EXHIBIT 3.02
ML CORNERSTONE FUTURESACCESS LLC
LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
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THE UNITS OF LIMITED LIABILITY COMPANY INTEREST CREATED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES ACT, AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED
UNDER APPLICABLE SECURITIES LAWS.
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Xxxxxxx Xxxxx Alternative Investments LLC
Manager
DATED AS OF OCTOBER 31, 2004
ML CORNERSTONE FUTURESACCESS LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
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TABLE OF CONTENTS
ARTICLE I ORGANIZATION
SECTION 1.01. OBJECTIVES AND PURPOSES.......................................................................................1
SECTION 1.02. APPOINTMENT OF THE TRADING ADVISOR; INVESTMENT OF CASH RESERVES...............................................2
SECTION 1.03. FISCAL YEAR; ACCOUNTING PERIODS...............................................................................2
SECTION 1.04. REGISTERED AGENT AND OFFICE; PRINCIPAL OFFICE.................................................................3
SECTION 1.05. DURATION OF THIS FUND.........................................................................................3
SECTION 1.06. ASSIGNABILITY OF UNITS; SUBSTITUTED INVESTORS; LIMITED ASSIGNABILITY OF THE MANAGER'S
INTEREST...........................................................................................................3
SECTION 1.07. LIABILITY OF INVESTORS........................................................................................4
ARTICLE II CAPITAL AND TAX ALLOCATIONS
SECTION 2.01. CAPITAL CONTRIBUTIONS.........................................................................................4
SECTION 2.02. OPENING CAPITAL ACCOUNTS......................................................................................6
SECTION 2.03. FINANCIAL ALLOCATIONS AMONG THE UNITS.........................................................................6
SECTION 2.04. NET ASSET VALUE...............................................................................................6
SECTION 2.05. SPONSOR'S FEES; MANAGEMENT AND PERFORMANCE FEES; TRANSACTION COSTS; OPERATING
EXPENSES...........................................................................................................7
SECTION 2.06. ALLOCATION OF PROFITS AND LOSSES FOR FINANCIAL PURPOSES.......................................................8
SECTION 2.07. ALLOCATION OF PROFITS AND LOSSES FOR INCOME TAX PURPOSES......................................................9
SECTION 2.08. CHARGEBACKS TO CURRENT OR FORMER INVESTORS...................................................................10
SECTION 2.09. PROCESSING OF SUBSCRIPTIONS..................................................................................11
SECTION 2.10. VALUATION OF ASSETS..........................................................................................11
SECTION 2.11. USE OF ESTIMATES.............................................................................................12
SECTION 2.12. ACCOUNTING PRACTICES.........................................................................................12
ARTICLE III PARTICIPATION IN FUTURESACCESS FUND PROPERTY; REDEMPTIONS AND DISTRIBUTIONS
SECTION 3.01. NO UNDIVIDED INTERESTS IN FUTURESACCESS FUND PROPERTY........................................................12
SECTION 3.02. REDEMPTIONS OF UNITS; EXCHANGES..............................................................................12
SECTION 3.03. WITHDRAWALS OF CAPITAL BY THE MANAGER........................................................................13
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TABLE OF CONTENTS (cont.)
SECTION 3.04. MANDATORY REDEMPTIONS........................................................................................13
SECTION 3.05. MANDATORY REDEMPTIONS TO PAY TAXES...........................................................................14
SECTION 3.06. DISTRIBUTIONS................................................................................................14
SECTION 3.07. FORM OF DISTRIBUTION AND REDEMPTION PAYMENTS.................................................................14
SECTION 3.08. REMOVAL OF THE MANAGER.......................................................................................14
ARTICLE IV WITHDRAWAL OF THE MANAGER AND INVESTORS
SECTION 4.01. WITHDRAWAL OF THE MANAGER....................................................................................14
SECTION 4.02. WITHDRAWAL OF AN INVESTOR....................................................................................14
SECTION 4.03. STATUS AFTER WITHDRAWAL......................................................................................14
ARTICLE V MANAGEMENT
SECTION 5.01. AUTHORITY OF THE MANAGER.....................................................................................14
SECTION 5.02. SERVICE PROVIDERS; INVESTMENTS; ACCOUNTS.....................................................................15
SECTION 5.03. ACTIVITIES OF THE MANAGER PARTIES............................................................................15
SECTION 5.04. SERVICES TO THIS FUND........................................................................................15
SECTION 5.05. INTERESTED PARTIES...........................................................................................16
SECTION 5.06. EXCULPATION..................................................................................................16
SECTION 5.07. INDEMNIFICATION..............................................................................................16
SECTION 5.08. INVESTORS' TRANSACTIONS......................................................................................16
SECTION 5.09. RELIANCE BY THIRD PARTIES....................................................................................16
SECTION 5.10. REGISTRATION OF ASSETS.......................................................................................17
SECTION 5.11. LIMITATION ON AUTHORITY OF THE MANAGER.......................................................................17
ARTICLE VI ADMISSION OF INVESTORS
SECTION 6.01. PROCEDURE AS TO NEW INVESTORS................................................................................17
SECTION 6.02. PROCEDURE AS TO NEW MANAGERS.................................................................................17
ARTICLE VII BOOKS OF ACCOUNT; AUDITS; REPORTS TO INVESTORS
SECTION 7.01. BOOKS OF ACCOUNT.............................................................................................17
SECTION 7.02. ANNUAL AUDIT.................................................................................................17
SECTION 7.03. INTERIM REPORTS..............................................................................................18
ARTICLE VIII CONFLICTS OF INTEREST
SECTION 8.01. INVESTORS' CONSENT...........................................................................................18
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TABLE OF CONTENTS (cont.)
ARTICLE IX DISSOLUTION AND WINDING UP OF THIS FUND
SECTION 9.01. EVENTS OF DISSOLUTION........................................................................................18
SECTION 9.02. DISSOLUTION..................................................................................................19
ARTICLE X MISCELLANEOUS PROVISIONS
SECTION 10.01. INVESTORS NOT TO CONTROL....................................................................................19
SECTION 10.02. POWER OF ATTORNEY...........................................................................................19
SECTION 10.03. AMENDMENTS; CONSENTS........................................................................................19
SECTION 10.04. NOTICES.....................................................................................................20
SECTION 10.05. LEGAL EFFECT; MANNER OF EXECUTION...........................................................................20
SECTION 10.06. GOVERNING LAW...............................................................................................20
SECTION 10.07. CONSENT TO JURISDICTION.....................................................................................21
SECTION 10.08. "TAX MATTERS PARTNER"; TAX ELECTIONS........................................................................21
SECTION 10.09. DETERMINATION OF MATTERS NOT PROVIDED FOR IN THIS AGREEMENT.................................................21
SECTION 10.10. NO PUBLICITY................................................................................................21
SECTION 10.11. SURVIVAL....................................................................................................21
SECTION 10.12. WAIVERS.....................................................................................................21
SECTION 10.13. VOTING RIGHTS...............................................................................................21
SECTION 10.14. ISSUANCE OF DIFFERENT CLASSES...............................................................................21
SECTION 10.15. COMPLIANCE WITH THE INVESTMENT ADVISERS ACT OF 1940; SECURITIES LAWS........................................21
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TESTIMONIUM
SIGNATURES
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ML CORNERSTONE FUTURESACCESS LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT ("Agreement") by and among
Xxxxxxx Xxxxx Alternative Investments LLC, a Delaware limited liability
company (the "Manager"), and those persons who shall invest in the units of
limited liability company interest ("Units") created hereby -- Class A, Class
C, Class D and Class I -- and shall execute this Agreement, by
power-of-attorney, as members (such members being hereinafter sometimes
referred to collectively as "Investors"; provided, that for purposes of
voting, Units held by the Manager shall not be considered to be held by an
Investor).
WHEREAS, the parties hereto desire to form a limited liability company, ML
Cornerstone FuturesAccess LLC (the "Fund"), under the provisions of the
Delaware Limited Liability Company Act (the "Act"), which shall be one of the
funds included in the Xxxxxxx Xxxxx FuturesAccessSM Program (the "Program");
such other funds to be hereinafter sometimes referred to as "FuturesAccess
Funds").
WHEREAS, in addition to the Program, the Manager also sponsors the
HedgeAccessSM Program (the "HedgeAccess Program") of private investment funds
concentrating on securities, rather than futures and forward, trading (such
funds being hereinafter referred to as "HedgeAccess Funds").
WHEREAS, the parties hereby desire to set forth the terms pursuant to which
this Fund shall be governed.
NOW, THEREFORE, in consideration of the premises, the mutual agreements herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
ORGANIZATION
SECTION 1.01. FUND NAME
(a) The name of this Fund is ML Cornerstone FuturesAccess LLC, or such
other name as the Manager shall from time to time determine.
SECTION 1.02. OBJECTIVES AND PURPOSES.
(a) This Fund shall have the following objectives and purposes:
(i) to retain Cornerstone Trading Company, Inc. (the "Trading
Advisor") as a professional trading advisor to manage this
Fund's speculative trading in the futures, forward, options and
other markets as described in the Part One (A) Confidential
Program Disclosure Document: FuturesAccessSM Program General
Information, the Part One (B): Confidential Program Disclosure
Document: Trading Advisor Information and the Part Two
Confidential Program Disclosure Document: Statement of
Additional Information (collectively, the "Confidential Program
Disclosure Document");
(ii) to maintain such futures brokerage, forward dealing and other
counterparty accounts, as well as such cash reserves as the
Manager may from time to time deem to be appropriate and to
invest and manage all such cash reserves; and
(iii) to engage in any other lawful act or activity within and
without the United States for which limited liability companies
may be organized under the laws of the State of Delaware.
