UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF 

TEXAS, DALLAS DIVISION 

In Re: Highland Capital Management, L.P. § Case No. 19-34054-SGJ-11 

The Charitable DAF Fund LP § 

 Appellant § 22-03052 

vs. § 

Highland Capital Management, L.P. § 

 Appellee § 3:22-CV-02280-S

[43] Order granting amended motion to dismiss adversary proceeding with prejudice (related 

document # 19) Entered on 9/30/2022 

APPELLANT RECORD 

VOLUME 21 

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Plaintiff’s Motion to Stay All Proceedings Page 1

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

THE CHARITABLE DAF FUND, LP., §

§

Plaintiff, §

§

v. § Cause No. 3:21-cv-01710-N

§

HIGHLAND CAPITAL MANAGEMENT, 

L.P.,

§

§

§

Defendant. §

PLAINTIFF’S MOTION TO STAY ALL PROCEEDINGS

I.

NECESSITY OF MOTION

Plaintiff submits this Motion as a result of the effective date, August 11, 2021, of Defendant

Highland Capital Management L.P.’s Chapter 11 plan of reorganization (the “Plan”). The Plan

purports to exculpate Defendant from liability and enjoin Plaintiff from pursuing actions against

them. It also contains an assertion of exclusive jurisdiction by the bankruptcy court.

An appeal of the Plan, which the Fifth Circuit certified for direct appeal under 28 U.S.C. §

158(d), is now before the Court of Appeals and captioned In re Highland Capital Management,

L.P., No. 21-10449 (the “Fifth Circuit Appeal”). Each of the issues noted above is raised in the

appeal. If successful, the appeal will overturn the exculpation, injunction, and assertion of

exclusive jurisdiction in the Plan, allowing Plaintiff to proceed with this action in this Court.

In the meantime, however, Plaintiff is enjoined from participating further in this pending

case and therefore asks that it be stayed pending the outcome of the Fifth Circuit Appeal.

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Plaintiff’s Motion to Stay All Proceedings Page 2

II.

BACKGROUND

On August 9, 2021, Plaintiff received notice that the Plan was now effective. In re Highland

Capital Management, L.P., No. 19-34054, Doc. 2700. Although one condition precedent to the

effectiveness of the Plan is finality of the confirmation order, which can only happen once all

appeals are resolved, that and all other conditions are waivable by the Debtor. Id., Doc. 1943 at

pdf 142-43 (Art. VIII at pp. 45-46). The Debtor’s notice, which waived finality and any other

unsatisfied conditions, makes the Plan’s exculpation provisions and injunctions immediately

effective.

As to exculpation, the Plan states,

Subject in all respects to ARTICLE XII.D of this Plan, to the maximum

extent permitted by applicable law, no Exculpated Party will have or incur, and

each Exculpated Party is hereby exculpated from, any claim, obligation, suit,

judgment, damage, demand, debt, right, Cause of Action, remedy, loss, and

liability for conduct occurring on or after the Petition Date in connection with

or arising out of (i) the filing and administration of the Chapter 11 Case; (ii) the

negotiation and pursuit of the Disclosure Statement, the Plan, or the solicitation

of votes for, or confirmation of, the Plan; (iii) the funding or consummation of

the Plan (including the Plan Supplement) or any related agreements,

instruments, or other documents, the solicitation of votes on the Plan, the offer,

issuance, and Plan Distribution of any securities issued or to be issued pursuant

to the Plan, including the Claimant Trust Interests, whether or not such Plan

Distributions occur following the Effective Date; (iv) the implementation of the

Plan; and (v) any negotiations, transactions, and documentation in connection

with the foregoing clauses (i)-(iv); provided, however, the foregoing will not

apply to (a) any acts or omissions of an Exculpated Party arising out of or

related to acts or omissions that constitute bad faith, fraud, gross negligence,

criminal misconduct, or willful misconduct or (b) Strand or any Employee other

than with respect to actions taken by such Entities from the date of appointment

of the Independent Directors through the Effective Date. This exculpation shall

be in addition to, and not in limitation of, all other releases, indemnities,

exculpations, any other applicable law or rules, or any other provisions of this

Plan, including ARTICLE IV.C.2, protecting such Exculpated Parties from

liability.

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Plaintiff’s Motion to Stay All Proceedings Page 3

Id. at pdf 144-45 (Art. IX.C at pp. 47-48 (emphasis added)). “Exculpated Parties” is a defined

term in the Plan that includes the Defendant in this action. Id. at pdf 106 (Art. I at p. 9).

As to the injunction, the Plan states,

Except as expressly provided in the Plan, the Confirmation Order, or a

separate order of the Bankruptcy Court, all Enjoined Parties are and shall be

permanently enjoined, on and after the Effective Date, with respect to any

Claims and Equity Interests, from directly or indirectly (i) commencing,

conducting, or continuing in any manner any suit, action, or other proceeding

of any kind (including any proceeding in a judicial, arbitral, administrative or

other forum) against or affecting the Debtor or the property of the Debtor, (ii)

enforcing, levying, attaching (including any prejudgment attachment),

collecting, or otherwise recovering, enforcing, or attempting to recover or

enforce, by any manner or means, any judgment, award, decree, or order against

the Debtor or the property of the Debtor, (iii) creating, perfecting, or otherwise

enforcing in any manner, any security interest, lien or encumbrance of any kind

against the Debtor or the property of the Debtor, (iv) asserting any right of

setoff, directly or indirectly, against any obligation due to the Debtor or against

property or interests in property of the Debtor, except to the limited extent

permitted under Sections 553 and 1141 of the Bankruptcy Code, and (v) acting

or proceeding in any manner, in any place whatsoever, that does not conform

to or comply with the provisions of the Plan.

The injunctions set forth herein shall extend to, and apply to any act of

the type set forth in any of clauses (i)-(v) of the immediately preceding

paragraph against any successors of the Debtor, including, but not limited to,

the Reorganized Debtor, the Litigation SubTrust, and the Claimant Trust and

their respective property and interests in property.

Subject in all respects to ARTICLE XII.D, no Enjoined Party may

commence or pursue a claim or cause of action of any kind against any

Protected Party that arose or arises from or is related to the Chapter 11 Case,

the negotiation of the Plan, the administration of the Plan or property to be

distributed under the Plan, the wind down of the business of the Debtor or

Reorganized Debtor, the administration of the Claimant Trust or the Litigation

Sub-Trust, or the transactions in furtherance of the foregoing without the

Bankruptcy Court (i) first determining, after notice and a hearing, that such

claim or cause of action represents a colorable claim of any kind, including, but

not limited to, negligence, bad faith, criminal misconduct, willful misconduct,

fraud, or gross negligence against a Protected Party and (ii) specifically

authorizing such Enjoined Party to bring such claim or cause of action against

any such Protected Party; provided, however, the foregoing will not apply to a

claim or cause of action against Strand or against any Employee other than with

respect to actions taken, respectively, by Strand or by such Employee from the

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Plaintiff’s Motion to Stay All Proceedings Page 4

date of appointment of the Independent Directors through the Effective Date.

The Bankruptcy Court will have sole and exclusive jurisdiction to determine

whether a claim or cause of action is colorable and, only to the extent legally

permissible and as provided for in ARTICLE XI, shall have jurisdiction to

adjudicate the underlying colorable claim or cause of action.

Id. at pdf 147-48 (Art. IX.F at pp. 50-51 (emphasis added)). “Enjoined Parties” is a defined term

in the Plan that includes Plaintiff. Id. at pdf 105 (Art. I; ¶ 56 at p.8).

Because these provisions are currently in force and prohibits Plaintiff from continuing this

action, and because the Fifth Circuit Appeal includes direct challenges to the validity of these very

provisions, Plaintiff respectfully submits that the most efficient course of action is for this Court

to stay this action until the Fifth Circuit Appeal is resolved. Plaintiff expects that any resolution of

the Fifth Circuit Appeal will necessarily determine that the Plan’s exculpation and injunction

provisions absolves Defendant of any liability or, alternatively, that this action can proceed.

III.

ARGUMENT

This Court should exercise its inherent powers to stay all proceedings in the case until the

Fifth Circuit Appeal is decided.

The Fifth Circuit has long held that “[t]he district court possesses the inherent power to

control its docket.” Marine Chance Shipping v. Sebastian, 143 F.3d 216, 218 (5th Cir. 1998). The

exercise of that power is a discretionary one. E.g., Petrus v. Bowen, 833 F.2d 581, 583 (5th Cir.

1987) (“A trial court has broad discretion and inherent power to stay discovery until preliminary

questions that may dispose of the case are determined.”)

Here, Plaintiff asks this Court to exercise discretion in favor of efficiency and to stay all

proceedings. Plaintiff respectfully submits that, until the appeal is resolved, many complex legal

questions exist that may affect the viability of this action or the forum in which it should be

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Plaintiff’s Motion to Stay All Proceedings Page 5

litigated. Those questions—including the validity of the exculpation and injunction provisions

quoted above—will likely be resolved by the Fifth Circuit Appeal. And therefore, Plaintiff

submist, judicial economy may be gained by staying all proceedings in this action pending that

appeal.

IV.

CONCLUSION

Plaintiff appears to be wholly prohibited from participating further in this action by the

now-effective terms of the Plan that purport to enjoins Plaintiff and exculpates Defendant. In light

of its inability to conduct the litigation and the pending Fifth Circuit Appeal, which that court has

certified for direct appeal, Plaintiff respectfully submits that the most appropriate course for this

Court is to stay all proceedings until the appeal is decided. Plaintiff therefore respectfully requests

a stay and all further relief to which it may be entitled.

Dated: August 26, 2021 Respectfully submitted,

SBAITI & COMPANY PLLC

/s/ Jonathan Bridges

Mazin A. Sbaiti

Texas Bar No. 24058096

Jonathan Bridges

Texas Bar No. 24028835

JPMorgan Chase Tower

2200 Ross Avenue – Suite 4900W

Dallas, TX 75201

T: (214) 432-2899

F: (214) 853-4367

E: mas@sbaitilaw.com

jeb@sbaitilaw.com

Counsel for Plaintiffs

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Plaintiff’s Motion to Stay All Proceedings Page 6

CERTIFICATE OF CONFERENCE

I hereby certify that, in a series of communications between August 13 and 26, 2021, I

conferred with Defendant’s counsel regarding this Motion, and counsel indicated that they are

opposed to the relief sought in this Motion.

/s/ Jonathan Bridges

Jonathan Bridges

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DOCKET TEXT:7 ELECTRONIC ORDER granting 6 Motion to Stay. (Ordered by Judge David C

Godbey on 9/7/2021) (chmb) [ORIGINALLY FILED IN 21ŞCVŞ1710 AS #7 ON 09/7/2021 IN

U.S. DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION] (Okafor,

Marcey)

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EXHIBIT 11 

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004247

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1 

DOCS_NY:44200.2 36027/003 

PACHULSKI STANG ZIEHL & JONES LLP 

Jeffrey N. Pomerantz (CA Bar No. 143717) 

Robert J. Feinstein (NY Bar No. 1767805) 

John A. Morris (NY Bar No. 266326) 

Gregory V. Demo (NY Bar No. 5371992) 

Hayley R. Winograd (NY Bar No. 5612569) 

10100 Santa Monica Blvd., 13th Floor 

Los Angeles, CA 90067 

Telephone: (310) 277-6910 

Facsimile: (310) 201-0760 

Email: jpomerantz@pszjlaw.com 

 rfeinstein@pszjlaw.com 

 jmorris@pszjlaw.com 

 gdemo@pszjlaw.com 

 hwinograd@pszjlaw.com 

-andHAYWARD PLLC 

Melissa S. Hayward 

Texas Bar No. 24044908 

MHayward@HaywardFirm.com 

Zachery Z. Annable 

Texas Bar No. 24053075 

ZAnnable@HaywardFirm.com 

10501 N. Central Expy, Ste. 106 

Dallas, Texas 75231 

Tel: (972) 755-7100 

Fax: (972) 755-7110 

Counsel for Highland Capital Management, L.P.

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

THE CHARITABLE DAF FUND, L.P., 

 Plaintiff, 

vs. 

HIGHLAND CAPITAL MANAGEMENT, L.P., 

 Defendant. 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

Case No. 3:21-cv-01710-N 

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004248

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2 

DOCS_NY:44200.2 36027/003 

HIGHLAND CAPITAL MANAGEMENT, L.P.’S MOTION FOR 

RECONSIDERATION OF STAY ORDER 

Highland Capital Management, L.P., a defendant in the above-captioned case (the “Debtor” 

or “Highland”), by and through its undersigned counsel, files this motion (the “Motion”) seeking 

reconsideration of the Stay Order (as defined below) that was recently entered by the Court without 

notice to, or opposition by, Highland. In support of its Motion, Highland states as follows: 

JURISDICTION AND VENUE 

1. This Court has jurisdiction over the Motion pursuant to section 1334(a) and (b) of 

title 11 of the United States Code (the “Bankruptcy Code”). 

2. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1409. 

3. The predicates for the relief requested in the Motion are 28 U.S.C. § 157(a), Rule 

9019 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), and Rule 59(a) of the 

Federal Rules of Civil Procedure. 

RELIEF REQUESTED 

4. Through this Motion, Highland requests that this Court issue the proposed form of 

order attached as Exhibit A (the “Proposed Order”) pursuant to 28 U.S.C. § 157(a). 

5. For the reasons set forth more fully in Highland Capital Management, L.P.’s 

Memorandum of Law in Support of Motion for Reconsideration of Stay Order (the “Memorandum 

of Law”) filed contemporaneously with this Motion, Highland requests that the Court: (a) re-open 

the Stay Order, amend the findings and conclusions, and issue a new order denying the Stay 

Motion, and (b) grant such other and further relief as the Court deems just and proper. 

6. In accordance with Rule 7.1 of the Local Civil Rules of the United States District 

Court for the Northern District of Texas (the “Local Rules”), contemporaneously herewith and in 

support of the Motion Highland is filing: (a) its Memorandum of Law, and (b) the Appendix in 

Case 3:21-cv-01710-N Document 8 Filed 10/05/21 Page 2 of 5 PageID 28

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004249

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DOCS_NY:44200.2 36027/003 

Support of Motion for Reconsideration of Stay Order (the “Appendix”), together with the exhibits 

annexed thereto. 

7. Based on the exhibits annexed to the Appendix and the arguments contained in the 

Memorandum of Law, Highland is entitled to the relief requested herein as set forth in the Proposed 

Order. 

8. Notice of this Motion has been provided to all parties. Highland submits that no 

other or further notice need be provided. 

WHEREFORE, Highland respectfully requests that the Court (i) enter the Proposed Order 

substantially in the formed annexed hereto as Exhibit A granting the relief requested herein, and 

(ii) grant Highland such other and further relief as the Court may deem proper. 

[Remainder of Page Intentionally Blank] 

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004250

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DOCS_NY:44200.2 36027/003 

Dated: October 5, 2021. PACHULSKI STANG ZIEHL & JONES LLP 

Jeffrey N. Pomerantz (CA Bar No. 143717) 

Robert J. Feinstein (NY Bar No. 1767805) 

John A. Morris (NY Bar No. 266326) 

Gregory V. Demo (NY Bar No. 5371992) 

Hayley R. Winograd (NY Bar No. 5612569) 

10100 Santa Monica Blvd., 13th Floor 

Los Angeles, CA 90067 

Telephone: (310) 277-6910 

Facsimile: (310) 201-0760 

Email: jpomerantz@pszjlaw.com 

 rfeinstein@pszjlaw.com 

 jmorris@pszjlaw.com 

 gdemo@pszjlaw.com 

 hwinograd@pszjlaw.com 

-andHAYWARD PLLC 

/s/ Zachery Z. Annable 

 Melissa S. Hayward 

Texas Bar No. 24044908 

MHayward@HaywardFirm.com 

Zachery Z. Annable 

Texas Bar No. 24053075 

ZAnnable@HaywardFirm.com 

10501 N. Central Expy, Ste. 106 

Dallas, Texas 75231 

Tel: (972) 755-7100 

Fax: (972) 755-7110 

Counsel for Highland Capital Management, L.P.

Case 3:21-cv-01710-N Document 8 Filed 10/05/21 Page 4 of 5 PageID 30

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004251

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DOCS_NY:44200.2 36027/003 

CERTIFICATE OF SERVICE 

I hereby certify that, on October 5, 2021, a true and correct copy of the foregoing Motion 

was served electronically upon all parties registered to receive electronic notice in this case via the 

Court’s CM/ECF system. 

/s/ Zachery Z. Annable

Zachery Z. Annable 

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004252

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1 

DOCS_NY:44200.2 36027/003 

EXHIBIT A 

 

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004253

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DOCS_NY:44200.2 36027/003 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

THE CHARITABLE DAF FUND, L.P., 

 Plaintiff, 

vs. 

HIGHLAND CAPITAL MANAGEMENT, L.P., 

 Defendant. 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

Case No. 3:21-cv-01710-N 

ORDER GRANTING MOTION FOR 

RECONSIDERATION OF STAY ORDER 

Before the Court is Highland Capital Management L.P.’s Motion for Reconsideration of 

Stay Order [Docket No. __] (the “Motion”)1

 Having considered: (a) the Motion; (b) Highland 

Capital Management, L.P.’s Memorandum of Law in Support of Motion for Reconsideration of 

Order to Enforce the Order of Reference [Docket No. __] (the “Memorandum of Law”); and (c) 

the Appendix in Support of Motion for Reconsideration of Stay Order [Docket No. __] (the 

“Appendix”), and the exhibits annexed thereto; and this Court having jurisdiction over this matter 

pursuant to 28 U.S.C. §§ 157 and 1334; and this Court having found that (a) venue of this 

proceeding and the Motion in this District is proper pursuant to 28 U.S.C. § 1409; (b) Highland 

was not served with the Stay Motion and had no opportunity to contest it; (c) the Court was 

presented with new facts and arguments in the Motion, the Memorandum of Law, and the 

Appendix of which it was unaware when it entered the Stay Order; (d) based on those new facts, 

1

 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the 

Memorandum of Law. 

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004254

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DOCS_NY:44200.2 36027/003 

the Court finds and determines that Plaintiff has not met its burden of proving that a stay of the 

Action is warranted; and this Court having found that Highland’s notice of the Motion and 

opportunity for a hearing on the Motion were appropriate under the circumstances and that no 

other notice need be provided; and this Court having determined that the legal and factual bases 

set forth in the Motion establish good cause for the relief granted herein; and upon all of the 

proceedings had before this Court; and after due deliberation and sufficient cause appearing 

therefor, and for the reasons set forth in the record on this Motion, it is HEREBY ORDERED 

THAT: 

1. The Motion is GRANTED. 

2. Pursuant to Rule 59, the Court re-opens and vacates the Stay Order and enters this 

new Order DENYING the Stay Motion. 

It is so ordered this ________ day of __________________, 2021. 

 ____________________________________ 

 The Honorable David C. Godbey 

 United States District Judge

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004255

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EXHIBIT 12 

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004256

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1 

DOCS_NY:44226.1 36027/003 

PACHULSKI STANG ZIEHL & JONES LLP 

Jeffrey N. Pomerantz (CA Bar No. 143717) 

Robert J. Feinstein (NY Bar No. 1767805) 

John A. Morris (NY Bar No. 266326) 

Gregory V. Demo (NY Bar No. 5371992) 

Hayley R. Winograd (NY Bar No. 5612569) 

10100 Santa Monica Blvd., 13th Floor 

Los Angeles, CA 90067 

Telephone: (310) 277-6910 

Facsimile: (310) 201-0760 

Email: jpomerantz@pszjlaw.com 

 rfeinstein@pszjlaw.com 

 jmorris@pszjlaw.com 

 gdemo@pszjlaw.com 

 hwinograd@pszjlaw.com 

-andHAYWARD PLLC 

Melissa S. Hayward 

Texas Bar No. 24044908 

MHayward@HaywardFirm.com 

Zachery Z. Annable 

Texas Bar No. 24053075 

ZAnnable@HaywardFirm.com 

10501 N. Central Expy, Ste. 106 

Dallas, Texas 75231 

Tel: (972) 755-7100 

Fax: (972) 755-7110 

Counsel for Highland Capital Management, L.P.

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

THE CHARITABLE DAF FUND, L.P., 

 Plaintiff, 

vs. 

HIGHLAND CAPITAL MANAGEMENT, L.P., 

 Defendant. 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

Case No. 3:21-cv-01710-N 

HIGHLAND CAPITAL MANAGEMENT, L.P.’S MOTION TO DISMISS 

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004257

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2 

DOCS_NY:44226.1 36027/003 

Highland Capital Management, L.P. (“Highland”), the putative defendant in the abovecaptioned case (the “Action”), by and through its undersigned counsel, files this motion (the 

“Motion”) to dismiss the Action. In support of its Motion, Highland states as follows: 

JURISDICTION AND VENUE 

1. This Court has jurisdiction over the Motion pursuant to section 1334(a) and (b) of 

title 11 of the United States Code (the “Bankruptcy Code”). 

2. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1409. 

3. The predicates for the relief requested in the Motion are 28 U.S.C. § 157(a), Rule 

9019 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules), and Rules 12(b)(1), 

(3), (4), and (6) of the Federal Rules of Civil Procedure, made applicable in this Action pursuant 

to Bankruptcy Rule 7012. 

RELIEF REQUESTED 

4. Through this Motion, Highland requests that this Court issue the proposed form of 

order attached as Exhibit A (the “Proposed Order”) pursuant to 28 U.S.C. § 157(a). 

5. For the reasons set forth more fully in Highland Capital Management, L.P.’s 

Memorandum of Law in Support of Its Motion to Dismiss (the “Memorandum of Law”) filed 

contemporaneously with this Motion, Highland requests that the Court: (a) dismiss the Action with 

prejudice, and (b) grant such other and further relief as the Court deems just and proper. 

6. In accordance with Rule 7.1 of the Local Civil Rules of the United States District 

Court for the Northern District of Texas (the “Local Rules”), contemporaneously herewith and in 

support of the Motion Highland is filing: (a) its Memorandum of Law, and (b) the Appendix in 

Support of Motion to Dismiss (the “Appendix”), together with the exhibits annexed thereto. 

Case 3:21-cv-01710-N Document 11 Filed 10/05/21 Page 2 of 5 PageID 1063

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004258

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DOCS_NY:44226.1 36027/003 

7. Based on the exhibits annexed to the Appendix and the arguments contained in the 

Memorandum of Law, Highland is entitled to the relief requested herein as set forth in the Proposed 

Order. 

8. Notice of this Motion has been provided to all parties. Highland submits that no 

other or further notice need be provided. 

WHEREFORE, Highland respectfully requests that the Court (i) enter the Proposed Order 

substantially in the formed annexed hereto as Exhibit A granting the relief requested herein, and 

(ii) grant Highland such other and further relief as the Court may deem proper. 

[Remainder of Page Intentionally Blank] 

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004259

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DOCS_NY:44226.1 36027/003 

Dated: October 5, 2021. PACHULSKI STANG ZIEHL & JONES LLP 

Jeffrey N. Pomerantz (CA Bar No. 143717) 

Robert J. Feinstein (NY Bar No. 1767805) 

John A. Morris (NY Bar No. 266326) 

Gregory V. Demo (NY Bar No. 5371992) 

Hayley R. Winograd (NY Bar No. 5612569) 

10100 Santa Monica Blvd., 13th Floor 

Los Angeles, CA 90067 

Telephone: (310) 277-6910 

Facsimile: (310) 201-0760 

Email: jpomerantz@pszjlaw.com 

 rfeinstein@pszjlaw.com 

 jmorris@pszjlaw.com 

 gdemo@pszjlaw.com 

 hwinograd@pszjlaw.com 

-andHAYWARD PLLC 

/s/ Zachery Z. Annable 

 Melissa S. Hayward 

Texas Bar No. 24044908 

MHayward@HaywardFirm.com 

Zachery Z. Annable 

Texas Bar No. 24053075 

ZAnnable@HaywardFirm.com 

10501 N. Central Expy, Ste. 106 

Dallas, Texas 75231 

Tel: (972) 755-7100 

Fax: (972) 755-7110 

Counsel for Highland Capital Management, L.P.

Case 3:21-cv-01710-N Document 11 Filed 10/05/21 Page 4 of 5 PageID 1065

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004260

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DOCS_NY:44226.1 36027/003 

CERTIFICATE OF SERVICE 

I hereby certify that, on October 5, 2021, a true and correct copy of the foregoing Motion 

was served electronically upon all parties registered to receive electronic notice in this case via the 

Court’s CM/ECF system. 

/s/ Zachery Z. Annable

Zachery Z. Annable 

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004261

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DOCS_NY:44226.1 36027/003 

EXHIBIT A 

 

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004262

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DOCS_NY:44226.1 36027/003 

IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

THE CHARITABLE DAF FUND, L.P., 

 Plaintiff, 

vs. 

HIGHLAND CAPITAL MANAGEMENT, L.P., 

 Defendant. 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

§ 

Case No. 3:21-cv-01710-N 

ORDER GRANTING MOTION TO DISMISS 

Before the Court is Highland Capital Management L.P.’s Motion to Dismiss [Docket No. 

__] (the “Motion”).1

 Having considered: (a) the Motion; (b) Highland Capital Management, 

L.P.’s Memorandum of Law in Support of Its Motion to Dismiss [Docket No. __] (the 

“Memorandum of Law”); and (c) the Appendix in Support of Motion to Dismiss [Docket No. __] 

(the “Appendix”), and the exhibits annexed thereto; and this Court having jurisdiction over this 

matter pursuant to 28 U.S.C. §§ 157 and 1334; and this Court having found that (a) venue of this 

proceeding and the Motion in this District is proper pursuant to 28 U.S.C. § 1409; (b) the Effective 

Date has occurred; (c) the Confirmation Order and Plan enjoin Plaintiff from continuing any action 

or suit against Highland and mandate that claims against Highland be brought in the Bankruptcy 

Court following the Effective Date pursuant to the Injunction Provision; (d) the purported claims 

asserted against Highland arise from transactions that took place post-petition and, to the extent 

1

 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the 

Memorandum of Law. 

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004263

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DOCS_NY:44226.1 36027/003 

valid, would constitute post-petition administrative claims; (e) the Plan provides a specific 

procedure through which holders of purported administrative claims, such as Plaintiff, can file an 

application with the Bankruptcy Court for allowance of its administrative expense claims; and (f) 

based on the foregoing, under the Confirmation Order and Plan, this Court is not the appropriate 

venue for this Action; and this Court having found that Highland’s notice of the Motion and 

opportunity for a hearing on the Motion were appropriate under the circumstances and that no 

other notice need be provided; and this Court having determined that the legal and factual bases 

set forth in the Motion establish good cause for the relief granted herein; and upon all of the 

proceedings had before this Court; and after due deliberation and sufficient cause appearing 

therefor, and for the reasons set forth in the record on this Motion, it is HEREBY ORDERED 

THAT: 

1. The Motion is GRANTED. 

2. The Action is DISMISSED with prejudice. 

It is so ordered this ________ day of __________________, 2021. 

 ____________________________________ 

 The Honorable David C. Godbey 

 United States District Judge

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004264

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EXHIBIT 13 

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004265

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ORDER – PAGE 1 

 IN THE UNITED STATES DISTRICT COURT 

 NORTHERN DISTRICT OF TEXAS 

 DALLAS DIVISION 

CHARITABLE DAF FUND, L.P., § 

 § 

 Plaintiff, § 

 § 

v. § Civil Action No. 3:21-CV-1710-N 

 § 

HIGHLAND CAPITAL § 

MANAGEMENT, L.P., § 

 § 

 Defendant. § 

 ORDER 

 This Order addresses Defendant Highland Capital Management, L.P.’s (“HCM”) 

motion for reconsideration of this Court’s earlier order staying this case [8]. This case 

challenges a transaction consumated in the course of a consolidated bankruptcy proceeding 

and names as the sole defendant the debtor in that bankruptcy. The Court therefore 

concludes that this case constitutes a matter “related to” a case in the bankruptcy court 

under the meaning of this District’s Miscellaneous Order No. 33. Accordingly, the Court 

grants Defendant’s motion, lifts the stay, and refers this case to Judge Stacey G.C. Jernigan 

of the United States Bankruptcy Court for the Northern District of Texas, to be adjudicated 

as a matter related to the Chapter 11 Bankruptcy of HCM., Chapter 11 Case No. 19-34054. 

The Clerk of this Court and the Clerk of the Bankruptcy Court to which this case is referred 

are directed to take such actions as are necessary to docket this matter as an Adversary 

Proceeding associated with the aforementioned consolidated bankruptcy case. 

Case 3:21-cv-01710-N Document 18 Filed 05/19/22 Page 1 of 2 PageID 1345

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004266

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ORDER – PAGE 2 

 Signed May 19, 2022. 

 ___________________________ 

 David C. Godbey 

 United States District Judge 

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004267

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EXHIBIT 14 

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004268

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Highland Multi Strategy Credit Fund, L.P.

A Delaware Limited Partnership

Fourth Amended and Restated

Limited Partnership Agreement

November 1, 2014

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004269

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i

TABLE OF CONTENTS

Page

Article I DEFINITIONS ..................................................................................................................1

Article II ORGANIZATION..........................................................................................................10

2.1 Continuation of Limited Partnership .....................................................................10

2.2 Name of Partnership ..............................................................................................11

2.3 Principal Office; Registered Office........................................................................11

2.4 Term of Partnership................................................................................................11

2.5 Object and Powers of Partnership..........................................................................11

2.6 Liability of Partners ...............................................................................................12

2.7 Actions by Partnership...........................................................................................12

2.8 Reliance by Third Parties.......................................................................................12

2.9 UCC Status of Limited Partner Interests ...............................................................12

2.10 Series of Interests...................................................................................................12

Article III CAPITAL......................................................................................................................13

3.1 Contributions to Capital.........................................................................................13

3.2 Rights of Partners in Capital..................................................................................14

3.3 Capital Accounts ....................................................................................................14

3.4 Allocations of Net Profit and Net Loss..................................................................15

3.5 Allocation of Management Fees, Withholding Taxes and Certain Other

Expenditures ..........................................................................................................15

3.6 Reserves; Adjustments for Certain Future Events .................................................16

3.7 Performance Allocation .........................................................................................17

3.8 Limited Participation Investments and New Issues ...............................................17

3.9 Allocation to Avoid Capital Account Deficits .......................................................18

3.10 Regulatory Allocations...........................................................................................18

3.11 Allocations for Income Tax Purposes ....................................................................19

3.12 Individual Partner’s Tax Treatment........................................................................21

3.13 Distributions...........................................................................................................21

Article IV MANAGEMENT .........................................................................................................22

4.1 Duties and Powers of the General Partner .............................................................22

4.2 Expenses ................................................................................................................23

4.3 Rights of Limited Partners.....................................................................................25

4.4 Other Activities of Partners....................................................................................25

4.5 Exculpation; Indemnification.................................................................................26

4.6 Advisory Committee..............................................................................................28

4.7 Alternative Investment Vehicles ............................................................................29

Article V ADMISSIONS, TRANSFERS AND WITHDRAWALS...............................................29

5.1 Admission of Limited Partners ..............................................................................29

5.2 Admission of Additional General Partners ............................................................29

5.3 Transfer of Interests of Limited Partners ...............................................................30

5.4 Transfer of Interest of the General Partner ............................................................30

5.5 Withdrawal of Interests of Partners .......................................................................31

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Article VI SOFT WIND DOWN, DISSOLUTION AND LIQUIDATION...................................35

6.1 Soft Wind Down ....................................................................................................35

6.2 Dissolution of Partnership......................................................................................36

6.3 Liquidation of Assets .............................................................................................36

Article VII ACCOUNTING AND VALUATION; BOOKS AND RECORDS .............................37

7.1 Accounting and Reports.........................................................................................37

7.2 Valuation of Partnership Assets and Interests ........................................................38

7.3 Determinations by the General Partner..................................................................38

7.4 Books and Records ................................................................................................39

7.5 Confidentiality .......................................................................................................39

Article VIII GENERAL PROVISIONS.........................................................................................41

8.1 Amendment of Partnership Agreement..................................................................41

8.2 Special Power-of-Attorney ....................................................................................43

8.3 Notices ...................................................................................................................44

8.4 Agreement Binding Upon Successors and Assigns; Delegation ...........................44

8.5 Governing Law ......................................................................................................44

8.6 Not for Benefit of Creditors...................................................................................45

8.7 Dispute Resolution.................................................................................................45

8.8 Consents and Voting...............................................................................................47

8.9 Merger and Consolidation......................................................................................48

8.10 Miscellaneous ........................................................................................................48

8.11 BHCA Subject Persons ..........................................................................................48

8.12 RIC Limited Partners .............................................................................................49

8.13 Bad Actor Limited Partners ...................................................................................50

8.14 Entire Agreement ...................................................................................................50

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THIS FOURTH AMENDED AND RESTATED LIMITED PARTNERSHIP

AGREEMENT of Highland Multi Strategy Credit Fund, L.P., dated effective as of November 1,

2014, is by and among Highland Multi Strategy Credit Fund GP, L.P., as General Partner, and

certain Persons who were admitted as Limited Partners in accordance with the Prior Agreement

and those Persons who are hereafter admitted as additional Limited Partners in accordance with

this Agreement. Capitalized terms have the meanings set forth in Article I below.

PRELIMINARY STATEMENTS

(A) The General Partner and certain of the Limited Partners have heretofore formed a

limited partnership pursuant to the Act (as defined herein) by filing a Certificate of

Limited Partnership with the office of the Secretary of State of the State of Delaware

on December 1, 2005, and previously entered into a Limited Partnership Agreement,

dated effective as of December 1, 2005, as last amended and restated by the Third

Amended and Restated Limited Partnership Agreement dated as of December 31, 2007

(the “Prior Agreement”).

(B) The General Partner filed an amendment to the Certificate of Limited Partnership of

the Fund on August 26, 2014, changing the name of the Fund to “Highland Multi

Strategy Credit Fund, L.P.”

(C) The parties hereto desire to continue the Partnership as a limited partnership under the

Act and to make certain modifications to the Prior Agreement, as hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants expressed herein and for

other good and valuable consideration, the receipt and legal sufficiency of which are hereby

acknowledged, the parties hereto hereby agree that the Prior Agreement is amended and restated

in its entirety to read as follows:

Article I

DEFINITIONS

For purposes of this Agreement:

“Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101,

et seq., as in effect on the date hereof and as amended from time to time, or any successor law.

“Accounting Period” means each period that starts on the day immediately following the

last day of the preceding Accounting Period, and that ends on the earliest of the following dates:

(a) the last day of a calendar month;

(b) any date as of which any withdrawal or distribution of capital is made with

respect to any Capital Account or as of which this Agreement provides for any amount to

be credited to or debited against a Capital Account, other than a withdrawal or distribution

by or to, or an allocation to, all Capital Accounts that does not result in any change of the

Partnership Percentage relating to any Capital Account;

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(c) the date which immediately precedes any day as of which a capital

contribution is accepted by the General Partner from any new or existing Partner; or

(d) any other date which the General Partner selects.

“Advisers Act” means the U.S. Investment Advisers Act of 1940, as amended, and the rules

promulgated thereunder.

“Advisory Committee” has the meaning set forth in Section 4.6.

“Affiliate” means, with respect to any Person, a Person which controls, is controlled by, or

is under common control with, such Person. For these purposes, “control” (including “controlled

by” and “under common control”) means the possession, direct or indirect, of the power to direct

or cause the direction of the management and policies of a Person, whether through the ownership

of voting securities, by contract or otherwise.

“Affiliated Investor” means any Limited Partner that is an Affiliate of the General Partner

or the Investment Manager, including their respective employees, members or partners and their

respective immediate family members.

“Agreement” means this Fourth Amended and Restated Limited Partnership Agreement of

the Partnership, as amended from time to time.

“Alternative Investment Vehicle” has the meaning set forth in Section 4.7.

“Arbitration Rules” has the meaning set forth in Section8.7(b)(i).

“Authorized Representative” has the meaning set forth in Section 7.5(a).

“Bad Actor Limited Partner” means a Limited Partner that (i) would cause the

disqualification of the Partnership from using Rule 506 under the Securities Act due to the

operation of paragraph (d) thereof (or its successor) if such Limited Partner were to beneficially

own 20% or more of the outstanding voting interest of all of the Partners (excluding any other

Interests that are Non-Voting Interests) or (ii) the General Partner determines is likely to become

subject to a conviction, order, judgment, finding or that would be likely to cause the

disqualification described in clause (i).

“BHCA” means the U.S. Bank Holding Company Act of 1956, as amended.

“BHCA Subject Person” means any Limited Partner that is subject, directly or indirectly,

to the provisions of Section 4 of the BHCA and the regulations of the Board of Governors of the

Federal Reserve System promulgated thereunder.

“Business Day” means any day other than (a) Saturday and Sunday and (b) any other day

on which banks located in New York, New York are required or authorized by law to be closed.

“Calculation Period” means, with respect to each Capital Account, the period commencing

as of the date of the establishment of the Capital Account (in the case of the initial Calculation

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Period) and thereafter each period commencing as of the day following the last day of the

preceding Calculation Period with respect to such Capital Account, and ending as of the close of

business on the first to occur of the following:

(a) the last day of a calendar year;

(b) the withdrawal of all or a portion of the Interest attributable to such Capital

Account (but only with respect to such withdrawn amount);

(c) the permitted Transfer of all or any portion of such Limited Partner’s

Interest; or

(d) the final distribution to such Limited Partner following the dissolution of

the Partnership.

“Capital Account” means, with respect to each Partner, the capital account established

and maintained on behalf of such Partner as described in Section 3.3.

“Carryforward Account” means a memorandum account to be recorded in the books and

records of the Partnership with respect to each Capital Account that has an initial balance of zero

and that is adjusted as follows:

(a) As of the first day after the close of each Calculation Period for such Capital

Account, the balance of the Carryforward Account is (i) increased by the amount, if any,

of such the Negative Performance Change with respect to such Capital Account for such

Calculation Period and (ii) reduced (but not below zero) by the amount, if any, of the

Positive Performance Change with respect to such Capital Account for such Calculation

Period.

(b) As of the close of the Calculation Period, any positive balance of the

Carryforward Account is further adjusted if such Capital Account has been reduced during

such Calculation Period as a result of a distribution or withdrawal, by reducing such

positive balance (but not below zero) by an amount determined by multiplying (i) such

positive balance by (ii) a fraction, of which (A) the numerator is equal to the amount so

distributed or withdrawn, and (B) the denominator is equal to the balance of such Capital

Account immediately before giving effect to such distribution or withdrawal.

The Carryforward Account attributable to each Series A Capital Account shall be reset to

zero on the Effective Date. For the avoidance of doubt, any gains or losses allocated by the

Partnership to any Capital Account of a Limited Partner prior to the Effective Date will be

inapplicable in the calculation of the Carryforward Account following the Effective Date.

“Certificate” means the Certificate of Limited Partnership of the Partnership referred to in

Section 2.1(b).

“Code” means the U.S. Internal Revenue Code of 1986, as amended, and as hereafter

amended, or any successor law.

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“Dispute” has the meaning set forth in Section 8.7.

“Effective Date” means the date set forth above as the effective date of this Agreement.

“Election Notice” has the meaning set forth in Section 8.11(c).

“FAA” has the meaning set forth in Section 8.7(b)(ii)

“FATCA” means Sections 1471 through 1474 of the Code, as amended, and any

Regulations thereunder or official interpretations thereof, including any successor Regulations or

interpretations, and any intergovernmental agreement implementing the foregoing.

“FINRA” means the Financial Industry Regulatory Authority, Inc.

“Fiscal Year” means each period commencing on January 1 of each year and ending on

December 31 of such year, unless the General Partner elects another fiscal year; provided that any

such other fiscal year is permissible for U.S. federal income tax purposes. In the case of the Fiscal

Year in which the Partnership is terminated in accordance with Article VI, “Fiscal Year” means

the portion of the calendar year ending on the date on which the Partnership is terminated.

“GAAP” means generally accepted accounting principles in the United States, as amended.

“General Partner” means Highland Multi Strategy Credit Fund GP, L.P., a Delaware

limited partnership, any successor thereto, and any Person hereafter admitted as an additional

general partner, in its capacity as general partner of the Partnership.

“Indemnified Person” has the meaning set forth in Section 4.5(a).

“Interest” means the entire ownership interest of a Partner in the Partnership at the relevant

time, including the right of such Partner to any and all benefits to which a Partner may be entitled

as provided in this Agreement, together with the obligations of such Partner to comply with all the

terms and provisions of this Agreement.

“Investment Company Act” means the U.S. Investment Company Act of 1940, as

amended, and the regulations promulgated thereunder.

“Investment Management Agreement” means the investment management agreement

between the Investment Manager, the General Partner, the Offshore Fund and the Partnership.

“Investment Manager” means Highland Capital Management, L.P., a Delaware limited

partnership, or any successor thereto, or any Person thereafter appointed as an investment manager

of the Partnership in accordance with the Investment Management Agreement.

“Investments” means investment in securities, assets and other financial or intangible

investment instruments, contracts or products made as described in the Partnership’s offering

memorandum.

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“Limited Partners” means any Person who is a limited partner of the Partnership (which,

except as otherwise indicated, will include a substituted Limited Partner) at the time of reference

thereto, in such Person’s capacity as a limited partner of the Partnership. For all purposes of the

Act, the Limited Partners of the Partnership will constitute a single class or group of limited

partners.

“Majority-in-Interest of Limited Partners” means Limited Partners whose Partnership

Percentages represent more than 50% of the aggregate Partnership Percentages of all Limited

Partners.

“Management Fee” means, with respect to each Capital Account, an amount equal to one

fourth of (i) 1.5% of each Series A Capital Account balance; (ii) 1.5% of each Series B Capital

Account balance; (iii) 1.0% of each Series C Capital Account balance; and (iv) 2.0% of each Series

D Capital Account balance, which amounts are calculated on the first Business Day of each

calendar quarter. Management Fees shall be appropriately adjusted for contributions during any

partial quarter.

“Negative Basis” means, with respect to any Partner and as of any time of calculation, the

excess of such Partner’s “adjusted tax basis” in its Interest for U.S. federal income tax purposes at

such time (determined without regard to any adjustments made to such adjusted tax basis by reason

of any Transfer of such Interest) over the amount that such Partner is entitled to receive upon

withdrawal from or liquidation of the Partnership.

“Negative Basis Partner” means any Partner who withdraws from the Partnership and who

has a Negative Basis as of the Withdrawal Date, but such Partner shall cease to be a Negative Basis

Partner at such time as it has received allocations pursuant to Section 3.11(d) equal to such

Partner’s Negative Basis as of the Withdrawal Date and without regard to such Partner’s share of

the liabilities of the Partnership under Section 752 of the Code.

“Net Assets” means the total value, as determined by the General Partner or its delegate(s)

in accordance with Section 7.2, of all Investments and other assets of the Partnership (including

net unrealized appreciation or depreciation of the assets and accrued interest and dividends

receivable net of any withholding taxes), less an amount equal to all accrued debts, liabilities and

obligations of the Partnership (including any reserves for contingencies accrued pursuant to

Section 3.6,). Except as otherwise expressly provided herein, Net Assets as of the first day of any

Accounting Period are determined on the basis of the valuation of assets conducted as of the close

of the immediately preceding Accounting Period, but after giving effect to any capital

contributions made by any Partner subsequent to the last day of such immediately preceding

Accounting Period, and after giving effect to Management Fee charges, and Net Assets as of the

last day of any Accounting Period are determined before giving effect to any of the following

amounts payable by the Partnership generally or in respect of any Investment which are effective

as of the date on which such determination is made:

(a) any Performance Allocation as of the date on which such determination is

made;

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(b) any withdrawals or distributions payable to any Partner which are effective

as of the date on which such determination is made; and

(c) withholding or other taxes, expenses of processing withdrawals and other

items payable, any increases or decreases in any reserves, holdbacks or other amounts

recorded pursuant to Section 3.6 and any increases or decreases in the value of any

Restricted New Issues pursuant to Section 3.8(b) and other amounts specially allocated

pursuant to Section 3.8 during the Accounting Period ending as of the date on which such

determination is made, to the extent the General Partner determines that, pursuant to any

provisions of this Agreement, such items are not to be charged ratably among the Capital

Accounts of all Partners on the basis of their respective Partnership Percentages as of the

commencement of the Accounting Period.

