Exhibit 3.2
AMENDED AND RESTATED
DECLARATION OF TRUST AND TRUST AGREEMENT
OF
MLM INDEX(TM) FUND
Dated as of August 31, 1998
By and Among
MOUNT XXXXX INDEX MANAGEMENT CORPORATION
and
WILMINGTON TRUST COMPANY
and
THE INTEREST HOLDERS
from time to time hereunder
MLM Index(TM) Fund
AMENDED AND RESTATED
DECLARATION OF TRUST AND TRUST AGREEMENT
This AMENDED AND RESTATED DECLARATION OF TRUST AND TRUST AGREEMENT (Trust
Agreement) is made and entered into as of the 31st day of August, 1998 by and
among MOUNT XXXXX INDEX MANAGEMENT CORPORATION, a Delaware corporation (the
Manager), WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee
(the Trustee), and the INTEREST HOLDERS from time to time hereunder.
WITNESSETH:
WHEREAS, the parties hereto previously entered into that certain Declaration
of Trust and Trust Agreement, dated as of December 11, 1997 (the Original
Trust Agreement), and pursuant thereto the Trustee filed a Certificate of
Trust with the Delaware Secretary of State on December 11, 1997, in order to
form the Trust as a Delaware business trust under the Delaware Business Trust
Act, 12 Del. C. 3801 et seq., as the same may be amended from time to time
(the Act);
WHEREAS, the parties amended the Original Trust Agreement as set forth in
Amendment No. 1 to the Declaration of Trust and Trust Agreement, dated as of
January 14, 1998 (Amendment No. 1"), to provide for the administration and
contemplated operation of the Trust;
WHEREAS, the parties amended, restated and replaced the Original Trust
Agreement, as amended by Amendment No. 1, in its entirety as set forth in the
Amended and Restated Declaration of Trust and Trust Agreement, dated as of
January 31, 1998 (the Amended and Restated Trust Agreement), to provide for
the administration and contemplated operation of the Trust;
WHEREAS, the parties amended the Amended and Restated Trust Agreement as set
forth in Amendment No. 2 to the Declaration of Trust and Trust Agreement,
dated as of June 17, 1998 (Amendment No. 2"), to provide for the
administration and contemplated operation of the Trust;
WHEREAS, the parties now desire to amend, restate and replace the Amended and
Restated Trust Agreement, as amended by Amendment No. 2, in its entirety as
set forth herein to provide for certain changes in the administration and
contemplated operation of the Trust;
NOW THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereby amend, restate and replace in its entirety the Amended and
Restated Trust Agreement, as previously amended by Amendment No. 2, as follows
and the Manager and the Initial Interest Holder hereby direct the Trustee,
pursuant to the Amended and Restated Trust Agreement, to execute and deliver
this Trust Agreement:
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ARTICLE I
DEFINITIONS; THE TRUST
SECTION 1.1
Definitions. As used in this Trust Agreement, the following terms shall have
the following meanings unless the context otherwise requires:
Affiliate of the Manager means: (i) any officer, director, employee or
shareholder of the Manager, (ii) any corporation, partnership, trust or other
entity controlling, controlled by or under common control with the Manager or
any person described in (i) above, and (iii) any officer, director, trustee,
general partner or employee of any person who is a member, other than as
limited partner, with any person described in (i) and (ii) above, in a
relationship of joint venture, general partnership or similar form of
unincorporated business association. For purposes of this definition the term
control shall also mean the control or ownership of ten percent (10%) or more
of the beneficial interest in the person referred to.
Business Day means a day other than Saturday, Sunday or other day when banks
and/or commodities exchanges in the City of New York, the City of Chicago, or
the City of Wilmington are authorized or obligated by law or executive order
to close.
Business Trust Statute means Chapter 38 of Title 12 of the Delaware Code, 12
Del.C. 3801 et seq., as the same may be amended from time to time.
Capital Contribution means the amount contributed and agreed to be contributed
to a Series by any Person in accordance with Article III hereof.
CE Act means the Commodity Exchange Act, as amended.
Certificate of Trust means the Certificate of Trust of the Trust in the form
attached hereto as Exhibit A, filed with the Secretary of State of the State
of Delaware pursuant to Section 3810 of the Business Trust Statute.
CFTC means the Commodity Futures Trading Commission.
Classes means each designated class of a Series of beneficial interests in the
profits, losses, distributions, capital and assets of the Trust issued
pursuant to Section 3.1(e) of this Trust Agreement.
Code means the Internal Revenue Code of 1986, as amended.
Continuous Offering Period means the period following the conclusion of the
Initial Offering Period.
Corporate Trust Office means the principal office at which at any particular
time the corporate trust business of the Trustee is administered, which office
at the date hereof is located at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Administration.
DOL means the United States Department of Labor.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
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Fiscal Quarter means each period ending on the last day of each March, June,
September and December of each Fiscal Year.
Fiscal Year shall have the meaning set forth in Article X hereof.
Futures means agreements to purchase or sell a commodity, currency or other
item for delivery in the future on a recognized contract market in the United
States (i) at a price that is determined at initiation of the contract; (ii)
which obligates each party to the contract to fulfill the contract at the
specified price; (iii) which is used to assume or shift price risk; and (iv)
which may be satisfied by delivery or offset.
Initial Interest Holder means Xxxxxxx Xxxxxxx, whose Capital Contribution has
been paid to the Trust as of the date hereof.
Initial Offering Period means the period commencing with the initial effective
date of the Offering Memorandum and terminating on October 31, 1998.
Notwithstanding the previous sentence, the Manager may, at its discretion,
terminate the Initial Offering Period prior to October 30, 1998 if at least
four million dollars ($4,000,000) of Interests of the Unleveraged Series or at
least two million dollars ($2,000,000) of Interests of the Enhanced Series
(exclusive of the Interests of the Manager and the Initial Interest Holder)
have been sold, and the Manager may, in its discretion, extend the Initial
Offering Period of a Series until December 31, 1998, subject to earlier
termination if at least four million dollars ($4,000,000) of Interests of the
Unleveraged Series or at least two million dollars ($2,000,000) of Interests
of the Enhanced Series (exclusive of the Interests of the Manager and Initial
Interest Holder) have been sold.
Interest Holders means the Manager and all other record holders of Interests,
where no distinction is required by the context in which the term is used.
Interests means the beneficial interests of a particular Series of the Trust.
Interests need not be represented by certificates.
Manager means Mount Xxxxx Index Management Corporation or any substitute
therefore as provided herein.
Net Asset Value means the total assets in the Trust Estate including, but not
limited to, all cash and cash equivalents (valued at cost plus accrued
interest and amortization of original issue discount) less total liabilities
of the Trust, each determined on a per Series basis in accordance with
generally accepted accounting principles in the United States, consistently
applied under the accrual method of accounting (GAAP), including, but not
limited to, the extent specifically set forth below:
(a) Net Asset Value shall include any unrealized profit or loss on
open Futures positions, and any other credit or debit accruing to
the Trust but unpaid or not received by the Trust.
(b) All open commodity futures contracts traded on a United States
exchange are calculated at their then current market value, which
shall be based upon the settlement price for that particular
commodity futures contract traded on the applicable United States
exchange on the date with respect to which Net Asset Value is being
determined; provided, that if a commodity futures contract traded on
a United States exchange could not be liquidated on such day, due to
the operation of daily limits or other rules of the exchange upon
which that position is traded or otherwise, the settlement price on
the first subsequent day on which the position could be liquidated
shall be the basis for determining the market value of such position
for such day. The Manager may in its discretion value any of the
Trust Estate pursuant to such other principles as it may deem fair
and equitable so long as such principles are consistent with normal
industry standards.
(c) Interest earned on the Trust's commodity brokerage account shall
be accrued at least monthly.
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(d) The amount of any distribution declared pursuant to Article VI
hereof shall be a liability of the Trust from the day when the
distribution is declared until it is paid.
Net Asset Value per Interest means, for each Series, the Net Asset Value
divided by the number of Interests in such Series outstanding on the date of
calculation.
NFA means the National Futures Association.
Offering Memorandum means the Confidential Offering Memorandum of the Trust,
as filed with the CFTC, as amended or supplemented.
Organization and Offering Expenses shall have the meaning set forth in Section
4.7 of this Trust Agreement.
Person means any natural person, partnership, limited liability company,
business trust, corporation, association or other legal entity.
Redemption Date means the date upon which Interests held by the Interest
Holders may be redeemed in accordance with the provisions of Article VII
hereof.
Series means each designated series of beneficial interests in the profits,
losses, distributions, capital and assets of the Trust issued pursuant to
Section 3.1(e) of this Trust Agreement.
Subscription Agreement means the agreement included as an exhibit to the
Offering Memorandum pursuant to which subscribers may subscribe for the
purchase of the Interests.
Trust means the trust formed pursuant to this Trust Agreement.
Trust Agreement means this Amended and Restated Trust Agreement, dated as of
August 31, 1998, as the same may at any time or from time to time be further
amended.
Trustee means Wilmington Trust Company or any substitute therefore as provided
herein, acting not in its individual capacity but solely as trustee of the
Trust.
Trust Estate means any cash, Futures and any other property held by the Trust,
and all proceeds there from, including any rights of the Trust pursuant to any
Subscription Agreement and any other agreements to which the Trust is a party.
SECTION 1.2
Name. The name of the Trust is MLM Index(TM) Fund, in which name the Trustee
and the Manager may engage in the business of the Trust, make and execute
contracts and other instruments on behalf of the Trust and xxx and be sued on
behalf of the Trust.
SECTION 1.3 Delaware Trustee; Business Offices.
(a) The Trustee of the Trust in the State of Delaware shall be
Wilmington Trust Company, which is located at the Corporate Trust
Office or at such other address in the State of Delaware as the Trustee
may designate in writing to the Interest Holders. The Trustee shall
receive service of process on the Trust in the State of Delaware at the
foregoing address. In the event Wilmington Trust Company resigns or is
removed as the Trustee, the Trustee of the Trust in the State of
Delaware shall be the successor Trustee.
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(b) The principal office of the Trust, and such additional offices as
the Manager may establish, shall be located at such place or places
inside or outside the State of Delaware as the Manager may designate
from time to time in writing to the Trustee and the Interest Holders.
Initially, the principal office of the Trust shall be at 00 Xxxxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000.
SECTION 1.4 Declaration of Trust. The Trustee hereby acknowledges that the
Trust has received from the Manager as grantor of the Trust $1,000 per Series
in a bank account in the Trust's name controlled by the Manager and has
received from the Initial Interest Holder $100 per Series in such bank
account, and hereby declares that it shall hold such sums in trust, upon and
subject to the conditions set forth herein for the use and benefit of the
Interest Holders. It is the intention of the parties hereto that the Trust
shall be a business trust under the Business Trust Statute and that this Trust
Agreement shall constitute the governing instrument of the Trust. It is not
the intention of the parties hereto to create a general partnership, limited
partnership, joint stock association, corporation, bailment or any form of
legal relationship other than a Delaware business trust except to the extent
such Trust is deemed to constitute a partnership under the Code and applicable
state and local tax laws. Notwithstanding the foregoing, it is the intention
of the parties thereto to create a partnership among the Interest Holders
solely for purposes of taxation under the Code and applicable state and local
tax laws. Effective as of the date hereof, the Trustee shall have all of the
rights, powers and authority set forth herein and in the Business Trust
Statute with respect to accomplishing the purposes of the Trust. The Trustee
has filed the certificate of trust required by Section 3810 of the Business
Trust Statute in connection with the formation of the Trust under the Business
Trust Statute.