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ML Cornerstone FuturesAccess LLC
Limited Liability Company Operating Agreement
(b) This Fund, and the Manager on behalf of this Fund, shall have the
power to enter into, make and perform all contracts and other
undertakings, and engage in all activities and transactions as may
be necessary or advisable to the carrying out of the foregoing
purposes, including, without limitation, the power:
(i) to trade futures, forwards, options and other instruments, on
margin and otherwise;
(ii) to borrow money from banks or brokers, and to secure the
payment of any obligations of this Fund by hypothecation or
pledge of all or part of the assets of this Fund;
(iii) to exercise, as applicable, all rights, powers, privileges and
other incidents of ownership or possession with respect to the
assets of this Fund;
(iv) to open, maintain and close bank, brokerage and other
accounts;
(v) to prepare and file all tax returns required of this Fund and
make any election or determination on behalf of this Fund in
connection therewith or as otherwise required or permitted by
applicable tax laws;
(vi) to bring, defend, compromise and settle legal actions or other
claims on behalf of this Fund;
(vii) to maintain insurance on behalf of this Fund, including
indemnification insurance; or
(viii) to take any and all such actions as the Manager may deem to
be necessary or advisable in connection with the foregoing.
SECTION 1.03. APPOINTMENT OF THE TRADING ADVISOR; INVESTMENT OF CASH RESERVES.
The Manager shall appoint the Trading Advisor to have discretionary authority
over this Fund's trading and investing as described in the Confidential
Program Disclosure Document. This Fund may execute transactions in commodity
interests, currency interests, swap agreements, securities and any other
manner of instruments, on either a principal or an agency basis, with or
through affiliates of the Manager (the Manager and such affiliates being
hereafter referred to as "Xxxxxxx Xxxxx") or third parties. The sole clearing
broker and the principal forward trading counterparty for this Fund shall be
Xxxxxxx Xxxxx unless the Manager otherwise determines.
This Fund shall deposit all or substantially all of this Fund's capital with
Xxxxxxx Xxxxx or any other clearing brokers selected by the Manager pursuant
to the arrangements described in the Confidential Program Disclosure Document,
all Investors acknowledging that Xxxxxxx Xxxxx will not only receive futures
brokerage commissions and bid-ask spreads from this Fund but also will retain
significant economic benefits from the possession of this Fund's assets (in
addition to the interest which Xxxxxxx Xxxxx will credit to this Fund's
account). In addition, the Manager may maintain this Fund's assets in deposit
or similar accounts with one or more affiliates of the Manager, which
affiliates may benefit from the possession of such assets, as well as with
unaffiliated entities. The interest paid by such affiliated and unaffiliated
entities on this Fund's cash so invested will be paid to this Fund. However,
neither the Manager nor any of its affiliates (or any third parties) will be
obligated to account to this Fund or any Investor for any additional economic
benefits which the Manager or any such affiliate may derive from possession of
this Fund's assets.
SECTION 1.04. FISCAL YEAR; ACCOUNTING PERIODS. The fiscal year of this Fund
shall end on each December 31. This Fund's accounting periods ("Accounting
Periods"), as of the end of each of which increases and decreases in this
Fund's Net Assets shall be calculated and reflected in the Net Asset Value of
the Units issued by this Fund, shall commence: (i) as of the day that this
Fund first begins operations; (ii) as of the day that any Unit is issued;
(iii) as of the day immediately following any redemption of Units or
withdrawal from an Investor's Capital Account; (iv) as of the beginning of
each calendar month; and (v) as of such other day as the Manager may
determine. An Accounting Period shall end on the day immediately preceding the
beginning of the next Accounting Period.
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Limited Liability Company Operating Agreement
SECTION 1.05. REGISTERED AGENT AND OFFICE; PRINCIPAL OFFICE. This Fund shall
maintain in the State of Delaware a registered agent and office. The identity
and location of said registered agent and office shall be determined by the
Manager, and may be changed from time to time in the discretion of the
Manager.
The initial registered office of this Fund in the State of Delaware is c/o The
Corporation Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
The principal office of this Fund shall be located at the offices of the
Manager, Princeton Corporate Campus, 800 Scudders Mill Road, Section 2G,
Xxxxxxxxxx, Xxx Xxxxxx 00000, or such other place as the Manager may designate
from time to time.
SECTION 1.06. DURATION OF THIS FUND. The term of this Fund commenced as of the
date its Certificate of Formation was filed with the Secretary of State of the
State of Delaware, and shall continue until terminated by the dissolution and
winding up of this Fund as hereinafter provided.
SECTION 1.07. ASSIGNABILITY OF UNITS; SUBSTITUTED INVESTORS; LIMITED
ASSIGNABILITY OF THE MANAGER'S INTEREST.
(a) Each Investor and any assignee expressly agrees that he or she (i)
is purchasing Units for investment and not with a view to the
assignment, transfer or disposition of any part of such Units and
(ii) will not assign, transfer or otherwise dispose of, by gift or
otherwise, any of such Units or any part or all of his or her right,
title and interest in the capital or profits of this Fund without
giving written notice of the assignment, transfer or disposition to
the Manager, which notice shall include evidence satisfactory to the
Manager that the proposed assignment, transfer or disposition is
exempt from registration under the Securities Act of 1933. If an
assignment, transfer or disposition occurs by reason of the death of
an Investor or assignee, such written notice may be given by the
duly authorized representative of the estate of the Investor or
assignee and shall be supported by such proof of legal authority and
valid assignment as may reasonably be requested by the Manager. The
written notice required by this Section 1.07(a) shall specify the
name and address of the assignee and the proposed date of
assignment, shall include a statement by the assignee that he or she
agrees to give the above-described written notice to the Manager
upon any subsequent assignment, shall include such other information
or be accompanied by such additional documentation as the Manager
may reasonably request, shall be signed by the assignor and assignee
and shall not contain any terms inconsistent with this Agreement.
The Manager may waive receipt of the above-described notice or waive
any defect therein. No assignee, except upon consent of the Manager,
may become a substituted Investor nor will the estate or any
beneficiary of a deceased Investor or assignee have any right to
withdraw any capital or profits from this Fund except by redemption
of Units or upon termination or dissolution of this Fund. A
substituted Investor shall have all the rights and powers and shall
be subject to all the restrictions and liabilities of his or her
assignor except as described in the Act. Each Investor agrees that
with the consent of the Manager any assignee may become a
substituted Investor without the further act or consent of any
Investor. Each Investor agrees that he or she has no right to
consent to and will not consent to any person's or entity's becoming
a substituted Investor, except as set forth in the preceding
sentence. If the Manager withholds consent, an assignee shall not
become a substituted Investor and shall not have any of the rights
of an Investor, except that the assignee shall be entitled to
receive that share of capital or profits and shall have that right
of redemption to which his or her assignor would otherwise have been
entitled and shall remain subject to the other terms of this
Agreement binding against Investors. An assigning Investor shall
remain liable to this Fund as provided in the Act, regardless of
whether his or her assignee becomes a substituted Investor.
(b) The Manager may not assign, encumber, pledge, hypothecate or
otherwise transfer all or any portion of its manager's interest in
this Fund; provided, that the Manager may assign such interest to an
affiliate of the Manager upon notice (which need not be prior
notice) to the Investors or in connection with the sale or transfer
of all or a material portion of the Manager's equity or assets. See
Sections 4.01 and 6.02.
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ML Cornerstone FuturesAccess LLC
Limited Liability Company Operating Agreement
SECTION 1.08. LIABILITY OF INVESTORS.
(a) Nothing herein shall require the Manager to maintain any minimum net
worth or shall make any person associated with the Manager
individually liable for any debt, liability or obligation of this
Fund or of the Manager, and neither shall the Manager have any
obligation to restore any negative balance in any Investor's or in
the Manager's Capital Account.
(b) Except as provided in Section 2.08 (providing for chargebacks to
current or former Investors), an Investor shall be liable for the
repayment, satisfaction and discharge of debts, liabilities and
obligations of this Fund only to the extent of such Investor's
investment in this Fund and not in excess thereof.
(c) No Investor shall have any obligation to restore any negative
balance in such Investor's Capital Account, and neither shall the
Manager have any obligation to restore any negative balance in any
Investor's or in the Manager's Capital Account.
ARTICLE II
CAPITAL AND TAX ALLOCATIONS
SECTION 2.01. CAPITAL CONTRIBUTIONS. All Capital Contributions to this Fund
shall be made in cash. Capital Contributions may be made in such amounts, and
at such times, as the Manager may determine. The Manager may permit smaller
initial or subsequent Capital Contributions for certain Investors without
entitling any other Investor the ability to make smaller initial or subsequent
Capital Contributions.
Investors will receive Units in return for their Capital Contributions. Each
Class of Units shall initially be issued at $1.00 per Unit, and thereafter at
Net Asset Value.
The Manager may, but need not, make Capital Contributions as of any date that
any Units are issued.
Sales commissions will be deducted from Class A, Class D and Class I
subscriptions as described in the Confidential Program Disclosure Document,
and the net amount of such subscriptions invested in the Units. The Manager
may waive or reduce sales commissions for certain Investors without entitling
any other Investor to any such waiver or reduction.
Subscriptions made to class A units issued by HedgeAccess Funds may be
combined with Class A Unit subscriptions to FuturesAccess Funds in determining
the level of Class A sales commissions.