“Net Loss” means any amount by which the Net Assets as of the first day of an Accounting

Period exceed the Net Assets as of the last day of the same Accounting Period.

“Net Profit” means any amount by which the Net Assets as of the last day of an Accounting

Period exceed the Net Assets as of the first day of the same Accounting Period.

“New Issue Rules” has the meaning set forth in Section 3.8(b).

“Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(b)(1)

and (c).

“Non-Voting Interest” means an Interest, the holder of which is not entitled to vote,

consent or withhold consent with respect to any Partnership matter (including but not limited to

mergers, sales of substantially all assets or consolidations of the Partnership), except as otherwise

expressly provided in this Agreement.

“Offshore Fund” means Highland Multi Strategy Credit Fund, Ltd., a Cayman Islands

exempted company and a Limited Partner of the Partnership.

“Orderly Realization” has the meaning set forth in Section 6.1.

“Other Account” means any assets or investments of the General Partner, or any assets

managed by the General Partner or any Affiliate of the General Partner for the account of any

Person or entity (including investment vehicles) other than the Partnership, which are invested or

which are available for investment in securities or other instruments or for trading activities

whether or not of the specific type being conducted by the Partnership.

“Partner” means the General Partner or any of the Limited Partners, except as otherwise

expressly provided herein, and “Partners” means the General Partner and all of the Limited

Partners.

“Partnership” means the limited partnership governed by this Agreement.

“Partnership Minimum Gain” has the meaning set forth in Regulations Section 1.704-

2(b)(2) and (d).

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“Partnership Percentage” means a percentage established for each Capital Account on the

Partnership’s books as of the first day of each Accounting Period. The Partnership Percentage of

a Capital Account for an Accounting Period is determined by dividing the amount of such Capital

Account as of the beginning of the Accounting Period by the sum of the Capital Accounts of all of

the Partners as of the beginning of the Accounting Period. The numerator and denominator of the

above shall be calculated after crediting all capital contributions to the Capital Account or

Partnership, as appropriate, which are effective as of such date, net of all deductions, including

Management Fees. The sum of the Partnership Percentages of all Capital Accounts for each

Accounting Period shall equal 100%.

“Performance Allocation” means, for each Capital Account of a Limited Partner, 20% of

the amount by which (a) the Positive Performance Change for such Calculation Period for such

Capital Account, if any, exceeds (b) any positive balance in the Carryforward Account for such

Capital Account as of the most recent prior date as of which any adjustment has been made

thereto.

“Performance Change” means, with respect to each Capital Account of a Limited Partner

for each Calculation Period, the difference between:

(a) the sum of (i) the balance of such Capital Account as of the close of the

Calculation Period (after giving effect to Management Fees and all allocations to be made

to such Capital Account as of such date, including such Capital Account’s allocable share

of any profits or losses pursuant to Section 3.8 and any credits or debits of any applicable

carrying charge associated therewith other than any Performance Allocation to be debited

against such Capital Account), plus (ii) any debits to such Capital Account during the

Calculation Period to reflect any actual or deemed distributions or withdrawals with respect

to such Capital Account, plus (iii) any debits to such Capital Account during the

Calculation Period to reflect any items allocable to such Capital Account pursuant to

Section 3.5(b) or (c); and

(b) the balance of such Capital Account as of the commencement of the

Calculation Period.

If the amount specified in clause (a) exceeds the amount specified in clause (b) such

difference is a “Positive Performance Change,” and if the amount specified in clause (b) exceeds

the amount specified in clause (a), such difference is a “Negative Performance Change.”

The Performance Change will be computed separately for each Capital Account (and thus

each separately maintained capital sub-account created to reflect an additional contribution to a

Capital Account). Thus, if a Limited Partner has multiple Capital Accounts, the Performance

Change will be calculated separately for each Capital Account and the resulting “Positive

Performance Change” and “Negative Performance Change” shall be separately allocated to each

such Capital Account and shall not be netted against each other.

“Person” means any individual, partnership, corporation, limited liability company, trust

or other entity or any government (including a governmental agency or political subdivision

thereof).

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“Positive Basis” means, with respect to any Partner and as of any time of calculation, the

excess of the amount that such Partner is entitled to receive upon withdrawal from or liquidation

of the Partnership over such Partner’s “adjusted tax basis” in its Interest for U.S. federal income

tax purposes at such time (determined without regard to any adjustments made to such adjusted

tax basis by reason of any Transfer of such Interest).

“Positive Basis Partner” means any Partner who withdraws from the Partnership and who

has a Positive Basis as of the Withdrawal Date, but such Partner ceases to be a Positive Basis

Partner at such time as it has received allocations pursuant to Section 3.11(c) equal to such

Partner’s Positive Basis as of the Withdrawal Date and without regard to such Partner’s share of

the liabilities of the Partnership under Section 752 of the Code.

“Prior Agreement” has the meaning set forth in the Preliminary Statements to this

Agreement.

“Realization Period” has the meaning set forth in Section 6.1.

“Recent Amendments” means the changes to the terms of an investment in the Partnership

as contemplated in this Agreement and the constituent documents related thereto, including, but

not limited to, the re-designation of all Interests held by Limited Partners on the Effective Date as

Series A Interests.

“Regulations” means the proposed, temporary and final U.S. Treasury Regulations

promulgated under the Code, including any successor regulations.

“Regulatory Allocations” has the meaning set forth in Section 3.10(d).

“Restricted Capital Accounts” has the meaning set forth in Section 3.8(b).

“Restricted Issues” has the meaning set forth in Section 3.8(b).

“Revocation Notice” has the meaning set forth in Section 8.11(c).

“RIC Limited Partner” means a Limited Partner that is registered as an investment

company under the Investment Company Act.

“Schedule of Partners” means a schedule to be maintained by the General Partner

containing the following information with respect to each Partner: (a) name; (b) address; (c) date

of admission; (d) amount and date of all capital contributions and withdrawals; and (e) the amount

and date of any permitted Transfers.

“Series” means a designated series of Interests established in accordance with this

Agreement and having such terms as the General Partner determines.

“Series A Capital Account” means the Capital Account attributable to a Limited Partner’s

Series A Interest.

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“Series A Interests” means a Series of Interests having the rights and obligations applicable

to Series A Interests as set forth in this Agreement.

“Series A Lock-Up” has the meaning set forth in Section 5.5(c)(i).

“Series A Withdrawal Date” has the meaning set forth in Section 5.5(c)(i).

“Series B Capital Account” means the Capital Account attributable to a Limited Partner’s

Series B Interest.

“Series B Interests” means a Series of Interests having the rights and obligations applicable

to Series B Interests as set forth in this Agreement.

“Series B Withdrawal Date” has the meaning set forth in Section 5.5(c)(ii).

“Series C Capital Account” means the Capital Account attributable to a Limited Partner’s

Series C Interest.

“Series C Interests” means a Series of Interests having the rights and obligations applicable

to Series C Interests as set forth in this Agreement.

“Series C Withdrawal Date” has the meaning set forth in Section 5.5(c)(iii).

“Series D Capital Account” means the Capital Account attributable to a Limited Partner’s

Series D Interest.

“Series D Interests” means a Series of Interests having the rights and obligations applicable

to Series D Interests as set forth in this Agreement.

“Series D Withdrawal Date” has the meaning set forth in Section 5.5(c)(iv).

“Sub-Series of Shares” refers to sub-series of the shares of the Offshore Fund, as created

from time to time, for purposes of accounting for any profits and losses attributable to each

individual shareholder and of permitting the Performance Allocation to be calculated separately

with respect to each shareholder to reflect different returns achieved as a result of subscriptions

received from shareholders at different times.

“Suspension” has the meaning set forth in Section 5.5(l).

“Super-Majority-in-Interest of Limited Partners” means Limited Partners whose

Partnership Percentages represent more than 75% of the aggregate Partnership Percentages of all

Limited Partners.

“Transfer” means any direct, indirect or synthetic sale, exchange, transfer, assignment,

pledge, encumbrance, charge, exchange, hypothecation, placing of a lien or a security interest on

an Interest or any other disposition by a Partner of its Interest to or in favor of another party,

whether voluntary or involuntary (including, but not limited to, being offered or listed on or

through any placement agent, intermediary, online service, site, agent or similar Person).

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“Withdrawal Date” means, as applicable, the Series A Withdrawal Date, the Series B

Withdrawal Date, the Series C Withdrawal Date, and the Series D Withdrawal Date or any other

effective date of withdrawal pursuant to Section 5.5.

Article II

ORGANIZATION

2.1 Continuation of Limited Partnership

(a) The General Partner and the Limited Partners hereby agree to continue the

Partnership as a limited partnership under and pursuant to the Act and this

Agreement.

(b) The General Partner has executed and filed with the Secretary of State of the State

of Delaware a Certificate, and shall execute, acknowledge and file with the

Secretary any amendments thereto as may be required by the Act, and any other

instruments, documents and certificates which, in the opinion of the Partnership’s

legal counsel, may from time to time be required by the laws of the United States

of America, the State of Delaware or any other jurisdiction in which the Partnership

determines to do business, or any political subdivision or agency thereof, or which

such legal counsel may deem necessary or appropriate to effectuate, implement and

continue the valid and subsisting existence and business of the Partnership. The

General Partner shall cause any required amendment to the Certificate to be filed

promptly following the event requiring such amendment. All amendments may be

signed by the General Partner (as required by the Act) and may be signed either

personally or by an attorney-in-fact.

(c) The parties hereto agree to operate the Partnership as a limited partnership pursuant

to the provisions of the Act and of this Agreement and agree that the rights and

liabilities of the Limited Partners and the General Partner are as provided in the

Act, for limited partners and the general partner except as provided herein.

(d) The parties hereto acknowledge and agree that the Partnership shall be classified as

a “partnership” and not as an association taxable as a corporation for U.S. federal

income tax purposes. No election may be made by the Partners or the Partnership

to treat the Partnership as other than a “partnership” for U.S. federal, state and/or

local income tax purposes and, to the extent necessary, the Partners or Partnership

shall make any election to treat the Partnership as a “partnership.” The Partners

shall treat the Partnership consistently with its status as a “partnership” for U.S.

federal income tax purposes and agree to undertake any further action which is

necessary to treat the Partnership as such, and shall not undertake any action that is

inconsistent with the Partnership’s status as a “partnership” for U.S. federal, state

and/or local income tax purposes.

(e) The General Partner may change the domicile of the Partnership to another state,

country or other jurisdiction where advisable due to legal, tax or other

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considerations; provided that no such change of domicile would reasonably be

expected to have a material adverse effect on the Limited Partners.

2.2 Name of Partnership

(a) The name of the Partnership is Highland Multi Strategy Credit Fund, L.P. or such

other name as the General Partner may hereafter adopt, subject to causing an

amendment to the Certificate to be filed with the Secretary of State of the State of

Delaware in accordance with the Act. The General Partner shall send a notice of

any change of name to the Limited Partners. All business of the Partnership shall

be conducted under such name or under such other name as the General Partner

deems appropriate.

(b) The Partnership shall have the exclusive ownership and right to use the Partnership

name so long as the Partnership continues, despite the withdrawal, expulsion,

resignation or removal of any Limited Partner, but upon the Partnership’s

termination or at such time as there ceases to be a general partner, the Partnership

shall assign the name and the goodwill attached thereto to the General Partner

without payment by the assignee(s) of any consideration therefor.

2.3 Principal Office; Registered Office

(a) The Partnership’s principal office shall be at such location as the General Partner

may designate from time to time.

(b) The Partnership’s registered office in the State of Delaware is at 1209 Orange

Street, County of New Castle, Wilmington, Delaware 19801, and the registered

agent of the Partnership in the State of Delaware is The Corporation Trust

Company, unless a different registered office or agent is designated from time to

time by the General Partner.

2.4 Term of Partnership

The term of the Partnership commenced on the date on which the Certificate was filed with

the Secretary of State of the State of Delaware and continues until the Partnership is dissolved

pursuant to Section 6.1 (unless its term is extended pursuant to Section 6.1). The legal existence

of the Partnership as a separate legal entity continues until the cancellation of the Certificate.

2.5 Object and Powers of Partnership

(a) The object and business of the Partnership is (i) to purchase, sell (including short

sales), invest and trade in Investments, (ii) to engage in financial transactions,

including borrowing, financing, pledging, hedging and other derivative transactions

relating thereto for the benefit of the Partnership, (iii) to engage in any lawful act

or activity of which limited partnerships may be formed under the Act and (iv) to

engage in any and all activities necessary or incidental to the foregoing.

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(b) The Partnership possesses and may exercise all such powers and privileges as the

General Partner considers necessary, convenient or incidental to the conduct,

promotion or attainment of the object of the Partnership.

2.6 Liability of Partners

In no event shall any Limited Partner (or former Limited Partner) be obligated to make any

contribution to the Partnership in addition to its agreed capital contribution (or other payments

provided for herein) or have any liability for the repayment or discharge of the debts and

obligations of the Partnership except to the extent provided herein or as required by the Act.

2.7 Actions by Partnership

The Partnership may execute, deliver and perform all contracts, agreements and other

undertakings and engage in all activities and transactions as may in the opinion of the General

Partner be necessary or advisable to carry out its objects.

2.8 Reliance by Third Parties

Persons dealing with the Partnership are entitled to rely conclusively upon the power and

authority of the General Partner as herein set forth.

2.9 UCC Status of Limited Partner Interests

(a) For purposes of the grant, pledge, attachment or perfection of a security interest in

an Interest or otherwise, the Interests are deemed to be “securities” within the

meaning of Section 8-102(a)(15) and as provided by Section 8-103(c) of the

Uniform Commercial Code as in effect from time to time in the State of Delaware

or analogous provisions in the Uniform Commercial Code in effect in any other

jurisdiction.

(b) Any Interest may be evidenced by a certificate of partnership interest issued by the

Partnership in such form as the General Partner may approve. Every certificate

representing an Interest shall bear a legend substantially in the following form:

“For the purposes of Section 8-103 of the Uniform Commercial Code of the United

States of America in effect in any relevant jurisdiction, the certificates representing

an interest in the Limited Partnership constitute “securities” within the meaning of

Section 8-102 and Section 8-103 of the Uniform Commercial Code.”

2.10 Series of Interests

(a) The General Partner, at any time, may without notification to or consent of the other

Limited Partners, create and offer different Series of Interests in the Partnership

with such rights, obligations, liabilities, privileges, designations and preferences

(including different investment strategies, underlying investments, degrees of

leverage, Management Fees, Performance Allocations, brokerage commissions,

transparency, withdrawal rights, co-investment opportunities, and other

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differences) as the General Partner may determine upon the issuance of such Series;

provided that such Series would not reasonably be expected to have a material

adverse effect on the existing Limited Partners. The terms and rights of such

Series may be set forth in a supplement to the Partnership’s offering memorandum

or a “side letter” or other agreement, which the General Partner may incorporate by

reference.

(b) All Interests in the Partnership held by Limited Partners (including Affiliated

Investors) as of the Effective Date are hereby designated as Series A Interests.

Article III

CAPITAL

3.1 Contributions to Capital

(a) The minimum required initial capital contribution of each Limited Partner is the

amount determined by the General Partner. The General Partner may change the

required minimum initial contribution amount at any time with respect to any, all

or less than all Limited Partners.

(b) The Partnership may accept additional contributions at such times as the General

Partner may permit, but no Limited Partner shall be obligated to make any

additional capital contribution to the Partnership, subject to the provisions of

Section 3.5(b) and any contrary provision of the Act. The minimum required

additional capital contribution of any existing Limited Partner to the Partnership

shall be the amount the General Partner may determine. The General Partner may

change the required minimum additional contribution amount at any time with

respect to any, all or less than all Limited Partners.

(c) The General Partner or an Affiliate has made a capital contribution to the

Partnership as set forth in the Schedule of Partners. Except as required by the Act,

the General Partner is not required to make any additional capital contributions to

the Partnership. The General Partner may, however, make capital contributions to

the Partnership in such amounts and at such times as it may determine. The

General Partner or any of its Affiliates have the right at any time to make additional

capital contributions as a Limited Partner or General Partner. If the General

Partner or any of its Affiliates (including their associated Persons, such as officers,

directors, partners, members or employees or any of their family members) makes

a capital contribution as a Limited Partner, the General Partner or the Investment

Manager shall have authority to waive the Management Fee and/or Performance

Allocation with respect to such Limited Partner.

(d) Except as otherwise permitted by the General Partner (i) initial or additional capital

contributions by each Partner shall be paid in one installment with cash and/or

Investments having an aggregate value as set forth in the Partnership’s books and

records, and (ii) initial contributions are due as of the date of admission of such

Person as a Limited Partner of the Partnership. Whether Investments may be

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accepted as a contribution to the capital of the Partnership is determined by the

General Partner.

3.2 Rights of Partners in Capital

(a) No Partner shall be entitled to interest on its capital contributions to the

Partnership. For the avoidance of doubt, interest income, if any, earned on

subscription amounts remitted to the Partnership prior to the date that an Interest is

issued to a Partner shall be payable to the Partnership and not applied toward the

purchase of an Interest.

(b) No Partner shall have the right to the return of any capital contribution to the

Partnership except (i) upon withdrawal of such Partner pursuant to Section 5.5 or

(ii) upon the dissolution of the Partnership pursuant to Section 6.1. The entitlement

to any such return is limited to the value of the Capital Account(s) of the

Partner. The General Partner shall not be liable for the return of any such amounts.

3.3 Capital Accounts

(a) The Partnership shall maintain a separate Capital Account for each Partner. In the

event a Limited Partner invests in more than one Series of Interests, the Partnership

will maintain a separate Capital Account with respect to each Series of Interests

held by such Limited Partner, with each such Capital Account being treated as if it

were the Capital Account of a separate Partner for purposes of computing the

Performance Allocation, the Management Fee and the withdrawal rights

attributable to the Series.

(b) The General Partner may, in its discretion, maintain a separate sub-account for such

purposes as the General Partner may determine appropriate, including for

recordkeeping, accounting or reporting or to otherwise give effect to the provisions

of this Agreement. Each Capital Account shall reflect the aggregate sum of the

balances in such Partner’s Capital Account.

(c) If a Partner makes an additional capital contribution to an existing Capital Account,

the Capital Account will be sub-divided into separate capital sub-accounts

attributable to each separate capital contribution, with each capital sub-account

treated as if it were the Capital Account of a separate Partner for purposes of

determining the Management Fee, the Performance Allocation and withdrawal

rights and restrictions applicable to each capital sub-account. References herein

to a Partner’s “Capital Account” include any such separately maintained capital

sub-accounts.

(d) The Partnership will issue to the Offshore Fund an Interest and maintain capital

sub-accounts that correspond to each Sub-Series of Shares and each capital subaccount is treated separately for determining Management Fees, the Performance

Allocations and withdrawal rights.

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(e) Each Capital Account has an initial balance equal to the amount of any cash and

the net value of any property constituting the relevant Partner’s initial capital

contribution to such Capital Account.

(f) Each Capital Account shall be increased by such Capital Account’s allocable share

of the Net Profits allocated by the Partnership to such Capital Account pursuant to

Section 3.4.

(g) Each Capital Account shall be reduced by (i) the amount of any cash and the net

value of any property withdrawn by or distributed to the relevant Partner pursuant

to Sections 5.5 or 6.3, including any amount deducted from any such withdrawal or

distribution pursuant to Section 5.5(h), (ii) such Capital Account’s allocable share

of the Net Losses allocated by the Partnership to such Capital Account pursuant to

Section 3.4, (iii) such Capital Account’s pro rata portion of the expenses allocable

(or specially allocable) by the Partnership pursuant to Section 3.5, (iv) such Capital

Account’s allocable share of the Performance Allocation allocable pursuant to

Section 3.7, and (v) such Capital Account’s pro rata portion of the expenses

payable by the Partnership pursuant to Section 4.2(b).

(h) The Capital Account of the Investment Manager, as a special Limited Partner of

the Partnership, shall be increased by the amount of the Performance Allocation

allocated to such Capital Account and the investment gains therein.

(i) Each Capital Account shall also be adjusted to reflect all other allocations and other

changes in the value of such Capital Account not otherwise described in this

Section 3.3 in the manner specified in the remaining provisions of this Article III.

3.4 Allocations of Net Profit and Net Loss

Subject to Sections 3.5 through 3.10, as of the last day of each Accounting Period, any Net

Profit or Net Loss of such Accounting Period shall be separately allocated among and credited to

or debited against the Capital Accounts of the Partners in proportion to their respective Partnership

Percentages for such Accounting Period.

3.5 Allocation of Management Fees, Withholding Taxes and Certain Other Expenditures

(a) As of the first Business Day of each calendar quarter, each Capital Account’s

Management Fee for such calendar quarter shall be debited against such Capital

Account and paid by the Partnership to the Investment Manager. Capital

contributions accepted after the commencement of the calendar quarter shall be

subject to a prorated Management Fee reflecting the time remaining during that

quarter. The Investment Manager may reduce or eliminate the Management Fee

with respect to any Partner (or Capital Account) in its sole discretion; provided that

such reduction or elimination shall not increase the Management Fee payable by

any other Partner (or Capital Account).

(b) To the extent the General Partner or the Partnership is required by law (including

under circumstances where the General Partner or the Partnership is unable to rely

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conclusively on any withholding certification provided by a Partner) to withhold or

to make tax payments on behalf of or with respect to any Partner or Partners

(including backup withholding or withholding under FATCA), the General Partner

or the Partnership may withhold such amounts and make such tax payments as so

required. If the Partnership pays or incurs any withholding tax or other tax

obligation (including under FATCA) with respect to the income allocable or

distributable to one or more Partners, then the amount of such withholding tax or

tax obligation shall be treated as a distribution to such Partner or Partners, as

applicable, pursuant to the terms of this Agreement. Such amount shall be debited

against the Capital Account(s) of such Partner or Partners as of the close of the

Accounting Period during which the Partnership so withholds, pays or incurs such

obligation. If the amount so withheld, paid or incurred is greater than the balance

of the Capital Account(s) of the relevant Partner or Partners, as applicable, then

such Partner or Partners and any successors shall make a contribution to the capital

of the Partnership, within 10 days following request by the General Partner, the

amount of such excess. The General Partner is not obligated to apply for or obtain

a reduction of or exemption from withholding tax on behalf of any Partner that may

be eligible for such reduction or exemption, or be otherwise obligated to structure

Investments so as to reduce or avoid any such withholding tax.

(c) Except as otherwise provided for in this Agreement, any expenditures payable by

the Partnership, to the extent determined by the General Partner to have been paid

or withheld on behalf of, or by reason of particular circumstances applicable to, one

or more but fewer than all of the Partners, shall be specially allocated only to the

Capital Accounts of those Partners on whose behalf such payments are made or

whose particular circumstances gave rise to such payments. Such allocations shall

be debited from the relevant Capital Accounts of such Partners as of the close of

the Accounting Period during which any such items were accrued by the

Partnership.

3.6 Reserves; Adjustments for Certain Future Events

(a) The General Partner may cause appropriate reserves to be created, accrued and

charged against Net Assets and proportionately against the Capital Accounts for

contingent liabilities or probable losses, such reserves to be in the amounts which

the General Partner deems necessary or appropriate. The General Partner may

increase or reduce any such reserve from time to time by such amounts as the

General Partner deems necessary or appropriate. The amount of any such reserve,

or any increase or decrease therein, may, at the election of the General Partner, be

debited or credited, as the General Partner deems appropriate, to the Capital

Accounts of current Partners that (i) are Partners at the time when such reserve is

created, increased, or decreased, as the case may be, or (ii) were Partners, or are

transferees from Persons who were Partners, at the time of the act or omission

giving rise to the contingent liability for which the reserve has been established by

the General Partner.

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(b) If the General Partner determines that it is equitable to treat an amount to be paid

or received as being applicable to one or more prior periods, then all or a portion of

such amount may be proportionately debited or credited, as appropriate, in

proportion to the Capital Account balances of the current Partners as such balances

existed during any such prior period.

3.7 Performance Allocation

(a) The Performance Allocation shall be debited against each Capital Account of each

Limited Partner as of the last day of each Calculation Period with respect to such

Capital Account, and the amount so debited shall simultaneously be credited to the

Capital Account of the Investment Manager, as a special Limited Partner of the

Partnership.

(b) The Investment Manager may waive or alter the Performance Allocation with

respect to any Limited Partner.

3.8 Limited Participation Investments and New Issues

(a) If the General Partner determines that for legal, tax, regulatory or bona fide other

reasons as to which the General Partner and any Partner may agree such Partner

should not participate (or should receive a reduced participation) in the Net Profit

or Net Loss with respect to any Investment, the General Partner may allocate Net

Profit or Net Loss, if any, with respect to such Investment only to Partners to whom

the restrictions on participating in that Investment do not apply. In order to

allocate Net Profit or Net Loss accordingly, the General Partner may establish and

maintain a memorandum account in the accounting records of the Partnership on a

Partner-by-Partner basis with respect to each such Investment. The Net Profit and

Net Loss and expenses relating to such Investment will be separately calculated and

allocated based on each participating Partner’s balance in such memorandum

account for such Investment divided by the sum of the balances of all memorandum

accounts for all participating Partners. In order to compensate a Limited Partner

who is not participating in an Investment pursuant to this Section 3.8 for the use of

such Partner’s share of Partnership capital to purchase the Investment, the General

Partner may credit the non-participating Partner’s Capital Account (and

correspondingly debit the Capital Account of the participating Partners with a

carrying charge). Any distributions from the memorandum account will be based

on the participating Partner’s respective percentage interest in such Investment.

(b) Pursuant to certain rules of FINRA (“New Issue Rules”), members of FINRA are

permitted to sell to the Partnership certain publicly-offered securities (“Restricted

Issues”) only if the Capital Accounts of Partners connected with the securities

industry or executive officers or directors of investment banking clients of

underwriters (“Restricted Capital Accounts”) are not restricted from sharing a

beneficial interest in such Restricted Issues in accordance with the provisions of the

New Issue Rules. Notwithstanding the provisions of Section 3.4, if the Partnership

chooses to invest in Restricted Issues, the Partnership shall not allocate any items

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of income, gain, loss, deduction and credit that relate to investments in Restricted

Issues to Restricted Capital Accounts except to the extent permitted by the New

Issue Rules, and shall instead allocate such items among the other Capital Accounts

on a pro rata basis. To the extent the New Issue Rules permit certain Persons with

Restricted Capital Accounts to participate in profits and losses from Restricted

Issues, the General Partner shall allocate such profits and losses from Restricted

Issues among such Restricted Capital Accounts on a pro rata basis or on such other

basis that the General Partner reasonably determines ensures compliance with the

New Issue Rules. To the extent consistent with the New Issue Rules, the General

Partner shall determine when all Capital Accounts may participate in the Net Profit

and Net Loss from any Restricted Issue. The General Partner shall value any

Restricted Issue at such time at the then-current price of the security in the

secondary market.

3.9 Allocation to Avoid Capital Account Deficits

To the extent that any debits pursuant to this Article III would reduce the balance of the

Capital Account of any Limited Partner below zero, that portion of any such debits shall instead

be allocated to the Capital Account of the General Partner. Any credits in any subsequent

Accounting Period which would otherwise be allocable pursuant to this Article III to a Capital

Account of any Limited Partner previously affected by the application of this Section 3.9 shall

instead be allocated to the Capital Account of the General Partner in such amounts as are necessary

to offset all previous debits attributable to such Limited Partner pursuant to this Section 3.9 not

previously recovered.

3.10 Regulatory Allocations

Notwithstanding anything to the contrary in this Agreement:

(a) Qualified Income Offset. In the event any Limited Partner unexpectedly receives

any adjustments, allocations, or distributions described in Section 1.704-

1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the

Regulations, items of Partnership income and gain shall be specially allocated to

each such Limited Partner in an amount and manner sufficient to eliminate, to the

extent required by the Regulations, the deficit balance in the Capital Account of

such Limited Partner as quickly as possible; provided that an allocation pursuant to

this Section 3.10(a) may be made only if and to the extent that such Limited Partner

would have a deficit balance in its Capital Account after all other allocations

provided for in this Article III have been tentatively made as if this Section 3.10(a)

were not in this Agreement. This Section 3.10(a) is intended to constitute a

“qualified income offset” within the meaning of Section 1.704-1(b)(2)(ii) of the

Regulations and is to be interpreted consistently therewith.

(b) Minimum Gain Chargeback. Notwithstanding any other provision of this

Section 3.10, if there is a net decrease in Partnership Minimum Gain during any

Fiscal Year, the Partners shall be specially allocated items of Partnership income

and gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an

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amount equal to the portion of any such Partner’s share of the net decrease in

Partnership Minimum Gain, determined in accordance with Regulations Sections

1.704-2(f) and (g). This Section 3.10(b) is intended to comply with the minimum

gain chargeback requirement in such Sections of the Regulations and shall be

interpreted consistently therewith.

(c) Gross Income Allocation. In the event any Limited Partner has a deficit Capital

Account at the end of any Fiscal Year that is in excess of the sum of (i) the amount

such Limited Partner is obligated to restore pursuant to any provision of this

Agreement and (ii) the amount such Limited Partner is deemed to be obligated to

restore pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-

2(i)(5) of the Regulations, each such Limited Partner shall be specially allocated

items of Partnership gross income and gain in the amount of such excess as quickly

as possible; provided that an allocation pursuant to this Section 3.10(c) may be

made only if and to the extent that such Limited Partner would have a deficit Capital

Account in excess of such sum after all other allocations provided for in this Article

III have been made as if Section 3.10(a) and this Section 3.10(c) were not in this

Agreement.

(d) Curative Allocations. The allocations set forth this Section 3.10 (the “Regulatory

Allocations”) are intended to comply with certain requirements of the Regulations.

It is the intent of the Partners that, to the extent possible, all Regulatory Allocations

shall be offset either with other Regulatory Allocations or with special allocations

of other items of Partnership income, gain, loss, or deduction pursuant to this

Section 3.10. Therefore, notwithstanding any other provision of this Article III

(other than the Regulatory Allocations), the General Partner shall make such

offsetting special allocations of the Partnership income, gain, loss, or deduction in

whatever manner it determines appropriate so that, after such offsetting allocations

are made, each Partner’s Capital Account balance is, to the extent possible, equal

to the Capital Account balance such Partner would have had if the Regulatory

Allocations were not part of this Partnership Agreement and all Partnership items

were allocated pursuant to other provisions of this Article III (other than the

Regulatory Allocations).

(e) Nonrecourse Deductions. Any Nonrecourse Deductions for any Fiscal Year or

other period shall be allocated to the Partners in accordance with their Partnership

Percentages.

(f) Section 704(b) Compliance. The allocations provided in this Section 3.10 are

intended to comply with the Regulations under Section 704(b) of the Code and may,

as determined by the General Partner, be interpreted and applied in a manner

consistent therewith.

3.11 Allocations for Income Tax Purposes

(a) Income Tax Allocations. Except as otherwise required by Code Section 704(c),

items of income, gain, deduction, loss, or credit that are recognized for U.S. federal

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income tax purposes in each Fiscal Year shall be allocated among the Partners in

such manner as to reflect equitably amounts credited to or debited against each

Partner’s Capital Account, whether in such Fiscal Year or in prior Fiscal Years.

To this end, the Partnership shall establish and maintain records which shall show

the extent to which the Capital Account of each Partner comprises amounts that

have not been reflected in the taxable income of such Partner as of the last day of

each Fiscal Year. To the extent deemed by the General Partner to be feasible and

equitable, taxable income and gains in each Fiscal Year shall be allocated among

the Partners who have enjoyed the related credits to their Capital Accounts, and

items of deduction, loss and credit in each Fiscal Year shall be allocated among the

Partners who have borne the burden of the related debits to their Capital Accounts.

Foreign tax credits attributable to taxes incurred by the Partnership shall be

allocated in a manner consistent with Section 1.704-1(b)(4)(viii) of the Regulations.

All matters concerning allocations for U.S. federal, state and/or local income tax

purposes, including accounting procedures, not expressly provided for in this

Agreement shall be determined by the General Partner.

(b) Basis Adjustments. To the extent an adjustment to the adjusted tax basis of any

Partnership asset pursuant to Section 734(b) of the Code or Section 743(b) of the

Code is required under Section 1.704-1(b)(2)(iv)(m) of the Regulations 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 Partners in a manner consistent with the

manner in which their Capital Accounts are required to be adjusted pursuant to such

Section of the Regulations; provided that in the event that an adjustment to the book

value of Partnership property is made as a result of an adjustment pursuant to

Section 734(b) of the Code, items of income, gain, loss, or deduction, as computed

for book and tax purposes, shall be specially allocated among the Partners so that

the effect of any such adjustment shall benefit (or be borne by) the Partner(s)

receiving the distribution that caused such adjustment.

(c) Positive Basis Allocations. If the Partnership recognized gains or items of gross

income (including short-term capital gain) from the sale of Partnership assets for

U.S. federal income tax purposes for any Fiscal Year in which one or more Positive

Basis Partners withdraws from the Partnership pursuant to Section 5.5, the General

Partner may elect: (i) to allocate such gains or items of gross income among such

Positive Basis Partners, pro rata in proportion to the respective Positive Basis of

each such Positive Basis Partner, until either the full amount of such gains or items

of gross income shall have been so allocated or the Positive Basis of each such

Positive Basis Partner shall have been eliminated; and (ii) to allocate any gains or

items of gross income not so allocated to Positive Basis Partners to the other

Partners in such manner that reflects equitably the amounts credited to such

Partners’ Capital Accounts pursuant to Section 3.3; provided, however, that if,

following such Fiscal Year, the Partnership recognizes gains or items of gross

income from a sale of an Investment the proceeds of which are designated on the

Partnership’s books and records as being used to effect payment of all or part of the

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liquidating share of any Positive Basis Partner, that continues to be a Partner in the

Partnership following such withdrawal (i.e., such Positive Basis Partner effected a

partial, and not a complete, withdrawal of its Interest), then such Positive Basis

Partner may be allocated an amount of such gains or items of gross income equal

to the amount, if any, by which its or its Positive Basis as of the Withdrawal Date

exceeds the amount allocated to such Partner pursuant to clause (i) of this Section

3.11(c).

(d) Negative Basis Allocations. If the Partnership recognizes net losses or items of

gross loss or deduction (including short-term capital loss) from the sale of

Partnership assets for U.S. federal income tax purposes for any Fiscal Year in which

one or more Negative Basis Partners withdraws from the Partnership pursuant to

Section 5.5, the General Partner may elect: (i) to allocate such net losses or items

of gross loss or deduction among such Negative Basis Partners, pro rata in

proportion to the respective Negative Basis of each such Negative Basis Partner,

until either the full amount of such losses or items of loss or deduction shall have

been so allocated or the Negative Basis of each such Negative Basis Partner has

been eliminated; and (ii) to allocate any net losses or items of gross loss or

deduction not so allocated to Negative Basis Partners to the other Partners in such

manner that reflects equitably the amounts credited to such Partners’ Capital

Accounts pursuant to Section 3.3; provided, however, that if, following such Fiscal

Year, the Partnership recognizes net losses or items of gross loss and deduction

from a sale of an Investment the proceeds of which are designated on the

Partnership’s books and records as being used to effect payment of all or part of the

liquidating share of any Negative Basis Partner that continues to be a Partner in the

Partnership following such withdrawal (i.e., such Negative Basis Partner effected a

partial, and not a complete, withdrawal of its Interest), there may be allocated to

such Negative Basis Partner an amount of such net losses or items of gross loss or

deduction equal to the amount, if any, by which its or its Negative Basis as of the

Withdrawal Date exceeds the amount allocated to such Partner pursuant to

clause (i) of this Section 3.11(d).

3.12 Individual Partner’s Tax Treatment

Each Partner agrees not to treat, on any U.S. federal, state, local and/or non-U.S. income

tax return or in any claim for a refund, any item of income, gain, loss, deduction or credit in a

manner inconsistent with the treatment of such item by the Partnership or which would result in

inconsistent treatment, and each Partner further agrees to treat, on any U.S. federal, state, local

and/or non-U.S. income tax return in any claim for a refund, any item of income, gain, loss,

deduction or credit in a manner consistent with the treatment of such item by the Partnership.

3.13 Distributions

(a) The Partnership shall make distributions in respect of withdrawals in accordance

with Section 5.5 and liquidation in accordance with Section 6.3. In addition, the

General Partner may make other distributions at the times and in the amounts the

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General Partner determines. Any distributions may be paid in cash, in kind or

partly in cash and partly in kind.

(b) Notwithstanding any provision to the contrary contained in this Agreement, the

Partnership, and the General Partner on behalf of the Partnership, may not make a

distribution to any Partner on any account of its Interest if such distribution would

violate Section 17-607 of the Act or other applicable law.

Article IV

MANAGEMENT

4.1 Duties and Powers of the General Partner

(a) Subject to the terms and conditions of this Agreement, the General Partner has

complete and exclusive power and responsibility, to the fullest extent permitted by

the Act, for (i) all investment and investment management decisions to be

undertaken on behalf of the Partnership and (ii) managing and administering the

affairs of the Partnership, and shall have the power and authority to do all things

that the General Partner considers necessary or desirable to carry out its duties

hereunder and to achieve the purposes of the Partnership, whether or not such action

or authority is expressly provided for in this Agreement. Without limiting the

foregoing generality, the General Partner’s powers include the power to borrow,

obtain leverage or otherwise incur indebtedness with respect to the Partnership’s

capital.

(b) Without limiting the generality of the General Partner’s duties and powers

hereunder and notwithstanding anything to the contrary contained herein, the

General Partner has full power and authority, subject to the other terms and

provisions of this Agreement, to execute, deliver and perform such contracts,

agreements and other undertakings on behalf of the Partnership, without the consent

or approval of any other Person, and to engage in all activities and transactions, as

it may deem necessary or advisable for, or as may be incidental to, the conduct of

the business contemplated by this Section 4.1.

(c) The General Partner may delegate to any other Person, including the Investment

Manager, any power and authority vested in the General Partner pursuant to this

Agreement.

(d) The General Partner is the “tax matters partner” for purposes of Section 6231(a)(7)

of the Code. The General Partner has the exclusive authority in its determination

to make any elections required or permitted to be made by the Partnership under

any provisions of the Code or any other revenue laws. The General Partner shall

be entitled to be reimbursed by the Partnership for all costs and expenses incurred

by it in connection with any administrative or judicial proceeding affecting tax

matters of the Partnership and/or the Partners in their capacity as such and to be

indemnified by the Partnership (solely out of Partnership assets) with respect to any

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action brought against it in connection with any judgment in or settlement of any

such proceeding.

(e) Every power vested in the General Partner pursuant to this Agreement and any

decision or determination that it is permitted to make is to be construed as a power

to act (or not to act) in its sole and absolute discretion, except as otherwise expressly

provided herein, and the General Partner shall be entitled to consider in making

such decisions or determinations only such interests and factors as it desires,

including its own interests. No provision of this Agreement is to be construed to

require the General Partner to violate the Act, the Advisers Act, or any other law,

regulation or rule of any self-regulatory organization. Notwithstanding any other

provision of this Agreement, whenever in this Agreement, the General Partner is

permitted or required to make a decision in its “good faith” or under another

expressed standard, the General Partner must act under such express standard and

will not be subject to any other or different standards.

(f) Each Limited Partner shall deliver to the General Partner, upon a reasonable

request, (i) an affidavit or certificate in form satisfactory to the General Partner that

is sufficient to establish that the applicable Partner (and its partners, members,

and/or beneficial owners, as the case may be) is not subject to withholding under

the provisions of any U.S. federal, state, local, non-U.S. or other tax laws, or with

respect to such Partner’s tax status under such laws, and (ii) any information or

documentation prescribed under FATCA or as may be necessary, as reasonably

determined by the General Partner, for the Partnership to comply with its

obligations under FATCA (including, but not limited to, information with respect

to citizenship, residency, ownership or control of such Partner). Each Limited

Partner shall reasonably cooperate with the General Partner in connection with any

tax audit of the Partnership, or any existing or former Investment.

4.2 Expenses

(a) Except as otherwise provided herein, and in consideration of the Management Fee,

the General Partner and the Investment Manager shall each pay all of its own

operating and overhead costs, without reimbursement by the Partnership.

(b) The Partnership shall pay, or reimburse the General Partner and the Investment

Manager for, all other reasonable costs, fees and expenses arising in connection

with the Partnership’s operations. Such expenses payable by the Partnership

include the following:

(i) all costs, fees and expenses directly related to Investments or prospective

Investments (whether or not consummated) of the Partnership, including

research and due diligence costs related to an Investment; brokerage

commissions and other execution and transaction costs, interest on, and

commitment fees and expenses arising out of, debit balances or borrowings;

exchange, clearing and settlement charges; fees and expenses of any thirdparty providers of “back office” and “middle office” services relating to

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trade settlement; travel expenses; appraisal fees; investment banking fees

and expenses; borrowing charges on Investments sold short; custody fees;

and fees of consultants and finders relating to Investments or prospective

Investments of the Partnership; the costs, fees and expenses of any

appraisers, accountants or other experts engaged by the General Partner or

the Investment Manager as well as other expenses directly related to the

Partnership’s Investments;

(ii) any withholding, transfer or other taxes imposed on the Partnership;

(iii) the reasonable, out-of-pocket fees, costs and expenses (including legal fees

and expenses) incurred to comply with any applicable law, rule or

regulation (including regulatory filings or other expenses of the Partnership

and the pro rata portion of any regulatory and other expenses of the General

Partner or the Investment Manager, which benefit or are attributable to the

Partnership);

(iv) the reasonable, out-of-pocket costs, fees and expenses for financial and tax

accounting, bookkeeping and reporting services, and administrative

services performed by any Person on behalf of the Partnership (e.g., the

administrator of the Partnership), including the cost of any audit of the

Partnership’s financial statements and the preparation of its tax returns

(including with respect to FATCA compliance);

(v) Management Fees;

(vi) the reasonable, out-of-pocket costs, fees and expenses of legal counsel and

any other litigation or investigation involving Partnership activities;

(vii) specific expenses incurred in obtaining, maintaining or performing systems,

research and other information, including information service subscriptions,

utilized with respect to the Partnership’s Investments including without

limitation for portfolio management, valuations and accounting purposes,

including the costs of statistics and pricing services, service contracts for

quotation equipment and related hardware, software, phone and internet

charges;

(viii) the reasonable, out-of-pocket costs, fees and expenses associated with the

Recent Amendments, including legal and accounting fees, printing costs,

reporting and providing information to existing and prospective Partners,

obtaining requisite consent from Limited Partners, travel fees and expenses

related to the Partnership’s offering, filing fees (including any “blue sky”

filing fees) and other out-of-pocket expenses and compliance with any

applicable federal and state laws;

(ix) the costs and expenses associated with meetings of Partners;

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(x) the expenses of the Advisory Committee and the members thereof,

including any indemnification expenses;

(xi) the costs associated with maintaining “directors and officers” or similar

liability insurance for the benefit of the Partnership, the General Partner, the

Investment Manager, or any other Indemnified Person; and

(xii) any costs or expenses of winding up and liquidating the Partnership and

(xiii) all costs, fees and expenses associated with the ongoing offering of Limited

Partner Interests.

(c) Expenses with respect to Section 4.2(b)(viii) above will be amortized by the

Partnership over a period of 36 months from the Effective Date; however, the

General Partner may limit the amount of expenses amortized so that the

Partnership’s audited financial statements do not contain qualification.

(d) Except as otherwise provided elsewhere in this Agreement, including Sections 3.4,

3.5, 3.6, 3.8 and 5.5(i), expenses are generally borne pro rata by the Partners in

accordance with their respective Partnership Percentages.

(e) If the General Partner or the Investment Manager, as appropriate, incurs any

Partnership expenses for the account or for the benefit of, or in connection with its

activities or those of its Affiliates on behalf of, both the Partnership and any Other

Account, the General Partner or the Investment Manager, as appropriate, shall

allocate such expense among the Partnership and each such Other Account in

proportion to the size of the Investment made by each in the activity or entity to

which the expense relates, or in such other manner as the General Partner considers

fair and reasonable.

