LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
EXCELSIOR VENTURE PARTNERS III, LLC
This LIMITED LIABILITY COMPANY OPERATING AGREEMENT (the
"Agreement") of Excelsior Venture Partners III, LLC, a Delaware limited
liability company (the "Company"), is made as of the 26th day of May, 2000,
by and among the initial member and the other parties who shall hereafter
be admitted as members and whose names and addresses are listed from time
to time as members on Schedule A hereto, as members (each, a "Member" and
collectively, the "Members") and has been executed for the purpose of
providing for the operation of the Company pursuant to the provisions of
the Delaware Limited Liability Company Act.
Accordingly, in consideration of the mutual covenants contained
herein, the Members agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following
meanings and all such terms which relate to accounting matters shall be
interpreted in accordance with generally accepted accounting principles in
effect from time to time except as otherwise specifically provided herein:
"Act" means the Delaware Limited Liability Company Act, as at any
time now existing or in the future.
"Adjusted Capital Account Deficit" shall mean, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of
the end of the relevant Fiscal Period, after giving effect to the following
adjustments:
(i) Credit to such Capital Account any amounts which
such Member is obligated to restore or is deemed to be obligated to
restore pursuant to Treasury Regulations under Section 704 of the
Code; and
(ii) Debit to such Capital Account the items
described in Treasury Regulations Sections 1.704-l(b)(2)(ii)(d)(4),
(5) and (6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treasury Regulations Section
1.704-l(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Affiliate" shall mean an affiliated person, as that term is
defined in the Investment Company Act, of a Special Member and any officer,
director, employee or member of an investment committee of such affiliated
person.
"Agreement" means this Limited Liability Company Operating
Agreement as originally executed and as amended, modified, supplemented or
restated from time to time.
"Applicable Rate" shall mean a rate per annum equal, at the time of
determination, to the sum of (i) the highest "prime rate" then published in
the "Money Rates" section of The Wall Street Journal or in such successor
publication as shall be acceptable to the Board of Managers, and (ii) two
percent (2%).
"Appropriate Officer" means an officer of the Company appointed in
accordance with Section 4.7(d), who has not resigned, been removed, or
become Incapacitated.
"Board of Managers" shall mean those natural persons who at any
given time are serving as Managers of the Company in accordance with this
Agreement.
"Capital Accounts" shall have the meaning specified in Section 7.2.
"Capital Commitment" shall mean, for any Member, the amount set
forth opposite his, her or its name on Schedule A hereto, as amended from
time to time (i) to take account of Capital Contributions made by Members,
and (ii) as otherwise provided in this Agreement.
"Capital Contribution" shall mean with respect to any Member, the
amount contributed by such Member to the capital of the Company pursuant to
this Agreement.
"Capital Investment" shall mean, with respect to any Member, the
Capital Contribution of such Member net of the return to such Member by the
Company of any portion thereof.
"Closing" shall have the meaning specified in Section 7.1(a).
"Closing Date" shall have the meaning specified in Section 7.1(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provision of succeeding law).
"Company" means Excelsior Venture Partners III, LLC, a Delaware
limited liability company .
"Company Expenses" means any expenses incurred by the Company
during a Fiscal Period including, but not limited to, fees and expenses of
the Board of Managers; fees and expenses of the Investment Adviser;
expenses of registering the Units for sale under federal and state
securities laws and other expenses in connection with the offering of the
Units; interest; taxes; fees and expenses of the Company's legal counsel
and independent accountants; fees and expenses of the Company's
administrator, transfer agent and custodian; expenses of printing and
mailing Unit certificates (if any), reports to Members, notices to Members,
proxy statements; reports to regulatory bodies; brokerage and other
expenses in connection with the execution, recording and settlement of
portfolio security transactions; expenses in connection with the
acquisition and disposition of portfolio securities or the registration of
privately issued portfolio securities; costs of third party evaluations or
appraisals of the Company (or its assets) or its investments; expenses of
membership in investment company and other trade associations; expenses of
fidelity bonding and other insurance premiums; expenses of Members'
meetings; fees payable to the National Association of Securities Dealers,
Inc. (the "NASD"), if any, in connection with the offering of its Units;
indemnification costs and expenses; and all of the Company's other business
and operating expenses.
"Direct Investments" means investments in domestic companies in
which the equity is closely held by company founders, management and/or a
limited number of investors, negotiated private investments in public
companies and investments in foreign companies in which the equity is
closely held by company founders, management and/or a limited number of
investors.
"Disinterested Manager" shall mean any member of the Board of
Managers that is not an "interested person" of the Company as such term is
defined in the Investment Company Act, as the same may be amended from time
to time.
"Final Subscription Closing Date" shall mean the date of the final
closing of the offering of the Company's Units not later than December 31,
2000 or such later date as determined by the Board of Managers.
"Fiscal Period" means the period commencing on the Closing Date,
and thereafter each period commencing on the day immediately following the
last day of the preceding Fiscal Period, and ending at the close of
business on the first to occur of the following dates:
(i) December 31 of such period; and
(ii) any other day as determined in the sole and absolute discretion
of the Board of Managers.
"Fiscal Year" means the period commencing on February 18, 2000 and
ending on the first October 31st following the Closing Date, and thereafter
each period commencing on November 1st of each year and ending on October
31st of each year (or on the date of a final distribution pursuant to
Section 13.2), unless the Board of Managers shall designate another fiscal
year for the Company.
"40 Act Majority of Members" means the lesser of (a) the holders of
67% or more of the outstanding Units present at a meeting of Members at
which the holders of more than 50% of the outstanding Units are present in
person or by proxy or (b) more than 50% of the outstanding Units.
"Incentive Carried Interest" means, for any given Fiscal Period, an
amount equal to 20% of the excess, if any, of the cumulative amount of all
capital gains on Direct Investments realized by the Company from the
commencement of operations through the end of such Fiscal Period over the
sum of:
(i) the cumulative amount of all capital losses on all
investments of any type realized by the Company from the
commencement of operations through the end of such Fiscal
Period; and
(ii) the excess, if any, of the aggregate amount of unrealized
capital depreciation on all Company investments of any type
over the aggregate amount of all unrealized capital
appreciation on all Company investments of any type, each
as determined as of the close of such Fiscal Period.
"Indemnified Liabilities" shall have the meaning specified in
Section 11.2(a).
"Indemnified Person" shall have the meaning specified in Section
11.2(a).
"Incapacity" shall mean as to any Person, the entry of an order for
relief in a bankruptcy proceeding ("bankruptcy"), entry of an order of
incompetence or insanity or the death, dissolution or termination (other
than by merger or consolidation), as the case may be, of such Person.
"Interest" shall mean a Member's rights and interest in the
Company.
"Interested Manager" shall mean any member of the Board of Managers
that is an "interested person" of the Company as such term is defined in
the Investment Company Act, as the same may be amended from time to time.
"Investment Adviser" means any Person who is party to an Investment
Advisory Agreement with the Company.
"Investment Advisory Agreement" means any agreement between or
among the Company and any Person or Persons that provides for the provision
of investment advisory services by such Person to the Company and the
payment therefor as in effect from time to time.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
"Investment Proceeds" shall have the meaning specified in Section
8.2.
"Majority in Interest of the Members" means Members who in the
aggregate own more than 50% of the outstanding Units.
"Manager" shall mean a member of the Board of Managers of the
Company. Each Manager shall be a manager within the meaning of the Act,
afforded the limitation of liability accorded to managers thereunder.
"Member" means any Person admitted to the Company as a member of
the Company pursuant to the provisions of this Agreement and named as a
member of the Company in the books and records of the Company, including
any Person admitted as a Substituted Member, in such Person's capacity as a
member of the Company. "Members" means two or more Persons acting in their
capacity as members of the Company.
"Net Loss" shall mean the net loss of the Company with respect to a
Fiscal Period, as determined for federal income tax purposes, provided that
such loss shall be decreased by the amount of all income during such period
that is exempt from federal income tax and increased by the amount of all
expenditures made by the Company during such period that are not deductible
for federal income tax purposes and that do not constitute capital
expenditures.
"Net Profit" shall mean the net income of the Company with respect
to a Fiscal Period, as determined for federal income tax purposes, provided
that such income shall be increased by the amount of all income during such
period that is exempt from federal income tax and decreased by the amount
of all expenditures made by the Company during such period that are not
deductible for federal income tax purposes and that do not constitute
capital expenditures.
"Nonrecourse Deductions" shall have the meaning set forth in
Treasury Regulations Section 1.704-2(b)(1).
"Nonrecourse Liability" shall have the meaning set forth in
Treasury Regulations Section 1.752-l(a)(2).
"Partner Nonrecourse Debt" shall have the meaning set forth in
Treasury Regulations Section 1.704-2(b)(4).
"Partner Nonrecourse Debt Minimum Gain" shall have the meaning set
forth in Treasury Regulations Section 1.704-2(i)(2).
"Partner Nonrecourse Deductions" shall have the meaning set forth
in Treasury Regulations Section 1.704-2(i).
"Partnership Minimum Gain" shall have the meaning set forth in
Treasury Regulations Section 1.704-2(b)(2).
"Pass-Through Member" shall have the meaning set forth in Section
10.5.
"Permitted Transfer" shall have the meaning specified in Section
9.2(a).
"Person" means any natural person, individual, corporation,
partnership, trust, estate, limited liability company, custodian,
unincorporated organization or association or any other entity.
"Portfolio Companies" means any Person in which the Company makes
an investment, other than a Short-Term Investment.
"Portfolio Investments" means investments in Portfolio Companies
and Short-Term Investments.
"Prospectus" shall mean the prospectus of the Company as included
in the most recent effective registration statement of the Company under
the Securities Act of 1933, as amended, as such prospectus may be amended
or supplemented from time to time.
"Regulatory Allocations" shall have the meaning set forth in
Section 7.4(e).
"Short-Term Investments" means liquid investments in
interest-bearing bank accounts, money market mutual funds, U.S. treasury
securities and/or certificates of deposit, commercial paper and other
short-term securities.
"Special Member" shall mean a Member admitted pursuant to Section
6.1.
"Subscription Agreement" means a contract for the purchase of
Units.
"Substituted Member" means any Person admitted to the Company as a
Member pursuant to the provisions of Section 9.5 and shown as a Member in
the books and records of the Company.
"Supermajority of Members" means Members who in the aggregate own
more than 67% of the outstanding Units.
"Tax Matters Member" shall have the meaning set forth in Section
10.5.
"Transfer" shall have the meaning specified in Section 9.2(a).
"Treasury Regulations" shall mean the income tax regulations,
including temporary regulations, promulgated under the Code, as the same
may be amended hereafter from time to time (including corresponding
provisions of succeeding income tax regulations).
"Unit" means the unlimited number of common equity interests of the
Company and are the increment by which Interests of Members other than the
Special Member are measured; and includes fractions of Units as well as
whole Units. Each Unit is divided into 1,000 shares.
ARTICLE II
GENERAL PROVISIONS
2.1 Formation. Excelsior Private Equity Fund III, LLC was
formed as a limited liability company under the laws of the State of
Delaware by the filing of the Certificate of Formation on the 18th day of
February, 2000 pursuant to the Act. The Company filed an Amended
Certificate on the 26th day of April, 2000 changing the name of the Company
to Excelsior Venture Partners III, LLC. Except as expressly provided herein
to the contrary, the rights and obligations of the Members and the
administration and termination of the Company shall be governed by the Act.
2.2 Name. The name of the Company is "Excelsior Venture
Partners III, LLC" The name of the Company may be changed from time to time
by the Board of Managers.
2.3 Purpose. The Company has been formed initially primarily
for the purpose of acting as a vehicle for collective investment, and may
engage in any legal activity whatsoever, without limitation. The Company is
authorized and empowered to elect to operate, and to operate, as a business
development company under the Investment Company Act.
2.4 Principal Place of Business. The Company shall maintain
its office and principal place of business at, and its business shall be
conducted from, 114 West 47th Street, New York, New York 10036, or such
place or places inside or outside the United States as the Board of
Managers may determine.
2.5 Registered Office and Registered Agent. The address of
the Company's registered office and registered agent for service of process
in the State of Delaware is The Corporation Trust Company, 1209 Orange
Street, Wilmington, New Castle County, Delaware 19801. The address of the
Company's registered office and registered agent for service of process in
the State of Delaware of the Company may be changed from time to time by
the Board of Managers.
2.6 Term. The Company will terminate and dissolve as set
forth herein on the earlier of the tenth anniversary of the Final
Subscription Closing Date. or the dissolution prior thereto pursuant to the
provisions hereof; provided, however, that the Board of Managers may twice
extend the time of termination and dissolution beyond the tenth anniversary
of the Final Subscription Closing Date, with each such extension being for
a period of not more than two years as determined by the Board of Managers
and, provided further, with the approval of the Board of Managers, Members,
by the vote of a Majority in Interest of the Members, may extend the time
of termination and dissolution of the Company to any date.
2.7 Title to Company Property. All property owned by the
Company, whether real or personal, tangible or intangible, shall be owned
by the Company as an entity, and no Member or Manager, individually, shall
have title to or any interest in such property.
2.8 No State Law Partnership. The Members intend that the
Company not be a partnership (including a limited partnership) or joint
venture and that no Member or Manager be a partner or joint venturer of any
other Member or Manager for any purposes other than applicable tax laws.
This Agreement may not be construed to suggest otherwise. Notwithstanding
the foregoing, the Members intend that the Company shall be treated as a
partnership for tax purposes.
2.9 No Liability of Members. All debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and
no Member or Manager shall be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a Member
or Manager.