SECTION 1.5 Purposes and Powers. The purposes of the Trust shall be (a) to
trade, buy, sell, spread or otherwise acquire, hold or dispose of Futures; (b)
to enter into any lawful transaction and engage in any lawful activities in
furtherance of or incidental to the foregoing purposes; and (c) as determined
from time to time by the manager, to engage in any other lawful business or
activity for which a business trust may be organized under the Business Trust
Statute.
SECTION 1.6 Tax Treatment.
(a) Each of the parties hereto, by entering into this Trust Agreement,
(i) expresses its intention that the Interests in a Series will qualify
under applicable tax law as interests in a separate partnership which
holds the assets of such Series for the benefit of its respective
Interest Holders, (ii) agrees that it will file its own federal, state
and local income, franchise and other tax returns in a manner that is
consistent with the treatment of the Series in which it is an Interest
Holder as a partnership in which it is a partner and (iii) agrees to
use reasonable efforts to notify the Manager promptly upon a receipt of
any notice from any taxing authority having jurisdiction over such
holders of interests with respect to the treatment of the Interests as
anything other than interests in a partnership.
(b) The Tax Matters Partner (as defined in Section 6231 of the Code and
any corresponding state and local tax law) in respect of each Series
shall be the Manager. The Tax Matters Partner, at the expense of the
relevant Series, (i) shall prepare or cause to be prepared and filed
the tax returns of each Series as a partnership for federal, state and
local tax purposes and (ii) shall be authorized to perform all duties
imposed by 6221 et seq. of the Code, including, without limitation, (A)
the power to conduct all audits and other administrative proceedings
with respect to the tax items of each Series; (B) the power to extend
the statute of limitations for all Interest Holders with respect to the
tax items of each Series; (C) the power to file a petition with an
appropriate federal court for review of a final administrative
adjustment of each Series; and (D) the power to enter into a settlement
with the IRS on behalf of, and binding upon, those Interest Holders
having less than one percent (1%) interest in the particular Series,
unless an Interest Holder shall have notified the IRS and the Manager
that the Manager shall not act on such Interest Holders behalf. The
designation made in this Section 1.6(b) is hereby approved by each
Interest Holder as an express condition to becoming an Interest Holder.
Each Interest Holder agrees to take any further action as may be
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required by regulation or otherwise to effectuate such designation.
Subject to Section 4.6, each Series hereby indemnifies, to the full
extent permitted by law, the Manager from and against any damages or
losses (including attorneys fees) arising out of or incurred in
connection with any action taken or omitted to be taken by it in
carrying out its responsibilities as Tax Matters Partner with respect
to such Series, provided such action taken or omitted to be taken does
not constitute fraud, gross negligence or willful misconduct.
(c) Each Interest Holder shall furnish the Manager with information
necessary to enable the Manager to comply with United States federal
income tax information reporting requirements in respect of such
Interest Holders Interests.
SECTION 1.7 Legal Title. Legal title to all the Trust Estate shall be vested in
the Trust as a separate legal entity, except that where applicable law in any
jurisdiction requires any part of the Trust Estate to be vested otherwise, the
Manager may cause legal title to the Trust Estate to be held by or in the name
of the Manager or any other Person as nominee.
ARTICLE II
THE TRUSTEE
SECTION 11.1 Term; Resignation.
(a) The parties confirm that Wilmington Trust Company has been
appointed to serve as the Trustee of the Trust and has accepted such
appointment. The Trust shall have only one trustee unless otherwise
determined by the Manager. The Trustee shall serve until such time as
the Manager removes the Trustee or the Trustee resigns and a successor
Trustee is appointed in accordance with the terms of Sections 2.1(b) or
2.5 hereof.
(b) The Trustee may resign at any time upon the giving of at least
sixty (60) days advance written notice to the Trust; provided, that
such resignation shall not become effective unless and until a
successor Trustee shall have been appointed by the Manager in
accordance with Section 2.5 hereof or by the Court of Chancery of the
State of Delaware in accordance with this Section 2.1(b). If the
Manager does not act within such sixty (60) day period, the Trustee may
apply to the Court of Chancery of the State of Delaware for the
appointment of a successor Trustee.
SECTION 11.2 Powers. Except to the extent otherwise expressly set forth in
Section 1.3 hereof and this Article II, all right, power, authority and duty
to manage the business and affairs of the Trust and each Series is hereby
vested in the Manager. The Trustee shall have only the rights, obligations and
liabilities specifically provided for herein and in the Business Trust
Statute, but the Trustee shall have no duty whatsoever to supervise or monitor
the Manager or the management of the Trust or any Series by the Manager and
shall have no implied rights, obligations and liabilities with respect to the
business and affairs of the Trust or any Series. The Trustee shall have the
power and authority to execute, deliver, acknowledge and file all necessary
documents as required by the Business Trust Statute. The Trustee shall provide
prompt notice to the Manager of its performance of any of the foregoing. The
Manager shall keep the Trustee reasonably informed of any actions taken by the
Manager with respect to the Trust or any Series that affect the rights,
obligations or liabilities of the Trustee hereunder or under the Business
Trust Statute.
SECTION 11.3 Compensation and Expenses of the Trustee. The Trustee shall be
entitled to receive from the Manager or an Affiliate of the Manager reasonable
compensation for its services hereunder as set forth in a separate fee
agreement and shall be entitled to be reimbursed by the Manager or an
Affiliate of the Manager for reasonable out-of-pocket expenses incurred by it
in the performance of its duties hereunder, including, without limitation, the
reasonable compensation, out-of-pocket expenses and disbursements of counsel
and such other agents as the Trustee may employ in connection with the
exercise and performance of its rights and duties hereunder.
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SECTION 11.4 Indemnification. The Manager agrees, whether or not any of the
transactions contemplated hereby shall be consummated, to assume liability
for, and does hereby indemnify, protect, save and keep harmless each of the
Trustee (including in its individual capacity) and its successors, assigns,
legal representatives, officers, directors, agents and servants (each an
Indemnified Party) from and against any and all liabilities, obligations,
losses, damages, penalties, taxes (excluding any taxes payable by the Trustee
on or measured by any compensation received by the Trustee for its services
hereunder or any indemnity payments received by the Trustee pursuant to this
Section 2.4), claims, actions, suits, costs, expenses or disbursements
(including legal fees and expenses) of any kind and nature whatsoever
(collectively, Expenses), which may be imposed on, incurred by or asserted
against such Indemnified Party in any way relating to or arising out of the
formation, operation or termination of the Trust, the execution, delivery and
performance of any other agreements to which the Trust is a party or the
action or inaction of the Trustee hereunder or there under, except for
Expenses resulting from the gross negligence or willful misconduct of such
Indemnified Party. The indemnities contained in this Section 2.4 shall survive
the termination of this Trust Agreement and shall survive the removal or
resignation of the Trustee. In addition, the Indemnified Parties shall be
entitled to indemnification from the Trust Estate to the extent set forth
above and to secure the same, the Trustee (including in its individual
capacity) shall have a lien against the Trust Estate which shall be prior to
the rights of the Manager and the Interest Holders to receive distributions
from the Trust Estate.
SECTION 11.5 Successor Trustee. Upon the resignation or removal of the
Trustee, the Manager shall appoint a successor Trustee. Any successor Trustee
must satisfy the requirements of Section 3807 of the Business Trust Statute.
Any resignation or removal of the Trustee and appointment of a successor
Trustee shall not become effective until a written acceptance of appointment
is delivered by the successor Trustee to the outgoing Trustee and the Manager
and any fees and expenses and other amounts hereunder due to the outgoing
Trustee are paid. Following compliance with the preceding sentence, the
successor Trustee shall become fully vested with all of the rights, powers,
duties and obligations of the outgoing Trustee under this Trust Agreement,
with like effect as if originally named as Trustee, and the outgoing Trustee
shall be discharged of its duties and obligations under this Trust Agreement.
SECTION 11.6 Liability of Trustee. Except as otherwise provided in this
Article II, in accepting the trust created hereby, Wilmington Trust Company
acts solely as Trustee hereunder and not in its individual capacity, and all
Persons having any claim against the Trustee by reason of the transactions
contemplated by this Trust Agreement and any other agreement to which the
Trust is a party shall look only to the Trust Estate for payment or
satisfaction thereof. The Trustee shall not be liable or accountable hereunder
or under any other agreement to which the Trust is a party, except that the
foregoing limitation shall not limit the liability, if any, that the Trustee
may have to an Interest Holder as a result of the Trustees gross negligence,
or willful misconduct. In particular, but not by way of limitation, to the
full extent permitted by applicable law:
(a) The Trustee shall have no liability or responsibility for the
validity or sufficiency of this Trust Agreement or for the form,
character, genuineness, sufficiency, value or validity of the Trust
Estate;
(b) The Trustee shall not be liable for any actions taken or
omitted to be taken by it in accordance with the instructions of
the Manager;
(c) The Trustee shall not have any liability for the acts or omissions
of the Manager;
(d) The Trustee shall have no duty or liability to supervise the
performance of any obligations of the Manager, any
commodity broker, or selling agent;
(e) No provision of this Trust Agreement shall require the Trustee to
expend or risk funds or otherwise incur any financial liability in the
performance of any of its rights or powers hereunder if the Trustee
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
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(f) Under no circumstances shall the Trustee be liable for indebtedness
or other obligations of the Trust or any Series arising under this
Trust Agreement or any other agreements to which the Trust or a Series
is a party;
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Trust Agreement, or to institute,
conduct or defend any litigation under this Trust Agreement or any
other agreements to which the Trust or a Series is a party at the
request, order or direction of an Interest Holder unless such Interest
Holder has offered to the Trustee security or indemnity satisfactory to
it against the costs, expenses and liabilities that may be incurred by
the Trustee (including, without limitation, the reasonable fees and
expenses of its counsel) therein or thereby; and
(h) Notwithstanding anything contained herein to the contrary, the
Trustee shall not be required to take any action in any jurisdiction
other than in the State of Delaware if the taking of such action will
(i) require the consent or approval or authorization or order of or the
giving of notice to, or the registration with or taking of any action
in respect of, any state or other governmental authority or agency of
any jurisdiction other than the State of Delaware, (ii) result in any
fee, tax or other governmental charge under the laws of any
jurisdiction or any political subdivision thereof in existence on the
date hereof other than the State of Delaware becoming payable by the
Trustee or (iii) subject the Trustee to personal jurisdiction other
than in the State of Delaware for causes of action unrelated to the
consummation of the transactions by the Trustee contemplated hereby.
SECTION II.7 Reliance; Advice of Counsel.
(a) In the absence of bad faith, the Trustee may conclusively rely upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Trust Agreement in determining the truth of the
statements and the correctness of the opinions contained therein, and
shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolutions, request, consent, order, certificate,
report, opinion, bond or other document or paper believed by it to be
genuine and believed by it to be signed by the proper party or parties
and need not investigate any fact or matter pertaining to or in any
such document; provided, however, that the Trustee shall examine each
such certificate or opinion so as to determine whether on its face it
complies with the requirements of this Trust Agreement. The Trustee may
accept a certified copy of a resolution of the board of directors or
other governing body of any corporate or other party as conclusive
evidence that such resolution has been duly adopted by such body and
that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed
herein, the Trustee may for all purposes herein rely on a certificate,
signed by the president or any vice president or by the treasurer or
other authorized officers of the relevant party, as to such fact or
matter and such certificate shall constitute full protection to the
Trustee for any action taken or omitted to be taken by it in good faith
in reliance thereon.