Fractional Units shall not be issued to Investors (but may be issued to the
Manager). Investors' subscriptions shall be used to purchase the largest whole
number of Units of the appropriate Class possible. Any subscription amount
which cannot be used to purchase whole Units will be credited (in cash) to
Investors' customer securities accounts.
The Units shall be issued in four Classes -- Class A Units, Class C Units,
Class D Units and Class I Units.
There is no minimum number of Units of any Class which must be subscribed for
in order for that Class to be issued. Units of a new Class may be issued in
the Manager's sole discretion.
If, immediately after a new or existing Investor subscribes for Units, such
Investor's aggregate subscriptions to the Program (including the current
subscription) total $5,000,000 or more, the entire new subscription will be
invested in Class I Units. The Investor's existing Units (if any) will not be
converted from Class A or Class C (as the case may be) to Class I Units, but
any subsequent subscription or exchange made by such Investor will be for
Class I Units.
If an Investor makes a single subscription to any one FuturesAccess Fund of
$5,000,000 or more, the Investor shall receive Class D Units in that
FuturesAccess Fund. If an Investor has previously subscribed for less than
$5,000,000 to a FuturesAccess Fund and then submits an additional subscription
or subscriptions (including exchanges) to that FuturesAccess Fund which brings
his or her aggregate subscriptions and exchanges in that FuturesAccess Fund
over the $5,000,000 threshold, the entire new subscription or exchange will be
invested in Class D Units. The Investor's existing Units in that FuturesAccess
Fund will not be converted to Class D Units, but all subsequent subscriptions
and exchanges
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ML Cornerstone FuturesAccess LLC
Limited Liability Company Operating Agreement
by such Investor into the same FuturesAccess Fund will be for Class D Units.
Notwithstanding the fact that an Investor has submitted aggregate
subscriptions to a FuturesAccess Fund equal to $5,000,000 or more, if that
Investor invests or exchanges into other FuturesAccess Funds and such
Investor's aggregate subscriptions and exchanges into any such FuturesAccess
Funds total less than $5,000,000, then such Investor will not receive Class D
Units in such FuturesAccess Fund.
If an Investor subscribes for a total of $15,000,000 or more in the aggregate
to any number of FuturesAccess Funds, whether or not such Investor's aggregate
subscriptions and exchanges into any one FuturesAccess Fund total $5,000,000,
such Investor will receive Class D Units in all such FuturesAccess Funds.
Investors who also participate in the HedgeAccess Program may combine their
investments in both FuturesAccess Funds and HedgeAccess Funds for purposes of
determining whether such $15,000,000 in aggregate investments has been made.
If the Investor has previously invested less than $15,000,000 in the Program
and then submits an additional subscription or subscriptions which bring his
or her aggregate subscriptions over the $15,000,000 threshold, the entire new
subscription will be invested in Class D Units. The Investor's existing Units
of any other Class will not be converted to Class D Units, but all subsequent
subscriptions or exchanges made by such Investor will be for Class D Units.
Subscriptions made to all FuturesAccess Funds will be aggregated for purposes
of determining whether an Investor is eligible to invest in Class D or Class I
Units.
Subscriptions to the HedgeAccess Program may be combined with subscriptions to
the Program for purposes of determining whether an Investor is eligible to
invest in Class D or Class I Units.
Redemptions are not netted against subscriptions for purposes of determining
Class D or Class I Unit eligibility.
Once an Investor has become eligible to invest in Class D or Class I Units,
such Investor will not lose such eligibility as a result of redemptions;
provided, that if an Investor withdraws entirely from the Program (and the
HedgeAccess Program, if the Investor is participating in the HedgeAccess
Program) and subsequently reinvests, such Investor's Class D and/or Class I
Unit eligibility will be determined from the date of such reinvestment as if
such Investor had never previously participated in the Program.
Xxxxxxx Xxxxx officers and employees may invest in Class I Units without
regard to the $5,000,000 minimum subscription requirement.
Certain Xxxxxxx Xxxxx clients may invest in Class I Units on somewhat
different terms than those available to Investors.
Once the initial Units have been sold, there will be no minimum dollar amount
of Units which must be sold in order for additional Units to be issued as of
the beginning of any calendar month. All Units will, however, be issued solely
in the Manager's discretion, irrespective of how many subscriptions are
received.
The amount of each Investor's Capital Contribution shall be set forth in such
Investor's FuturesAccess Program Subscription and Exchange Agreement Signature
Page. A FuturesAccess Program Subscription and Exchange Agreement and a
FuturesAccess Program Subscription and Exchange Agreement Signature Page must
be completed and accepted by the Manager prior to an Investor's initial
Capital Contribution if such Investor is not already an investor in the
Program. When an existing investor in the Program makes a Capital
Contribution, a FuturesAccess Program Subscription and Exchange Agreement
Signature Page must be submitted, but a FuturesAccess Program Subscription and
Exchange Agreement need not be, unless the Manager so requests.
The aggregate of all Capital Contributions shall be available to this Fund to
carry out its objectives and purposes.
No Investor shall be obligated to make any additional Capital Contributions,
except as provided in Section 2.08.
No provision of this Agreement shall be construed as guaranteeing the return,
by any Manager Party or this Fund, of all or any part of the Capital
Contribution(s) of any Investor.
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ML Cornerstone FuturesAccess LLC
Limited Liability Company Operating Agreement
SECTION 2.02. OPENING CAPITAL ACCOUNTS.
(a) There shall be established for each Unit of each Class on the books
of this Fund, as of the first day of each Accounting Period, an
Opening Capital Account which, for the Accounting Period as of the
beginning of which such Unit is issued, shall be the Capital
Contribution made in respect of such Unit and which, for each
Accounting Period thereafter, shall be an amount equal to the
Closing Capital Account (determined as set forth in Section 2.06)
attributable to such Unit for the immediately preceding Accounting
Period.
(b) The Manager may, but shall not be required to, make Capital
Contributions to this Fund from time to time as new Units are
issued, which shall be accounted for on a Unit-equivalent basis and
shall participate in the profits and losses of the Units on the same
basis as the Capital Accounts of the Class I Units.
(c) For all purposes of this Agreement, references to Units shall be
deemed to include the Manager's Capital Account on a Unit-equivalent
basis (unless the context otherwise requires or the reference is
made explicit for greater certainty).
SECTION 2.03. FINANCIAL ALLOCATIONS AMONG THE UNITS. The net profits and
losses are allocated to each Class as provided in Section 2.06 and shall be
allocated equally among the Units of such Class. All Units of the same Class
shall have the same Net Asset Value.
SECTION 2.04. NET ASSET VALUE. For the purposes of this Agreement, unless the
context otherwise requires, "Net Assets" and "Net Asset Value" shall mean
assets less liabilities. For purposes of determining Opening Capital Accounts,
Net Asset Value shall be determined as of the beginning of, and for purposes
of determining Closing Capital Accounts, Net Asset Value will be determined as
of the close of business on the relevant valuation date.
(a) The assets of this Fund shall include:
(i) all cash on hand or on deposit in bank or other
interest-bearing accounts, including any interest accrued
thereon;
(ii) any accrued gains on open positions which have not been
settled by crediting this Fund's account, as valued pursuant
to Section 2.10;
(iii) all bills, demand notes and accounts receivable;
(iv) all securities (including, without limitation, money-market
funds, Treasury bills and other short-term, interest-bearing
instruments), commodity interests, currency interests, swap
agreements and all other instruments owned or contracted for
by this Fund;
(v) all interest accrued on any interest-bearing securities owned
by this Fund except to the extent that the same is included or
reflected in the valuation of such securities; and
(vi) all other assets of every kind and nature, including prepaid
expenses.
(b) The liabilities of this Fund shall be deemed to include the
following (provided, however, that in determining the amount of such
liabilities, this Fund may calculate expenses of a regular or
recurring nature for any given period on an estimated basis in
advance, and may accrue the same in such manner as the Manager may
deem appropriate over such period):
(i) any accrued losses on open positions which have not been
settled by debiting this Fund's account, as valued pursuant
to Section 2.10;
(ii) all bills and accounts payable;
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ML Cornerstone FuturesAccess LLC
Limited Liability Company Operating Agreement
(iii) all expenses accrued, reimbursable or payable; and
(iv) all other liabilities, present or future, including such
reserves as the Manager may (as contemplated by Section
2.04(g)), deem advisable.
(c) The Management, Performance and Sponsor's Fees shall be determined,
and Units' Capital Accounts correspondingly reduced, after the
allocation of the other components of Net Asset Value, as described
above.
(d) Operating expenses shall be allocated among the Units pro rata based
on their respective Net Asset Values as of the beginning of the
month.
(e) Extraordinary costs, if any, shall be allocated as incurred in such
manner as the Manager may deem to be fair and equitable.
(f) Organizational and initial offering costs shall be deducted from Net
Asset Value in installments as of the end of each of the first 60
calendar months after the initial issuance of the Units, as
contemplated by Section 2.05(b) (for financial and performance
reporting purposes, all such costs must be deducted from Net Asset
Value as of the date of such initial issuance).
(g) All Investors, by becoming party to this Agreement, hereby agree and
consent to the Manager's authority to establish whatever reserves
the Manager may determine to be appropriate in order to cover
losses, contingencies, liabilities, uncertain valuations and other
factors. Any such reserves shall, unless the Manager determines that
such reserves are properly attributable to certain but less than all
outstanding Units, reduce the Net Asset Value of the Units of each
Class pro rata based on their respective Net Asset Values, after
reduction for accrued Sponsor's Fees, operating expenses and
extraordinary expenses until such time, if any, as such reserves are
reversed. Reserves, when reversed, shall be similarly allocated
among the Units then outstanding pro rata based on their respective
Net Asset Value (irrespective of whether such Units were outstanding
when the reserves were established).