ARTICLE III
MEMBERS; CAPITAL STRUCTURE; AND MEETINGS
3.1 Members. The name, address and Capital Commitment of
each initial Member is as set forth on Schedule A hereto. From time to
time, the books and records of the Company shall, and Schedule A hereto
shall, be amended to reflect the name, address and Capital Commitment of
each Member (including, as permitted by this Agreement, adding the name,
address and Capital Contribution of each additional Member who is admitted
or becomes a Substituted Member pursuant to the transfer of Interests and
deleting the name, address and Capital Commitment of Persons ceasing to be
Members). The Members shall have the management and voting rights set forth
in this Agreement and provided under the Act and the Investment Company Act
and shall have all rights to any allocations and to any distributions as
may be authorized and set forth under this Agreement and under the Act.
3.2 Capital Structure.
(a) Subject to the terms of this Agreement, the Company
is authorized to issue common equity interests in the Company designated as
"Units," which shall constitute an unlimited number of limited liability
company interests under the Act. Other than as set forth in this Agreement,
each Unit shall be identical in all respects with each other Unit. Each
Unit shall consist of 1,000 shares. The relative rights, powers,
preferences, duties, liabilities and obligations of Members shall be as set
forth herein.
(b) The Company is authorized to issue Units to any
Person at such prices per Unit as may be determined by the Board of
Managers or a duly authorized committee thereof and in exchange for either
capital contributions or the provision of property, services or otherwise,
as may be determined by the Board of Managers. The number of Units issued
to Members shall be listed in the membership records of the Company, which
shall be amended from time to time by the Company as required to reflect
issuances of Units to new Members, changes in the number of Units held by
Members and to reflect the addition or cessation of Members. The number of
Units held by each Member shall not be affected by any (i) issuance by the
Company of Units to other Members or (ii) change in the Capital Account of
such Member (other than such changes to reflect additional Capital
Contributions from such Member in exchange for new Units). Subject to the
requirements of the Investment Company Act, the Company is authorized to
issue options or warrants to purchase Units, restricted Units, Unit
appreciation rights, phantom Units and other securities convertible,
exchangeable or exercisable for Units, on such terms as may be determined
by the Board of Managers or a duly authorized committee thereof.
(c) In the sole discretion of the Board of Managers, the
issued and outstanding Units may be represented by certificates. In
addition to any other legend required with respect to a particular class,
group or series of Units, each such certificate shall bear the following
legend:
"THE UNITS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY
NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT COMPLYING WITH THE
PROVISIONS OF THE LIMITED LIABILITY COMPANY OPERATING AGREEMENT BY
AND AMONG THE MEMBERS OF EXCELSIOR VENTURES PARTNERS III, LLC (THE
"COMPANY"), AS IT MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH
IS ON FILE WITH THE COMPANY. IN ADDITION TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN SUCH AGREEMENT, NO TRANSFER OF THE INTERESTS
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER (THE "1933 ACT"), AND ALL APPLICABLE STATE SECURITIES
LAWS OR ALL APPLICABLE NON-U.S. SECURITIES LAWS OR (B) IF SUCH
TRANSFER IS PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT AND PURSUANT TO SUCH EXEMPTION UNDER
APPLICABLE STATE OR NON-U.S. SECURITIES LAWS, THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND
BY ALL OF THE PROVISIONS OF THE AFORESAID AGREEMENT."
3.3 Changes to Capital Structure. Additional Persons may be
admitted as Members, and additional Units or other equity interests may be
created and issued from time to time; the terms of admission or issuance
may provide for the creation of different classes, groups or series of
membership interests having different rights, powers and duties, which
rights, powers and duties may be senior, pari passu or junior to the
rights, powers and duties of the Units, as determined by the Board of
Managers. Any creation of any new class, group or series of units or other
equity interests shall be reflected in a supplemental exhibit to this
Agreement indicating such rights, powers and duties.
3.4 No Management Responsibility. No Member, in such
capacity, shall participate in the management or control of the business of
or transact any business for the Company, but may exercise the voting
rights and powers of a Member set forth in this Agreement. All management
responsibility is vested in the Board of Managers. The Members hereby
consent to the taking of any action by the Board of Managers, Appropriate
Officers and the Special Member contemplated under this Agreement or
otherwise permitted under the Act.
3.5 No Authority to Act. No Member, in such capacity, shall
have the power to represent, act for, sign for, or to bind the Company,
except for the Special Member to the extent expressly set forth herein. All
authority to act on behalf of the Company is vested in the Board of
Managers, Appropriate Officers, and the Investment Adviser. The Members
consent to the exercise by the Board of Managers, Appropriate Officers and
the Investment Adviser of the powers conferred on them under this Agreement
or otherwise permitted under the Act.
3.6 No Preemptive Rights. Holders of Units will have no
preemptive rights with respect to the issuance of any membership or other
equity interest in the Company or any other securities of the Company
convertible into, or carrying rights or options to purchase any such
membership or other equity interest.
3.7 Redemption or Repurchase Rights. Except as otherwise
provided in this Agreement, the Company shall not redeem or repurchase any
Member's Units and no Member shall have the right to withdraw from the
Company or to receive any return of any Capital Commitment.
3.8 Member Meetings. Unless required by the Act or other
applicable law, the Company is not required to hold annual or other regular
meetings of Members. Special meetings of the Members may be called to
consider any matter requiring the consent of all or any of the Members
pursuant to this Agreement and as otherwise determined by the Board of
Managers. Special meetings of the Members may be called by the Board of
Managers or by Members who are the holders of not less than 66 2/3 % of the
outstanding Units.
3.9 Place of Meetings. The Board of Managers may designate
any place, either within or outside of the State of Delaware, as the place
of meeting for any annual meeting or for any special meeting called by the
Managers. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive offices of
the Company. Members may participate in a meeting in person, by proxy or by
means of a conference telephone or similar communications equipment by
which all persons participating in the meeting can hear and speak to each
other at the same time, and any such participation in a meeting shall
constitute presence in person of such Member at such meeting.
3.10 Notice of Members' Meetings.
(a) Written notice stating the place, day, and hour of
the meeting and, in case of a special meeting, the purpose for which the
meeting is called shall be delivered not less than ten days nor more than
ninety days before the date of the meeting, either personally, by
facsimile, electronic mail or by postal mail, by or at the direction of the
Board of Managers or Members calling the meeting to each Member of record
entitled to vote at such meeting.
(b) Notice to Members, if mailed by post, shall be
deemed delivered as to any Member when deposited in the United States mail,
addressed to the Member, with postage prepaid, but, if two successive
letters mailed to the last-known address of any Member are returned as
undeliverable, no further notices to such Member shall be necessary until
another address for such Member is made known to the Company. Notice to
Members, if by facsimile or by electronic mail, shall be deemed delivered
upon receipt of a confirmation of transmission.
(c) At an adjourned meeting, the Company may transact
any business which might have been transacted at the original meeting
without additional notice.
3.11 Waiver of Notice.
(a) When any notice is required to be given to any
Member of the Company under the provisions of this Agreement, a waiver
thereof in writing signed by the Person entitled to such notice, whether
before, at, or after the time stated therein, shall be equivalent to the
giving of such notice.
(b) By attending a meeting, a Member:
(i) Waives objection to lack of notice or defective
notice of such meeting unless the Member, at the beginning of the
meeting, objects to the holding of the meeting or the transacting
of business at the meeting; and
(ii) Waives objection to consideration at such
meeting of a particular matter not within the purpose or purposes
described in the meeting notice unless the Member objects to
considering the matter when it is presented.
3.12 Record Dates. For the purpose of determining the
Members who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any distribution, or for the
purpose of any other action, the Managers may fix a date and time not more
than ninety (90) days prior to the date of any meeting of Members or other
action as the date and time of record for the determination of Members
entitled to vote at such meeting or any adjournment thereof or to be
treated as Members of record for purposes of such other action, and any
Member who was a Member at the date and time so fixed shall be entitled to
vote at such meeting or any adjournment thereof or to be treated as a
Member of record for purposes of such other action, even though he has
since that date and time disposed of his Units, and no Member becoming such
after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Member of record for purposes
of such other action.
3.13 Voting Record. The Person having charge of the
membership records of the Company shall make, at least two days before such
meeting of Members, a complete record of the Members entitled to vote at
each meeting of Members or any adjournment thereof, with the address of
each. The record, for a period of two days prior to such meeting, shall be
kept on file at the principal executive offices of the Company, and shall
be subject to inspection by any Member for any proper purpose germane to
the meeting at any time during usual business hours; provided, however,
that such Member shall have made a demand to view such records not less
than 5 business days after receipt of notice of such meeting, properly
delivered to the Company and setting forth in reasonable detail the purpose
for which such Member desires to view such information. The original
membership records shall be the prima facie evidence as to who are the
Members entitled to examine the record or transfer books or to vote at any
meeting of Members.
3.14 Voting; Quorum of Members; Vote Required. Except as
otherwise set forth herein, each Member shall be entitled to one vote per
Unit and a proportionate fractional vote for each fractional Unit upon all
matters upon which Members have the right to vote based upon the Units of
the Company as set forth in the membership records of the Company as of the
applicable record date. The presence, in person or by proxy, of Members
owning more than 50% of the Units at the applicable record date for the
action to be taken constitutes a quorum for the transaction of business. If
a quorum is present, the affirmative vote, in person or by proxy, of the
owners of more than 50% of the Units then outstanding and represented in
person or by proxy at the meeting and entitled to vote on the subject
matter shall be the act of the Members, unless the vote of a greater
proportion or number or voting by classes is required by the Act, the
Investment Company Act or this Agreement. If a quorum is not represented at
any meeting of the Members, such meeting may be adjourned by an Appropriate
Officer.
The Members shall have the following voting rights:
(a) to the extent required by the Investment Company Act
or as otherwise provided for herein, the right to elect Managers by the
affirmative vote of a plurality of votes cast;
(b) as provided herein, the right to remove Managers for
cause by the affirmative vote of a Supermajority of Members at a meeting of
Members duly called for such purpose;
(c) to the extent required by the Investment Company
Act, the right to approve proposed changes in the nature of the Company's
business so as to cause the Company to cease to be, or to withdraw its
election as, a business development company under the Investment Company
Act by the affirmative vote of a 40 Act Majority of Members;
(d) to the extent required by the Investment Company
Act, the right to approve any proposed investment advisory agreement or to
disapprove and terminate any such existing agreement by the affirmative
vote of a 40 Act Majority of Members; provided, however, in the case of
approval that such agreement is also approved by a majority of Managers who
are not parties to such contract or "interested persons" of any such party
as such term is defined in the Investment Company Act, as the same may be
amended from time to time;
(e) to the extent required by the Investment Company
Act, the right to ratify the appointment of the independent accountants of
the Company by the affirmative vote of more than 50% of the Units then
outstanding and represented in person or by proxy at the meeting and
entitled to vote; provided, however, that such appointment is approved by a
majority of the Disinterested Managers;
(f) to the extent required by the Investment Company
Act, the right to terminate the Company's independent accountants by the
affirmative vote of a 40 Act Majority of Members;
(g) extension of the time of termination and dissolution
of the Company to the extent provided in Section 2.6 hereof by the
affirmative vote of a Majority in Interest of the Members;
(h) to the extent required by the Investment Company
Act, the right to consent to the dissolution of the Company pursuant to
Section 13.1 by the affirmative vote of a 40 Act Majority of Members;
(i) to the extent required by Section 13.2, the
selection of a liquidator by the affirmative vote of a Majority of
Interests of the Members;
(j) to the extent required by Section 14.1 or 14.3, the
right to approve certain amendments to this Agreement by the affirmative
vote of a Majority of Interests of the Members; and
(k) so long as the Company is subject to the provisions
of the Investment Company Act, the right to approve any other matters that
the Investment Company Act requires to be approved by the Members by the
affirmative vote of Members as specified in the Investment Company Act.
3.15 No Consent Required. Notwithstanding the foregoing, no
vote, approvals, or other consent shall be required of the Members to amend
this Agreement in any of the following respects: (i) to reflect any change
in the amount or character of the Capital Contribution of any Member; (ii)
to admit an additional Member or a Substituted Member or withdraw a Member
in accordance with the terms of this Agreement; (iii) to correct any false
or erroneous statement, or to make a change in any statement in order that
such statement shall accurately represent the agreement among the Members
in this Agreement; (iv) a change that is necessary to qualify the Company
as a limited liability company under the laws of any state or that is
necessary or advisable in the opinion of the Board of Managers to assure
that the Company will not be treated as a publicly traded partnership or
otherwise treated as a corporation for federal income tax purposes; (v) to
reflect any change in the name or principal place of business of the
Company; (vi) to make any other change or amendment that does not require
the vote, approval or consent of Members under the Investment Company Act,
the Act or expressly hereunder, provided that such change or Amendment has
been approved by a majority of the Board of Managers and a majority of the
Disinterested Managers.
3.16 Limitations on Requirements for Consents.
Notwithstanding any other provisions of this Agreement, but subject to the
requirements of the Investment Company Act, in the event that counsel for
the Company or counsel designated by Members holding not less than 10% of
the Units owned by all Members shall have delivered to the Company an
opinion to the effect that either the existence of a particular consent
right or particular consent rights or the exercise thereof will violate the
provisions of the Act or the laws of the other jurisdictions in which the
Company is then formed or qualified, will adversely affect the limited
liability of the Members, or will adversely affect the classification of
the Company as a partnership for federal or state income tax purposes, then
notwithstanding the other provisions of this agreement, the Members shall
no longer have such right, or shall not be entitled to exercise such right
in the instant case, as the case may be.
