Exhibit 10.5

 

LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
ACAS BUSINESS LOAN LLC, 2002-2

 

This Limited Liability Company Operating Agreement (together with the schedules
attached hereto, this “Agreement”) of ACAS BUSINESS LOAN LLC, 2002-2 (the
“Company”), is entered into by AMERICAN CAPITAL STRATEGIES, LTD., as the sole
equity member (“ACAS” or the “Member”), and WILLIAM HOLLORAN and EVELYNE S.
STEWARD, as the Special Members.  Capitalized terms used and not otherwise
defined herein have the meanings set forth on Schedule A hereto.

 

The Member, by execution of this Agreement, hereby forms the Company as a
limited liability company pursuant to and in accordance with this Agreement and
the Delaware Limited Liability Company Act (6 Del. C. §18-101 et seq.), as
amended from time to time (the “Act”), and the Member and the Special Members
hereby agree as follows:

 

Section 1.               Name.

 

The name of the limited liability company formed hereby is ACAS Business Loan
LLC, 2002-2.

 

Section 2.               Principal Business Office.

 

The principal business office of the Company shall be located at 2 Bethesda
Metro Center, 14th Floor, Bethesda, Maryland 20814 or such other location as may
hereafter be determined by the Member.

 

Section 3.               Registered Office.

 

The address of the registered office of the Company in the State of Delaware is
c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington,
Delaware 19808.

 

Section 4.               Registered Agent.

 

The name and address of the registered agent of the Company for service of
process on the Company in the State of Delaware is Corporation Service Company,
2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.

 

Section 5.               Members.

 

(A)             THE MAILING ADDRESS OF THE MEMBER IS SET FORTH ON SCHEDULE B
ATTACHED HERETO.  THE MEMBER WAS ADMITTED TO THE COMPANY AS A MEMBER OF THE
COMPANY UPON ITS EXECUTION OF A COUNTERPART SIGNATURE PAGE TO THIS AGREEMENT.

 

(B)            SUBJECT TO SECTION 9(J), THE MEMBER MAY ACT BY WRITTEN CONSENT
INCLUDING TAKING ACTION PERMITTED HEREUNDER TO BE TAKEN BY THE BOARD.

 

(C)             UPON THE OCCURRENCE OF ANY EVENT THAT CAUSES THE MEMBER TO CEASE
TO BE A MEMBER OF THE COMPANY (OTHER THAN (I) UPON AN ASSIGNMENT BY THE MEMBER
OF ALL OF ITS LIMITED LIABILITY COMPANY INTEREST IN THE COMPANY AND THE
ADMISSION OF THE TRANSFEREE PURSUANT TO SECTIONS 21 AND 23, OR (II) THE
RESIGNATION OF THE MEMBER AND THE ADMISSION OF AN ADDITIONAL MEMBER OF THE
COMPANY PURSUANT TO SECTIONS 22 AND 23), EACH PERSON ACTING AS AN INDEPENDENT
MANAGER PURSUANT TO SECTION 10 SHALL, WITHOUT ANY ACTION OF ANY PERSON AND
SIMULTANEOUSLY WITH THE MEMBER CEASING TO BE A MEMBER OF THE COMPANY,
AUTOMATICALLY BE ADMITTED TO THE COMPANY AS A SPECIAL MEMBER AND SHALL CONTINUE
THE COMPANY WITHOUT

 

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dissolution.  No Special Member may resign from the Company or transfer its
rights as Special Member unless (i) a successor Special Member has been admitted
to the Company as Special Member by executing a counterpart to this Agreement,
and (ii) such successor has also accepted its appointment as Independent Manager
pursuant to Section 10; provided, however, the Special Members shall
automatically cease to be members of the Company upon the admission to the
Company of a substitute Member.  Each Special Member shall be a member of the
Company that has no interest in the profits, losses and capital of the Company
and has no right to receive any distributions of Company assets.  Pursuant to
Section 18-301 of the Act, a Special Member shall not be required to make any
capital contributions to the Company and shall not receive a limited liability
company interest in the Company.  A Special Member, in its capacity as Special
Member, may not bind the Company.  Except as required by any mandatory provision
of the Act, each Special Member, in its capacity as Special Member, shall have
no right to vote on, approve or otherwise consent to any action by, or matter
relating to, the Company, including, without limitation, the merger,
consolidation or conversion of the Company.  In order to implement the admission
to the Company of each Special Member, each person acting as an Independent
Manager pursuant to Section 10 shall execute a counterpart to this Agreement. 
Prior to its admission to the Company as Special Member, each person acting as
an Independent Manager pursuant to Section 10 shall not be a member of the
Company.

 

Section 6.               Certificates.

 

Todd M. Bloomquist is hereby designated as an “authorized person” within the
meaning of the Act, and has executed, delivered and filed the Certificate of
Formation of the Company with the Secretary of State of the State of Delaware. 
Upon the filing of the Certificate of Formation with the Secretary of State of
the State of Delaware, his powers as an “authorized person” ceased, and the
Member thereupon became the designated “authorized person” and shall continue as
the designated “authorized person” within the meaning of the Act.  Unless
otherwise specified by the Board of Managers, the Member or an Officer shall
execute, deliver and file any other certificates, affidavits and other
documentation (and any amendments and/or restatements thereof) necessary for the
Company to qualify to do business in any jurisdiction in which the Company may
wish to conduct business.

 

The existence of the Company as a separate legal entity shall continue until
cancellation of the Certificate of Formation as provided in the Act.

 

Section 7.               Purposes.

 

(A)             THE PURPOSES AND ACTIVITIES TO BE CONDUCTED OR PROMOTED BY THE
COMPANY SHALL BE LIMITED TO THE FOLLOWING:

 

(I)              TO PURCHASE OR OTHERWISE ACQUIRE, OWN OR HOLD PURSUANT TO
CERTAIN TRANSFER AGREEMENTS, CERTAIN LOANS AND ALL COLLECTIONS AND OTHER MONIES
DUE OR TO BECOME DUE IN PAYMENT OF SUCH LOANS, ANY AMOUNTS PAYABLE OR ANY
PAYMENTS MADE UNDER ANY INSURANCE POLICY COVERING SUCH LOANS, THE COLLATERAL
RELATED TO SUCH LOANS, INCLUDING THE RELATED SECURITY INTEREST GRANTED BY THE
OBLIGOR UNDER SUCH LOANS AND ALL PROCEEDS FROM ANY SALE OR OTHER DISPOSITION OF
SUCH COLLATERAL, ALL DOCUMENTS AND RECORDS RELATED TO SUCH LOANS, ALL
GUARANTEES, INDEMNITIES, WARRANTIES AND OTHER AGREEMENTS OR ARRANGEMENTS OF
WHATEVER CHARACTER FROM TIME TO TIME SUPPORTING OR SECURING PAYMENT OF SUCH
LOANS, THE ACCOUNTS RELATING TO SUCH LOANS AND ALL INCOME, PAYMENTS, PRODUCTS,
PROCEEDS AND OTHER BENEFITS OF ANY AND ALL OF THE FOREGOING, ALL AS MORE
PARTICULARLY DESCRIBED IN THE BASIC DOCUMENTS;

 

(II)             TO ENTER INTO, AND PERFORM ITS OBLIGATIONS UNDER, ANY
AGREEMENTS WITH AFFILIATES RELATING TO OR EFFECTING THE TRANSFERS AND
CONVEYANCES OF LOAN ASSETS AS DESCRIBED ABOVE;

 

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(III)            TO TRANSFER THE LOAN ASSETS OR INTERESTS THEREIN (INCLUDING FOR
THE PURPOSE OF ESTABLISHING, FORMING OR FUNDING ONE OR MORE TRUSTS), PURSUANT TO
ONE OR MORE INDENTURES, TRANSFER AND SERVICING AGREEMENT OR OTHER AGREEMENTS,
ENTERED INTO BY AND AMONG, AMONG OTHERS, THE COMPANY, ANY TRUSTEE OR TRUSTEES OR
COLLATERAL AGENT NAMED THEREIN, AND ANY ENTITY ACTING AS SERVICER FOR THE LOAN
ASSETS, AS WELL AS CERTAIN OTHER FINANCING ENTITIES (COLLECTIVELY HEREINAFTER
REFERRED TO AS THE “ENTITIES”), AND TO PERFORM ITS OBLIGATIONS UNDER ANY SUCH
AGREEMENTS;

 

(IV)           TO HOLD AND ENJOY ANY AND ALL OF THE RIGHTS AND PRIVILEGES OF ANY
CERTIFICATES, NOTES OR OTHER OWNERSHIP INTERESTS  (THE “INTERESTS”) ISSUED BY OR
SOLD BY THE ENTITIES TO THE COMPANY UNDER THE RELATED AGREEMENTS AND TO HOLD AND
ENJOY ALL OF THE RIGHTS AND PRIVILEGES OF ANY CLASS OF ANY SERIES OF INTERESTS,
TO SELL, ASSIGN, PLEDGE OR OTHERWISE TRANSFER ANY SUCH INTERESTS OR ANY INTEREST
THEREIN;