(b) In the exercise or administration of the trust hereunder and in the
performance of its duties and obligations under this Trust Agreement,
the Trustee, at the expense of the Trust (i) may act directly or
through its agents, attorneys, custodians or nominees pursuant to
agreements entered into with any of them, and the Trustee shall not be
liable for the conduct or misconduct of such agents, attorneys,
custodians or nominees if such agents, attorneys, custodians or
nominees shall have been selected by the Trustee with reasonable care
and (ii) may consult with counsel, accountants and other skilled
professionals to be selected with reasonable care by it. The Trustee
shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the opinion or advice of any such
counsel, accountant or other such persons.
SECTION II.8 Not Part of Trust Estate. Amounts paid to the Trustee or any other
Indemnified Party from the Trust Estate, if any, pursuant to this Article II
shall be deemed not to be part of the Trust Estate immediately after such
payment.
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ARTICLE III
INTERESTS; CAPITAL CONTRIBUTIONS
SECTION III.1 General.
(a) The beneficial interests in the Trust shall consist of a limited
number of Interests as set forth in this Article III.
(b) The initial Capital Contribution by the Manager to each Class and
Series was $1,000 and has been paid, and the Manager is hereby issued its
Interests corresponding to such contributions. The Capital Contribution
of the Initial Interest Holder was $100 to each Class and Series and has
been paid, and the Initial Interest Holder is hereby issued its Interests
corresponding to such contributions. The Interest of the Initial Interest
Holder in a Class and Series shall terminate upon the admission of any
other person as an Interest Holder in such Class and Series and his
Capital Contribution in such Class and Series shall be returned at that
time.
(c) Certificates or other evidence of ownership of the Interests will be
issued only upon the written request of an Interest Holder.
(d) Every Interest Holder, by virtue of having purchased or otherwise
acquired an Interest, shall be deemed to have expressly consented and
agreed to be bound by the terms of this Trust Agreement.
(e) The Trust may issue multiple Series of Interests, and shall issue
Interests only in designated Series. Such Series may consist of separate
Classes. Initially, the Trust shall issue Interests in the Class A-1
Unleveraged Series, the Class B-1 Unleveraged Series, the Class A-1
Enhanced Series and in the Class B-1 Enhanced Series. The Unleveraged
Series will attempt to replicate the MLM Index at a leverage ratio of 1
to 1, and the Enhanced Series shall trade the MLM Index at a leverage
ratio of 3 to 1. The Trust will maintain separate and distinct records
for each such Series and the assets associated with each such Series
shall be held and accounted for separately from the other assets of the
Trust and of any other Series thereof. The debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing
with respect to a particular Series shall be enforceable against the
assets of such Series only and not against the assets of the Trust
generally or the assets of any other Series.
SECTION III.2 Interests.
(a) Offer of Interests. During the Initial Offering Period, each Series
of the Trust shall offer at a price of $100 per Interest, a maximum of
1,000,000 Interests ($100,000,000), including the Interests of the
Manager. No fractional Interests shall be issued during the Initial
Offering Period. Each Interest Holder whose subscription for Interests in
a Series has been accepted by the Manager on behalf of such Series shall
make a Capital Contribution to the Trust of at least $25,000 per Series
in increments of $1000 unless the Manager in its discretion permits an
Interest Holder to make a smaller
Capital Contribution. The offering shall be made pursuant to and on the
terms and conditions set forth in the Offering Memorandum. The Manager
shall make such arrangements for the sale of the Interests as it deems
appropriate.
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(b) Effect of the Sale of at least 40,000 Interests of the Unleveraged
Series or 20,000 Interests of the Enhanced Series. In the event that at
least 40,000 Interests of the Unleveraged Series or 20,000 Interests of
the Enhanced Series, excluding the Interests of the Manager and the
Initial Interest Holder, offered pursuant to the Offering Memorandum are
sold during the Initial Offering Period, the Manager will admit all
accepted subscribers in such Series as Interest Holders by executing on
behalf of such Interest Holders this Trust Agreement, pursuant to the
Power of Attorney set forth in the Subscription Agreement, and by making
an entry on the books and records of the Trust reflecting that such
subscribers have been admitted as Interest Holders, as soon as
practicable after the termination of the Initial Offering Period.
Accepted subscribers will be deemed Interest Holders at such time as such
admission is reflected on the books and records of the Trust.
(c) Effect of the Sale of Less than 40,000 Interests of the Unleveraged
Series or 20,000 Interests of the Enhanced Series. In the event that at
least 40,000 Interests of the Unleveraged Series or 20,000 Interests of
the Enhanced Series, excluding the Interests of the Manager and the
Initial Interest Holder, offered pursuant to the Offering Memorandum are
not sold during the Initial Offering Period, subscriptions in such Series
will be canceled and the related subscription payments, together with
interest earned thereon, if any, if the interest on a subscription
payment equals $10 or more, will be returned to each subscriber in such
Series no later than ten (10) Business Days after the conclusion of the
Initial Offering Period (or as soon thereafter as practicable if payment
cannot be made in such time period), and such Series shall be terminated.
If such interest is less than $10, it will be paid to the Trust. If all
Series of the Trust are so terminated the Trust shall be terminated and
the Manager shall cause the certificate of cancellation required by
Section 3810 of the Business Trust Statute to be filed.
(d) Offer of Interests After Initial Offering. In the event that 40,000
or more Interests of the Unleveraged Series or 20,000 or more Interests
of the Enhanced Series offered pursuant to the Offering Memorandum,
excluding the Interests of the Manager and the Initial Interest Holder in
such Series, are sold during the Initial Offering Period, such Series may
continue to offer and accept subscriptions for Interests and admit
additional Interest Holders pursuant to the Offering Memorandum following
the Initial Offering Period from time to time (the Continuous Offering
Period) in an aggregate amount not to exceed $100,000,000 for a Series or
such higher amount as the Manager shall determine with notice thereof to
the Interest Holders.
Each such additional Interest Holder shall make an initial Capital
Contribution to the Trust on the first day of any calendar month at
Interest Net Asset Value as of the close of business on the last day of
the preceding calendar month and in an amount of at least $25,000.
Existing Interest Holders will be permitted to make additional Capital
Contributions to a Series of the Trust as of the close of business on the
last day of any calendar month and in the amount of at least $1000 or
even multiples thereof. The Manager may, in its discretion, permit
Interest Holders to make smaller Capital Contributions.
A subscriber whose subscription is received and accepted by the Manager
on behalf of a Series of the Trust after the termination of the Initial
Offering Period shall be admitted to the Trust and deemed an Interest
Holder of such Series on the first day of the month next succeeding the
month during which such subscribers subscription was accepted. Existing
Interest Holders in a Series who contribute additional sums are
considered to have made the contribution and received the related
Interests as of the first day of the next succeeding month.
(e) Subscription Agreement. Each Interest Holder other than the Manager
shall contribute to the capital of a Class and Series of the Trust such
amount as he shall state in the Subscription Agreement which he shall
execute (as required therein), acknowledge and, together with the Power
of Attorney set forth therein, deliver to the Manager as a counterpart of
this Trust Agreement. All subscription amounts shall be in such form as
may be acceptable to the Manager at the time of the execution and
delivery of such Subscription Agreement. To the extent that the Manager
determines to accept a subscription check, it shall be subject to prompt
collection. All subscriptions are subject to acceptance by the Manager.
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(f) Escrow Agreement. All proceeds from the sale of a Series of Interests
offered pursuant to the Offering Memorandum shall be deposited in a
separate interest bearing escrow account at PNC Bank, Princeton, New
Jersey, or such other bank as the Manager shall determine until the
conclusion of the Initial Offering Period. In the event subscriptions for
at least 40,000 Interests of the Unleveraged Series or 20,000 Interests
of the Enhanced Series offered pursuant to the Offering Memorandum
(excluding the Interests of the Manager and the Initial Interest Holder)
are received and accepted during the Initial Offering Period, each
subscriber in such Series whose subscription has been accepted will be
paid the amount of any interest earned on such subscribers subscription
payment before trading commences, if such interest equals $10 or more. If
such interest equals less than $10, it will be paid to the relevant
Series.
ARTICLE IV
THE MANAGER
SECTION IV.1 Management of the Trust. Pursuant to Section 3806 of the Business
Trust Statute, the Trust and each Series shall be managed by the Manager and
the conduct of the Trust's and each Series business shall be controlled and
conducted solely by the Manager in accordance with this Trust Agreement.
SECTION IV.2 Authority of the Manager. In addition to and not in limitation of
any rights and powers conferred by law or other provisions of this Trust
Agreement, and except as limited, restricted or prohibited by the express
provisions of this Trust Agreement, the Manager shall have and may exercise on
behalf of the Trust and each Series, all powers and rights necessary, proper,
convenient or advisable to effectuate and carry out the purposes, business and
objectives of the Trust and each Series and shall, except as provided in this
Trust Agreement or the Business Trust Statute, have powers which shall
include, without limitation, the following:
(a) To enter into, execute, deliver and maintain contracts, agreements
and any or all other documents and instruments, and to do and perform all
such things, as may be in furtherance of Trust or Series purposes or
necessary or appropriate for the offer and sale of the Interests and the
conduct of Trust or Series activities, including, but not limited to,
contracts with third parties for commodity brokerage and selling agent
services, as well as administrative services necessary to the prudent
operation of the Trust or Series, and such services may be performed by
an Affiliate or Affiliates of the Manager.
(b) To establish, maintain, deposit into, sign checks and/or otherwise
draw upon accounts on behalf of the Trust or Series with appropriate
banking and brokerage institutions, and execute and/or accept any
instrument or agreement incidental to the Trust's or Series business and
in furtherance of its purposes, and any such instrument or agreement so
executed or accepted by the Manager in the Managers name shall be deemed
executed and accepted on behalf of the Trust and Series by the Manager;
(c) To deposit, withdraw, pay, retain and distribute the Trust Estate in
any manner consistent with the provisions of this Trust Agreement;
(d) To supervise the preparation and filing of the Offering Memorandum;
(e) To pay or authorize the payment of distributions to the Interest
Holders and expenses of the Trust or relevant Series, and to establish
reserves for contingent liabilities of the Trust or relevant Series;
(f) To invest or direct the investment of funds of the Trust or relevant
Series and prohibit any transactions contemplated hereunder which may
constitute prohibited transactions under ERISA and the Code;
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(g) To make any elections on behalf of the Trust or relevant Series under
the Code, or any other applicable federal or state tax law, as the
Manager shall determine to be in the best interests of the Trust or
relevant Series;
(h) To redeem any Interests of a Series upon at least ten (10) Business
Days prior written notice to the affected Interest Holder(s) if (i) there
is an unauthorized assignment pursuant to the provisions of Article V
hereof, (ii) in the event that any transaction would or might violate any
law or constitute a prohibited transaction under ERISA or the Code and a
statutory, class or individual exemption from the prohibited transaction
provisions of ERISA for such transaction or transactions does not apply
or cannot be obtained from the DOL (or the Manager determines not to seek
such an exemption), or (iii) for any other reason the Manager, in its
sole discretion, elects to cause the Trust to effect any redemption of
such Interests. In the case of such redemptions, the Redemption Date
shall be the close of business on the date written notice of intent to
redeem is sent by the Manager to an Interest Holder. A notice may be
revoked prior to the payment date by written notice from the Manager to
an Interest Holder;
(i) In the sole discretion of the Manager, to appoint an Affiliate or
Affiliates of the Manager as additional Managers; and
(j) To establish the Trust's and Series trading policies and impose
limitations on the trading activities of the Trust and each Series beyond
those enumerated in the Trust's and Series trading policies if the
Manager determines that such limitations are necessary or in the best
interests of the Trust or Series; and to be responsible for the
management of the Trust's and Series assets.