3.17 Informal Action by Members. Any action that may be
taken by Members at a meeting of Members may be taken without a meeting
without prior notice and without a vote if consent in writing setting forth
the action to be taken is signed by the Members holding not less than the
minimum percentage of Units that would be necessary to authorize or take
such action at a meeting at which all the Members were present and voted,
with prompt written notice thereof delivered to all Members. Written
consent by the Members has the same force and effect as a vote of such
Members held at a duly held meeting of the Members and may be stated as
such in any document.
3.18 Voting by Ballot. Voting on any question or in any
election may be by voice vote unless the presiding officer shall order or
any Member shall demand that voting be by ballot.
3.19 No Cumulative Voting. No Members shall be entitled to
cumulative voting in any circumstance.
3.20 Representations and Warranties of Members;
Indemnification.
(a) Each Member hereby represents and warrants to the
Company and each other Member as follows:
(i) In each case to the extent applicable, such
Member is duly incorporated or organized, validly existing
and in good standing under the laws of the jurisdiction of
its incorporation or organization and has full power and
authority to execute and deliver this Agreement and to
perform its obligations hereunder. All requisite actions
necessary for the due authorization, execution, delivery and
performance of this Agreement by such Member have been duly
taken.
(ii) Such Member has duly executed and
delivered this Agreement. This Agreement constitutes a valid
and binding obligation of such Member enforceable against
such Member in accordance with its terms (except as may be
limited by bankruptcy, insolvency, or similar laws of
general application and by the effect of general principles
of equity, regardless of whether considered at law or in
equity).
(iii) Such Member's authorization, execution,
delivery and performance of this Agreement does not and will
not (i) conflict with, or result in a breach, default or
violation of (A) to the extent applicable, the certificate
or articles of incorporation, by-laws or other
organizational documents of such Member, (B) any material
contract or agreement to which that Member is a party or is
otherwise subject, or (C) any law, order, judgment, decree,
writ, injunction, or arbitration award to which that Member
is subject; or (ii) require any consent, approval, or
authorization from filing, or registration with, or notice
to, any governmental authority or other Person, other than
those that have already been obtained.
(iv) Such Member is familiar with the proposed
business, financial condition, properties, operations, and
prospects of the Company, and has asked such questions and
conducted such due diligence concerning such matters and
concerning its acquisition of any membership interests as it
has desired to ask and conduct, and all such questions have
been answered to its full satisfaction. Such Member has such
knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of an
investment in the Company. Such Member understands that
owning membership interests involves various risks,
including the restrictions on transferability set forth in
this Agreement, lack of any public market for such
membership interests, the risk of owning its membership
interests for an indefinite period of time, and the risk of
losing its entire investment in the Company. Such Member is
able to bear the economic risk of such investment; is
acquiring its membership interests for investment and solely
for its own beneficial account and not with a view to or any
present intention of directly or indirectly selling,
transferring, offering to sell or transfer, participating in
any distribution, or otherwise disposing of all or a portion
of its membership interests.
(b) Each Member hereby indemnifies the Company from and
against and agrees to hold the Company free and harmless from any and all
claims, losses, damages, liabilities, judgments, fines, settlements,
compromises, awards, costs, expenses or other amounts (including without
limitation any attorney fees, expert witness fees or related costs) arising
out of or otherwise related to a breach of any of the representations and
warranties of such Member as set forth in this Section 3.21.
(c) such Member shall not transfer, sell, or offer to
sell such Member's Units without compliance with the conditions and
provisions of this Agreement;
(d) if such Member assigns all or any part of such
Member's Units, then until such time as one or more assignees thereof are
admitted to the Company as a Substituted Member with respect to the entire
Interest so assigned, the matters to which any holder thereof would
covenant and agree if such holder were to execute this Agreement as a
Member shall be and remain true;
(e) such Member shall notify the Managers immediately if
any representations or warranties made herein or in any subscription
agreement should be or become untrue; and
(f) such Member shall not take any action that would
have the effect of causing the Company (i) to be treated as a publicly
traded partnership for purposes of Section 7704(b) of the Code or (ii)
otherwise to be treated as a corporation for federal income tax purposes.
ARTICLE IV
MANAGEMENT OF COMPANY
4.1 Board of Managers. The governing body of the Company
shall be the Board of Managers, which shall have the power to control the
management and policies of the Company. The maximum number of managers
shall initially be set at four (4), and may be increased or decreased by
action of the Board of Managers provided that at no time shall the number
of Managers be set at less than three (3) nor more than ten (10). The
Managers shall be set forth in Schedule B hereto or in the official records
of the Company. The Managers shall hold office until their successors are
approved and elected, unless they are sooner removed pursuant to Section
4.4 or sooner resign pursuant to Section 4.3 or sooner are incapacitated
pursuant to Section 4.5, as the case may be. Managers may succeed
themselves in office. No reduction in the number of Managers shall have the
effect of removing any Manager from office unless specially removed
pursuant to Section 4.4 at the time of such decrease. Subject to the
requirements of the Investment Company Act, the Board of Managers may
designate successors to fill vacancies created by an authorized increase in
the number of Managers, the resignation of a Manager pursuant to Section
4.3, the removal of a member of the Board of Managers pursuant
to Section 4.4 or the incapacity of a Manager pursuant to Section 4.5. In
the event that no Managers remain, the Appropriate Officers shall continue
the business of the Company and shall perform all duties of the Managers
under this Agreement and shall as soon as practicable call a special
meeting of Members for the purpose of approving and electing Managers. When
Managers are subject to election by Members, Managers are elected by a
plurality of the Units voting at the meeting. Managers may, but need not
be, admitted to the Company as Members to act in their capacity as
Managers.
4.2 Disinterested Managers. Subject to the requirements of
the Investment Company Act, at any time that the Company shall have in
effect an election to be treated as a business development company under
the Investment Company Act, then at least a majority of the members of the
Board of Managers shall be Disinterested Managers. If at any time the
number of Disinterested Managers is less than a majority, action shall be
taken pursuant to Section 4.1 or Section 4.4 to restore the number of
Disinterested Managers to at least a majority.
4.3 Resignation by a Manager. A Manager may voluntarily
resign from the Board of Managers upon the giving of notice thereof to the
Company, such resignation to take effect upon receipt of such notice by the
Company or such later date as set forth in such notice.
4.4 Removal of a Manager; Designation of a Successor Manager.
(a) Any Manager may be removed either: (i) for cause by
the action of at least two-thirds of the remaining Managers, including in
the case of a Disinterested Manager a majority of the remaining
Disinterested Managers; (ii) by failure to be re-elected by the Members at
a meeting of Members duly called by the Managers for such purpose; or (iii)
for cause by the affirmative vote of a Supermajority of Members. The
removal of a Manager shall in no way derogate from any rights or powers of
such Manager, or the exercise thereof, or the validity of any actions taken
pursuant thereto, prior to the date of such removal.
(b) Subject to Section 4.2, the remaining Managers shall
designate a successor Manager to fill any vacancy existing in the number of
Managers fixed pursuant to Section 4.2 resulting from removal of a Manager.
Any such successor Manager shall hold office until his or her successor has
been approved and elected.
(c) Any removal of a Manager shall not affect any rights
or liabilities of the removed Manager that matured prior to such removal.
4.5 Incapacity of a Manager.
(a) In the event of the Incapacity of a Manager, the
business of the Company shall be continued with the Company property by the
remaining Managers. The remaining Managers shall, within 90 days, call a
meeting of the Board of Managers for the purpose of designating a successor
Manager. Any such successor Manager shall hold such office until his or her
successor has been approved and elected. The Managers shall make such
amendments to the certificate of formation and execute and file for
recordation such amendments or other documents or instruments as are
necessary and required by the Act or this Agreement to reflect the fact
that such Incapacitated Manager has ceased to be a Manager, and the
appointment of such successor Manager.
(b) In the event of the Incapacity of all Managers, an
Appropriate Officer shall as promptly as practicable convene a meeting of
Members for the purpose of electing new Managers nominated by the Special
Member. Upon the Incapacity of a Manager, the Manager shall immediately
cease to be a Manager.
(c) Any such termination of a Manager shall not affect
any rights or liabilities of the Incapacitated Manager that matured prior
to such Incapacity.
4.6 Continuation. In the event of the withdrawal, removal,
or retirement of a Manager, the Company shall not be dissolved and the
business of the Company shall be continued by the remaining Managers.
4.7 Board of Managers Powers. Subject to the terms hereof,
the Board of Managers shall have full and complete discretion in the
management and control of the affairs of the Company, shall make all
decisions affecting Company affairs and shall have all of the rights,
powers, and obligations of a managing member of a limited liability company
under the Act and otherwise as provided by law. The Board of Managers shall
provide overall guidance and supervision with respect to the operations of
the Company, shall perform all duties imposed on the directors of business
development companies by the Investment Company Act, and shall monitor the
activities of the Appropriate Officers, Investment Advisers and any
administrator to the Company and distributor of the Company's securities.
Except as otherwise expressly provided in this Agreement, the Board of
Managers is hereby granted the right, power, and authority to do on behalf
of the Company all things which, in its sole judgment, are necessary or
appropriate to manage the Company's affairs and fulfill the purposes of the
Company. Any determination as to what is in the interests of the Company
made by the Managers in good faith shall be conclusive. In construing the
provisions of this Agreement, the presumption shall be in the favor of a
grant of power to the Managers. The powers of the Managers include, by way
of illustration and not by way of limitation, the power and authority from
time to time to do the following:
(a) invest the assets of the Company in such investments
as are consistent with the Company's purpose and employ one or more
Investment Advisers to do the same;
(b) incur all expenses permitted by this Agreement;
(c) to the extent that funds are available, cause to be
paid all expenses, debts, and obligations of the Company;
(d) appoint and dismiss such Persons to serve as
officers of the Company ("Appropriate Officers") with such powers and
authority as may be provided to such Persons by the Board of Managers or by
this Agreement;
(e) employ and dismiss from employment such agents,
employees, managers, accountants, attorneys, consultants, and other Persons
necessary or appropriate to carry out the business and affairs of the
Company, whether or not any such Persons so employed are affiliated persons
of any Manager, and to pay such compensation to such Persons as is
competitive with the compensation paid to unaffiliated Persons in the area
for similar services;
(f) subject to the indemnification provisions in this
Agreement, pay, extend, renew, modify, adjust, submit to arbitration,
prosecute, defend, or settle, upon such terms it deems sufficient, any
obligation, suit, liability, cause of action, or claim, including tax
audits, either in favor of or against the Company;
(g) enter into any sales, distribution, agency, or
dealer agreements, and escrow agreements, with respect to the sale of Units
and provide for the distribution of such Units by the Company through one
or more Persons (which may be affiliated persons of a Manager or Managers),
or otherwise; borrow money and issue multiple classes of senior
indebtedness or a single class of Interests senior to the Units to the
extent permitted by the Investment Company Act and repay, in whole or in
part, any such borrowing or indebtedness and repurchase or retire, in whole
or in part, any such Interests senior to the Units; and in connection with
such loans or senior instruments to mortgage, pledge, assign, or otherwise
encumber any or all properties or assets owned by the Company, including
any income therefrom, to secure such borrowing or provide repayment
thereof;
(h) establish and maintain accounts with financial
institutions, including federal or state banks, brokerage firms, trust
companies, savings and loan institutions, or money market funds;
(i) make temporary investments of Company capital in
Short-Term Investments;
(j) to the extent permitted by the Investment Company
Act, form or cause to be formed one or more small business investment
companies under the Small Business Investment Fund Act of 1958, as amended;
(k) establish valuation principles and periodically
apply such principles to the Company's investment portfolio;
(l) to the extent permitted by the Investment Company
Act, designate and appoint one or more agents for the Company who shall
have such authority as may be conferred upon them by the Board of Managers
and who may perform any of the duties of, and exercise any of the powers
and authority conferred upon, the Board of Managers hereunder including,
but not limited to, designation of one or more agents as authorized
signatories on any bank accounts maintained by the Company;
(m) prosecute, protect, defend, or cause to be protected
and defended, or abandon, any patents, patent rights, copyrights, trade
names, trademarks, and service marks, and any applications with respect
thereto, that may be held by the Company;
(n) take all reasonable and necessary actions to protect
the secrecy of and the proprietary rights with respect to any know-how,
trade secrets, secret processes, or other proprietary information and to
prosecute and defend all rights of the Company in connection therewith;
(o) subject to the other provisions of this Agreement,
to enter into, make, and perform such contracts, agreements, and other
undertakings, and to do such other acts, as it may deem necessary or
advisable for, or as may be incidental to, the conduct of the business
contemplated by this Agreement, including, without in any manner limiting
the generality of the foregoing, contracts, agreements, undertakings, and
transactions with any Member, Manager, Appropriate Officer or Investment
Adviser or with any other person, firm, or corporation having any business,
financial, or other relationship with any Member, Manager, Appropriate
Officer or Investment Adviser, provided, however, such transactions with
such Persons and entities (i) shall only be entered into to the extent
permitted under the Investment Company Act and (ii) shall be on terms no
less favorable to the Company than are generally afforded to unrelated
third parties in comparable transactions;
(p) purchase, rent, or lease equipment for Company
purposes;
(q) purchase and maintain, at the Company's expense,
liability and other insurance to protect the Company's assets from third
party claims; and cause the Company to purchase or bear the cost of any
insurance covering any potential liabilities of the Members, Managers,
Appropriate Officers, Investment Adviser or agents of the Company, or
officers, employees, directors, members or partners of the Investment
Adviser or any agent of the Company as well as the potential liabilities of
any Person serving at the request of the Investment Adviser as a director
of or adviser to a Portfolio Company;
(r) cause to be paid any and all taxes, charges, and
assessments that may be levied, assessed or imposed upon any of the assets
of the Company;
(s) make or caused to be made any election on behalf of
the Company under the Code and other tax laws and supervise the preparation
and filing of all tax and information returns that the Company may be
required to file;
(t) take any 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
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;
(u) admit Members to the Company in accordance with
Section 7.1; admit an assignee of a Member's Interest to be a Substituted
Member in the Company, pursuant to and subject to the terms of Section 9.5,
without the consent of any Member; admit additional Persons as members by
creating and issuing Units or other equity interests from time to time with
terms of admission or issuance providing for the creation of different
classes, groups or series of membership interests having different rights,
powers and duties, which rights, powers and duties may be senior, pari
passu or junior to the rights, powers and duties of the Units, as
determined by the Board of Managers without the consent of Members;
(v) value the assets of the Company from time to time
pursuant to and consistent with the policies of the Company with respect
thereto as in effect from time to time;
(w) borrow money or otherwise incur indebtedness to fund
loans and other investments subject to the provision of applicable law and
this Agreement; each Member expressly agrees that any such borrowing may be
secured by the assets of the Company and that its Capital Account may be
pledged by the Company to secure any such borrowing or indebtedness;
(x) delegate all or any portion of its rights, powers
and authority to any committee or subset of the Board of Managers, or to
any Investment Adviser, Appropriate Officer or agent of the Company,
subject to the control and supervision of the Managers; and
(y) perform all normal business functions, and otherwise
operate and manage the business and affairs of the Company, in accordance
with and as limited by this Agreement.