(h) The Manager may suspend the calculation of Net Asset Value during
any period for which the Manager is unable to value a material
portion of this Funds' positions. The Manager will give notice of
any such suspension to all Investors.
SECTION 2.05. SPONSOR'S FEES; MANAGEMENT AND PERFORMANCE FEES; TRANSACTION
COSTS; OPERATING EXPENSES.
(a) The Manager shall receive monthly Sponsor's Fees, payable in arrears
of 1/12 of 1.50%, 2.50%, 0% and 1.10%, respectively, of the
aggregate Net Asset Value of the Class A, Class C, Class D and Class
I Units, in each case as of the close of business (as determined by
the Manager) on the last business day of each calendar month (Net
Asset Value for purposes of calculating the Sponsor's Fees shall not
be reduced by the accrued Sponsor's Fees being calculated). The
Sponsor's Fees shall be accrued monthly. The Manager may waive or
reduce Sponsor's Fees for certain Investors without entitling any
other Investor to any such waiver or reduction.
(b) This Fund shall reimburse the Manager for the organizational and
initial offering costs incurred by this Fund in respect of the
initial offering of the Units (of all Classes combined) in
installments as of the end of each of the first 60 calendar months
of this Fund's operation, beginning with the end of the first
calendar month after the initial issuance of the Units. This Fund
shall expense such costs over the same 60-month schedule. If this
Fund dissolves prior to the end of such 60 calendar-month period,
any remaining reimbursement obligation with respect to
organizational and initial offering costs shall be eliminated.
(c) The Sponsor's Fees, as well as operating expenses due to the Manager
(including: organizational and initial offering costs; ongoing
offering costs; administrative, custody, transfer, exchange and
redemption
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processing, legal, regulatory, filing, tax, audit, escrow,
accounting and printing costs; and extraordinary expenses), shall be
debited by the Manager directly from this Fund's account and paid to
the Manager, where appropriate, as if to a third party, not credited
to the Manager's Capital Account.
(d) This Fund shall pay all transaction costs (including futures
brokerage commissions and bid-ask spreads as well as interest on
foreign currency borrowings), as well as all Management and
Performance Fees, as incurred.
(e) The Sponsor's Fees, but not organizational and initial offering
costs reimbursement payments, shall be appropriately pro rated in
the case of partial calendar months.
(f) This Fund shall pay all expenses, including administrative and
ongoing offering costs, as well as any extraordinary expenses,
incurred in its operations (including the expenses of any services
provided by the Manager, other than in its capacity as Manager, or
its affiliates); provided, that this Fund shall not pay any
allocable Manager overhead.
(g) The Manager retains outside service providers to supply tax
reporting, custody and accounting services to the Program. This
Fund's operating costs will include this Fund's allocable share of
the fees and expenses of such service providers, as well as the fees
and expenses of any Xxxxxxx Xxxxx entity which may provide such (or
other) services in the future.
(h) The Capital Account of the Manager (if any) shall not be subject to
Sponsor's Fees.
SECTION 2.06. ALLOCATION OF PROFITS AND LOSSES FOR FINANCIAL PURPOSES. As of
the end of each Accounting Period and before giving effect to any redemptions
then being made, the Closing Capital Account of each Class shall be determined
by adjusting the Opening Capital Account of each such Class as of the
beginning of such Accounting Period in the following manner:
(a) Any increase or decrease in the Net Asset Value of this Fund, after
deduction of all Management and Performance Fees, transaction costs
and operating expenses, but prior to accrual of the Sponsor's Fees,
during such Accounting Period shall be credited pro rata, without
any order or priority, among: (i) each Class of Units; and (ii) the
Manager's Capital Account, if any, based in each case on the
aggregate Opening Capital Accounts attributable to each such Class
of Units and the Manager's Capital Account; provided that any
amounts received by this Fund from the Trading Advisor for payment
to the Manager shall be allocated to the Capital Account of the
Manager. Extraordinary expenses shall be allocated as the Manager
may determine.
(b) If the Closing Capital Account per Unit of any Class is reduced to
zero, any further decrease in the Net Asset Value per Unit shall be
allocated to the Manager's Capital Account, if any.
(c) The Sponsor's Fee shall be debited from each Class, in each case
after the Section 2.06(a) and (b) allocations are made.
(d) The Net Assets of each Class shall be divided equally among all
Units of such Class.
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SECTION 2.07. ALLOCATION OF PROFITS AND LOSSES FOR INCOME TAX PURPOSES.
(a) A Tax Account shall be established for each Unit of each Class. The
Tax Accounts of all outstanding Units shall initially be equal to
each Unit's net purchase price (reduced by any sales commissions),
subsequently increased by such Unit's share of the taxable and
tax-exempt income of this Fund and decreased by such Unit's share of
the items of loss or expense and nondeductible items of loss or
expense of this Fund, as well as by any distributions.
(b) For federal income tax purposes, items of ordinary income and loss,
capital gain and capital loss shall, unless the Manager believes
that doing so would not equitably reflect the economic experience of
the Units, be allocated as of December 31 of each year among the
Units, in the following order and priority:
(i) Items of ordinary income and deduction generated by this Fund
shall be allocated pro rata among the Units which were
outstanding during the months in such year when such items of
ordinary income and deductions accrued.
(ii) Gains will be allocated FIRST, to Investors who have redeemed
Units during such year (including as of December 31), to the
extent of the positive difference (if any) between the amounts
received or receivable upon redemption and the respective Tax
Account balances of the redeemed Units. SECOND, gains will be
allocated to Investors to the extent of the positive
difference (if any) between the Capital Account balances and
the Tax Account balances attributable to their remaining Units.
THIRD, gains will be allocated among all outstanding Units
based on their respective Net Asset Values.
(iii) Losses shall be allocated FIRST, to Investors who have
redeemed Units during such year (including as of December 31)
to the extent of the negative difference (if any) between the
amounts received or receivable upon redemption and the
respective Tax Account balances of the redeemed Units. SECOND,
losses shall be allocated to Investors to the extent of the
negative difference (if any) between the Capital Account
balances and Tax Account balances attributable to their Units.
THIRD, losses shall be allocated among all outstanding Units
based on their respective Net Asset Values.
(iv) In the case of each of the FIRST and SECOND allocation levels
described above, if there is insufficient gain or loss to make
the complete allocation required at such level, the allocation
will be made pro rata among all Units which are subject to an
allocation at such level based on the respective amounts which
would have been allocated had a complete allocation been
possible.
(v) Management, Performance and Sponsor's Fees, as well as the
operating expenses (in each case as adjusted to reflect the
non-deductibility of all or a portion of such Sponsor's Fees
and operating expenses) and extraordinary expenses, shall be
allocated, for tax purposes, to the Tax Accounts of the Units
based on the amount of the foregoing actually debited from the
Units' respective Capital Accounts.
(vi) Items of ordinary income and/or gain attributable to amounts
received by this Fund from the Trading Advisor for payment to
the Manager shall be specially allocated to the Manager.
(c) The character of items of income, gain, loss or deduction
(ordinary, short-term and long-term) and of the items required to
be separately stated by Section 702(a) of the Code shall be
allocated to the Investors pursuant to this Section 2.07 so as
equitably to reflect, without discrimination or preference among
Investors, the amounts credited or debited to the Units' respective
Capital Accounts pursuant to Section 2.06.
(d) In the case of Units which are transferred during a fiscal year,
the tax allocations shall be made to such Units as provided above.
The Tax Items so allocated will then be divided among the
transferor(s) and the
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transferee(s) based on the number of months during such year that
each held the Units or in such other manner as the Manager may deem
equitable.
(e) Having in mind the principles of the allocations set forth above in
this Section 2.07 (to which all Investors consent by becoming
Investors), the Manager may nevertheless make such allocations of
items of ordinary income and gain, any items required to be
separately stated by Section 702(a) of the Code, ordinary deduction
and loss as the Manager may deem fair and equitable -- even if not
consistent with the foregoing allocations -- in order to cause the
Tax Items allocated to the Investors, respectively, better to take
into account (as determined by the Manager) the Units' respective
Opening Capital Accounts and distributive shares of net profit and
net loss, any entry of new Investors, any redemptions, any
differences between income for tax purposes and for Net Asset Value
purposes, the differences between the Classes of Units and any
other special circumstances which may arise; provided, however,
that no such allocation by the Manager shall discriminate unfairly
against any Investor; and provided further, that the Manager shall
be under no obligation whatsoever to deviate from the allocations
set forth above.
(f) This Fund may allocate Tax Items on a gross rather than a net basis
(and may do so in respect of certain but less than all fiscal
years).
(g) Allocations pursuant to this Section 2.07 are solely for purposes
of federal, state and local taxes and shall not affect, or in any
way be taken into account in computing, any Units' Capital Account
or share of net profits, net losses, other items or distributions.
(h) The tax allocations set forth in this Section 2.07 are intended to
allocate items of this Fund's income, gains, losses and deductions
(ordinary, short-term and long-term) in accordance with Sections
704(b) and 704(c) of the Code, and the regulations thereunder,
including, without limitation, the requirements set forth therein
regarding a "qualified income offset."
(i) The Manager may make such modifications to this Agreement as the
Manager believes may be required to comply with Section 704(c) of
the Code and the regulations thereunder.