 

(V)            TO PERFORM ITS OBLIGATIONS UNDER THE AGREEMENTS PURSUANT TO WHICH
ANY INTERESTS ARE ISSUED, SOLD OR SERVICED;

 

(VI)           TO INVEST THE PROCEEDS DERIVED FROM THE SALE OR OWNERSHIP OF THE
LOAN ASSETS AS DETERMINED BY THE COMPANY’S BOARD OF MANAGERS; AND

 

(VII)          TO ENGAGE IN ANY LAWFUL ACT OR ACTIVITY AND TO EXERCISE ANY
POWERS PERMITTED TO LIMITED LIABILITY COMPANIES ORGANIZED UNDER THE LAWS OF THE
STATE OF DELAWARE THAT ARE RELATED OR INCIDENTAL TO AND NECESSARY, CONVENIENT OR
ADVISABLE FOR THE ACCOMPLISHMENT OF THE ABOVE-MENTIONED PURPOSES (INCLUDING THE
ENTERING INTO OF INTEREST RATE OR BASIS SWAP, CAP, FLOOR OR COLLAR AGREEMENTS,
CURRENCY EXCHANGE AGREEMENTS OR SIMILAR HEDGING TRANSACTIONS AND REFERRAL,
MANAGEMENT, SERVICING AND ADMINISTRATION AGREEMENTS).

 

(B)            THE COMPANY, BY OR THROUGH THE MEMBER, OR ANY MANAGER OR OFFICER
ON BEHALF OF THE COMPANY, MAY ENTER INTO AND PERFORM THE BASIC DOCUMENTS AND ALL
DOCUMENTS, AGREEMENTS, CERTIFICATES OR FINANCING STATEMENTS CONTEMPLATED THEREBY
OR RELATED THERETO, ALL WITHOUT ANY FURTHER ACT, VOTE OR APPROVAL OF ANY OTHER
PERSON NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE ACT OR
APPLICABLE LAW, RULE OR REGULATION.  THE FOREGOING AUTHORIZATION SHALL NOT BE
DEEMED A RESTRICTION ON THE POWERS OF THE MEMBER OR ANY MANAGER OR OFFICER TO
ENTER INTO OTHER AGREEMENTS ON BEHALF OF THE COMPANY, IN EACH CASE IN CONNECTION
WITH PERMITTED ACTIVITIES AND PURPOSES OF THE COMPANY.

 

Section 8.               Powers.

 

Subject to Sections 7 and 9(j), the Company, and the Board of Managers and the
Officers of the Company on behalf of the Company, (i) shall have and exercise
all powers necessary, convenient or incidental to accomplish its purposes as set
forth in Section 7 and (ii) shall have and exercise all of the powers and rights
conferred upon limited liability companies formed pursuant to the Act.

 

Section 9.               Management.

 

(A)             BOARD OF MANAGERS.  SUBJECT TO SECTION 9(J), THE BUSINESS AND
AFFAIRS OF THE COMPANY SHALL BE MANAGED BY OR UNDER THE DIRECTION OF A BOARD OF
ONE OR MORE MANAGERS DESIGNATED BY THE MEMBER.  SUBJECT TO SECTION 10, THE
MEMBER MAY DETERMINE AT ANY TIME IN ITS SOLE AND ABSOLUTE DISCRETION THE NUMBER
OF MANAGERS TO CONSTITUTE THE BOARD.  THE AUTHORIZED NUMBER OF MANAGERS MAY BE
INCREASED OR DECREASED BY THE MEMBER AT ANY TIME IN ITS SOLE AND ABSOLUTE
DISCRETION, UPON NOTICE TO ALL MANAGERS, AND SUBJECT IN ALL CASES TO
SECTION 10.  THE INITIAL NUMBER OF MANAGERS SHALL BE THREE, TWO OF WHICH SHALL
BE INDEPENDENT MANAGERS AS AND TO THE EXTENT REQUIRED BY SECTION 10.  EACH
MANAGER ELECTED, DESIGNATED OR APPOINTED BY THE MEMBER SHALL HOLD OFFICE UNTIL A
SUCCESSOR IS ELECTED AND QUALIFIED OR UNTIL SUCH MANAGER’S EARLIER DEATH,
RESIGNATION, EXPULSION OR REMOVAL.  EACH MANAGER SHALL EXECUTE AND DELIVER THE

 

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MANAGEMENT AGREEMENT.  MANAGERS NEED NOT BE A MEMBER.  THE INITIAL MANAGERS
HEREBY DESIGNATED BY THE MEMBER ARE LISTED ON SCHEDULE D HERETO.

 

(B)            POWERS.  SUBJECT TO SECTION 9(J), THE BOARD OF MANAGERS SHALL
HAVE THE POWER TO DO ANY AND ALL ACTS NECESSARY, CONVENIENT OR INCIDENTAL TO OR
FOR THE FURTHERANCE OF THE PURPOSES DESCRIBED HEREIN, INCLUDING ALL POWERS,
STATUTORY OR OTHERWISE.  SUBJECT TO SECTION 7, THE BOARD OF MANAGERS HAS THE
AUTHORITY TO BIND THE COMPANY.

 

(C)             MEETING OF THE BOARD OF MANAGERS.  THE BOARD OF MANAGERS OF THE
COMPANY MAY HOLD MEETINGS, BOTH REGULAR AND SPECIAL, WITHIN OR OUTSIDE THE STATE
OF DELAWARE.  REGULAR MEETINGS OF THE BOARD MAY BE HELD WITHOUT NOTICE AT SUCH
TIME AND AT SUCH PLACE AS SHALL FROM TIME TO TIME BE DETERMINED BY THE BOARD. 
SPECIAL MEETINGS OF THE BOARD MAY BE CALLED BY THE PRESIDENT ON NOT LESS THAN
ONE DAY’S NOTICE TO EACH MANAGER BY TELEPHONE, FACSIMILE, MAIL, TELEGRAM OR ANY
OTHER MEANS OF COMMUNICATION, AND SPECIAL MEETINGS SHALL BE CALLED BY THE
PRESIDENT OR SECRETARY IN LIKE MANNER AND WITH LIKE NOTICE UPON THE WRITTEN
REQUEST OF ANY ONE OR MORE OF THE MANAGERS.

 

(D)            QUORUM: ACTS OF THE BOARD.  AT ALL MEETINGS OF THE BOARD, A
MAJORITY OF THE MANAGERS SHALL CONSTITUTE A QUORUM FOR THE TRANSACTION OF
BUSINESS AND, EXCEPT AS OTHERWISE PROVIDED IN ANY OTHER PROVISION OF THIS
AGREEMENT, THE ACT OF A MAJORITY OF THE MANAGERS PRESENT AT ANY MEETING AT WHICH
THERE IS A QUORUM SHALL BE THE ACT OF THE BOARD.  IF A QUORUM SHALL NOT BE
PRESENT AT ANY MEETING OF THE BOARD, THE MANAGERS PRESENT AT SUCH MEETING MAY
ADJOURN THE MEETING FROM TIME TO TIME, WITHOUT NOTICE OTHER THAN ANNOUNCEMENT AT
THE MEETING, UNTIL A QUORUM SHALL BE PRESENT.  ANY ACTION REQUIRED OR PERMITTED
TO BE TAKEN AT ANY MEETING OF THE BOARD OR OF ANY COMMITTEE THEREOF MAY BE TAKEN
WITHOUT A MEETING IF ALL MEMBERS OF THE BOARD OR COMMITTEE, AS THE CASE MAY BE,
CONSENT THERETO IN WRITING, AND THE WRITING OR WRITINGS ARE FILED WITH THE
MINUTES OF PROCEEDINGS OF THE BOARD OR COMMITTEE, AS THE CASE MAY BE.

 

(E)             ELECTRONIC COMMUNICATIONS.  MEMBERS OF THE BOARD, OR ANY
COMMITTEE DESIGNATED BY THE BOARD, MAY PARTICIPATE IN MEETINGS OF THE BOARD, OR
ANY COMMITTEE, BY MEANS OF TELEPHONE CONFERENCE OR SIMILAR COMMUNICATIONS
EQUIPMENT THAT ALLOWS ALL PERSONS PARTICIPATING IN THE MEETING TO HEAR EACH
OTHER, AND SUCH PARTICIPATION IN A MEETING SHALL CONSTITUTE PRESENCE IN PERSON
AT THE MEETING.  IF ALL THE PARTICIPANTS ARE PARTICIPATING BY TELEPHONE
CONFERENCE OR SIMILAR COMMUNICATIONS EQUIPMENT, THE MEETING SHALL BE DEEMED TO
BE HELD AT THE PRINCIPAL PLACE OF BUSINESS OF THE COMPANY.