4.8 Annual and other Regular Meetings of the Board of
Managers. An annual meeting of the Board of Managers shall be held without
notice other than this provision. The Board of Managers may provide, by
resolution, the time and place, either within or without the State of
Delaware, for the holding of the annual meeting and any additional regular
meetings without notice other than such resolution.
4.9 Special Meetings of the Board of Managers. Special
meetings of the Board of Managers may be called by an Appropriate Officer
or the Chairman of the Board of Managers, or, if no such Chairman exists,
at the request of any two Managers. The person or persons authorized to
call special meetings of the Board of Managers may fix any place, either
within or without the State of Delaware, as the place for holding any
special meeting of the Board of Managers called by them.
4.10 Notice of Meetings of the Board of Managers. Written
notice of any special meeting of the Board of Managers shall be given as
follows:
(a) By mail to each Manager at the Manager's mailing
address at least five business days prior to the meeting; or
(b) By personal delivery, e-mail or facsimile
transmission at least three business days prior to the meeting to each
Manager.
If mailed by post, such notice shall be deemed to be
delivered when deposited in the United States mail, so addressed, with
postage thereon prepaid. If notice be given by e-mail or facsimile
transmission such notice shall be deemed to be delivered when the e-mail or
facsimile transmission is transmitted by the sender.
(c) Any Manager may waive notice of any meeting. The
attendance of a Manager at any meeting shall constitute a waiver of notice
of such meeting, except where a Manager attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the Board of
Managers need be specified in the notice or waiver of notice of such
meeting.
4.11 Quorum for Board of Managers Meetings. A majority of
the number of Managers shall constitute a quorum for the transaction of
business at any meeting of the Board of Managers, but if less than such
majority is present at a meeting, a majority of the Managers present may
adjourn the meeting from time to time without further notice.
4.12 Manner of Acting for Board of Managers. Except as
otherwise required by the Act, the Investment Company Act or this Agreement
the act of the majority of the Managers present at a meeting at which a
quorum is present shall be the act of the Board of Managers. Each Manager
shall be entitled to one vote upon all matters submitted to the Board of
Managers.
4.13 Written Consent by Board of Managers. Unless otherwise
required by the Investment Company Act, any action required or permitted to
be taken at any meeting of the Board of Managers or by a committee thereof
may be taken without a meeting without prior notice and without a vote if
the members of the Board of Managers or such committee that would be
required to approve such action at a meeting consent thereto in writing,
and the writing or writings are filed with the minutes of proceedings of
the Board of Managers or such committee.
4.14 Participation by Electronic Means by Board of Managers.
Any Manager may participate in a meeting of the Board of Managers or any
committee thereof in person or by means of conference telephone or similar
communications equipment by which all persons participating in the meeting
can hear and speak to each other at the same time. Except for purposes of
the Investment Company Act, such participation shall constitute presence in
person at the meeting.
4.15 Committees of Managers. By resolution adopted by the
Board of Managers, the Board of Managers may designate two or more Managers
to constitute a committee, any of which shall have such authority in the
management of the Company as the Board of Managers shall designate.
4.16 Manager Presumption of Assent. A Manager of the Company
who is present at a meeting of the Board of Managers at which action on any
matter taken shall be presumed to have assented to the action taken unless
a dissent shall be entered in the minutes of the meeting or unless the
Manager files a written dissent to such action with the person acting as
the secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary of the Company
immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Manager who voted in favor of such action.
4.17 Manager Power to Bind Company. Unless the Board of
Managers consists of one Manager, no Manager (acting in his capacity as
such) shall have any authority to bind the Company to any third party with
respect to any matter except pursuant to a resolution expressly authorizing
such action which resolution is duly adopted by the Board of Managers by
the affirmative vote required for such matter pursuant to the terms of this
Agreement.
4.18 Liability of the Managers. No Manager shall be (i)
personally liable for the debts, obligations or liabilities of the Company,
including any such debts, obligations or liabilities arising under a
judgement decree or order of a court; (ii) obligated to cure any deficit in
any Capital Account; (iii) required to return all or any portion of any
Capital Contribution; or (iv) required to lend any funds to the Company.
4.19 Reliance by Third Parties. Persons dealing with the
Company are entitled to rely conclusively upon the power and authority of
the Board of Managers, the Appropriate Officers and the Special Member of
the Company herein set forth.
4.20 Appointment of Auditors. Subject to the approval or
ratification of the Members and the Disinterested Managers if and to the
extent required under the Investment Company Act, the Board of Managers, in
the name and on behalf of the Company, is authorized to appoint independent
certified public accountants for the Company.
4.21 Contracts with Affiliates. The Board of Managers may,
on behalf of the Company subject to approval by a majority of the Managers
who do not have an interest in the contract and a majority of the
Disinterested Managers and to compliance with the Investment Company Act,
enter into contracts for goods or services with any affiliate of a Manager,
Member, Appropriate Officer, Investment Adviser or any other person,
provided that the charges for such goods or services do not exceed those
charged by unaffiliated Persons in the area for similar goods and services.
4.22 Obligations of the Managers. The Managers shall devote
such time and effort to the Company business as, in their judgment, may be
necessary or appropriate to oversee the affairs of the Company.
4.23 Other Business of Managers. Any Manager and any
affiliate of any Manager may engage in or possess any interest in other
business ventures of any kind, nature or description, independently or with
others, whether such ventures are competitive with the Company or
otherwise. Neither the Company nor any Member shall have any rights or
obligations by virtue of this Agreement or the company relationship created
hereby in or to such independent ventures or the income or profits or
losses derived therefrom, and the pursuit of such ventures, even if
competitive with the business of the Company, shall not be deemed wrongful
or improper. Neither the Managers nor any affiliate of any Manager shall be
obligated to present any investment opportunity to the Company.
4.24 Limitations on Board of Managers and Appropriate Officers.
(a) Notwithstanding anything expressed or implied to the
contrary in this Agreement (other than Article IX), the Board of Managers
and the Appropriate Officers shall not authorize or otherwise cause or
allow the Company to purchase all or any portion of any Member's Interest
(or any attributes thereof).
(b) Notwithstanding anything expressed or implied to the
contrary in this Agreement, the Board of Managers and the Appropriate
Officers shall not (i) participate in the establishment of a secondary
market (or the substantial equivalent thereof) with respect to the
Interests for purposes of Treasury Regulation ss. 1.7704-1(d)(1) or (ii)
take any action that would have the effect of causing the Company (A) to be
treated as a publicly traded partnership for purposes of Section 7704(b) of
the Code or (B) otherwise to be treated as a corporation for federal income
tax purposes.
ARTICLE V
OFFICERS
5.1 Appropriate Officers. The day-to-day management and
operation of the Company and its business shall be the responsibility of
the Appropriate Officers of the Company, subject to the supervision and
control of the Board of Managers. The Appropriate Officers shall, subject
to the supervision and control of the Board of Managers, exercise all
powers necessary and convenient for the purposes of the Company, on behalf
and in the name of the Company. Notwithstanding anything to the contrary
contained herein, the acts of an Appropriate Officer in carrying on the
business of the Company as authorized herein shall bind the Company.
The Appropriate Officers of the Company shall be chosen by
the Board of Managers and shall include a President, a Secretary and a
Treasurer. The Board of Managers may also choose a Chairman of the Board of
Managers (who must be a Manager), and the following additional Appropriate
Officers: a Chief Executive Officer, a Chief Financial Officer, a Chief
Operating Officer, and one or more Vice Presidents (and, in the case of
each Vice President, with such descriptive title, if any, as the Board of
Managers shall determine), Assistant Secretaries, Assistant Treasurers and
other officers. Any number of offices may be held by the same person,
unless otherwise prohibited by law. The officers of the Company need not be
Members of the Company nor, except in the case of the Chairman of the
Board, need such officers be Managers of the Company.
5.2 Election of Officers. The Board of Managers shall elect
the officers of the Company who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Managers; and all officers of the Company
shall hold office until their successors are chosen and qualified, or until
their earlier death, resignation or removal. Any officer elected by the
Board of Managers may be removed at any time, with or without cause, by the
affirmative vote of the Board of Managers or upon the Incapacity of such
officer. Any vacancy occurring in any office of the Company shall be filled
by the Board of Managers. The salaries of all officers of the Company shall
be fixed by the Board of Managers. The Board of Managers may delegate such
duties to any such officers or other employees, agents and consultants of
the Company as the Board of Managers deems appropriate, including the
power, acting individually or jointly, to represent and bind the Company in
all matters, in accordance with the scope of their respective duties.
5.3 Voting Securities Owned by the Company. Powers of
attorney, proxies, waivers of notice of meeting, consents and other
instruments relating to securities owned by the Company may be executed in
the name of and on behalf of the Company by the President or any Vice
President or any other officer authorized to do so by the Board of Managers
and any such officer may, in the name of and on behalf of the Company, take
all such action as any such officer may deem advisable to vote in person or
by proxy at any meeting of security holders of any entity in which the
Company may own securities and at any such meeting shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities and which, as the owner thereof, the Company might have
exercised and possessed if present. The Board of Managers may, by
resolution, from time to time confer like powers upon any other person or
persons.
5.4 Chairman of the Board of Managers. The Chairman of the
Board of Managers, if there be one, shall preside at all meetings of the
Members and of the Board of Managers. The Chairman of the Board of Managers
shall be selected from time to time by the Board of Managers. The Chairman
of the Board of Managers shall possess the same power as the President to
sign all contracts, certificates and other instruments of the Company which
may be authorized by the Board of Managers. During the absence or
disability of the President, the Chairman of the Board of Managers shall
exercise all the powers and discharge all the duties of the President. The
Chairman of the Board of Managers shall also perform such other duties and
may exercise such other powers as may from time to time be assigned by this
Agreement or by the Board of Managers.
5.5 President. The President shall, subject to the control
of the Board of Managers and, if there be one, the Chairman of the Board of
Managers, have general supervision of the business of the Company and shall
see that all orders and resolutions of the Board of Managers are carried
into effect. The President or, when authorized by this Agreement, the Board
of Managers or the President, the other officers of the Company shall
execute all bonds, mortgages, contracts, documents and other instruments of
the Company. In the absence or disability of the Chairman of the Board of
Managers, or if there be none, the President, shall preside at all meetings
of the Members and the Board of Managers. Unless the Board of Managers
shall otherwise designate, the President shall be the Chief Executive
Officer of the Company. The President shall also perform such other duties
and may exercise such other powers as may from time to time be assigned to
such officer by this Agreement or by the Board of Managers.
5.6 Vice Presidents. At the request of the President or in
the President's absence or in the event of the President's inability or
refusal to act (and if there be no Chairman of the Board of Managers), the
Vice President, or the Vice Presidents if there is more than one (in the
order designated by the Board of Managers), shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Each Vice President shall
perform such other duties and have such other powers and duties as the
Board of Managers, the Chairman of the Board of Managers or the President
from time to time may prescribe. The Vice President shall act under the
supervision of the President. If there be no Chairman of the Board of
Managers and no Vice President, the Board of Managers shall designate the
officer of the Company who, in the absence of the President or in the event
of the inability or refusal of the President to act, shall perform the
duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
5.7 Secretary. The Secretary shall attend all meetings of
the Board of Managers and all meetings of Members and record all the
proceedings thereat in a book or books to be kept for that purpose; the
Secretary shall also perform like duties for committees of the Board of
Managers when required. The Secretary shall give, or cause to be given,
notice of all meetings of the Members and special meetings of the Board of
Managers, and shall perform such other duties as may be prescribed by the
Board of Managers, the Chairman of the Board of Managers or the President,
under whose supervision the Secretary shall act. If the Secretary shall be
unable or shall refuse to cause to be given notice of all meetings of the
Members and special meetings of the Board of Managers, and if there be no
Assistant Secretary, then either the Board of Managers or the President may
choose another officer to cause such notice to be given. The Secretary
shall have custody of the seal of the Company, if any, and the Secretary or
any Assistant Secretary, if there be one, shall have authority to affix the
same to any instrument requiring it and when so affixed, it may be attested
by the signature of the Secretary or by the signature of any such Assistant
Secretary. The Secretary may give general authority to any other officer to
affix the seal of the Company and to attest to the affixing by such
officer's signature. The Secretary shall see that all books, reports,
statements, certificates and other documents and records required by law to
be kept or filed are properly kept or filed, as the case may be.