(j) In the event that the Manager determines to issue a new Class of
Units, the foregoing tax allocations shall be adjusted so as
equitably to allocate tax items between or among the different
Classes.
SECTION 2.08. CHARGEBACKS TO CURRENT OR FORMER INVESTORS. Each Investor, by
subscribing for Units, agrees to repay, irrespective of whether such Investor
remains an Investor, to this Fund any amount (including interest at the rate
set by the Manager in good faith from the date of any payment of redemption or
distribution proceeds to such Investor by this Fund) which the Manager may
reasonably determine to be due to this Fund from such Investor as a result,
for example, of any claims arising (prior or subsequent to such Investor's
withdrawal from this Fund) relating to events or circumstances (whether known
or unknown at the time of such Investor's withdrawal) in existence while such
Investor was an Investor or, subject to the following paragraph, in the event
that the Net Asset Value per Unit (of any Class) at which such Investor was
permitted to redeem is later determined to have been overstated or otherwise
miscalculated due to circumstances (whether known or unknown at the time of
such Investor's redemption) in existence as of the date of redemption. In no
event shall any provision of this Section 2.08 require any Investor to repay
to this Fund any amounts in excess of the redemption proceeds received by such
Investor from, or the amounts distributed to such Investor by, this Fund plus
interest thereon as provided above.
In the event that the Manager determines that an amount paid by this Fund to a
withdrawn or continuing Investor was less or more than the amount which such
Investor was, in fact, entitled to receive, the Manager shall not (unless the
Manager otherwise determines) attempt to make appropriate adjusting payments
to, or formally request appropriate adjusting payments from, such withdrawn
Investor or make retroactive adjustments to such continuing Investor's Capital
Account in order to reflect such discrepancy, but shall rather reflect such
adjustments in the Accounting Period in which they become known.
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SECTION 2.09. PROCESSING OF SUBSCRIPTIONS.
(a) The Manager may admit new Investors to this Fund at such times and
upon such notice (if any) as the Manager may determine.
(b) Pursuant to Securities and Exchange Commission Rule 15c2-4, all
subscriptions while held in escrow during the initial offering
period pending release to this Fund shall be held by a bank
independent of the Manager, its affiliates, and their respective
officers, employees, representatives and agents (each, a "Manager
Party" and, collectively, the "Manager Parties").
SECTION 2.10. VALUATION OF ASSETS. For all purposes of this Agreement,
including, without limitation, the determination of the Net Asset Value per
Unit of each Class, the assets of this Fund shall be valued according to the
following principles:
(a) Net Assets of this Fund are its assets less its liabilities
determined in accordance with generally accepted accounting
principles and as described below. Accrued Performance Fees (as
described in the Confidential Program Disclosure Document) shall
reduce Net Asset Value, even though such Performance Fees may
never, in fact, be paid.
(b) For the avoidance of doubt, the Manager shall, in general, apply
the following principles in valuing this Fund's assets:
(i) commodity interests and currency interests which are traded
on a United States exchange shall be valued at their
settlement on the date as of which the values are being
determined;
(ii) commodity interests and currency interests not traded on a
United States exchange shall be valued based upon policies
established by the Manager, generally based on prices as
reported by any reliable source selected by the Manager,
consistently applied for each variety of interest;
(iii) swap agreements shall be valued in the good faith discretion
of the Manager based on quotations received from dealers
deemed appropriate by the Manager;
(iv) bank and other interest-bearing accounts, Treasury bills and
other short-term, interest-bearing instruments shall be
valued at cost plus accrued interest;
(v) securities which are traded on a national securities exchange
shall be valued at their closing price on the date as of
which their value is being determined on the national
securities exchange on which such securities are principally
traded or on a consolidated tape which includes such
exchange, whichever shall be selected by the Manager, or, if
there is no closing price on such date on such exchange or
consolidated tape, at the prior day's closing price;
(vi) securities not traded on a national securities exchange but
traded over-the-counter shall be valued based on prices as
reported by any reliable source selected by the Manager;
(vii) money-market funds shall be valued at their net asset value
on the date as of which their value is being determined;
(viii) if on the date as of which any valuation is being made, the
exchange or market herein designated for the valuation of any
given assets is not open for business, the basis for valuing
such assets shall be such value as the Manager may deem fair
and reasonable;
(ix) all other assets, including securities traded on foreign
exchanges, and liabilities shall be valued in the good faith
discretion of the Manager, including assets and liabilities
for which there is no readily identifiable market value;
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Limited Liability Company Operating Agreement
(x) the foregoing valuations may be modified by the Manager if
and to the extent that it shall determine that modifications
are advisable in order better to reflect the true value of
any asset; and
(xi) the Manager may reduce the valuation of any asset by reserves
established to reflect losses, as contemplated by Section
2.04(g) and for the avoidance of doubt, contingencies,
liabilities, uncertain valuations or other factors, which the
Manager determines, reduce, or might reduce, the value of such
asset (or of this Fund as a whole in the case of reserves not
specifically attributable to any particular asset).
All determinations of value by the Manager shall be final and conclusive as to
all Investors, in the absence of manifest error, and the Manager shall be
absolutely protected in relying upon valuations furnished to the Manager by
third parties, provided that such reliance is in good faith.
The Manager may suspend the calculation of Net Asset Value during any period
in which the Manager believes that it is reasonably impracticable to value a
material portion of this Fund's assets.
SECTION 2.11. USE OF ESTIMATES. The Manager is authorized to make all Net
Asset Value determinations (including, without limitation, for purposes of
determining redemption payments and calculating Sponsor's Fees) on the basis
of estimated numbers. The Manager shall not (unless the Manager otherwise
determines) attempt to make any retroactive adjustments in order to reflect
the differences between such estimated and the final numbers, but rather shall
reflect such differences in the Accounting Period in which final numbers
become available. The Manager also shall not (unless the Manager otherwise
determines) revise Sponsor's Fee calculations to reflect differences between
estimated and final numbers (including differences which have resulted in
economic benefit to a Manager Party).
If, after payment of redemption proceeds, the Manager determines that
adjustment to the Net Asset Value of the redeemed Units is necessary, the
redeeming Investor (if the Net Asset Value is adjusted upwards) or the
remaining Investors (if the Net Asset Value is adjusted downwards) will bear
the risk of such adjustment. The redeeming Investor will neither receive
further distributions from, nor will it be required to reimburse, this Fund in
such circumstances.
SECTION 2.12. ACCOUNTING PRACTICES. All matters concerning Fund accounting
practices shall be determined by the Manager on a fair and equitable basis,
and all such determinations shall be final and conclusive as to all Investors.
However, the Manager shall be under no obligation whatsoever to make any
deviations from the allocations set forth in this Article II.
In reporting Net Asset Values to Investors and third parties on an interim
basis, the Manager shall be entitled to accrue fees and payments due at the
end of a period as if such fee or payment were due (on a pro rata basis, if
appropriate) as of the end of an interim period within such period.
ARTICLE III
PARTICIPATION IN FUND PROPERTY; REDEMPTIONS AND DISTRIBUTIONS
SECTION 3.01. NO UNDIVIDED INTERESTS IN FUND PROPERTY. Each Unit shall
represent an interest in this Fund, not an undivided interest in the assets
and liabilities of this Fund. The Units shall constitute personal property
for all purposes.
SECTION 3.02. REDEMPTIONS OF UNITS; EXCHANGES.
(a) Timing and Amount of Redemptions. An Investor shall be
entitled to redeem as of the end of any calendar month
(subject to this Section 3.02) all or part of such Investor's
Units, upon giving at least 10 days' written or oral notice.
Investors who have Xxxxxxx Xxxxx customer securities accounts
may give such notice by contacting their Xxxxxxx Xxxxx
Financial Advisor, orally or in writing; Investors who no
longer have a Xxxxxxx Xxxxx customer securities account must
submit written notice of redemption, with signature guaranteed
by a United States bank or broker-dealer, to the Manager.
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(b) No Redemption Fees. This Fund shall not charge a redemption fee.
(c) Payment of Redemptions. The Manager shall cause this Fund to
distribute to redeeming Investors the estimated Net Asset Value of
the Units redeemed by them generally approximately 10 business days
after the effective date of redemption, although there can be no
assurance of the timing of such payment.
Units which have been redeemed, but the proceeds of which have not yet been
paid, shall nevertheless be deemed to have ceased to be outstanding from the
effective date of redemption for all other purposes hereunder.
No interest shall be paid to Investors on redemption proceeds held pending
distribution. This Fund shall retain any such interest.
(d) Suspension of Redemptions. In the event that this Fund suspends the
calculation of Net Asset Value, the Manager shall, upon written
notice to all affected Investors, suspend any or all redemption
requests (as well as any request to exchange Units for units of
other funds included in the Program). Any unsatisfied redemption
requests shall be suspended until such time as this Fund is able to
determine Net Asset Value. All Units subject to suspended
redemption requests shall continue to be treated as outstanding for
all purposes hereunder, as if no redemption requests relating
thereto had been submitted, until the effective date of their
suspended redemption. During any period in which this Fund is
suspending redemptions, Investors will not be able to exchange
Units for units of other FuturesAccess Funds.
If the Manager determines that a portion, but not all, of pending redemption
requests can be processed in due course, the requests of all Investors
submitting timely redemption requests with respect to any given redemption
date shall be satisfied pro rata (based on the aggregate Net Asset Value of
the Units requested to be redeemed by all Investors) from such funds as the
Manager determines are available for distribution.