(f) The General Partner and the Investment Manager may, to the extent disclosed in

the Partnership’s offering memorandum or otherwise disclosed to the Limited

Partners, use “soft dollars” generated by the Partnership. Use of “soft dollars” by

the General Partner or the Investment Manager as disclosed herein shall not

constitute a breach by either the General Partner or the Investment Manager of any

fiduciary or other duty which the General Partner or the Investment Manager may

be deemed to owe to the Partnership or its Partners.

4.3 Rights of Limited Partners

The Limited Partners may not take any part in the management, control or operation of the

Partnership’s business, and have no right or authority to act for the Partnership or to vote on matters

other than the matters set forth in this Agreement or as required by applicable law.

4.4 Other Activities of Partners

(a) The General Partner is not required to devote any specific amount of its time to the

affairs of the Partnership, but shall devote such of its time to the business and affairs

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of the Partnership as it may determine to be necessary to conduct the affairs of the

Partnership for the benefit of the Partnership and the Partners.

(b) Each Partner acknowledges and agrees that the General Partner, its Affiliates and

their respective partners, managers, directors, officers, shareholders, members or

employees may engage in or possess an interest in other business ventures or

commercial dealings of every kind and description, independently or with others,

including, but not limited to, management of other accounts, investment in, or

financing, acquisition and disposition of, Investments, investment and management

counseling, brokerage services, serving as directors, officers, advisers or agents of

other issuers, partners of any partnership, or trustee of any trust, or entering into

any other commercial arrangements, whether or not any such activities may conflict

with any interest of the parties with respect to the Partnership. Without in any way

limiting the foregoing, each Partner hereby acknowledges that none of the General

Partner, its Affiliates or their respective partners, managers, directors, officers,

shareholders, members or employees shall have any obligation or responsibility to

disclose or refer any of the investment or other opportunities obtained through

activities contemplated by this Section 4.4(b) to the Partnership, but may refer the

same to any other party or keep such opportunities for their own benefit.

(c) The General Partner and its Affiliates shall act in a manner that each considers fair,

reasonable and equitable on an overall basis in allocating investment opportunities

to the Partnership and any Other Account. The General Partner and its Affiliates

shall allocate investment opportunities as set forth in their policies and procedures,

as may be amended from time to time, and as communicated to Limited Partners

through the Partnership’s private offering memorandum for Interests or otherwise.

(d) Each of the Partners hereby waives and covenants not to sue on the basis of any

law (statutory, common law or otherwise) respecting the rights and obligations of

the Partners inter se which is or may be inconsistent with this Section 4.4.

4.5 Exculpation; Indemnification

(a) The General Partner, the Investment Manager, any of their Affiliates, each direct

or indirect member, manager, partner, director, officer, shareholder and employee

of any of the foregoing and, with the approval of the General Partner, any agent of

any of the foregoing (including their respective executors, heirs, assigns, successors

or other legal representatives) (each an “Indemnified Person”) shall not be liable

to the Partnership or to any of the Limited Partners for any loss or damage

occasioned by any acts or omissions in the performance of services under this

Agreement or the Investment Management Agreement, or otherwise in connection

with the Partnership, its Investments or operations, unless such loss or damage has

occurred by reason of the willful misconduct, fraud or gross negligence of such

Indemnified Person or as otherwise required by law; provided that nothing in this

Agreement is to be construed as waiving any legal rights or remedies which the

Partnership may have under state or federal securities laws.

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(b) The Partnership (but not the Partners individually) shall indemnify each

Indemnified Person to the fullest extent permitted by law against any cost, expense

(including reasonable attorneys’ fees), judgment or liability incurred by or imposed

upon it in connection with any action, suit or proceeding (including any proceeding

before any judicial, administrative or legislative body or agency) to which it may

be made a party or otherwise be involved or with which it shall be threatened by

reason of being or having been General Partner, having been the Investment

Manager pursuant to the Investment Management Agreement or its having

provided services to the Partnership; provided that the Indemnified Person is not so

indemnified to the extent such cost, expense, judgment or liability has been finally

determined (i) in a non-appealable decision on the merits in any such action, suit or

proceeding, or (ii) on a plea of nolo contendere, to have been incurred or suffered

by the Indemnified Person solely by reason of willful misconduct, fraud or gross

negligence by the Indemnified Person.

(i) The right to indemnification granted by this Section 4.5 shall be in addition

to any rights to which the Indemnified Person may otherwise be entitled and

shall inure to the benefit of the successors or assigns of such Indemnified

Person. The Partnership shall pay the expenses incurred by the

Indemnified Person in defending a civil or criminal action, suit or

proceeding in advance of the final disposition of such action, suit or

proceeding, upon receipt of an undertaking by the Indemnified Person to

repay such payment if there is an adjudication or determination that it is not

entitled to indemnification as provided herein; provided that no such

advance shall be made in connection with any action brought by a Majorityin-Interest of the Limited Partners.

(ii) In any suit in the name of the Partnership to recover expenses advanced

pursuant to the terms of an undertaking, the Partnership shall be entitled to

recover such expenses upon a final adjudication that the Indemnified Person

or other Person claiming a right to indemnification hereunder has not met

the applicable standard of conduct set forth in Section 4.5(a). In any such

suit brought to enforce a right to indemnification or to recover an

advancement of expenses pursuant to the terms of an undertaking, the

burden of proving that the Indemnified Person or other Person claiming a

right to indemnification shall not be entitled to be indemnified, or to an

advancement of expenses, hereunder shall be on the Partnership (or any

Limited Partner acting derivatively or otherwise on behalf of the Partnership

or the Limited Partners) unless otherwise required by applicable law.

(iii) Each Indemnified Person may not satisfy any right of indemnity or

reimbursement granted in this Section 4.5 or to which it may be otherwise

entitled except out of the assets of the Partnership, and no Partner shall be

personally liable with respect to any such claim for indemnity or

reimbursement. The General Partner may obtain appropriate insurance on

behalf, and at the expense, of the Partnership to secure the Partnership’s

obligations hereunder.

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(iv) Nothing in this Agreement is to be construed as to provide for the

indemnification of an Indemnified Person for any liability (including

liability under U.S. federal securities laws) to the extent that such

indemnification would be in violation of applicable law but is to be

construed so as to effectuate this Section 4.5 to the fullest extent permitted

by law.

(v) Each Indemnified Person shall be deemed a third-party beneficiary (to the

extent not a direct party hereto) of this Agreement and, in particular, the

provisions of this Section 4.5. The General Partner and/or the Investment

Manager may enter into agreements on behalf of the Partnership with an

Indemnified Person to provide an indemnity to the same extent provided in

this Section 4.5.

4.6 Advisory Committee

(a) The General Partner and/or the Investment Manager may appoint a committee (the

“Advisory Committee”) composed of one or more individuals selected from time

to time by the General Partner. No member of the Advisory Committee may be

an Affiliate of the General Partner and/or the Investment Manager (except as a

Limited Partner or as an investor in an Affiliate of the Partnership).

(b) If established, the Advisory Committee will meet with the General Partner and/or

the Investment Manager from time to time as requested by and deemed appropriate

by the General Partner and/or the Investment Manager to consult with and advise

the General Partner and/or the Investment Manager on any matter deemed

appropriate by the General Partner and/or the Investment Manager, including any

circumstances involving conflicts of interest between the General Partner and/or

the Investment Manager (and their Affiliates), on the one hand, and the Limited

Partners and the Partnership, on the other.

(c) The General Partner and/or the Investment Manager may in its discretion seek the

approval of the Advisory Committee or establish any other reasonable mechanism

in connection with (i) approvals that are or would be required under the Investment

Advisers Act (including Section 206(3)) or (ii) any other matter deemed appropriate

by the General Partner and/or the Investment Manager. Each Limited Partner

agrees that, except as otherwise specifically provided herein and to the extent

permitted by applicable law, the approval of a majority of the members of the

Advisory Committee at such time is binding upon the Partnership and each Partner

with respect to any approval sought under this Section 4.6(c).

(d) As determined by the General Partner and/or the Investment Manager, meetings of

the Advisory Committee may be held in person or by telephone. Approval of the

Advisory Committee is deemed to have been given if given by a majority of those

members present at a meeting or by a majority of all members of the Advisory

Committee if given pursuant to a written consent without a meeting.

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(e) The Partnership agrees to reimburse members of the Advisory Committee for their

out-of-pocket expenses relating to their services as Advisory Committee members

and to indemnify each Advisory Committee member to the maximum extent

permitted by law

(f) In the event an Advisory Committee is not appointed, the General Partner and/or

the Investment Manager may obtain the approval of an unaffiliated third party, as

is determined advisable by the General Partner and/or the Investment Manager, and

any such approval by such third party shall, to the extent permitted under applicable

law, serve as the approval of the Advisory Committee and shall be binding on the

Partnership and the Limited Partners.

4.7 Alternative Investment Vehicles

The General Partner shall have the right in connection with any Investment to direct the

capital contributions of some or all of the Partners to be made through one or more alternative

investment vehicles (“Alternative Investment Vehicles”) and to exchange a portion of the Interests

of one or more Limited Partners for similar equity interests in one or more Alternative Investment

Vehicles if, in the judgment of the General Partner, the use of such vehicle or vehicles would allow

the Partnership to overcome legal or regulatory constraints or invest in a more tax efficient manner

and/or would facilitate participation in certain types of Investments; provided that the General

Partner shall not employ the use of an Alternative Investment Vehicle in any manner that would

reasonably be expected to have a material adverse effect on the participating Limited Partners.

Any Alternative Investment Vehicle shall contain terms and conditions substantially similar to

those of the Partnership and shall be managed by the General Partner or an Affiliate thereof, and

such controlling Person is required to comply with the provisions of this Agreement applicable to

Alternative Investment Vehicles. Expenses related to an Alternative Investment Vehicle on behalf

of less than all of the Partners shall not be borne by the Partners that do not participate in such

Alternative Investment Vehicle.

Article V

ADMISSIONS, TRANSFERS AND WITHDRAWALS

5.1 Admission of Limited Partners

The General Partner may, at such times as the General Partner may determine, without

advance notice to or consent from the Limited Partners, admit to the Partnership any Person who

executes this Agreement or any other writing evidencing the intent of such Person to become a

Limited Partner. Such admission shall be effective when the General Partner enters the name of

such Person on the books and records of the Partnership as a Partner and does not require the

consent or approval of any other Partner. The General Partner has the authority to reject

subscriptions for Interests in whole or in part.

5.2 Admission of Additional General Partners

(a) Except as provided in Section 5.2(b), the General Partner may admit one or more

Persons as additional general partners to the Partnership. No additional general

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partner shall be added unless such additional general partner agrees to be bound by

all of the terms of this Agreement.

(b) Any Person to whom the General Partner has transferred its general partner interest

in accordance with Section 5.4 shall be admitted to the Partnership as a substitute

General Partner without the consent of the Limited Partners unless otherwise

provided for in Section 5.4.

5.3 Transfer of Interests of Limited Partners

(a) No Transfer of any Limited Partner’s Interest, whether voluntary or involuntary,

shall be valid or effective, and no transferee may become a substituted Limited

Partner, unless the prior written consent of the General Partner has been obtained,

which consent may be granted, withheld or conditioned for any reason by the

General Partner. Any attempted Transfer not made in accordance with this

Section 5.3, to the fullest extent permitted by law, shall be void ab initio.

(b) Prior to recognizing any Transfer in accordance with this Section 5.3, the General

Partner may require the transferring Limited Partner to execute and acknowledge

an instrument of Transfer in form and substance satisfactory to the General Partner,

and may require the transferee to make certain representations and warranties to the

Partnership and Partners and to accept, adopt and approve in writing all of the terms

and provisions of this Agreement.

(c) In the event of a Transfer of a Partner’s Interest or in the event of a distribution of

assets of the Partnership to any Partner, the Partnership may, but shall not be

required to, file an election under Section 754 of the Code and in accordance with

the applicable Regulations, to cause the basis of the Partnership’s assets to be

adjusted for U.S. federal income tax purposes as provided by Section 734 or 743 of

the Code.

(d) In the event of a Transfer at any time other than the end of a Fiscal Year, items of

income, gain, loss, deduction or credit recognized by the Partnership for U.S.

federal income tax purposes shall be allocated between the transferring parties, as

determined by the General Partner, using any permissible method under Code

Section 706(d) and the Regulations thereunder. To the extent the transferring

parties have given the General Partner written notice prior to the consent by the

General Partner pursuant to Section 5.3(a) of their agreement to apply a particular

and reasonable method, then the General Partner may elect to use such method.

The transferring parties agree to reimburse the General Partner and the Partnership

for any incidental accounting fees and other expenses incurred by the General

Partner and the Partnership in making allocations pursuant to this Section 5.3(d).

5.4 Transfer of Interest of the General Partner

The General Partner may Transfer its Interest as a General Partner in the Partnership;

provided that if any such proposed Transfer would result in an “assignment” (as such term is

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defined under the Advisers Act), the General Partner shall obtain the consent of Limited Partners

constituting a Majority-in-Interest of Limited Partners that are not Affiliated Investors.

5.5 Withdrawal of Interests of Partners

(a) The Interest of a Limited Partner may not be withdrawn from the Partnership prior

to its dissolution except as provided in this Section 5.5.

(b) Withdrawal rights are determined separately with respect to each Capital Account

(and each capital sub-account, if applicable). Each capital contribution shall be

accounted for using a separate capital sub-account, and, in the case of a Limited

Partner for which more than one capital sub-account is maintained, the withdrawals

from any such capital sub-accounts shall be processed on a “first-in, first-out” basis

based upon the date on which each capital contribution was made, unless otherwise

agreed between the General Partner and such Partner. Each capital sub-account

relating to a contribution of capital from a Limited Partner will be treated as if it

were the separate Capital Account of a separate Partner for the purposes of applying

the withdrawal provisions of this Section 5.5.

(c) Subject to a Suspension and the other provisions of this Section 5.5:

(i) A Limited Partner may make a complete or partial withdrawal from its

Series A Capital Account effective on the last Business Day of each

calendar quarter occurring at least 36 calendar months after the contribution

of the capital to be withdrawn (each, a “Series A Withdrawal Date”) by

providing written notice to the General Partner at least 90 days prior to the

proposed Series A Withdrawal Date (such restriction, the “Series A LockUp”). For purposes of calculating the Series A Lock-Up, each Limited

Partner holding Series A Interests on of the Effective Date is deemed to

have made its initial contribution for Series A Interests as of the Effective

Date. Additional contributions for Series A Interests after the Effective

Date will also be subject to the Series A Lock-Up, which lock-up period

shall commence on the date of each such additional contribution.

(ii) A Limited Partner may make a complete or partial withdrawal from its

Series B Capital Account upon written notice to the General Partner at least

180 days prior to the applicable Series B Withdrawal Date. The “Series B

Withdrawal Date” means: (i) the end of the day on the last Business Day of

the calendar month that immediately precedes the one-year anniversary of

the contribution of the capital to be withdrawn; and thereafter (ii) the end of

the day on each one-year anniversary of the preceding Series B Withdrawal

Date (or the last Business Day of such month).

(iii) A Limited Partner may make a complete or partial withdrawal from its

Series C Capital Account upon written notice to the General Partner at least

180 days prior to the applicable Series C Withdrawal Date. The “Series C

Withdrawal Date” means: (i) the end of the day on the last Business Day of

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the calendar month that immediately precedes the two-year anniversary of

the contribution of the capital to be withdrawn; and thereafter (ii) the end of

the day on each two-year anniversary of the preceding Series C Withdrawal

Date (or the last Business Day of such month).

(iv) A Limited Partner may make a complete or partial withdrawal from its

Series D Capital Account effective on the last Business Day of each

calendar quarter (each, a “Series D Withdrawal Date”) occurring at least 12

calendar months after the contribution of the capital to be withdrawn by

providing written notice to the General Partner at least 90 days prior to the

proposed Series D Withdrawal Date.

(d) Any notice of withdrawal shall be irrevocable by the Limited Partner, unless

otherwise agreed by the General Partner. For the avoidance of doubt, if a Limited

Partner notifies the General Partner of its intent to withdraw and later chooses not

to withdraw (with the General Partner’s consent), any transaction costs incurred by

the Partnership or the General Partner in connection therewith may be charged to

such withdrawing Limited Partner. The General Partner may refuse to honor any

Limited Partner’s request for a full or partial withdrawal if such request is not

accompanied by such additional information as the General Partner may reasonably

require, including any information required to determine the “adjusted basis” for

U.S. federal income tax purposes in the Limited Partner’s Interest withdrawn.

(e) With respect to any amounts withdrawn, a withdrawing Partner shall not share in

the income, gains and losses of the Partnership or have any other rights as a Partner

(in the case of a complete withdrawal) after the applicable Withdrawal Date, and

withdrawn amounts will be fixed as of the applicable Withdrawal Date, except as

provided in Section 3.6. For the avoidance of doubt, none of the Partnership, the

General Partner or the Investment Manager shall be liable to a Limited Partner for

interest on the proceeds of any withdrawal.

(f) At least 90% of the estimated amount due with respect to the Partnership’s

marketable investments is normally settled in cash or, subject to the sole discretion

of the General Partner, wholly or partially with securities or other assets of the

Partnership, within 30 Business Days after the Withdrawal Date, provided that the

General Partner may delay such payment if such delay is reasonably necessary to

prevent such withdrawal from having a material adverse impact on the Partnership

or the remaining Capital Accounts. The General Partner is entitled to deduct from

such settlement payment an amount equal to the pro rata portion of any

Performance Allocation (based on the portion of the withdrawal being settled)

payable to the Investment Manager with respect to such withdrawn amount. Any

balance will be held back and distributed, without interest thereon, promptly

following completion of the audit of the Partnership’s financial statements for such

Fiscal Year, or sooner in the General Partner’s discretion.

(g) In the case of a complete withdrawal, or a partial withdrawal that cannot be fully

funded out of the Limited Partner’s interest in the Partnership’s marketable

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investments, no settlements occur with respect to any of such Limited Partner’s

interest in the Partnership’s non-marketable investments until the occurrence of

liquidity events with respect to such non-marketable investments after the

scheduled payment date for the withdrawal (without interest thereon).

Notwithstanding the foregoing, the General Partner may, however, make

settlements in such cases prior to the occurrence of a liquidity event if such

settlement would, in the good faith opinion of the General Partner, not have a

material adverse effect on the Partnership. Generally, a liquidity event will be a

sale of the relevant investment for cash, in which case the settlement will be funded

in cash within 90 days after the liquidity event (without interest). If the liquidity

event is not a sale for cash, the General Partner may effect the settlement either by

making a distribution in kind of the Limited Partner’s ratable share of the relevant

investment or by distributing the net proceeds derived from a sale of such

investment. The General Partner is entitled to withdraw from each such settlement

an amount equal to the remaining portion of any Performance Allocation (pro rata

based on the portion of such withdrawal being distributed) to be credited to the

Investment Manager at the same time and in the same form (in cash or in kind) as

the distribution to the withdrawing Limited Partner.

(h) The General Partner may effect withdrawal payments (i) in cash, (ii) in kind, by

transfer of marketable or non-marketable Investments to the Limited Partner, the

value of which, as determined in accordance with Section 7.2, would satisfy the

Limited Partner’s request for withdrawal, or (iii) in any combination of the

foregoing.

(i) The General Partner may deduct from any withdrawal proceeds due to any Limited

Partner pursuant to this Section 5.5 an amount representing the Partnership’s actual

or estimated expenses, as determined by the General Partner, associated with

processing the withdrawal. Any such withdrawal deduction shall be retained by

the Partnership for the benefit of the remaining Limited Partners.

(j) The right of any Partner to withdraw or receive distributions pursuant to the

provisions of this Section 5.5 is subject to all Capital Account allocations and

adjustments contemplated by this Agreement and to the provision by the General

Partner for all Partnership liabilities and for reserves and holdbacks for

contingencies provided in Section 3.6.

(k) The General Partner may suspend or limit, in whole or in part, (i) the right of the

Partners to withdraw or receive distributions from the Partnership and/or (ii) the

valuation of the Partnership’s Net Assets:

(i) during any period when any exchange or over-the-counter market on which

the Partnership’s Investments are quoted, traded or dealt in is closed, other

than for ordinary holidays and weekends, or during periods in which

dealings are restricted or suspended;

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(ii) during the existence of any state of affairs as a result of which, in the

reasonable opinion of the General Partner, disposal of, or withdrawals or

redemptions from, Investments by the Partnership, or the determination of

the value of the assets of the Partnership, would not be reasonably

practicable;

(iii) during any breakdown in the means of communication normally employed

in determining the price or value of the Partnership’s assets or liabilities, or

of current prices in any market as aforesaid, or when for any other reason

the prices or values of any assets or liabilities of the Partnership cannot

reasonably be accurately ascertained within a reasonable time frame;

(iv) during any period when the transfer of funds involved in the realization or

acquisition of any Investments cannot, in the reasonable opinion of the

General Partner, be effected at normal rates of exchange;

(v) in other circumstances where the General Partner is unable to fairly value

the Partnership’s assets due to extreme market conditions; or

(vi) automatically upon liquidation of the Partnership.

(l) In the event of any such suspension or limitation described above in Section 5.5(k)

(a “Suspension”), the General Partner shall promptly notify each Limited Partner.

Any Limited Partner who has submitted a withdrawal request and to whom

payment in full of the amount being withdrawn has not yet been remitted is not

given any priority with respect to the withdrawal of such Interests or portions

thereof after the cause for such Suspension ceases to exist. The General Partner

may, however, allow any such Partners to rescind their withdrawal requests to the

extent of any portion thereof for which withdrawal proceeds have not yet been

remitted. Upon the reasonable determination by the General Partner that

conditions leading to Suspension no longer apply, withdrawal rights for all Limited

Partners shall be promptly reinstated, and any pending withdrawal requests (or new,

timely withdrawal requests) shall be honored as of the last Business Day of the

calendar quarter in which withdrawals have recommenced, subject to the

application of the withdrawal limitations described herein.

(m) The General Partner may, notwithstanding any Suspension, upon not less than five

days’ prior written notice (or immediately if the General Partner determines in its

sole discretion that such Limited Partner’s continued participation in the

Partnership may cause the Partnership, the Investment Manager or the General

Partner to violate any applicable law), require any Limited Partner’s Interest to be

withdrawn in part or in its entirety from the Partnership (including, but not limited

to, for reasons relating to FATCA) and for the Limited Partner to cease to be a

Limited Partner of the Partnership (in the case of a withdrawal of a Limited

Partner’s Interest in its entirety) pursuant to this Section 5.5(m). Except as

otherwise provided herein, settlements of withdrawals pursuant to this Section

5.5(m) are made in the same manner as voluntary withdrawals.

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(n) Notwithstanding the foregoing, the General Partner may waive any restrictions on

any Limited Partner’s ability to withdraw.

Article VI

SOFT WIND DOWN, DISSOLUTION AND LIQUIDATION

6.1 Soft Wind Down

(a) The General Partner may, in consultation with the Investment Manager, make a

determination that the investment strategy should no longer be continued (whether

or not the General Partner has implemented a Suspension). Having made such

determination, the Investment Manager may recommend to the General Partner to

cause the Partnership to return the Partnership’s assets to Limited Partners in an

orderly manner (without proceeding with a liquidation of the Partnership) (an

“Orderly Realization”). The General Partner may, in such circumstances, resolve

to effect an Orderly Realization should it determine that doing so is in the best

interests of the Partnership as a whole. Such Orderly Realization shall not

constitute a dissolution or winding up of the Partnership for any purposes, but rather

only the continued management of the Partnership’s portfolio so as to reduce such

portfolio to cash (to the extent reasonably practicable, as advised by the Investment

Manager) and return such cash as well as all other assets of the Partnership to the

Limited Partners.

(b) The General Partner will notify the Limited Partners of any decision to proceed

with an Orderly Realization of the Partnership. During an Orderly Realization, the

Investment Manager may, in consultation with the General Partner, take such steps

as are considered appropriate in the best interests of the Partnership as a whole to

effect the Orderly Realization. The General Partner, in consultation with the

Investment Manager, shall establish what they consider to be a reasonable time by

which the Orderly Realization should be effected (the “Realization Period”). Any

resolution to undertake an Orderly Realization and the process thereof shall be

deemed to be integral to the business of the Partnership and may be carried out

without recourse to a formal process of liquidation under Delaware law or any other

applicable bankruptcy or insolvency regime.

(c) The General Partner, in consultation with the Investment Manager, may resolve to

cease the Orderly Realization within the Realization Period and recommence active

trading if the circumstances permit a lifting of any applicable Suspension or, where

no Suspension is in effect, if the circumstances are such that the investment strategy

can then be continued.

(d) Management Fees, and all other fees and expenses, shall be payable and

Performance Allocations shall be made during an Orderly Realization on the same

basis as provided herein.

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6.2 Dissolution of Partnership

(a) The Partnership shall be dissolved upon the first to occur of the following dates:

(i) any date on which the General Partner shall elect in writing to dissolve the

Partnership; or

(ii) the occurrence of any other event causing (A) the General Partner (or a

successor to its business) to cease to be the general partner of the Partnership

or (B) the dissolution of the Partnership under the Act.

(b) In the event an Orderly Realization lasts longer than three years, a Super-Majorityin-Interest of the Limited Partners may seek a court decree of dissolution or seek

the appointment by the court of a liquidator for the Partnership. The Limited

Partners will not have any other right to bring an action in court to dissolve the

Partnership. The parties agree that irreparable damage would be done to the

goodwill and reputation of the Partners if any Limited Partner should bring an

action in court to dissolve the Partnership. Care has been taken in this Agreement

to provide for fair and just payment in liquidation of the Interests of all

Partners. Accordingly, each Limited Partner hereby waives and renounces its right

to such a court decree of dissolution or to seek the appointment by the court of a

liquidator for the Partnership except as provided herein.

6.3 Liquidation of Assets

(a) Upon dissolution of the Partnership, the General Partner shall promptly liquidate

the business and administrative affairs of the Partnership to the extent feasible,

except that if the General Partner is unable to perform this function, a liquidator

elected by a Majority-in-Interest of Limited Partners shall liquidate the business

and administrative affairs of the Partnership. Net Profit and Net Loss during any

Accounting Period, which includes the period of liquidation, shall be allocated

pursuant to Article III. The proceeds from liquidation shall be divided in the

following manner, subject to the Act:

(i) the debts, liabilities and obligations of the Partnership, other than any debts

to the Partners as Partners, and the expenses of liquidation (including legal,

administrative and accounting expenses incurred in connection therewith),

up to and including the date that distribution of the Partnership’s assets to

the Partners has been completed, shall first be satisfied (whether by payment

or the making of reasonable provision for payment thereof);

(ii) such debts as are owing to the Partners as Partners are next paid; and

(iii) the Partners shall next be paid liquidating distributions (in cash or in

securities or other assets, whether or not readily marketable) pro rata in

accordance with, and up to the positive balances of their respective Capital

Accounts, as adjusted pursuant to Article III to reflect allocations for the

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Accounting Period ending on the date of the distributions under this

Section 6.1(a)(iii).

(b) Notwithstanding this Section 6.3 and the priorities set forth in the Act, the General

Partner or liquidator may distribute ratably in kind rather than in cash, upon

dissolution, any assets of the Partnership; provided, however, that if any in kind

distribution is to be made, (i) the assets distributed in kind shall be valued pursuant

to Section 7.2, and charged as so valued and distributed against amounts to be paid

under Section 6.3(a) and (ii) any gain or loss (as computed for book purposes)

attributable to property distributed in kind shall be included in the Net Profit or Net

Loss for the Accounting Period ending on the date of such distribution.

Article VII

ACCOUNTING AND VALUATION; BOOKS AND RECORDS

7.1 Accounting and Reports

(a) The Partnership may adopt for tax accounting purposes any accounting method that

the General Partner shall decide is in the best interests of the Partnership and that

is permissible for U.S. federal income tax purposes.

(b) As soon as practicable after the end of each Fiscal Year thereafter, the General

Partner shall cause an audit of the financial statements of the Partnership as of the

end of each such period to be made by a firm of independent accountants selected

by the General Partner. As soon as is practicable thereafter, but subject to

Section 7.4, the General Partner shall furnish to each Limited Partner a copy of the

set of financial statements prepared in accordance with GAAP, with such

adjustments thereto as the General Partner determines appropriate, including the

report of such independent accountants.

(c) As soon as practicable after the end of each taxable year, the General Partner shall

furnish to each Limited Partner such information as may be required to enable each

Limited Partner properly to report for U.S. federal, state and local income tax

purposes its distributive share of each Partnership item of income, gain, loss,

deduction or credit for such year. The General Partner shall have discretion as to

how to report Partnership items of income, gain, loss, deduction or credit on the

Partnership’s tax returns, and the Limited Partners shall treat such items

consistently on their own tax returns.

(d) As soon as practicable after the end of each calendar month, but subject to Section

7.5, the General Partner shall arrange for the preparation and delivery to each

Limited Partner of an interim report containing such information concerning the

affairs of the Partnership (which need not include any financial statements) as the

General Partner considers appropriate.

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7.2 Valuation of Partnership Assets and Interests

(a) The General Partner (or its delegate, including the Investment Manager or the

administrator of the Partnership) shall value the assets of the Partnership as of the

close of business on the last day of each Accounting Period. Such valuations will

generally be in accordance with GAAP, with such adjustments thereto as the

General Partner reasonably determines appropriate. In addition, the General

Partner shall value the assets which are being distributed in kind as of the close of

the Business Day immediately preceding the distribution date in accordance with

Section 5.5(c) or Section 6.3(b). In determining the value of the assets of the

Partnership, no value shall be placed on the goodwill or name of the Partnership,

or the office records, files, statistical data or any similar intangible assets of the

Partnership not normally reflected in the Partnership’s accounting records, but there

shall be taken into consideration any related items of income earned but not

received, expenses incurred but not yet paid, liabilities fixed or contingent, prepaid

expenses to the extent not otherwise reflected in the books of account, and the value

of options or commitments to purchase or sell securities pursuant to agreements

entered into on or prior to such valuation date.

(b) To the extent readily available, valuations will be based on independent market

quotations obtained by the General Partner from recognized pricing services,

market participants or other sources. In the case of any Investment for which a

quotation from an independent source is not available or is determined by the

General Partner to be unreliable or inadequate, the General Partner (i) shall be

authorized, to the extent permitted by applicable law, to value such positions at

their fair value in such manner as the General Partner determines in good faith, or

(ii) may (but shall not be required to) obtain an appraisal, at the expense of the

Partnership, by an independent third party selected by the General Partner. Except

as otherwise determined by or at the direction of the General Partner, investment

and trading transactions shall be accounted for on the trade date.

(c) Accounts shall be maintained in U.S. dollars, and except as otherwise determined

by or at the direction of the General Partner: (i) assets and liabilities denominated

in currencies other than U.S. dollars shall be translated at the rates of exchange

quoted by an independent pricing service as in effect as of the close of business on

the relevant valuation dates (and exchange adjustments shall be recorded in the

results of operations); and (ii) investment and trading transactions and income and

expenses shall be translated at the rates of exchange in effect at the time of each

transaction.

7.3 Determinations by the General Partner

(a) All matters concerning the determination and allocation among the Partners of the

amounts to be determined and allocated pursuant to this Agreement, including

Article III and accounting procedures applicable thereto, shall be determined by the

General Partner, unless specifically and expressly otherwise provided for by the

provisions of this Agreement, and such determinations and allocations shall be final

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and binding on all the Partners; provided, however, that all calculations of the

Performance Allocation will be made on the basis of, or subject to correction based

on, the annual audit of the Partnership’s financial statements and appropriate

adjustments will be made to all such calculations and related allocations to the

extent necessary as a result of that audit.

(b) The General Partner may make such adjustments to the computation of Net Profit

or Net Loss or any other allocations with respect to any Limited Partner, or any

component items comprising any of the foregoing, as it considers appropriate to

reflect the financial results of the Partnership and the intended allocation thereof

among the Partners in a reasonably accurate, fair and efficient manner. Without

limiting the generality of the foregoing, any provision of this Agreement that

requires an adjustment to be made to any Capital Account or sub-account as of any

mid-month or mid-quarter date may be made as of the most recent preceding or

succeeding date when a regular valuation is being conducted.

7.4 Books and Records

(a) The General Partner shall keep books and records pertaining to the Partnership’s

affairs showing all of its assets and liabilities, receipts and disbursements, realized

income, gains, deductions and losses, Partners’ Capital Accounts and all

transactions entered into by the Partnership. The General Partner shall afford to

the Partnership’s independent auditors reasonable access to such documents during

customary business hours and shall permit the Partnership’s auditors to make

copies thereof or extracts therefrom at the expense of the Partnership.

(b) The General Partner shall establish such standards as it deems appropriate regarding

the access of Limited Partners to the books and records of the Partnership and shall

not be obliged to permit access by a Limited Partner to the name or address of any

other Limited Partner.

7.5 Confidentiality

(a) Each Limited Partner agrees to keep confidential, and not to make any use of (other

than for purposes reasonably related to its Interest or for purposes of filing such

Limited Partner’s tax returns) or disclose to any Person, any information or matter

relating to the Partnership and its affairs and any information or matter related to

any Investment (other than disclosure to such Limited Partner’s directors,

employees, agents, advisors, or representatives responsible for matters relating to

the Partnership or to any other Person approved in writing by the General Partner

(each such Person being hereinafter referred to as an “Authorized

Representative”)); provided that (i) such Limited Partner and its Authorized

Representatives may make such disclosure to the extent that (A) the information to

be disclosed is publicly available at the time of proposed disclosure by such Limited

Partner or Authorized Representative, (B) the information otherwise is or becomes

legally available to such Limited Partner other than through disclosure by the

Partnership or the General Partner, or (C) such disclosure is required by law or in

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response to any governmental agency request or in connection with an examination

by any regulatory authorities; provided that such governmental agency, regulatory

authorities or association is aware of the confidential nature of the information

disclosed; (ii) such Limited Partner and its Authorized Representatives may make

such disclosure to its beneficial owners to the extent required under the terms of its

arrangements with such beneficial owners; and (iii) each Limited Partner will be

permitted, after written notice to the General Partner, to correct any false or

misleading information which becomes public concerning such Limited Partner’s

relationship to the Partnership or the General Partner. Prior to making any

disclosure required by law, each Limited Partner shall use its best efforts to notify

the General Partner of such disclosure. Prior to any disclosure to any Authorized

Representative or beneficial owner, each Limited Partner shall advise such

Authorized Representative or beneficial owner of the obligations set forth in this

Section 7.5(a) and each such Authorized Representative or beneficial owner shall

agree to be bound by such obligations.

(b) The General Partner may keep confidential from the Limited Partners, for such

period of time as the General Partner deems reasonable, any information, including

the identity of the Partners or information regarding the Partners or Investments,

which the General Partner reasonably believes to be in the nature of trade secrets

or other information the disclosure of which the General Partner believes is not in

the best interests of the Partnership or could damage the Partnership or its business

or which the Partnership is required by law or agreement with a third party to keep

confidential.

(c) Subject to applicable legal and regulatory considerations, the General Partner shall

use reasonable efforts to keep confidential any information relating to a Limited

Partner obtained by the General Partner in connection with or arising out of the

Partnership which the Limited Partner requests to be kept confidential.

(d) Notwithstanding the provisions of this Section 7.5, Partners (and their employees,

representatives and other agents) may disclose to any and all Persons, without

limitation of any kind, the tax treatment and tax structure of the Partnership and its

transactions and all materials of any kind (including tax opinions or other tax

analyses) that are provided to such Person by, or on behalf of the Partnership. For

this purpose, “tax treatment” is the purported or claimed U.S. federal income tax

treatment of a transaction and “tax structure” is limited to any fact that may be

relevant to understanding the purported or claimed U.S. federal income tax

treatment of a transaction. For this purpose, the names of the Partnership, the

Partners, their affiliates, the names of their partners, members or equity holders and

the representatives, agents and tax advisors of any of the foregoing are not items of

tax structure.

(e) The General Partner may disclose to prospective investors such information

relating to the Partnership or the Investments as it believes in good faith will benefit

the Partnership and facilitate investment in the Partnership by such prospective

investors.

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(f) The Investment Manager and a Person acting as a service provider to the

Partnership shall have the right to access all information belonging to the

Partnership.

Article VIII

GENERAL PROVISIONS

8.1 Amendment of Partnership Agreement

(a) Except as otherwise provided in this Section 8.1, this Agreement may be amended,

in whole or in part, with the written consent of (i) the General Partner and (ii) the

consent of a Majority-in-Interest of Limited Partners (which approval may be

obtained by negative consent affording the Limited Partners at least 30 calendar

days to object).

(b) Any amendment that would:

(i) increase the obligation of a Partner to make any contribution to the capital

of the Partnership;

(ii) reduce the Capital Account of a Partner other than in accordance with

Article III;

(iii) adversely alter any Partner’s rights with respect to the allocation of Net

Profit or Net Loss or with respect to distributions and withdrawals; or

(iv) change the respective liabilities of the General Partner and the Limited

Partners;

may only be made if the consent of each Partner adversely affected thereby is

obtained (which consent may be obtained by negative consent affording the Partner

at least 30 calendar days to object).

(c) Notwithstanding paragraphs (a) and (b) of this Section 8.1, this Agreement may be

amended by the General Partner without the consent of the Limited Partners, at any

time and without limitation, if any Limited Partner whose contractual rights as a

Limited Partner would be materially and adversely changed by such amendment

has an opportunity to withdraw from the Partnership as of a date determined by the

General Partner that is not less than 30 calendar days after the General Partner has

furnished written notice of such amendment to each affected Limited Partner and

that is prior to the effective date of the amendment. The admission and withdrawal

of Limited Partners will not require notice or disclosure to, or the approval of, the

other Limited Partners.

(d) The General Partner may at any time without the consent of the other Partners:

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(i) add to the representations, duties or obligations of the General Partner or

surrender any right or power granted to the General Partner under this

Agreement, for the benefit of the Limited Partners;

(ii) cure any ambiguity or correct or supplement any conflicting provisions of

this Agreement;

(iii) change the name of the Partnership;

(iv) make any changes required by a governmental body or agency which is

deemed to be for the benefit or protection of the Limited Partners, provided,

however, that no such amendment may be made unless such change (A) is

for the benefit of, or not adverse to, the interests of Limited Partners,

(B) does not affect the right of the General Partner to manage and control

the Partnership’s business, (C) does not affect the allocation of profits and

losses among the Partners and (D) does not affect the limited liability of the

Limited Partners;

(v) amend this Agreement to reflect a change in the identity of the General

Partner which has been made in accordance with this Agreement;

(vi) amend this Agreement (other than with respect to the matters set forth in

Section 8.1(b)) to effect compliance with any applicable laws, regulations

or administrative actions;

(vii) subject to Section 8.1(b), amend this Agreement to reflect the creation, and

terms, of any new Series of Interests;

(viii) effect any other amendment which would not, in the good faith judgment of

the General Partner, adversely affect any of the existing Limited Partners;

and

(ix) restate this Agreement together with any amendments hereto which have

been duly adopted in accordance herewith to incorporate such amendments

in a single, integrated document.

(e) Following the adoption of any amendments to this Agreement pursuant to 8.1(d),

the General Partner shall promptly deliver a copy of such amendments to this

Agreement to the Limited Partners.

(f) The General Partner may agree with a Limited Partner to waive or modify the

application of any provision of this Agreement with respect to such Limited Partner

without notifying or obtaining the consent of any other Limited Partner (other than

a Limited Partner whose rights as a Limited Partner pursuant to this Agreement

would be materially and adversely changed by such waiver or modification). Any

such waiver or modification may be evidenced by a “side letter” or other document

which will govern with respect to the applicable Limited Partner and be

incorporated as part of this Agreement.

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8.2 Special Power-of-Attorney

(a) Each Limited Partner hereby irrevocably makes, constitutes and appoints the

General Partner (and each of its successors and permitted assigns), with full power

of substitution, the true and lawful representative and attorney-in-fact of, and in the

name, place and stead of, such Limited Partner with the power from time to time to

make, execute, sign, acknowledge, swear to, verify, deliver, record, file or publish:

(i) an amendment to this Agreement that complies with the provisions of this

Agreement (including the provisions of Section 8.1);

(ii) the Certificate and any amendment thereof required because this Agreement

is amended, including an amendment to effectuate any change in the

membership of the Partnership or in the capital contributions of the Partners;

(iii) any financing statement or other filing or document required or permitted

to perfect the security interests contemplated by any provision hereof; and

(iv) all such other instruments, documents and certificates which, in the opinion

of legal counsel to the Partnership, may from time to time be required by

the laws of the United States of America, the State of Delaware, or any other

jurisdiction in which the Partnership determines to do business, or any

political subdivision or agency thereof, or which such legal counsel may

deem necessary or appropriate to effectuate, implement and continue the

valid and subsisting existence and business of the Partnership as a limited

partnership, exchange a portion of a Limited Partner’s Interest for similar

equity interests in an Alternative Investment Vehicle, or to effect the

dissolution or termination of the Partnership.

(b) Each Limited Partner is aware that the terms of this Agreement permit certain

amendments to this Agreement to be effected and certain other actions to be taken

or omitted by or with respect to the Partnership without that Limited Partner’s

consent. If an amendment of the Certificate or this Agreement or any action by or

with respect to the Partnership is taken by the General Partner in the manner

contemplated by this Agreement, each Limited Partner agrees that, notwithstanding

any objection which such Limited Partner may assert with respect to such action,

the General Partner in its sole discretion is authorized and empowered, with full

power of substitution, to exercise the authority granted above in any manner which

may be necessary or appropriate to permit such amendment to be made or action to

be lawfully taken or omitted. Each Partner is fully aware that each other Partner

relies on the effectiveness of this special power-of-attorney with a view to the

orderly administration of the affairs of the Partnership. This power-of-attorney is

a special power-of-attorney and is coupled with an interest in favor of the General

Partner and as such:

(i) is irrevocable and continues in full force and effect notwithstanding the

subsequent death or incapacity of any party granting this power-of-attorney,

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regardless of whether the Partnership or the General Partner has had notice

thereof; and

(ii) survives the delivery of an assignment by a Limited Partner of the whole or

any portion of such Limited Partner’s Interest, except that where the

assignee thereof has been approved by the General Partner for admission to

the Partnership as a substituted Limited Partner, this power-of-attorney

given by the assignor survives the delivery of such agreement for the sole

purpose of enabling the General Partner to execute, acknowledge and file

any instrument necessary to effect such substitution.

8.3 Notices

Notices which may be or are required to be given under this Agreement by any party to

another shall be given by hand delivery, transmitted by facsimile, transmitted electronically to an

address that has been previously provided or verified through another form of notice or sent by

registered or certified mail, return receipt requested or internationally recognized courier service,

and shall be addressed to the respective parties hereto at their addresses as set forth on the register

of Partners maintained by the General Partner or to such other addresses, facsimile numbers or

electronic addresses as may be designated by any party hereto by notice addressed to (a) the

General Partner, in the case of notice given by any Limited Partner, and (b) each of the Limited

Partners, in the case of notice given by the General Partner. Notices will be deemed to have been

given (i) when delivered by hand, transmitted by facsimile or transmitted electronically or (ii) on

the date indicated as the date of receipt on the return receipt when delivered by mail or courier

service.

8.4 Agreement Binding Upon Successors and Assigns; Delegation

This Agreement is binding upon and inures to the benefit of the parties hereto and their

respective successors, but the rights and obligations of the Partners hereunder are not assignable,

transferable or delegable except as provided in Sections 4.1(c), 5.3 and 5.4, and any attempted

assignment, transfer or delegation thereof which is not made pursuant to the terms of such Sections

will be null and void ab initio.