5.8 Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Company and shall
deposit all moneys and other valuable effects in the name and to the credit
of the Company in such depositories as may be designated by the Board of
Managers. The Treasurer shall disburse the funds of the Company as may be
ordered by the Board of Managers, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Managers,
at its regular meetings, or when the Board of Managers so requires, an
account of all transactions as Treasurer and of the financial condition of
the Company. If required by the Board of Managers, the Treasurer shall give
the Company a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Managers for the faithful performance of the
duties of the office of the Treasurer and for the restoration to the
Company, in case of the Treasurer's death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other
property of whatever kind in the Treasurer's possession or under the
Treasurer's control belonging to the Company.
5.9 Assistant Secretaries. Assistant Secretaries, if there
be any, shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Managers, the President, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of the Secretary's disability or refusal to act,
shall perform the duties of the Secretary, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the
Secretary.
5.10 Assistant Treasurers. Assistant Treasurers, if there be
any, shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Managers, the President, any Vice
President, if there be one, or the Treasurer, and in the absence of the
Treasurer or in the event of the Treasurer's disability or refusal to act,
shall perform the duties of the Treasurer, and when so acting, shall have
all the powers of and be subject to all the restrictions upon the
Treasurer. If required by the Board of Managers, an Assistant Treasurer
shall give the Company a bond in such sum and with such surety or sureties
as shall be satisfactory to the Board of Managers for the faithful
performance of the duties of the office of Assistant Treasurer and for the
restoration to the Company, in case of the Assistant Treasurer's death,
resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in the Assistant
Treasurer's possession or under the Assistant Treasurer's control belonging
to the Company.
5.11 Other Officers. Such other officers as the Board of
Managers may choose shall perform such duties and have such powers as from
time to time may be assigned to them by the Board of Managers, the Chairman
of the Board of Managers or the President. The Board of Managers may
delegate to any other officer of the Company the power to choose such other
officers and to prescribe their respective duties and powers.
ARTICLE VI
INVESTMENT ADVISERS
6.1 Investment Advisers.
(a) The Investment Advisers, subject to the control and
supervision of the Board of Managers and the terms and conditions of the
Investment Advisory Agreement, are hereby granted the power and authority
from time to time to do the following: manage and control the investments
of the Company, including, but not limited to, the power to make all
investment decisions regarding the Company's investment portfolio and,
among other things, to find, evaluate, structure, monitor, sell, and
liquidate, upon dissolution or otherwise, such investments, to assist the
Appropriate Officers of the Company in the provision of managerial
assistance to Portfolio Companies and in connection therewith to enter
into, execute, amend, supplement, acknowledge, and deliver any and all
contracts, agreements, or other instruments for the performance of such
functions, including the investment and reinvestment of all or part of the
Company's assets, execution of portfolio transactions, and any or all
related administrative functions. The grant of power and authority to the
Investment Adviser under this Section 6.1 in no way limits the rights,
powers, or authority of the Board of Managers under this Agreement, the
Act, or as otherwise provided by law.
(b) The Board of Managers may admit any Investment Adviser
as a Member of the Company with the rights, powers and obligations of a
Special Member as set forth herein. A Special Member shall not make a
Capital Contribution to the Company in its capacity as Special Member and
shall not be issued any Units representing its interest as a Special
Member.
6.2 Portfolio Investments
(a) Subject to the disclosure and reporting requirements
contained in Article X or elsewhere in this Agreement, except as any Member
may be entitled to under applicable law, the Investment Adviser may keep
confidential from the Members any information known by the Investment
Adviser relating to investments made or being considered by the Company.
(b) Any and all rights, including voting rights,
pertaining to any Portfolio Investments shall be vested exclusively in the
Company and may be exercised only by the Investment Adviser acting in
accordance with the terms of this Agreement and the Investment Advisory
Agreement or by the Company pursuant to the act of an Appropriate Officer
or the Board of Managers.
6.3 Withdrawal by a Special Member.
(a) Subject to clause (b) below, a Special Member may
voluntarily withdraw from the Company, at any time upon notice to the
Company. Such withdrawal shall not affect the Special Member's status as
Investment Adviser under the Investment Advisory Agreement.
(b) A Special Member shall not voluntarily withdraw from
the Company if such withdrawal would cause material adverse tax
consequences to the Company and its Members as determined by the Board of
Managers in its sole and absolute discretion.
6.4 Removal of a Special Member.
(a) Subject to clause (b) below, in the event of
termination without renewal of an Investment Advisory Agreement with
respect to a Special Member, the Special Member shall be removed and
terminated as a Member.
(b) In the event of the removal of the Special Member
and continuation of the Company, the investments held by the Company at the
time of removal shall be appraised by two independent appraisers, one
selected by the Special Member and one by the Disinterested Managers. In
the event that such two appraisers are unable to agree on the value of the
Company's investment portfolio, they shall jointly appoint a third
independent appraiser whose determination shall be final and binding. The
cost of the appraisal conducted by the appraiser selected by the Special
Member shall be borne by the Special Member, and the cost of the appraisal
conducted by the appraiser selected by the Disinterested Managers shall be
borne by the Company. The cost of the appraisal conducted by a third
appraiser shall be borne equally by the Company and by the Special Member.
The Special Member shall receive a final allocation of Net Profit or Net
Loss pursuant to Article VII as if all unrealized capital gains and losses
of the Company as of the date of removal determined on the basis of such
approval were realized at such time and the Fiscal Period ended at such
time. If the Capital Account of the Special Member has a positive balance
after such allocation, the Company shall within 30 days of determination
distribute such amount in cash to the Special Member or deliver a
promissory note of the Company to the Special Member, the principal amount
of which shall be equal to the amount, if any, by which the positive amount
of the Special Member's Capital Account exceeds the amount so distributed
in cash and which bears interest at a rate per annum equal to 100% of the
prime rate in effect at a major national bank selected by a majority of the
Disinterested Members at the time of removal, with interest payable
annually and principal payable, if at all, only from 20% of any available
cash before any distributions thereof are made to the Members pursuant to
Article VIII. In the event that any of the foregoing requires an exemptive
order from the Securities and Exchange Commission or its staff that is not
granted, the Special Member shall not be removed as a Member of the Company
until such time as all Direct Investments held by the Company at the time
of the proposed removal have been liquidated and allocations of Net Profit
and Net Loss resulting therefrom have been made pursuant to Article VII. In
such event, the Investment Adviser upon removal shall be entitled to
payments in respect of its Capital Account as set forth in Section 9.1(b).
6.5 Covenants of Special Member. Each Special Member
covenants, warrants, and agrees with the Company and each of the other
Members that the Special Member will not:
(a) purchase all or any portion of any Member's Interest
(or any attributes thereof);
(b) participate in the establishment of a secondary
market (or the substantial equivalent thereof) with respect to the
Interests for purposes of Treasury Regulationss. 1.7704-1(d)(1); or
(c) take any action that would have the effect of
causing the Company (i) to be treated as a publicly traded partnership for
purposes of Section 7704(b) of the Code or (ii) otherwise to be treated as
a corporation for federal income tax purposes.
ARTICLE VII
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS AND ALLOCATIONS
7.1 Capital Contributions.
(a) The initial Member or Members are as set forth on
Schedule A hereto. Additional Persons making Capital Commitments shall be
admitted as Members and added to Schedule A at one or more closings (each
a"Closing"), each such Closing to be held on such date as may be determined
by the Appropriate Officers (the date of the first such Closing being
referred to as the "Closing Date"). Members not making Capital Commitments
may be admitted to the Company at any time by the act of the Managers.
(b) RESERVED
(c) RESERVED
(d) Capital Contributions by the Members shall be made
in dollars by wire transfer of federal funds to an account or accounts of
the Company as specified by the Company or in such other manner as the
Company may direct. No Member shall be entitled to any interest or
compensation by reason of his, her or its Capital Contribution or by reason
of being a Member. No Member shall be required to lend any funds to the
Company.
(e) At each Closing, Schedule A hereto shall be amended
appropriately to reflect the Capital Commitments of the Members, and the
Appropriate Officers shall take any appropriate action in connection
therewith. Further, the Appropriate Officers shall cause Schedule A hereto
to be amended from time to time to reflect the transfer of a Member's
Interests, the admission and withdrawal of Members and changes in Capital
Commitments, which are accomplished in accordance with the provisions
hereof.
(f) RESERVED
(g) Negative Capital Accounts. Except as may be required
by law, no Member shall be required to reimburse the Company for any
negative balance in such Member's Capital Account.
7.2 Capital Accounts. A capital account ("Capital Account")
shall be established and maintained on the Company's books with respect to
each Member, in accordance with the provisions of Treasury Regulations
Section 1.704-1(b), including the following:
(a) Each Member's Capital Account shall be increased by:
(i) the amount of that Member's Capital Contribution; (ii) the amount of
Net Profit (or items thereof) allocated to that Member; and (iii) any other
increases required by the Treasury Regulations.
(b) Each Member's Capital Account shall be decreased by:
(i) the amount of Net Loss (or items thereof) allocated to that Member;
(ii) all cash amounts distributed to that Member pursuant to this
Agreement, other than any amount required to be treated as a payment for
property or services for federal income tax purposes; (iii) the fair market
value of any property distributed in kind to that Member (net of any
liabilities secured by such distributed property that such Member is
considered to assume or take subject to for federal income tax purposes);
and (iv) any other decreases required by the Treasury Regulations.
(c) All provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with the Code and
Treasury Regulations thereunder and shall be interpreted and applied in a
manner consistent with such law. The Managers shall make any necessary
modifications to this Section 7.2 in the event unanticipated events occur
that might otherwise cause this Agreement not to comply with such law or
any changes thereto.
(d) A Manager, in its capacity as a Manager, shall not
be entitled to any distributions.
7.3 Interest. No interest shall be paid or credited to the
Members with respect to their Capital Contributions, their Capital Accounts
or upon any undistributed funds left on deposit with the Company.
7.4 Allocations to Capital Accounts.
(a) Special Member Allocations. Except as provided in
this Agreement, the capital gains realized by the Company in a Fiscal
Period shall be allocated first to the Special Member in an amount equal to
the excess, if any, of the Incentive Carried Interest as calculated for
such Fiscal Period over the cumulative amount of all capital gains
allocated to the Special Member pursuant to this Section 7.4(a) for all
prior Fiscal Periods. This allocation of capital gain shall be made out of
long-term capital gain and short-term capital gain in proportion to the
amount of such gains realized in such Fiscal Period.
(b) Member Allocations. Except as provided in this
Agreement, all Net Profit (and items thereof) and all Net Loss (and items
thereof) remaining after the allocation set forth in Section 7.4(a) has
been made to the Special Member shall be allocated to the Members (other
than the Special Member) in proportion to their Capital Investments.
(c) RESERVED
(d) Additional Rule. In furtherance and not in
limitation of Section 7.4(a) and (b), and except as otherwise provided in
this Agreement, the Board of Managers may, in its sole and absolute
discretion, allocate Net Profit (and items thereof) and Net Loss (and items
thereof) for any Fiscal Period in a manner that the Board of Managers deems
necessary or appropriate in order to effectuate the intended economic
sharing arrangement of the Members as reflected in Article VIII.
(e) Regulatory and Related Allocations. Notwithstanding
anything expressed or implied to the contrary in this Agreement, the
following special allocations shall be made in the following order:
(i) Minimum Gain Chargeback. Except as otherwise
provided in Treasury Regulations Section 1.704-2, if there is a net
decrease in Partnership Minimum Gain during any Fiscal Period, each
Member shall be specially allocated items of Company income and
gain for such Fiscal Period (and, if necessary, subsequent Fiscal
Periods) in an amount equal to such Member's share of the net
decrease in such Partnership Minimum Gain, as determined in
accordance with Treasury 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
the Members pursuant thereto. The items to be so allocated shall be
determined in accordance with Treasury Regulations Section 1.704-2.
This Section 7.4(e)(i) is intended to comply with the minimum gain
chargeback requirements in such Treasury Regulations and shall be
interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Except as
otherwise provided in Treasury Regulations Section 1.704-2, if there
is a net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to Partner Nonrecourse Debt during any Fiscal Period,
each Member shall be specially allocated items of Company income
and gain for such Fiscal Period (and, if necessary, subsequent
Fiscal Periods) in an amount equal to such Member's share, if any,
of the net decrease in Partner Nonrecourse Debt Minimum Gain
attributable to such Member's Partner Nonrecourse Debt, as
determined in accordance with Treasury Regulations Section
1.704-2(i). 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 Treasury
Regulations Section 1.704-2. This Section 7.4(e)(ii) is intended to
comply with the minimum gain chargeback requirements in such
Treasury Regulations and shall be interpreted consistently
therewith.