 

(F)             COMMITTEES OF MANAGERS.

 

(I)              SUBJECT TO SECTION 9(J), THE BOARD MAY, BY RESOLUTION PASSED BY
A MAJORITY OF THE WHOLE BOARD, DESIGNATE ONE OR MORE COMMITTEES, EACH COMMITTEE
TO CONSIST OF ONE OR MORE OF THE MANAGERS OF THE COMPANY.  THE BOARD MAY
DESIGNATE ONE OR MORE MANAGERS AS ALTERNATE MEMBERS OF ANY COMMITTEE, WHO MAY
REPLACE ANY ABSENT OR DISQUALIFIED MEMBER AT ANY MEETING OF THE COMMITTEE.

 

(II)             IN THE ABSENCE OR DISQUALIFICATION OF A MEMBER OF A COMMITTEE,
THE MEMBER OR MEMBERS THEREOF PRESENT AT ANY MEETING AND NOT DISQUALIFIED FROM
VOTING, WHETHER OR NOT SUCH MEMBERS CONSTITUTE A QUORUM, MAY UNANIMOUSLY APPOINT
ANOTHER MEMBER OF THE BOARD TO ACT AT THE MEETING IN THE PLACE OF ANY SUCH
ABSENT OR DISQUALIFIED MEMBER.

 

(III)            ANY SUCH COMMITTEE, TO THE EXTENT PROVIDED IN THE RESOLUTION OF
THE BOARD, SHALL HAVE AND MAY EXERCISE ALL THE POWERS AND AUTHORITY OF THE BOARD
IN THE MANAGEMENT OF THE BUSINESS AND AFFAIRS OF THE COMPANY.  SUCH COMMITTEE OR
COMMITTEES SHALL HAVE SUCH NAME OR NAMES AS MAY BE DETERMINED FROM TIME TO TIME
BY RESOLUTION ADOPTED BY THE BOARD.  EACH COMMITTEE SHALL KEEP REGULAR MINUTES
OF ITS MEETINGS AND REPORT THE SAME TO THE BOARD WHEN REQUIRED.

 

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(G)            COMPENSATION OF MANAGERS; EXPENSES.  THE BOARD SHALL HAVE THE
AUTHORITY TO FIX THE COMPENSATION OF MANAGERS.  THE MANAGERS MAY BE PAID THEIR
EXPENSES, IF ANY, OF ATTENDANCE AT MEETINGS OF THE BOARD, WHICH MAY BE A FIXED
SUM FOR ATTENDANCE AT EACH MEETING OF THE BOARD OR A STATED SALARY AS MANAGER. 
NO SUCH PAYMENT SHALL PRECLUDE ANY MANAGER FROM SERVING THE COMPANY IN ANY OTHER
CAPACITY AND RECEIVING COMPENSATION THEREFOR.  MEMBERS OF SPECIAL OR STANDING
COMMITTEES MAY BE ALLOWED LIKE COMPENSATION FOR ATTENDING COMMITTEE MEETINGS.

 

(H)            REMOVAL OF MANAGERS.  UNLESS OTHERWISE RESTRICTED BY LAW, ANY
MANAGER OR THE ENTIRE BOARD OF MANAGERS MAY BE REMOVED OR EXPELLED, WITH OR
WITHOUT CAUSE, AT ANY TIME BY THE MEMBER, AND, SUBJECT TO SECTION 10, ANY
VACANCY CAUSED BY ANY SUCH REMOVAL OR EXPULSION MAY BE FILLED BY ACTION OF THE
MEMBER.

 

(I)              MANAGERS AS AGENTS.  TO THE EXTENT OF THEIR POWERS SET FORTH IN
THIS AGREEMENT AND SUBJECT TO SECTION 9(J), THE MANAGERS ARE AGENTS OF THE
COMPANY FOR THE PURPOSE OF THE COMPANY’S BUSINESS, AND THE ACTIONS OF THE
MANAGERS TAKEN IN ACCORDANCE WITH SUCH POWERS SET FORTH IN THIS AGREEMENT SHALL
BIND THE COMPANY.  NOTWITHSTANDING THE LAST SENTENCE OF SECTION 18-402 OF THE
ACT AND EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT OR IN A RESOLUTION OF
THE MANAGERS, A MANAGER SHALL NOT HAVE THE AUTHORITY TO BIND THE COMPANY.

 

(J)              LIMITATIONS ON THE COMPANY’S ACTIVITIES.

 

(I)              THIS SECTION 9(J) IS BEING ADOPTED IN ORDER TO COMPLY WITH
CERTAIN PROVISIONS REQUIRED IN ORDER TO QUALIFY THE COMPANY AS A “SPECIAL
PURPOSE” ENTITY.

 

(II)             THE MEMBER SHALL NOT, SO LONG AS ANY OBLIGATION IS OUTSTANDING,
AMEND, ALTER, CHANGE OR REPEAL THE DEFINITION OF “INDEPENDENT MANAGER” OR
SECTIONS 5(C), 7, 8, 9, 10, 16, 20, 21, 22, 23, 24, 25, 26 OR 31 OR SCHEDULE A
OF THIS AGREEMENT WITHOUT THE UNANIMOUS WRITTEN CONSENT OF THE BOARD (INCLUDING
ALL INDEPENDENT MANAGERS).  SUBJECT TO THIS SECTION 9(J), THE MEMBER RESERVES
THE RIGHT TO AMEND, ALTER, CHANGE OR REPEAL ANY PROVISIONS CONTAINED IN THIS
AGREEMENT IN ACCORDANCE WITH SECTION 31.

 

(III)            NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT AND ANY
PROVISION OF LAW THAT OTHERWISE SO EMPOWERS THE COMPANY, THE MEMBER, THE BOARD,
ANY OFFICER OR ANY OTHER PERSON, NEITHER THE MEMBER NOR THE BOARD NOR ANY
OFFICER NOR ANY OTHER PERSON SHALL BE AUTHORIZED OR EMPOWERED, NOR SHALL THEY
PERMIT THE COMPANY, WITHOUT THE PRIOR UNANIMOUS WRITTEN CONSENT OF THE MEMBER
AND THE BOARD (INCLUDING ALL INDEPENDENT MANAGERS), TO TAKE ANY MATERIAL ACTION.
 THE BOARD MAY NOT VOTE ON, OR OTHERWISE AUTHORIZE, THE TAKING OF ANY MATERIAL
ACTION UNLESS THERE ARE AT LEAST TWO INDEPENDENT MANAGERS THEN SERVING IN SUCH
CAPACITY IN ACCORDANCE WITH SECTION 10.

 

(IV)           THE BOARD AND THE MEMBER SHALL CAUSE THE COMPANY TO DO OR CAUSE
TO BE DONE ALL THINGS NECESSARY TO PRESERVE AND KEEP IN FULL FORCE AND EFFECT
ITS EXISTENCE, RIGHTS (CHARTER AND STATUTORY) AND FRANCHISES; PROVIDED, HOWEVER,
THAT THE COMPANY SHALL NOT BE REQUIRED TO PRESERVE ANY SUCH RIGHT OR FRANCHISE
IF: (1) THE BOARD SHALL DETERMINE THAT THE PRESERVATION THEREOF IS NO LONGER
DESIRABLE FOR THE CONDUCT OF ITS BUSINESS AND THAT THE LOSS THEREOF IS NOT
DISADVANTAGEOUS IN ANY MATERIAL RESPECT TO THE COMPANY AND (2) THE RATING AGENCY
CONDITION IS SATISFIED.  THE BOARD ALSO SHALL CAUSE THE COMPANY TO:

 

(A)          MAINTAIN ITS OWN SEPARATE BOOKS AND RECORDS AND BANK ACCOUNTS;

 

(B)           AT ALL TIMES HOLD ITSELF OUT TO THE PUBLIC AND ALL OTHER PERSONS
AS A LEGAL ENTITY SEPARATE FROM THE MEMBER AND ANY OTHER PERSON;

 

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(C)           HAVE A BOARD OF MANAGERS SEPARATE FROM THAT OF THE MEMBER AND ANY
OTHER PERSON;

 

(D)          FILE ITS OWN TAX RETURNS, IF ANY, AS MAY BE REQUIRED UNDER
APPLICABLE LAW, TO THE EXTENT (1) NOT PART OF A CONSOLIDATED GROUP FILING A
CONSOLIDATED RETURN OR RETURNS OR (2) NOT TREATED AS A DIVISION FOR TAX PURPOSES
OF ANOTHER TAXPAYER, AND PAY ANY TAXES SO REQUIRED TO BE PAID UNDER APPLICABLE
LAW;

 