8.5 Governing Law

This Agreement is, and the rights of the Partners hereunder are, governed by and shall be

construed in accordance with the laws of the State of Delaware, without regard to the conflict of

laws rule thereof which would result in the application of the laws of a different jurisdiction. The

parties hereby consent to the exclusive jurisdiction and venue for any action arising out of this

Agreement in the courts located in Dallas County, Texas. Each Partner consents to service of

process in any action or proceeding involving the Partnership by the mailing thereof by registered

or certified mail, postage prepaid, to such Partner’s mailing address set forth in the register of

Partners maintained by the General Partner.

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8.6 Not for Benefit of Creditors

The provisions of this Agreement are intended only for the regulation of relations among

Partners and between Partners and former or prospective Partners and the Partnership. Except for

the rights of the Indemnified Persons hereunder, this Agreement is not intended for the benefit of

non-Partner creditors and no rights are granted to non-Partner creditors under this Agreement.

8.7 Dispute Resolution

The following procedures shall be used to resolve any controversy or claim (“Dispute”)

arising out of, relating to or in connection with the Agreement or otherwise involving the

Partnership, its Partners and/or any Indemnified Person. If any of these provisions are determined

to be invalid or unenforceable, the remaining provisions shall remain in effect and binding on the

parties to the fullest extent permitted by law.

(a) Mediation

(i) Any Dispute shall be submitted to mediation by written notice to the other

party or parties. In the mediation process, the parties will try to resolve

their differences voluntarily with the aid of an impartial mediator, who will

attempt to facilitate negotiations. The mediator will be selected by

agreement of the parties. If the parties cannot agree on a mediator, a

mediator shall be designated by JAMS/Endispute at the request of a party

using, if necessary, strike and rank procedures then in effect.

(ii) The mediation will be conducted as specified by the mediator and agreed

upon by the parties. The parties agree to discuss their differences in good

faith and to attempt, with the assistance of the mediator, to reach an

amicable resolution of the dispute.

(iii) The mediation will be treated as a settlement discussion and therefore will

be confidential. The mediator may not testify for either party in any later

proceeding relating to the dispute. No recording or transcript shall be made

of the mediation proceedings.

(iv) Each party will bear its own costs in the mediation. The fees and expenses

of the mediator will be shared equally by the parties.

(b) Arbitration

(i) If a Dispute has not been resolved within 90 days after the written notice

beginning the mediation process (or a longer period, if the parties agree to

extend the mediation), the mediation shall terminate and the dispute will be

settled by arbitration. A party who files a suit in court regarding a Dispute

rather than in arbitration waives its claim and must pay all attorney’s fees

and costs incurred by the other party in seeking to have such suit dismissed.

Under no circumstances will a party maintain its right to pursue his/her/its

Dispute if that party initiates a judicial suit instead of complying with the

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mediation and arbitration provisions herein. The arbitration will be

conducted through JAMS/Endispute in accordance with the procedures in

this document and the commercial dispute arbitration rules then in effect

(“Arbitration Rules”). In the event of a conflict, the provisions of this

document will control.

(ii) The arbitration will be conducted before a panel of three arbitrators,

regardless of the size of the dispute, to be selected as provided in the

Arbitration Rules. Any issue concerning the extent to which any dispute is

subject to arbitration, or concerning the applicability, interpretation, or

enforceability of these procedures, including any contention that all or part

of these procedures are invalid or unenforceable, shall be governed by the

U.S. Federal Arbitration Act (“FAA”), and resolved by the arbitrators,

provided, however, that the Partnership or such applicable affiliate thereof

may pursue a temporary restraining order and/or preliminary injunctive

relief in connection with confidentiality, non-competition, non-solicitation

or non-recruitment covenants or agreements binding on any party, with

related expedited discovery for the parties, in a court of law, and, thereafter,

require arbitration of all issues of final relief. Under no circumstances will

a state arbitration act preclude application of the FAA, including any choice

of law provisions in this Agreement, or any other agreement. No potential

arbitrator may serve on the panel unless he or she has agreed in writing to

abide and be bound by these procedures.

(iii) The arbitrators may not award non-monetary or equitable relief of any sort.

They shall have no power to award punitive damages or any other damages

not measured by the prevailing party’s actual damages, and the parties

expressly waive their right to obtain such damages in arbitration or any in

other forum. In no event, even if any other portion of these provisions is

held to be invalid or unenforceable, shall the arbitrators have power to make

an award or impose a remedy that could not be made or imposed by a court

deciding the matter in the same jurisdiction. The arbitrator(s) shall be

required to state in a written opinion all facts and conclusions of law relied

upon to support any decision rendered. Any dispute over whether the

arbitrator(s) has failed to comply with the foregoing will be resolved by

summary judgment in a court of law.

(iv) The party initiating arbitration shall pay all arbitration costs and arbitrator's

fees, subject to a final arbitration award on who should bear costs and fees.

All proceedings shall be conducted in Dallas, Texas, or another mutually

agreeable site. Each party shall bear its own attorneys fees, costs and

expenses, including any costs of experts, witnesses and/or travel, subject to

a final arbitration award on who should bear costs and fees. The duty to

arbitrate described above shall survive the termination of this Agreement.

(v) No discovery will be allowed in connection with the arbitration unless the

arbitration panel, upon a showing of substantial need, expressly authorizes

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it. In any event, there shall be no more than (a) two party depositions of

six hours each. Each deposition is to be taken pursuant to the Texas Rules

of Civil Procedure; (b) one non-party deposition of six hours; (c) twentyfive interrogatories; (d) twenty-five requests for admission; (e) ten requests

for production. In response, the producing party shall not be obligated to

produce in excess of 5,000 total pages of documents. The total pages of

documents shall include electronic documents; and (f) one request for

disclosure pursuant to the Texas Rules of Civil Procedure. Any discovery

not specifically provided for in this paragraph, whether to parties or nonparties, shall not be permitted.

(vi) All aspects of the arbitration shall be treated as confidential, including its

institution and/or settlement. Neither the parties nor the arbitrators may

disclose the existence, content or results of the arbitration, except as

necessary to comply with legal or regulatory requirements. Before making

any such disclosure, a party shall give written notice to all other parties and

shall afford such parties a reasonable opportunity to protect their interests.

In the event a party who recovered monies by settlement, award by the

arbitration panel, or otherwise in connection with the Dispute violates this

confidentiality term, he, she, or it shall refund all such sums recovered.

The parties expressly intend to waive the right to retain any monies received

through settlement, award by the arbitration panel, or otherwise in

connection with the Dispute in the event that that party violates the

aforementioned confidentiality term.

(vii) The result of the arbitration will be binding on the parties, and judgment on

the arbitrators’ award may be entered in any court having jurisdiction.

8.8 Consents and Voting

(a) Except as provided in Section 5.4, Limited Partners do not have any right to vote

for the admission or removal of any General Partner and, except for the right to

vote on certain amendments proposed by the General Partner and as otherwise

expressly set out herein, have no other voting rights. Upon the request of any

Limited Partner, the General Partner may designate an Interest as a Non-Voting

Interest, in which case the Limited Partner shall not have the right to vote on any

matter including amendments.

(b) Any and all consents, agreements or approvals provided for or permitted by this

Agreement shall be in writing and a copy thereof shall be filed and kept with the

books of the Partnership. For the avoidance of doubt, an amendment made

pursuant to Section 8.1(c) or pursuant to negative consent under Section 8.1(a) or

Section 8.1(b) shall not require any affirmative written response by any Limited

Partner who is not electing to withdraw from the Partnership.

(c) In the event the Partnership seeks the approval, vote or consent of the Offshore

Fund with respect to any matter to which it would be entitled to vote as a Limited

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Partner of the Partnership under this Agreement, the Offshore Fund will: (i) submit

such matter for the consent of the shareholders and (ii) shall vote its Limited Partner

interest proportionally for and against such matter in the same proportion that the

shareholders voted for and against such matter.

8.9 Merger and Consolidation

(a) The Partnership may merge or consolidate with or into one or more limited

partnerships formed under the Act or other business entities pursuant to an

agreement of merger or consolidation which has been approved in the manner

contemplated by Section 17-211(b) of the Act.

(b) Notwithstanding anything to the contrary contained elsewhere in this Agreement,

an agreement of merger or consolidation approved in accordance with Section 17-

211(b) of the Act may, to the extent permitted by Section 17-211(g) of the Act,

(i) effect any amendment to this Agreement, (ii) effect the adoption of a new limited

partnership agreement for the Partnership if it is the surviving or resulting limited

partnership in the merger or consolidation, or (iii) provide that the limited

partnership agreement of any other constituent partnership to the merger or

consolidation (including a limited partnership formed for the purpose of

consummating the merger or consolidation) shall be the limited partnership

agreement of the surviving or resulting limited partnership.

8.10 Miscellaneous

(a) The captions and titles preceding the text of each Section hereof shall be

disregarded in the construction of this Agreement. Use of the word “including” in

this Agreement means in each case “without limitation,” whether or not such term

is explicitly stated.

(b) This Agreement may be executed in counterparts, each of which shall be deemed

to be an original hereof.

(c) If any provision of this Agreement is held invalid or unenforceable by any court of

competent jurisdiction, the other provisions of this Agreement shall remain in full

force and effect. Any provision of this Agreement held invalid or unenforceable

only in part or degree shall remain in full force and effect to the extent not held

invalid or unenforceable.

8.11 BHCA Subject Persons

Notwithstanding any other provision of this Agreement to the contrary:

(a) Solely for purposes of any provision of this Agreement that confers voting rights

on the Limited Partners and any other provisions hereof regarding consents of or

action by the Limited Partners, any BHCA Subject Person that shall have given the

General Partner an Election Notice and shall not thereafter have given the General

Partner a Revocation Notice, and that at any time has a Partnership Percentage in

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excess of 4.9% of the aggregate Partnership Percentages of the Limited Partners

entitled to participate in such voting or the giving of any consent or the taking of

any action, shall be deemed to hold a Partnership Percentage of only 4.9% of the

aggregate Partnership Percentages of the Limited Partners (after giving effect to the

limitations imposed by this Section 8.11 on all such Limited Partners), and such

Partnership Percentage in excess of said 4.9% shall be deemed held by the Limited

Partners who are not BHCA Subject Persons, pro rata in proportion to their

respective Partnership Percentages; provided that this limitation shall not prohibit

a Limited Partner from voting or participating in giving or withholding consent or

taking any action under any provision of this Agreement up to the full amount of

its Partnership Percentage in situations where such Limited Partner’s vote or

consent or action is of the type customarily provided by statute or stock exchange

rules with regard to matters that would significantly and adversely affect the rights

or preference of the Limited Partner’s Interest. The foregoing voting restriction

shall continue to apply with respect to any assignee or other transferee of such

BHCA Subject Person’s Interest; provided, however, that the foregoing voting

restriction shall not continue to apply if the Interest is transferred: (i) to the

Partnership; (ii) to the public in an offering registered under the Securities Act;

(iii) in a transaction pursuant to Rule 144 or Rule 144A under the Securities Act in

which no Person acquires more than 2% of the Partnership’s outstanding Interests;

or (iv) in a single transaction to a third party who acquires at least a majority of the

Partnership’s outstanding Interests without regard to the Transfer of such Interests.

(b) Except as specifically provided otherwise in this Agreement, a Limited Partner that

is a BHCA Subject Person that shall have given the General Partner an Election

Notice, and shall not thereafter have given the General Partner a Revocation Notice,

shall not be entitled to exercise any rights to consent to actions to be taken with

respect to the Partnership, including rights conferred by any applicable law. Such

right to consent shall be deemed granted to the Limited Partners who are not BHCA

Subject Persons, pro rata in proportion to their respective Partnership Percentages.

(c) A Limited Partner that is a BHCA Subject Person and that elects to be subject to

Section 8.11(a) and (b) shall notify the General Partner thereof (an “Election

Notice”) and, on the General Partner’s receipt of such Election Notice, such

Limited Partner shall be subject to Section 8.11(a) and (b) until 10 calendar days

after such Limited Partner notifies the General Partner that it elects no longer to be

subject to Section 8.11(a) and (b) (a “Revocation Notice”), which period may be

reduced by the General Partner.

8.12 RIC Limited Partners

An Interest of a RIC Limited Partner does not entitle the RIC Limited Partner to vote or

consent with respect to any Partnership matter unless the RIC Limited Partner’s vote or consent

with respect to its Interest would not be considered to be “voting securities” as defined under

Section 2(a)(42) of the Investment Company Act. Except as provided in this Section 8.12, an

Interest held by a RIC Limited Partner as a Non-Voting Interest is identical in all regards to all

other Interests held by Limited Partners.

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8.13 Bad Actor Limited Partners

Under Rule 506(d) under the Securities Act, the Partnership may be banned from selling

Interests under Rule 506 if a Limited Partner beneficially owning 20% or more of the Partnership’s

voting securities engages in a “bad act” set forth in Rule 506. Accordingly, each Limited Partner

agrees that the General Partner may deem the portion of any Bad Actor Limited Partner’s Interests

to be, or convert any Bad Actor Limited Partner’s Interests into, Non-Voting Interests (except for

the purposes of voting on any amendment to this Agreement that would materially and adversely

change the Bad Actor Limited Partner’s rights and preferences as a Limited Partner other than

pursuant to an amendment under Section 8.1(c)) to the extent that the General Partner determines

that such portion is in excess of 19.99% of the outstanding aggregate voting Interests of all Partners

excluding any Interests that are Non-Voting Interests.

8.14 Entire Agreement

The parties acknowledge and agree that, this Agreement, together with any other agreement

with a Limited Partner pursuant to Section 8.1(e), constitutes the entire agreement among the

parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and

understandings pertaining thereto.

[Signature Page Follows]

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EXHIBIT 15 

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THE COMPANIES LAW (2013 REVISION)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

AMENDED AND RESTATED 

MEMORANDUM AND ARTICLES OF ASSOCIATION

OF

HIGHLAND MULTI STRATEGY CREDIT FUND, LTD.

(As Adopted by Special Resolution on 1 November 2014) 

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SFC/690420-000001/33202513v4 

THE COMPANIES LAW (2013 REVISION)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

AMENDED AND RESTATED 

MEMORANDUM OF ASSOCIATION

OF

HIGHLAND MULTI STRATEGY CREDIT FUND, LTD. 

(As Adopted by Special Resolution on 1 November 2014)

1 The name of the Company is Highland Multi Strategy Credit Fund, Ltd.

2 The Registered Office of the Company shall be at the offices of Maples Corporate Services 

Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands, or at such 

other place within the Cayman Islands as the Directors may decide. 

3 The objects for which the Company is established are unrestricted and the Company shall have 

full power and authority to carry out any object not prohibited by the laws of the Cayman Islands. 

4 The liability of each Member is limited to the amount unpaid on such Member's Shares. 

5 The share capital of the Company is US$50,000 divided into 100 Management Shares of 

US$0.01 par value each and 49,999,000 Participating Shares of US$0.001 par value each. 

6 The Company has power to register by way of continuation as a body corporate limited by shares 

under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the 

Cayman Islands. 

7 Capitalised terms that are not defined in this Memorandum of Association bear the respective 

meanings given to them in the Articles of Association of the Company. 

 

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SFC/690420-000001/33202513v4 

THE COMPANIES LAW (2013 REVISION)

OF THE CAYMAN ISLANDS

COMPANY LIMITED BY SHARES

AMENDED AND RESTATED 

ARTICLES OF ASSOCIATION

OF

HIGHLAND MULTI STRATEGY CREDIT FUND, LTD. 

(As Adopted by Special Resolution on 1 November 2014)

1 Interpretation 

1.1 In these Articles, Table A in the First Schedule to the Statute does not apply and unless there is 

something in the subject or context inconsistent therewith: 

"Administrator" means the person, firm or corporation appointed and from time to 

time acting as administrator of the Company.

"Articles" means these articles of association of the Company.

"Auditor" means the person (if any) for the time being performing the duties of 

auditor of the Company.

"Business Day" means any day normally treated as a business day in such places 

and/or on such markets as the Directors may from time to time 

determine.

"Cayman Islands" means the British Overseas Territory of the Cayman Islands. 

"Class" means a separate class of Participating Share (and includes any 

sub-class of any such class). 

"Company" means the above-named Company. 

"Directors" means the directors for the time being of the Company.

"Dollars" or "US$" refers to the currency of the United States.

"Electronic Record" has the same meaning as in the Electronic Transactions Law.

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"Electronic Transactions 

Law" 

means the Electronic Transactions Law (2003 Revision) of the 

Cayman Islands.

"Eligible Investor" means a person eligible to hold Participating Shares, as determined 

from time to time by the Directors.

"FATCA" means:

(i) sections 1471 to 1474 of the US Internal Revenue 

Code of 1986 and any associated legislation, 

regulations or guidance, or similar legislation, 

regulations or guidance enacted in any jurisdiction 

which seeks to implement similar tax reporting and/or 

withholding tax regimes; 

(ii) any intergovernmental agreement, treaty, regulation, 

guidance or any other agreement between the 

Cayman Islands (or any Cayman Islands government 

body) and the US, the UK or any other jurisdiction 

(including any government bodies in such 

jurisdiction), entered into in order to comply with, 

facilitate, supplement or implement the legislation, 

regulations or guidance described in paragraph (i); 

and 

(iii) any legislation, regulations or guidance in the 

Cayman Islands that give effect to the matters 

outlined in the preceding paragraphs. 

"Gross Negligence" shall have the meaning ascribed thereto under the laws of the State 

of Delaware, USA. 

"Investment Manager" means the person, firm or corporation appointed and for the time 

being acting as the investment manager of the Company.

"Management Share" means a voting non participating Share in the capital of the Company 

of US$0.01 par value designated as a Management Share and 

having the rights provided for in these Articles.

"Master Fund" means Highland Multi Strategy Credit Fund, L.P., or any other entity 

in which all, or substantially all, of the assets of the Company are 

invested. 

"Member" means each person whose name is, from time to time and for the 

time being, entered in the Register of Members as the holder of one 

or more Shares.

2

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"Memorandum" means the memorandum of association of the Company.

"Net Asset Value" means the value of the assets less the liabilities of the Company, or 

of a Separate Account (as the context may require), calculated in 

accordance with these Articles.

"Net Asset Value per 

Participating Share" 

means the amount determined in accordance with these Articles as 

being the Net Asset Value per Participating Share of a particular 

Class and/or Series.

"New Issue" has the meaning ascribed thereto by Rule 2790 adopted by the 

National Association of Securities Dealers, Inc.

"New Issue Investment" means any New Issue acquired by the Company. 

"New Issue Shares" means a class of Participating Shares issued and designated as 

"New Issue Shares" and which may be issued in any one or more 

Series having the rights and restrictions set out in these Articles

"Offering Memorandum" means an offering memorandum relating to Participating Shares of 

any Class and/or Series as amended or supplemented from time to 

time subject to and in accordance with these Articles.

"Ordinary Resolution" means a resolution passed by a simple majority of the votes of such 

Members as, being entitled to do so, vote in person or, where proxies 

are allowed, by proxy at a general meeting, and includes a 

unanimous written resolution.

"Participating Share" means a participating redeemable Share in the capital of the 

Company of US$0.001 par value and having the rights provided for in 

these Articles. Participating Shares may be divided into Classes in 

the discretion of the Directors in accordance with the provisions of 

these Articles and each Class may be further divided into different 

Series of Participating Shares and the term "Participating Share" 

shall include all such Classes and Series of Participating Share.

"Prohibited Person" means any person who is restricted from participating in a New Issue 

pursuant to the Free-Riding and Withholding Interpretation adopted 

by the Board of Governors of the National Association of Securities 

Dealers Inc.

"Redemption Date" means, in relation to any Class and/or Series of Participating Shares, 

such day or days as are set out in the Offering Memorandum or as 

may be specified by the Directors from time to time, upon which a 

Member is entitled to require the redemption of Participating Shares 

3

g Shares

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of that Class and/or Series. 

"Redemption Fee" means such fee (if any) payable by a Member to the Company on a 

redemption of Participating Shares, as the same may be determined 

by the Directors and disclosed to the Member at the time of its 

subscription for such Participating Shares.

"Redemption Notice" means a notice in a form approved by the Directors by which a holder 

of Participating Shares is entitled to require the Company to redeem 

its Participating Shares.

"Redemption Price" means the price determined in accordance with these Articles at 

which redeemable Participating Shares of the relevant Class and/or 

Series may be redeemed.

"Register of Members means the register of Members, which shall be maintained in 

accordance with the Statute and includes (except where otherwise 

stated) any branch or duplicate Register of Members. 

"Registered Office" means the registered office for the time being of the Company.

"Sales Charge" means such sales charge (if any) determined by the Directors as 

being payable by a subscriber on a subscription for Participating 

Shares of any Class and/or Series. 

"Seal" means the common seal of the Company and includes every 

duplicate seal.

"Separate Account" means a separate internal account of the Company which the 

Directors may establish and cause to be maintained in accordance 

with these Articles. 

"Series" means a separate series of Participating Share (and includes any 

sub-series of any such series). 

"Share" and "Shares" means a share or shares of any class or series in the Company, 

including a Management Share, a Participating Share or a New Issue 

Share, as well as any fraction of a Share. 

"Share Rights" means, with respect to the Participating Shares of any Class or 

Series in issue, the class rights for the time being applicable to such 

Participating Shares or other terms of offer for the time being 

applicable to such Participating Shares whether set out in the 

Offering Memorandum, any subscription agreement or otherwise 

(including any representations, warranties or other disclosure relating 

4

g

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to the offer or holding of such Participating Shares). 

"Special Resolution" has the same meaning as in the Statute and includes a unanimous 

written resolution.

"Statute" means the Companies Law (2013 Revision) of the Cayman Islands. 

"Subscriber" means the subscriber to the Memorandum.

"Subscription Date" means, in relation to Participating Shares of any Class and/or Series, 

such day or days as are set out in the Offering Memorandum or as 

may be specified by the Directors from time to time upon which a 

person may subscribe for Participating Shares of that Class and/or 

Series.

"Subscription Price" means the price determined in accordance with these Articles at 

which Participating Shares of the relevant Class and/or Series may 

be subscribed.

"Suspension" means a determination by the Directors to postpone or suspend (i) 

the calculation of the Net Asset Value of Participating Shares of any 

one or more Classes and/or Series (and the applicable Valuation 

Date) (a "Calculation Suspension"); (ii) the issue of Participating 

Shares of any one or more Classes and/or Series (and the applicable 

Subscription Date) (an "Issue Suspension"); (iii) the redemption by 

Members (in whole or in part) of Participating Shares of any one or 

more Classes and/or Series (and the applicable Redemption Date) (a 

"Redemption Suspension"); and/or (iv) the payment (in whole or in 

part) of any redemption proceeds (even if Valuation Dates and 

Redemption Dates are not postponed) (a "Payment Suspension"). 

"Transfer" means, in respect of any Share, any sale, assignment, exchange, 

transfer, pledge, encumbrance or other disposition of that Share, and 

"Transferred" shall be construed accordingly. 

"Treasury Share" means a Share held in the name of the Company as a treasury share 

in accordance with the Statute.

"Valuation Date" means, in relation to each Class and/or Series of Participating 

Shares, the day or days determined from time to time by the 

Directors to be the day or days on which the Net Asset Value per 

Participating Share of that Class and/or Series is calculated.

"Valuation Point" means, with respect to any Class and/or Series, the time or times on 

the Valuation Date of such Class and/or Series at which the Directors 

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determine that the Net Asset Value per Participating Share of that 

Class and/or Series shall be calculated. 

1.2 In these Articles: 

(a) the singular number includes the plural number and vice versa; 

(b) the masculine gender includes the feminine gender; 

(c) persons includes corporations; 

(d) "written" and "in writing" include all modes of representing or reproducing words in visible 

form, including in the form of an Electronic Record; 

(e) "shall" shall be construed as imperative and "may" shall be construed as permissive; 

(f) references to provisions of any law or regulation shall be construed as references to 

those provisions as amended, modified, re-enacted or replaced from time to time; 

(g) any phrase introduced by the terms "including", "include", "in particular" or any similar 

expression shall be construed as illustrative and shall not limit the sense of the words 

preceding those terms; 

(h) the term "and/or" is used herein to mean both "and" as well as "or." The use of "and/or" in 

certain contexts in no respects qualifies or modifies the use of the terms "and" or "or" in 

others. "Or" shall not be interpreted to be exclusive, and "and" shall not be interpreted to 

require the conjunctive — in each case, unless the context otherwise requires; 

(i) any reference to the powers of the Directors shall include, when the context admits, the 

service providers or any other person to whom the Directors may delegate their powers; 

(j) any requirements as to delivery under the Articles include delivery in the form of an 

Electronic Record; 

(k) any requirements as to execution or signature under the Articles including the execution 

of the Articles themselves can be satisfied in the form of an electronic signature as 

defined in the Electronic Transactions Law; 

(l) sections 8 and 19(3) of the Electronic Transactions Law shall not apply; and 

(m) headings are inserted for reference only and shall be ignored in construing these Articles. 

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2 Commencement of Business 

2.1 The business of the Company may be commenced as soon after incorporation as the Directors 

shall see fit. 

2.2 The Directors may pay, out of the capital or any other monies of the Company, all expenses 

incurred in or about the formation and operation of the Company, including the expenses of 

registration and the initial offering of Participating Shares. 

3 Service Providers 

3.1 The Directors may appoint any person, firm or corporation to act as a service provider to the 

Company (whether in general or in respect of any Class and/or Series of Shares) and may 

entrust to and confer upon any such service providers any of the functions, duties, powers and 

discretions exercisable by them as Directors, upon such terms and conditions (including as to 

remuneration payable by the Company) and with such powers of delegation, but subject to such 

restrictions, as they think fit. Without limiting the generality of the foregoing, such service 

providers may include managers, investment advisers, administrators, registrars, transfer agents, 

custodians and prime brokers. 

3.2 Without prejudice to the generality of the preceding Article, the Directors may appoint any person, 

firm or corporation to act as the Investment Manager with respect to the assets of the Company 

(whether in general or in respect of any Class and/or Series of Shares). The Directors may 

entrust to and confer upon the Investment Manager any of the functions, duties, powers and 

discretions exercisable by them as Directors upon such terms and conditions (including as to 

remuneration payable by the Company) and with such powers of delegation, but subject to such 

restrictions, as they think fit. 

4 Rights attaching to Shares 

4.1 The Management Shares shall have the following rights: 

(a) as to voting: the holder of a Management Share shall (in respect of such Management 

Share) have the right to receive notice of, attend at and vote as a Member at any general 

meeting of the Company; and 

(b) as to capital: a Management Share shall confer upon the holder the right in a winding up 

to repayment of capital as provided in these Articles but shall confer no other right to 

participate in the profits or assets of the Company; and 

(c) as to income: no dividends shall be payable on the Management Shares. 

4.2 The Participating Shares shall have the following rights: 

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(a) as to voting: the holder of a Participating Share shall not (in respect of such Participating 

Share) have the right to receive notice of, attend at or vote as a Member at any general 

meeting of the Company, but may vote at a separate Class meeting convened in 

accordance with these Articles; and 

(b) as to capital: a Participating Share shall confer upon the holder thereof the right in a 

winding up to participate in the surplus assets of the Company by reference to the 

Separate Account attributable to the relevant Class or Series of Participating Shares as 

provided in these Articles; and 

(c) as to income: the Participating Shares shall confer on the holders thereof the right to 

receive dividends as provided in these Articles. 

4.3 Notwithstanding Articles 4.1(a) and 4.2(a), if the Company, in its capacity as a limited partner of 

the Master Fund, is called upon to approve, vote or consent to any matter to which it would be 

entitled to vote as a limited partner of the Master Fund and is required to seek the consent of the 

holders of Participating Shares in connection with any such approval, vote or consent pursuant to 

the constitutional documents of the Master Fund (a "Master Fund Consent Transaction"), each 

holder of a Participating Share shall have the right (in respect of such Participating Share), to the 

exclusion of the holders of the Management Shares (in respect of such Management Shares), to 

receive notice of, and vote on, the Master Fund Consent Transaction (the "Special Voting 

Right"). The voting rights attributable to each Participating Share shall be calculated by 

reference to the Net Asset Value per Participating Share (calculated as at the most recent 

Valuation Date) and not on the basis of one Participating Share, one vote. For every Master 

Fund Consent Transaction, the Directors shall cause the Company to vote its limited partnership 

interest in the Master Fund proportionally for and against such matter in the same proportion that 

the Members holding Participating Shares voted for and against such matter pursuant to the 

Special Voting Right. 

4.4 In relation to any Special Voting Right pursuant to Article 4.3, unless otherwise determined by the 

Directors in their sole discretion, the procedure in this Article 4.4 shall be invoked. The Directors 

shall provide written notice of the proposed Master Fund Consent Transaction to the Members 

holding Participating Shares and shall specify a deadline (the "Consent Date"), which shall be no 

earlier than 30 days after the date of giving such notice, by which date such Members may submit 

a written refusal to consent to the proposed Master Fund Consent Transaction. The holders of 

Participating Shares in respect of which an express written refusal to consent has not been 

received by the Consent Date shall be deemed to have consented in writing to the proposed 

Master Fund Consent Transaction. 

5 Share Capital 

5.1 Subject to these Articles, the Directors may allot, issue, grant options or warrants over, or 

otherwise dispose of Shares in separate classes and/or series with different terms, preferences, 

privileges or special rights including, without limitation, with respect to investment strategy and/or 

policy, participation in assets, profits and losses of the Company, voting, fees charged (including 

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management, performance and incentive fees), redemption privileges, allocation of costs and 

expenses (including, without limitation, the costs and expenses incurred in any hedging activities 

and any profits and losses arising therefrom) as they think proper. Subject to the Statute, these 

Articles and any applicable subscription agreement, any Share Rights (other than those set out in 

these Articles or set out in a Special Resolution) may be varied by either the Directors or by 

Ordinary Resolution. Notwithstanding the foregoing, the Subscriber shall have the power to: 

(a) issue one Share to itself; 

(b) transfer that Share by an instrument of transfer to any person; and 

(c) update the Register of Members in respect of the issue and transfer of that Share. 

5.2 On or before the allotment of any Participating Share the Directors shall resolve the Class and/or 

Series to which such Participating Share shall be classified and may, prior to the issue of any 

Participating Share, reclassify such Participating Share. Each Class and/or Series shall be 

specifically identified. Subject to the Statute and these Articles, the Directors may at any time rename any Participating Share. 

5.3 Notwithstanding the currency in which the par value of the Participating Shares is denominated, 

the Directors may specify any currency as the currency in which the Subscription Price, 

Redemption Price and Net Asset Value of Participating Shares of a Class and/or Series is 

calculated. 

5.4 The Company shall not issue Shares to bearer. 

5.5 Fractional Shares may be issued. 

5.6 Shares shall only be issued as fully paid-up. 

5.7 No right of pre-emption or first refusal shall attach to any Shares. 

5.8 New Issue Shares shall not be issued to a Prohibited Person. 

6 Allotment and Issue of Participating Shares 

6.1 The Directors may from time to time allot and issue Participating Shares of any Class and/or 

Series. The Directors may, in their discretion, refuse to allot and issue any Participating Shares, 

and shall not issue any Participating Shares to or for the account of an investor who is not an 

Eligible Investor. If the Directors have declared a Calculation Suspension or Issue Suspension, 

no Participating Shares of that Class or Series (as appropriate) shall be issued until the relevant 

Suspension has ended. 

6.2 The Directors shall determine the Subscription Price at the time of issue of the first issue of 

Participating Shares of any Class and/or Series. Thereafter, the Directors may allot and issue 

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Participating Shares of the same Class and/or Series on any Subscription Date provided that 

such additional Participating Shares are issued at a Subscription Price equal to not less than the 

Net Asset Value per Participating Share of such Class and/or Series calculated on the relevant 

Subscription Date (or if the Subscription Date is not also a Valuation Date then on the 

immediately preceding Valuation Date). 

6.3 The Directors may add to the Subscription Price per Participating Share (before making any 

rounding adjustment) an amount which they consider to be an appropriate allowance to reflect 

fiscal and purchase charges which would be incurred for the account of the Company in investing 

an amount equal to the Subscription Price. The Directors may also add, in their discretion, a 

Sales Charge and/or an amount equal to any stamp duty and any other governmental taxes or 

charges payable by the Company with respect to the issue of such Participating Shares. 

6.4 An applicant for Participating Shares shall pay for such Participating Shares in such currencies, in 

such manner, at such time, in such place and to such person acting on behalf of the Company as 

the Directors may from time to time determine. 

6.5 Subject to the terms of any subscription agreement, an application for Participating Shares shall 

be irrevocable by an applicant for Participating Shares once it has been received by the 

Company. Participating Shares shall be treated as having been issued with effect from the 

relevant Subscription Date notwithstanding that the subscriber for those Participating Shares may 

not be entered in the Register of Members until after the Subscription Date. 

6.6 Participating Shares shall be issued in such minimum numbers as the Directors may specify 

either generally or in any particular case; likewise the Directors may from time to time prescribe 

an amount as the minimum subscription amount. 

6.7 The Directors may resolve to accept non-cash assets in satisfaction (in whole or in part) of the 

Subscription Price. 

6.8 The Directors may require an applicant for Participating Shares to pay to the Company for the 

benefit of any selling agent such selling commissions or such organisational charges as may 

have been disclosed to such applicant. The Directors may differentiate between applicants as to 

the amount of such selling commissions or such organisational charges. 

6.9 The Company may, in so far as the Statute permits, pay a commission to any person in 

consideration of that person subscribing or agreeing to subscribe whether absolutely or 

conditionally for any Participating Shares. Such commissions may be satisfied by the payment of 

cash and/or the issue of fully or partly paid-up Participating Shares. The Company may also on 

any issue of Participating Shares pay such brokerage as may be lawful. 

7 Separate Accounts 

7.1 The Directors shall have the power to establish and maintain, with respect to Participating Shares 

of any Class and/or Series, a Separate Account, to record (purely as an internal accounting 

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matter) the allocation, on a differentiated basis, of the assets and liabilities of the Company to the 

holders of Participating Shares of any such Class and/or a Series in a manner consistent with the 

methodology set forth in the Offering Memorandum and the rights otherwise attaching to the 

Participating Shares. 

7.2 The proceeds from the issue of Participating Shares of any Class and/or Series shall be applied 

in the books of the Company to the Separate Account established for Participating Shares of that 

Class and/or Series. The assets and liabilities and income and expenditure attributable to that 

Separate Account shall be applied to such Separate Account and, subject to the provisions of 

these Articles, to no other Separate Account. In the event that the assets of a Separate Account 

referable to any Class and/or Series are exhausted, any and all unsatisfied claims which any 

Members or former Members referable to that Class and/or Series have against the Company 

shall be extinguished. The Members or former Members referable to a Class and/or Series shall 

have no recourse against the assets of any other Separate Account established by the Company. 

7.3 Where any asset is derived from another asset (whether cash or otherwise), such derivative asset 

shall be applied in the books of the Company to the same Separate Account as the asset from 

which it was derived, and on each revaluation of an asset the increase or diminution in value shall 

be applied to the same Separate Account and, subject to the provisions of these Articles, to no 

other Separate Account. 

7.4 In the case of any asset or liability of the Company which the Directors do not consider is 

attributable to a particular Separate Account, the Directors shall have discretion to determine the 

basis upon which any such asset or liability shall be allocated between or among Separate 

Accounts. 

7.5 The Directors may, in the books of the Company, allocate assets and liabilities to and from 

Separate Accounts if, as a result of a creditor proceeding against certain of the assets of the 

Company or otherwise, a liability would be borne in a different manner from that in which it would 

have been borne if applied under the foregoing Articles. 

7.6 The Directors may from time to time transfer, allocate or exchange an asset or liability from one 

Separate Account to another Separate Account provided that at the time of such transfer, 

allocation or exchange the Directors form the opinion (in good faith) that the value in money or 

money's worth of each such asset or liability transferred, allocated or exchanged is not 

significantly less or more than the value in money or money's worth (referred to in these Articles 

as "proper value") received by the Separate Account from which such asset or liability is 

transferred, allocated or exchanged except only as is otherwise provided by these Articles. 

8 Determination of Net Asset Value 

8.1 The Net Asset Value and Net Asset Value per Participating Share of each Class and/or Series 

shall be determined by or on behalf of the Directors as at the relevant Valuation Point on each 

relevant Valuation Date. 

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8.2 In calculating the Net Asset Value and the Net Asset Value per Participating Share, the Directors 

shall apply such generally accepted accounting principles as they may determine. 

8.3 The assets and liabilities of the Company shall be valued in accordance with such policies as the 

Directors may determine. Absent bad faith or manifest error, any valuation made pursuant to 

these Articles shall be binding on all persons. 

8.4 Unless otherwise determined by the Directors in any resolution creating a Class and/or Series of 

Participating Shares or as otherwise disclosed in any Offering Memorandum, the Net Asset Value 

per Participating Share of each Class (or Series) shall be determined by allocating pro rata the 

Net Asset Value, as at the relevant Valuation Point, of the Company and/or of the relevant 

Separate Account among each Class and/or Series, adjusting the amount so calculated to reflect 

any fees, costs, foreign exchange items or other assets or liabilities which are properly 

attributable to a specific Class and/or Series and then by dividing the resultant amount by the 

number of Participating Shares of such Class and/or Series then in issue. 

8.5 The Directors may determine that the Net Asset Value of any Class and/or Series shall be 

definitively determined on the basis of estimates and that such determination shall not be 

modified to reflect final valuations. 

8.6 Any expense or liability may be amortised over such period as the Directors may determine. 

8.7 The Directors may establish such reserves as they deem reasonably necessary for Company 

expenses and any other contingent Company assets or liabilities, and may, upon the reversal or 

release of such reserves, apply any monies resulting therefrom in such manner as they may, in 

their absolute discretion, determine. 

8.8 Net Asset Value per Participating Share shall be rounded to the nearest cent or such other 

amount as the Directors may determine and the benefit of any such roundings may be retained 

by the Company. 

8.9 The Directors may cause the Company to issue new Participating Shares at par or to 

compulsorily redeem at par such number of Participating Shares as they consider necessary to 

address, in such manner as they consider equitable, any prior miscalculation of Net Asset Value 

or Net Asset Value per Participating Share. The Company shall not be required to pay to the 

holder the redemption proceeds of any such compulsorily redeemed Participating Shares, which 

proceeds shall be retained by the Company. 

9 Suspensions 

9.1 The Directors may, from time to time, in the circumstances disclosed in the Offering 

Memorandum, declare a Suspension with respect to any one or more Classes and/or Series of 

Participating Shares. 

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9.2 The Directors shall promptly notify all affected Members of any such Suspension and shall 

promptly notify such Members upon termination of such Suspension. 

10 Transfer of Shares 

10.1 Subject to Article 5.1, Shares may not be Transferred without the prior written approval of the 

Directors (which may be withheld for any or no reason) provided that the Directors may waive this 

requirement to the extent that they deem appropriate in connection with the listing of any Class or 

Series of Share on a stock exchange. 

10.2 The Directors shall not register any Transfer of any Share to any person who is, in the opinion of 

the Directors, not an Eligible Investor. 

10.3 Any proposed transferee shall provide to the Directors such information and documents as the 

Directors may request, including, without limitation, such documents or information as the 

Directors deem necessary or desirable: 

(a) to enable the Directors to determine that the proposed transferee is an Eligible Investor; 

and 

(b) to enable the Company to comply with all applicable laws, including anti-money 

laundering laws. 

10.4 The instrument of Transfer of any Share shall be in writing and shall be executed by or on behalf 

of the transferor (and, if the Directors so require, signed by or on behalf of the transferee). The 

transferor shall be deemed to remain the holder of a Share until the name of the transferee is 

entered in the Register of Members. 

11 Transmission of Shares 

11.1 If a Member dies, the survivor or survivors (where the Member was a joint holder) or his or her 

legal personal representatives (where the Member was a sole holder) shall be the only persons 

recognised by the Company as having any title to the Member's interest in the Company. The 

death of any Member shall not operate to relieve, waive or reduce any liabilities attaching to the 

Member's Shares at the time of death and such liabilities shall continue to bind any survivor or 

survivors, or any personal representative, as the case may be. 

11.2 Any person becoming entitled to a Share in consequence of the death or bankruptcy, or the 

liquidation or dissolution, of a Member (or in any other way than by Transfer) and who is an 

Eligible Investor may, upon delivery to the Directors of such evidence as may from time to time be 

required by them of: 

(a) such person's entitlement to such Shares; and/or 

(b) such person's status as an Eligible Investor, 

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elect, either to become the holder of such Share or to have such Share Transferred to another 

Eligible Investor nominated by such person. If such person elects to become the holder of such 

Share, such person shall give notice in writing to the Directors to that effect, but the Directors 

shall, in either case, have the same right to decline registration of such person as a holder of 

such Share as they would have had in the case of a Transfer of the Share by that Member before 

his or her death or bankruptcy, or liquidation or dissolution, as the case may be. 

11.3 Any person becoming entitled to a Share in consequence of the death or bankruptcy, or the 

liquidation or dissolution, of a Member (or in any other way than by Transfer) and who is not an 

Eligible Investor shall not be registered as the holder of such Share and shall promptly Transfer 

such Share to an Eligible Investor in accordance with these Articles. 

11.4 A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or 

dissolution of the holder (or in any other case than by Transfer), and who is an Eligible Investor, 

shall be entitled to the same dividends and other advantages to which such person would be 

entitled if such person were the registered holder of such Share. However, the person shall not, 

before becoming a Member in respect of a Share, be entitled in respect of it to exercise any right 

conferred by membership in relation to meetings of the Company and the Directors may at any 

time give notice requiring any such person to elect either to be registered himself or to have some 

person nominated by him become the holder of the Share (but the Directors shall, in either case, 

have the same right to decline or suspend registration as they would have had in the case of a 

transfer of the Share by the relevant Member before his death or bankruptcy or liquidation or 

dissolution or any other case than by transfer, as the case may be). If the notice is not complied 

with within ninety days the Directors may thereafter withhold payment of all dividends, bonuses or 

other monies payable in respect of the Share until the requirements of the notice have been 

complied with. 

12 Redemption of Shares 

12.1 Subject to any provisions relating to a specific Class and/or Series as set out in the Offering 

Memorandum or these Articles or in any resolution constituting a Class and/or Series or 

otherwise forming part of the special rights of such Participating Shares, a Member may require 

the redemption of all or any of such Member's Participating Shares by serving a Redemption 

Notice on the Company. Unless timely receipt is waived by the Directors in a particular case, a 

Redemption Notice shall be required to be received on or before a Redemption Date with respect 

to such Participating Shares (or such number of days prior to such Redemption Date as may be 

determined by the Directors). Any Member redeeming Participating Shares shall submit to the 

Directors the share certificate (if any) issued in respect of those Participating Shares. The 

Company shall redeem such Participating Shares at the Redemption Price, being an amount 

equal to the Net Asset Value per Participating Share of the relevant Class and/or Series 

prevailing on the relevant Redemption Date (or if the Redemption Date is not a Valuation Date 

then on the immediately preceding Valuation Date) subject to any deductions, holdbacks or 

adjustments provided for in these Articles and/or the Offering Memorandum. 

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12.2 The Directors may deduct any Redemption Fee from the Redemption Price. The Directors may 

also deduct such amount which they consider to be an appropriate allowance to reflect fiscal and 

sale charges which would be incurred for the account of the Company in realising assets or 

closing out positions to provide funds to meet any redemption request. 

12.3 A Member may not withdraw a Redemption Notice once submitted to the Company unless (a) the 

Directors shall have declared a Calculation Suspension or Redemption Suspension or (b) the 

Directors determine (in their sole discretion) to permit the withdrawal of such redemption request 

(which they may do in whole or in part). If a relevant Suspension has been declared by the 

Directors, the right of a Member to have its Participating Shares redeemed shall be suspended 

and during the period of Suspension the Member may withdraw its Redemption Notice. Any 

withdrawal of the Redemption Notice shall be made in writing and shall only be effective if 

actually received by the Company before the termination of the period of the Redemption 

Suspension or Calculation Suspension, as applicable. If the Redemption Notice is not withdrawn, 

any Participating Shares the redemption of which has been suspended shall be redeemed once 

the relevant Suspension has ended at the Redemption Price for Participating Shares of the 

relevant Class and/or Series calculated on the next Redemption Date following the end of the 

relevant Suspension. 