(iii) Qualified Income Offset. In the event any
Member unexpectedly receives any adjustments, allocations or
distributions described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) with respect to such Member's
Capital Account, items of Company income and gain shall be
specially allocated to each such Member in an amount and manner
sufficient to eliminate, to the extent required by the Treasury
Regulations, the Adjusted Capital Account Deficit of such Member as
quickly as possible; provided, however, that an allocation pursuant
to this Section 7.4(e)(iii) shall be made only if and to the extent
that such Member would have an Adjusted Capital Account Deficit
after all other allocations provided for in this Section 7.4 have
been tentatively made as if this Section 7.4(e)(iii) were not in
this Agreement. This Section 7.4(e)(iii) is intended to constitute
a "qualified income offset" within the meaning of Treasury
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(iv) Gross Income Allocation. In the event any Member
has an Adjusted Capital Account Deficit, items of Company income
and gain shall be specially allocated to such Member in an amount
and manner sufficient to eliminate such Member's Adjusted Capital
Account Deficit as quickly as possible; provided, however, that an
allocation pursuant to this Section 7.4(e)(iv) shall be made only
if and to the extent that such Member would have an Adjusted
Capital Account Deficit after all other allocations provided for in
this Section 7.4 (other than Section 7.4(e)(iii)) have been tentatively
made as if this Section 7.4(e)(iv) were not in this Agreement.
(v) Nonrecourse Deductions. Any Nonrecourse
Deductions for any Fiscal Period shall be allocated to the Members
in proportion to their respective Capital Contributions.
(vi) Partner Nonrecourse Deductions. Any Partner
Nonrecourse Deductions for any Fiscal Period shall be allocated to
the Member who bears the economic risk of loss with respect to the
Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with Treasury Regulations
Section 1.704-2.
(vii) Loss Allocation Limitation. No allocation of
Net Loss (or items thereof) shall be made to any Member to the
extent that such allocation would create or increase an Adjusted
Capital Account Deficit with respect to such Member.
(f) Curative Allocations. The allocations set forth in
Section 7.4(e) (the "Regulatory Allocations") are intended to comply with
certain requirements of Treasury Regulations under Section 704 of the Code.
Notwithstanding any other provision of this Article VII (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken into
account in allocating other Company items of income, gain, loss, deduction
and expense among the Members so that, to the extent possible, the net
amount of such allocations of other Company items and the Regulatory
Allocations shall be equal to the net amount that would have been allocated
to the Members pursuant to this Section 7.4 if the Regulatory Allocations
had not occurred.
(g) Section 754 Adjustments. Pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(m), to the extent an adjustment to
the adjusted tax basis of any Company asset under Section 734(b) or Section
743(b) of the Code is required to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital Accounts
shall be treated as an item of gain (if the adjustment increases the basis
of the asset) or loss (if the adjustment decreases such basis) and such
gain or loss shall be specially allocated to the Members in a manner
consistent with the manner in which their Capital Accounts are required to
be adjusted pursuant to such Treasury Regulations.
(h) Transfer of or Change in Interests. The Managers are
authorized to adopt any convention or combination of conventions likely to
be upheld for federal income tax purposes regarding the allocation and/or
special allocation of items of Company income, gain, loss, deduction and
expense with respect to a newly issued Interest, a transferred Interest and
a redeemed Interest. Upon admission as a Substituted Member, a transferee
of an Interest shall succeed to the Capital Account of the transferor
Member to the extent it relates to the transferred Interest.
(i) Certain Expenses. Syndication and organization
expenses, as defined in Section 709 of the Code (and, to the extent
necessary as determined in the sole and absolute discretion of the
Managers, any other items) shall be allocated to the Capital Accounts of
the Members so that, as nearly as possible, the cumulative amount of such
syndication and organization expenses (and other items, if relevant)
allocated with respect to each dollar of Capital Commitment for each Member
is the same amount; provided, however, that expenses related to the
registration and public offering of Units shall be allocated solely to
those Members who acquired their Interests in such public offering of
Interests. The determination of the amount of Company expenses that are
related to the registration and public offering of the Units shall be made
in the sole and absolute discretion of the Managers, which determination
shall be final and conclusive as to all Members.
(j) Allocation Periods and Unrealized Items. Subject to
applicable Treasury Regulations and other applicable law and
notwithstanding anything expressed or implied to the contrary in this
Agreement, the Managers may, in their sole and absolute discretion,
determine allocations to Capital Accounts based on an annual, quarterly or
other period and/or on realized and unrealized net increases or net
decreases (as the case may be) in the fair market value of Company
property.
7.5 Tax Allocations.
(a) Items of Company income, gain, loss, deduction and
expense shall be allocated, for federal, state and local income tax
purposes, among the Members in the same manner as the Net Profit (and items
thereof) and Net Loss (and items thereof) of which such items are
components were allocated pursuant to Section 7.4; provided, however, that
tax allocations shall be made in accordance with Section 704(c) of the Code
and the Treasury Regulations promulgated thereunder, to the extent so
required thereby.
(b) Allocations pursuant to this Section 7.5 are solely
for federal, state and local income tax purposes and shall not affect, or
in any way be taken into account in computing, any Member's Capital Account
or share of Net Profit (and items thereof) or Net Loss (and items thereof).
(c) The Members are aware of the tax consequences of the
allocations made by this Section 7.5 and hereby agree to be bound by the
provisions of this Section 7.5 in reporting their shares of items of
Company income, gain, loss, deduction and expense.
7.6 Determinations by Managers. All matters concerning the
computation of Capital Accounts, the allocation of Net Profit (and items
thereof) and Net Loss (and items thereof), the allocation of items of
Company income, gain, loss, deduction and expense for tax purposes and the
adoption of any accounting procedures not expressly provided for by the
terms of this Agreement shall be determined by the Managers in their sole
and absolute discretion. Such determination shall be final and conclusive
as to all the Members. Notwithstanding anything expressed or implied to the
contrary in this Agreement, in the event the Managers shall determine, in
their sole and absolute discretion, that it is prudent to modify the manner
in which the Capital Accounts, or any debits or credits thereto, are
computed in order to effectuate the intended economic sharing arrangement
of the Members as reflected in Article VIII, the Managers may make such
modification in their sole and absolute discretion without the approval of
Members.
ARTICLE VIII
WITHDRAWALS AND DISTRIBUTIONS OF CAPITAL
8.1 Withdrawals and Distributions in General. No Member
shall be entitled to withdraw any amount from any Capital Account other
than as provided in this Agreement.
8.2 Distributions. After provision for Company Expenses and
establishment of working capital and other reserves as the Appropriate
Officers shall deem appropriate, the Managers may cause all cash and other
property received by the Company in respect of its investments in any
Fiscal Period (collectively, "Investment Proceeds") to be distributed as
follows:
(a) First, to the Special Member in an amount equal to
the excess, if any, of the Incentive Carried Interest as calculated for
such Fiscal Period over the cumulative amount of all distributions made to
the Special Member pursuant to this Section 8.2(a) for all prior Fiscal
Periods; and
(b) Second, the balance, if any, to the Members (other
than the Special Member) of record on the record date set by the Managers
with respect to such distribution, in proportion to such Member's
respective Capital Investment.
8.3 Restrictions on Distributions. Notwithstanding anything
expressed or implied to the contrary in this Agreement, no distribution
shall be made if, as determined in the sole and absolute discretion of the
Managers, (i) such distribution would violate any contract or agreement to
which the Company is then a party or any law, rule, regulation, order or
directive of any governmental authority then applicable to the Company or
(ii) the amount to be distributed pursuant to this Article VIII is
immaterial.
8.4 Deemed Sale of Assets. For all purposes of this
Agreement, (i) any property (other than United States dollars) that is
distributed in kind to one or more Members with respect to a Fiscal Period
(including, without limitation, any such in kind property that is
distributed upon the dissolution and winding up of the Company) shall be
deemed to have been sold for cash equal to its fair market value, (ii) the
unrealized gain or loss inherent in such property shall be treated as
recognized gain or loss for purposes of determining the Net Profit and Net
Loss, (iii) such gain or loss shall be allocated pursuant to Section 7.4
for such Fiscal Period and (iv) such in kind distribution shall be made
after giving effect to such allocation.
8.5 Withholding. Notwithstanding anything expressed or
implied to the contrary in this Agreement, the Appropriate Officers are
authorized to take any action that they determine to be necessary or
appropriate to cause the Company to comply with any non-United States or
United States federal, state or local withholding requirement with respect
to any allocation, payment or distribution by the Company to any Member or
other Person. All amounts so withheld, and, in the manner determined by the
Appropriate Officers, amounts withheld with respect to any allocation,
payment or distribution by any Person to the Company, shall be treated as
distributions to the applicable Members under the applicable provision of
this Agreement. If any such withholding requirement with respect to any
Member exceeds the amount distributable to such Member under this
Agreement, or if any such withholding requirement was not satisfied with
respect to any amount previously allocated, paid or distributed to such
Member, such Member or any successor or assignee with respect to such
Member's Interest hereby indemnifies and agrees to hold harmless the other
Members and the Company for such excess amount or such withholding
requirement, as the case may be (including any interest, additions and
penalties).
ARTICLE IX
WITHDRAWAL OF MEMBERS; TRANSFER OF INTERESTS; ADMISSION
OF SUBSTITUTED MEMBERS; EFFECT OF DEATH, ETC.
9.1 Withdrawal of Members
(a) The Managers may (but shall not be required to)
terminate the Interest of any Member and cause that Member to withdraw from
the Company at any time upon at least five days' prior written notice (120
days' prior written notice in the case of clause (i) of this sentence) upon
(i) the request of such Member; or (ii) a determination by the Managers
that the continued participation of that Member in the Company might
adversely affect the Company by jeopardizing the treatment of the Company
as a partnership for federal income tax purposes, involve the Company in
any litigation arising out of or relating to the participation of that
Member in the Company or subject the Company to restrictions or other
adverse consequences as a result of applicable laws or regulations. In the
event that the Managers terminate a Member's Interest, that Member shall
immediately withdraw from the Company and cease to be a Member of the
Company. Such withdrawal shall occur automatically upon termination without
the necessity of any further act by the Member or any other Person. The
date of termination shall be the effective date of withdrawal of the
terminated Member.
(b) (i) The Company shall pay to the terminated Member
90% of the amount of the terminated Member's Capital Account balance
(determined in accordance with the next sentence) within 90 days of
termination or as soon thereafter as the Company shall have sufficient
funds available and shall pay the remainder upon completion of that year's
audit. The amount of the terminated Member's Capital Account shall be
determined not more than ten days prior to the date of termination in the
case of a termination pursuant to Section 9.1(a)(i) and not more than three
days prior to the date of termination in the case of a termination pursuant
to Section 9.1(a)(ii). Such amounts paid to a terminated Member shall not
be entitled to interest for any period after the date of termination.
(c) From and after the effective date of withdrawal of a
Member, such withdrawn Member shall cease to be a Member of the Company for
all purposes and the Units of a withdrawn Member shall not be included in
calculating the Units of the Members required to take any action under this
Agreement.
9.2 General Provisions Relating to Transfers of Interests.
(a) Transfers. A Member may not transfer, assign, sell,
pledge, hypothecate or otherwise dispose of any of the attributes of his,
her or its Interest (collectively, a "Transfer"), in whole or in part, to
any Person except as follows (a "Permitted Transfer"):
(i) as permitted by the operation of law pursuant to
the death, bankruptcy, insolvency or dissolution of the Member or
otherwise;
(ii) in connection with the transfer to a family
trust or another entity that does not result in a change in
beneficial ownership;
(iii) a Transfer meeting the conditions in Section
9.2(b); or
(iv) an assignment described in Section 9.2 (d).
Any attempted transfer of Interests, other than in strict
accordance with this Article IX, shall be null and void and of no force or
effect whatsoever, and the purported transferee shall have no rights as a
Member.
(b) Conditions to Transfers. A Member shall be entitled
to make a Transfer of all or any portion of its Interests pursuant to
Section 9.2(a)(iii) only upon the Managers' determination, which
determination the Managers shall make in their sole and absolute
discretion, that the Transfer meets each of the following conditions:
(i) such Transfer, itself or together with any other
Transfers, would not result in the Company being treated as a
publicly traded partnership within the meaning of Section 7704(b)
of the Code or otherwise being treated as a corporation for federal
income tax purposes;
(ii) such Transfer does not require the registration
or qualification of such Interests pursuant to any applicable
federal or state securities or "blue sky" laws;
(iii) such Transfer does not result in a violation of
other laws ordinarily applicably to such transactions;
(iv) the transferor and purported transferee each
shall have represented to the Manager in writing that such Transfer
was not effected through a broker-dealer or matching agent that
makes a market in Interests or that provides a readily available,
regular and ongoing opportunity to Members to sell or exchange
their Interests;
(v) the transferor shall reaffirm, and the purported
transferee shall affirm, in writing his, her or its agreement to
indemnify as described in Section 9.4;
(vi) such Transfer would not result in employee
benefit plans (as defined in Section 3(3) of ERISA or Code Section
4975(e)) and other benefit plan investors (as defined in Section
2510.3-101(f) of the Department of Labor Regulations under ERISA),
directly or indirectly owning, in the aggregate, 25% or more of the
Interests (as determined in accordance with such regulations);
(vii) no facts are known to the Managers that cause
the Managers to conclude that such transfer will have a material
adverse effect on the Company; and
(viii) the transferee has agreed in writing to become
a Member to and subject to all of the terms, obligations and
limitations of this Agreement.
(c) The Managers may reasonably interpret, and are
hereby authorized to take such action as they deem necessary or desirable
to effect, the provisions of this Section 9.2. The Managers may, in their
sole and absolute discretion, amend the provisions of this Section 9.2 in
such manner as may be necessary or desirable (or eliminate or amend such
provisions to the extent they are no longer necessary or desirable) to
preserve the status of the Company as a partnership for federal income tax
purposes.