In addition to the foregoing provisions of this Section 3.02(d), the Manager
may delay or suspend both the payment of redemption proceeds and the effective
date of redemptions if the Manager determines that not doing so would have
adverse consequences for the non-redeeming Investors.
(e) Exchanges. Investors may exchange Units for Units in other
FuturesAccess Funds as described in the FuturesAccess Program
Subscription and Exchange Agreement and Signature Pages thereto, as
supplemented and amended from time to time. Any circumstance
leading to a delay or suspension of either redemption dates or the
receipt of the proceeds of redemptions from this Fund shall have a
corresponding effect on Investors' exercise of their Exchange
Privileges relating to this Fund.
SECTION 3.03. WITHDRAWALS OF CAPITAL BY THE MANAGER. The Manager may withdraw
capital from its Capital Account(s), if any, without notice to the Investors.
SECTION 3.04. MANDATORY REDEMPTIONS.
(a) The Manager may mandatorily redeem part or all of the Units held by
a particular Investor if the Manager determines that (i) such
Investor's continued holding of Units could result in adverse
consequences to this Fund, (ii) such Investor has a history of
excessive exchanges between different FuturesAccess Funds and/or
HedgeAccess Funds that is contrary to the purpose and/or efficient
management of the Programs, (iii) such Investor's investment in the
Units, or aggregate investment in the FuturesAccess Program, is
below the minimum level established by the Manager (including any
increase in such minimum level that the Manager may implement in
the future), or (iv) for any other reason.
(b) The Manager will mandatorily redeem all of a FuturesAccess Fund's
outstanding Units in the event that the Manager concludes that it
is no longer advisable to place client capital with the Trading
Advisor or if the amount of assets invested in this Fund declines
to a level that the Manager believes makes the continued operation
of this Fund impracticable or uneconomical.
(c) Units mandatorily redeemed shall be redeemed as of the specified
month-end without any further action
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on the part of the affected Investor, and the provisions of
Sections 3.02 and 3.07 shall apply. In the event that the Manager
mandatorily redeems any of an Investor's Units, such Investor shall
have the option to redeem all of such Investor's Units as of the
date fixed for redemption. Payment of mandatory redemption proceeds
shall be made.
SECTION 3.05. MANDATORY REDEMPTIONS TO PAY TAXES. In the event that this Fund
is required to pay or withhold state, local or other taxes with respect to a
particular Investor or Investors, this Fund may redeem an appropriate number
of such Investor's or Investors' Units as of the end of the Accounting Period
immediately following such payment in order to reimburse this Fund for the
amount of such payment, together with interest on the amounts so paid at the
91-day Treasury xxxx rate as in effect as of the beginning of each calendar
month, starting with the calendar month in which such payment is made, through
the end of such Accounting Period.
SECTION 3.06. DISTRIBUTIONS. This Fund's distributions shall be in the sole
discretion of the Manager. No distributions are required.
SECTION 3.07. FORM OF DISTRIBUTION AND REDEMPTION PAYMENTS. No Investor shall
have the right to demand or receive any property other than cash upon
redemption. Distributions or payouts made to Investors shall be made in cash.
SECTION 3.08. REMOVAL OF THE MANAGER. Upon at least 60 days written notice to
the Manager and all Investors in this Fund, the Manager may be required to
withdraw as manager of this Fund by a vote of Investors owning not less than
50% of the Units of this Fund. Any such removal shall be effective as of the
end of the calendar quarter in which such vote occurs.
ARTICLE IV
WITHDRAWAL OF THE MANAGER AND INVESTORS
SECTION 4.01. WITHDRAWAL OF THE MANAGER.
(a) The Manager may withdraw from this Fund at any time, without any
breach of this Agreement, upon 90 calendar days' written notice to
the Investors. Withdrawal of the Manager shall not dissolve this
Fund if at the time there is at least one other manager remaining;
however, all Investors shall be entitled to redeem their Units, in
total and not in part, as of the effective date of any such
withdrawal by the Manager, unless an entity affiliated with the
Manager remains as a manager of this Fund. Nothing in this Section
4.01(a) shall, however, restrict the Manager from assigning and
delegating its rights and obligations under this Agreement to an
affiliate of the Manager upon notice (which need not be prior
notice) to the Investors or in connection with the sale of all or a
material portion of the Manager's equity or assets.
(b) Withdrawal of the last remaining manager shall dissolve this Fund.
SECTION 4.02. WITHDRAWAL OF AN INVESTOR. An Investor shall withdraw from this
Fund upon redemption of all of such Investor's outstanding Units. Withdrawal
of an Investor shall not be a cause for dissolution of this Fund.
SECTION 4.03. STATUS AFTER WITHDRAWAL. Except to the extent provided in
Section 2.08 or Section 7.02, each Investor upon redemption of the last of
such Investor's Units shall cease to have any rights under this Agreement.
ARTICLE V
MANAGEMENT
SECTION 5.01. AUTHORITY OF THE MANAGER.
(a) The management and operation of this Fund and the determination of
its policies shall be vested exclusively in the Manager, and all
determinations made by the Manager shall be made (unless otherwise
expressly provided) in the Manager's sole and absolute discretion.
The Manager shall have the authority and power on behalf and in the
name of this Fund to carry out any and all of the objectives and
purposes
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of this Fund set forth in Section 1.02, and to perform all acts and
enter into and perform all contracts and other undertakings which
the Manager may deem necessary or advisable in connection with such
objectives and purposes or incidental thereto; provided, that the
Trading Advisor shall at all times have discretionary authority
over the trading and investing of this Fund.
(b) The Manager is specifically authorized to manage this Fund's cash
flow, pay costs by bank or other borrowings.
SECTION 5.02. SERVICE PROVIDERS; INVESTMENTS; ACCOUNTS. The Manager is hereby
authorized and empowered to carry out and implement any and all of the
objectives and purposes of this Fund, including and without limiting the
generality of the foregoing:
(a) to place capital under the management of, and withdraw capital
from, the discretionary control of the Trading Advisor; provided,
that this Fund shall not retain any other Trading Advisor (although
the Manager may dissolve this Fund at any time).
(b) to engage attorneys, accountants, agents and other persons as the
Manager may deem necessary or advisable;
(c) to open, maintain and close accounts, including margin,
discretionary and cash management accounts, with brokers, dealers,
counterparties or other persons (in each case, including affiliates
of the Manager) and to pay the customary fees and charges
applicable to transactions in, or the maintenance of, all such
accounts;
(d) to invest in money-market funds (including funds sponsored by
affiliates of the Manager), Treasury bills or other short-term,
interest-bearing instruments;
(e) to open, maintain and close bank and other interest-bearing and
non-interest-bearing accounts; and
(f) to enter into, make and perform such contracts, agreements and
other undertakings as the Manager may deem necessary, advisable or
incidental to the conduct of the business of this Fund.
SECTION 5.03. ACTIVITIES OF THE MANAGER PARTIES.
(a) The respective Manager Parties will not devote their full business
time, or any material portion of their business time, to this Fund,
as each is involved in the management of numerous other client and
proprietary accounts. However, the Manager hereby agrees to devote
to the objectives and purposes of this Fund such amount of the
business time of its officers and employees as the Manager shall
deem necessary for the management of the affairs of this Fund;
provided, however, that nothing contained in this Section 5.03(a)
shall preclude any Manager Party from acting as a director,
stockholder, officer or employee of any corporation, a trustee of
any trust, a partner of any partnership, a manager or member of any
other limited liability company or an administrative official of
any other business or governmental entity, or from receiving
compensation for services rendered thereto, from participating in
profits derived from investments in any such entity or from
investing in any securities or other property for such person's own
account.
(b) As contemplated by Section 2.05(g), the Manager retains an outside
service provider to supply certain services to the Program,
including, but not limited to: tax reporting, custody, accounting
and escrow services to the Program. Operating costs include this
Fund's allocable share of the fees and expenses of such (or other)
service provider, as well as the fees and expenses of any Manager
Party which may provide such (or other) services in the futures.
SECTION 5.04. SERVICES TO THIS FUND. Any Manager Party may perform
administrative services for this Fund, without such Manager Party waiving its
fees for such services.
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SECTION 5.05. INTERESTED PARTIES. The fact that a Manager Party or an Investor
is directly or indirectly interested in or connected with this Fund or a
related party with which or with whom this Fund has dealings, including but
not limited to the Manager's sharing in the Management Fees paid and
Performance Fee paid by this Fund to the Trading Advisor (such sharing to be
effected either by the Trading Advisor making a direct payment to the Manager
or by the Trading Advisor making payments to this Fund which are specially
allocated to the Manager), the receipt or rebate of other advisory and/or
management fees, brokerage commissions, "bid-ask" spreads, xxxx-ups or other
expenses, shall not preclude such dealings or make them void or voidable; and
neither this Fund nor any of the Investors shall have any rights in or to any
such dealings or in or to any profits derived therefrom.
SECTION 5.06. EXCULPATION. The Manager Parties shall not be liable to this
Fund or any Investor for any claims, costs, expenses, damages or losses
arising out of or in connection with this Agreement, the Manager acting as
manager of this Fund, this Fund in general or the offering of the Units, for
any conduct undertaken or omitted in good faith, and in the belief that such
conduct or omission was in, or not opposed to, the best interests of this
Fund; provided, that such conduct or omission did not constitute gross
negligence or intentional misconduct on the part of such Manager Party.
No Manager Party shall be liable to this Fund or any Investor for claims,
costs, expenses, damages or losses due to circumstances beyond any Manager
Party's control, or due to the negligence, dishonesty, bad faith or
misfeasance of any third party chosen by a Manager Party in good faith.