12.4 The Directors may impose a gate the effect of which is to limit the redemptions of Participating 

Shares of any Class and/or Series or to limit the redemptions of Participating Shares held by any 

Member or Members as of any Redemption Date to such extent and in such manner as is 

disclosed in the Offering Memorandum. If the Directors determine to limit redemptions, the 

Directors may determine the manner in which such gated redemption requests will be dealt with 

on any subsequent Redemption Date. 

12.5 If the Company is required by the laws of any relevant jurisdiction to make a withholding from any 

redemption monies payable to the holder of Participating Shares the amount of such withholding 

shall be deducted from the redemption monies otherwise payable to such person. 

12.6 No redemption of part of a Member's holding of Participating Shares of any one Class and/or 

Series may be made if, as a result thereof, such Member would hold fewer Participating Shares 

of such Class and/or Series than such minimum number or value of Participating Shares of such 

Class and/or Series as may from time to time be specified (either generally or in any particular 

case or cases) by the Directors. If such partial redemption would reduce such Member's holding 

of Participating Shares to less than such minimum holding, the Directors may, in their discretion, 

elect to compulsorily redeem all of such Member's Participating Shares. 

12.7 The Company may, in the absolute discretion of the Directors, refuse to make a redemption 

payment to a Member if the Directors suspect or are advised that the payment of any redemption 

proceeds to such Member may result in a breach or violation of any anti-money laundering law by 

any person in any relevant jurisdiction, or if such refusal is necessary to ensure the compliance 

by the Company, its Directors, the Administrator or any other service provider of the Company 

with any anti-money laundering law in any relevant jurisdiction. 

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12.8 Any amount payable to a Member for the redemption of Participating Shares shall be paid in such 

currency or currencies as the Directors may determine. Subject to any Payment Suspension, the 

Company shall remit redemption proceeds (net of the costs of remittance) by cheque or wire 

transfer within such period or periods as the Directors shall have disclosed to the Member at the 

time of its subscription for Participating Shares or, in the absence of any such disclosure, within 

such period or periods as the Directors shall determine. In the absence of directions as to 

payment the Company may remit redemption proceeds by cheque to the address of the Member 

appearing on the Register of Members or by wire transfer to such account as the Directors deem 

appropriate in the circumstances. The Company shall not be liable for any loss resulting from this 

procedure. 

12.9 On any redemption of Participating Shares the Directors shall have the power to satisfy (in whole 

or in part) the Redemption Price (and any other sums payable on redemption as provided in 

these Articles) owing on the redemption of such Participating Shares by dividing in specie the 

whole or any part of the assets of the Company (including, without limitation, shares, debentures, 

or securities of any other company whether or not held by the Company on the Redemption Date 

in question) and either (i) distributing such assets directly to the redeeming shareholder, and/or 

(ii) distributing or allocating such assets to a liquidating account or other similar mechanism to be 

managed and/or liquidated at the discretion of the Directors. 

12.10 Participating Shares shall be treated as having been redeemed with effect from the relevant 

Redemption Date irrespective of whether or not a Member has been removed from the Register 

of Members or the Redemption Price has been determined or remitted. Accordingly, on and from 

the relevant Redemption Date, Members in their capacity as such will not be entitled to or be 

capable of exercising any rights arising under these Articles with respect to Participating Shares 

being redeemed (including any right to receive notice of, attend or vote at any meeting of the 

Company) save the right to receive the Redemption Price and any dividend which has been 

declared prior to the relevant Redemption Date but not yet paid (in each case with respect to the 

Participating Shares being redeemed). Such Members will be treated as creditors of the 

Company with respect to the Redemption Price and will rank accordingly in the priority of the 

Company's creditors. 

12.11 Once a Participating Share is redeemed it shall be available for re issue and, until re issue, shall 

form part of the authorised and unissued share capital of the Company. 

12.12 Upon the written request of a Member or prospective Member in a form acceptable to the 

Directors, the Company may, in the discretion of the Directors, accept a standing redemption 

request from such Member or prospective Member pursuant to which the Company shall agree 

(without assuming any liability for failing to do so) to use its commercially reasonable efforts to 

redeem such Member's Participating Shares to the extent necessary to ensure that such Member 

does not own over a specified percentage of the outstanding Participating Shares of the 

Company or any Class and/or Series thereof; such percentage to be the percentage identified by 

such Member or prospective Member in such written request as being the percentage which such 

Member's or prospective Member's ownership cannot exceed without material risk of such 

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Member or prospective Member being in violation of applicable law or regulation. Any such 

written request may be revoked by notice in writing to the Company from the affected Member. 

12.13 No amendment to these Articles made after a Redemption Date shall affect a Member with 

respect to Participating Shares of that Member which have been redeemed, or are being treated 

as redeemed, on or prior to that Redemption Date. 

12.14 Unless otherwise provided in the Offering Memorandum, unremitted redemption proceeds shall 

not bear interest against the Company and redeemed Participating Shares shall not participate in 

the profits and losses of the Company with effect from the relevant Redemption Date. 

13 Compulsory Redemption 

13.1 The Directors may cause the Company to redeem any or all of the Participating Shares held by 

any person at the appropriate Redemption Price in the circumstances disclosed in the Offering 

Memorandum. If the Directors determine compulsorily to redeem any Participating Shares under 

this Article they shall give the holder of the Participating Shares such notice of the redemption as 

they shall have disclosed to the Member at the time of its subscription for Participating Shares or, 

in the absence of any such disclosure, within such period as the Directors shall determine. 

13.2 The Directors may cause a compulsory redemption during any period for which a Redemption 

Suspension has been declared. 

13.3 Without prejudice to the generality of the foregoing, the Company may (without notice) 

compulsorily redeem the Participating Shares of any Member and, on behalf of such Member, 

apply the proceeds of redemption in paying for new Participating Shares to give effect to any 

exchange, conversion or roll-up policy disclosed to Members pursuant to which Participating 

Shares of one Class or Series (the "Old Shares") may, at the option of the Company, be 

exchanged for Participating Shares of another Class or Series (the "New Shares") by means of 

the redemption of the Old Shares and the immediate re-subscription of the redemption proceeds 

in paying up the New Shares. 

14 FATCA 

14.1 Notwithstanding any other Article, in order to comply with FATCA, any Director shall be entitled to 

release and/or disclose on behalf of the Company to the Cayman Islands Tax Information 

Authority or equivalent authority (the "TIA") and any other foreign government body as required 

by FATCA, any information in its or its agents' or delegates' possession regarding a Member 

including, without limitation, financial information concerning the Member's investment in the 

Company, and any information relating to any shareholders, principals, partners, beneficial 

owners (direct or indirect) or controlling persons (direct or indirect) of such Member. Any such 

Director may also authorise any third party agent, including but not limited to, the Investment 

Manager or Administrator, to release and/or disclose such information on behalf of the Company. 

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14.2 In order to comply with FATCA and, if necessary, to reduce or eliminate any risk that the 

Company or its Members are subject to withholding taxes pursuant to FATCA or incur any costs 

or liabilities associated with FATCA, the Directors may cause the Company to undertake any of 

the following actions: 

(a) compulsorily redeem any or all of the Shares held by a Member either (i) where the 

Member fails to provide (in a timely manner) to the Company, or any agent or delegate of 

the Company, including but not limited to, the Investment Manager or the Administrator, 

any information requested by the Company or such agent or delegate pursuant to 

FATCA; or (ii) where there has otherwise been non-compliance by the Company with 

FATCA whether caused, directly or indirectly, by the action or inaction of such Member, or 

any related person, or otherwise; 

(b) deduct from, or hold back, redemption or repurchase proceeds, dividend payments or any 

other distributions, in order to: 

(i) comply with any requirement to apply and collect withholding tax pursuant to 

FATCA; 

(ii) allocate to a Member an amount equal to any withholding tax imposed on the 

Company as a result of the Member's, or any related person's, action or inaction 

(direct or indirect), or where there has otherwise been non-compliance by the 

Company with FATCA; 

(iii) ensure that any FATCA related costs, debts, expenses, obligations or liabilities 

(whether external, or internal, to the Company) are recovered from the Member(s) 

whose action or inaction (directly or indirectly, including the action or inaction of 

any person related to such Member) gave rise or contributed to such costs or 

liabilities; 

(c) in order to give effect to the requirements imposed upon the Company by FATCA, 

including the actions contemplated by articles 14.2(a) and 14.2(b), the Directors may: 

(i) create separate classes and/or series of Shares ("FATCA Shares"), with such 

rights and terms as the Directors may in their sole discretion determine, and 

following the compulsory redemption of some or all of a Member's Shares may 

immediately apply such redemption proceeds in subscribing for such number of 

FATCA Shares as the Directors determine; and/or 

(ii) may re-name any number of Shares (whether issued or unissued) as FATCA 

Shares, create a Separate Account with respect to such FATCA Shares and apply 

any FATCA related costs, debts, expenses, obligations or liabilities (whether 

external, or internal, to the Company) to such Separate Account; and/or 

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(iii) allocate any FATCA costs, debts, expenses, obligations, liabilities or withholding 

tax among Separate Accounts on a basis determined solely by the Directors; 

and/or 

(iv) adjust the Net Asset Value per Share of any relevant Shares (including any 

FATCA Share). 

15 Designated Investments 

15.1 The Directors may, in their discretion, classify certain of the Company's investments which are 

deemed by the Directors or the Investment Manager to be illiquid or the value of which is not 

readily or reliably ascertainable or which may have a relatively long-term investment horizon as 

"Designated Investments". Once so classified, Designated Investments may, in the discretion 

of the Directors, be represented by a separate Class and/or Series of Participating Shares which, 

unless otherwise determined by the Directors, shall be allotted only to those Members who are 

holders of Participating Shares at the time of such designation. The gains and losses attributable 

to Designated Investments may, in the discretion of the Directors, be segregated and separately 

calculated and attributed amongst Members holding Shares of the relevant Class or Series in 

such manner as is consistent with the relevant provisions of the Offering Memorandum. 

Participating Shares of any such separate Class and/or Series may be issued by way of bonus or 

by way of conversion or exchange of all or part of a Member's holding of Participating Shares of 

another Class and/or Series. Similarly, Shares of a Designated Investment Class and/or Series 

may be converted or exchanged back into Participating Shares of the original Class and/or Series 

upon the Directors making a determination that the relevant investment no longer qualifies as a 

Designated Investment. The power to convert or exchange Participating Shares of one Class 

and/or Series into Participating Shares of another Class and/or Series may be effected by the 

Directors in any manner permitted by the Statute and the Articles, including the compulsory 

redemption of Participating Shares of one Class and/or Series and the application of the 

proceeds of redemption in subscribing for Participating Shares of the other Class and/or Series or 

by redesignating a portion of the Participating Shares of any existing Class and/or Series as 

thereafter belonging to a new Class and/or Series. Shares of a Class or Series of Shares which 

represent Designated Investments shall not, unless the Directors otherwise determine, be 

redeemable at the option of the Members holding such Participating Shares. Where investments 

are classified as Designated Investments and Participating Shares of a separate Class and/or 

Series are issued by way of bonus, the requirement of these Articles to ensure proper value is 

transferred to the Separate Account of the Participating Shares of the original Class and/or Series 

to which such investments were originally allocated shall not apply. 

16 Purchase and Surrender of Shares 

16.1 Subject to the provisions of the Statute and without prejudice to these Articles, the Company may 

purchase its own Shares (including any redeemable Shares) in such manner and on such other 

terms as the Directors may agree with the relevant Member. 

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16.2 The Company may make a payment in respect of the redemption or purchase of its own Shares 

in any manner permitted by the Statute, including out of capital. 

16.3 The Directors may accept the surrender for no consideration of any fully paid Share. 

17 Treasury Shares 

17.1 The Directors may, prior to the purchase, redemption or surrender of any Share, determine that 

such Share shall be held as a Treasury Share. 

17.2 The Directors may determine to cancel a Treasury Share or transfer a Treasury Share on such 

terms as they think proper (including, without limitation, for nil consideration). 

18 Variation of Share Rights 

18.1 Subject to the Statute, these Articles and any applicable subscription agreement, all or any of the 

Share Rights applicable to any Class or Series of Participating Shares in issue (unless otherwise 

provided by the terms of issue of those Participating Shares) may (whether or not the Company is 

being wound up) be varied without the consent of the holders of the issued Participating Shares 

of that Class or Series where such variation is considered by the Directors not to have a material 

adverse effect upon such holders' Share Rights; otherwise, any such variation may be made with 

the prior consent in writing of the holders of not less than two-thirds by Net Asset Value of such 

Participating Shares, or with the sanction of a resolution passed by a majority of at least twothirds of the votes cast in person or by proxy at a separate meeting of the holders of such 

Participating Shares. For the avoidance of doubt, the Directors reserve the right, notwithstanding 

that any such variation may not have a material adverse effect, to obtain consent from the holders 

of such Participating Shares. To any such meeting all the provisions of these Articles as to 

general meetings shall mutatis mutandis apply, but so that any holder of a Participating Share 

present in person or by proxy may demand a poll, and the quorum for any such meeting shall be 

Members holding not less than twenty per cent. by Net Asset Value of the issued Participating 

Shares of the relevant Class or Series. At any Class meeting, the voting rights attributable to 

each Participating Share shall be calculated by reference to the Net Asset Value per Participating 

Share (calculated as at the most recent Valuation Date) and not on the basis of one Participating 

Share, one vote. 

18.2 For the purposes of a Class consent, the Directors may treat two or more or all the Classes or 

Series of Participating Shares as forming one Class or Series if the Directors consider that such 

Classes or Series would be affected in the same way by the proposals under consideration, but in 

any other case shall treat them as separate Classes or Series. 

18.3 Where the Shares of any Class or Series (the "First Class") rank, or will on issue rank, pari 

passu with the Shares of another Class or Series (the "Second Class") with respect to 

participation in the same pool of profits or assets of the Company on a winding up, the rights of 

the First Class shall be deemed to be varied by any variation of or creation of rights in the Second 

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Class (including on initial issue) which gives the Second Class priority over the First Class on a 

winding up of the Company. 

18.4 Subject to the foregoing Articles, the Share Rights applicable to any Class or Series of Shares in 

issue shall (unless otherwise expressly provided by the conditions of issue of such Shares) be 

deemed not to be varied by: 

(a) the creation, allotment or issue of further Shares ranking pari passu therewith and which 

may be issued with the benefit of the terms referred to below; 

(b) the purchase or redemption of any Shares; 

(c) the exercise of the powers to allocate assets and charge liabilities to the various Separate 

Accounts or any of them and to transfer the same to and from the various Separate 

Accounts or any of them, as provided for in these Articles; 

(d) any reduction or waiver of any fees (including early redemption, management or 

performance fees) chargeable or allocable to any Class or Series of Shares; 

(e) any reduction or waiver of any redemption notice, gate or lock-up period applicable to any 

Class or Series of Shares; or 

(f) any variation or waiver contemplated by or provided for in the Offering Memorandum 

applicable to the relevant Class and/or Series. 

18.5 In relation to any Class or Series consent required pursuant to Article 18.1, the Directors in their 

discretion may invoke the following procedure (the "Negative Consent Procedure"). The 

Directors shall provide written notice of the proposed variation (the "Proposal") to the Members 

of the affected Class or Series and shall specify a deadline (the "Redemption Request Date"), 

which shall be no earlier than 30 days after the date of giving such notice, by which date such 

Members may submit a written request for redemption of some or all of their Participating Shares 

of the affected Class and/or Series on the Redemption Date (the "Specified Redemption Date") 

specified by the Directors in such notice. The terms of the Proposal shall be such that its 

specified effective date (the "Effective Date") shall not be on or prior to the Specified Redemption 

Date. Such notice shall further provide that the holders of any Participating Shares in respect of 

which a request for redemption has not been received by the Redemption Request Date (the 

"Affected Shares") shall, in the absence of express written refusal to consent, be deemed to 

have consented in writing to the Proposal (such Affected Shares being the "Negative Consent

Shares"). In the event that the Negative Consent Procedure is followed, only the Affected 

Shares shall be considered for the purposes of determining whether the written consent majority 

has been obtained under Article 18.1 with the holders of the Negative Consent Shares being 

deemed to have submitted a written consent in favour of the Proposal on the Effective Date. 

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19 Variation of Terms 

The Directors, with the consent of the Investment Manager, shall have the absolute discretion to 

agree with a Member to waive or modify the terms applicable to such Member's subscription for 

Participating Shares (including those relating to management and performance fees and 

redemption terms) without obtaining the consent of any other Member; provided that such waiver 

or modification does not amount to a variation of the rights attaching to the Participating Shares 

of such other Members. 

20 Certificates for Shares 

20.1 A Member shall only be entitled to a share certificate if the Directors resolve that share 

certificates shall be issued. Share certificates representing Shares, if any, shall be in such form 

as the Directors may determine. Share certificates shall be signed by one or more Directors or 

another person authorised by the Directors. The Directors may authorise certificates to be issued 

with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall 

be consecutively numbered or otherwise identified and shall specify the Shares to which they 

relate. All certificates surrendered to the Company for transfer shall be cancelled and, subject to 

these Articles, no new certificate shall be issued until the former certificate representing a like 

number of relevant Shares shall have been surrendered and cancelled. 

20.2 The Company shall not be bound to issue more than one certificate for Shares held jointly by 

more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery 

to all of them. 

20.3 If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if 

any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by 

the Company in investigating evidence, as the Directors may prescribe, and (in the case of 

defacement or wearing out) on delivery up of the old certificate. 

21 Register of Members 

21.1 The Company shall maintain or cause to be maintained the Register of Members. 

21.2 The Directors may determine that the Company shall maintain one or more branch registers of 

Members in accordance with the Statute. The Directors may also determine which register of 

Members shall constitute the principal register and which shall constitute the branch register or 

registers, and to vary such determination from time to time. 

22 Closing Register of Members and Fixing Record Date 

22.1 For the purpose of determining Members entitled to notice of, or to vote at any meeting of 

Members or any adjournment thereof, or Members entitled to receive payment of any dividend, or 

in order to make a determination of Members for any other proper purpose, the Directors may 

provide that the Register of Members shall be closed for transfers for a stated period which shall 

not in any case exceed thirty days. 

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22.2 In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or 

arrears a date as the record date for any such determination of Members entitled to notice of, or 

to vote at any meeting of the Members or any adjournment thereof, or for the purpose of 

determining the Members entitled to receive payment of any dividend or in order to make a 

determination of Members for any other proper purpose. 

22.3 If the Register of Members is not so closed and no record date is fixed for the determination of 

Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive 

payment of a dividend, the date on which notice of the meeting is sent or the date on which the 

resolution of the Directors declaring such dividend is passed, as the case may be, shall be the 

record date for such determination of Members. When a determination of Members entitled to 

vote at any meeting of Members has been made as provided in this Article, such determination 

shall apply to any adjournment thereof. 

23 Non Recognition of Trusts 

The Company shall not be bound by or compelled to recognise in any way (even when notified) 

any equitable, contingent, future or partial interest in any Share, or (except only as is otherwise 

provided by these Articles or the Statute) any other rights in respect of any Share other than an 

absolute right to the entirety thereof in the registered holder. 

23.1 if it is not paid all the provisions of these Articles shall apply as if that amount had become due 

and payable by virtue of a call. 

23.2 The Directors may issue Shares with different terms as to the amount and times of payment of 

calls, or the interest to be paid. 

23.3 The Directors may, if they think fit, receive an amount from any Member willing to advance all or 

any part of the monies uncalled and unpaid upon any Shares held by it, and may (until the 

amount would otherwise become payable) pay interest at such rate as may be agreed upon 

between the Directors and the Member paying such amount in advance. 

23.4 No such amount paid in advance of calls shall entitle the Member paying such amount to any 

portion of a dividend declared in respect of any period prior to the date upon which such amount 

would, but for such payment, become payable. 

24 Lien on Shares 

24.1 The Company shall have a first and paramount lien on all Shares (whether fully paid-up or not) 

registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities 

or engagements to or with the Company (whether presently payable or not) by such Member or 

such Member's estate, either alone or jointly with any other person, whether a Member or not, but 

the Directors may at any time declare any Share to be wholly or in part exempt from the 

provisions of this Article. The registration of a Transfer of any such Share shall operate as a 

waiver of the Company's lien thereon. The Company's lien on a Share shall also extend to any 

amount payable in respect of that Share. 

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24.2 The Company may sell, in such manner as the Directors think fit, any Shares on which the 

Company has a lien, if a sum in respect of which the lien exists is presently payable, and is not 

paid within fourteen clear days after notice has been given to the holder of the Shares, or to the 

person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment 

and stating that if the notice is not complied with the Shares may be sold. 

24.3 To give effect to any such sale the Directors may authorise any person to execute an instrument 

of Transfer of the Shares sold to, or in accordance with the directions of, the purchaser. The 

purchaser or such purchaser's nominee shall be registered as the holder of the Shares comprised 

in any such Transfer, and the purchaser shall not be bound to see to the application of the 

purchase money, nor shall the purchaser's title to the Shares be affected by any irregularity or 

invalidity in the sale or the exercise of the Company's power of sale under these Articles. 

24.4 The net proceeds of such sale after payment of costs, shall be applied in payment of such part of 

the amount in respect of which the lien exists as is presently payable and any balance shall 

(subject to a like lien for sums not presently payable as existed upon the Shares before the sale) 

be paid to the person entitled to the Shares at the date of the sale. 

25 Amendments of Memorandum and Articles and Alteration of Capital 

25.1 The Company may, by Ordinary Resolution: 

(a) increase its share capital by such sum and with such rights, priorities and privileges 

annexed thereto, as the resolution shall prescribe; 

(b) consolidate and divide all or any of its share capital into Shares of larger amount than its 

existing Shares; 

(c) by subdivision of its existing Shares or any of them divide the whole or any part of its 

share capital into Shares of smaller amount than is fixed by the Memorandum; and 

(d) cancel any Shares that at the date of the passing of the resolution have not been taken or 

agreed to be taken by any person. 

25.2 All new Shares created in accordance with the provisions of the preceding Article shall be subject 

to the same provisions of these Articles with reference to liens, Transfer, transmission and 

otherwise as the Shares in the original share capital. 

25.3 Subject to the provisions of the Statute and the provisions of these Articles as regards the matters 

to be dealt with by Ordinary Resolution the Company may, by Special Resolution: 

(a) change its name; 

(b) alter or add to these Articles; 

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(c) alter or add to the Memorandum with respect to any objects, powers or other matters 

specified therein; and 

(d) reduce its share capital or any capital redemption reserve fund. 

26 Registered Office 

Subject to the provisions of the Statute, the Company may by resolution of the Directors change 

the location of its Registered Office. The Company may, in addition to its Registered Office, 

maintain such other offices or places of business as the Directors determine. 

27 General Meetings 

27.1 All general meetings other than annual general meetings shall be called extraordinary general 

meetings. The Directors may call general meetings. 

27.2 The Company may but shall not be obliged to hold a general meeting in each year as its annual 

general meeting, and shall specify the meeting as such in the notice calling it. Any annual 

general meeting shall be held at such time and place as the Directors shall determine. 

28 Notice of General Meetings 

28.1 At least five Business Days' notice shall be given of any general meeting. Every notice shall be 

exclusive of the day on which it is given or deemed to be given and of the day on which the 

meeting is to be held and shall specify the place, the day and the hour of the meeting and the 

general nature of the business and shall be given in the manner hereinafter mentioned or in such 

other manner if any as may be prescribed by the Company, provided that a general meeting of 

the Company shall, whether or not the notice specified in this Article has been given and whether 

or not the provisions of these Articles regarding general meetings have been complied with, be 

deemed to have been duly convened if it is so agreed: 

(a) in the case of an annual general meeting, by all the Members entitled to attend and vote 

thereat; and 

(b) in the case of an extraordinary general meeting, by a majority in number of the Members 

having the right to attend and vote at the meeting, being a majority together holding not 

less than ninety five per cent. in par value of the Shares giving that right. 

28.2 The accidental omission to give notice of a general meeting to, or the non receipt of notice of a 

meeting by, any person entitled to receive notice thereof shall not invalidate the proceedings of 

that meeting. 

29 Proceedings at General Meetings 

29.1 No business shall be transacted at any general meeting unless a quorum is present. A quorum 

shall be one or more Members (present in person, by proxy or authorised corporate 

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representative, as the case may be) entitled to attend and vote and representing not less than 

twenty per cent. in par value of all of the Shares in issue and carrying the right to vote at the 

meeting. 

29.2 A person may, with the consent of the Directors, participate at a general meeting by conference 

telephone or other communications equipment by means of which all the persons participating in 

the meeting can communicate with each other. Participation by a person in a general meeting in 

this manner is treated as presence in person at that meeting. 

29.3 A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by all 

Members for the time being entitled to receive notice of and to attend and vote at general 

meetings (or, being corporations or other non-natural persons, signed by their duly authorised 

representatives) shall be as valid and effective as if the resolution had been passed at a general 

meeting of the Company duly convened and held. 

29.4 If a quorum is not present within half an hour from the time appointed for the meeting or if during 

such a meeting a quorum ceases to be present, the meeting, if convened upon the requisition of 

Members, shall be dissolved and in any other case it shall stand adjourned to the same day in the 

next week at the same time and place or to such other day, time or such other place as the 

Directors may determine, and if at the adjourned meeting a quorum is not present within half an 

hour from the time appointed for the meeting the Members present shall be a quorum. 

29.5 The chairman, if any, of the board of Directors shall preside as chairman at every general 

meeting of the Company, or if there is no such chairman, or if the chairman shall not be present 

within fifteen minutes after the time appointed for the holding of the meeting, or is unwilling to act, 

the Directors present shall elect one of their number to be chairman of the meeting. 

29.6 If no Director is willing to act as chairman, or if no Director is present within fifteen minutes after 

the time appointed for holding the meeting, the Members present shall choose one of their 

number to be chairman of the meeting. 

29.7 The chairman may, with the consent of a meeting at which a quorum is present (and shall if so 

directed by the meeting) adjourn the meeting from time to time and from place to place, but no 

business shall be transacted at any adjourned meeting other than the business left unfinished at 

the meeting from which the adjournment took place. When a general meeting is adjourned for 

thirty days or more, notice of the adjourned meeting shall be given as in the case of an original 

meeting. Otherwise it shall not be necessary to give any such notice. 

29.8 A resolution put to the vote of a meeting shall be decided on a show of hands unless before, or 

on the declaration of the result of, the show of hands, the chairman or any Member present in 

person or by proxy (or in the case of a non-natural person, by its duly authorised representative 

or by proxy) demands a poll. 

29.9 Unless a poll is duly demanded a declaration by the chairman that a resolution has been carried 

or carried unanimously, or by a particular majority, or lost or not carried by a particular majority, 

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an entry to that effect in the minutes of the proceedings of the meeting shall be conclusive 

evidence of that fact without proof of the number or proportion of the votes recorded in favour of 

or against such resolution. 

29.10 The demand for a poll may be withdrawn. 

29.11 Except on a poll demanded on the election of a chairman or on a question of adjournment, a poll 

shall be taken as the chairman directs, and the result of the poll shall be deemed to be the 

resolution of the general meeting at which the poll was demanded. 

29.12 A poll demanded on the election of a chairman or on a question of adjournment shall be taken 

forthwith. A poll demanded on any other question shall be taken at such time as the chairman of 

the general meeting directs, and any business other than that upon which a poll has been 

demanded or is contingent thereon may proceed pending the taking of the poll. 

29.13 In the case of an equality of votes, whether on a show of hands or on a poll, the chairman shall 

not be entitled to a second or casting vote. 

30 Votes of Members 

30.1 Subject to any rights or restrictions attached to any Shares, on a show of hands every Member 

holding Shares carrying the right to vote on the matter in question who (being an individual) is 

present in person or by proxy or (if a corporation or other non-natural person) is present by its 

duly authorised representative or by proxy, shall have one vote and on a poll every such Member 

shall have one vote for every Share of which he is the holder. 

30.2 In the case of joint holders of record, the vote of the senior holder who tenders a vote, whether in 

person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. 

Seniority among joint holders shall be determined by the order in which the names of the holders 

stand in the Register of Members. 

30.3 A Member of unsound mind, or in respect of whom an order has been made by any court or 

authority having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by the 

Member's committee, receiver, curator bonis, or other similar person appointed on such 

Member's behalf by that court or authority and any such committee, receiver, curator bonis or 

other similar person may vote by proxy. 

30.4 No person shall be entitled to vote at any general meeting unless such person is registered as a 

Member on the record date for such meeting, nor unless all calls or other monies then payable by 

such person in respect of such Shares have been paid. 

30.5 No objection shall be raised to the qualification of any voter except at the general meeting or 

adjourned general meeting at which the vote objected to is purported to be given or tendered and 

every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be 

referred to the chairman whose decision shall be final and conclusive. 

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30.6 On a poll or on a show of hands votes may be cast either personally or by proxy. A Member may 

appoint more than one proxy or the same proxy under one or more instruments to attend and 

vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall 

state which proxy is entitled to vote on a show of hands. 

30.7 A Member holding more than one Share need not cast the votes in respect of its Shares in the 

same way on any resolution and therefore may vote a Share or some or all such Shares either for 

or against a resolution and/or abstain (any such abstentions to count neither for nor against the 

resolution) from voting a Share or some or all of the Shares and, subject to the terms of the 

instrument appointing it, a proxy appointed under one or more instruments may vote a Share or 

some or all of the Shares in respect of which such proxy is appointed either for or against a 

resolution and/or abstain from voting. 

31 Proxies 

31.1 The instrument appointing a proxy shall be in writing, be executed under the hand of the 

appointor or of such appointor's attorney duly authorised in writing or, if the appointor is a 

corporation or other non-natural person, under the hand of an officer or other person duly 

authorised for that purpose. A proxy need not be a Member of the Company. 

31.2 The Directors may, in the notice convening any meeting or adjourned meeting, or in an 

instrument of proxy sent out by the Company, specify the place and the time (being not later than 

the time for holding the meeting or adjourned meeting to which the proxy relates) at which the 

instrument appointing a proxy shall be deposited. In the absence of any such direction from the 

Directors in the notice convening any meeting or adjourned meeting, the instrument appointing a 

proxy shall be deposited at the Registered Office not less than 48 hours before the time for 

holding the meeting or adjourned meeting at which the person named in the instrument proposes 

to vote. 

31.3 The chairman may in any event, at the chairman's discretion, declare that an instrument of proxy 

shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the 

manner permitted and which has not been declared to have been duly deposited by the 

chairman, shall be invalid. 

31.4 The instrument appointing a proxy may be in any usual or common form and may be incorporated 

within any subscription agreement or other document signed by or on behalf of the Member. An 

instrument appointing a proxy may be expressed to be for a particular meeting or any 

adjournment thereof or generally until revoked. An instrument appointing a proxy shall be 

deemed to include the power to demand or join or concur in demanding a poll. 

31.5 Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding 

the previous death or insanity of the principal or revocation of the proxy or of the authority under 

which the proxy was executed, or the Transfer of the Share in respect of which the proxy is given 

unless notice in writing of such death, insanity, revocation or Transfer was received by the 

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Company at the Registered Office before the commencement of the general meeting, or 

adjourned meeting at which it is sought to use the proxy. 

32 Corporate Members 

Any corporation or other non-natural person which is a Member of the Company may in 

accordance with its constitutional documents, or in the absence of such provision by resolution of 

its directors or other governing body, authorise such person as it thinks fit to act as its 

representative at any meeting of the Company or of any Class of Members, and the person so 

authorised shall be entitled to exercise the same powers on behalf of the corporation which such 

person represents as the corporation could exercise if it were an individual Member. 

33 Shares Beneficially Owned by the Company 

Shares of the Company that are beneficially owned by the Company shall not be voted, directly 

or indirectly, at any meeting and shall not be counted in determining the total number of 

outstanding Shares at any given time. 

34 Directors 

There shall be a board of Directors consisting of not less than one person (exclusive of alternate 

Directors) provided however that the Company may from time to time by Ordinary Resolution 

increase or reduce the limits in the number of Directors. The first Directors of the Company shall 

be determined in writing by, or appointed by a resolution of, the Subscriber. 

35 Powers of Directors 

35.1 Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions 

given by Special Resolution, the business of the Company shall be managed by the Directors 

who may exercise all the powers of the Company. No alteration of the Memorandum or these 

Articles and no such direction shall invalidate any prior act of the Directors which would have 

been valid if that alteration had not been made or that direction had not been given. A duly 

convened meeting of Directors at which a quorum is present may exercise all powers exercisable 

by the Directors. 

35.2 All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all 

receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or 

otherwise executed as the case may be in such manner as the Directors shall determine by 

resolution. 

35.3 The Directors may exercise all the powers of the Company to borrow money and to mortgage or 

charge its undertaking, property and uncalled capital or any part thereof and to issue debentures, 

debenture stock, mortgages, bonds and other such securities whether outright or as security for 

any debt, liability or obligation of the Company or of any third party. Notwithstanding the 

foregoing, the Directors shall not exercise the powers specified in this Article in breach of any 

limits or restrictions specified in the Offering Memorandum. 

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36 Appointment and Removal of Directors 

36.1 The Company may, by Ordinary Resolution, appoint any person to be a Director and may, by 

Ordinary Resolution, remove any Director. 

36.2 The Directors may appoint any person to be a Director, either to fill a vacancy or as an additional 

Director provided that the appointment does not cause the number of Directors to exceed any 

number fixed by or in accordance with these Articles as the maximum number of Directors. 

37 Vacation of Office of Director 

The office of a Director shall be vacated if: 

(a) the Director gives notice in writing to the Company that such Director resigns the office of 

Director; 

(b) the Director is absent (without being represented by proxy or an alternate Director 

appointed by such Director) from three consecutive meetings of the board of Directors 

without special leave of absence from the Directors, and they pass a resolution that such 

Director has by reason of such absence vacated office; 

(c) the Director dies, becomes bankrupt or makes any arrangement or composition with such 

Director's creditors generally; 

(d) the Director is or becomes of unsound mind; 

(e) the Director ceases to be a Director by virtue of, or is prohibited from being a Director by, 

an order made pursuant to any law or regulation binding on the Company; or 

(f) all the other Directors of the Company (being not less than two in number) resolve that 

such Director should be removed as a Director. 

38 Proceedings of Directors 

38.1 The quorum for the transaction of the business of the Directors may be fixed by the Directors, and 

unless so fixed shall be two if there are two or more Directors, and shall be one if there is only 

one Director. A person who holds office as an alternate Director shall, if such person's appointor 

is not present, be counted in the quorum. A Director who also acts as an alternate Director shall, 

if such Director's appointor is not present, count twice towards the quorum. 

38.2 Subject to the provisions of these Articles, the Directors may regulate their proceedings as they 

think fit. Questions arising at any meeting shall be decided by a majority of votes. In the case of 

an equality of votes, the chairman shall not have a second or casting vote. A Director who is also 

an alternate Director shall be entitled in the absence of such Director's appointor to a separate 

vote on behalf of such Director's appointor in addition to such Director's own vote. 

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38.3 A person may participate in a meeting of the Directors or any committee of Directors by 

conference telephone or other communications equipment by means of which all the persons 

participating in the meeting can communicate with each other at the same time. Participation by a 

person in a meeting in this manner is treated as presence in person at that meeting. Unless 

otherwise determined by the Directors, the meeting shall be deemed to be held at the place 

where the chairman is located at the start of the meeting. 

38.4 A resolution in writing (in one or more counterparts) signed by all the Directors or all the members 

of a committee of Directors (an alternate Director being entitled to sign such a resolution on 

behalf of such alternate Director's appointor) shall be as valid and effectual as if it had been 

passed at a meeting of the Directors, or committee of Directors as the case may be, duly 

convened and held. 

38.5 A Director or alternate Director may, or other officer of the Company at the direction of a Director 

or alternate Director may call a meeting of the Directors by at least two days' notice in writing to 

every Director and alternate Director which notice shall set forth the general nature of the 

business to be considered unless notice is waived by all the Directors (or their alternates) either 

at, before or after the meeting is held. 

38.6 The continuing Directors may act notwithstanding any vacancy in their body, but if and so long as 

their number is reduced below the number fixed by or pursuant to these Articles as the necessary 

quorum of Directors the continuing Directors or Director may act for the purpose of increasing the 

number of Directors to that number, or of summoning a general meeting of the Company, but for 

no other purpose. 

38.7 The Directors may elect a chairman of their board and determine the period for which the 

chairman is to hold office; but if no such chairman is elected, or if at any meeting the chairman is 

not present within five minutes after the time appointed for holding the same, the Directors 

present may choose one of their number to be chairman of the meeting. 

38.8 All acts done by any meeting of the Directors or of a committee of Directors (including any person 

acting as an alternate Director) shall, notwithstanding that it be afterwards discovered that there 

was some defect in the appointment of any Director or alternate Director, or that they or any of 

them were disqualified, be as valid as if every such person had been duly appointed and qualified 

to be a Director or alternate Director as the case may be. 

38.9 A Director but not an alternate Director may be represented at any meetings of the board of 

Directors by a proxy appointed in writing by such Director. The proxy shall count towards the 

quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing 

Director. 

39 Presumption of Assent 

A Director who is present at a meeting of the board of Directors at which action on any Company 

matter is taken shall be presumed to have assented to the action taken unless the Director's 

dissent shall be entered in the minutes of the meeting or unless the Director shall file such 

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Director's written dissent from such action with the person acting as the chairman or secretary of 

the meeting before the close or adjournment thereof or shall forward such dissent by personal 

delivery, courier or registered post to such person immediately after the close or adjournment of 

the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action. 

40 Directors' Interests 

40.1 A Director may hold any other office or place of profit under the Company (other than the office of 

Auditor) in conjunction with such Director's office of Director for such period and on such terms as 

to remuneration and otherwise as the Directors may determine. 

40.2 A Director may act alone or by such Director's firm in a professional capacity for the Company 

and the Director or such Director's firm shall be entitled to remuneration for professional services 

as if such Director were not a Director or alternate Director. 

40.3 A Director or alternate Director of the Company may be or become a director or other officer of or 

otherwise interested in any company promoted by the Company or in which the Company may be 

interested as shareholder or otherwise, and no such Director or alternate Director shall be 

accountable to the Company for any remuneration or other benefits received by such Director or 

alternate Director as a director or officer of, or from such Director or alternate Director's interest 

in, such other company. 

40.4 No person shall be disqualified from the office of Director or alternate Director or prevented by 

such office from contracting with the Company, either as vendor, purchaser or otherwise, nor 

shall any such contract or any contract or transaction entered into by or on behalf of the 

Company in which any Director or alternate Director shall be in any way interested be or be liable 

to be avoided, nor shall any Director or alternate Director so contracting or being so interested be 

liable to account to the Company for any profit realised by any such contract or transaction by 

reason of such Director holding office or of the fiduciary relationship thereby established. A 

Director (or such Director's alternate Director in such Director's absence) shall be at liberty to vote 

in respect of any contract or transaction in which such Director is interested provided that the 

nature of the interest of any Director or alternate Director in any such contract or transaction shall 

be disclosed by such Director at or prior to such Director's consideration and any vote thereon. 

40.5 A general notice that a Director or alternate Director is a shareholder, director, officer or 

employee of any specified firm or company and is to be regarded as interested in any transaction 

with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution 

in respect of a contract or transaction in which such Director has an interest, and after such 

general notice it shall not be necessary to give special notice relating to any particular 

transaction. 

41 Minutes 

The Directors shall cause minutes to be made in books kept for the purpose of recording all 

appointments of officers made by the Directors, all proceedings at meetings of the Company or 

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the holders of any Class of Shares and of the Directors, and of committees of Directors including 

the names of the Directors or alternate Directors present at each meeting. 

42 Delegation of Directors' Powers 

42.1 The Directors may delegate any of their powers to any committee consisting of one or more 

Directors or such other persons as the Directors may designate. They may also delegate to any 

managing director or any Director holding any other executive office such of their powers as they 

consider desirable to be exercised by such managing director or any Director provided that an 

alternate Director may not act as managing director and the appointment of a managing director 

shall be revoked forthwith if such managing director ceases to be a Director. Any such 

appointment may be made subject to any conditions the Directors may impose, and either 

collaterally with or to the exclusion of their own powers, and may be revoked or altered. Subject 

to any such conditions, the proceedings of a committee of Directors shall be governed by these 

Articles regulating the proceedings of Directors, so far as they are capable of applying. 

42.2 The Directors may establish any committees, local boards or agencies or appoint any person to 

be a manager or agent for managing the affairs of the Company and may appoint any person to 

be a member of such committees or local boards. Any such appointment may be made either 

collaterally with or to the exclusion of the Directors' powers, shall be subject to any conditions the 

Directors may impose, and may be revoked or altered. Subject to any such conditions, the 

proceedings of any such committee, local board or agency shall be governed by these Articles 

regulating the proceedings of Directors, so far as they are capable of applying. 

42.3 The Directors may by power of attorney or otherwise appoint any company, firm, person or body 

of persons to be the attorney or authorised signatory of the Company for such purpose and with 

such powers, authorities and discretions (not exceeding those vested in or exercisable by the 

Directors under these Articles) and for such period and subject to such conditions as they may 

think fit, and any such powers of attorney or other appointment may contain such provisions for 

the protection and convenience of persons dealing with any such attorneys or authorised 

signatories as the Directors may think fit and may also authorise any such attorney or authorised 

person to delegate all or any of the powers, authorities and discretions vested in such attorney or 

authorised person. 

42.4 The Directors may appoint such officers as they consider necessary on such terms, at such 

remuneration (if any) and to perform such duties, and subject to such provisions as to 

disqualification and removal as the Directors may think fit. Unless otherwise specified in the 

terms of such officer's appointment an officer may be removed by resolution of the Directors or 

Members. 

43 Alternate Directors 

43.1 Any Director (other than an alternate Director) may by written notice to the Company appoint any 

other Director, or any other person willing to act, to be an alternate Director and by written notice 

to the Company may remove from office an alternate Director so appointed by the Director. 

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43.2 An alternate Director shall be entitled to receive notice of all meetings of Directors and of 

meetings of committees of Directors of which such alternate Director's appointor is a member, to 

attend and vote at every such meeting at which the Director appointing such alternate Director is 

not personally present, and generally to perform all the functions of such alternate Director's 

appointor as a Director in such Director's absence. 

43.3 An alternate Director shall cease to be an alternate Director if such alternate Director's appointor 

ceases to be a Director. 

43.4 Any appointment or removal of an alternate Director shall be by notice to the Company signed by 

the Director making or revoking the appointment or in any other manner approved by the 

Directors. 

43.5 Subject to the provisions of the Articles, an alternate Director shall be deemed for all purposes to 

be a Director and shall alone be responsible for such alternate Director's own acts and defaults 

and shall not be deemed to be the agent of the Director appointing such alternate Director. 

44 No Minimum Shareholding for Directors 

The Company in general meeting may fix a minimum shareholding required to be held by a 

Director, but unless and until such a shareholding qualification is fixed a Director shall not be 

required to hold Shares. 

45 Remuneration of Directors 

45.1 The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors 

shall determine. The Directors shall also be entitled to be paid all travelling, hotel and other 

expenses properly incurred by them in connection with their attendance at meetings of Directors 

or committees of Directors, or general meetings of the Company, or separate meetings of the 

holders of any Class of Shares or debentures of the Company, or otherwise in connection with 

the business of the Company, or to receive a fixed allowance in respect thereof as may be 

determined by the Directors, or a combination partly of one such method and partly the other. 

45.2 The Directors may by resolution approve additional remuneration to any Director for any services 

other than such Director's ordinary routine work as a Director. Any fees paid to a Director who is 

also counsel to the Company, or otherwise serves it in a professional capacity, shall be in 

addition to such Director's remuneration as a Director. 

46 Seal 

The Company may, if the Directors so determine, have a Seal, which shall only be used by the 

authority of the Directors or of a committee of the Directors authorised by the Directors. Every 

instrument to which the Seal has been affixed shall be signed by at least one person who shall be 

either a Director or some officer or other person authorised by the Directors for the purpose. 