(d) Notwithstanding the restrictions on transfers
provided for in this Section 9.2, a Special Member may assign the economic
attributes of its Interest, in whole or in part, to any Affiliate of such
Special Member, and any such Affiliate may further assign such economic
attributes, in whole or in part, to any other Affiliate of such Special
Member, in each case without such assignee Affiliate becoming admitted to
the Company as a substituted Member pursuant to Section 9.5.
9.3 Effect of Transfers. Upon any Permitted Transfer, the
transferee of the transferred Interest shall be entitled to receive the
distributions and allocations to which the transferring Member would be
entitled with respect to such transferred Interest, but shall not be
entitled to exercise any of the other rights of a Member with respect to
such transferred Interest, including, without limitation, the right to
vote, unless and until such transferee is admitted to the Company as a
Substituted Member pursuant to Section 9.5.
9.4 Transfer Indemnity. Each Member hereby agrees to
indemnify and hold harmless the Company, the Special Member, the Managers,
each Appropriate Officer and each other Member (and any successor or assign
of any of the foregoing) from and against all costs, claims, damages,
liabilities, losses and expenses (including losses, claims, damages,
liabilities, costs and expenses of any judgments, fines and amounts paid in
settlement), joint or several, to which those persons may become subject by
reason of or arising from any Transfer made in contravention of the
provisions of this Agreement or any misrepresentation made by such Member
in connection with any purported Transfer.
9.5 Substituted Members. No transferee of a transferred
Interest shall be admitted as a Member ("Substituted Member") until each of
the following conditions has been satisfied:
(a) the written consent of the Managers, which may be
withheld or granted in the sole and absolute discretion of the Managers;
(b) the execution and delivery to the Company of a
counterpart of this Agreement by the Substituted Member or its agent or
attorney-in-fact;
(c) receipt by the Company of other written instruments
that are in form and substance satisfactory to the Managers (as determined
in their sole and absolute discretion);
(d) payment by the Substituted Member to the Company of
an amount determined by the Managers to be equal to the costs and expenses
incurred in connection with such assignment, including, without limitation,
costs incurred in preparing and filing such amendments to this Agreement as
may be required; (e) the updating of the books and records of the Company
and Schedule A hereto to reflect the Person's admission as a Substituted
Member;
(f) if required by the Managers in their sole and
absolute discretion, execution and affirmation to an instrument by the
terms of which such Person acknowledges that the relevant transfer of
Interests have not been registered under the Securities Act of 1933, as
amended, or any applicable state securities laws, and covenants, represents
and warrants that such Person acquired the relevant Interests for
investment only and not with a view to the resale or distribution thereof;
and
(g) any other similar information or documentation as
the Managers may request.
9.6 Effect of Death, Etc. The death, retirement, withdrawal,
expulsion, disability, incapacity, incompetency, bankruptcy, insolvency or
dissolution of a Member, or the occurrence of any other event under the Act
that terminates the continued membership of a Member as a member of the
Company, shall not cause the Company to be dissolved and its affairs to be
wound up so long as the Company has at least one Member at all times. Upon
the occurrence of any such event, the business of the Company shall be
continued without dissolution. The legal representatives, if any, of a
Member shall succeed as assignee to the Member's Interest upon death,
incapacity, incompetency, bankruptcy, insolvency or dissolution of a
Member, but shall not be admitted as a Substituted Member except under the
provisions of Section 9.5 of this Agreement and with the written consent of
the Managers, which written consent the Managers may withhold in their sole
and absolute discretion. The Units held by such legal representative of a
Member shall not be included in calculating the Units of the Members
required to take any action under this Agreement.
ARTICLE X
BOOKS AND RECORDS; REPORTS TO MEMBERS; TAX MATTERS
10.1 Books and Records. In compliance with Section 31 of the
Investment Company Act, the books and records of the Company, and a list of
the names and residence, business or mailing addresses and Interests of all
Members, shall be maintained at the principal executive offices of the
Company or such other location as the Managers' may approve. The Company
shall not be required to provide any documentation or other information to
Members except that which it is required to provide under the Investment
Company Act, the Act or other applicable law. Each Member shall have the
right to obtain from the Company from time to time upon reasonable demand
for any proper purpose reasonably related to the Member's interest as a
Member of the Company, and upon paying the costs of collection, duplication
and mailing, the documents and other information which the Company is
required to provide under the Investment Company Act, the Act or other
applicable law. Any demand by a Member pursuant to this section shall be in
writing and shall state the purpose of such demand. The Company may
maintain such other books and records and may provide such financial or
other statements as the Managers or the Appropriate Officers in their
discretion deem advisable.
10.2 Annual Reports to Current Members. Within 60 days after
the end of each Fiscal Year or as soon thereafter as practicable, the
Company shall have prepared and distributed to the Members, at the expense
of the Company, an annual report containing a summary of the year's
activity and such financial statements and schedules as may be required by
law or as the Managers may otherwise determine.
10.3 Accounting; Tax Year.
(a) The books and records of the Company shall be kept
on the cash basis or the accrual basis, as determined by the Managers in
their sole and absolute discretion. The Company shall report its operations
for tax purposes on the cash method or the accrual method, as determined by
the Managers in their sole and absolute discretion. The taxable year of the
Company shall be the calendar year, unless the Managers shall designate
another taxable year for the Company that is a permissible taxable year
under the Code.
(b) The books and records of the Company shall be
audited by the Company's independent accountants as of the end of each
Fiscal Year, commencing with the first partial Fiscal Year, of the Company.
10.4 Filing of Tax Returns. The Appropriate Officers shall
prepare and file, or cause the Company's accountants to prepare and file, a
federal information tax return and any required state and local income tax
and information returns for each taxable year of the Company. The Managers
have sole and absolute discretion as to whether or not to prepare and file
(or cause its accountants to prepare and file) composite, group or similar
state, local and foreign tax returns on behalf of the Members where and to
the extent permissible under applicable law. Each Member hereby agrees to
execute any relevant documents (including a power of attorney authorizing
such a filing), to furnish any relevant information and otherwise
to do anything necessary in order to facilitate any such composite, group
or similar filing. Any taxes paid by the Company in connection with any
such composite, group or similar filing shall be treated as an advance to
the relevant Members (with interest being charged thereon) and shall be
recouped by the Company out of any distributions subsequently made to such
relevant Members. Such advances may be funded by Company borrowing. Both
the deduction for interest payable by the Company with respect to any such
borrowing, and the corresponding income from interest received by the
Company from the relevant Members, shall be specifically allocated to such
Members.
10.5 Tax Matters Member. The Special Member shall be
designated as the tax matters member of the Company (the "Tax Matters
Member") as provided in Section 6231(a)(7) of the Code. Each Person (for
purposes of this provision, a "Pass-Through Member") that holds or controls
an Interest on behalf of, or for the benefit of another Person or Persons,
or which Pass-Through Member is beneficially owned (directly or indirectly)
by another Person or Persons shall, within 30 days following receipt from
the Tax Matters Member of a notice or document, convey such notice or other
document in writing to all holders of beneficial interests in the Company
holding such Interest through such Pass-Through Member. In the event the
Company becomes the subject of an income tax audit by any federal, state or
local authority, to the extent the Company is treated as an entity for
purposes of such audit, including administrative settlement and judicial
review, the Tax Matters Member shall be authorized to act for, and its
decision shall be final and binding upon, the Company and each Member. The
Company shall bear all expenses incurred in connection with any such audit,
investigation, settlement or review.
10.6 Tax Information for Current and Former Members. Within
90 days after the end of each taxable year of the Company or as soon
thereafter as practicable, the Company shall prepare and distribute to each
Member (and, to the extent necessary, to each former Member (or such
Member's legal representatives)), at the expense of the Company, a report
setting forth in sufficient detail such information as shall enable such
Member or former Member (or such Member's legal representatives) to prepare
its respective federal, state and local income tax returns in accordance
with the laws, rules and regulations then prevailing. The Company shall
also provide Schedules K-1 to Members as soon as practicable after the end
of each taxable year of the Company.
ARTICLE XI
LIABILITY AND INDEMNIFICATION
11.1 Liability of the Members and Managers. Except for the
obligations hereunder and under the Subscription Agreements, the liability
of the Members shall be limited to the maximum extent permitted by the Act.
In no event shall the Members be obligated to make Capital Contributions in
excess of their respective Capital Commitments. If a Member is required
under the Act to return to the Company or pay, for the benefit of creditors
of the Company, amounts previously distributed to such Member, the
obligation of such Member to return or pay any such amount to the Company
shall be the obligation of such Member and not the obligation of the
Managers. The liability of the Managers shall be limited to the maximum
extent permitted by the Act.
11.2 Indemnification.
(a) No Manager, Appropriate Officer, Member, Investment
Adviser to the Company, distributor or selling agent of or for the Units or
any of their respective affiliates, shareholders, partners, officers,
directors, members, employees, agents and representatives (each an
"Indemnified Person") shall have any liability, responsibility or
accountability in damages or otherwise to any Member or the Company for,
and the Company agrees, to the fullest extent permitted by law, to
indemnify, pay, protect and hold harmless each Indemnified Person from and
against, any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, proceedings, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, all
reasonable costs and expenses of attorneys, defense, appeal and settlement
of any and all suits, actions or proceedings instituted or threatened
against the Indemnified Persons or the Company) and all costs of
investigation in connection therewith which may be imposed on, incurred by,
or asserted against the Indemnified Persons or the Company in any way
relating to or arising out of, or alleged to relate to or arise out of, any
action or inaction on the part of the Company, on the part of the
Indemnified Persons when acting on behalf of the Company or otherwise in
connection with the business or affairs of the Company or any Portfolio
Investment, or on the part of any brokers or agents when acting on behalf
of the Company or any Portfolio Investment (collectively, the "Indemnified
Liabilities"); provided that the Company shall not be liable to any
Indemnified Person for any portion of any Indemnified Liabilities which
results from such Indemnified Person's willful misfeasance, bad faith or
gross negligence in the performance of his, her or its duties or by reason
of his, her or its reckless disregard of his, her or its obligations and
duties. The indemnification rights provided for in this Section 11.2(a)
shall survive the termination of the Company or this Agreement. Any
indemnification rights provided for in this Section 11.2(a) shall be
retained by any removed, resigned or withdrawn Manager, Member, Appropriate
Officer, Investment Adviser, distributor or selling agent and its
constituent Indemnified Persons. Any indemnification rights provided for in
this Section 11.2(a) shall also be retained by any Person who has acted in
the capacity of officer, director, partner, employee, agent, stockholder or
affiliate of an Indemnified Person after such Persons shall have ceased to
hold such positions.
(b) The right of any Indemnified Person to the
indemnification provided herein shall be cumulative of, and in addition to,
any and all rights to which such Indemnified Person may otherwise be
entitled by contract or as a matter of law or equity and shall extend to
such Indemnified Person's successors, assigns and legal representatives.
(c) The provision of advances from Company funds to an
Indemnified Person for legal expenses and other costs incurred as a result
of any legal action or proceeding is permissible if (i) such suit, action
or proceeding relates to or arises out of, or is alleged to relate to or
arise out of, any action or inaction on the part of the Indemnified Person
in the performance of its duties or provision of its services on behalf of
the Company or otherwise in connection with the business or affairs of the
Company or any Portfolio Investment; and (ii) the Indemnified Person
undertakes to repay any funds advanced pursuant to this Section 11.2(c) in
any case in which such Indemnified Person would not be entitled to
indemnification under Section 11.2 (a). If advances are permissible under
this Section 11.2(c), the Indemnified Person shall furnish the Company with
an undertaking as set forth in clause (ii) of this paragraph and shall
thereafter have the right to bill the Company for, or otherwise request the
Company to pay, at any time and from time to time after such Indemnified
Person shall become obligated to make payment therefor, any and all amounts
for which such Indemnified Person believes in good faith that such
Indemnified Person is entitled to indemnification under Section 11.2(a)
with the approval of the Managers who are not seeking such indemnification,
or if all Managers are seeking such indemnification, the Special Member,
which approval shall not be unreasonably withheld. The person granting such
approval may, but shall not be required unless otherwise provided by
applicable law, prior to approval require an opinion of counsel to be in
effect that such Indemnified Person is likely to be entitled to
indemnification. The Company shall pay any and all such bills and honor any
and all such requests for payment within sixty (60) days after such bill or
request is received by the Company, and the Company's rights to repayment
of such amounts shall be secured by the Indemnified Person's Interest in
the Company, if any, or by such other security as the Managers, or if all
Managers are seeking indemnification, the Special Member may require. In
the event that a final judicial (or binding arbitration) determination is
made that the Company is not so obligated in respect of any amount paid by
it to a particular Indemnified Person, such Indemnified Person will refund
such amount within sixty (60) days of such final determination, and in the
event that a final determination is made that the Company is so obligated
in respect to any amount not paid by the Company to a particular
Indemnified Person, the Company will pay such amount to such Indemnified
Person within sixty (60) days of such final determination, in either case
together with interest (at the lesser of (x) the Applicable Rate and (y)
the maximum rate permitted by applicable law) from the date paid by the
Company until repaid by the Indemnified Person or the date it was obligated
to be paid by the Company until the date actually paid by the Company to
the Indemnified Person.