(E)           EXCEPT AS CONTEMPLATED BY THE BASIC DOCUMENTS, NOT COMMINGLE ITS
ASSETS WITH ASSETS OF ANY OTHER PERSON;

 

(F)           CONDUCT ITS BUSINESS IN ITS OWN NAME AND STRICTLY COMPLY WITH ALL
ORGANIZATIONAL FORMALITIES TO MAINTAIN ITS SEPARATE EXISTENCE;

 

(G)           MAINTAIN SEPARATE FINANCIAL STATEMENTS, SHOWING ITS ASSETS AND
LIABILITIES SEPARATE AND APART FROM ANY OTHER PERSON OR ENTITY;

 

(H)          PAY ITS OWN LIABILITIES ONLY OUT OF ITS OWN FUNDS;

 

(I)            MAINTAIN AN ARM’S LENGTH AND COMMERCIALLY REASONABLE RELATIONSHIP
WITH ITS AFFILIATES AND THE MEMBER;

 

(J)            NOT IDENTIFY ITSELF AS A DIVISION OF ANY OTHER PERSON;

 

(K)          PAY THE SALARIES OF ITS OWN EMPLOYEES, IF ANY;

 

(L)           NOT HOLD OUT ITS CREDIT OR ASSETS AS BEING AVAILABLE TO SATISFY
THE OBLIGATIONS OF OTHERS;

 

(M)         ALLOCATE FAIRLY AND REASONABLY ANY OVERHEAD FOR SHARED OFFICE SPACE;

 

(N)          USE SEPARATE STATIONERY, INVOICES AND CHECKS;

 

(O)          EXCEPT AS CONTEMPLATED BY THE BASIC DOCUMENTS, NOT PLEDGE ITS
ASSETS FOR THE BENEFIT OF ANY OTHER PERSON;

 

(P)           CORRECT ANY KNOWN MISUNDERSTANDING REGARDING ITS SEPARATE
IDENTITY;

 

(Q)          MAINTAIN ADEQUATE CAPITAL IN LIGHT OF ITS CONTEMPLATED BUSINESS
PURPOSE, TRANSACTIONS AND LIABILITIES;

 

(R)           CAUSE ITS BOARD OF MANAGERS TO MEET AT LEAST ANNUALLY OR ACT
PURSUANT TO WRITTEN CONSENT AND KEEP MINUTES OF SUCH MEETINGS AND ACTIONS AND
OBSERVE ALL OTHER DELAWARE LIMITED LIABILITY COMPANY FORMALITIES;

 

(S)           NOT ACQUIRE ANY SECURITIES OF THE MEMBER; AND

 

(T)           CAUSE THE MANAGERS, OFFICERS, AGENTS AND OTHER REPRESENTATIVES OF
THE COMPANY TO ACT AT ALL TIMES WITH RESPECT TO THE COMPANY CONSISTENTLY AND IN
FURTHERANCE OF THE FOREGOING AND IN THE BEST INTERESTS OF THE COMPANY.

 

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Failure of the Company, or the Member or Board on behalf of the Company, to
comply with any of the foregoing covenants or any other covenants contained in
this Agreement shall not affect the status of the Company as a separate legal
entity or the limited liability of the Member or the Managers.

 

(V)            SO LONG AS ANY OBLIGATION IS OUTSTANDING, THE BOARD SHALL NOT
CAUSE OR PERMIT THE COMPANY TO:

 

(A)          EXCEPT AS CONTEMPLATED BY THE BASIC DOCUMENTS, GUARANTEE ANY
OBLIGATION OF ANY PERSON, INCLUDING ANY AFFILIATE;

 

(B)           ENGAGE, DIRECTLY OR INDIRECTLY, IN ANY BUSINESS OTHER THAN THE
ACTIONS REQUIRED OR PERMITTED TO BE PERFORMED UNDER SECTION 7, THE BASIC
DOCUMENTS OR THIS SECTION 9(J);

 

(C)           INCUR, CREATE OR ASSUME ANY INDEBTEDNESS OTHER THAN AS EXPRESSLY
PERMITTED UNDER THE BASIC DOCUMENTS;

 

(D)          MAKE OR PERMIT TO REMAIN OUTSTANDING ANY LOAN OR ADVANCE TO, OR OWN
OR ACQUIRE ANY STOCK OR SECURITIES OF, ANY PERSON, EXCEPT THAT THE COMPANY MAY
INVEST IN THOSE INVESTMENTS PERMITTED UNDER THE BASIC DOCUMENTS AND MAY MAKE ANY
ADVANCE REQUIRED OR EXPRESSLY PERMITTED TO BE MADE PURSUANT TO ANY PROVISIONS OF
THE BASIC DOCUMENTS AND PERMIT THE SAME TO REMAIN OUTSTANDING IN ACCORDANCE WITH
SUCH PROVISIONS;

 

(E)           TO THE FULLEST EXTENT PERMITTED BY LAW, ENGAGE IN ANY DISSOLUTION,
LIQUIDATION, CONSOLIDATION, MERGER, ASSET SALE OR TRANSFER OF OWNERSHIP
INTERESTS OTHER THAN SUCH ACTIVITIES AS ARE EXPRESSLY PERMITTED PURSUANT TO ANY
PROVISION OF THE BASIC DOCUMENTS; OR

 

(F)           FORM, ACQUIRE OR HOLD ANY SUBSIDIARY (WHETHER CORPORATE,
PARTNERSHIP, LIMITED LIABILITY COMPANY OR OTHER).

 

Section 10.             Independent Managers.

 

As long as any Obligation is outstanding, the Member shall cause the Company at
all times to have at least two Independent Managers who will be appointed by the
Member.  To the fullest extent permitted by law, including Section 18-1101(c) of
the Act, the Independent Managers shall consider only the interests of the
Company, including its respective creditors, in acting or otherwise voting on
the matters referred to in Section 9(j)(iii).  No resignation or removal of an
Independent Manager, and no appointment of a successor Independent Manager,
shall be effective until such successor (i) shall have accepted his or her
appointment as an Independent Manager by a written instrument, which may be a
counterpart signature page to the Management Agreement, and (ii) shall have
executed a counterpart to this Agreement as required by Section 5(c).  In the
event of a vacancy in the position of Independent Manager, the Member shall, as
soon as practicable, appoint a successor Independent Manager.  All right, power
and authority of the Independent Managers shall be limited to the extent
necessary to exercise those rights and perform those duties specifically set
forth in this Agreement.  Except as provided in the second sentence of this
Section 10, in exercising their rights and performing their duties under this
Agreement, any Independent Manager shall have a fiduciary duty of loyalty and
care similar to that of a director of a business corporation organized under the
General Corporation Law of the State of Delaware.  No Independent Manager shall
at any time serve as trustee in bankruptcy for any Affiliate of the Company. 
The initial Independent Managers appointed hereby shall be as set forth in
Schedule D hereto.

 

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Section 11.             Officers.

 

(A)             OFFICERS.  THE INITIAL OFFICERS OF THE COMPANY SHALL BE
DESIGNATED BY THE MEMBER.  THE ADDITIONAL OR SUCCESSOR OFFICERS OF THE COMPANY
SHALL BE CHOSEN BY THE BOARD AND SHALL CONSIST OF AT LEAST A PRESIDENT, A
SECRETARY AND A TREASURER.  THE BOARD OF MANAGERS MAY ALSO CHOOSE ONE OR MORE
VICE PRESIDENTS, ASSISTANT SECRETARIES AND ASSISTANT TREASURERS.  ANY NUMBER OF
OFFICES MAY BE HELD BY THE SAME PERSON. THE BOARD SHALL CHOOSE A PRESIDENT, A
SECRETARY AND A TREASURER.  THE BOARD MAY APPOINT SUCH OTHER OFFICERS AND AGENTS
AS IT SHALL DEEM NECESSARY OR ADVISABLE 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.  THE SALARIES OF ALL OFFICERS AND
AGENTS OF THE COMPANY SHALL BE FIXED BY OR IN THE MANNER PRESCRIBED BY THE
BOARD.  THE OFFICERS OF THE COMPANY SHALL HOLD OFFICE UNTIL THEIR SUCCESSORS ARE
CHOSEN AND QUALIFIED.  ANY OFFICER MAY BE REMOVED AT ANY TIME, WITH OR WITHOUT
CAUSE, BY THE AFFIRMATIVE VOTE OF A MAJORITY OF THE BOARD.  ANY VACANCY
OCCURRING IN ANY OFFICE OF THE COMPANY SHALL BE FILLED BY THE BOARD.  THE
INITIAL OFFICERS OF THE COMPANY DESIGNATED BY THE MEMBER ARE LISTED ON
SCHEDULE E HERETO.

