE MEMBERS.
----------------------------------------------
(a) There is hereby established a dividend reinvestment plan for the
Company pursuant to which any Unitholder, in the discretion of the
President, his designee, or any other designee of the Managers, shall
have the option, prior to the declaration of a dividend, to elect
whether to receive such dividend in cash or in additional Units issued
at the then current value of such Units. No sales load shall be
charged in connection with any additional Unit purchases made pursuant
to the plan, nor shall any Unitholder be required to provide
additional consideration in connection therewith.
xxxiv
<PAGE>
Explanation: This amendment will enable the Company's Unitholders the
-----------
option to reinvest dividends, an action which currently requires approval of the
Board of Managers or a Majority-in-Interest Vote of the Members on a case-by-
case basis.
Indemnification of Managers, Officers and Others
------------------------------------------------
Proposed Amendments: Sections 11.3(c) and (d)
-------------------
shall be amended as follows:
(c) 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. Specifically, upon the submission of a claim to
the Company for indemnification hereunder, the Company shall pay such claim
from Company Assets within 45 days unless it has been determined prior to
such time, and subject in any event to recoupment by the Company upon any
later 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 is brought that such Indemnitee is not
entitled to indemnification hereunder or, (2) in the absence of such a
decision, (i) by a Majority Vote of those Managers of the Company not
parties to the Proceeding ("Disinterested Non-Party Managers") that the
Indemnitee is not 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 is not
entitled to indemnification hereunder because of Disabling Conduct. All
requests for indemnification or advancement of expenses shall be
accompanied by an undertaking by the claimant to repay the Company in the
event such a determination is made and proof reasonably satisfactory to the
Disinterested Non-Party Managers that the claimant is capable of meeting
such undertaking.
(d) The
xxxv
<PAGE>
Company may also indemnify and advance expenses to 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.
Explanation: This amendment is designed to clarify the previous
-----------
indemnification provisions and to obligate the Company to indemnify its managers
and officers and advance their expenses to the fullest extent allowed by law.
Other Miscellaneous Revisions
-----------------------------
Proposed Amendments: The following definitions shall be added to Article I
-------------------
as follows:
"TERM" shall have the meaning set forth in Section 2.4.
"TREASURER" 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.
Section 17.1 shall be amended to read as follows in relevant part:
17.1 NOTICES. ....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 Company Secretary of WhiteRock Portfolio Investors, L.L.C. at
the address of any administrative agent appointed by the Company with
respect to its affairs. For purposes of notice to the initial Managers,
each of their addresses shall be as follows:
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<PAGE>
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
and for purposes of notice to any additional Managers named after the
Effective Date, as set forth in their Admission Agreements, provided,
--------
however, that each Manager listed above (and any additional or successor
-------
Manager appointed pursuant to the terms hereof) shall have the continuing
right to change his or her 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.
The cover page of the Operating Agreement shall be amended to read in
relevant part as follows:
AMENDED AND RESTATED
====================
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 January 21, 1997
Finally, other conforming changes such as updating of the Table of Contents
to reflect the changes indicated above and redating of the document footer shall
be made, and the
xxxvii
<PAGE>
Operating Agreement shall be regenerated in its entirety as so amended and
restated to date.
Explanation: The remaining amendments outlined above are designed to
-----------
clarify the Operating Agreement and update changed factual information. For
example, several terms defined in the main articles of the Operating Agreement
were not cross-referenced in the definitions section. Other changes were needed
to reflect the resignation of Robert Gidel as the Company's Secretary and its
original contact person, and the recent election of the additional Managers.
PROPOSAL 3
ELECTION OF ADDITIONAL PERSONS TO THE BOARD OF MANAGERS;
RE-ELECTION OF CERTAIN MANAGERS
The Board of Managers has approved for submission to the Unitholders Mr.
Craig Longfield and Mr. Dan Rosborough for election to fill the vacancies
created on the Board by the recent resignations of Messrs. Crandall, Wirkkala
and Lanz. The Board has also approved submitting the names of Ms. Nori Gerardo
and Mr. William Peressini for re-election by the Unitholders at this time as
well. Each nominee has indicated his or her willingness to serve if elected.
Each nominee will hold office until his or her death, Resignation, Removal or
Dissociation as a Member and until his or her successor is elected and
qualified. Subject to adoption of Proposal 2(b)
xxxviii
<PAGE>
above, a vote for the proposed slate of four Managers will also be deemed a vote
in favor of reducing the current number of Managers from five to four in
accordance with Section 4.2(b) of the Operating Agreement as it will be amended
pursuant to this proxy solicitation.
Information on the business experience during the past five years of Mr.
Peressini is set forth in Proposal No. 1 above. Such information regarding the
business experience of Messrs. Longfield and Rosborough and Ms. Gerardo is set
forth below:
<TABLE>
<CAPTION>
=================================================
NAME AND ADDRESS OF AGE PRINCIPAL UNITS
NOMINEE OCCUPATION OWNED
<S> <C> <C> <C>
- -------------------------------------------------
Craig Longfield
_______________
Portland, OR ______
- -------------------------------------------------
Dan Rosborough
______________
Portland, OR ______
- -------------------------------------------------
Nori Gerardo __ __________ 5
________________
Portland, OR _____.