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47 Dividends, Distributions and Reserves 

47.1 Subject to the Statute, these Articles, and the special rights attaching to Participating Shares of 

any Class and/or Series, the Directors may, in their absolute discretion, declare dividends and 

distributions on Participating Shares of any Class and/or Series in issue and authorise payment of 

the dividends or distributions out of the relevant Separate Account in respect of such Participating 

Shares. No dividend or distribution shall be paid except out of the realised or unrealised profits of 

the Company, or out of the share premium account attributable to Participating Shares of the 

Class and/or Series in respect of which the dividend or distribution is proposed to be paid, or as 

otherwise permitted by law. 

47.2 Except as otherwise provided by the rights attached to Participating Shares, or as otherwise 

determined by the Directors, all dividends and distributions in respect of Participating Shares of a 

particular Class and/or Series shall be declared and paid according to Net Asset Value of the 

Participating Shares of the Class and/or Series that a Member holds. If any Participating Share is 

issued on terms providing that it shall rank for dividend or distribution as from a particular date, 

that Participating Share shall rank for dividend or distribution accordingly. 

47.3 The Directors may deduct and withhold from any dividend or distribution otherwise payable to any 

Member all sums of money (if any) then payable by it to the Company on account of calls or 

otherwise or any monies which the Company is obliged by law to pay to any taxing or other 

authority. 

47.4 Under no circumstances may the assets (or the income derived from such assets) attributed to a 

Separate Account in respect of any Class and/or Series be used to pay a dividend in respect of a 

Separate Account that is attributed to any other Class and/or Series. 

47.5 The Directors may declare that any dividend or distribution be paid wholly or partly by the 

distribution of specific assets and in particular of shares, debentures or securities of any other 

company or in any one or more of such ways and, where any difficulty arises in regard to such 

distribution, the Directors may settle the same as they think expedient and in particular may issue 

fractional Shares and fix the value for distribution of such specific assets or any part thereof and 

may determine that cash payments shall be made to any Members upon the basis of the value so 

fixed in order to adjust the rights of all Members and may vest any such specific assets in 

trustees as may seem expedient to the Directors. 

47.6 Any dividend, distribution, interest or other monies payable in cash in respect of Participating 

Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post 

directed to the registered address of the holder or, in the case of joint holders, to the registered 

address of the holder who is first named on the Register of Members or to such person and to 

such address as such holder or joint holders may in writing direct. Every such cheque or warrant 

shall (unless the Directors in their sole discretion otherwise determine) be made payable to the 

order of the person to whom it is sent. Any one of two or more joint holders may give effectual 

receipts for any dividends, bonuses, or other monies payable in respect of the Participating Share 

held by them as joint holders. 

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47.7 Any dividend or distribution which cannot be paid to a Member and/or which remains unclaimed 

after six months from the date of declaration of such dividend or distribution may, in the discretion 

of the Directors, be paid into a separate account in the Company's name, provided that the 

Company shall not be constituted as a trustee in respect of that account and the dividend or 

distribution shall remain as a debt due to the Member. Any dividend or distribution which remains 

unclaimed after a period of six years from the date of declaration of such dividend or distribution 

shall be forfeited and shall revert to the Company. 

47.8 No dividend or distribution shall bear interest against the Company. 

48 Capitalisation 

The Directors may capitalise any sum standing to the credit of any of the Company's reserve 

accounts (including share premium account and capital redemption reserve) or any sum standing 

to the credit of profit and loss account or otherwise available for distribution and to appropriate 

such sum to Members of any Class and/or Series in the proportions in which such sum would 

have been divisible amongst them had the same been a distribution of profits by way of dividend 

and to apply such sum on their behalf in paying up in full unissued Participating Shares for 

allotment and distribution credited as fully paid-up to and amongst them in the proportion 

aforesaid. In such event the Directors shall do all acts and things required to give effect to such 

capitalisation, with full power to the Directors to make such provisions as they think fit for the case 

of Participating Shares becoming distributable in fractions (including provisions whereby the 

benefit of fractional entitlements accrue to the Company rather than to the Members concerned). 

The Directors may authorise any person to enter into an agreement with the Company, on behalf 

of all of the Members interested, providing for such capitalisation and matters incidental thereto 

and any agreement made under such authority shall be effective and binding on all concerned. 

49 Books of Account 

49.1 The Directors shall cause proper books of account (including, where applicable, 

material underlying documentation including contracts and invoices) to be kept with respect to all 

sums of money received and expended by the Company and the matters in respect of which the 

receipt or expenditure takes place, all sales and purchases of goods by the Company and the 

assets and liabilities of the Company. Such books of account must be retained for a minimum 

period of five years from the date on which they are prepared. Proper books shall not be deemed 

to be kept if there are not kept such books of account as are necessary to give a true and fair 

view of the state of the Company's affairs and to explain its transactions. 

49.2 The Directors shall from time to time determine whether and to what extent and at what times and 

places and under what conditions or regulations the accounts and books of the Company or any 

of them shall be open to the inspection of Members not being Directors and no Member (not 

being a Director) shall have any right of inspecting any account or book or document of the 

Company except as conferred by Statute, or authorised by the Directors or by the Company in 

general meeting. 

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49.3 The Directors may from time to time cause to be prepared and to be laid before the Company in 

general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other 

reports and accounts as may be required by law. 

50 Audit 

50.1 The Directors may appoint an Auditor of the Company who shall hold office on such terms as the 

Directors determine. 

50.2 Every Auditor of the Company shall have a right of access at all times to the books and accounts 

and vouchers of the Company and shall be entitled to require from the Directors and officers of 

the Company such information and explanation as may be necessary for the performance of the 

duties of the Auditor. 

50.3 Any Auditors of the Company shall, if so required by the Directors, make a report on the accounts 

of the Company during their tenure of office at the next annual general meeting following their 

appointment in the case of a company which is registered with the Registrar of Companies as an 

ordinary company, and at the next extraordinary general meeting following their appointment in 

the case of a company which is registered with the Registrar of Companies as an exempted 

company, and at any other time during their term of office, upon request of the Directors or any 

general meeting of the Members. 

51 Notices 

51.1 Notices shall be in writing and may be given by the Company to any Member either personally or 

by sending it by courier, post, cable, telex, fax or e-mail to the Member or to the address as 

shown in the Register of Members (or where the notice is given by e-mail by sending it to the email address provided by such Member). Any notice, if posted from one country to another, is to 

be sent airmail. 

51.2 Where a notice is sent by courier, service of the notice shall be deemed to be effected by delivery 

of the notice to a courier company, and shall be deemed to have been received on the third day 

(not including Saturdays or Sundays or public holidays) following the day on which the notice was 

delivered to the courier. Where a notice is sent by post, service of the notice shall be deemed to 

be effected by properly addressing, pre paying and posting a letter containing the notice, and 

shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or 

public holidays in the Cayman Islands) following the day on which the notice was posted. Where 

a notice is sent by cable, telex or fax, service of the notice shall be deemed to be effected by 

properly addressing and sending such notice and shall be deemed to have been received on the 

same day that it was transmitted. Where a notice is given by e-mail service shall be deemed to 

be effected by transmitting the e-mail to the e-mail address provided by the intended recipient 

and shall be deemed to have been received on the same day that it was sent, and it shall not be 

necessary for the receipt of the e-mail to be acknowledged by the recipient. 

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51.3 A notice may be given by the Company to the person or persons which the Company has been 

advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a 

Member in the same manner as other notices which are required to be given under these Articles 

and shall be addressed to them by name, or by the title of representatives of the deceased, or 

trustee of the bankrupt, or by any like description at the address supplied for that purpose by the 

persons claiming to be so entitled, or at the option of the Company by giving the notice in any 

manner in which the same might have been given if the death or bankruptcy had not occurred. 

51.4 Notice of every general meeting shall be given in the manner authorised by these Articles to 

every person shown as holding Shares carrying an entitlement to receive such notice in the 

Register of Members on the record date for such meeting except that in the case of joint holders 

the notice shall be sufficient if given to the joint holder first named in the Register of Members and 

every person upon whom the ownership of a Share devolves by reason of such person being a 

legal personal representative or a trustee in bankruptcy of a Member where the Member but for 

such Member's death or bankruptcy would be entitled to receive notice of the meeting, and no 

other person shall be entitled to receive notices of general meetings. 

52 Winding Up 

52.1 If the Company shall be wound up the liquidator shall apply the assets of the Company in 

satisfaction of creditors' claims in such manner and order as such liquidator thinks fit. The 

liquidator shall in relation to the assets available for distribution among the Members make in the 

books of the Company such transfers thereof to and from Separate Accounts as may be 

necessary in order that the effective burden of such creditors' claims may be shared among the 

holders of Participating Shares of different Classes and/or Series in such proportions as the 

liquidator in such liquidator's absolute discretion may think equitable. 

52.2 Subject to the special rights attaching to Participating Shares of any Class or Series, the balance 

shall then be applied in the following priority: 

(a) first, to the holders of Management Shares, an amount equal to the par value of such 

Management Shares; and 

(b) second, the balance shall be paid to the holders of Participating Shares in proportion to 

the Net Asset Value of Participating Shares held, subject to a deduction from those 

Participating Shares in respect of which there are monies due, of all monies due to the 

Company for unpaid calls, or otherwise. 

52.3 If the Company shall be wound up (whether the liquidation is voluntary or by or under the 

supervision of the Court) the liquidator may, with the authority of a resolution or resolutions 

passed by the holders of Participating Shares (whether as a whole or at separate Class 

meetings), divide among the Members in specie the whole or any part of the assets of the 

Company, and whether or not the assets shall consist of property of one kind or shall consist of 

property of different kinds, and may for such purposes set such value as the liquidator deems fair 

upon any one or more class or classes of property, and may determine how such division shall be 

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carried out as between the Members or different classes of Members. The liquidator may, with 

the like authority, vest any part of the assets in trustees upon such trusts for the benefit of 

Members as the liquidator, with the like authority, shall think fit, and the liquidation of the 

Company may be closed and the Company dissolved, but so that no Member shall be compelled 

to accept any shares or other property in respect of which there is a liability. 

53 Indemnity and Insurance 

53.1 Every Director and officer of the Company (which for the avoidance of doubt, shall not include 

any Auditor), together with every former Director and former officer of the Company (each an 

"Indemnified Person") shall be indemnified out of the assets of the Company against any 

liability, action, proceeding, claim, demand, costs, damages or expenses, including legal 

expenses, whatsoever which they or any of them may incur as a result of any act or failure to act 

in carrying out their functions other than such liability (if any) that they may incur by reason of 

their own actual fraud, wilful default or Gross Negligence. No Indemnified Person shall be liable 

to the Company for any loss or damage incurred by the Company as a result (whether direct or 

indirect) of the carrying out of their functions unless that liability arises through the actual fraud, 

wilful default or Gross Negligence of such Indemnified Person. No person shall be found to have 

committed actual fraud, wilful default or Gross Negligence under this Article unless or until a court 

of competent jurisdiction shall have made a finding to that effect. 

53.2 The Company shall advance to each Indemnified Person reasonable attorneys' fees and other 

costs and expenses incurred in connection with the defence of any action, suit, proceeding or 

investigation involving such Indemnified Person for which indemnity will or could be sought. In 

connection with any advance of any expenses hereunder, the Indemnified Person shall execute 

an undertaking to repay the advanced amount to the Company if it shall be determined by final 

judgment or other final adjudication that such Indemnified Person was not entitled to 

indemnification pursuant to this Article. If it shall be determined by a final judgment or other final 

adjudication that such Indemnified Person was not entitled to indemnification with respect to such 

judgment, costs or expenses, then such party shall not be indemnified with respect to such 

judgment, costs or expenses and any advancement shall be returned to the Company (without 

interest) by the Indemnified Person. 

53.3 The Directors, on behalf of the Company, may purchase and maintain insurance for the benefit of 

any Director or other officer of the Company against any liability which, by virtue of any rule of 

law, would otherwise attach to such person in respect of any negligence, default, breach of duty 

or breach of trust of which such person may be guilty in relation to the Company. 

53.4 Pursuant to the foregoing provisions, the Company may enter into a service or other agreement 

with any Director (or any entity providing one or more persons to the Company to act as 

Directors) upon such terms and conditions (including as to indemnification and exculpation) as 

the Directors shall, in their absolute discretion, determine. Any such indemnification and 

exculpation provisions may be specified to a standard equal to or more favourable (but not less 

favourable) to the Company than any standard specified in these Articles. 

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54 Disclosure 

If required to do so under the laws of any jurisdiction to which the Company, the Investment 

Manager, the Administrator or any other service provider is subject, or in compliance with the 

rules of any stock exchange upon which the Company's Shares are listed, or to ensure the 

compliance by any person with any anti-money laundering law in any relevant jurisdiction, any 

Director, Officer, the Investment Manager, the Administrator or Auditor of the Company shall be 

entitled to release or disclose any information in its possession regarding the affairs of the 

Company or a Member including, without limitation, any information contained in the Register of 

Members or subscription documentation of the Company relating to any Member. 

55 Financial Year 

Unless the Directors otherwise prescribe, the financial year of the Company shall end on 31st 

December in each year and, following the year of incorporation, shall begin on 1st January in 

each year. 

56 Transfer by way of Continuation 

The Company shall, subject to the provisions of the Statute and with the approval of a Special 

Resolution, have the power to register by way of continuation as a body corporate under the laws 

of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands. 

57 Mergers and Consolidations 

The Company shall, with the approval of a Special Resolution, have the power to merge or 

consolidate with one or more constituent companies (as defined in the Statute), upon such terms 

as the Directors may determine. 

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EXHIBIT 16 

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THIRD AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT

by and among

HIGHLAND MULTI STRATEGY CREDIT FUND, LTD.

HIGHLAND MULTI STRATEGY CREDIT FUND, L.P.

and

HIGHLAND CAPITAL MANAGEMENT, L.P.

November 1, 2013

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THIS THIRD AMENDED AND RESTATED INVESTMENT MANAGEMENT

AGREEMENT (this “Agreement”), is dated effective as of November 1, 2014, by and among:

HIGHLAND MULTI STRATEGY CREDIT FUND, LTD., a Cayman Islands

exempted company (the “Offshore Fund”);

HIGHLAND MULTI STRATEGY CREDIT FUND, L.P., a Delaware limited

partnership (the “Domestic Fund,” and together with the Offshore Fund, the “Clients”) acting

through its general partner, Highland Multi Strategy Credit Fund GP, L.P. a Delaware limited

partnership (the “General Partner”); and

HIGHLAND CAPITAL MANAGEMENT, L.P., a Delaware limited partnership (the

“Investment Manager”).

PRELIMINARY STATEMENTS

A. The Domestic Fund previously retained the Investment Manager as its investment

manager pursuant to an investment management agreement dated as of December 1, 2005, as

amended and restated as of December 29, 2005 and as further amended and restated as of

September 1, 2006 (the “Original Agreement”).

B. The Offshore Fund will invest all of its investable assets in the Domestic Fund. The

Investment Manager will exercise no discretion with respect to the investment of the assets of the

Offshore Fund and will serve merely as a steward thereof. The Investment Manager will conduct

its investment activities at the Domestic Fund level as the investment manager to the Domestic

Fund.

C. The Domestic Fund desires to continue to retain the Investment Manager and the

Offshore Fund desires to retain the Investment Manager to provide certain discretionary advisory

services relating to the assets and liabilities of the Domestic Fund and the Investment Manager

desires to accept such appointment, all subject to the terms and conditions hereinafter set forth.

AGREEMENT

This Agreement amends and restates in its entirety the Original Agreement as set forth

below. For good and valuable consideration, the sufficiency and adequacy of which are hereby

acknowledged, the parties hereto agree as follows:

++*%).(!).

The Clients hereby appoint the Investment Manager as investment manager with respect

to the assets and liabilities of the Domestic Fund and the Investment Manager hereby

accepts such appointment and agrees to perform its obligations in accordance with the

terms hereof and of the Fourth Amended and Restated Limited Partnership Agreement of

the Domestic Fund, dated effective as of November 1, 2014, as amended from time to time

(the “Domestic Fund Partnership Agreement”), and the investment objectives, policies,

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guidelines and restrictions that from time to time are set forth in the Governing Documents

of the Clients as applicable. “Governing Documents” mean, with respect to:

(a) the Offshore Fund: the Memorandum and Articles of Association of the Offshore

Fund, as amended from time to time, and the Confidential Private Offering

Memorandum dated November 2014, as may be supplemented from time to time

(the “POM”);

(b) the Domestic Fund: the Domestic Fund Partnership Agreement and the Private

Placement Memorandum dated November 2014, as may be supplemented from

time to time (the “PPM”).

/.$*,%.3) /.%!-*".$!)0!-.(!).)#!,

(a) All of the investable assets of the Offshore Fund must be invested in, and the

investment program of the Offshore Fund is to be conducted by the Investment

Manager through, the Domestic Fund. The Investment Manager will exercise no

discretion with respect to the investment of the assets of the Offshore Fund and the

investment activities of the Investment Manager will be conducted at the Domestic

Fund level as the investment manager to the Domestic Fund.

(b) The Domestic Fund’s investment program will be conducted by the Investment

Manager in accordance with the PPM.

(c) The Investment Manager serves as the investment manager to the Domestic Fund

and in that capacity has full discretion and authority, without obtaining the prior

approval of any officer or other agent of the Domestic Fund:

(i) to continuously supervise the investment program of the Domestic Fund

and the composition of its investment portfolio including, without

limitation, determining from time to time what investments will be purchased,

retained or sold, what contracts will be entered into by the Domestic Fund

and what portion of its assets will be retained as cash, and to engage

consultants and analysts in connection therewith; to cause the Domestic

Fund to purchase or sell any asset, enter into any other investment-related

transaction, including (directly or through subsidiaries or affiliates of the

Domestic Fund) borrowing money, entering into swap transactions, lending

securities, exercising control over a company, exercising voting or approval

rights and selecting brokers and dealers for execution of portfolio transactions;

and to undertake to do anything incidental to the foregoing to facilitate the

performance of its obligations hereunder;

(ii) to invest within or outside the United States of America in “Investments”

(as defined in, and subject to the provisions of, the Domestic Fund Limited

Partnership Agreement);

(iii) to effect any and all transactions in Investments, including collateralized

loan obligations, asset-backed securities, commodities, total return swaps,

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credit default swaps, synthetic securities and other financial instruments and

assets (and options and other contracts thereon), and everything connected

therewith in the broadest sense, including, without limitation, the full

discretion and authority to make short sales, to purchase or write options

(including uncovered options) and to trade on margin;

(iv) to, on behalf of the Clients, exercise all rights, powers, privileges and other

incidents of ownership or possession with respect to the Investments and

other property and funds held or owned by the Domestic Fund, including

without limitation the right to possess, lend, transfer, mortgage, pledge or

otherwise deal in, and to secure the payment of obligations of the Domestic

Fund by mortgage upon, or hypothecation or pledge of, all or part of the

property of the Domestic Fund, whether at the time owned or thereafter

acquired, and to vote Investments, participate in arrangements with

creditors, institute and settle or compromise suits and administrative

proceedings and other similar matters;

(v) to select brokers, dealers, banks and other intermediaries by or through

whom such transactions will be executed or carried out and to open,

maintain and close accounts with brokers, which power shall include the

authority to issue all instructions and authorizations to brokers regarding

securities and money therein and to cause the Domestic Fund to pay, or

authorize the payment and reimbursement of, brokerage commissions;

(vi) to open, maintain and close bank accounts and authorize the drawing of

checks or other orders for the payment of monies;

(vii) to borrow or raise monies or utilize any other forms of leverage and to issue,

accept, endorse and execute promissory notes, drafts, bills of exchange,

warrants, bonds, debentures and other negotiable or non- negotiable

instruments and evidences of indebtedness and otherwise to utilize any lines

of credit, credit balances or overdraft privileges available to the Domestic

Fund;

(viii) to value the Client's assets as of the close of each fiscal period and any other

date selected by the respective Client;

(ix) to direct any administrator of the Clients, banks, brokers or other custodians

to effect deliveries of funds or assets, but only in the course of effecting

portfolio transactions for the account of the Clients;

(x) to remove or replace any administrator of the Clients and/or any accountant

of the Clients at any time; and

(xi) to make and execute all such documents and to take all such other actions

as the Investment Manager considers necessary or appropriate to carry out

its investment management duties hereunder.

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(d) In furtherance of the foregoing, the Board of Directors, on behalf of the Offshore

Fund, and the General Partner, on behalf of the Domestic Fund, has delegated

certain rights and responsibilities with respect to the operation of their respective

partnerships and funds to the Investment Manager, as more fully set forth in the

Governing Documents.

(e) Each Client hereby designates the Investment Manager as the commodity pool

operator (the “CPO”) for such Client with complete authority and responsibility for

compliance with the U.S. Commodity Exchange Act and the regulations

promulgated thereunder, including to perform any and all duties required of a CPO

(i) that is exempt from registration under the regulations of the U.S. Commodity

Futures Trading Commission (the “CFTC”) and (ii) that is in compliance with

CFTC Rule 4.13(a)(3), including the filing of a notice of exemption under said Rule

4.13(a)(3) with the CFTC.

(f) Additionally, each of the Clients hereby designates and appoints the Investment

Manager as its agent and attorney-in-fact, with full power and authority and without

the need for further approval of the Clients (except as may be required by law) to

complete and execute all such documents and to take any and all actions that the

Investment Manager, in its discretion, may deem advisable to carry out the

foregoing with respect to the assets of the Clients; provided, however, that the

Investment Manager is not intended to have actual or constructive custody of any

assets of the Clients. In connection with any of the foregoing, the Investment

Manager is further authorized to transfer or tender for cash or exchange such assets.

In all such purchases, sales or trades the Clients authorize the Investment Manager

to act for the Clients, and at their risk, and in their name and on their behalf, in the

same manner and with the same force and effect as the Clients might or could do

with respect to such purchases, sales or trades without prior consultation with the

Clients. The Clients also appoint the Investment Manager as their agent and

attorney-in-fact to vote, and to execute proxies, waivers, consents and other

instruments with respect to, the assets of the Clients.

(g) At the request of a Client, in any wind down of such Client, the Investment Manager

will manage the realization of the Client’s assets and the distribution thereof to

investors.

(h) In connection with the execution of transactions on behalf of the Domestic Fund,

the Domestic Fund hereby acknowledges and agrees that in the course of selecting

brokers, dealers, futures commission merchants, banks and financial intermediaries

to effect transactions for the Domestic Fund’s account, the Investment Manager

may agree to such commissions, fees and other charges on behalf of the Domestic

Fund’s account as it may deem reasonable in the circumstances, taking into

consideration all such factors as the Investment Manager deems relevant, including

the following: the ability to effect prompt and reliable executions at favorable

prices; the operational efficiency with which transactions are effected; the financial

strength, integrity and stability of the broker; the quality, comprehensiveness and

frequency of available research and other services considered to be of value; and

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the competitiveness of commission rates in comparison with other brokers

satisfying the Investment Manager’s other selection criteria. It is understood that

the costs of such services will not necessarily represent the lowest costs available

and that the Investment Manager is under no obligation to combine or arrange

orders so as to obtain reduced charges.

!!-) 2+!)-!-

(a) For its services to the Domestic Fund, the Domestic Fund will pay the Investment

Manager the Management Fee (as defined in the Domestic Fund Partnership

Agreement), calculated and payable monthly in advance. The Investment Manager

may waive or reduce the management fees with respect to capital account and

capital sub-accounts of the Domestic Fund in its discretion.

(b) The Clients will pay, or will reimburse the Investment Manager, for all costs and

expenses arising in connection with their operations, including without limitation,

with respect to the Domestic Fund, all costs and expenses directly related to

portfolio investments or prospective investments (whether or not consummated) of

the Domestic Fund.

(c) The Clients will not have their own separate employees or office, and they will not

reimburse the Investment Manager for salaries, office rent and other general

overhead costs of the Investment Manager. The Investment Manager will pay all of

its own operating and overhead costs (except liability insurance) without

reimbursement by the Clients. The Investment Manager is entitled to

reimbursement from the Clients for any expenses paid by it on behalf of the Clients;

provided that, the Investment Manager in its sole discretion may absorb any or all

of such expenses incurred on behalf of the Clients. If the Investment Manager

incurs any such expenses for the account of the Clients and any Customers (as

defined below), the Investment Manager will allocate such expenses among the

Clients and each such Customer in proportion to the size of the investment made

by each in the activity or entity to which the expense relates, or in such other manner

as the Investment Manager in its sole discretion considers fair and reasonable.

.$!,.%0%.%!-) )0!-.(!).-

(a) The Investment Manager is not required to devote its full time to the affairs of the

Clients, but must devote such of its time to the business and affairs of the Clients

as it may determine, in its discretion exercised in good faith, to be necessary to

conduct the affairs of the Clients for the benefit of the Clients, the shareholders of

the Offshore Fund and the partners of the Domestic Fund. Subject to this limitation,

the Investment Manager, its partners and principals and their affiliates are not

precluded from engaging in or owning an interest in other business ventures or

investment activities of any kind. It is expressly understood that the Investment

Manager and its affiliates may effect investment transactions for their own accounts

and for the accounts of other customers (generally, “Customers”), and the Clients

further understand and agree that nothing herein restricts the ability of the

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Investment Manager and its affiliates to engage in any such transactions

notwithstanding the fact that the Clients may enter into or engage in such

transactions so long as such transactions are in the best interests of the Clients.

(b) The Investment Manager will act in a manner that it considers fair, reasonable and

equitable in allocating investment opportunities to the Clients. It is understood that

when the Investment Manager determines that it would be appropriate for the

Clients and one or more of the Customers to participate in an investment

opportunity, the Investment Manager will seek to execute orders for, or otherwise

allocate such opportunities to, the Clients and such Customers on an equitable basis.

In such situations, the Investment Manager may place orders for the Clients and

each Customer simultaneously, and if all such orders are not filled at the same price,

the Investment Manager may cause the Clients and each Customer to pay or receive

the average of the prices at which such orders were filled for the Clients and all

other Customers. If all such orders cannot be fully executed under prevailing

market conditions, the Investment Manager may allocate among the Clients and the

Customers the investments traded in a manner which the Investment Manager

considers equitable, taking into account the size of the order placed for the Clients

and each such Customer as well as any other factors which the Investment Manager

deems relevant.

*/).) .$!,)"*,(.%*)

(a) The Investment Manager must furnish such information concerning activities

undertaken for the account of the Clients as the Clients may reasonably request.

(b) The Clients agree to keep confidential and not to disclose to any person any

information or matter relating to the Clients’ investments (other than disclosure to

the Clients’ shareholders, partners, directors and employees, legal counsel,

administrator, registrar and accountant in connection with the preparation and

review of financial statements and with the filing of any tax returns or to any other

person approved in writing by the Investment Manager (each such person being

hereinafter referred to as an “Authorized Representative”)); provided that the

Clients and their Authorized Representatives may make such disclosure to the

extent that (x) the information to be disclosed is publicly known at the time of

proposed disclosure by the Clients or Authorized Representative, (y) the

information otherwise is or becomes legally known to the Clients other than

through disclosure by the Investment Manager or (z) such disclosure is required by

law or in response to any governmental agency request or in connection with an

examination by any regulatory authorities, provided that such agency, regulatory

authorities or association is aware of the confidential nature of the information

disclosed. Prior to making any disclosure required by law, the Clients will use their

best efforts to notify the Investment Manager of such disclosure. Prior to any

disclosure to any Authorized Representative, the Clients must advise such

Authorized Representative of the obligations set forth in this Section 5(b) and are

responsible for any breach of these obligations made by an Authorized

Representative.

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8

(c) The Investment Manager retains, or arranges for the retention of, for a period of at

least 5 years, copies of any documents generated or received by the Investment

Manager in the ordinary course of business pertaining to the financial condition of

the account of the Clients or to the compensation payable to the Investment

Manager. At the request of the Clients, the Investment Manager will afford to the

Clients’ independent auditors reasonable access to such documents during

customary business hours and will permit the Clients’ auditors to make copies

thereof or extracts therefrom at the expense of the Clients.

	/-.* 3

The assets of the Clients must be held in the custody of one or more custodians (or other

independent institutions performing the functions of custodian, with respect to the assets

which are held by such institutions) selected by the Investment Manager. The Investment

Manager will notify the Clients promptly of the proposed selection of any custodians.


*+!*"%%'%.3

The Clients agree that the Investment Manager is not liable to the Clients or any of their

partners or shareholders for any losses, damages, expenses or claims occasioned by any act

or omission of the Investment Manager in connection with the performance of its services

hereunder, other than as a result of the Investment Manager’s willful misconduct, fraud or

gross negligence, or as otherwise prescribed by applicable law. The Clients explicitly

recognize that the investment advisory opinions, recommendations and actions of the

Investment Manager will be based on advice and information deemed to be reliable but not

guaranteed by or to the Investment Manager.

) !()%"%.%*)

(a) The Clients must indemnify and hold harmless the Investment Manager, each

member, shareholder, partner, manager or director of, or any person who controls,

the Investment Manager, each of the respective affiliates of the foregoing and each

of the respective executors, heirs, assigns, successors or other legal representatives

of the foregoing (each, an “indemnitee”) from and against any expense, loss,

liability or damage arising out of any claim asserted or threatened to be asserted

against such indemnitee in connection with the Investment Manager’s serving or

having served as such pursuant to this Agreement; provided, however, that the

indemnitee is not entitled to any such indemnification with respect to any expense,

loss, liability or damage that was caused by the indemnitee’s willful misconduct,

fraud or gross negligence.

(b) In the event that the Investment Manager or any other indemnitee entitled to

indemnification pursuant to paragraph (a) above is or becomes a party to any action

or proceeding in respect of which, or there otherwise exists a claim pursuant to

which, it may be entitled to seek indemnification hereunder, the indemnitee must

promptly notify the respective Client thereof. The respective Client is entitled to

participate in any such suit or proceeding and, to the extent that it may wish, to

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9

assume the defense thereof with counsel reasonably satisfactory to the indemnitee.

After notice of an election by the Client so to assume the defense thereof, the Client

will not be liable to the indemnitee hereunder for any legal or other expenses

subsequently incurred by the indemnitee in connection with the defense thereof

other than reasonable costs of investigation or reasonable legal expenses incurred

as a result of (i) potential conflicts of interest between the indemnitee and the Client

or (ii) the protection of proprietary or privacy interests of other clients of or parties

in interest with the indemnitee. The Client must advance to the indemnitee the

reasonable costs and expenses of investigating and/or defending such claim, subject

to receiving a written undertaking from the indemnitee to repay such amounts if

and to the extent of any subsequent determination by a court or other tribunal of

competent jurisdiction that the indemnitee was not entitled to indemnification

hereunder.

(c) A Client is not liable hereunder for any settlement of any action or claim effected

without its written consent thereto.

) !+!) !).*).,.*,

For all purposes of this Agreement, the Investment Manager is an independent contractor

and not an employee or dependent agent of any Client. Nothing herein is to be construed

as making any Client a partner or co-venturer with the Investment Manager or any of its

affiliates or Customers. Except as provided in this Agreement, the Investment Manager

has no authority to bind, obligate or represent the Clients.

!,(
!,(%).%*)
!)!1'

(a) This Agreement will remain in full force and effect for a period commencing on

the date first above written and ending on December 31, 2014, and thereafter will

renew automatically for successive one-year periods. This Agreement may be

terminated by any party hereto, without penalty, upon 75 days’ prior written notice

to the other parties.

(b) The termination of this Agreement does not extinguish the obligations of the Clients

for the payment of fees and expenses in respect of services rendered by the

Investment Manager prior to the effective date of such termination.

&)*1'! #!(!).

Each of the Clients certifies and acknowledges to the Investment Manager that it:

(i) has fully disclosed to potential investors the fee provisions and other arrangements

relating to the Client’s account with the Investment Manager and is satisfied that

the potential investors have received sufficient information from the Investment

Manager to enable them to evaluate the terms of this Agreement; and

(ii) fully understands the method of compensation provided herein and its associated

risks, including the risk that the performance compensation arrangements with

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affiliates of the Investment Manager may create an incentive for the Investment

Manager to engage in transactions that are riskier or more speculative than would

be the case in the absence of performance compensation and that such risk has been

disclosed to potential investors.

(!) (!).
* %"%.%*)
%0!,

Except as otherwise expressly provided herein, this Agreement may not be amended, nor

may any provision of this Agreement be considered modified or waived, unless evidenced

by a writing signed by the party to be charged with such amendment, waiver or

modification.

%) %)#""!.
--%#)(!).

This Agreement is binding upon and inures to the benefit of the parties hereto and their

respective successors, but the rights and obligations hereunder are not, except as otherwise

expressly provided herein, assignable, transferable or delegable without the written consent

of the other parties hereto and any attempted assignment, transfer or delegation thereof

without such consent is null and void, except that the Investment Manager may assign its

rights and obligations hereunder to an entity that controls, is controlled by or is under

common control with the Investment Manager; provided, however, that such entity

assumes the obligations of the Investment Manager hereunder.

*0!,)%)#1

This Agreement is governed by and construed in accordance with the substantive laws of

the State of Delaware which are applicable to contracts made and entirely to be performed

therein, without regard to the place of performance hereunder.

[SIGNATURE PAGE FOLLOWS]

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EXHIBIT 17 

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004378

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[1992–93 CILR 372]

CAYMAN HOTEL AND GOLF INCORPORATED v. RESORT GEMS LIMITED

GRAND COURT (Smellie, Ag. J.): July 6th, 1993

Civil Procedure—joinder of parties—party who “ought to have been joined”—Grand Court (Civil Procedure)

Rules, r.26 permits joinder of defendant who ought to have been joined at commencement of proceedings only if

established link between original cause of action and that against party to be joined—joinder not permitted for

purpose of expanding original cause, e.g. to join party not privy to contract forming subject of original cause

Civil Procedure—pleading—amendment—application to amend under Rules of Supreme Court, O.20, r.5 to be

decided on merits and effect on action against original defendant—normally allowed unless applicant causing

injury for which no compensation or acting mala fide—inconsistent, useless or futile claims or those constituting

new cause of action not permitted

Landlord and Tenant—characteristics of relationship—exclusivity—if landlord/tenant relationship and remedy

for breach comprehensively covered by lease agreement, court will not impose equitable or agency relationship

—court will also not impose duties not strictly and necessarily incidental to relationship expressly created by

parties

Landlord and Tenant—breach of covenant—forfeiture—notice—Registered Land Law (Revised), s.56

requirements for notice before forfeiture applicable only if breach capable of remedy

 The plaintiff sought leave to amend its writ and statement of claim in an action against the defendant for breach

of a lease.

 The plaintiff leased premises to the defendant for the operation of its jewellery retail business. The form of

lease was based on a Canadian model and provided for the payment of an annual basic rent and an annual

percentage rent based on sales. The lease contained extensive provisions dealing with the defendant’s obligations

to report and account to the plaintiff and specified the relief available in the event of breach of those provisions.

 The defendant failed to keep full and faithful records and refused to comply with the directions of an

independent auditor engaged by the plaintiff to obtain a reconstruction or compilation of those records. The

plaintiff also obtained evidence of at least one sale of a valuable item which had not been recorded. The plaintiff

claimed forfeiture of the lease and gave notice

1992–93 CILR 373

to that effect. It brought proceedings for recovery of possession and for rent claiming that the defendant had

repudiated the lease.

 The plaintiff subsequently sought leave to amend its writ and statement of claim (a) to add four more

defendants who it alleged conspired with and facilitated or assisted the defendant in its falsification of accounts

and disclosures; (b) to plead claims against those defendants; and (c) to effect substantial amendments of the

pleadings against the primary defendant to include inter alia a claim for an account from the defendant to

ascertain the amount owed to it, a claim for a declaration that the lease was duly forfeited and a claim in the

alternative for damages for breach of the covenant to pay rent.

 The plaintiff submitted that (a) the joinder of the additional defendants was permitted under r.26 of the Grand

Court (Civil Procedure) Rules because the proper test was whether they could have been joined in some way at

the time the original action was brought irrespective of whether they could have been joined in the action as it

was actually brought. Accordingly, though the original action sought recovery of possession and mesne profits

from the defendant, it could have instituted proceedings in damages at the same time against the other parties for

having procured and conspired with the defendant to breach the lease; (b) the justification for giving leave to

amend to include a claim for an account from the defendant consisted in the fiduciary relationship of principal

and agent which should be implied as existing between it and the defendant having regard to the lease agreement

which demanded a duty of trust from the defendant as tenant; further, an action for an account was an

established remedy available to a principal against his agent in lieu of damages; (d) it was entitled to forfeit the

lease on the basis that the breach was incapable of being remedied; and (e) it was entitled to make an alternative

claim for damages for breach of the covenant to pay rent.

 The defendant submitted in reply that (a) the joinder of the proposed defendants under r.26 was not permissible

as they were not party to any contract with the plaintiff; (b) the court had no jurisdiction to permit the plaintiff to

amend its writ and statement of claim to include new causes of action or inconsistent or useless amendments; (c)

no fiduciary relationship existed between itself and the plaintiff; theirs was strictly a relationship of landlord and

tenant to be governed by the clearly express terms of the lease; and (d) the plaintiff’s application should be

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dismissed in its entirety for the most important reason that the cause of action was bound to fail, for though it

might have breached the lease, that breach was not irremediable. Accordingly, by virtue of s.56 of the Registered

Land Law (Revised) it was entitled to notice requiring it to remedy the breach. As there had been no such proper

notice nor any proper demand to remedy, the forfeiture was wrong in law and the cause of action based on it, for

recovery of possession, rent and, latterly, damages, could not succeed. Further, the lease was still intact despite

the plaintiff’s claim to forfeiture.

 Held, granting the application in part:

 (1) The Grand Court (Civil Procedure) Rules, r.26 provided for the

1992–93 CILR 374

joinder of defendants who ought to have been joined at the commencement of the proceedings where there was

an established link between the original cause and the cause against those to be joined. It did not permit joinder

for the purpose of expanding the original cause of action. Since the original action between the plaintiff and the

defendant was based on the lease agreement between them as landlord and tenant and the plaintiff’s claim to

recovery of possession and mesne profits arising from the defendant’s breach, there could have been no other

parties to the action as instituted because privity of contract existed only between those two (page 381, lines 13–

15; lines 21–28; page 383, line 37 – page 384, line 9).

 (2) In general, a plaintiff’s application to amend pleadings to vary or add claims was to be decided on the

merits to the extent that they might affect the action brought against the original defendant. The applicable

principles were embodied in the Rules of the Supreme Court, O.20, r.5, by which amendments should normally

be allowed unless it was apparent that the plaintiff applicant was acting mala fide or that by his omission or by

the amendment he had done or would cause injury to his opponent which could not be compensated for by costs

or otherwise; a plaintiff would not be permitted to raise entirely new claims amounting to a new cause of action

or those that were inconsistent or useless or which sought to support a case that was bound to fail (page 385, line

27 – page 386, line 26).

 (3) The court should not search for liability in tort or in equity where the parties were in a contractual

relationship and this was particularly so in commercial relationships. More specifically it should not impose

duties which were not strictly and necessarily incidental to that relationship. Since the lease agreement between

the parties was a commercial transaction and it specified expressly and comprehensively their intentions with

regard to the defendant’s duties as well as an appropriate remedy for breach of the agreement, the court would

not invoke the rules of equity so as to impose a relationship where there was no true need for the special

protection that equity afforded. Similarly, no relationship of principal and agent could be found in what was

strictly a landlord and tenant relationship. Furthermore, the proposition that the court should impose a fiduciary

duty on the defendant because of the self-dealing manner in which he had breached the agreement was not

acceptable since the equitable rules about self-dealing were based on a pre-existing fiduciary duty. Accordingly,

no separate fiduciary duty on the defendant to account was to be implied from their relationship and the

plaintiff’s application to amend the pleadings on this basis would therefore be refused (page 387, lines 12–30;

page 388, line 28 – page 389, line 36).

 (4) The plaintiff had satisfied the court that it had a good, arguable case for forfeiture on the merits since even

though it had omitted to address the question of whether the defendant’s breach could be

1992–93 CILR 375

remedied, it was at least objectively arguable that it should be entitled to treat the circumstances existing at the

time it purported to forfeit the case as irremediable because (a) the defendant’s falsifications were deliberate; (b)

its failure to assist the independent auditor betrayed an intention to continue its dissemblance; and (c) the

continued performance of the lease depended on the good faith and willingness of the defendant, not only to

remedy the breach but also to keep faithful accounts and make full and frank disclosure of sales and income.

Although s.56 of the Registered Land Law (Revised) and its requirements for proper notice superseded any

provisions in the lease to the contrary, the section would apply only if it were to be determined on the facts that

the breaches were capable of remedy. Since the plaintiff’s contention was that the breach was irremediable and

repudiatory and entitled him to repudiate the lease without notice, it should be allowed to present that claim for

determination on its merits. Given the interlocutory nature of these proceedings, the plaintiff needed to show no

more than that it had a good, arguable case in this respect. Accordingly, the leave to amend would be granted to

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include the claim for a declaration that the lease had been duly forfeited (page 390, lines 3–10; page 390, line 21

– page 392, line 20; page 392, lines 33–41).

 (5) Leave would also be granted to include a claim in the alternative for damages for breach of the covenant to

pay rent. This was sustainable in light of the evidence of at least one instance in which the defendant had failed

to declare the sale of a valuable item which would have generated income to be assessed for percentage rent

(page 393, lines 14–19).

Cases cited:

 (1) Baker (G.L.) Ltd. v. Medway Building & Supplies Ltd., [1958] 1 W.L.R. 1216; [1958] 3 All E.R. 540,

observations of Jenkins, L.J. applied.

 (2) Bank of Nova Scotia v. Becker, 1988–89 CILR 12, applied.

 (3) Cayman Arms (1982) Ltd. v. English Shoppe Ltd., 1988–89 CILR 383; on appeal, Cause No. 16 of 1989,

September 20th, 1989, unreported.

 (4) Clarapede v. Commercial Union Assn. (1883), 32 W.R. 262, observations of Brett, M.R. applied.

 (5) Executive Air Servs. Ltd. v. MacDonald, 1990–91 CILR N–4.

 (6) Empire Clothing Serv. & Sales Ltd. v. Hillgate House Ltd., [1986] Ch. 340; [1985] 2 All E.R. 998, dicta

of Slade, L.J. applied.

 (7) Iorgulescu v. Swiss Bank & Trust Corp. Ltd., 1990–91 CILR 163.

 (8) Jones v. Hughes, [1905] 1 Ch. 180, observations of Vaughan Williams, L.J. applied.

 (9) Ketteman v. Hansel Properties Ltd, [1987] A.C. 189; [1988] 1 All E.R. 38, observations of Lord Griffiths

applied.

(10) Kurtz v. Spence (1887), 36 Ch. D. 770.

(11) Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 R.C.S. 574, applied.

(12) Molnlycke AB v. Procter & Gamble Ltd., [1992] 1 W.L.R. 1112; [1992] 4 All E.R. 47, distinguished.

1992–93 CILR 376

(13) Norwich Pharmacal Co. v. Customs & Excise Commrs., [1974] A.C. 133; [1973] 2 All E.R. 943.

(14) Paradise Manor Ltd. v. Bank of Nova Scotia, 1984–85 CILR 437, considered.

(15) Raleigh v. Goschen, [1898] 1 Ch. 73.

(16) Salomon v. A. Salomon & Co. Ltd., [1897] A.C. 22; [1895–99] All E.R. Rep. 33, considered.

(17) Tai Hing Cotton Mill Ltd. v. Liu Chong Hing Bank Ltd., [1986] A.C. 519; [1985] 2 All E.R. 947; [1985] 2

Lloyd’s Rep. 313, followed.

(18) Tildesley v. Harper (1878), 10 Ch. D. 393, observations of Bramwell, L.J. applied.

(19) Tito v. Waddell (No.2), [1977] Ch. 106; [1977] 3 All E.R. 129, dicta of Megarry, V.-C. applied.

Legislation construed:

Grand Court (Civil Procedure) Rules, r.25: The relevant terms of this rule are set out at page 380, lines 29–34.

r.26: The relevant terms of this rule are set out at page 380, line 35 – page 381, line 9.