SECTION IV.3 Obligations of the Manager. In addition to the obligations
expressly provided by the Business Trust Statute or this Trust Agreement, the
Manager shall:
(a) Devote such of its time to the business and affairs of the Trust and
each Series as it shall, in its discretion exercised in good faith,
determine to be necessary to conduct the business and affairs of the
Trust and each Series for the benefit of the Trust and each Series and
the Interest Holders;
(b) Execute, file, record and/or publish all certificates, statements and
other documents and do any and all other things as may be appropriate for
the formation, qualification and operation of the Trust and each Series
and for the conduct of its business in all appropriate jurisdictions;
(c) Retain independent public accountants to audit the accounts of the
Trust and each Series;
(d) Employ attorneys to represent the Trust and each Series;
(e) Use its best efforts to maintain the status of (1) the Trust as a
business trust for state law purposes, and (2) each Series as a
partnership for federal income tax purposes;
(f) Have fiduciary responsibility for the safekeeping and use of the
Trust Estate, whether or not in the Managers immediate possession or
control;
(g) Acknowledge and accept appointment as an investment manager and
fiduciary under ERISA, with respect to the assets of each Interest Holder
subject to ERISA invested in the Trust.
(h) Admit substitute Interest Holders and additional Interest Holders in
accordance with this Trust Agreement;
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(i) Refuse to recognize any attempted transfer or assignment of an
Interest that is not made in accordance with the provisions of Article V
hereof; and
(j) Maintain a current list of the names and last known addresses and
number of Interests owned by each Interest Holder and the other Trust
documents described in Section 9.6 hereof at the Trust's principal place
of business.
SECTION IV.4 General Prohibitions. The Trust and each Series shall not:
(a) Borrow money from or loan money to any Interest Holder or other
person, except that the foregoing is not intended to prohibit (i) the
deposit of margin with respect to the initiation and maintenance of the
Trust's and Series Futures positions or (ii) a loan as described in
Section 6.7 hereof; and
(b) Create, incur, assume or suffer to exist any lien, mortgage, pledge,
conditional sales or other title retention agreement, charge, security
interest or encumbrance on the Trust Estate, except (i) the right and/or
obligation of a Futures broker incurred in the ordinary course of
business, (ii) liens for taxes not delinquent or being contested in good
faith and by appropriate proceedings and for which appropriate reserves
have been established, (iii) deposits or pledges to secure obligations
under workmen's compensation, social security or similar laws or under
unemployment insurance, (iv) deposits or pledges to secure contracts
(other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of business, (v) mechanics, warehousemen,
carriers, workmen, materialmens or other like liens arising in the
ordinary course of business with respect to obligations which are not due
or which are being contested in good faith, and for which appropriate
reserves have been established if required by generally accepted
accounting principles, and liens arising under ERISA and (vi) as
permitted in Section 2.4 hereof.
SECTION IV.5 Liability of the Manager. The Manager shall have no liability to
the Trust or a Series or to any Interest Holder for any loss suffered by the
Trust or Series which arises out of any action or inaction of the Manager if
the Manager, in good faith, determined that such course of conduct was in the
best interest of the Trust or Series and such course of conduct did not
constitute gross negligence, willful misconduct or a breach of ERISA by the
Manager. Subject to the foregoing, the Manager shall not be personally liable
for the return or repayment of all or any portion of the capital or profits of
any Interest Holder or assignee thereof, it being expressly agreed that any
such return of capital or profits made pursuant to this Trust Agreement shall
be made solely from the assets of the relevant Series without any rights of
contribution from the Manager.
SECTION IV.6 Indemnification of the Manager and the Trust.
(a) The Manager shall be indemnified by the relevant Series against any
losses, judgments, liabilities, expenses and amounts paid in settlement
of any claims sustained by it in connection with such Series, provided
that (i) the Manager was acting on behalf of or performing services for
such Series and determined, in good faith, that such course of conduct
was in the best interests of such Series and such liability or loss was
not the result of gross negligence, willful misconduct or a breach of
this Trust Agreement or ERISA on the part of the Manager, and (ii) any
such indemnification will be recoverable only from the assets of such
Series. All rights to indemnification permitted herein and payment of
associated expenses shall not be affected by the dissolution or other
cessation to exist of the Manager, or the withdrawal, adjudication of
bankruptcy or insolvency of the Manager.
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(b) In the event the Trust or a Series is made a party to any claim,
dispute, demand or litigation or otherwise incurs any loss, liability,
damage, cost or expense as a result of or in connection with any Interest
Holders (or assignees) obligations or liabilities unrelated to the
Trust's and Series business, such Interest Holder (or assignees
cumulatively) shall indemnify, defend, hold harmless, and reimburse the
Trust or Series for all such loss, liability, damage, cost and expense
incurred, including attorneys and accountants fees.
SECTION IV.7 Expenses.
(a) The Manager or an Affiliate of the Manager shall be responsible for
the payment of all Organization and Offering Expenses incurred in the
creation of the Trust, each Series and sale of Interests. Organization
and Offering Expenses shall mean those expenses incurred in connection
with the formation, qualification and registration of the Trust, each
Series and the Interests and in offering, distributing and processing the
Interests under applicable federal and state law, and any other expenses
actually incurred and, directly or indirectly, related to the
organization of the Trust and each Series or the initial and continuous
offering of the Interests, including, but not limited to, expenses such
as: (i) initial and ongoing filing fees, escrow fees and taxes, (ii)
costs of preparing, printing (including typesetting), amending,
supplementing, mailing and distributing the Offering Memorandum and
related sales materials during the Initial and Continuous Offering
Periods, (iii) travel, telegraph, telephone and other expenses in
connection with the offering and issuance of the Interests during the
Initial and Continuous Offering Periods and (iv) accounting, auditing and
legal fees (including disbursements related thereto) incurred in
connection therewith. The Manager shall charge an organizational fee in
the amount of one-half of one percent (0.5%) of a subscribers initial
investment and any subsequent investment (excluding Exchanges) in a
Series of the Trust.
(b) All ongoing charges, costs and expenses of each Series operation,
including, but not limited to, the expenses associated with (i)
preparation of monthly, annual and other reports required by applicable
federal and state regulatory authorities, (ii) printing and mailing of
reports to Interest Holders, (iii) services of legal counsel and
independent auditors and accountants, (iv) postage and insurance, (v)
client relations and services, (vi) computer equipment and system
development and (vii) trustee fees shall be paid by the relevant Series;
provided, however, that these expenses will be reimbursed to a Series of
the Trust by the Manager to the extent that the aggregate amount per
series exceeds one-half of one percent (0.5%) of the average of the Net
Asset Value of the Trust allocated to that Series in any Fiscal Year. All
ongoing expenses associated with (i) management fee payments to the
Manager and (ii) brokerage fees and (iii) extraordinary expenses
(including, but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto) shall be paid
by the relevant Series.
SECTION IV.8 Compensation to the Manager. The Manager shall receive from the
relevant Series a management fee at an annual rate of one percent (1%) for the
Unleveraged Series and two percent (2.0%) for the Enhanced Series based upon
the Net Asset Value of the relevant Series, determined and paid as of the last
day of each calendar month. The Manager shall, in its capacity as an Interest
Holder, be entitled to receive allocations and distributions pursuant to the
provisions of this Trust Agreement.
SECTION IV.9 Other Business of Interest Holders. Except as otherwise
specifically provided herein, any of the Interest Holders and any shareholder,
officer, director, employee or other person holding a legal or beneficial
interest in an entity which is an Interest Holder, may engage in or possess an
interest in other business ventures of every nature and description,
independently or with others, and the pursuit of such ventures, even if
competitive with the business of the Trust and a Series, shall not be deemed
wrongful or improper.
SECTION IV.10 Voluntary Withdrawal of the Manager. The Manager may withdraw
voluntarily as the Manager of the Trust upon sixty (60) days prior written
notice to all Interest Holders and the Trustee. The term of the Trust shall
end upon the withdrawal of the Manager.
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SECTION IV.11 Litigation. The Manager is hereby authorized to prosecute,
defend, settle or compromise actions or claims at law or in equity at the
relevant Series expense as may be necessary or proper to enforce or protect
the relevant Series interests. The Manager shall satisfy any judgment, decree
or decision of any court, board or authority having jurisdiction or any
settlement of any suit or claim prior to judgment or final decision thereon,
first, out of any insurance proceeds available therefore, and next, out of the
relevant Series assets.
ARTICLE V
TRANSFERS OF INTERESTS
SECTION V.1 General Prohibition. An Interest Holder may not sell, assign,
transfer or otherwise dispose of, or pledge, hypothecate or in any manner
encumber any or all of his Interests or any part of his right, title and
interest in the capital or profits of any Series except as permitted in this
Article V and any act in violation of this Article V shall not be binding upon
or recognized by the Trust (regardless of whether the Manager shall have
knowledge thereof), unless approved in writing by the Manager.
SECTION V.2 Transfer of the Managers Interests.
(a) The Manager will not cease to be the Manager of the Trust merely upon
the occurrence of its making an assignment for the benefit of creditors,
filing a voluntary petition in bankruptcy, filing a petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation, filing an answer or other pleading admitting
or failing to contest material allegations of a petition filed against it
in any proceeding of this nature or seeking, consenting to or acquiescing
in the appointment of a trustee, receiver of liquidator for itself or of
all or any substantial part of its properties.
(b) To the full extent permitted by law, nothing in this Trust Agreement
shall be deemed to prevent the merger of the Manager with another entity,
the reorganization of the Manager into or with any other entity, the
transfer of all the capital stock of the Manager or the assumption of the
rights, duties and liabilities of the Manager by, in the case of a
merger, reorganization or consolidation, the surviving entity by
operation of law.
(c) Upon assignment of all of its Interests, the Manager shall not cease
to be the Manager of the Trust, or to have the power to exercise any
rights or powers as the Manager, until an additional Manager, who shall
carry on the business of the Trust, has been admitted to the Trust.
SECTION V.3 Transfer of Interests.
(a) An Interest Holder other than the Manager may transfer, assign,
pledge or encumber his Interest in a Series as provided herein only after
written notice to and written approval by the Manager, the granting or
denying of which shall be in the Managers sole and absolute discretion
and subject to whatever conditions, if any, the Manager may require. No
such transferee, assignee, pledgee, or secured creditor (each, an
Assignee) shall become a substituted Interest Holder unless the Manager
first consents to such substitution in writing, which consent shall be
granted or denied in the sole discretion of the Manager and subject to
whatever conditions, if any, the Manager shall require. Any Assignee of
an Interest Holder who has not been admitted with respect to a Series as
a substituted Interest Holder shall not have any of the rights of an
Interest Holder, except that such person shall receive that share of
capital and profits and shall have that right to request redemption to
which his transferor, assignor, pledgor, or debtor would otherwise have
been entitled and shall remain subject to the other terms of this Trust
Agreement binding upon Interest Holders. The transferring Interest Holder
shall bear all costs (including any attorneys fees) related to such
transfer, assignment, pledge, or encumbrance of his Interest.