=================================================
</TABLE>
Mr. Peressini is considered an "interested person" of the Company, as that
term is defined in Section 2(a)(19) of the Investment Company Act. Messrs.
Longfield and Rosborough and Ms. Gerardo are not considered "interested persons"
of the Company.
xxxix
<PAGE>
The Company's Board of Managers has no separate nominating, compensation or
audit committee, or any committee performing similar functions, although the
Board previously had designated Mr. Brian Wirkkala to serve as liaison for the
Board in connection with the services to be provided by the Company's
independent accountant. The Board as a whole acts in these capacities.
As of December 16, 1996, all Managers and Officers of the Company as a
group owned approximately [1.2%] of the Company's outstanding securities.
No per meeting attendance fees have been authorized for any of the
Managers. For fiscal 1995 and 1996, no compensation was paid to any
"disinterested" Board member for attendance at any regularly scheduled meeting
of the Board. The Company has no bonus, profit-sharing, pension or retirement
plan.
PROPOSAL 4
APPROVAL OF VARIOUS UNIT ISSUANCES AND UNIT TRANSFERS
The Managers have determined it to be in the best interest of the Company
(1) to be able to accept additional Capital Commitments from certain of the
existing Members to the extent offered by such Members, (2) to approve the
transfer of any or all of Mr. Crandall's Units to Mr. Grayken, (3) to approve
the making of additional gifts by Brazos
xl
<PAGE>
Principal Genpar, L.P. ("Brazos") of Units purchased by it to those of its
employees or employees of affiliates who are already Members of the Company, and
(4) to approve the transfer of Units from each of Messrs. Wirkkala and Lanz, as
outgoing Managers, to each of Messrs. Longfield and Rosborough (the newly
elected Managers), respectively, if they so agree among themselves. By prior
board resolution and under the provisions of the amended Operating Agreement
discussed above, however, such actions can only be taken if approved by the
President and those Members holding more than 50 percent of the outstanding
Units of the Company. The Managers therefore request authorization from the
Members for the President or his designee to take the actions indicated above.
With respect to the issuances of new Units, a vote for this proposal will
authorize the President to accept additional Capital Commitments on behalf of
the Company and its Managers from those Members indicated below, and thereafter
to call capital from any or all of such Members from time to time, but solely
for the purpose of fulfilling the Company's obligations with respect to its
investments as previously approved by the Managers (including its subscription
for a limited partner interest in the Lone Star Opportunity Fund, L.P.), and the
President's acceptance shall remain subject to the Company's receipt of a valid
Admission
xli
<PAGE>
Agreement or equivalent subscription document from each of the following
Members. In this regard, if approved by vote of the Unitholders, the President
or his designee may accept additional Capital Commitments in the following or
any lesser amounts from the Members listed below, and thereafter may act to call
capital from such persons from time to time, and shall cause the Company to
issue additional Units therefor on its books to the extent fully paid in cash:
<TABLE>
<CAPTION>
Amount of Authorized
Member Additional Commitment
------ ---------------------
<S> <C>
John P. Grayken Up to an amount equal to the greater of 1%
of the Members' Ownership Interests or 1% of
the Company's total capitalization assuming
funding of all outstanding commitments.
Brazos Principal Genpar, L.P. $20,000
</TABLE>
A vote in favor of this proposal shall also be a vote of approval of the
sale, assignment or transfer of any or all of Mr. Crandall's Units to Mr.
Grayken, and of Messrs. Wirkkala or Lanz's Units to Messrs. Rosborough and
Longfield, in either case in the discretion of the transferor and on such terms
as the transferor and transferee may agree amongst themselves, and to the
admission of Messrs. Rosborough and Longfield as Members of the Company, whether
after purchasing Units from another Member as indicated above, from the Company
xlii
<PAGE>
directly, or otherwise. Finally, a vote in favor will authorize approval of
gifts of any of the Units held by Brazos Principal Genpar, L.P. ("Brazos") from
time to time and whenever issued (including any Units newly issued pursuant to
the approvals requested above), in the sole discretion of Brazos, to any of
those persons previously identified to and approved by the Board of Managers by
Unanimous Written Consent dated as of December 22, 1995, each of whom is
currently a Member of the Company, and subject in either case to a determination
by the Company's Administrator that such actions are permitted under applicable
securities laws without adverse consequence to the Company or its Members.
OTHER MATTERS
The Board of Managers does not intend to present for action at the Meeting
any business other than the matters described in the Notice of Special Meeting,
and at the date of this Proxy Statement is not aware of any other matters that
properly may be presented for action at the Meeting. If any other business not
described herein should properly be brought before the Meeting, or if any
procedural matters requiring a vote of Unitholders should arise at the Meeting,
the persons named as proxies or their substitutes will vote the Units
represented by them in accordance with their best judgment.
xliii
<PAGE>
NEXT MEETING OF MEMBERS
The Company is not required, and does not intend, to hold annual or other
periodic meetings of Members except as required by the Investment Company Act.