 

(B)            PRESIDENT.  THE PRESIDENT SHALL BE THE CHIEF EXECUTIVE OFFICER OF
THE COMPANY, SHALL PRESIDE AT ALL MEETINGS OF THE BOARD, SHALL BE RESPONSIBLE
FOR THE GENERAL AND ACTIVE MANAGEMENT OF THE BUSINESS OF THE COMPANY AND SHALL
SEE THAT ALL ORDERS AND RESOLUTIONS OF THE BOARD ARE CARRIED INTO EFFECT.  THE
PRESIDENT OR ANY OTHER OFFICER AUTHORIZED BY THE PRESIDENT OR THE BOARD SHALL
EXECUTE ALL BONDS, MORTGAGES AND OTHER CONTRACTS, EXCEPT: (I) WHERE REQUIRED OR
PERMITTED BY LAW OR THIS AGREEMENT TO BE OTHERWISE SIGNED AND EXECUTED,
INCLUDING SECTION 7(B); (II) WHERE SIGNING AND EXECUTION THEREOF SHALL BE
EXPRESSLY DELEGATED BY THE BOARD TO SOME OTHER OFFICER OR AGENT OF THE COMPANY,
AND (III) AS OTHERWISE PERMITTED IN SECTION 11(C).

 

(C)             VICE PRESIDENT.  IN THE ABSENCE OF THE PRESIDENT OR IN THE EVENT
OF THE PRESIDENT’S INABILITY TO ACT, THE VICE PRESIDENT, IF ANY (OR IN THE EVENT
THERE BE MORE THAN ONE VICE PRESIDENT, THE VICE PRESIDENTS IN THE ORDER
DESIGNATED BY THE MANAGERS, OR IN THE ABSENCE OF ANY DESIGNATION, THEN IN THE
ORDER OF THEIR ELECTION), 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.  THE VICE PRESIDENTS, IF ANY, SHALL PERFORM SUCH OTHER DUTIES AND
HAVE SUCH OTHER POWERS AS THE BOARD MAY FROM TIME TO TIME PRESCRIBE.

 

(D)            SECRETARY AND ASSISTANT SECRETARY.  THE SECRETARY SHALL BE
RESPONSIBLE FOR FILING LEGAL DOCUMENTS AND MAINTAINING RECORDS FOR THE COMPANY. 
THE SECRETARY SHALL ATTEND ALL MEETINGS OF THE BOARD AND RECORD ALL THE
PROCEEDINGS OF THE MEETINGS OF THE COMPANY AND OF THE BOARD IN A BOOK TO BE KEPT
FOR THAT PURPOSE AND SHALL PERFORM LIKE DUTIES FOR THE STANDING COMMITTEES WHEN
REQUIRED.  THE SECRETARY SHALL GIVE, OR SHALL CAUSE TO BE GIVEN, NOTICE OF ALL
MEETINGS OF THE MEMBER, IF ANY, AND SPECIAL MEETINGS OF THE BOARD, AND SHALL
PERFORM SUCH OTHER DUTIES AS MAY BE PRESCRIBED BY THE BOARD OR THE PRESIDENT,
UNDER WHOSE SUPERVISION THE SECRETARY SHALL SERVE.  THE ASSISTANT SECRETARY, OR
IF THERE BE MORE THAN ONE, THE ASSISTANT SECRETARIES IN THE ORDER DETERMINED BY
THE BOARD (OR IF THERE BE NO SUCH DETERMINATION, THEN IN ORDER OF THEIR
ELECTION), SHALL, IN THE ABSENCE OF THE SECRETARY OR IN THE EVENT OF THE
SECRETARY’S INABILITY TO ACT, PERFORM THE DUTIES AND EXERCISE THE POWERS OF THE
SECRETARY AND SHALL PERFORM SUCH OTHER DUTIES AND HAVE SUCH OTHER POWERS AS THE
BOARD MAY FROM TIME TO TIME PRESCRIBE.

 

(E)             TREASURER AND ASSISTANT TREASURER.  THE TREASURER SHALL HAVE THE
CUSTODY OF THE COMPANY 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. 
THE TREASURER SHALL DISBURSE THE FUNDS OF THE COMPANY AS MAY BE ORDERED BY THE
BOARD, TAKING PROPER VOUCHERS FOR SUCH DISBURSEMENTS, AND SHALL RENDER TO THE
PRESIDENT AND TO THE BOARD, AT ITS REGULAR MEETINGS OR WHEN THE BOARD SO
REQUIRES, AN ACCOUNT OF ALL OF THE TREASURER’S TRANSACTIONS AND OF THE FINANCIAL
CONDITION OF THE COMPANY.  THE ASSISTANT TREASURER, OR IF THERE SHALL BE MORE
THAN ONE, THE ASSISTANT TREASURERS IN THE

 

8

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ORDER DETERMINED BY THE BOARD (OR IF THERE BE NO SUCH DETERMINATION, THEN IN THE
ORDER OF THEIR ELECTION), SHALL, IN THE ABSENCE OF THE TREASURER OR IN THE EVENT
OF THE TREASURER’S INABILITY TO ACT, PERFORM THE DUTIES AND EXERCISE THE POWERS
OF THE TREASURER AND SHALL PERFORM SUCH OTHER DUTIES AND HAVE SUCH OTHER POWERS
AS THE BOARD MAY FROM TIME TO TIME PRESCRIBE.

 

(F)             OFFICERS AS AGENTS.  THE OFFICERS, TO THE EXTENT OF THEIR POWERS
SET FORTH IN THIS AGREEMENT OR OTHERWISE VESTED IN THEM BY ACTION OF THE BOARD
NOT INCONSISTENT WITH THIS AGREEMENT, ARE AGENTS OF THE COMPANY FOR THE PURPOSE
OF THE COMPANY’S BUSINESS AND, SUBJECT TO SECTION 9(J), THE ACTIONS OF THE
OFFICERS TAKEN IN ACCORDANCE WITH SUCH POWERS SHALL BIND THE COMPANY.

 

(G)            DUTIES OF BOARD AND OFFICERS.  EXCEPT TO THE EXTENT OTHERWISE
PROVIDED HEREIN, EACH MANAGER AND OFFICER SHALL HAVE A FIDUCIARY DUTY OF LOYALTY
AND CARE SIMILAR TO THAT OF DIRECTORS AND OFFICERS OF BUSINESS CORPORATIONS
ORGANIZED UNDER THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE.

 

Section 12.             Limited Liability.

 

Except as otherwise expressly provided by the Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be the debts, obligations and liabilities solely of the Company, and
neither the Member nor the Special Members nor any Manager or Officer shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member, Special Member, Manager or Officer of the
Company.

 

Section 13.             Capital Contributions.

 

The Member has contributed to the Company property of an agreed value as listed
on Schedule B attached hereto.  In accordance with Section 5(c), the Special
Members shall not be required to make any capital contributions to the Company.

 

Section 14.             Additional Contributions.

 

The Member is not required to make any additional capital contribution to the
Company.  However, the Member may, in its discretion, make additional capital
contributions to the Company at any time.  To the extent that the Member makes
an additional capital contribution to the Company, the Member shall revise
Schedule B of this Agreement to reflect such additional capital contribution. 
The provisions of this Agreement, including this Section 14, are intended to
benefit the Member and the Special Members and, to the fullest extent permitted
by law, shall not be construed as conferring any benefit upon any creditor of
the Company (and no such creditor of the Company shall be a third-party
beneficiary of this Agreement) and the Member and the Special Members shall not
have any duty or obligation to any creditor of the Company to make any
contribution to the Company or to issue any call for capital pursuant to this
Agreement.

 

Section 15.             Allocation of Profits and Losses.

 

The Company’s profits and losses shall be allocated to the Member.

 

Section 16.             Distributions.

 

Distributions shall be made to the Member at the times and in the aggregate
amounts determined by the Board.  Notwithstanding any provision to the contrary
contained in this Agreement, the Company shall not be required to make a
distribution to the Member on account of its interest in the Company if

 

9

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such distribution would violate Section 18-607 of the Act or any other
applicable law or any Basic Document.

 

Section 17.             Books and Records.

 

The Board shall keep or cause to be kept complete and accurate books of account
and records with respect to the Company’s business.  The books of the Company
shall at all times be maintained by the Board.  The Member and its duly
authorized representatives shall have the right to examine the Company books,
records and documents during normal business hours.  The Company, and the Board
on behalf of the Company, shall not have the right to keep confidential from the
Member any information that the Board would otherwise be permitted to keep
confidential from the Member pursuant to Section 18-305(c) of the Act.  The
Company’s books of account shall be kept using the method of accounting
determined by the Member.  The Company’s independent auditor, if any, shall be
an independent public accounting firm selected by the Member.

 

Section 18.             Reserved.

 

Section 19.             Other Business.

 

The Member, the Special Members and any Affiliate of the Member or the Special
Members may engage in or possess an interest in other business ventures
(unconnected with the Company) of every kind and description, independently or
with others.  The Company shall not have any rights in or to such independent
ventures or the income or profits therefrom by virtue of this Agreement.