Registered Land Law (Revised) (Law 21 of 1971, revised 1976), s.37(1): The relevant terms of this section are

set out at page 392, lines 25–27.

s.55(1):

 “Subject to the provisions of section 57 and to any provision to the contrary in the lease, the lessor shall have

the right to forfeit the lease if the lessee—

 (a) commits any breach of, or omits to perform any agreement or condition on his part expressed or implied

in the lease. . . .”

s.56:

 “Notwithstanding anything to the contrary contained in the lease, no lessor shall be entitled to exercise the right

of forfeiture for the breach of any agreement or condition in the lease whether expressed or implied, until the

lessor has served on the lessee a notice—

 (a) specifying the particular breach complained of; and

 (b) if the breach is capable of remedy, requiring the lessee to remedy the breach within such reasonable

period as is specified in the notice; and

 (c) in any case other than non-payment of rent, requiring the lessee to make compensation in money for the

breach,

and the lessee has failed to remedy the breach within a reasonable time thereafter, if it is capable of remedy, and

to make reasonable compensation in money.”

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Rules of the Supreme Court, O.20, r.5:

 “Subject to Order 15, rules 6, 7 and 8 and the following provisions of this rule, the Court may at any stage of

the proceedings allow the plaintiff to amend his writ, or any party to

1992–93 CILR 377

amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may

direct.”

M. Parkinson for the plaintiff;

P. Lamontagne, Q.C. and P. Boni for the defendant.

 SMELLIE, Ag. J.: By summons dated March 1st, 1993 the 

 landlord/plaintiff sought leave to re-amend its writ and statement 

 of claim in this matter to achieve three main objectives. The first 

 was to add parties—the proposed second to fifth defendants. The 

10 second was to plead claims against those additional defendants 

 and the third, to effect consequential amendments of the 

 pleadings against the original defendant. Submissions were taken 

 on March 31st, April 1st and April 5th and an order made on 

 April 16th, 1993 with written reasons to be delivered at a later 

15 date. These are the reasons. 

 The original parties stand in the position of landlord and tenant 

 by virtue of a lease dated August 16th, 1990. In the action the 

 plaintiff’s case is that the tenant/defendant has falsified records of 

 accounts and disclosures required to be respectively kept and 

20 made by the defendant pursuant to the lease and that the 

 defendant has falsified those records in order to deprive the 

 plaintiff of rents lawfully due under the lease. The proposed 

 additional defendants are parties who, the plaintiff alleges, 

conspired with and actually facilitated or assisted the defendant

in 

25 its falsification of the accounts and disclosures. 

 The lease is not typical of the forms in use in this jurisdiction 

 and I am informed by counsel that it follows a Canadian model. It 

 is unusual in that, among other things, it includes a provision for 

 “annual percentage rent” as well as a provision for “basic rent.” 

30 Central to the dispute is the issue whether the defendant has 

 made full and frank disclosure as to its income from sales as the 

 basis for arriving at the annual percentage rent. 

 Article III of the lease contains the following provisions: 

 “3.01 Basic rent

35 The tenant shall pay to the landlord in each lease year 

 $45,000 per annum (in this lease referred to as ‘basic rent’) 

 by equal monthly instalments in advance, commencing upon 

 the commencement date and on the first day of each calendar 

 month thereafter during the term (provided that if the term 

40 commences on a day which is not the first day of a calendar 

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 month, then the instalment of basic rent payable on the 

1992–93 CILR 378

 commencement date for the broken portion of the calendar 

 month at the beginning of the term shall be calculated at a 

 rate per day of 1/365 of the annual basic rent). 

 3.02 Percentage rent

5 The tenant shall pay to the landlord in each lease year 

 during the term the annual percentage rent for such lease 

 year. Such annual percentage rent shall be payable in 

 monthly instalments of estimated monthly percentage rent 

 which shall be payable 20 days after the close of each 

10 calendar month in each and every lease year (including any 

 portion of a calendar month at the commencement of the 

 term if the term commences on a day other than the first day 

 of a calendar month) the amount of such estimated monthly

 percentage rent to be calculated by the tenant and accom

15 panied by a statement certified as correct by the tenant

 showing in such detail as the landlord shall reasonably

 require, the amount of gross revenue for such calendar month

 and the amount of estimated monthly percentage rent payable. 

 3.03 Adjustment of annual percentage rent

20 Within 120 days after the end of each lease year the tenant

 shall deliver to the landlord a statement in writing and certified

 by the tenant, and which shall also be certified as being

 audited by an independent chartered accountant acceptable to

 the landlord, setting forth accurately and with reasonable

25 detail and particulars and in such form as the landlord may

 require the gross revenue both monthly and in the aggregate,

 for such lease year and its annual percentage rent payable for

 such lease year. If the aggregate annual percentage rent set 

 forth in such statement differs from the annual percentage 

30 rent set forth in such statement, the tenant shall pay or the 

 landlord shall refund the difference within 30 days after such 

 statement is provided.” [Emphasis supplied.] 

 In the definitions in Article I, the following appears: 

 “ ‘Annual percentage rent’ means 6% of gross revenue 

35 plus 1.5% of extraordinary off premises revenue (derived 

 from sales by the tenant of stock kept on the leased premises 

 or sold off-premises having been placed for display on the 

 leased premises) minus the basic rent. Annual percentage 

 rent shall only be payable in the event such calculation from 

40 time to time produces a net positive figure.” 

 By virtue of those provisions the plaintiff claims that special 

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1992–93 CILR 379

 duties and responsibilities are created and are owed to him by the 

 defendant and that they give rise to an implied relationship of 

 trust which is not to be found in an ordinary lease where liabilities 

 for rent are essentially stipulated as a pre-determined sum. Here 

5 the plaintiff argues that the lease contains covenants that the 

 tenant must keep proper accounts of its income in order to ensure 

 that the proper amounts of annual percentage rent are known and 

 payable to the plaintiff. 

 A most important issue centered on this argument. It is 

10 whether this implied relationship of trust is so germane to the 

 landlord/tenant relationship in this lease that the manner in which 

 it was dishonoured by the tenant gave rise to an irremediable 

 breach of the lease. If so the consequence would be that the 

 plaintiff should be entitled to claim that the lease has been duly 

15 forfeited and in the manner which the plaintiff has purported to 

 do so in a letter and notice which it sent to the defendant dated 

 November 17th, 1992. 

 The plaintiff having raised these allegations of breach of 

 contract and breach of faith, the court was invited by counsel for 

20 the defendant to reject any suggestion of fraudulent conduct on 

 the part of the defendant as fraud had not been specifically 

 pleaded at the outset. Instead, and without any admission on the 

 part of his client, counsel for the defendant invited the court to 

 make the following assumptions for the purposes of the hearing 

25 of this summons that (a) there is no dispute as to the tenant’s 

 contractual obligations to pay basic rent and annual percentage 

 rent, although the amount owed may be disputed; (b) there is no 

 dispute that the tenant is in breach of the lease in not having kept 

 full and faithful records as required by Articles 3:03, 3:04 and 

30 3:05 of the lease; (c) despite efforts on the part of the landlord to 

 obtain a reconstruction or compilation of the records of the 

 revenue of the defendant, through an independent auditor 

 engaged for the purpose by the landlord, the tenant had failed to 

 comply with the directions of the auditor to provide names and 

35 addresses of customers from whom verification of sales transac- 

 tions might be obtained, and that such verification was essential 

 to that exercise of reconstruction or compilation of the records; 

 and (d) in at least one instance a certain named customer had 

 purchased an expensive item of jewellery from the tenants’ on40 premises shop and that the tenant had failed to declare that item 

 of revenue for the purposes of the accounting records. 

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1992–93 CILR 380

 Despite those assumptions which I was invited to make, 

 counsel for the defendant submitted ultimately that the plaintiff’s 

 application on his summons should be dismissed in its entirety for 

 the most important reason that the cause of action was bound to 

5 fail. This submission was based on the position taken by the 

 defendant that though it may have breached the lease, those 

 breaches were not irremediable; it was entitled to notice 

 requiring it to remedy them; and as there was no such proper 

 notice nor any proper demand to remedy, the forfeiture was 

10 wrong in law and the cause of action based on it, for recovery of 

 possession, rent and, latterly, damages, could not succeed. 

 Further, that the lease was still intact despite the landlord’s claim 

 to forfeiture. The landlord’s claim was therefore bound to fail. 

 For the reasons which will follow, I was unable to accept the 

15 defendant’s submissions that the plaintiff will inevitably fail to 

 establish that it was entitled to forfeit the lease. Although that is 

 the central issue underlying the action as it stands between the 

 plaintiff and the defendant, the plaintiff sought leave by its 

 summons to do a number of things, some of which were allowed 

20 by my order of April 16th and others disallowed. I will proceed to 

 set out my reasons for the order in respect of each issue 

 separately. 

(A) Application for leave to re-amend to join the proposed

second,

25 third, fourth and fifth defendants. Leave refused.

 For the purposes of joinder of defendants to an existing cause 

 of action, rr. 25 and 26 of the Grand Court (Civil Procedure) 

 Rules are applicable. The text of the rules is as follows: 

 “25. All persons may be joined as defendants against 

30 whom the right of any relief is alleged to exist, whether 

 jointly, severally or in the alternative, and any judgment may 

 be given against such one or more of the defendants as may 

 be found to be liable, according to their respective liabilities, 

 without any amendment. 

35 26. No cause or matter shall be defeated by reason of the 

 misjoinder or nonjoinder of parties and the Court may in 

 every cause or matter deal with the matter in controversy so 

 far as regards the rights and interests of the parties actually 

 before it. The Court may, at any stage of the proceedings, 

40 either upon or without the application of any party and upon 

 such terms as may seem just, order the names of any parties 

1992–93 CILR 381

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 improperly joined, whether as plaintiffs or defendants, to be 

 struck out and the names of any parties added who ought to

 have been joined, whether as plaintiffs or defendants, or 

 whose presence before the Court may be necessary to enable

5 the Court effectually and completely to adjudicate upon and

 settle all the questions involved in the cause or matter: 

 Provided that no person shall be added as a plaintiff, or as 

 the next friend of a plaintiff under a disability, without his 

 own consent in writing thereto.” [Emphasis supplied.] 

10 Rule 25 deals with the joinder of defendants in a single action. 

 Rule 26 addresses the principles and circumstances which 

 determine the joinder of a party to proceedings already insti- 

 tuted. As to joinder of plaintiffs or defendants, r.26 provides for 

 the addition of two categories of persons: (a) those who ought to 

15 have been joined at the commencement of the proceedings, and 

 (b) those whose presence may be necessary to enable the court 

 effectually and completely to adjudicate upon and settle all the 

 questions involved in the cause or matter. Mr. Parkinson sought 

 the joinder of the additional defendants on the basis that they 

20 came within the first category of persons. 

 The original action is between the landlord and tenant based on 

 the lease agreement between them. The claim at the time that 

 action was brought was against the tenant for recovery of 

 possession, for rent and for mesne profits and arose from the 

25 tenant’s alleged repudiation of the lease. Privity of contract 

 existed only between those parties and in the cause of action as it 

 was thus framed, there could have been no other parties to the 

 action as originally instituted. Notwithstanding those circum- 

 stances Mr. Parkinson submitted that amendments ought to be 

30 allowed to add the proposed second to fifth defendants because 

 the proper test is whether they could have been joined as 

 defendants in some way, at the time the original action was 

 brought, irrespective of whether they could have been joined as 

 defendants in the action as it was actually brought.

35 The plaintiff’s claim against the proposed second to fifth 

 defendants was, inter alia, for damages for having procured and 

conspired with the defendant to breach the lease. As such a

claim 

 could have been brought originally and at the same time as the 

 original action, Mr. Parkinson submitted the requirements of 

40 rr. 25 and 26 were met, notwithstanding that the rules of privity 

 of contract would have precluded joinder of the proposed 

1992–93 CILR 382

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 defendants in the action as originally framed. He relied primarily 

 on the judgment of the Court of Appeal in Executive Air Servs.

Ltd. v. MacDonald (5). 

 In that case the Court of Appeal upheld the decision of this 

5 court in allowing amendments to join a party as a joint tortfeasor 

 in a statement of claim which originally raised allegations of 

 tortious conduct as well as of breach of contract. In so doing it is 

 significant that the court disallowed amendments seeking to join 

 the same party as defendant to the claim based on allegations of 

10 breach of contract. In that case it was urged that the additional 

 defendant was someone who fell within the first of the two 

 categories of persons covered by r.26 of those who ought to have 

 been joined at the commencement of the proceedings. From my 

 reading of that case it appears clear that the court regarded the 

15 additional defendant as a party who “ought to have been joined” 

 in the original action as framed in tort and within the meaning of 

 that expression as it appears within r.26. It follows that the Court 

 of Appeal disallowed the further pleadings as the additional 

 defendant was not a party who ought to have been joined in the 

20 contractual claim as originally pleaded; as such an amendment 

 would have been contrary to the principles of privity of contract, 

 the additional defendant not having been a party to the contract 

 and therefore against the principles established by Salomon v. A.

Salomon & Co. Ltd. (16). I therefore did not think the case 

25 supported Mr. Parkinson’s position. 

 Although rr. 25 and 26 may be outmoded, they still apply and I 

 consider that the applicable principles were settled by the Court 

 of Appeal in the earlier case of Bank of Nova Scotia v. Becker (2)

which was cited in argument by Mr. Lamontagne on behalf of

the 

30 proposed defendants. 

 In that case, the applicant and third defendant, a company in 

 liquidation which had been joined as a party in the suit between 

 the plaintiff bank and the other defendants, applied for an order 

 to join its own receivers as parties. The company had been 

35 granted a loan by the plaintiff bank for which collateral had been 

 provided by the other defendants. It had defaulted in payment 

 and the bank had appointed receivers who took possession of the 

 company’s property. In an action by the bank against the other 

 defendants as guarantors, the company was itself made a 

40 co-defendant upon the successful application of one of the other 

 defendants. It was joined for the purpose of setting off any 

1992–93 CILR 383

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 damages it might recover for the wrongful acts of the receivers 

(whom it alleged to be agents or servants of the bank) against

any 

 relief granted to the bank in relation to it as principal debtor and 

 the other defendants as guarantors. 

5 The company then sought to counterclaim against the bank 

 alleging that the receivers, as the bank’s agents or servants, had 

trespassed upon the company’s land, wrongfully taken

possession 

 of it and wrongfully converted the company’s chattels. The 

 company also applied for leave to join the receivers as added 

10 parties in the counterclaim contending that (a) as it was entitled 

 to damages from the bank or the receivers or both, the receivers 

 were, under the Grand Court (Civil Procedure) Rules, r.26 

 “necessary parties to the proceedings”; and (b) in any event, 

 since by virtue of r.25 it could have initiated proceedings against 

15 the bank and joined the receivers as co-defendants, it was “only 

 just and convenient” that it should be able to counterclaim 

 against them both at the same time. 

 The Court of Appeal, in refusing to order the joinder of the 

 receiver, held (a) the court was obliged to have regard to the 

20 terms of the Grand Court (Civil Procedure) Rules and was only 

 entitled to consider whether joinder was “just and convenient” as 

 an aspect of the application of those rules. It was not entitled to 

 use the “just and convenient” principles to give itself an 

 unfettered discretion to order joinder; (b) as the bank had 

25 originally made no claim against the receivers they could not be 

 added as defendants in the bank’s writ against the guarantors. 

 Consequently, so far as that action was concerned, the receivers 

 could not qualify as persons who “ought to have been joined” at 

 the beginning of the proceedings. Nor did they so qualify when 

30 the company was introduced into the proceedings as an added 

 party and counterclaimed against the bank. The application had 

 therefore failed the first criterion for joinder in r.26; and (c) nor 

 did the receivers qualify under the second criterion as parties 

 “whose presence before the court may be necessary to enable the 

35 court effectually and completely to adjudicate upon the issue 

 involved within the meaning of r.26. . . .” 

 From the second head of the ratio decidendi of the case as 

 extracted above from the report and from the judgment itself, it 

 seems to me that parties can only be joined pursuant to r.26 as 

40 persons “who ought to have been joined” if that nexus is 

 established with the action as originally commenced. It is 

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1992–93 CILR 384

 impermissible to join parties for the purpose of expanding the 

 original cause of action. 

 In the case before me, there was no privity of contract between 

 the proposed additional defendants and the plaintiff. The action 

5 based on the lease for recovery of possession and mesne profits as 

 commenced could have joined no other parties. It rested entirely 

 between the plaintiff as landlord and the defendant as tenant. For 

 those reasons I was unable to allow the joinder of the proposed 

 second to fifth defendants. 

10 I should also mention in passing that Mr. Parkinson also placed 

 great reliance on the case of Molnlycke AB v. Procter & Gamble

Ltd. (12) as authority for two propositions. The first was that 

 other members of a corporate group besides the defendant (as 

 were the proposed second and third defendants in relation to the 

15 defendant herein) may be brought in as defendants in the same 

 action if they are in some way shown to have facilitated the 

 conspiracy whereby the original defendant was able to commit 

 the wrongdoing complained of and that is so whether or not the 

 others are willing parties to the conspiracy. The second proposi20 tion was that the Molnlycke case confirms it is not an abuse of 

 process to join other parties for the purpose only of obtaining 

 discovery where that discovery will assist in proving the claims 

 against the original defendant and assist in the later claim against 

 the added defendants and further that that approach would not 

25 be in breach of the principles laid down in Norwich Pharmacal

Co. v. Customs & Excise Commrs. (13). 

 My reading of the Molnlycke case leads me to a different view 

 of it. To my mind it deals with a situation where a plaintiff sought 

 to join as an alleged tortfeasor a German company which was an 

30 affiliate of the defendant company. By virtue of certain provisions 

 of the Convention on Jurisdiction and the Enforcement of Civil 

 and Commercial Judgments 1968, joinder in the circumstances of 

 that case was as of right provided the plaintiff met the preliminary 

 criterion of showing it had a good arguable case against the 

35 alleged defendant by satisfying the court that there was a serious 

 question which called for a trial for its proper determination in 

 respect of an alleged defendant company domiciled in a country 

 which was party (as was Germany) to the convention. That 

 criterion is premised on a basis entirely distinct from those 

40 criteria laid down by rr. 25 and 26 of the Grand Court (Civil 

 Procedure) Rules and which are clearly set out in the judgment of 

1992–93 CILR 385

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 the Court of Appeal in Bank of Nova Scotia v. Becker (2) which I 

 regard as applicable here. It follows I did not regard the 

Molnlycke case as persuasive authority for either proposition in 

 the circumstances of this case. 

5 I should also make it clear that leave to amend to join the 

 additional defendants was not refused on the basis that the 

 plaintiff’s case was doomed to failure in its entirety. Had that 

 been my view of the case I would have been obliged to invoke 

 also the principles stated in Raleigh v. Goschen (15) that leave 

10 should not be given to add parties to an action which is bound to 

 fail and where such leave would allow the plaintiff to mount a 

 substantially different cause of action against added parties. 

 (B) Leave for consequential re-amendments in respect of the

15 proposed additional defendants, including an amendment seeking

orders for discovery against them. Leave refused.

 It followed from the refusal of leave to join the proposed 

 additional defendants that leave for consequential re-amend- 

 ments to plead claims against them had also to be refused. I note 

20 further that in any event Mr. Parkinson for the plaintiff indicated 

 he would have been prepared to seek discovery from them 

 separately had they been joined as defendants and to have done 

 so by separate process. As joinder was refused, on the merits, 

 that recourse would also fail to materialize. I have set out above 

25 the reasons for the decision not to allow further amendments 

 which sought to add new parties. 

 The remaining issues related to the application to re-amend the 

 pleadings to vary or add claims. Such applications still fell to be 

 decided on the merits to the extent that they might affect the 

30 action brought against the original defendant. There was no 

 dispute as to the general principles which the court should apply 

in deciding on an application to amend pleadings for the

purposes 

 of adding or varying claims. They are set out at O.20, r.5 of the 

 Rules of the Supreme Court and, as they apply to this case, I 

35 summarize them as follows: 

 (a) Generally speaking, all amendments ought to be allowed 

 which are for the purpose of determining the real question in 

 controversy between the parties to any proceedings or for 

 correcting any defect or error in any proceedings (per Jenkins, 

40 L.J. in G.L. Baker Ltd. v. Medway Building & Supplies Ltd. (1) 

 ([1958] 1 W.L.R. at 1231). 

1992–93 CILR 386

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 (b) Leave should be given to amend unless the court is satisfied 

 that the party applying was acting mala fide, or that, by his 

 blunder, he had done some injury to his opponent which could 

 not be compensated for by costs or otherwise. However negligent 

5 or careless may have been the omission, and however late the 

 proposed amendment, the amendment should be allowed if it can 

 be made without injustice to the other side. There is no injustice 

 if the other side can be compensated by costs (per Bramwell, L.J. 

 in Tildesley v. Harper (18) (10 Ch. D. at 397) and per Brett, M.R. 

10 in Clarapede v. Commercial Union Assn. (4) (32 W.R. at 263). 

 (c) An amendment ought to be allowed if thereby “the real 

 substantial question” can be raised between the parties and 

multiplicity of legal proceedings avoided: see Kurtz v. Spence

(10). 

 (d) On the other hand, it should be remembered that there is a 

15 clear difference between allowing amendments to clarify the 

 issues in dispute and those that provide distinct defences or claims 

 to be raised for the first time (per Lord Griffiths in Ketteman v. 

Hansel Properties Ltd. (9) ([1987] A.C. at 220)). 

 (e) Furthermore, the court will always look at the materiality of 

20 the proposed amendment; inconsistent or useless amendments 

 will not be allowed nor will amendments be allowed to raise a 

 case which must fail: see 1 The Supreme Court Practice 1991, 

 para. 20/5 – 8/23; Jones v. Hughes (8) ([1905] 1 Ch. at 187 per

 Vaughan Williams, L.J.) and the judgment of the Court of 

25 Appeal of the Cayman Islands in Iorgulescu v. Swiss Bank &

Trust Corp. Ltd. (7). 

 I now turn to deal with the application for re-amendments to 

 the claims. 

30 (C) Leave to re-amend the writ and the statement of claim to

include a claim for an account from the defendant to be taken in

order to ascertain the ultimate amount which the defendant owes

the plaintiff by way of annual percentage rent. Leave refused.

 This aspect of the application had proceeded on the basis that a 

35 fiduciary relationship of principal and agent should be implied as 

 existing between the plaintiff and defendant having regard to the 

 lease arrangement which demanded a duty of trust from the 

 defendant as tenant. Mr. Parkinson had submitted further that an 

 action for an account is an established remedy available to a 

40 principal against his agent (in lieu of damages) and that such an 

 action arose here. I need not provide reasons at length for this 

1992–93 CILR 387

 aspect of the ruling as it appears Mr. Parkinson accepted as 

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 correct the principles cited by Mr. Lamontagne in his response 

 but as considerable time was taken on it and as a distinction needs 

 to be struck between the duty to account prescribed by the lease 

5 and the remedy in equity which was sought here, I will provide a 

 brief minute of reasons. 

 Two considerations were paramount bearing in mind that the 

 lease agreement embodies a commercial arm’s length transaction 

 between the parties. It contains extensive provisions as set out in 

10 Articles 3:01 – 3:05 as to the tenant’s obligations to report and 

 account to the landlord. It also specifies the relief available in the 

 event of breach of those provisions. The two questions which 

 arose were (a) whether there was the necessity and therefore a 

 basis for implying as between the parties, a term or condition of 

15 the lease that there existed a further fiduciary relationship and 

 arising from it that there should be accounting, as a separate 

 remedy, beyond that expressly provided in the lease in the event 

 the tenant acted in breach of the lease; and (b) could there be a 

 need or basis for finding a relationship of principal and agent and 

20 a resulting duty to account, where the written agreement between 

 the parties is a complete code of the intentions of the parties. 

 The decision of the Privy Council in Tai Hing Cotton Mill Ltd.

 v. Liu Chong Hing Bank Ltd. (17) was cited in opposition to Mr. 

 Parkinson’s submissions and is clear authority for the proposition 

25 that the court should not search for a liability in tort or in equity 

 where the parties are in a contractual relationship and that this is 

 particularly so in commercial relationships. It is not permissible, 

 on the contractual analysis of the relationship between the 

 parties, to imply duties which are not strictly and necessarily 

30 incidental to that relationship. 

 Mr. Parkinson had conceded there was no English authority 

 directly on point to support his submissions but had cited extracts 

 from Underhill & Hayton, Law relating to Trusts & Trustees, 14th 

 ed., at 14 (1987), 1(2) Halsbury’s Laws of England, 4th ed., para. 

35 86, at 62, and from 1 Atkin’s Court Forms, 2nd ed., at 601 et seq.

 (1992 Issue) in support of his general submissions that the 

 categories of circumstances which may give rise to a fiduciary 

 relationship are not closed and that a principal/agent relationship 

 might be inferred from the nature of the relationship between the 

40 parties as was evident in this case from the lease. Further, that an 

 action for an account is a remedy arising from that relationship. 

1992–93 CILR 388

 Mr. Lamontagne in opposition relied also on the decision of 

 the Supreme Court of Canada in Lac Minerals Ltd. v. Interna

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tional Corona Resources Ltd. (11) for the following statement of 

 principles which are extracted from the headnote to the case in 

5 the Canada Supreme Court Reports ([1989] 2 R.C.S. at 577–

578): 

 “The following common features provide a rough and 

 ready guide to whether or not a fiduciary obligation should 

 be imposed on a new relationship: (1) the fiduciary has scope 

 for the exercise of some discretion or power; (2) the fiduciary 

10 can unilaterally exercise that power or discretion so as to 

 affect the beneficiary’s legal or practical interests; and (3) the 

 beneficiary is peculiarly vulnerable to or at the mercy of the 

 fiduciary holding the discretion or power.” 

 This description of the fiduciary relationship accords with the 

15 treatment of the subject in the textbooks which were cited in 

 argument and especially as regards the relationship of principal 

 and agent the following definition of agency is to be found in 

 Fridman’s Law of Agency, 6th ed., at 9 (1990): 

 “Agency is the relationship that exists between two persons 

20 when one, called the agent, is considered in law to represent 

 the other, called the principal, in such a way as to be able to 

 affect the principal’s legal position in respect of strangers to 

 the relationship by the making of contracts or the disposition 

 of property.” 

25 That definition does not accord with the relationship created 

 between the landlord and tenant in the context of the lease which 

 is the subject of this action. 

 The very helpful and exhaustive treatment of the subject in the 

Lac Minerals case also demonstrates that no relationship of 

30 principal and agent could properly be implied into the commer- 

 cial arm’s length transaction which was the lease agreement 

 between the parties herein. It would not be appropriate to invoke 

 the rules of equity so as to impose a relationship in a situation 

 such as this where there is no true need for the special protection 

35 that equity affords. 

 I also observe that the plaintiff’s submissions were based not on 

 any suggestion of a pre-existing fiduciary duty but on the pro- 

 position that the court might find one having regard to the self- 

 dealing manner in which the contractual duties of the defendant 

40 had been breached. In that regard I was specifically guided by the 

 opinion of Megarry, V.-C. in Tito v. Waddell (No. 2) (19) in 

1992–93 CILR 389

 commenting on this approach to identifying a fiduciary

obligation 

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 ([1977] 3 All E.R. at 232): 

 “I cannot see why the imposition of a statutory duty to 

 perform certain functions, or the assumption of such a duty, 

5 should as a general rule impose fiduciary obligations, or even 

 be presumed to impose any. Of course, the duty may be of 

 such a nature as to carry with it fiduciary obligations. . . . 

 Impose a fiduciary duty and you impose fiduciary obliga- 

 tions. But apart from such cases, it would be remarkable 

10 indeed if in each of the manifold cases in which statute 

 imposes a duty, or imposes a duty relating to property, the 

 person on whom the duty is imposed were thereby to be put 

 in a fiduciary relationship with those interested in the 

 property, or towards whom the duty could be said to be 

15 owed. . . . 

 Furthermore, I cannot see that coupling the job to be 

 performed with self-dealing in the performance of it makes 

 any difference. If there is a fiduciary duty, the equitable rules 

 about self-dealing apply: but self-dealing does not impose 

20 the duty. Equity bases its rules about self-dealing on some 

 pre-existing fiduciary duty: it is a disregard of this pre- 

 existing duty that subjects the self-dealer to the con- 

 sequences of the self-dealing rules. I do not think that one 

 can take a person who is subject to no pre-existing fiduciary 

25 duty and then say that because he self-deals he is thereupon 

 subjected to a fiduciary duty.” 

 Notwithstanding the assumptions I was invited by Mr. Lamon- 

 tagne to make and which lead irresistibly to the conclusion that 

 the defendant was in breach of the lease and thereby guilty of 

30 “self-dealing,” I was unable to conclude, having regard to the 

 foregoing statements of principles, that there could be found to 

 be a principal/agent relationship between the landlord and tenant 

 as parties to the lease. Accordingly, no separate fiduciary duty to 

 account was to be implied. The plaintiff had no arguable case for 

35 a claim in that regard and the re-amendments could not have 

 been allowed. 

 (D) Application for leave to re-amend to include a claim for a

declaration that the lease was properly rescinded. Leave refused.

40 This aspect of the application was abandoned by Mr. Parkinson 

 and I see no need to comment further on it. 

1992–93 CILR 390

 (E) Leave to re-amend to include a claim for a declaration

against

the defendant that the lease was duly forfeited. Leave granted.

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 Having regard to the assumptions which I should make for 

 present purposes that the defendant was in breach of the lease, 

5 the real point in dispute, as I earlier mentioned, was whether the 

 breaches committed by the defendant were repudiatory, that is 

 irremediable breaches giving rise to a right in the plaintiff to 

 repudiate the lease without first giving notice as required by the 

 lease and more importantly as required by ss. 55 and 56 of the 

10 Registered Land Law (Revised). 

 Mr. Lamontagne submitted that leave should not be granted 

 because the plaintiff’s claim for a declaration that the lease was 

 duly forfeited was bound to fail. This was so, he urged, because in 

 purporting to forfeit the lease the plaintiff treated as irremedi15 able breaches which were patently capable of being remedied 

 and because it failed to give notice to remedy as mandatorily 

 prescribed by s.56 of the Law. Furthermore, he submitted, it was 

 not for the plaintiff unilaterally and subjectively to decide 

 whether the breach was remediable; it was obliged to give notice 

20 and see whether the defendant complied within the reasonable 

 time to be set in the notice. Acceptance of Mr. Lamontagne’s 

 submissions in this regard would result in the disallowance of the 

 plaintiff’s application to re-amend to include a claim for a 

 declaration that the lease was duly forfeited as, having regard to 

25 the principles earlier cited, amendments should not be allowed in 

 aid of futile claims. This would be the result as no right of action 

 in forfeiture could have accrued to the plaintiff, if the breach had 

 been capable of remedy. 

 I was satisfied the plaintiff had at least an arguable case that the 

30 breaches complained of were not capable of remedy. On the basis 

 of the authorities the plaintiff need not show more than that, at 

 this stage, in order to render his claim strike-out proof. In 

 arriving at that conclusion I was guided by the following passage 

 from the judgment of the English Court of Appeal given by 

35 Slade, L.J. in Empire Clothing Serv. & Sales Ltd. v. Hillgate

House Ltd. (6) ([1985] 2 All E.R. at 1010): 

 “In my judgment, on the remediability issue, the ultimate 

 question for the court was this: if the s.146 notice had 

 required the lessee to remedy the breach and the lessors had 

40 then allowed a reasonable time to elapse to enable the lessee 

 fully to comply with the relevant covenant, would such 

1992–93 CILR 391

 compliance, coupled with the payment of any appropriate 

 monetary compensation, have effectively remedied the harm 

 which the lessors had suffered or were likely to suffer from 

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 the breach? If, but only if, the answer to this question was 

5 No would the failure of the s.146 notice to require remedy of 

 the breach have been justifiable. In the Rugby School,

 Esplanade and Hoffman cases the answer to this question 

 plainly would have been No. In the present case, however, 

 for the reasons already stated, I think the answer to it must 

10 have been Yes.” 

 Essentially, given the interlocutory nature of the proceedings 

 before me, the issue is whether the plaintiff has an arguable case. 

 The answer to that question is No. There is no dispute that the 

 plaintiff’s notice did not afford an opportunity to the defendant to 

15 remedy the breach. 

 I took the view, in the light of the assumptions I was invited to 

 draw by the defendant and having regard to the affidavit of Mr. 

 Mark Chapman, the independent auditor engaged by the plaintiff 

 to examine the records of the defendant, in which Mr. Chapman 

20 expressed the view that there had been no proper records of 

 accounts at all maintained by the defendant, that the plaintiff had 

 at least an arguable case that the harm had been irretrievably 

 done and that the breaches of the positive covenants to keep and 

 maintain proper accounts and to enable full disclosure of income 

25 are breaches which in the context of this case may be shown to

be 

 incapable of remedy. This is, in my view, arguable notwithstand- 

 ing that Mr. Chapman’s affidavit dealt with the situation as he 

 found it and did not specifically address the question whether it 

 would be possible for the defendant to rectify the breach by 

30 reconstruction of the records. 

 To my mind it must be at least objectively arguable that the 

 plaintiff should be entitled to treat the circumstances existing at 

 the time it purported to forfeit the lease as irremediable because 

 the defalcations were deliberate, because the defendant’s failure 

35 to assist Mr. Chapman’s audit betrayed its intention to continue 

 its dissemblance and because the continued performance of the 

 lease depended on the good faith, willingness and ability of the 

 defendant not only to remedy the breach but also to keep faithful 

 accounts and make full and final disclosure of sales and income. 

40 Put another way, it will be an arguable matter whether a notice 

 in keeping with s.56 of the Law, specifying the breach and 

1992–93 CILR 392

 requiring remedy, should have been issued in circumstances 

 where it would have been clear no proper records existed and that 

 their creation would depend upon the recall and co-operation of 

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 the officers or employees of the defendant which, from all 

5 indications, would likely be convenient to the defendant’s own 

 interests and which records may have therefore been predisposed 

to falsification. Whether the plaintiff as landlord could

reasonably 

 and objectively apprehend such an outcome as the inevitable 

 result of a notice to remedy is an issue to be tried. 

10 On account of the unusual nature of this lease, none of the 

 cases cited in argument provided a full answer by way of 

 precedent to these factual issues which remain to be resolved on 

 the question whether the plaintiff was entitled to forfeit this lease. 

 It should also be clear that in arriving at this view of the matter I 

15 proceeded on the basis that the requirements of ss. 55 and 56 of 

 the Registered Land Law (Revised), in respect of the exercise of 

 the right of forfeiture of leases, are paramount, and specifically as 

 regards the requirements set out in s.56 for proper notice, this is 

 so regardless whether there are provisions to the contrary 

20 contained in the lease itself. 

 The primacy of the s.56 requirements is confirmed by the 

 pronouncements of this court in Cayman Arms (1982) Ltd. v. 

English Shoppe Ltd. (3) and by their confirmation by the Court of 

 Appeal. Moreover, s.37(1) of the Registered Land Law (Revised) 

25 also expressly states that “no land, lease or charge registered 

 under this Law shall be capable of being disposed of except in 

 accordance with this Law. . . .” Henry, J.A. stated in the Court 

 of Appeal case of Paradise Manor Ltd. v. Bank of Nova Scotia

(14) (1984–85 CILR at 480) that under s.37 of the Registered 

30 Land Law (Revised), “no right of a proprietor in or over his land, 

lease or charge registered under the Law shall be capable of

being 

 affected except in accordance with the Law. . . .” 

 Nonetheless, as the plaintiff’s primary contention is that it was 

 entitled to forfeit the lease on the basis that the breaches were 

35 incapable of being remedied and as I decided it should be

allowed 

 to present that claim for determination on its merits, there was no 

 need for me to consider whether the requirements of s.56 as to 

 notice had been met, as those requirements would apply in the 

 factual circumstances of this case only if it is determined that the 

40 breach is capable of remedy or that the defendant should have 

 been afforded an opportunity to remedy. 

1992–93 CILR 393

 (F) Leave to re-amend to include a claim in respect of auditor’s

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fees. Leave granted.

 The lease in Article 3:04 provides that the cost of “any special 

 audit or an examination by an accountant designated by the 

5 landord pursuant to this section shall be chargeable to and paid 

 by the tenant” in circumstances like those which led to Mr. 

 Chapman’s audit. Accordingly Mr. Lamontagne for the defen- 

 dant conceded that the plaintiff’s claim in that regard was not 

 prone to being struck out and did not oppose the amendment. 

 (G) Leave to re-amend to include a claim, in the alternative to the

claim for a declaration of forfeiture, for damages for breach of

the

covenant to pay rent. Leave granted.

 In light of the proof of at least one instance where the 

15 defendant failed to declare the sale of a valuable item which 

 would have generated income which would be subject to being 

 assessed for percentage rent, a claim in the alternative for 

 damages for breach of the covenant to pay rent is sustainable. 

 This re-amendment was therefore allowed without opposition. 

Order accordingly.

Attorneys: Ritch & Connolly for the plaintiff; Ian Boxall & Co. for the

defendant.

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EXHIBIT 19 

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CAYMAN ISLANDS

Supplement No. 5 published with Extraordinary 

Gazette No. 35 dated 21st May, 2014. 

THE CONTRACTS (RIGHTS OF THIRD PARTIES) LAW, 2014

(LAW 4 OF 2014)

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The Contracts (Rights of Third Parties) Law, 2014 

THE CONTRACTS (RIGHTS OF THIRD PARTIES) LAW, 2014 

ARRANGEMENT OF SECTIONS

1. Short title

2. Interpretation

3. Application

4. Rights of third party to enforce contractual term

5. Variation and rescission of contract

6. Defences

7. Enforcement of contract by promisee

8. Protection of promisor from double liability

9. Exceptions

10. Supplementary provisions relating to third party

11. Arbitration provisions

2 

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The Contracts (Rights of Third Parties) Law, 2014 

CAYMAN ISLANDS

Law 4 of 2014.

I Assent

Franz Manderson

Acting Governor.

14th May, 2014

A LAW TO MAKE PROVISION FOR THE ENFORCEMENT OF 

CONTRACTUAL TERMS BY THIRD PARTIES; AND FOR INCIDENTAL 

AND CONNECTED PURPOSES

ENACTED by the Legislature of the Cayman Islands.

1. This Law may be cited as the Contracts (Rights of Third Parties) Law, 2014. 

2. (1) In this Law - 

“contract of employment” has the meaning assigned to that expression under 

section 2 of the Labour Law (2011 Revision);

“employee” has the meaning assigned to that expression under section 2 of the 

Labour Law (2011 Revision);

“set off” includes netting of claims; and

“third party” means a person who is not a party to a contract.

(2) In relation to a term of a contract which is enforceable by a third 

party - 

(a) “promisor” means a party to the contract against whom the term 

is enforceable by the third party; and

Short title

Interpretation

(2011 Revision)

3 

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The Contracts (Rights of Third Parties) Law, 2014 

(b) “promisee” means a party to the contract by whom the term is 

enforceable against the promisor. 

3. (1) This Law shall apply to any contract which, on or after the date on 

which this Law comes into force, includes terms which comply with section 4.

(2) A contract made on, before or after the date on which this Law comes 

into force may be amended to include terms which comply with section 4.

(3) If, after this Law comes into force, a contract is amended to include 

terms which comply with section 4, a third party may only enforce a right which 

accrues on or after the date on which the contract is amended.

(4) If, prior to the date on which this Law comes into force, a contract 

included terms which comply with section 4, a third party may only enforce a 

right which accrues on or after the date on which this Law comes into force.

4. (1) Subject to section 9, a third party may in his own right enforce a term 

of the contract if - 

(a) he is expressly identified in the contract by name, as a member of 

a class or as answering a particular description, which includes a 

person nominated or otherwise identified pursuant to the terms of 

the contract but the third party need not be in existence when the 

contract is entered into; and

(b) the contract expressly provides in writing that he may. 

(2) This section does not confer a right on a third party to enforce a term 

of a contract otherwise than subject to and in accordance with any other relevant 

terms of the contract.

(3) For the purpose of exercising his right to enforce a term of the contract, 

there shall be available to the third party any remedy that would have been 

available to him in an action for breach of contract if he had been a party to the 

contract and the rules relating to damages, injunctions, specific performance and 

other relief shall apply accordingly.

(4) Where a term of a contract excludes or limits liability in relation to any 

matter, references in this Law to the third party enforcing the term shall be 

construed as references to his availing himself of the exclusion or limitation.

5. (1) Where a third party has a right under section 4 to enforce a term of the 

contract, the parties to the contract may not, by agreement, rescind the contract, or 

Application

Rights of third party to 

enforce contractual term

Variation and rescission 

of contract

4 

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The Contracts (Rights of Third Parties) Law, 2014 

vary it so as to extinguish or alter his entitlement under that right, without his 

consent if - 

(a) the third party has communicated his assent to the term to the 

promisor; 

(b) the promisor is aware that the third party has relied on the term; 

or

(c) the promisor can reasonably be expected to have foreseen that the 

third party would rely on the term and the third party has in fact 

relied on it.

(2) The assent referred to in subsection (1)(a) - 

(a) may be by words or conduct; and

(b) if sent to the promisor by post or other means, shall not be 

regarded as communicated to the promisor until received by him.

(3) Subsection (1) is subject to any express term of the contract under 

which - 

(a) the contract may be rescinded or varied without the consent of the 

third party; or 

(b) the consent of the third party is required in circumstances 

specified in the contract instead of those set out in subsection 

(1)(a) to (c).

(4) Where the consent of a third party is required under subsection (1) or 

(3), the court may, on the application of one or more of the parties to the contract, 

dispense with his consent if satisfied that it is just and equitable to do so having 

regard to all the circumstances.

(5) The court may, on the application of one or more of the parties to a 

contract, dispense with any consent that may be required under subsection (1)(c) 

if satisfied that it cannot reasonably be ascertained whether or not the third party 

has in fact relied on the term.

(6) If the court dispenses with a third party’s consent, it may impose the

conditions it thinks fit, including a condition requiring the payment of 

compensation to the third party.

6. (1) Subsections (2) to (5) apply where, in reliance on section 4,

proceedings for the enforcement of a term of a contract are brought by a third 

party.

(2) The promisor shall have available to him by way of defence or set-off 

any matter that - 

Defences

5 

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(a) arises from or in connection with the contract and is relevant to 

the term; and

(b) would have been available to him by way of defence or set-off if 

the proceedings had been brought by the promisee.

(3) The promisor shall also have available to him by way of defence or setoff any matter if - 

(a) an express term of the contract provides for it to be available to

him in proceedings brought by the third party; and

(b) it would have been available to him by way of defence or set-off 

if the proceedings had been brought by the promisee.

(4) The promisor shall also have available to him - 

(a) by way of defence or set-off any matter; and

(b) by way of counterclaim any matter not arising from the contract,

that would have been available to him by way of defence or set-off or, as the case 

may be, by way of counterclaim against the third party if the third party had been 

a party to the contract.

(5) Subsections (2) and (4) are subject to any express term of the contract 

as to the matters that are not to be available to the promisor by way of defence, 

set-off or counterclaim. 

(6) Where in any proceedings brought against him a third party seeks in 

reliance on section 4 to enforce a term of a contract including, in particular, a 

term purporting to exclude or limit liability, he may not do so if he could not have 

done so, whether by reason of any particular circumstances relating to him or 

otherwise, had he been a party to the contract.

7. Section 4 does not affect any right of the promisee to enforce any term of the 

contract.

8. Where under section 4 a term of a contract is enforceable by a third party 

and a promisee has recovered from the promisor a sum in respect of - 

(a) the third party’s loss in respect of the term; or 

(b) the expense to the promisee of making good to the third party the 

default of the promisor,

then, in any proceedings brought in reliance on that section by the third party, the 

court shall reduce any award to the third party to the extent it thinks appropriate 

to take account of the sum recovered by the promisee.

Enforcement of contract 

by promisee

Protection of promisor 

from double liability

6 

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9. (1) Section 4 confers no rights on a third party in the case of a contract on 

a bill of exchange, promissory note or other negotiable instrument.