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(b) Except as specifically provided in this Trust Agreement, a permitted
Assignee of an Interest shall be entitled to receive distributions from
the relevant Series attributable to the Interest acquired by reason of
such assignment from and after the effective date of the assignment of
such Interest to him. The effective date of an assignment of an Interest
as used in this clause shall be the first day of the next succeeding
calendar month, provided the Manager shall have been in receipt of the
written instrument of assignment for at least two (2) Business Days prior
thereto. If the assignee is (A) an ancestor or descendant of the Interest
Holder, (B) the personal representative or heir of a deceased Interest
Holder, (C) the trustee of a trust whose beneficiary is the Interest
Holder or another person to whom a transfer could otherwise be made or
(D) a shareholder, partner, or beneficiary of a corporation, partnership
or trust upon its termination or liquidation, then the effective date of
an assignment of an Interest shall be the first day of the calendar month
immediately following the month in which the written instrument of
assignment is received by the Manager.
(c) Anything herein to the contrary notwithstanding, the Trust and the
Manager shall be entitled to treat the assignor of an Interest as the
absolute owner thereof in all respects, and shall incur no liability for
distributions made in good faith to him, until such time as the written
assignment has been received by, and recorded on the books of, the Trust
and the Manager has approved the assignment in writing.
(d)
(i) If the Manager, its stockholders and any person related to the
Manager or its stockholders within the meaning of Sections 267(b) or
707(b)(1) of the Code own in the aggregate 80% or more of the
aggregate Interests of a Series, an Assignee of any such Interest
may not become a substitute Interest Holder with respect thereto
except, if there are Interest Holders other than such persons which
in the aggregate own at least a 1% interest in the Series income,
gain, loss, deduction, credit and capital, but this restriction will
not apply if all such Interest Holders, at their sole discretion,
consent in writing to such substitution.
(ii) Anything else to the contrary contained herein
notwithstanding: (A) In any particular twelve (12) consecutive
month period no assignment or transfer of an Interest in a
Series may be made which would result in increasing the
aggregate total of Interests in such Series previously
assigned and/or transferred in said period to forty-nine
percent (49%) or more of the outstanding Interests in such
Series. This limitation is hereinafter referred to as the
forty-nine percent (49%) limitation; (B) Clause (ii)(A) hereof
shall not apply to a transfer by gift, bequest or inheritance,
or a transfer to (e.g., a redemption by) the Series, and, for
purposes of the forty-nine percent (49%) limitation, any such
transfer shall not be treated as such; (C) If, after the
forty-nine percent (49%) limitation is reached in any
consecutive twelve (12) month period with respect to a Series,
a transfer of an Interest in such Series would otherwise take
place by operation of law (but not including any transfer
referred to in clause (ii)(B) hereof) and would cause a
violation of the forty-nine percent (49%) limitation, then
said Interest(s) shall be deemed to have been sold by the
transferor to the Series in liquidation of said Interest(s)
immediately prior to such transfer for a liquidation price
equal to the Net Asset Value of said Interest(s) on such date
of transfer. The liquidation price shall be paid within ninety
(90) days after the date of the transfer.
(e) The Manager, in its sole discretion, may cause a Series to make,
refrain from making, or, once having made, to revoke, the election
referred to in Section 754 of the Code, and any similar election provided
by state or local law, or any similar provision enacted in lieu thereof.
(f) The Manager, in its sole discretion, may cause a Series to make,
refrain from making, or, once having made, to revoke the election in
Section 988(a)(1)(B) of the Code or by a qualified fund under Section
988(c)(1)(E)(V) of the Code, and any similar election provided by state
or local law, or any similar provision enacted in lieu thereof.
17
(g) No election to treat a Series other than as a partnership for federal
income tax purposes shall be made without the consent of all Interest
Holders of such Series.
(h) Each Interest Holder of a Series hereby agrees to indemnify and hold
harmless such Series and each Interest Holder of such Series against any
and all losses, damages, liabilities or expense (including, without
limitation, tax liabilities or loss of tax benefits) arising, directly or
indirectly, as a result of any transfer or purported transfer by such
Interest Holder in violation of any provision contained in this Section
5.3.
(i) The requirements of Sections 5.3(a), 5.3(b) and 5.3(d)(i) hereof may
be modified in the discretion of the Manager if the Manager is advised by
tax counsel to the Trust that a proposed modification will not adversely
affect the classification of a Series as a partnership for federal income
tax purposes or otherwise adversely affect the Interest Holders.
SECTION V.4 Not to be Subject to Corporate Tax as a Publicly Traded
Partnership.
(a) All Interests in the Trust have been or will be issued in a
transaction or transactions that were not required to be registered under
the Securities Act of 0000 (xxx 0000 Xxx), and to the extent such
offerings or sales were not required to be registered under the 1933 Act
by reason of Regulation S (17 CFR 230.901 through 230.904) or any
successor thereto, such offerings or sales would not have been required
to be registered under the 1933 Act if the Interests so offered or sold
had been offered and sold within the United States.
(b) Neither the Manager nor the Trust or any Series will participate in
the Interests in the Trust being traded on an established securities
market. For purposes of the preceding sentence, an established securities
market is a national securities exchange that is either registered under
Section 6 of the Securities Exchange Act of 0000 (xxx 0000 Xxx) or exempt
from registration because of the limited volume of transactions, a
foreign securities exchange that, under the law of the jurisdiction where
it is organized, satisfies regulatory requirements that are analogous to
the regulatory requirements of the 1934 Act, a regional or local
exchange, or an interdealer quotation system that regularly disseminates
firm buy or sell quotations by identified brokers or dealers by
electronic means or otherwise.
(c) Notwithstanding anything to the contrary in this Trust Agreement, for
each taxable year of a Series, pursuant to Sections 7704(c) and 7704(d)
of the Code, the principal activity of the Series will consist of
entering into and buying for investment purposes futures contracts on
foreign currencies and commodities (which are capital assets to the
Series) and at least 90% of the Series gross income for each taxable year
of such Series will constitute qualifying income under such provisions in
the form of gains from such trading and other qualifying income,
including interest income.
ARTICLE VI
DISTRIBUTION AND ALLOCATIONS
SECTION VI.1 Capital Accounts. Each Series shall be accounted for separately,
as if it were a separate partnership. A capital account shall be established
for each Interest Holder of each Series on the books of the Trust (such
account sometimes hereinafter referred to as a book capital account). The
initial balance of each Interest Holders book capital account for a Series
shall be the amount of his initial Capital Contribution to such Series. Each
Interest Holders capital account shall be maintained in accordance with the
Treasury Regulations promulgated under Section 704(b) of the Code.
18
SECTION VI.2 Monthly Allocations. As of the close of business (as determined
by the Manager) on the last day of each calendar month during each Fiscal Year
of the Trust, the following determinations and allocations shall be made:
(a) First, any increase or decrease in the Net Asset Value of a Series as
of such date as compared to the next previous determination of Net Asset
Value shall be credited or charged to the book capital accounts of the
Interest Holders of such Series in the ratio that the balance of each
Interest Holders book capital account in such Series bears to the balance
of all Interest Holders book capital accounts in such Series; and
(b) Next, the amount of any distribution from a Series to be made to an
Interest Holder and any amount to be paid to an Interest Holder upon
redemption of his Interests in a Series shall be charged to that Interest
Holders book capital account for such Series as of the applicable record
date and Redemption Date, respectively.
(c) Notwithstanding this Section 6.2, if after taking into account any
distributions to be made with respect to an Interest Holder for the
relevant period pursuant to Section 6.5 hereof, any allocation would
produce a deficit in the book capital account for a Series of an Interest
Holder, the portion of such allocation that would create such a deficit
shall instead be allocated pro rata to the book capital accounts of all
the remaining Interest Holders of such Series (subject to the same
limitation).
(d) Notwithstanding anything to the contrary in this Trust Agreement, the
interest of the Manager in each material item of income, gain, loss and
deduction of each Series shall be equal, in the aggregate, to at least
one percent (1%) of each such item at all times during the term of this
Trust Agreement. This requirement may be modified in the discretion of
the Manager if the Manager is advised by tax counsel to the Trust that a
proposed modification will not adversely effect the classification of a
Series as a partnership for federal income tax purposes or otherwise
adversely affect the income tax consequences to the Interest Holders.
SECTION VI.3 Allocation of Profit and Loss for United States Federal Income Tax
Purposes. As of the end of each Fiscal Year of a Series, the recognized profit
or loss of such Series shall be allocated among the Interest Holders of such
Series pursuant to the following subparagraphs for federal income tax purposes.
(a) For federal income tax purposes, items of income, gain, loss,
deduction or credit of a Series for each Fiscal Year shall be allocated
among the Interest Holders of such Series in such manner as to reflect as
nearly as possible the amounts credited or charged to each Interest
Holders book capital account in such Series.
(b) Unrealized gains or losses of a Series from prior periods which have
been credited or charged to an Interest Holders book capital account
shall, when realized, be allocated as nearly as possible for federal
income tax purposes to reflect such prior allocation to an Interest
Holders book capital account.
(c) Allocations hereunder shall be made in accordance with the Treasury
Regulations promulgated by the Department of the Treasury under Section
704(b) and Section 704(c) of the Code, and in the case of allocations
made in accordance with subparagraphs (a) and (b) above, may be made in
accordance with the provisions in Treasury Regulation Section
1.704-3(e)(3) (or successor regulations) for securities partnerships to
the extent a Series constitutes a securities partnership within the
meaning of such provisions.
(d) Notwithstanding subparagraph (b) above, to the extent permitted by
the Treasury Regulations (or successor regulations) referred to in
subparagraph (c), allocations of gains of a Series that have been
realized up to the time an Interest Holder has redeemed all or any
portion of his Interests in such Series may be allocated first to each
Interest Holder of such Series who has redeemed any such Interests during
the year to the extent that the amount the Interest Holder received on
redemption exceeds the amount of the Interest Holders tax basis
attributable to the Interests redeemed, and allocations of losses of a
Series that have been realized up to the time an Interest Holder has
redeemed all or any portion of his Interests in such Series may be
allocated first to each Interest Holder of such Series who has redeemed
any such Interests during the year to the extent that the amount of the
19
Interest Holders tax basis attributable to the Interests redeemed exceeds
the amount the Interest Holder received on redemption. If more than one
Interest Holder receives a special allocation described above, the
allocation to each Interest Holder may be made in proportion to the ratio
that such Interest Holders tax basis bears to the total tax basis for all
Interests of the relevant Series redeemed at that time.
(e) Notwithstanding anything contained in this Trust Agreement to the
contrary, the Manager shall be given the absolute discretion to make such
adjustments to the allocation of gain, deduction, income, loss or
distributions of a Series so that the allocations are consistent with
those permitted under Subchapter K of the Code.
(f) The tax allocations prescribed by this Section 6.3 shall be made to
each holder of an Interest whether or not the holder is a substituted
Interest Holder.