 

Section 20.             Exculpation and Indemnification.

 

(A)             NEITHER THE MEMBER NOR THE SPECIAL MEMBERS NOR ANY OFFICER,
MANAGER, EMPLOYEE OR AGENT OF THE COMPANY NOR ANY EMPLOYEE, REPRESENTATIVE,
AGENT OR AFFILIATE OF THE MEMBER OR THE SPECIAL MEMBERS (COLLECTIVELY, THE
“COVERED PERSONS”) SHALL BE LIABLE TO THE COMPANY OR ANY OTHER PERSON WHO HAS AN
INTEREST IN OR CLAIM AGAINST THE COMPANY FOR ANY LOSS, DAMAGE OR CLAIM INCURRED
BY REASON OF ANY ACT OR OMISSION PERFORMED OR OMITTED BY SUCH COVERED PERSON IN
GOOD FAITH ON BEHALF OF THE COMPANY AND IN A MANNER REASONABLY BELIEVED TO BE
WITHIN THE SCOPE OF THE AUTHORITY CONFERRED ON SUCH COVERED PERSON BY THIS
AGREEMENT, EXCEPT THAT A COVERED PERSON SHALL BE LIABLE FOR ANY SUCH LOSS,
DAMAGE OR CLAIM INCURRED BY REASON OF SUCH COVERED PERSON’S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.

 

(B)            TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, A COVERED
PERSON SHALL BE ENTITLED TO INDEMNIFICATION FROM THE COMPANY FOR ANY LOSS,
DAMAGE OR CLAIM INCURRED BY SUCH COVERED PERSON BY REASON OF ANY ACT OR OMISSION
PERFORMED OR OMITTED BY SUCH COVERED PERSON IN GOOD FAITH ON BEHALF OF THE
COMPANY AND IN A MANNER REASONABLY BELIEVED TO BE WITHIN THE SCOPE OF THE
AUTHORITY CONFERRED ON SUCH COVERED PERSON BY THIS AGREEMENT, EXCEPT THAT NO
COVERED PERSON SHALL BE ENTITLED TO BE INDEMNIFIED IN RESPECT OF ANY LOSS,
DAMAGE OR CLAIM INCURRED BY SUCH COVERED PERSON BY REASON OF SUCH COVERED
PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT WITH RESPECT TO SUCH ACTS OR
OMISSIONS; PROVIDED, HOWEVER, THAT ANY INDEMNITY UNDER THIS SECTION 20 BY THE
COMPANY SHALL BE PROVIDED OUT OF AND TO THE EXTENT OF COMPANY ASSETS ONLY, AND
THE MEMBER AND THE SPECIAL MEMBERS SHALL NOT HAVE PERSONAL LIABILITY ON ACCOUNT
THEREOF; AND PROVIDED FURTHER, THAT SO LONG AS ANY OBLIGATION IS OUTSTANDING, NO
INDEMNITY PAYMENT FROM FUNDS OF THE COMPANY (AS DISTINCT FROM FUNDS FROM OTHER
SOURCES, SUCH AS INSURANCE) IN RESPECT OF ANY INDEMNITY UNDER THIS SECTION 20
SHALL BE PAYABLE FROM AMOUNTS ALLOCABLE TO ANY OTHER PERSON PURSUANT TO THE
BASIC DOCUMENTS.

 

(C)           TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EXPENSES
(INCLUDING LEGAL FEES) INCURRED BY A COVERED PERSON DEFENDING ANY CLAIM, DEMAND,
ACTION, SUIT OR PROCEEDING SHALL, FROM TIME TO TIME, BE

 

10

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ADVANCED BY THE COMPANY PRIOR TO THE FINAL DISPOSITION OF SUCH CLAIM, DEMAND,
ACTION, SUIT OR PROCEEDING UPON RECEIPT BY THE COMPANY OF AN UNDERTAKING BY OR
ON BEHALF OF THE COVERED PERSON TO REPAY SUCH AMOUNT IF IT SHALL BE DETERMINED
THAT THE COVERED PERSON IS NOT ENTITLED TO BE INDEMNIFIED AS AUTHORIZED IN THIS
SECTION 20.

 

(D)            A COVERED PERSON SHALL BE FULLY PROTECTED IN RELYING IN GOOD
FAITH UPON THE RECORDS, OF THE COMPANY AND UPON SUCH INFORMATION, OPINIONS,
REPORTS OR STATEMENTS PRESENTED TO THE COMPANY BY ANY PERSON AS TO MATTERS THE
COVERED PERSON REASONABLY BELIEVES ARE WITHIN SUCH OTHER PERSON’S PROFESSIONAL
OR EXPERT COMPETENCE AND WHO HAS BEEN SELECTED WITH REASONABLE CARE BY OR ON
BEHALF OF THE COMPANY, INCLUDING INFORMATION, OPINIONS, REPORTS OR STATEMENTS AS
TO THE VALUE AND AMOUNT OF THE ASSETS, LIABILITIES, OR ANY OTHER FACTS PERTINENT
TO THE EXISTENCE AND AMOUNT OF ASSETS FROM WHICH DISTRIBUTIONS TO THE MEMBER
MIGHT PROPERLY BE PAID.

 

(E)             TO THE EXTENT THAT, AT LAW OR IN EQUITY, A COVERED PERSON HAS
DUTIES (INCLUDING FIDUCIARY DUTIES) AND LIABILITIES RELATING THERETO TO THE
COMPANY OR TO ANY OTHER COVERED PERSON, A COVERED PERSON ACTING UNDER THIS
AGREEMENT SHALL NOT BE LIABLE TO THE COMPANY OR TO ANY OTHER COVERED PERSON FOR
ITS GOOD FAITH RELIANCE ON THE PROVISIONS OF THIS AGREEMENT OR ANY APPROVAL OR
AUTHORIZATION GRANTED BY THE COMPANY OR ANY OTHER COVERED PERSON.  THE
PROVISIONS OF THIS AGREEMENT, TO THE EXTENT THAT THEY RESTRICT THE DUTIES AND
LIABILITIES OF A COVERED PERSON OTHERWISE EXISTING AT LAW OR IN EQUITY, ARE
AGREED BY THE MEMBER AND THE SPECIAL MEMBERS TO REPLACE SUCH OTHER DUTIES AND
LIABILITIES OF SUCH COVERED PERSON.

 

(F)             THE FOREGOING PROVISIONS OF THIS SECTION 20 SHALL SURVIVE ANY
TERMINATION OF THIS AGREEMENT.

 

Section 21.             Assignments.

 

Subject to Section 23, the Member may assign in whole or in part its limited
liability company interest in the Company.  If the Member transfers all of its
limited liability company interest in the Company pursuant to this Section 21,
the transferee shall be admitted to the Company as a member of the Company upon
its execution of an instrument signifying its agreement to be bound by the terms
and conditions of this Agreement, which instrument may be a counterpart
signature page to this Agreement.  Such admission shall be deemed effective
immediately prior to the transfer and, immediately following such admission, the
transferor Member shall cease to be a member of the Company.  Notwithstanding
anything in this Agreement to the contrary, any successor to the Member by
merger or consolidation in compliance with the Basic Documents shall, without
further act, be the Member hereunder, and such merger or consolidation shall not
constitute an assignment for purposes of this Agreement and the Company shall
continue without dissolution.

 

Section 22.             Resignation.

 

So long as any Obligation is outstanding, the Member may not resign, except as
permitted under the Basic Documents and if the Rating Agency Condition is
satisfied.  If the Member is permitted to resign pursuant to this Section 22, an
additional member of the Company shall be admitted to the Company, subject to
Section 23, upon its execution of an instrument signifying its agreement to be
bound by the terms and conditions of this Agreement, which instrument may be a
counterpart signature page to this Agreement.  Such admission shall be deemed
effective immediately prior to the resignation and, immediately following such
admission, the resigning Member shall cease to be a member of the Company.

 

11

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Section 23.             Admission of Additional Members.

 

One or more additional members of the Company may be admitted to the Company
with the written consent of the Member; provided, however, that, notwithstanding
the foregoing, so long as any Obligation remains outstanding, no additional
Member may be admitted to the Company unless the Rating Agency Condition is
satisfied.

 

Section 24.             Dissolution.