In no respect by way of limiting the foregoing exculpatory provisions but
rather by way of greater certainty, no Manager Party shall be liable to this
Fund or any Investor for any actions or omissions of: (i) the Trading Advisor;
(ii) any broker, dealer or counterparty unaffiliated with Xxxxxxx Xxxxx chosen
by a Manager Party in good faith; or (iii) any broker, dealer or counterparty
chosen by the Trading Advisor.
Affiliates of the Manager will provide this Fund with futures brokerage,
forward dealing and other counterparty and dealer services, and shall receive
compensation in connection therewith.
SECTION 5.07. INDEMNIFICATION. This Fund shall indemnify and hold harmless the
Manager Parties from and against any claims, costs, expenses, damages or
losses (including, without limitation, from and against any judgment,
settlement, attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action or proceeding) suffered or
sustained by any of them by reason of the fact that a Manager Party is or was
connected in any respect with this Fund; provided, that the conduct or
omission which led to such claim, cost, expense, damage or loss met the
standard of exculpation set forth in Section 5.06 above.
This Fund shall advance payments asserted by a Manager Party to be due under
the preceding paragraph pending a final determination of whether such
indemnification is, in fact, due; provided, that such Manager Party agrees in
writing to return any amounts so advanced (without interest) in the event such
indemnification is finally determined not to be due.
Whether or not a Manager Party is entitled to indemnification hereunder shall
be determined by the judgment of independent counsel as to whether such
Manager Party has reasonable grounds for asserting that indemnification is so
due, unless otherwise determined by a court, arbitral tribunal or
administrative forum.
In the event this Fund is made a party to any claim, dispute or litigation or
otherwise incurs any loss or expense as a result of or in connection with any
Investor's activities, obligations or liabilities unrelated to this Fund's
business, such Investor shall indemnify and reimburse this Fund for all loss
and expense incurred, including attorneys' fees.
SECTION 5.08. INVESTORS' TRANSACTIONS. Nothing in this Agreement is intended
to prohibit any Investor from buying, selling or otherwise transacting in
securities, commodity interests, currency interests, swap agreements or other
instruments for such Investor's own account, including commodity interests,
currency interests, swap agreements, securities or other instruments which are
the same as those held by this Fund.
SECTION 5.09. RELIANCE BY THIRD PARTIES. In dealing with the Manager acting on
behalf of this Fund, no person shall be required to inquire into the authority
of the Manager to bind this Fund. Persons dealing with this Fund shall also
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be entitled to rely on a certification by the Manager with regard to the
authority of other persons to act on behalf of this Fund in any matter.
SECTION 5.10. REGISTRATION OF ASSETS. Any assets owned by this Fund may be
registered in this Fund's name, in the name of a nominee or in "street name."
SECTION 5.11. LIMITATION ON AUTHORITY OF THE MANAGER. The Manager shall not
have the authority without the consent of Investors holding more than 50% of
the outstanding Units (by Net Asset Value) then held by Investors to:
(a) do any act in contravention of this Agreement (other than pursuant
to the Manager's authority to unilaterally amend this Agreement, as
provided in Section 10.03);
(b) confess a judgment against this Fund; or
(c) possess Fund property or assign rights to specific Fund property
for other than a Fund purpose.
ARTICLE VI
ADMISSION OF INVESTORS
SECTION 6.01. PROCEDURE AS TO NEW INVESTORS. The Manager may, as of the
beginning of any calendar month (or as of such other times as the Manager may
deem appropriate), admit one or more new Investors by issuing to such Investor
Units of the appropriate Class; provided, however, that each such new investor
to the Program shall execute and deliver an appropriate FuturesAccess Program
Subscription and Exchange Agreement (unless a FuturesAccess Program
Subscription and Exchange Agreement Signature Page has previously been
accepted from such Investor and the Manager does not request a resubmission),
and each Capital Contribution shall be accompanied by a FuturesAccess Program
Subscription and Exchange Agreement Signature Page. This Fund may charge an
Investor such amount as may be deemed appropriate by the Manager to compensate
this Fund in the case of any Capital Contribution received by this Fund after
the day as of which the new Investor is admitted to this Fund and such
Investor's Units are deemed to have been issued.
Admission of a new Investor shall not result in a dissolution of this Fund.
SECTION 6.02. PROCEDURE AS TO NEW MANAGERS. One or more additional managers
may be admitted to this Fund by the Manager, without the consent of any
Investor, if, but only if, the additional manager or managers are affiliates
of the Manager or successors to all or a material portion of the Manager's
equity or assets. The Manager shall promptly notify the Investors of the
admission of any such affiliated manager(s) (such notice need not, however, be
prior notice). No manager which is not affiliated with the Manager may be
admitted to this Fund without the consent of Investors holding more than 50%
of the outstanding Units then held by Investors; provided, that the foregoing
restriction shall not apply in the case of a sale of all or a material portion
of the Manager's equity or assets.
ARTICLE VII
BOOKS OF ACCOUNT; AUDITS; REPORTS TO INVESTORS
SECTION 7.01. BOOKS OF ACCOUNT. Books of account of this Fund shall be
maintained in accordance with generally accepted accounting principles under
the accrual basis of accounting by or under the supervision of the Manager and
shall be open to inspection by any Investor or such Investor's representative
during regular business hours; provided, however, that such books and records
shall only be available for inspection pursuant to a valid, non-commercial
purpose related to an Investor's status as an Investor. This Fund's books of
account shall not, however, include any record of the particular transactions
entered into by this Fund.
SECTION 7.02. ANNUAL AUDIT. The accounts of this Fund shall be audited as of
the close of each fiscal year by an independent public accounting firm (the
"Accountant") selected by the Manager and in accordance with the applicable
Commodity Futures Trading Commission regulations.
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The Manager or its agents shall cause to be prepared and mailed to each
Investor, including Investors who have redeemed all of their Units and
withdrawn but who were Investors at any time during a fiscal year, audited
financial statements and a report prepared by the Accountant, setting forth as
of the end of such fiscal year:
(a) the assets and liabilities of this Fund;
(b) the net capital appreciation or depreciation of this Fund for such
fiscal year;
(c) the Net Asset Value of this Fund as of the end of such fiscal year;
and
(d) the Net Asset Value per Unit of each Class as of the end of such
fiscal year.
The Manager shall not be required to provide Investors with an annual audit in
respect of any given year by any particular date in the following year, nor
shall the Net Asset Value of the Units be audited as of any date other than
the end of each fiscal year.
The Manager or its agents shall cause each Investor, including former
Investors who were Investors at any time during such fiscal year, to be
furnished with all information relating to this Fund necessary to enable such
Investor to prepare such Investor's federal income tax return; provided, that
all Investors acknowledge and agree that such information may initially be
provided in the form of estimates pending completion of this Fund's audit for
the year in question, and that Investors may be required to obtain extensions
of the date by which their federal and state income tax returns must be filed.
The Manager will have no liability to any Investor as a result of such
Investor being required to obtain any such extensions.
SECTION 7.03. INTERIM REPORTS. From time to time, but no less frequently than
monthly, the Manager shall cause to be prepared and delivered (at the expense
of this Fund), to each Investor interim reports indicating this Fund's
estimated results of operations and presenting such other matters concerning
this Fund's operations as the Manager may deem appropriate as well as those
required by the applicable Commodity Futures Trading Commission regulations.
The estimated performance of this Fund will be available upon request to the
Manager by any Investor.
ARTICLE VIII
CONFLICTS OF INTEREST
SECTION 8.01. INVESTORS' CONSENT. Each Investor, by subscribing for Units,
gives full and informed consent to the conflicts of interest to which the
Manager Parties are subject in their operation of this Fund, as disclosed in
the Confidential Program Disclosure Document and as contemplated herein
(including without limitation Xxxxxxx Xxxxx acting as exclusive clearing
broker and principal forward contract and swap dealer at rates and dealer
spreads which have not been negotiated at arm's-length as well as the Manager
sharing in the Management and Performance Fees paid to the Trading Advisor by
this Fund) and covenants not to object to or bring any proceedings against any
Manager Party relating to any such conflict of interest; provided, that such
Manager Party complies with the standard of exculpation set forth in Section
5.06.
The Manager is hereby specifically authorized by all Investors to cause this
Fund to use Xxxxxxx Xxxxx as this Fund's exclusive clearing broker and primary
forward contract and swap counterparty, and all Investors acknowledge and
agree that the brokerage rates and dealer spreads charged by Xxxxxxx Xxxxx to
this Fund are higher than those charged to other Xxxxxxx Xxxxx clients; in
addition, Xxxxxxx Xxxxx will retain significant additional economic benefit
from possession of this Fund's assets.
ARTICLE IX
DISSOLUTION AND WINDING UP OF THIS FUND
SECTION 9.01. EVENTS OF DISSOLUTION. This Fund will be dissolved, the affairs
of this Fund will be wound up and this Fund will be liquidated upon the
occurrence of any of the following events:
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(a) bankruptcy, dissolution, withdrawal or other termination of the
last remaining manager of this Fund;
(b) any event which would make unlawful the continued existence of this
Fund; or
(c) withdrawal of the Manager unless at such time there is at least one
remaining manager.
Nothing in this Section 9.01 shall impair the right of Investors holding more
than 50% of the outstanding Units then held by Investors to vote within 90
calendar days of any of the foregoing events of dissolution to continue this
Fund on the terms set forth herein (if it is lawful to do so), and to appoint
one or more managers for this Fund.