SECTION VI.4 Qualified Income Offset. In the event any Interest Holder of a
Series unexpectedly receives any adjustments, allocations, or distributions
described in Treasury Regulations Section 1.704-1(b) (2) (ii) (d) (4),
Treasury Regulations Section 1.704-1(b) (2) (ii) (d) (5), or Treasury
Regulations Section 1.704-1 (b) (2) (ii) (d) (6), items of income and gain of
such Series shall be specially allocated to each such Interest Holder in an
amount and manner sufficient to eliminate, to the extent required by the
Treasury Regulations, the book capital account deficit in such Series of such
Interest Holder as quickly as possible, provided that an allocation pursuant
to this Section 6.4 shall be made if and only to the extent that such Interest
Holder would have a book capital account deficit after all other allocations
provided for in Section 6.2 of this Trust Agreement have been tentatively made
as if this Section were not in this Trust Agreement.
SECTION VI.5 Allocation of Distributions. Distributions shall be made by the
Manager, and the Manager shall have sole discretion in determining the amount
and frequency of distributions, other than redemptions, which the Trust shall
make with respect to the Interests; provided, however, that the Trust shall
not make any distribution that violates the Business Trust Statute. The
aggregate distributions made in a Fiscal Year with respect to a Series (other
than distributions on termination, which shall be allocated in the manner
described in Article VIII hereof) shall be allocated among the Interest
Holders in such Series in the ratio in which the number of Interests held by
each of them bears to the number of Interests held by all of the Interest
Holders of such Series as of the record date of such distribution; provided,
further, however, that any distribution with respect to a Series made in
respect of an Interest shall not exceed the book capital account for such
Interest.
SECTION VI.6 Admissions of Interest Holders; Transfers. For purposes of this
Article VI, Interest Holders shall be deemed admitted, and a book capital
account shall be established in respect of the Interests acquired by such
Interest Holder, as of the first day of the calendar month following the
calendar month in which such Interest Holders subscription or additional
Capital Contribution, as the case may be, is accepted, or the transfer of
Interests to such Interest Holder is recognized, determined in accordance with
Section 3.2(e) hereof except that persons accepted as subscribers to the Trust
pursuant to Section 3.2(b) hereof shall be deemed admitted on the date
determined pursuant to such Section. Any Interest Holder to whom an Interest
has been transferred shall succeed to the book capital account attributable to
the Interest transferred.
SECTION VI.7 Liability for State and Local and Other Taxes. In the event that
the Trust or a Series shall be separately subject to taxation by any state or
local taxing authority or by any foreign taxing authority, the Trust or a
Series shall be obligated to pay such taxes to such jurisdiction. In the event
that the Trust or a Series shall be required to make payments to any taxing
authority in respect of any Interest Holders allocable share of income of a
Series, the amount of such taxes shall be considered a loan by the Series to
such Interest Holder, and such Interest Holder shall be liable for and shall
pay to the Series (and the Manager shall be entitled to redeem Interests of
the Interest Holder as necessary to satisfy), any taxes so required to be
withheld and paid by the Trust or Series within ten (10) days after the
Managers request therefore. Such Interest Holder shall also be liable for (and
the Manager shall be entitled to redeem additional Interests of the Interest
Holder as necessary to satisfy) interest on the amount of taxes paid by the
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Trust or Series to the taxing authority, from the date of the Managers request
for payment to the date of payment or the redemption, as the case may be, at
the rate of two percent (2%) over the prime rate charged from time to time by
Citibank, N.A. The amount, if any, payable by the Series to the Interest
Holder in respect of his Interests so redeemed, or in respect of any other
actual distribution by the Series to such Interest Holder, shall be reduced by
any obligations owed to the Series by the Interest Holder, including, without
limitation, the amount of any taxes required to be paid by the Series to the
taxing authority and interest thereon as aforesaid. Amounts, if any, deducted
by the Series from any actual distribution or redemption payment to such
Interest Holder shall be treated as an actual distribution to such Interest
Holder for all purposes of this Trust Agreement.
ARTICLE VII
REDEMPTIONS AND EXCHANGES
SECTION VII.1 Redemption of Interests. The Interest Holders recognize that the
profitability of a Series depends upon long-term and uninterrupted investment
of capital. It is agreed, therefore, that profits and gains of a Series may be
automatically reinvested, and that the Manager does not intend to make any
distributions. Nevertheless, the Interest Holders contemplate the possibility
that one or more of the Interest Holders may elect to realize and withdraw
profits, or withdraw capital, through the redemption of Interests prior to the
dissolution of the Trust and each Series. In that regard and subject to the
provisions of Section 4.2(h) hereof:
(a) Subject to the conditions set forth in this Article VII, each
Interest Holder (or any permitted assignee thereof) shall have the right
to request such Series to redeem any Interest in such Series in its
entirety, or a portion thereof in even multiples of $1000, that he owns
immediately after the close of business on the last day of a calendar
month following the date the Manager is in receipt of written notice of
redemption for ten (10) Business Days (a Redemption Date), commencing
with the end of the first full calendar month of trading activity of such
Series. Interests will be redeemed on a first in, first out basis based
on the time of receipt of redemption requests. Interests which are
redeemed will be deemed canceled, but such cancellation shall not reduce
the maximum number of Interests that a Series may offer under Section 3.2
of this Trust Agreement. If an Interest Holder (or permitted assignee
thereof) is permitted to request that the Series redeem any or all of his
Interests in such Series as of a date other than a Redemption Date, such
adjustments in the determination and allocation among the Interest
Holders of such Series of profits, losses and items of income, gain,
deduction, loss or credit for tax accounting purposes shall be made as
are necessary or appropriate to reflect and give effect to the
redemption.
(b) The value of an Interest for purposes of redemption shall be the book
capital account balance of such Interest at the close of business on the
Redemption Date, less any amount owing by such Interest Holder (and his
permitted assignee, if any) to the Series pursuant to Sections 4.6(b),
5.3(h), 6.7 or 7.1(c) of this Trust Agreement. If redemption of an
Interest shall be requested by a permitted assignee, all amounts which
shall be owed to the relevant Series under Sections 4.6(b), 5.3(h), 6.7
or 7.1(c) hereof by the Interest Holder, as well as all amounts which
shall be owed by all permitted assignees of such Interest, shall be
deducted from the Net Asset Value of such Interest upon redemption.
(c) With respect to all redemptions, payment ordinarily will be made
within ten (10) Business Days of the Redemption Date, except that under
special circumstances, including, but not limited to, the inability on
the part of a Series to liquidate positions as of the Redemption Date or
default or delay in payments due the relevant Series from brokers, banks
and other Persons, the Series may delay payment to Interest Holders whose
Interests are being redeemed. Further, the right to obtain redemption is
contingent upon the relevant Series having property sufficient to
discharge its liabilities on the date of redemption. The Manager is
hereby authorized to charge an Interest Holder whose Interests are being
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redeemed such reasonable expenses and costs as may be occasioned by any
such redemption. Under certain circumstances, the Manager may find it
advisable to establish a reserve for contingent liabilities. In such
event, the amount receivable by an Interest Holder on redemption of his
Interest will be reduced by his proportionate share of the reserve.
(d) An Interest Holder wishing to request redemption of his Interests
must provide the Manager with written notice of his request for
redemption, which notice shall specify the name and address of the
Interest Holder requesting redemption and the amount and Series of
Interests he seeks to have redeemed. The notice of redemption shall be in
the form annexed to the Offering Memorandum or in any other form
acceptable to the Manager and shall be mailed or delivered to the
principal place of business of the Manager. Such notice must include
representations and warranties that the Interest Holder requesting
redemption is the lawful and beneficial owner of the Interests to be
redeemed and that such Interests are not subject to any pledge or
otherwise encumbered in any fashion. In certain circumstances, the
relevant Series may require additional documents, such as, but not
limited to, trust instruments, death certificates, appointments as
executor or administrator or certificates of corporate authority.
Interest Holders requesting redemption shall be notified in writing
within ten (10) Business Days following the Redemption Date whether or
not their Interests will be redeemed, unless payment for the redeemed
Interests is made within that ten (10) Business Day period, in which case
the notice of acceptance of the redemption shall not be required.
(e) The Manager may suspend temporarily any redemption if the effect of
such redemption, either alone or in conjunction with other redemptions,
would be to impair the relevant Series' ability to operate in pursuit of
its objectives; provided, however, that the Manager shall only suspend a
redemption pursuant to this Section 7.1 (e) if the impairment would be
caused by a third party other than the Manager. In addition, the Manager
may cause one or more Series to redeem Interests pursuant to Section 4.2
(h) hereof.
(f) Subject to Sections 7.1(c) and 7.1(e) hereof, all requests for
redemption in proper form will be honored, and the relevant Series
positions will be liquidated to the extent necessary to discharge its
liabilities on the Redemption Date.
SECTION VII.2 Redemption By the Manager. Notwithstanding any provision in this
Trust Agreement to the contrary, for so long as it shall act as the Trust's
Manager, the Manager shall not transfer or permit a Series to redeem any of
the Managers Interests in such Series to the extent that any such transfer or
redemption would result in its having a capital account balance for such
Series of less than $1,000.
SECTION VII.3 Exchanges. Interests of one Series may be exchanged, without any
charge, for Interests of the other Series (an Exchange) on the last day of
each month, subject to the conditions set forth below. An Exchange will be
treated as a redemption of Interests of one Series and a simultaneous purchase
of Interests of the other Series. No organizational fee will be charged in
connection with Interests acquired in an Exchange. Interests purchased in an
Exchange will be issued and sold at a price equal to one hundred percent
(100%) of the Net Asset Value of the Interests in such new Series as of the
date of the Exchange. Each Exchange is subject to satisfaction of the
conditions governing redemptions set forth in Section 7.1 hereof. In order to
effect an Exchange, a request for exchange must be received by the Manager not
less than ten (10) Business Days prior to the proposed date of the Exchange.
An Interest Holder must request an Exchange on the form attached to the
Offering Memorandum.
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ARTICLE VIII
THE INTEREST HOLDERS
SECTION VIII.1 No Management or Control; Limited Liability. The Interest
Holders, except for the Manager, shall not participate in the management or
control of the Trust's and Series business nor shall they transact any
business for the Trust or any Series or have the power to sign for or bind the
Trust or any Series, said power being vested solely and exclusively in the
Manager. Except as provided in Section 8.3 hereof, no Interest Holder shall be
bound by, or be personally liable for, the expenses, liabilities or
obligations of a Series in excess of his Capital Contribution to such Series
plus his share of the Trust Estate belonging to such Series and profits of
such Series remaining in such Series, if any. Each Interest, when purchased in
accordance with this Trust Agreement, shall, except as otherwise provided by
law, be fully paid and nonassessable. No salary shall be paid to any Interest
Holder in his capacity as an Interest Holder, nor shall any Interest Holder
have a drawing account or earn interest on the contribution to his capital
account(s).
SECTION VIII.2 Rights and Duties. The Interest Holders shall have the
following rights, powers, privileges, duties and liabilities:
(a) The Interest Holders of a Series shall receive from the Series
distributions if, when and as declared by the Manager.
(b) Except for the Interest Holders rights to request redemption set
forth in Article VII hereof or upon a redemption effected by the Manager
pursuant to Section 4.2(h) hereof, Interest Holders shall have the right
to demand the return of their capital account in a Series only upon the
dissolution and winding up of the Series. In no event shall an Interest
Holder be entitled to demand or receive property other than cash. Except
upon a redemption effected by the Manager pursuant to Section 4.2(h)
hereof, no Interest Holder of a Series shall have priority over any other
Interest Holder of such Series either as to the return of capital or as
to profits, losses or distributions. No Interest Holder shall have the
right to bring an action for partition against the Trust or any Series.