(d) With respect to the liabilities of the Company, all
such liabilities:
(1) shall be liabilities of the Company as an
entity, and shall be paid or otherwise satisfied from the Company's
assets; and
(2) except to the extent otherwise required by
law, shall not in any event be payable in whole or in part by any
Member, Manager, Appropriate Officer, Investment Adviser,
distributor or selling agent, or by any director, officer, trustee,
employee, agent, shareholder, beneficiary, member or partner of any
of them.
(e) The Managers may cause the Company, at the Company's
expense, to purchase insurance to insure the Indemnified Persons against
liability hereunder (including liability arising in connection with the
operation of the Company), including, without limitation, for a breach or
an alleged breach of their responsibilities hereunder.
ARTICLE XII
COMPENSATION AND REIMBURSEMENT
12.1 Investment Adviser.
(a) Reimbursement for Company Expenses. The Company
shall reimburse any Investment Adviser for Company Expenses incurred by
such Investment Adviser and its affiliates in connection with the
organization of the Company, the Company's offer and sale of Units and the
ongoing operations of the Company, subject to the terms and conditions of
the Investment Advisory Agreement between the Company and such Investment
Adviser.
(b) Advisory Fee. The Company may pay any Investment
Adviser an investment advisory fee as set forth in, and subject to the
terms and conditions of, the Investment Advisory Agreement with such
Investment Adviser. The approval of any contract or agreement pursuant to
which a Person serves as an Investment Adviser to the Company shall be
subject to the applicable requirements of the Investment Company Act.
12.2 Board of Managers. As compensation for services
rendered to the Company, the Company may pay each Manager who is not an
officer, director or employee of any Investment Adviser or its affiliates
such amounts as may be determined from time to time by the Disinterested
Managers. Subject to compliance with the Investment Company Act, the Board
of Managers may establish pensions, profit sharing, Unit purchase and other
retirement, incentive or benefit plans for Managers.
12.3 Distributor, Selling Agents, Administrator, Custodian
and Other Persons. As compensation for services rendered to the Company or
its Members, the Company may pay each distributor, selling agent,
administrator, transfer agent, custodian, accountant, attorney and other
agent or independent contractor duly engaged by or on behalf of the Company
to provide such services. The approval of any contract or agreement
pursuant to which a Person serves as a principal underwriter to the Company
shall be subject to the applicable requirements of the Investment Company
Act.
ARTICLE XIII
DISSOLUTION AND TERMINATION
13.1 Dissolution. The Company shall be dissolved upon the
occurrence of any of the following:
(a) the expiration of its term, except to the extent
extended pursuant to Section 2.6;
(b) the election by the Managers to dissolve the Company
prior to the expiration of its terms, subject, to the extent required by
the Investment Company Act, to the consent of the Members;
(c) voluntary bankruptcy, liquidation or other
dissolution of the Company;
(d) the sale or other disposition at any one time of all
or substantially all of the assets of the Company; and
(e) dissolution required by operation of law.
Except as otherwise determined by the Managers in their sole discretion,
the Company shall not be subject to dissolution at the election of Members.
Dissolution of the Company shall be effective on the day on which the event
occurs giving rise to the dissolution, but the Company shall not terminate
until the assets of the Company have been distributed as provided in
Section 13.2 and the certificate of formation of the Company has been
canceled.
13.2 Liquidation. On dissolution of the Company, a
liquidator (who shall be selected by the Board of Managers, if still
constituted, and otherwise shall be a Person proposed and approved by a
Majority in Interest of the Members) and who may be any Investment Adviser
or any of its affiliates, shall cause to be prepared a statement setting
forth the assets and liabilities of the Company as of the date of
dissolution, and such statement shall be furnished to all of the Members.
Then, those Company assets that the liquidator determines should be
liquidated shall be liquidated as promptly as possible, but in an orderly
and business-like manner to maximize proceeds. Assets that the liquidator
determines to distribute in kind shall be so distributed in a manner
consistent with applicable law. If the liquidator determines that an
immediate sale at the time of liquidation of all or part of the Company
assets would be unduly disadvantageous to the Members, the liquidator may,
either defer liquidation and retain the assets for a reasonable time, or
distribute the assets to the Members in kind. The liquidator shall then
wind up the affairs of the Company and distribute the proceeds of the
Company by the end of the calendar year of the liquidation (or, if later,
within 90 days after the date of such liquidation) in the following order
or priority:
(a) to the payment of the expenses of liquidation and to
creditors (including Members who are creditors, to the extent permitted by
law) in satisfaction of liabilities of the Company other than liabilities
for distributions to Members, in the order of priority as provided by law;
(b) to the setting up of any reserves that the
liquidator may deem necessary or appropriate for any anticipated
obligations or contingencies of the Company or of the liquidator arising
out of or in connection with the operation or business of the Company. Such
reserves may be paid over by the liquidator to an escrow agent or trustee
proposed and approved by the liquidator to be disbursed by such escrow
agent or trustee in payment of any of the aforementioned obligations or
contingencies and, if any balance remains at the expiration of such period
as the liquidator shall deem advisable, to be distributed by such escrow
agent or trustee in the manner hereinafter provided;
(c) to the Special Member in an amount equal to the
excess, if any, of the Incentive Carried Interest as calculated for the
Fiscal Period ending on the date of distribution over the cumulative amount
of all distributions made to the Special Member pursuant to Section 8.2 and
this Section 13.2(c) for all prior Fiscal Periods; then
(d) to the Members or their legal representatives in
accordance with the positive balances in their respective Capital Accounts,
as determined after taking into account all adjustments to Capital Accounts
for all periods.
13.3 Termination. The liquidator shall comply with any
requirements of the Act or other applicable law pertaining to the winding
up of a limited liability company, at which time the Company shall stand
terminated.
ARTICLE XIV
AMENDMENTS
14.1 Proposal of Amendments. Except as otherwise specified
in this Agreement, any amendment to this Agreement may be proposed by any
Manager, by the Investment Adviser or by Members who, in aggregate, own not
less than 10% of the Units owned by all such Members. The Person or Persons
proposing such amendment shall submit to the Board of Managers: (i) the
text of such amendment; (ii) a statement of the purpose of such amendment;
and (iii) in the case of an amendment so proposed by the Members (other
than an Investment Adviser), an opinion of counsel reasonably acceptable to
the Managers obtained by the Members proposing such amendment to the effect
that such amendment is permitted by the Investment Company Act, the Act and
the laws of any other jurisdiction where the Company is qualified to do
business, will not impair the limited liability of the Managers or Members,
and will not adversely affect the classification of the Company as a
partnership for federal and state income tax purposes. To the extent
required by the Investment Company Act, the Board of Managers shall, within
40 days after receipt from Members of a proposal under clause (iii) of this
Section 14.1 and the required opinion, give notification to all Members of
such proposed amendment, of such statement of purpose, and of such opinion
of counsel, together with the views, if any, of the Board of Managers and
each Investment Adviser with respect to such proposed amendment. All
amendments validly proposed by Members pursuant to clause (iii) of this
Section 14.1 or proposed by Managers or the Investment Adviser but
requiring the approval of Members shall be submitted to the Members for a
vote no less than 10 days nor more than 90 days after the date of mailing
of notice of the proposed amendment and will be adopted if approved (i) in
the case of an amendment the adoption of which is recommended by the Board
of Managers, an affirmative vote of a Majority in Interest of the Members,
or (ii) in the case of an amendment the adoption of which has not been
recommended by the Board of Managers, an affirmative vote of a
Supermajority of Members, in each case subject to the approval of any
greater number of Members as may be required by this Agreement or
applicable law.
14.2 Amendments to Be Adopted Solely by the Board of
Managers. Subject to Section 14.3, the Board of Managers may, without the
consent of any Member, amend any provision of this Agreement as set forth
in Section 3.15, and execute whatever documents may be required in
connection therewith.
14.3 Amendments Not Allowable.
(a) Unless approved by a Majority in Interest of the
Members affected thereby, no amendment to this Agreement shall be permitted
if the effect of such amendment would be to:
(i) impair the limited liability of Members provided
for in Section 11.1; or
(ii) adversely affect in any way the federal income tax
status of the Company as a partnership.
(b) Subject to Section 3.15(iii), unless approved by a
40 Act Majority of Members and a Majority of the Disinterested Managers, no
amendment shall be permitted if the effect of such amendment would be to
increase the amounts distributable to the Special Member and decrease the
amounts distributable to the other Members.
ARTICLE XV
POWER OF ATTORNEY
15.1 Power of Attorney. Each Member hereby irrevocably
constitutes and appoints each Manager and each Appropriate Officer, and
their respective designees, as such Member's true and lawful agents and
attorneys-in-fact, with full power and authority in such Member's name,
place, and stead, to make, execute, acknowledge, deliver, swear to, file
and record the following documents and instruments in accordance with the
other provisions of this Agreement;
(a) this Agreement and a certificate of formation, a
certificate of doing business under fictitious name and any other
instrument or filing which the Board of Managers or the Appropriate
Officers of the Company consider necessary or desirable to carry out the
purposes of this Agreement or the business of the Company or that may be
required under the laws of any state or local government, or of any other
jurisdiction;
(b) any and all amendments, restatements, cancellations,
or modifications of the instruments described in Section 15.1(a);
(c) any and all instruments related to the admission,
removal, or withdrawal of any Member; and
(d) all documents and instruments that may be necessary
or appropriate to effect the dissolution and termination of the Company,
pursuant to the terms hereof.
15.2 Irrevocability. The foregoing power of attorney is
coupled with an interest and such grant shall be irrevocable. Such power of
attorney shall survive the subsequent Incapacity of any such Member or the
transfer of any or all of such Member's Units.
15.3 Priority of Agreement. In the event of any conflict
between provisions of this Agreement or any amendment hereto and any
documents executed, acknowledged, sworn to, or filed by any Manager or
Appropriate Officer under this power of attorney, this Agreement and its
amendments shall govern.
15.4 Exercise of Power. This power of attorney may be
exercised by any of Members either by signing separately as
attorney-in-fact for each such Member or by a single signature of any
Manager or Appropriate Officer acting as attorney-in-fact for all Members.
ARTICLE XVI
MISCELLANEOUS
16.1 Certificate of Formation. On each subsequent change in
the Company specified in the Act, the Managers shall to the extent required
by the Act cause to be executed and acknowledged an amended certificate of
formation pursuant to the provisions of the Act, which will be duly filed
as prescribed by Delaware law.
16.2 Delaware Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by, and construed
and interpreted according to, the laws of Delaware subject to the
provisions of the Investment Company Act.
16.3 Counterparts. This Agreement may be executed in
counterparts, and all counterparts so executed shall constitute one
agreement that shall be binding on all the parties hereto. Any counterpart
of this Agreement that has attached to it separate signature pages which
altogether contain the signatures of all Members or their attorneys-in-fact
shall for all purposes be deemed a fully executed instrument.
16.4 Binding upon Successors and Assigns. Subject to and
unless otherwise provided in this Agreement, each and all of the covenants,
terms, provisions, and agreements herein contained shall be binding upon
and inure to the benefit of the successors, successors-in-title, heirs and
assigns of the respective parties hereto.
16.5 Notices. Any notice, offer, consent, or demand
permitted or required to be made under this Agreement to any party hereto
shall be given in writing signed by the Person giving such notice either by
(i) personal delivery or (ii) by registered or certified mail, postage
prepaid, addressed to that party at the respective address shown on the
Company's books and records, or to such other address as that party shall
indicate by proper notice to the Board of Managers, in the same manner as
provided above. All notices shall be deemed effective upon receipt or five
days after the date of mailing in accordance with the above provisions.
16.6 Severability. If any provision of this Agreement, or
the application thereof, shall for any reason and to any extent be invalid
or unenforceable, the remainder of this Agreement and the application of
such provision to other Persons or circumstances shall not be effected
thereby, but shall be enforced to the maximum extent possible under
applicable law.
16.7 Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the
subject hereof and supersedes all prior agreements or understandings,
written or oral, between the parties with respect thereto.
16.8 Headings, Etc. The headings in this Agreement are
inserted for convenience of reference only and shall not affect
interpretation of this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine or the neuter genders shall include the masculine, the feminine
and the neuter.
16.9 Legends. If certificates are issued evidencing a
Member's Units, each such certificate shall bear such legends as may be
required by applicable federal and state laws, or as may be deemed
necessary or appropriate by the Board of Managers to reflect restrictions
upon transfer contemplated herein.
16.10 Waiver of Partition. Except as may otherwise be
provided by law in connection with the winding up, liquidation and
dissolution of the Company, each Member hereby irrevocably waives any and
all rights that it may have to maintain an action for partition of any of
the Company's property.
16.11 Survival of Certain Provisions. All indemnities and
reimbursement obligations made pursuant to this Agreement shall survive
dissolution and liquidation of the Company until the expiration of the
longest applicable statute of limitations (including extensions and
waivers) with respect to the matter for which a party would be entitled to
be indemnified or reimbursed, as the case may be.
EXECUTED ______________ at _________
---------------------------------
Initial Member
SPECIAL MEMBER
By:
------------------------------------
President and Chief Executive Officer
MEMBERS
(All Members now and hereafter
admitted as Members of the Company
pursuant to powers of attorney now
and hereafter executed in favor of,
and delivered to, the Managers or
Appropriate Officers)
By: _____________________________
Attorney-in-Fact
SCHEDULE A
EXCELSIOR VENTURE PARTNERS III, LLC
Schedule of Members
As of May 26, 2000
Name
David I. Fann
SCHEDULE B
EXCELSIOR VENTURE PARTNERS III, LLC
Schedule of Managers
As of May 26, 2000
Name
John C. Hover, II
Gene M. Bernstein
Stephen V. Murphy
Victor F. Imbimbo, Jr.