 

(A)             SUBJECT TO SECTION 9(J), THE COMPANY SHALL BE DISSOLVED, AND ITS
AFFAIRS SHALL BE WOUND UP UPON THE FIRST TO OCCUR OF THE FOLLOWING: (I) THE
TERMINATION OF THE LEGAL EXISTENCE OF THE LAST REMAINING MEMBER OF THE COMPANY
OR THE OCCURRENCE OF ANY OTHER EVENT WHICH TERMINATES THE CONTINUED MEMBERSHIP
OF THE LAST REMAINING MEMBER OF THE COMPANY IN THE COMPANY UNLESS THE BUSINESS
OF THE COMPANY IS CONTINUED IN A MANNER PERMITTED BY THIS AGREEMENT OR THE ACT
OR (II) THE ENTRY OF A DECREE OF JUDICIAL DISSOLUTION UNDER SECTION 18-802 OF
THE ACT.  UPON THE OCCURRENCE OF ANY EVENT THAT CAUSES THE LAST REMAINING MEMBER
OF THE COMPANY TO CEASE TO BE A MEMBER OF THE COMPANY, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE PERSONAL REPRESENTATIVE OF SUCH MEMBER IS HEREBY
AUTHORIZED TO, AND SHALL, WITHIN 90 DAYS AFTER THE OCCURRENCE OF THE EVENT THAT
TERMINATED THE CONTINUED MEMBERSHIP OF SUCH MEMBER IN THE COMPANY, AGREE IN
WRITING (I) TO CONTINUE THE COMPANY AND (II) TO THE ADMISSION OF THE PERSONAL
REPRESENTATIVE OR ITS NOMINEE OR DESIGNEE, AS THE CASE MAY BE, AS A SUBSTITUTE
MEMBER OF THE COMPANY, EFFECTIVE AS OF THE OCCURRENCE OF THE EVENT THAT
TERMINATED THE CONTINUED MEMBERSHIP OF THE LAST REMAINING MEMBER OF THE COMPANY
IN THE COMPANY.

 

(B)            NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE
BANKRUPTCY OF THE MEMBER OR A SPECIAL MEMBER SHALL NOT CAUSE THE MEMBER OR
SPECIAL MEMBER, RESPECTIVELY, TO CEASE TO BE A MEMBER OF THE COMPANY AND UPON
THE OCCURRENCE OF SUCH AN EVENT, THE BUSINESS OF THE COMPANY SHALL CONTINUE
WITHOUT DISSOLUTION.

 

(C)             IN THE EVENT OF DISSOLUTION, THE COMPANY SHALL CONDUCT ONLY SUCH
ACTIVITIES AS ARE NECESSARY TO WIND UP ITS AFFAIRS (INCLUDING THE SALE OF THE
ASSETS OF THE COMPANY IN AN ORDERLY MANNER), AND THE ASSETS OF THE COMPANY SHALL
BE APPLIED IN THE MANNER, AND IN THE ORDER OF PRIORITY, SET FORTH IN
SECTION 18-804 OF THE ACT.

 

(D)            THE COMPANY SHALL TERMINATE WHEN (I) ALL OF THE ASSETS OF THE
COMPANY, AFTER PAYMENT OF OR DUE PROVISION FOR ALL DEBTS, LIABILITIES AND
OBLIGATIONS OF THE COMPANY SHALL HAVE BEEN DISTRIBUTED TO THE MEMBER IN THE
MANNER PROVIDED FOR IN THIS AGREEMENT AND (II) THE CERTIFICATE OF FORMATION
SHALL HAVE BEEN CANCELED IN THE MANNER REQUIRED BY THE ACT.

 

Section 25.             Waiver of Partition: Nature of Interest.

 

Except as otherwise expressly provided in this Agreement, to the fullest extent
permitted by law, each of the Member and the Special Members hereby irrevocably
waives any right or power that such Person might have to cause the Company or
any of its assets to be partitioned, to cause the appointment of a receiver for
all or any portion of the assets of the Company, to compel any sale of all or
any portion of the assets of the Company pursuant to any applicable law or to
file a complaint or to institute any proceeding at law or in equity to cause the
dissolution, liquidation, winding up or termination of the Company.  The Member
shall not have any interest in any specific assets of the Company, and the
Member shall not have the status of a creditor with respect to any distribution
pursuant to Section 16 hereof.  The interest of the Member in the Company is
personal property.

 

12

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Section 26.             Benefits of Agreement; No Third-Party Rights.

 

None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditor of the Company or by any creditor of the Member or a
Special Member.  Nothing in this Agreement shall be deemed to create any right
in any Person (other than Covered Persons) not a party hereto, and this
Agreement shall not be construed in any respect to be a contract in whole or in
part for the benefit of any third Person (except as provided in Section 29).

 

Section 27.             Severability of Provisions.

 

Each provision of this Agreement shall be considered severable and if for any
reason any provision or provisions herein are determined to be invalid,
unenforceable or illegal under any existing or future law, such invalidity,
unenforceability or illegality shall not impair the operation of or affect those
portions of this Agreement which are valid, enforceable and legal.

 

Section 28.             Entire Agreement.

 

This Agreement constitutes the entire agreement of the parties with respect to
the subject matter hereof.

 

Section 29.             Binding Agreement.

 

Notwithstanding any other provision of this Agreement, the Member agrees that
this Agreement, including, without limitation, Sections 7, 8, 9, 10, 20, 21, 22,
23, 24, 26, 29 and 31, constitutes a legal, valid and binding agreement of the
Member, and is enforceable against the Member by the Independent Managers, in
accordance with its terms.  In addition, the Independent Managers shall be
intended beneficiaries of this Agreement.

 

Section 30.             Governing Law.

 

This Agreement shall be governed by and construed under the laws of the State of
Delaware (without regard to conflict of laws principles), all rights and
remedies being governed by said laws.

 

Section 31.             Amendments.

 

Subject to Section 9(j), this Agreement may not be modified, altered,
supplemented or amended except pursuant to a written agreement executed and
delivered by the Member.  Notwithstanding anything to the contrary in this
Agreement, so long as any Obligation is outstanding, this Agreement may not be
modified, altered, supplemented or amended unless the Rating Agency Condition is
satisfied except: (i) to cure any ambiguity or (ii) to convert or supplement any
provision in a manner consistent with the intent of this Agreement and the other
Basic Documents.

 

Section 32.             Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original of this Agreement and all of which together shall
constitute one and the same instrument.

 

Section 33.             Notices.

 

Any notices required to be delivered hereunder shall be in writing and
personally delivered, mailed or sent by telecopy, electronic mail or other
similar form of rapid transmission, and shall be

 

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deemed to have been duly given upon receipt (a) in the case of the Company, to
the Company at its address in Section 2, (b) in the case of the Member, to the
Member at its address as listed on Schedule B attached hereto and (c) in the
case of either of the foregoing, at such other address as may be designated by
written notice to the other party.

 

Section 34.             Effectiveness.

 

Pursuant to Section 18-201(d) of the Act, this Agreement shall be effective as
of the time of the filing of the Certificate of Formation with the Office of the
Delaware Secretary of State on July 23, 2002.

 

Section 35.             Tax Matters.

 

The Member intends to form a limited liability company and does not intend to
form a partnership under the laws of the State of Delaware or any other laws. 
It is the intention of the parties hereto that the Company be disregarded as a
separate entity for federal income tax purposes pursuant to Treasury Regulation
Section 301.7701-3(b)(1)(ii) as in effect for periods after January 1, 1997. 
The parties agree not to take any action inconsistent with such intended federal
income tax treatment.

 

14

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, has
duly executed this Limited Liability Company Agreement as of the 23rd day of
July, 2002.

 

 

MEMBER:

 

 

 

AMERICAN CAPITAL STRATEGIES, LTD.

 

 

 

 

 

By:

 

 

Name:

John Erickson

 

Title:

Vice President and Chief Financial Officer

 

 

 

 

 

 

 

SPECIAL MEMBERS:

 

 

 

 

 

 

 

Name:

William Holloran

 

 

 

 

 

 

 

 

 

Name:

Evelyne S. Steward

 

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SCHEDULE A

 

Definitions

 

A.            Definitions

 

When used in this Agreement, the following terms not otherwise defined herein
have the following meanings:

 

“Act” has the meaning set forth in the preamble to this Agreement.

 

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such Person.  “Affiliated” shall have a correlative meaning.

 

“Agreement” means this Limited Liability Company Operating Agreement of the
Company, together with the schedules attached hereto, as amended, restated or
supplemented or otherwise modified from time to time.

 

“Bankruptcy” means, with respect to any Person, if such Person (i) makes an
assignment for the benefit of creditors, (ii) files a voluntary petition in
bankruptcy, (iii) is adjudged a bankrupt or insolvent, or has entered against it
an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a
petition or answer seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any statute, law
or regulation, (v) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of this nature, (vi) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of the Person or of all or any
substantial part of its properties, or (vii) if 120 days after the commencement
of any proceeding against the Person seeking reorganization, arrangement,
composition, readjustment, liquidation or similar relief under any statute, law
or regulation, if the proceeding has not been dismissed, or if within 90 days
after the appointment without such Person’s consent or acquiescence of a
trustee, receiver or liquidator of such Person or of all or any substantial part
of its properties, the appointment is not vacated or stayed, or within 90 days
after the expiration of any such stay, the appointment is not vacated.  The
foregoing definition of “Bankruptcy” is intended to replace and shall supersede
and replace the definition of “Bankruptcy” set forth in Sections 18-101(1) and
18-304 of the Act.