(c) Except as set forth above and in Article XI hereof, to the fullest
extent permitted by law, the Interest Holders shall have no voting or
other rights with respect to the Trust or any Series, including, without
limitation, any right to vote on or approve any merger or consolidation
of the Trust or any Series with any other Person or any conversion of the
Trust or any Series.
SECTION VIII.3 Limitation on Liability.
(a) Except as provided in Sections 2.6(g) (if applicable), 4.6(b), 5.3(h)
and 6.7 hereof, and as otherwise provided under Delaware law, the
Interest Holders shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the general corporation law of Delaware and no Interest
Holder shall be liable for claims against, or debts of the Trust and a
Series in excess of his Capital Contribution to such Series and his share
of the Trust Estate belonging to such Series and undistributed profits of
such Series, except in the event that the liability is founded upon
misstatements or omissions contained in such Interest Holders
Subscription Agreement delivered in connection with his purchase of
Interests. In addition, and subject to the exceptions set forth in the
immediately preceding sentence, the Trust and a Series shall not make a
claim against an Interest Holder with respect to amounts distributed to
such Interest Holder or amounts received by such Interest Holder upon
redemption unless, under Delaware law, such Interest Holder is liable to
repay such amount.
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(b) The relevant Series shall indemnify, to the full extent permitted by
law, to the extent of the Trust Estate belonging to such Series, each
Interest Holder (excluding the Manager) of such Series against any claims
of liability asserted against such Interest Holder solely because he is a
beneficial owner of the Trust and such Series (other than for taxes for
which such Interest Holder is liable under Section 6.7 hereof).
(c) Every written note, bond, contract, instrument, certificate or
undertaking made or issued by the Manager shall give notice to the effect
that the same was executed or made by or on behalf of the Trust and the
relevant Series and that the obligations of such instrument are not
binding upon the Interest Holders individually but are binding only upon
the assets and property of the relevant Series, and no resort shall be
had to the Interest Holders personal property for satisfaction of any
obligation or claim there under, and appropriate references may be made
to this Trust Agreement and may contain any further recital which the
Manager deems appropriate, but the omission thereof shall not operate to
bind the Interest Holders individually or otherwise invalidate any such
note, bond, contract, instrument, certificate or undertaking.
ARTICLE IX
BOOKS OF ACCOUNT AND REPORTS
SECTION IX.1 Books of Account. Proper books of account shall be kept for each
Series and shall be audited annually by an independent certified public
accounting firm selected by the Manager in its sole discretion, and there
shall be entered therein all transactions, matters and things relating to the
business of each Series as are required by the CE Act and regulations
promulgated there under, and all other applicable rules and regulations, and
as are usually entered into books of account kept by persons engaged in a
business of like character. The books of account shall be kept at the
principal office of the Trust. Information regarding positions held by a
Series, to the extent deemed proprietary or confidential by the Manager, will
not be made available to the Interest Holders except as required by law. Such
books of account shall be kept, and the relevant Series shall report, on the
accrual method of accounting for financial accounting purposes on a Fiscal
Year basis as described in Article X hereof.
SECTION IX.2 Annual Reports and Monthly Statements. Each Interest Holder shall
be furnished as of the last Business Day of each month and as of the end of
each Fiscal Year with (a) such reports (in such detail) as are required to be
given to Interest Holders by the CFTC and the NFA, (b) any other reports (in
such detail) required by any other governmental authority which has
jurisdiction over the activities of the Trust and a Series and (c) any other
reports or information which the Manager, in its discretion, determines to be
necessary or appropriate.
SECTION IX.3 Tax Information. Appropriate tax information (adequate to enable
each Interest Holder to complete and file his federal tax return) shall be
delivered to each Interest Holder as soon as practicable following the end of
each Fiscal Year but generally no later than March 15.
SECTION IX.4 Calculation of Net Asset Value. Net Asset Value of each Series
will be calculated as of the last day of each calendar month and as of such
other days as the Manager shall determine in its sole discretion.
SECTION IX.5 Other Reports. The Manager shall send such other reports and
information, if any, to the Interest Holders as it may deem necessary or
appropriate.
SECTION IX.6 Maintenance of Records. The Manager shall maintain (a) for a
period of at least eight (8) Fiscal Years all books of account required by
Section 9.1 hereof, a list of the names and last known address of, and Series
and number of Interests owned by, all Interest Holders, a copy of the
Certificate of Trust and all certificates of amendment thereto, together with
executed copies of any powers of attorney pursuant to which any certificate
has been executed; copies of each Series federal, state and local income tax
returns and reports, if any; a record of the information obtained to indicate
that an Interest Holder meets the investor suitability standards set forth in
the Offering Memorandum, and (b) for a period of at least six (6) Fiscal Years
copies of any effective written trust agreements, subscription agreements and
any financial statements of the Trust and each Series.
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SECTION IX.7 Certificate of Trust. Except as otherwise provided in the
Business Trust Statute or this Trust Agreement, the Manager shall not be
required to mail a copy of any Certificate of Trust filed with the Secretary
of State of the State of Delaware to each Interest Holder; however, such
certificates shall be maintained at the principal office of the Trust and
shall be available for inspection and copying by the Interest Holders in
accordance with this Trust Agreement.
SECTION IX.8 Registration of Interests. The Manager shall keep, at the Trust's
principal place of business, an Interest Register for each Series in which,
subject to such requirements as it may provide, it shall provide for the
registration of Interests and of transfers of Interests of such Series. Prior
to receipt of any notice to the contrary, the Manager may treat the Person in
whose name any Interest shall be registered in the Interest Register as the
Interest Holder of such Interest for the purpose of receiving distributions
pursuant to Article VI hereof and for all other purposes whatsoever.
ARTICLE X
FISCAL YEAR
SECTION X.1 Fiscal Year. The Fiscal Year for the Trust and each Series shall
begin on the 1st day of January and end on the 31st day of December of each
year. The first Fiscal Year of the Trust, the Unleveraged Series and the
Enhanced Series shall commence on the date of filing of the Certificate of
Trust and end on the 31st day of December, 1997. The Fiscal Year in which the
Trust shall terminate shall end on the date of termination of the Trust.
ARTICLE XI
AMENDMENT OF TRUST AGREEMENT
SECTION XI.1 Amendments to this Trust Agreement
(a) This Trust Agreement may not be amended without the consent of the
Manager. If at any time during the term of the Trust the Manager shall
deem it necessary or desirable to amend this Trust Agreement, such
amendment shall be effective only if embodied in an instrument signed by
the Manager and by the other Interest Holders of each relevant Series
owning more than 10% of the then outstanding Interests (exclusive of the
Interests of the Manager) of each relevant Series and if made in
accordance with and to the extent permissible under the Business Trust
Statute.
(b) Notwithstanding any provision to the contrary contained in Sections
11.1(a) or 11.1(d) hereof, the Manager may, without the approval of the
other Interest Holders, make such amendments to this Trust Agreement
which (i) change the name of the Trust, (ii) are necessary to add to the
representations, duties or obligations of the Manager or surrender any
right or power granted to the Manager herein, for the benefit of the
other Interest Holders, (iii) are necessary to cure any ambiguity, to
correct or supplement any provision herein which may be inconsistent with
any other provision herein, or to make any other provisions with respect
to matters or questions arising under this Trust Agreement which will not
be inconsistent with the provisions of this Trust Agreement or (iv) the
Manager deems advisable or considers necessary to comply with any
applicable law, provided, however, that no amendment shall be adopted
pursuant to this clause (iv) unless the adoption thereof (A) is for the
benefit of, or not adverse to, the interests of the other Interest
Holders; (B) is consistent with Section 4.1 hereof; and (C) except as
otherwise provided in Section 11.1(c) hereof, does not affect the
allocation of profits and losses among the Interest Holders or between
the other Interest Holders and the Manager.
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(c) No amendment shall adversely affect the limitations on liability of
the Interest Holders as described in Section 8.3 of this Trust Agreement
or the status of each Series as a partnership for federal income tax
purposes, change any Interest Holders share of the profits or losses of a
Series without the consent of such Interest Holder, extend the duration
of the Trust and each Series or change the provisions of this Section
11.1.
(d) Upon amendment of this Trust Agreement, the Certificate of
Trust shall also be amended, if required by the Business Trust Statute,
to reflect such change.
(e) No amendment shall be made to this Trust Agreement without the
express written consent of the Trustee if such amendment adversely
affects any of the rights, duties or liabilities of the Trustee. The
Trustee shall execute and file any amendment to the Certificate of Trust
if so directed by the Manager or if such amendment is required in the
opinion of the Trustee.
ARTICLE XII
TERM
SECTION XII.1 Term. The term for which the Trust is to exist shall commence on
the date of the filing of the Certificate of Trust, and shall expire on
December 31, 2017, unless sooner terminated pursuant to the provisions of
Article XIII hereof or as otherwise provided by law.
ARTICLE XIII
TERMINATION
SECTION XIII.1 Events Requiring Dissolution. A Series of the Trust shall
dissolve in the event that subscriptions for at least 40,000 Interests of the
Unleveraged Series or 20,000 Interests of the Enhanced Series offered pursuant
to the Offering Memorandum (excluding the Interests of the Manager and the
Initial Interest Holder) are not sold during the Initial Offering Period. The
Trust shall dissolve at any time upon the happening of any of the following
events:
(a) The expiration of its term as provided in Article XII hereof.
(b) The filing of a certificate of dissolution or revocation of the
charter (and the expiration of ninety (90) days after the date of notice
to the Manager of revocation without a reinstatement of its charter) of
the Manager, or upon the resignation or other withdrawal, adjudication of
bankruptcy or insolvency of the Manager (each of the foregoing events an
Event of Withdrawal), except that, in the discretion of the Manager, the
Trust and each Series thereof shall not be dissolved upon an Event of
Withdrawal of the Manager if the Manager is advised by tax counsel to the
Trust that a proposed modification of this requirement will not adversely
affect the classification of a Series of the Trust as a partnership for
federal income tax purposes or otherwise adversely affect the Interest
Holders.
(c) The occurrence of any event which would make unlawful the continued
existence of the Trust.
(d) The suspension, revocation or termination of the Managers
registration as a commodity pool operator under the CE Act, or membership
as a commodity pool operator with the NFA.
(e) The Trust files a voluntary petition for bankruptcy; is adjudged
bankrupt or insolvent, or has entered against it an order for relief in
any bankruptcy or insolvency proceeding.
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(f) The determination by the Manager that it is in the best interests of
the other Interest Holders to terminate the Trust.
The death, legal disability, bankruptcy, insolvency, dissolution, or
withdrawal of any Interest Holder other than the Manager (as long as such
Interest Holder is not the sole Interest Holder of the Trust) shall not
result in the termination of the Trust or any Series thereof, and such
Interest Holder, his estate, custodian or personal representative shall
have no right to withdraw or value such Interest Holders Interests except
as provided in Section 7.1 hereof. Each Interest Holder (and any assignee
thereof) expressly agrees that in the event of his death, he waives on
behalf of himself and his estate, and he directs the legal representative
of his estate and any person interested therein to waive the furnishing
of any inventory, accounting or appraisal of the assets of the Trust or
any Series thereof and any right to an audit or examination of the books
of the Trust or any Series thereof, except for such rights as are set
forth in Article IX hereof relating to the books of account and reports
of the Trust.
SECTION XIII.2 Stop Loss Provision. A Series of the Trust will cease trading
and liquidate all positions if the Net Asset Value of such Series of the Trust
declines by more than fifty percent (50%) from either such Series initial Net
Asset Value or the Series Net Asset Value on the first day of the then-current
calendar year, after adjusting in each case for distributions, redemptions and
additional contributions to capital.