(2) Section 4 confers no rights on a third party in the case of any contract 

binding on a company and its members under sections 12 and 25 of the 

Companies Law (2013 Revision).

(3) Section 4 confers no rights on a third party to enforce any term of a 

contract of employment against an employee.

(4) Section 4 confers no rights on a third party in the case of - 

(a) a contract for the carriage of goods by sea; 

(b) a contract for the carriage of goods by road, or for the carriage of 

cargo by air; or

(c) letters of credit. 

(5) In subsection (4) - 

“contract for the carriage of goods by sea” means a contract of carriage - 

(a) contained in or evidenced by a bill of lading, sea waybill or a 

corresponding electronic transaction; or

(b) under or for the purposes of which there is given an undertaking 

which is contained in a ship’s delivery order or a corresponding 

electronic transaction.

10. (1) Section 4 does not affect any right or remedy of a third party that exists 

or is available apart from this Law.

(2) In sections 7 and 10 of the Limitation Law (1996 Revision) the 

references to an action founded on a simple contract and an action upon a 

specialty shall respectively include references to an action brought in reliance on 

section 4 relating to a simple contract and an action brought in reliance on that 

section relating to a specialty.

(3) Except to the extent provided in section 11(1) or (2), a third party shall 

not, by virtue of section 4(4), 6(4), 6(6), 11(1) or 11(2) be treated as a party to the 

contract for the purposes of any other Law or any instrument made under any 

other Law.

11. (1) Where a right under section 4 to enforce a term is subject to an 

arbitration agreement, the third party shall be treated for the purposes of the 

Arbitration Law, 2012 as a party to the arbitration agreement as regards disputes 

Exceptions

(2013 Revision)

Supplementary 

provisions relating to 

third party

(1996 Revision)

Arbitration provisions 

(Law 3 of 2012)

7 

Case 22-03052-sgj Doc 34-19 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 8 of 9

004411

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 187 of 233 PageID 4625
The Contracts (Rights of Third Parties) Law, 2014 

between himself and the promisor relating to the enforcement of the term by the 

third party.

(2) Where - 

(a) a third party has a right under section 4 to enforce an arbitration 

agreement; and

(b) the third party does not fall to be treated under subsection (1) as a 

party to the arbitration agreement,

the third party shall, if he exercises the right, be treated for the purposes of the 

Arbitration Law, 2012 as a party to the arbitration agreement in relation to the 

matter with respect to which the right is exercised, and be treated as having been 

so immediately before the exercise of the right.

(3) In this section - 

“arbitration agreement” has the meaning assigned to that expression under section 

2 of the Arbitration Law, 2012.

Passed by the Legislative Assembly the 11th day of April, 2014. 

Juliana Y. O’Connor-Connolly

Speaker.

Zena Merren-Chin

Clerk of the Legislative Assembly.

8 

Case 22-03052-sgj Doc 34-19 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 9 of 9

004412

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 188 of 233 PageID 4626
EXHIBIT 20 

Case 22-03052-sgj Doc 34-20 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 1 of 9

004413

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 189 of 233 PageID 4627
	

		

	
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Case 22-03052-sgj Doc 34-20 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 2 of 9

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004415

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Case 22-03052-sgj Doc 34-20 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 4 of 9

004416

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Case 22-03052-sgj Doc 34-20 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 5 of 9

004417

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 193 of 233 PageID 4631
	

		

	
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004419

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Case 22-03052-sgj Doc 34-20 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 8 of 9

004420

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 196 of 233 PageID 4634
	

		

	
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Case 22-03052-sgj Doc 34-20 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 9 of 9

004421

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 197 of 233 PageID 4635
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004422

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 198 of 233 PageID 4636
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004423

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 199 of 233 PageID 4637
 

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IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE NORTHERN DISTRICT OF TEXAS 

DALLAS DIVISION 

 ) Case No. 19-34054-sgj-11

In Re: ) Chapter 11 

 ) 

HIGHLAND CAPITAL ) Dallas, Texas 

MANAGEMENT, L.P., ) Friday, June 25, 2021 

 ) 9:30 a.m. Docket 

 Debtor. ) 

 ) EXCERPT: MOTION FOR 

 ) MODIFICATION OF ORDER 

 ) AUTHORIZING RETENTION OF JAMES 

 ) P. SEERY, JR. DUE TO LACK OF 

 ) SUBJECT MATTER JURISDICTION 

 ) (2248) 

 ) 

TRANSCRIPT OF PROCEEDINGS 

BEFORE THE HONORABLE STACEY G.C. JERNIGAN, 

UNITED STATES BANKRUPTCY JUDGE. 

 

WEBEX APPEARANCES: 

For the Debtor: Jeffrey Nathan Pomerantz 

 PACHULSKI STANG ZIEHL & JONES, LLP 

 10100 Santa Monica Blvd., 

 13th Floor 

 Los Angeles, CA 90067-4003 

 (310) 277-6910 

For the Debtor: John A. Morris 

 PACHULSKI STANG ZIEHL & JONES, LLP 

 780 Third Avenue, 34th Floor 

 New York, NY 10017-2024 

 (212) 561-7700 

For CLO Holdco, Ltd. and Jonathan E. Bridges 

The Charitable DAF Fund, Mazin Ahmad Sbaiti 

LP: SBAITI & COMPANY, PLLC 

 JP Morgan Chase Tower 

 2200 Ross Avenue, Suite 4900 W 

 Dallas, TX 75201 

 (214) 432-2899 

For Get Good Trust and Douglas S. Draper 

Dugaboy Investment Trust: HELLER, DRAPER & HORN, LLC 

 650 Poydras Street, Suite 2500 

 New Orleans, LA 70130 

 (504) 299-3300 

Case 22-03052-sgj Doc 34-21 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 3 of 124

004424

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 200 of 233 PageID 4638
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APPEARANCES, cont'd.: 

For the Official Committee Matthew A. Clemente 

of Unsecured Creditors: SIDLEY AUSTIN, LLP 

 One South Dearborn Street 

 Chicago, IL 60603 

 (312) 853-7539 

Recorded by: Michael F. Edmond, Sr. 

 UNITED STATES BANKRUPTCY COURT 

 1100 Commerce Street, 12th Floor 

 Dallas, TX 75242 

 (214) 753-2062 

Transcribed by: Kathy Rehling 

 311 Paradise Cove 

 Shady Shores, TX 76208 

 (972) 786-3063 

Proceedings recorded by electronic sound recording; 

transcript produced by transcription service.

Case 22-03052-sgj Doc 34-21 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 4 of 124

004425

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 201 of 233 PageID 4639
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DALLAS, TEXAS - JUNE 25, 2021 - 9:36 A.M. 

 (Transcript excerpt begins at 11:33 a.m.) 

 THE CLERK: All rise. 

 THE COURT: All right. Please be seated. We are 

back on the record, and our last motion this morning is the 

Motion to Reconsider filed by CLO Holdco and the DAF. Do we 

have Mr. Bridges and Mr. Sbaiti back with us now? 

 MR. BRIDGES: Yes, Your Honor. I have changed seats 

because of audio problems we're having here, but we're both 

here. 

 THE COURT: Okay. Well, I think we heard an 

agreement that you all have agreed that you're going to have 

an hour and a half each, and I presume that means everything: 

opening statements, arguments, evidence. So, we'll start the 

clock. Nate, it's 11:35. So, Mr. Bridges, your opening 

statement? 

OPENING STATEMENT ON BEHALF OF CLO HOLDCO AND THE CHARITABLE 

DAF, LP 

 MR. BRIDGES: Thank you, Your Honor. We're here on a 

motion to modify an order that we'd submit has already been 

modified by the plan confirmation order, although that order 

has not yet become effective. 

 The modification there was to add the phrase "to the 

extent legally permissible" to the Court's assertion of 

jurisdiction in what is essentially the same gatekeeper 

Case 22-03052-sgj Doc 34-21 Filed 08/01/22 Entered 08/01/22 17:35:41 Page 5 of 124

004426

Case 3:22-cv-02280-S Document 3-21 Filed 12/06/22 Page 202 of 233 PageID 4640
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provision that's at issue here. We submit that change is an 

admission or at least a strong indication that the unmodified 

order, at least as applied in some instances, contains 

legally-impermissible provisions. The entire argument today 

from our side is about what's not legally permissible in that 

order. 

 And that starts with our concerns regarding the 

application of 28 U.S.C. § 959(a). As Your Honor knows well, 

959(a) is a provision of law that the Fifth Circuit and 

Collier on Bankruptcy call an exception to the Barton

doctrine. I know from the last time we were here that the 

Court is already aware of what 959(a) says. It's the second 

sentence, I understand, which the Court pointed to in our 

previous hearing that creates general equity powers or 

authorizes the Court to use its general equity powers to 

exercise some jurisdiction, some control over actions that 

fall within the first sentence of 959(a). But that second 

sentence also prohibits explicitly the Court's using general 

equity powers to deprive a litigant of his right to trial by 

jury. 

 Here, we're not under Barton, the statutory exception to 

Barton applies, because Mr. Seery is a manager of hundreds of 

millions of third-party investor property. Instead, we're 

here under the Court's general equity powers, as authorized by 

959(a). And those equity powers cannot deprive the right to 

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trial by jury. 

 But the order does deprive trials by jury, first by 

asserting sole jurisdiction here, where jury trials are 

unavailable, and secondly, by abolishing any trial rights for 

claims that do not involve gross negligence or intentional 

misconduct. 

 Movants' third cause of action in the District Court case 

is for ordinary negligence. It comes with a Seventh Amendment 

jury right. But it's barred by the order because the order 

only allows colorable claims involving gross negligence or 

intentional conduct, not ordinary negligence. 

 Movants' second cause of action in the District Court case 

is for breach of contract. That comes with a Seventh 

Amendment jury right, but it's barred by the order because the 

order only allows colorable claims of gross negligence or 

intentional misconduct, not negligent or faultless breaches of 

contractual obligations. 

 Movants' first cause of action in the District Court case, 

breach of Advisers Act fiduciary duties, comes with a jury 

right. It's also barred by the order because the order only 

allows colorable claims involving gross negligence or 

intentional misconduct. 

 You see there what I mean. Congress couldn't have been 

clearer. Courts cannot deprive litigants of their day in 

court before a jury of their peers by invoking general equity 

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powers. Those powers don't trump the constitutional right to 

a jury trial. 

 Yet this Court's order purports to do precisely that, not 

only for the Movants, but also for future potential litigants 

who may have claims that have not even accrued yet. If those 

claims are for ordinary negligence or breach of contract or 

breach of fiduciary duties and don't rise to the level of 

gross negligence or intentional misconduct, this order says 

that those claims are barred, and it would deprive them of 

their day in court. 

 The Court's general equity powers are simply not broad 

enough to uphold such an order. 

 This issue is even more problematic when the causes of 

action at issue fall within the mandatory withdrawal of the 

reference provisions of 28 U.S.C. § 157(d). As this Court 

knows, it lacks jurisdiction over proceedings that require 

consideration of non-bankruptcy federal law regulating 

interstate commerce. Some such claims -- Movants' Advisers 

Act claim, for instance -- do not involve culpability rising 

to the level of gross negligence or intentional misconduct, 

but the order purports to bar them nonetheless, despite this 

Court's lacking jurisdiction over the subject matter of those 

claims. 

 Even if there is gross negligence or intentional 

misconduct, the order states that this Court will have sole 

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jurisdiction over such claims. And that can't be right if 

withdrawal of the reference is mandatory. 

 Opposing counsel will tell you that 157(d) is inapplicable 

here because they think our claims in the District Court won't 

require substantial consideration of the Advisers Act or any 

other federal laws regulating interstate commerce. But their 

cases don't come anywhere close to making that showing, as the 

briefing demonstrates. 

 And in any case, that argument is beside the point. This 

order is contrary to 157(d) because it asserts jurisdiction 

over claims that 157(d) does not apply -- I'm sorry, does 

apply to. And that's true regardless of whether Movants' 

claims are among those. 

 The idea that there's no substantial consideration of 

federal law, however, in the District Court case is undermined 

by Mr. Seery's testimony in support of his appointment in 

which he confirmed that the Advisers Act applies to him and 

that he has fiduciary duties under that Act to the investors 

of the funds he manages. 

 Your Honor, importantly, the Advisers Act isn't the 

typical federal statute with loads of case law under it. It's 

actually an underdeveloped, less-relied-upon statute, and most 

-- most of the law under that Act is promulgated by regulation 

and supervised by the SEC. As a registered investment 

advisor, Mr. Seery is bound by that Act, which he admits, he 

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agrees to. But to flesh out what his duties are requires a 

close exam of more than three dozen regulations under 17 

C.F.R. Part 275. 

 The obligations include robust duties of transparency and 

disclosure, as well as duties against self-dealing and the 

necessity of obtaining informed consent, none of which are 

waivable, these duties. 

 The proceedings here in this Court reflect an effort to 

have those unwaivable duties waived. The allegations in the 

District Court are essentially insider trading allegations 

that the Debtor and Mr. Seery knew or should have known 

information that they had a duty under the Advisers Act to 

disclose to their advisees. Both under the Act and 

contractually, they had those duties. And, instead, they did 

not disclose and consummated a transaction that benefited 

themselves nonetheless. 

 In considering those claims, the presiding court will have 

to consider and apply the Advisers Act and the many 

regulations promulgated under it, in addition to other federal 

laws regulating interstate commerce. For that reason, 

withdrawal of the reference on the District Court action is 

mandatory. That's the two major -- that's two major problems 

out of four with the order that we're here on today. 

 First, it deprives litigants of their right to trial, to a 

jury trial, when Section 959(a) says that can't be done. And, 

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two, the order asserts jurisdiction -- sole jurisdiction, even 

-- over proceedings in which withdrawal of the reference is 

mandatory under 157(d). 

 The fourth major problem is what the Court called 

specificity at the previous hearing. The Fifth Circuit's 

Applewood Chair case holds that the rule from Shoaf does not 

apply without a "specific discharge or release," and that that 

release has to be enumerated and approved by the Bankruptcy 

Court. Thus, the order here can't exculpate Mr. Seery of 

liability for ordinary negligence and the like in a blanket 

fashion. The claims being released must be identified. 

 That's what happened in Shoaf. Shoaf's guaranty 

obligation was explicitly released. That's also what happened 

in Espinosa. Espinosa's plan listed his student loan as his 

only specific indebtedness. But it's not what happened here. 

And it couldn't happen here, because the ordinary negligence 

and similar claims being discharged by the order had not yet 

accrued and thus were not even in existence at the time the 

order issued. 

 Instead, what we have here is a nonconsensual, nondebtor 

injunction or release that's precisely what the Fifth Circuit 

refused to enforce in the Pacific Lumber case. 

 So, lack of specificity is the third major problem with 

the order. And that brings us to the fourth problem, which is 

the Barton doctrine. Barton is the only possible basis for 

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this Court to assert exclusive or sole jurisdiction over 

anything. Outside of Barton, it's plain black letter law that 

the District Court's jurisdiction is equal to and includes 

anything that this Court's derivative jurisdiction would also 

reach. 

 But the exception to the Barton doctrine in 959(a) plainly 

applies here, leaving no basis for exclusivity with regards to 

jurisdiction and the District Court. That's because Mr. Seery 

is carrying on the business of a debtor and managing the 

property of others, rather than merely administering the 

bankruptcy estate. The exclusive jurisdiction function of the 

Barton doctrine has no applicability because 959(a) creates 

that exception here. 

 Under its general equity powers, yes, 959(a) still 

authorizes this Court to exercise some control over actions 

against Mr. Seery, but short of depriving litigants of their 

day in court. And nothing in 959(a), that exception to 

Barton, says that the Court can nonetheless exercise 

exclusivity in that jurisdiction. Those general equity powers 

do not create exclusive or sole jurisdiction. They do not 

deprive the District Court of its Congressionally-granted 

original jurisdiction. 

 Moreover, Mr. Seery is not an appointed trustee entitled 

to the protections of the Barton doctrine in any case. His 

appointment was a corporate decision that the Court was asked 

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not to interfere with. The Court was asked to defer under the 

business judgment rule to the Debtor's appointment of Mr. 

Seery. And the Court did so. 

 As we asserted last time, no authority that we can find 

combines these two unrelated doctrines, the Barton doctrine 

and the business judgment rule. And they don't go together. 

None of the testimony or the briefing or argument, in the July 

order, in the January order that preceded it, none of that 

indicated that Mr. Seery would be a trustee or the functional 

equivalent of a trustee. The word "trustee" does not appear 

in any of those briefs or transcripts. 

 Opposing -- and because of that, the District Court suit 

is not about -- well, not because of that. The District Court 

suit simply is not about any trustee-like role that Mr. Seery 

may have played anyway. Opposing counsel will try to convince 

you otherwise, will tell you that the District Court case is a 

collateral attack on the settlement, but it's not. Wearing 

his estate administrator hat, Mr. Seery can settle claims in 

this court. Wearing his advisor hat, he has to fulfill his 

Advisers Act duties and properly advise his clients. 

 He doesn't have to wear both hats, and it seems highly 

unusual that he would choose to fill both of those roles 

simultaneously. But he has chosen both roles. And the 

District Court case is a hundred percent about his role as an 

advisor. Did he comply with the Act? Did he do the things 

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that his advisor role obligated him to do as a manager of that 

property? 

 The District Court suit really is only being used to 

illustrate the issues that we're raising here. It's 

important, it's timely to address those issues now because of 

the District Court action, but that's an illustration of the 

problems with the order. It is not exclusively that that 

action is what we're attempting to address. Rather, the order 

exculpating Mr. Seery from ordinary negligence liability and 

similar liability is problematic, is contrary to the law. On 

top of that, the Court is asserting jurisdiction over gross 

negligence and intentional misconduct claims. To the extent 

that 157(d) applies, it is problematic and contrary to law as 

well. 

 THE COURT: Okay. We're occasionally getting some 

breakup of your sound. So please -- I don't know what you can 

do to adjust, but it was just now, and intermittently we get a 

little bit of garbly. So if you could just say your last 

sentence one more time, and we'll see if it improves. 

 MR. BRIDGES: Your Honor, I'm not sure I can say this 

last sentence again. 

 THE COURT: Okay. 

 MR. BRIDGES: I was -- I was mentioning that the 

District Court case is an illustration of our argument. Our 

argument is not merely that the District Court case should be 

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exempted or excepted from the order. Our argument is that the 

order is legally infirm and that the District Court case and 

the claims there illustrate some of those infirmities, but 

that the infirmities go beyond just what's at issue in the 

District Court case. 

 In sum, there are four problems with the order that render 

parts of it legally infirm. It deprives the right of a jury 

trial -- in fact, of any trial -- in contravention of 959(a) 

for some causes of action. 

 It asserts jurisdiction -- two, it asserts jurisdiction 

over claims that are subject to the mandatory withdrawal of 

the reference provision (garbled) 157(d). 

 And three, it lacks the specificity required to discharge 

future claims under Applewood. 

 Finally, Your Honor, number four, the order relies on the 

Barton doctrine, which doesn't apply and which 959(a) creates 

an exception to. 

 Movants respectfully submit the order should be modified 

for those reasons. 

 MR. SBAITI: Tell him Mark Patrick is here, for the 

record. 

 THE COURT: All right. I have a couple of follow-up 

questions for you. I want to drill down on the issue of your 

client not having appealed the July 2020 order. Or the 

HarbourVest settlement order, for that matter. Tell me as 

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directly as possible why you don't view that as a big problem. 

Because it's high on my list of possible problems here. 

 MR. BRIDGES: I understand, Your Honor. The 

Applewood Chair case is our -- our defense to that argument, 

that without providing specifics as to the claims being 

discharged in the July order, that Shoaf cannot apply to 

create a res judicata effect from the failure to appeal that 

order. 

 THE COURT: But is that really what we're talking 

about, a discharge of certain claims? We're talking about a 

protocol that the Court established which wasn't appealed. 

 MR. BRIDGES: Your Honor, your order does many 

things. We're talking about a few of them in one paragraph of 

the order. And in that order -- in that paragraph, yes, it 

creates a protocol for determining the colorability of some 

claims, claims that rise to the level of gross negligence or 

intentional misconduct. It does not create a protocol for 

claims that fall below that threshold, claims for ordinary 

negligence, as an example. 

 THE COURT: Okay. 

 MR. BRIDGES: For breach of contract that's not 

intentional, is not grossly negligent, it's just a breach of 

contract. It can even be faultless. There's still liability. 

There's still a jury right under the Seventh Amendment for 

faultless breach of contract. 

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 The protocols in the order do not address such claims 

other than to bar them. To discharge them. And thus, yes, 

it's a release, it's a discharge of those claims. It can be 

viewed as a permanent injunction against bringing such claims. 

It's what's -- it's what's not allowed by the Applewood Chair

case and by Pacific Lumber. 

 THE COURT: All right. So you're arguing that was -- 

the wording of the order was not specific enough to apprise 

affected parties of what they were releasing, they're 

releasing claims based on ordinary negligence against Mr. 

Seery? That's not specific enough? 

 MR. BRIDGES: Correct. Future unproved claims, the 

factual basis for which has not happened yet. Those cannot be 

and were not disclosed with any specificity in this order. 

 If we compare it to Shoaf and to Espinosa, in Shoaf what 

we had was a guaranty, Shoaf's guaranty on a transaction that 

was listed in the actual release, describing what the 

transaction was that was being -- that the guaranty was being 

released for. 

 In Espinosa, what we had was a student loan -- 

 THE COURT: Right. 

 MR. BRIDGES: -- that was listed in the plan 

specifically, as the only specific indebtedness. 

 Here, we don't have any of that specificity. What we have 

is a notice to the entire world, Your Honor, that for an 

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unlimited period of time any claim for ordinary negligence, 

for ordinary breach of contract or fiduciary duty against Mr. 

Seery is barred if it relates to his CEO role. And his CEO 

role means as a manager of property, exactly precisely what 

959(a) is talking about. 

 Those jury rights (garbled) claims cannot be released, 

discharged, expunged, done away with, in an order that isn't 

explicit. 

 On top of that, even in an explicit order, 959(a) tells 

the Court it cannot deprive a litigant of its jury trial 

right. 

 THE COURT: Well, as anyone knows who's been around a 

while in this case, my brain sometimes goes down an unexpected 

trail, and maybe this one is one of those situations. Are 

there contracts that your clients would rely on in potential 

litigation? 

 MR. BRIDGES: Yes, Your Honor. 

 THE COURT: What are those contracts? 

 MR. BRIDGES: It is a management contract. I don't 

think I can give you the specifics at this moment, but I 

probably can before we're done here today. A management 

contract in which the Debtor provides advisory and management 

services to the DAF -- 

 THE COURT: Well, you know, the shared services 

agreements that we heard so much about in this case? A shared 

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service agreement? I can't remember, you know, which entities 

have them and which do not at times. So, -- 

 MR. BRIDGES: The shared services agreement is one of 

those contracts, Your Honor. 

 THE COURT: Okay. 

 MR. BRIDGES: It's not the only one. 

 THE COURT: And what are the others? 

 MR. BRIDGES: There's -- the other is the investment 

advisory agreement. 

 THE COURT: Those two? 

 MR. BRIDGES: (no response) 

 THE COURT: Those are the only two? 

 MR. BRIDGES: There may be one other, Your Honor. 

I'm not sure. 

 THE COURT: Are they in evidence? 

 MR. BRIDGES: I can find out shortly. 

 THE COURT: Are they in evidence? We haven't talked 

about evidence yet, but are they going to be in evidence, 

potentially? 

 MR. BRIDGES: They are referenced in the District 

Court case, the complaint, which is in evidence. 

 THE COURT: I'm asking, are -- 

 MR. BRIDGES: But those contracts I don't believe are 

listed as exhibits here in this motion, no. 

 THE COURT: They are not? Okay. 

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 Well, what my brain is thinking about here is, of the 

umpteen agreements I've seen -- more than umpteen -- of the 

many, many agreements I've seen over time in this case, so 

often there's a waiver of jury trial rights, as I recall, as 

well as an arbitration clause. I just was curious, hmm, you 

know, you talked a lot about your clients' jury trial rights: 

do we know that these agreements have not waived those? 

 MR. BRIDGES: Your Honor, I think I can answer that 

by the end of our hearing. I don't have an answer off the top 

of my head. What I can tell you is a jury right has been 

demanded in the federal court complaint, which is in evidence, 

and that opposing counsel has brought no evidence indicating 

that they have the defense of our having waived the right to a 

jury trial here. 

 THE COURT: Okay. Well, I just -- 

 MR. BRIDGES: Or arbitra... 

 THE COURT: -- would think that you would know that. 

Does anyone know that on the Debtor's side off the top of your 

head? 

 MR. POMERANTZ: I do not, Your Honor. 

 THE COURT: Uh-huh. 

 MR. POMERANTZ: And to Mr. Bridges' last point, we 

have filed a motion to dismiss. We have not answered the 

complaint. So any time to object to their jury trial right 

would be in the context of the answer. So the implication 

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that we have not raised the issue and therefore it doesn't 

exist is just not a correct implication and connection he's 

trying to draw. 

 THE COURT: Okay. All right. 

 Well, let me also ask you about this. I'm obsessing a 

little over the Barton doctrine and your insistence that it 

does not provide authority or an analogy here. 

 Well, for one thing, is there anything in the Fifth 

Circuit case Sherman v. Ondova that you think either helps you 

or hurts you on that point? I'm intimately familiar with it, 

although I haven't read it in a while, because it was my 

opinion that the Fifth Circuit affirmed. And I spent a lot of 

time thinking about that. It was a trustee, a traditional -- 

well, no, a Chapter 11 trustee and his counsel. But anything 

from that case that you think is worthy of pointing out here? 

 MR. BRIDGES: No, Your Honor. I'm not -- nothing 

comes to mind. That case is not fresh on my mind. 

 What I would tell you is that Barton doctrine and the 

business judgment rule are incompatible, and the appointment 

of a trustee never involves application of the business 

judgment rule or deference to the Debtor or another party in 

terms of making that appointment. 

 The Barton doctrine, as it applies to trustees, is viewed 

as an extension, to some extent, of judicial immunity to the 

trustee, who is chosen by, selected by the Court and assigned 

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by the Court to carry out certain functions. That -- 

 THE COURT: Well, let me -- 

 MR. BRIDGES: -- quasi-immunity -- 

 THE COURT: -- stop you there. You say it's an 

extension of immunity. But isn't it, by nature, really a 

gatekeeping provision? It's a gatekeeping provision, right? 

Before you even get to immunity, maybe, in a lawsuit, it's a 

gatekeeping function that the Supreme Court has blessed, you 

know, obviously in the context of a receiver, but appellate 

courts have blessed it in the bankruptcy context. The 

Bankruptcy Court can be the gatekeeper on whether the trustee 

or someone I think in a similar position can get sued or not. 

 And then we had that Fifth Circuit case after Ondova. It 

begins with a V, Villegas or something like that. Didn't 

that, I don't know, further ratify, if you will, the whole 

Barton doctrine by saying, oh, just because they're noncore 

claims, state law or non-bankruptcy law claims, doesn't mean, 

after Stern, the Bankruptcy Court still cannot serve the 

gatekeeper function. 

 Tell me what you disagree. That's my kind of combined 

reading of all of that. 

 MR. BRIDGES: Your Honor, I have to parse it out. 

There's a lot to unpack there. If I can make sure to get in 

the follow-ups, I can start with saying it's okay for the 

Court in many instances to act as a gatekeeper. 

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 THE COURT: Okay. 

 MR. BRIDGES: Both under Barton -- under Barton, or 

when the Barton exception in 959(a) applies, under the Court's 

general equitable powers, that gatekeeping functions are not 

across-the-board prohibited, -- 

 THE COURT: Okay. 

 MR. BRIDGES: -- and we aren't trying to argue that 

they're prohibited across the board. 

 THE COURT: Okay. 

 MR. BRIDGES: Now, to try to dig into that a little 

deeper, the order does two things: gatekeeping as to some 

claims, and, frankly, discharging or barring other claims. 

Those are two separate functions. 

 The first one, the gatekeeping, may be, in some 

circumstances, which we'll come to, many circumstances, may be 

allowable, may be even mandatory under Barton, not even 

requiring an order from this Court, for the gatekeeping of 

Barton to apply. But nonetheless, allowable in many instances 

under the Court's general equity powers under 959(a). That 

part is right about gatekeeping. 

 It does not create jurisdiction in this Court where 157(d) 

deprives this Court of jurisdiction. Just because it's 

related to bankruptcy isn't enough to say that the Court 

therefore has jurisdiction if, one, if mandatory withdrawal of 

the reference is required. 

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 Furthermore, Your Honor, that gatekeeping function, under 

the equity powers authorized by 959(a), will not allow a court 

to discharge or -- or deprive, is the word I'm looking for -- 

deprive a litigant of their right to a trial -- a specific 

kind of trial, a jury trial -- but a trial. And by crafting 

an order that says certain kinds of claims that do (garbled) 

jury rights are barred, rather than just providing a 

gatekeeper provision, flat-out bars them, that doesn't -- that 

doesn't comply with 959. 

 THE COURT: Okay. 

 MR. BRIDGES: Your Honor, if I could add one last 

thing. 

 THE COURT: Go ahead. 

 MR. BRIDGES: The Supreme Court's Stern case points 

out that -- that it's -- well, actually, it's the Villegas 

case from the Fifth Circuit -- 

 THE COURT: The one I mentioned. 

 MR. BRIDGES: -- points out that Stern -- Stern -- 

yes, you did. Stern did not create an exception to the Barton

doctrine. And that gives -- that endorses a Barton court's 

ability to perform gatekeeping, even over claims that Stern

says there would not be jurisdiction over. 

 Contrast that with 959(a), which Collier on Bankruptcy and 

the Fifth Circuit have held is an exception to the Barton

doctrine. Because of that exception, Barton no longer 

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applies, and what you're using in invoking a gatekeeper order 

is the Court's inherent equitable powers, its general powers 

in equity. And those equity powers are cabined. They're 

broad, but they're cabined by 959(a)'s prohibition of doing 

away with a litigant's right to a trial, a jury trial. 

 Now, I also -- counsel is telling me I should note for the 

record that Mr. Mark Patrick is here as a representative of 

our clients. But Your Honor, I'll -- I will quit now unless 

you have further questions for me. 

 THE COURT: All right. I do not at this time. Mr. 

Morris or Mr. Pomerantz, who's going to make the argument? 

 MR. POMERANTZ: It's me, Your Honor. 

OPENING STATEMENT ON BEHALF OF THE DEBTOR 

 MR. POMERANTZ: And I'll start with the jury trial 

right. In the last few minutes, we have been able to 

determine that the Second Amended and Restated Investment 

Advisory Agreement between the DAF and the Debtor has a broad 

jury trial waiver under 14(f). And in addition, as I will 

include in my discussion, there is no private right of action 

under the Investment Advisers Act. 

 I think those two points are fatal to Movants' argument, 

and probably I can get away with not even responding to the 

others. But since I prepared a lengthy presentation to 

address the issues that were raised today, and also the half 

hour that Mr. Bridges spent with Your Honor on June 8th in 

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which was his first opening statement on the motion for 

reconsideration, I'll now proceed. 

 THE COURT: All right. 

 MR. POMERANTZ: The arguments that the Movants made 

in the original motion essentially boil down to one legal 

proposition, that the Court did not have jurisdiction to enter 

the July 16th order because those orders impermissibly 

stripped the District Court from jurisdiction, in violation of 

(inaudible) Supreme Court precedent and 28 U.S.C. Section 

157(d). 

 As with all things Dondero, the arguments continue to 

morph, and you heard argument at the contempt hearing on June 

8th and further argument today that now the prospective 

exculpation for negligence in the order is also unenforceable 

and should be modified. 

 Movants continue to try to distance themselves from the 

January 9th order and argue that it is not relevant because 

they seek to pursue claims against Mr. Seery as CEO and not as 

an independent director. Movants ignore, however, that the 

January 9th order not only protects Mr. Seery in his role as 

the independent director, but also as an agent of the board. 

I will walk the Court through my arguments on that issue in a 

few moments. 

 Of course, the Movants had no explanation, Your Honor, for 

the question of why it took them until May of 2021, 10 months 

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after the entry of the July 16th order that appointed Mr. 

Seery as CEO and CRO, and 16 months after the Court appointed 

the independent board, with Mr. Dondero's blessing and 

consent, as a substitute for what would have surely been the 

imminent appointment of a Chapter 11 trustee. 

 Movants try to distance themselves from the prior orders 

by essentially arguing that the DAF is a newcomer to the 

Chapter 11 and is not under Mr. Dondero's control but is 

rather managed separately and independently by Mr. Patrick, 

who recently replaced Mr. Scott. 

 The Movants admit, as they must, that the DAF is the 

parent and the sole shareholder of CLO Holdco and conducts its 

business through CLO Holdco, and both entities conduct their 

business through one individual. It was Grant Scott then; 

it's Mark Patrick now. So even if Mr. Dondero does not 

control the DAF and CLO Holdco, which issue was the subject of 

lengthy testimony in connection with the DAF hearing, both the 

DAF and the CLO Holdco are bound by the Debtor's res judicata 

argument, which I will discuss shortly. 

 In any event, I really doubt the Court is convinced that 

the DAF operates truly independently of Mr. Dondero any more 

than the Court has been convinced that the Advisors, the 

Funds, Dugaboy and Get Good, all operate independently from 

Mr. Dondero. The only explanation for the delay is that Mr. 

Dondero has been and continues to be unhappy with the Court's 

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rulings and has now hired a new set of lawyers in a desperate 

attempt to evade this Court's jurisdiction. Having failed in 

their attempt to recuse Your Honor from the case, this is 

essentially their last hope. 

 And these new lawyers, Your Honor, have not only filed 

this DAF lawsuit in the District Court which is the subject of 

the contempt motion and today's motion, but they also filed 

another lawsuit in the District Court on behalf of an entity 

called PCMG, another Dondero entity, challenging yet another 

of Mr. Seery's postpetition decisions. 

 And there's no doubt that this is only the beginning. Mr. 

Dondero recently told Your Honor at a hearing that there were 

many more sets of lawyers waiting in the wings. And as the 

Court remarked at the hearing on the Trusts' motion to compel 

compliance with Rule 2015.3, the Trusts were trying through 

that motion to obtain information about the Debtor's control 

entities so that they could file more lawsuits against the 

Debtor, a concern that Mr. Draper unconvincingly denied. 

 I would like to focus the Court preliminarily on exactly 

what the January 9th and July 16th orders do, because Movants 

try to confuse things by casting the entire order with a broad 

brush of their jurisdictional overreach arguments, and they 

misinterpret Supreme Court and Fifth Circuit precedent. 

 I would like to put up on the screen the language of 

Paragraph 10 of the January 9th order and Paragraph 35 

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(garbled) of the July 16th. 

 Your Honor is very familiar with these orders, I'm sure, 

having dealt with them in connection with confirmation and in 

prior proceedings. But to recap, the orders essentially do 

three things. 

 First, they require the parties to first come to the 

Bankruptcy Court before commencing or pursuing a claim against 

certain parties. 

 Second, they provided the Court with the sole jurisdiction 

to make a finding of whether the party has asserted a 

colorable claim of negligence -- of willful misconduct or 

gross negligence. 

 And lastly, the orders provided the Court with exclusive 

jurisdiction over any claims that the Court determined were 

colorable. 

 The protected parties under the January 9th order are the 

independent directors, their agents and advisors, which, as I 

mentioned earlier, includes Mr. Seery -- who, at least as of 

March 2020, was acting as the agent on the board's behalf as 

the CEO -- for any actions taken under their direction. 

 The protected parties under the July 16th order are Mr. 

Seery, as the CEO and CRO, and his agents and advisors. 

 Movants spend a lot of time in their moving papers and 

reply arguing that the Court may not assert exclusive 

jurisdiction over any claims that pass through the gate. They 

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also spend a lot of time arguing that the Bankruptcy Court 

does not even have jurisdiction at all to assert -- to 

adjudicate claims against Mr. Seery because such claims are 

subject to mandatory withdrawal under Section 157(d). 

 The Debtor doesn't agree, and has briefed why mandatory 

withdrawal of the reference is inapplicable. The Debtor has 

also filed in the District Court a motion to enforce the 

reference in effect in this district which refers cases in 

this district arising under, arising in, or related to Chapter 

11 to the Bankruptcy Court. 

 The motion to enforce the reference, Your Honor, which 

extensively briefs this issue, is contained in Exhibit 3 of 

the Debtor's exhibits. 

 We were somewhat surprised that the complaint filed in the 

District Court wasn't automatically referred to this Court 

under the standing order in effect in this district, given the 

related bankruptcy case, the Court's prior approval of the 

HarbourVest settlement, and the appeal in the District Court 

of the HarbourVest settlement. 

 When we dug a little further, we found out that Movants 

filed a civil case cover sheet accompanying the complaint in 

the District Court. They neglected in that initial filing to 

point out that there was any related case to the lawsuit they 

filed. 

 Mr. Bridges fell on his sword at the contempt hearing on 

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June 8th and took complete responsibility for the oversight. 

I commend him for not trying to argue that the bankruptcy 

case, the HarbourVest settlement, and the District Court 

appeal are not related cases that would require disclosure, an 

argument that surely would have been unsupportable. 

 But as I said at the contempt hearing, I find it curious 

that such an important issue was overlooked, an issue which 

would have likely changed the entire trajectory of the 

proceedings and landed the DAF lawsuit in this Court rather 

than the District Court. 

 And this Tuesday, Your Honor, Movants filed a revised 

civil cover sheet with the District Court. Although they 

referenced the bankruptcy case as a related case, they didn't 

bother to mention the appeal already pending in the District 

Court regarding the HarbourVest settlement -- surely, a 

related case. 

 Your Honor also asked Mr. Bridges at the June 8th hearing 

whether it was an oversight or intentional that he didn't 

mention 28 U.S.C. Section 1334 as a basis for jurisdiction in 

his complaint. Mr. Bridges had no answer for Your Honor then, 

and has given no answer now. His only comment at the hearing 

last time was that it must have been Ms. Sbaiti that wrote it 

because he had no recollection of it. 

 So, Your Honor, it's no surprise that Movants conveniently 

found themselves in the District Court, which was their 

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ultimate strategy from the get go. 

 In any event, Your Honor, we have briefed the withdrawal 

of the reference issue. A response by the Movants is due -- 

CLO Holdco and DAF is due on June 29th. And we hope the 

District Court will decide soon thereafter whether to enforce 

the reference. 

 While I'm happy to argue why Movants' mandatory withdrawal 

of the reference argument is [not] persuasive, I don't think 

it's necessary, but I do, again, want to highlight that there 

is no private right of action under the Investment Advisers 

Act. 

 Your Honor, it's not really relevant to today's hearing, 

since we have argued in opposition to the motion before Your 

Honor that resolving the issue of the Bankruptcy Court's 

jurisdiction to adjudicate claims contained in the complaint 

as they relate to Mr. Seery is premature at this point. The 

January 9th and July 16th orders first require the Court to 

determine whether a claim is colorable. It's not until this 

Court determines if a claim is colorable that the decision on 

where the lawsuit should be tried is relevant. 

 Having said that, Your Honor, we read the Movants' reply 

brief very carefully and noticed in Footnote 6 that the 

Movants state that modifying the exclusive grant of 

jurisdiction to adjudicate any claims that pass through the 

gate to include the language "to the extent permissible by 

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law," in the same way the Debtor modified the plan, would 

resolve the motion. So let's look at the provision as it 

exists in the plans. 

 Ms. Canty, if you can put up the next demonstrative, 

please. 

 This provision provides that the Bankruptcy Court will 

have sole and exclusive jurisdiction to determine whether a 

claim or cause of action is colorable, and, only to the extent 

legally permissible and provided in Article XI, shall have 

jurisdiction to determine -- to adjudicate the underlying 

colorable claim or cause of action. 

 The Movants request in their reply brief in Footnote 6 

that the July 16th order be given the plan treatment. That 

treatment: sole authority to determine colorability and 

jurisdiction, and, to the extent legally permissible, to 

adjudicate underlying claim, only if jurisdiction existed. 

 After reviewing the reply brief and prior to the June 8th 

hearing, we decided that we would agree to modify both the 

January 9th and the July 16th orders to provide that the 

Bankruptcy Court would only have jurisdiction to adjudicate 

claims that pass through the colorability gate to the extent 

permissible by law. 

 Prior to the June 8th hearing, Mr. Morris and I had a 

conversation with Mr. Bridges. We conferred about a potential 

resolution and a proposed modification. Mr. Bridges indicated 

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they were interested in exploring a resolution and wanted to 

-- 

 MR. BRIDGES: Objection, Your Honor. 

 THE COURT: There's an objection? 

 MR. BRIDGES: Objection, Your Honor. There's a Rule 

408 settlement discussion. He's welcome to talk about the 

results, but he shouldn't be talking about what was -- what 

was proposed by opposing counsel in a settlement conversation. 

 THE COURT: Okay. I overrule. 

 MR. POMERANTZ: Your Honor, this was not -- 

 THE COURT: I don't think this is a 408 issue. 

Continue. 

 MR. BRIDGES: Thank you. 

 MR. POMERANTZ: The stipulation and order which we 

provided to counsel is attached to my declaration, which is 

found at Document 2418, and it was filed in connection with a 

Notice of Revised Proposed Orders that we filed at Docket 

2417. And I would like to put up on the screen the relevant 

paragraphs of the order that we provided to the Movants. 

 So, you see, we agreed to modify each of the orders at the 

end to do what the plan says. The Court would only have 

jurisdiction for claims passing through the gate if the Court 

had jurisdiction and it was legally permissible. 

 Movants' counsel, however, responded with a mark-up that 

went beyond -- went beyond what Movants proposed in Footnote 6 

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and sought to fundamentally change the January 9th and July 

16th orders in ways that were not acceptable to the Debtor and 

not even contemplated by the original motion. 

 Ms. Canty, can you put up on the screen the relevant 

paragraphs of the response we received? 

 Specifically, Your Honor, you see at the first part they 

wanted to provide that the only -- the order only applied to 

claims involving injury to the Debtor, presumably as opposed 

to alleged injuries to affiliated funds or third parties. 

They also provided that the Court's ability to make the 

initial colorability determination was also qualified by "to 

the extent permissible by law" in the way that the Court -- 

that the Debtor agreed to modify the ultimate adjudication 

jurisdiction provision. 

 Your Honor, Movants haven't even talked about this back 

and forth. They haven't talked about their about-face. And 

I'll leave it for Your Honor to read their Footnote 6 that 

said it would resolve their motion, the back and forth, our 

proposal, and now Mr. Bridges' modified, morphed arguments 

that now point out other issues. 

 In any event, Your Honor, we made the change, and we think 

it should resolve the motion, or at least it resolves part of 

the motion. There can't be any argument that the Court is 

trying to exert exclusive jurisdiction on claims that pass 

through the gate. 

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 What apparently remains from the arguments raised by the 

Movants is the argument that the Court does not even have 

jurisdiction to act as a gatekeeper in the first place because 

it doesn't have jurisdiction of the underlying lawsuit. And 

on June 8th and today, they've added a new argument, that the 

orders impermissibly exculpate Mr. Seery and others, violate 

their jury trial rights, and are contrary to the Fifth Circuit 

precedent. 

 Movants claims that the orders are a jurisdictional 

overreach, a violation of constitutional proportions, a 

violation of due process, and inconsistent with several U.S. 

Supreme Court cases. But, of course, they cite no cases whose 

facts are even remotely similar to this one. Instead, they 

are content to rely on general statements regarding bankruptcy 

jurisdiction, how it is derived from district court 

jurisdiction and is constitutionally limited, legal 

propositions which are not terribly controversial or even 

applicable to these facts. 

 There are several arguments -- I mean, there are several 

reasons, Your Honor, why Movants' arguments fail. Initially, 

Movants have not cited any authority, any statute, or any rule 

which would allow this Court to revisit the January 9th and 

July 16th orders. As I will discuss in a moment, Your Honor, 

Republic v. Shoaf, a case the Court is very familiar in and 

relied on in connection with plan confirmation, bars a 

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