 

“Basic Documents” means this Agreement, the Management Agreement, the ACAS
Transfer Agreement with American Capital Strategies, Ltd., the Transfer and
Servicing Agreement among the Company, American Capital Strategies, Ltd., ACAS
Business Loan Trust 2002-2, Wells Fargo Bank Minnesota, National Association, as
Indenture Trustee and Backup Servicer, the Trust Agreement for ACAS Business
Loan Trust 2002-2 and the Placement Agency Agreement with Wachovia Securities,
Inc., and all documents and certificates contemplated thereby or delivered in
connection therewith.

 

“Board” or “Board of Managers” means the Board of Managers of the Company.

 

“Certificate of Formation” means the Certificate of Formation of the Company
filed with the Secretary of State of the State of Delaware on July 23, 2002, as
amended or amended and restated from time to time.

 

“Company” means ACAS Business Loan LLC, 2002-2, a Delaware limited liability
company.

 

A-1

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“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities or general partnership or managing
member interests, by contract or otherwise.

 

“Controlling” and “Controlled” shall have correlative meanings.  Without
limiting the generality of the foregoing, a Person shall be deemed to Control
any other Person in which it owns, directly or indirectly, a majority of the
ownership interests.

 

“Covered Persons” has the meaning set forth in Section 20(a).

 

“Independent Manager” means an individual who (i) is not and has not been
employed by ACAS or any of its subsidiaries or Affiliates as a director,
officer, employee, partner, attorney or counsel within the five years
immediately prior to such individual’s appointment as an Independent Manager;
(ii) is not (and is not Affiliated with a company or a firm that is) a
significant advisor or consultant to ACAS or any of its subsidiaries and
Affiliates; (iii) does not have significant personal services contract(s) with
ACAS or any of its subsidiaries or Affiliates; (iv) is not Affiliated with a
tax-exempt entity that receives significant contributions from ACAS or any of
its subsidiaries or Affiliates; (v) is not the beneficial owner at the time of
such individual’s appointment as an Independent Manager, or at any time
thereafter while serving as an Independent Manager, of any beneficial or
economic interest in Company or its Affiliates; and (vi) is not a spouse,
parent, sibling or child of any person described in clauses (i) through (v).

 

“Loan Assets” has the meaning set forth in the Basic Documents.

 

“Loans” has the meaning set forth in the Basic Documents.

 

“Management Agreement” means the agreement of the Managers in the form attached
hereto as Schedule C.  The Management Agreement shall be deemed incorporated
into, and a part of, this Agreement.

 

“Managers” means the Persons elected to the Board of Managers from time to time
by the Member, including the Independent Managers, in their capacity as managers
of the Company.  A Manager is hereby designated as a “manager” of the Company
within the meaning of Section 18-101(10) of the Act.

 

“Material Action” means to consolidate or merge the Company with or into any
Person, or sell all or substantially all of the assets of the Company, or to
institute proceedings to have the Company be adjudicated bankrupt or insolvent,
or consent to the institution of bankruptcy or insolvency proceedings against
the Company or file a petition seeking, or consent to, reorganization or relief
with respect to the Company under any applicable federal or state law relating
to bankruptcy, or consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Company or a
substantial part of its property, or make any assignment for the benefit of
creditors of the Company, or admit in writing the Company’s inability to pay its
debts generally as they become due, or, to the fullest extent permitted by law,
take action in furtherance of any such action, or dissolve or liquidate the
Company.

 

“Member” means American Capital Strategies, Ltd., as the initial member of the
Company, and includes any Person admitted as an additional member of the Company
or a substitute member of the Company pursuant to the provisions of this
Agreement, each in its capacity as a member of the Company; provided, however,
the term “Member” shall not include the Special Members.

 

A-2

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“Obligations” shall mean the indebtedness, liabilities and obligations of the
Company under or in connection with this Agreement, the other Basic Documents or
any related document in effect as of any date of determination.

 

“Officer” means an officer of the Company described in Section 11.

 

“Officer’s Certificate” means a certificate signed by any Officer of the Company
who is authorized to act for the Company in matters relating to the Company.

 

“Person” means any individual, corporation, partnership, joint venture, limited
liability company, limited liability partnership, association, joint stock
company, trust, unincorporated organization, or other organization, whether or
not a legal entity, and any governmental authority.

 

“Rating Agency” has the meaning assigned to that term in the Basic Documents.

 

“Rating Agency Condition” means, with respect to any action, that each Rating
Agency shall have been given ten days prior notice thereof and that each of the
Rating Agencies shall have notified the Company in writing that such action will
not result in a reduction or withdrawal of the then current rating by such
Rating Agency of any outstanding Class (as defined in the Basic Documents) with
respect to which such Rating Agency has previously issued a rating.

 

“Special Member” means, upon such person’s admission to the Company as a member
of the Company pursuant to Section 5(c), a person acting as Independent Manager,
in such person’s capacity as a member of the Company.  A Special Member shall
only have the rights and duties expressly set forth in this Agreement.

 

B.            Rules of Construction

 

Definitions in this Agreement apply equally to both the singular and plural
forms of the defined terms.  The words “include” and “including” shall be deemed
to be followed by the phrase “without limitation.” The terms “herein,” “hereof’
and “hereunder” and other words of similar import refer to this Agreement as a
whole and not to any particular Section, paragraph or subdivision.  The Section
titles appear as a matter of convenience only and shall not affect the
interpretation of this Agreement.  All Section, paragraph, clause, Exhibit or
Schedule references not attributed to a particular document shall be references
to such parts of this Agreement.

 

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SCHEDULE B

 

Member

 

Name

 

Mailing Address

 

Agreed Value of
Capital Contribution

 

Membership Interest

 

American Capital Strategies, Ltd.

 

2 Bethesda Metro Cr.,
14th Floor
Bethesda, Maryland  20814

 

$

100.00

 

100

%

 

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SCHEDULE C

 

Management Agreement

 

July 23, 2002

 

ACAS BUSINESS LOAN LLC, 2002-2

2 Bethesda Metro Center, 14th Floor

Bethesda, Maryland 20184

 

Re:                               Management Agreement -ACAS Business Loan LLC,
2002-2

 

Ladies and Gentlemen:

 

For good and valuable consideration, each of the undersigned Persons, who have
been designated as Managers of ACAS Business Loan LLC, 2002-2, a Delaware
limited liability company (the “Company”), in accordance with the Limited
Liability Company Agreement of the Company, dated as of July 23, 2002, as it may
be amended or restated from time to time (the “LLC Agreement”), hereby agree as
follows:

 

1.             Each of the undersigned accepts such Person’s rights and
authority as a Manager under the LLC Agreement and agrees to perform and
discharge such Person’s duties and obligations as a Manager under the LLC
Agreement, and further agrees that such rights, authorities, duties and
obligations under the LLC Agreement shall continue until such Person’s successor
as a Manager is designated or until such Person’s resignation or removal as a
Manager in accordance with the LLC Agreement.  Each of the undersigned agrees
and acknowledges that it has been designated as a “manager” of the Company
within the meaning of the Delaware Limited Liability Company Act.

 

2.             So long as any Obligation is outstanding, each of the undersigned
agrees, solely in its capacity as a creditor of the Company on account of any
indemnification or other payment owing to the undersigned by the Company, not to
acquiesce, petition or otherwise invoke or cause the Company to invoke the
process of any court or governmental authority for the purpose of commencing or
sustaining a case against the Company tinder any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Company or any
substantial part of the property of the Company, or ordering the winding up or
liquidation of the affairs of the Company.

 

3.             THIS MANAGEMENT AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, AND ALL RIGHTS AND REMEDIES
SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS.

 

Initially capitalized terms used and not otherwise defined herein have the
meanings set forth in the LLC Agreement.

 

This Management Agreement may be executed in any number of counterparts, each of
which shall be deemed an original of this Management Agreement and all of which
together shall constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the undersigned have executed this Management Agreement as
of the day and year first above written.

 

 

 

 

 

William Holloran

 

 

 

 

 

Evelyne S. Steward

 

 

 

 

 

Malon Wilkus

 

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SCHEDULE D

 

Managers

 

1.             William Holloran (Independent Manager)

 

2.             Evelyne S. Steward (Independent Manager)

 

3.             Malon Wilkus

 

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SCHEDULE E

 

OFFICERS

 

TITLE

 

 

 

 

 

Malon Wilkus

 

President

 

 

 

 

 

 

 

Vice President

 

 

 

 

 

John Erickson

 

Vice President, Treasurer and Secretary

 

 

 

 

 

Ira Wagner

 

Vice President

 

 

 

 

 

Thomas McHale

 

Vice President and Assistant Secretary

 

 

E-1

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