SECTION XIII.3 Distributions on Dissolution. Upon the dissolution of the Trust
or Series thereof, the Manager (or in the event there is no Manager, such
person as the majority in interest of the Interest Holders of each relevant
Series may propose and approve with respect to each relevant Series) shall
take full charge of the assets and liabilities of each relevant Series.
Thereafter, the business and affairs of each relevant Series shall be wound up
and with respect to each relevant Series all assets shall be liquidated as
promptly as is consistent with obtaining the fair value thereof, and the
proceeds there from shall be applied and distributed in the following order of
priority with respect to each such relevant Series respectively: (a) to the
expenses of liquidation and termination of such Series and to creditors,
including Interest Holders who are creditors, to the extent otherwise
permitted by law, in satisfaction of liabilities of such Series (whether by
payment or the making of reasonable provision for payment thereof) other than
liabilities for distributions to Interest Holders, and (b) to the Manager and
each Interest Holder other than the Manager pro rata in accordance with his
positive book capital account balance in such Series, less any amount owing by
such Interest Holder to such Series, after giving effect to all adjustments
made pursuant to Article VI hereof and all distributions theretofore made to
the Interest Holders pursuant to Article VI hereof.
After the distribution of all remaining assets of a Series, the Manager will
contribute to such Series an amount equal to the lesser of (i) the deficit
balance, if any, in its book capital account for such Series, and (ii) the
excess of 1.01% of the total Capital Contributions of the Interest Holders
(excluding the Manager) of such Series over the capital previously contributed
to such Series by the Manager. Any capital contributions made by the Manager
pursuant to this Section shall be applied first to satisfy any amounts then
owed by the relevant Series to its creditors, and the balance, if any, shall
be distributed to those Interest Holders in such Series whose book capital
account balances (immediately following the distribution of any liquidation
proceeds) were positive, in proportion to their respective positive book
capital account balances.
SECTION XIII.4 Termination; Certificate of Cancellation. Following the
dissolution and upon the completion of winding up of the Trust, the Manager
shall execute and cause a certificate of cancellation to be filed in
accordance with the Business Trust Statute, and thereupon the Trust shall
terminate.
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ARTICLE XIV
POWER OF ATTORNEY
SECTION XIV.1 Power of Attorney Executed Concurrently. Concurrently with the
written acceptance and adoption of the provisions of this Trust Agreement,
each Interest Holder other than the Manager shall execute and deliver to the
Manager a Power of Attorney as part of the Subscription Agreement, or in such
other form as may be prescribed by the Manager. Each Interest Holder other
than the Manager, by its execution and delivery hereof, irrevocably
constitutes and appoints the Manager as the true and lawful attorney-in-fact
and agent for such Interest Holder with full power and authority to act in his
name and on his behalf in the execution, acknowledgment, filing and publishing
of Trust documents, including, but not limited to, the following:
(a) Any certificates and other instruments, including but not limited to
any applications for authority to do business and amendments thereto,
which the Manager deems appropriate to qualify or continue the Trust as a
business trust in the jurisdictions in which the Trust may conduct
business, so long as such qualifications and continuations are in
accordance with the terms of this Trust Agreement or any amendment
hereto, or which may be required to be filed by the Trust or the Interest
Holders under the laws of any jurisdiction;
(b) Any instrument which may be required to be filed by the Trust under
the laws of any state or by any governmental agency, or which the Manager
deems advisable to file; and
(c) This Trust Agreement and any documents which may be required to
effect an amendment to this Trust Agreement approved under the terms of
this Trust Agreement, the admission of the signer of the Power of
Attorney as an Interest Holder or of others as additional or substituted
Interest Holders, or the termination of the Trust, provided such
admission or termination is in accordance with the terms of this Trust
Agreement.
SECTION XIV.2 Effect of Power of Attorney. The Power of Attorney concurrently
granted by each Interest Holder, other than the Manager, to the Manager:
(a) Is a special, irrevocable Power of Attorney coupled with an interest,
and shall survive and not be affected by the subsequent death,
disability, dissolution, liquidation, termination or incapacity of the
Interest Holder;
(b) May be exercised by the Manager by a facsimile signature of one of
its officers or by a single signature of one of its officers acting as
attorney-in-fact for such Interest Holders or for an individual Interest
Holder; and
(c) Shall survive the delivery of an assignment by an Interest Holder of
the whole or any portion of his Interests, except that where the assignee
thereof has been approved by the Manager for admission to a Series as a
substituted Interest Holder, the Power of Attorney of the assignor as it
relates to such Series shall survive the delivery of such assignment for
the sole purpose of enabling the Manager to execute, acknowledge and file
any instrument necessary to effect such substitution.
Each Interest Holder agrees to be bound by any representations made by
the Manager and by any successor thereto, determined to be acting in good
faith pursuant to such Power of Attorney and not constituting gross
negligence or willful misconduct.
SECTION XIV.3 Limitation on Power of Attorney. The Power of Attorney
concurrently granted by each Interest Holder, other than the Manager, to the
Manager shall not authorize the Manager to act on behalf of Interest Holders in
any situation in which this Trust Agreement requires the approval of Interest
Holders unless such approval has been obtained as required by this Trust
Agreement. In the event of any conflict between this Trust Agreement and any
instruments filed by the Manager pursuant to this Power of Attorney, this Trust
Agreement shall control.
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ARTICLE XV
MISCELLANEOUS
SECTION XV.1 Governing Law. This Trust Agreement and the rights of all parties
hereto and the effect of every provision hereof shall be governed by and
construed according to the laws of the State of Delaware without regard to the
conflicts of law provisions thereof; provided, however, that the parties
hereto intend that the provisions hereof shall control over any contrary or
limiting statutory or common law of the State of Delaware (other than the
Business Trust Statute) and that, to the maximum extent permitted by
applicable law, there shall not be applicable to the Trust, the Trustee, the
Manager, the Interest Holders or this Trust Agreement any provision of the
laws (statutory or common) of the State of Delaware (other than the Business
Trust Statute) pertaining to Trust's which relate to or regulate in a manner
inconsistent with the terms hereof: (a) the filing with any court or
governmental body or agency of trustee accounts or schedules of trustee fees
and charges, (b) affirmative requirements to post bonds for trustees,
officers, agents, or employees of a trust, (c) the necessity for obtaining
court or other governmental approval concerning the acquisition, holding or
disposition of real or personal property, (d) fees or other sums payable to
trustees, officers, agents or employees of a trust, (e) the allocation of
receipts and expenditures to income or principal, (f) restrictions or
limitations on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other manner
of holding of trust assets, or (g) the establishment of fiduciary or other
standards or responsibilities or limitations on the acts or powers of trustees
or the Managers that are inconsistent with the limitations on liability or
authorities and powers of the Trustee or the Manager set forth or referenced
in this Trust Agreement. Section 3540 of Title 12 of the Delaware Code shall
not apply to the Trust. The Trust shall be of the type commonly called a
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers that are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to business Trust's and the absence of a
specific reference herein to any such power, privilege or action shall not
imply that the Trust may not exercise such power or privilege or take such
actions.
SECTION XV.2 Provisions In Violation of Law or Regulations.
(a) The provisions of this Trust Agreement are severable, and if the
Manager shall determine, with the advice of counsel, that any one or more
of such provisions (the Conflicting Provisions) violate the Code, the
Business Trust Statute or other applicable laws, the Conflicting
Provisions shall be deemed never to have constituted a part of this Trust
Agreement, even without any amendment of this Trust Agreement pursuant to
this Trust Agreement; provided, however, that such determination by the
Manager shall not affect or impair any of the remaining provisions of
this Trust Agreement or render invalid or improper any action taken or
omitted prior to such determination; provided, further, that this Section
15.2(a) shall not affect or impair any right, duty or liability of the
Trustee without the express written consent of the Trustee. No Manager or
Trustee shall be liable for making or failing to make such a
determination.
(b) If any provision of this Trust Agreement shall be held invalid or
unenforceable in any jurisdiction, such holding shall not in any manner
affect or render invalid or unenforceable such provision in any other
jurisdiction or any other provision of this Trust Agreement in any
jurisdiction.
SECTION XV.3 Construction. In this Trust Agreement, unless the context
otherwise requires, words used in the singular or in the plural include both
the plural and singular and words denoting any gender include all genders. The
title and headings of different parts are inserted for convenience and shall
not affect the meaning, construction or effect of this Trust Agreement.
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SECTION XV.4 Notices. All notices or communications under this Trust Agreement
(other than reports and notices by the Manager to the Interest Holders) shall
be in writing and shall be effective upon receipt, and shall be sent by mail,
postage prepaid, telecopy or air courier; and addressed, in each such case, to
the address set forth in the books and records of the Trust and Series or such
other address, as may be specified in writing, of the party to whom such
notice is to be given.
SECTION XV.5 Counterparts. This Trust Agreement may be executed in several
counterparts, and all so executed shall constitute one agreement, binding on
all of the parties hereto.
SECTION XV.6 Binding Nature of Trust Agreement. The terms and provisions of
this Trust Agreement shall be binding upon and inure to the benefit of the
heirs, custodians, executors, estates, administrators, personal
representatives, successors and permitted assigns of the respective Interest
Holders. For purposes of determining the rights of any Interest Holder or
assignee hereunder, the Trust and the Manager may rely upon the Trust and
Series records as to who are Interest Holders and permitted assignees, and all
Interest Holders and assignees agree that they shall be bound by such
determination.
SECTION XV.7 No Legal Title to Trust Estate. The Interest Holders shall not
have legal title to any part of the Trust Estate.
SECTION XV.8 Creditors. No creditors of any Interest Holders shall have any
right to obtain possession of, or otherwise exercise legal or equitable
remedies with respect to, the Trust Estate.
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IN WITNESS WHEREOF, the undersigned have duly executed this Amended and
Restated Declaration of Trust and Trust Agreement as of the day and year first
above written.
MOUNT XXXXX INDEX MANAGEMENT CORPORATION, as the Manager
By: _______________________________________________________________
Name:______________________________________________________________
Title:_____________________________________________________________
WILMINGTON TRUST COMPANY, as Trustee
By: _______________________________________________________________
Name:______________________________________________________________
Title: ____________________________________________________________
XXXXXXX XXXXXXX, as the sole Interest Holder
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Amended and Restated Declaration of Trust and Trust Agreement
CERTIFICATE OF TRUST OF MLM Index(TM) Fund
THIS Certificate of Trust of MLM Index(TM) Fund (the Trust) is being duly
executed and filed by Wilmington Trust Company, a Delaware banking
corporation, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del.C. 3801 et seq.).
1. Name. The name of the business trust formed hereby is MLM
Index(TM)Fund.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Xxxxxx
Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Corporate Trust Administration.
3. Multiple Series. The Trust may issue multiple series of
beneficial interests. The Trust will maintain separate and distinct
records for each such series and the assets associated with each such
series shall be held and accounted for separately from the other assets
of the Trust and of any other series thereof. Notice is hereby given that
the debts, liabilities, obligations and expenses incurred, contracted for
or otherwise existing with respect to a particular series are enforceable
against the assets of such series only and not against the assets of the
Trust generally or the assets of any other series.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust, has
executed this Certificate of Trust.
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee
By: _______________________________________________________________
Name: _____________________________________________________________
Title:_____________________________________________________________
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