The next meeting of Members will be held at such time as the Board of Managers
may determine or at such time as may be legally required. A proposal which a
Member wishes to have included in the Company's proxy materials for such meeting
must be received by the Company at its principal office within a reasonable time
before the release of the Company's proxy soliciting materials with respect to
such meeting, as determined by the Board of Managers. Any such proposal must
comply with the requirements of applicable law and regulations governing both
the eligibility of the proponent and the form and substance of the proposal.
All Unitholders are urged to mark, date, sign and return the Proxy in the
enclosed envelope, which requires no postage if mailed in the United States.
By Order of the Board of Managers
/s/ Sharlene Snyder
Sharlene Snyder, Secretary
Dated: January 6, 1997
xliv
<PAGE>
xlv
<PAGE>
PRELIMINARY COPIES
PROXY
WHITEROCK PORTFOLIO INVESTORS, L.L.C.
MEETING OF UNITHOLDERS
January 21, 1997
KNOW ALL MEN BY THESE PRESENTS that the undersigned unitholder of WhiteRock
Portfolio Investors, L.L.C. ("WhiteRock") hereby appoints Larry Wallace,
Sharlene Snyder, and David Hood, or any one of them, true and lawful attorneys,
with power of substitution of each, to vote all units which the undersigned is
entitled to vote, at the Special Meeting of Unitholders of WhiteRock to be held
on January 21, 1997 at the Offices of Brazos GenPar, Inc., 600 N. Pearl Street,
Suite 1500, Dallas, Texas, 75201, at 2:00 p.m. Central Prevailing Time, and at
any adjournment thereof ("Meeting").
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF MANAGERS OF WHITEROCK.
The attorneys named will vote the units represented by this proxy in accordance
with the choices made on this proxy. IF NO CHOICE IS INDICATED AS TO ANY ITEM,
THIS PROXY WILL BE VOTED AFFIRMATIVELY ON THESE MATTERS.
1. To ratify various actions taken by the Board of Managers by unanimous
written consent in lieu of a meeting to elect two additional managers, and at
the Company's initial organizational meeting to appoint an independent
accountant for the Company and other actions in furtherance of compliance with
the Investment Company Act of 1940;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To approve the following amendments to the Company's Limited Liability
Company Agreement ("Operating Agreement"):
(a) amendments with respect to approval of Unit transfers and admittance
of new Members directly by the Unitholders rather than the Board of
Managers, and changing those persons to whom various dissolution
events may apply, each of which amendment is designed to provide an
alternative method for the Company to obtain various desired
attributes respecting its entity classification as a partnership for
certain tax purposes, and
xlvi
<PAGE>
corresponding amendments to delete certain requirements previously
applicable to the Managers as a group;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(b) amendments to clarify the quorum and other voting requirements for the
Board;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(c) an amendment to add a recusal procedure for Managers;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(d) an amendment to clarify and specify the line of succession of the
Officers of the Company and the filling of vacancies on an interim
basis between meetings of the Board of Managers, and to allow for the
appointment of subordinate Officers;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(e) an amendment designed to more closely match the ability of the Company
to call Capital Commitments from the Members with its obligation to
meet its own capital commitments with respect to its investments;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(f) amendments designed to eliminate the obligation of the Company to send
all tax filings, returns and correspondence of the Company to each
Member automatically rather than upon request;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(g) an amendment to enable the Managers to make certain ministerial or
corrective amendments to the Operating Agreement, or those required by
law or otherwise advisable, without the vote of the Members, provided
various protections of those parties affected are in place; and
FOR [ ] AGAINST [ ] ABSTAIN [ ]
xlvii
<PAGE>
(h) amendments to expand the definition of Qualified Investment and extend
the termination date of the Company;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(i) an amendment to create a Unit dividend investment plan for the
Company's Unitholders;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(j) amendments to clarify and expand the Company's indemnification
obligations with respect to its officers and managers;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(k) various amendments which add cross-references to terms previously
undefined in the Definitions section of the Operating Agreement, and
to update notice provisions and other factual matters referenced in
the Operating Agreement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To elect Messrs. Longfield and Rosborough to the Board of Managers; to
re-elect Mr. Peressini and Ms. Gerardo, and to reduce the current number of
Managers to four;
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To approve various Unit issuances and capital
calls to John Grayken and Brazos Principal GenPar, L.P., transfers of Units from
Mr. Crandall to Mr. Grayken and from Messrs. Lanz and Wirkkala to Messrs.
Longfield and Rosborough, and from Brazos Principal Genpar, L.P. to various
other Members referenced in the proxy solicitation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
xlviii
<PAGE>
Discretionary authority is hereby conferred as to all other matters as may
properly come before the Meeting.
Date January ___, 1997
_____________________________
_____________________________
Please sign exactly as your name or names
appear hereon. If units are held jointly,
either holder may sign. Corporate proxies
should be signed by an authorized officer.
PLEASE SIGN AND RETURN THIS PROXY PROMPTLY TO AVOID ADDITIONAL EXPENSES TO
WHITEROCK.
xlix