SECTION 9.02. DISSOLUTION. Upon the dissolution of this Fund, the Manager (or,
if the Manager has withdrawn, such other liquidator as the Investors may, by
vote of more than 50% of the outstanding Units then held by Investors, select)
shall wind up this Fund's affairs and, in connection therewith, shall
distribute this Fund's assets in the following manner and order:
(a) FIRST, to the payment and discharge of all claims of creditors of
this Fund (including creditors who are Investors);
(b) SECOND, to the establishment of such reserves as the Manager or
such other liquidator, in its sole discretion, may consider
reasonably necessary or appropriate for any losses, contingencies,
liabilities or other matters of or relating to this Fund; provided,
however, that if and when the Manager or such other liquidator, in
its sole discretion, determines that the causes for such reserves
have ceased to exist, the monies, if any, then held in reserve
shall be distributed in the manner hereinafter provided; and
(c) THIRD, after making all final allocations contemplated by Article
II (and for such purposes treating the date of dissolution as if it
were a December 31), to the distribution in cash of the remaining
assets among the Investors in accordance with the positive balance
in each such Investor's Closing Capital Account as of the last day
of the Accounting Period in which this Fund's dissolution occurs.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. INVESTORS NOT TO CONTROL. The Investors shall take no part in
the conduct or control of this Fund's business and shall have no authority or
power to act for or to bind this Fund.
SECTION 10.02. POWER OF ATTORNEY. Each Investor, by subscribing for Units,
does hereby constitute and appoint the Manager, as such Investor's true and
lawful representative and attorney-in-fact, with authority in such Investor's
name, place and stead to make, execute, sign and file a Certificate of
Formation of this Fund, any amendments thereto authorized herein, any
amendments to this Agreement authorized herein, and all such other
instruments, documents and certificates which may, from time to time, be
required by the laws of the United States of America, the State of Delaware,
the State of New Jersey, the State of New York or any other state or political
subdivision in which the Manager shall determine that this Fund shall do
business, to effectuate, implement and continue the valid existence of this
Fund.
SECTION 10.03. AMENDMENTS; CONSENTS. This Agreement may not be modified or
amended without the written consent of the Manager.
This Agreement may be modified or amended at any time with the consent of the
Manager and by Investors holding more than 50% of the outstanding Units then
held by Investors.
For all purposes of this Agreement, except as provided in the last paragraph
of this Section 10.03, when the consent of Investors is required, the
affirmative consent of Investors is not required; "negative consent" by
failure to object in writing after reasonable notice of a proposed
modification or amendment is sufficient -- 30 calendar days to be conclusively
presumed to constitute "reasonable notice" for such purposes.
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The Manager may, without the consent of the Investors, modify or amend any
provision of this Agreement for any of the following purposes:
(a) to add to this Agreement any further covenants, restrictions,
undertakings or other provisions for the protection or benefit of
Investors;
(b) to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any
other provisions contained herein or in the Confidential Program
Disclosure Document;
(c) to cause the allocations contained in Article II to comply with
Section 704 of the Code or any other statutory provisions or
regulations relating to such allocations;
(d) to provide for the issuance of new Classes of Units, or to amend
the manner in which Units may be exchanged among funds in the
Program or between different Classes of Units, provided that doing
so is not adverse to outstanding Units (as contemplated by Section
10.14); or
(e) to make any other change not materially adverse to the interests of
the Investors.
Notwithstanding anything in this Section 10.03 to the contrary, without the
affirmative written consent of each Investor affected thereby, no such
modification or amendment shall: reduce the liabilities, obligations or
responsibilities of the Manager (except that the Manager may take action to
admit any person or entity which is an affiliate of the Manager as a
substitute manager, and to provide for the Manager subsequently to withdraw
from this Fund or to provide for the Manager to withdraw from this Fund
without admitting any such substitute manager to this Fund); increase the
liabilities of Investors; or reduce the participation of Investors in the
profits and losses of this Fund or in any distributions made by this Fund as
set forth herein.
SECTION 10.04. NOTICES. Any notice to this Fund or the Manager relating to
this Agreement shall be in writing and delivered in person or by registered or
certified mail and addressed to the Manager at the principal office of this
Fund. All notices and reports sent to the Investors shall be addressed to each
Investor at the address set forth in such Investor's FuturesAccess Program
Subscription and Exchange Agreement (including the FuturesAccess Program
Subscription and Exchange Agreement Signature Page). Any Investor may
designate a new address by written notice to the Manager. Unless otherwise
specifically provided in this Agreement, a notice shall be deemed to have been
given to this Fund or the Manager when actually received by the Manager, and
to have been given to an Investor three business days after being deposited in
a post office or regularly maintained mailbox or when delivered in person. The
Manager may waive any notice requirement relating to notice to this Fund or to
itself, but no such waiver shall constitute a continuing waiver.
SECTION 10.05. LEGAL EFFECT; MANNER OF EXECUTION. This Agreement shall be
binding upon the Investors, the Manager and their respective permitted
successors and assigns. This Agreement shall inure to the benefit of the
foregoing parties as well as to the benefit of the Manager Parties.
This Agreement may be executed by power-of-attorney embodied in a
FuturesAccess Program Subscription and Exchange Agreement (including the
FuturesAccess Program Subscription and Exchange Agreement Signature Page) or
similar instrument with the same effect as if the parties executing the
FuturesAccess Program Subscription and Exchange Agreement (including the
FuturesAccess Program Subscription and Exchange Agreement Signature Page) or
similar instrument had all executed one counterpart of this Agreement;
provided, that this Agreement may also be executed in separate counterparts.
SECTION 10.06. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS. THE RIGHTS AND LIABILITIES OF THE
INVESTORS SHALL BE AS PROVIDED IN THE DELAWARE LIMITED LIABILITY COMPANY ACT,
EXCEPT AS HEREIN OTHERWISE EXPRESSLY PROVIDED.
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SECTION 10.07. CONSENT TO JURISDICTION. All controversies arising hereunder or
in connection with the affairs of this Fund shall be brought in the state or
federal courts located in New York, New York, and all Investors hereby
irrevocably consent to such jurisdiction and venue.
SECTION 10.08. "TAX MATTERS PARTNER"; TAX ELECTIONS. The Manager is designated
as the "Tax Matters Partner" for this Fund and shall be empowered to make or
revoke any elections now or hereafter required or permitted to be made by the
Code or any state or local tax law.
Each Investor, by subscribing for Units, agrees not to treat any tax item on
such Investor's individual tax return in a manner inconsistent with the
treatment of such item by this Fund, as reflected on the Schedule K-1 or other
information statement furnished by this Fund to such Investor, or to file any
claim for refund relating to any such Tax Item which would result in such
inconsistent treatment.
SECTION 10.09. DETERMINATION OF MATTERS NOT PROVIDED FOR IN THIS AGREEMENT.
The Manager shall be empowered to decide, in its good faith judgment, any
questions arising with respect to this Fund or to this Agreement, and to
provide for matters arising hereunder but which are not specifically set forth
herein, as the Manager may deem to be in, or not opposed to, the best
interests of this Fund.
SECTION 10.10. NO PUBLICITY. Each Investor agrees that such Investor will in
no event provide information concerning this Fund to any third party, knowing
that such third party may use such information in any form of publication,
newsletter or circular, whether publicly or privately distributed. Each
Investor's investment in this Fund, as well as the performance of such
investment, shall be maintained on a strictly confidential basis; provided,
that the Manager may make use of this Fund's performance record in the
ordinary course of the Manager's business activities.
SECTION 10.11. SURVIVAL. The indemnity and exculpation provisions hereof, as
well as the obligations to settle accounts, shall survive the withdrawal of
any Investor as well as the dissolution of this Fund.
SECTION 10.12. WAIVERS. The Manager may waive any provision of this Agreement
restricting the actions of Investors in respect of certain but not all
Investors provided that doing so will have no adverse effect on other
Investors.
SECTION 10.13. VOTING RIGHTS. In determining the number of Units entitled to
vote or consent and the number of votes or consents needed for approval of any
matter for which such a vote or consent is provided for herein, Units held by
any Manager Party (including, without limitation, the Manager's Capital
Account, if any, on a Unit-equivalent basis) shall not be counted.
SECTION 10.14. ISSUANCE OF DIFFERENT CLASSES.
(a) The Manager may, at any time and from time to time, issue different
Classes of Units, and may adjust the allocation, voting and other
provisions of this Agreement so as equitably to reflect the
issuance of such additional Classes. The Manager may also alter the
terms on which Units of any Class are sold, provided that doing so
does not adversely affect existing Investors.
(b) The fact that, for purposes of convenience, Units issued by this
Fund shall be designated as being Units of different "Classes"
shall in no respect imply that these Units constitute different
classes of equity interests as opposed to simply being subject to
different fees.
SECTION 10.15. COMPLIANCE WITH THE INVESTMENT ADVISERS ACT OF 1940;
SECURITIES LAWS.
(a) This Fund is not an "advisory client" of the Manager for purposes
of the Investment Advisers Act of 1940 (the "Advisers Act") due to
this Fund trading futures, forward and options contracts other than
securities. Nevertheless, to the extent that any provision hereof
may be construed in a manner inconsistent with the Advisers Act, it
is the express intent of the Manager and the Investors that such
provision be interpreted and applied ab initio so as to comply with
the Advisers Act in all respects (even if doing so effectively
amends the terms of this Agreement).
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(b) Nothing in this Agreement shall be deemed to constitute a waiver by
any Investor of such Investor's rights under any federal or state
securities laws.
* * * * * * *
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date on the cover page hereof by their respective representatives thereunto
duly authorized.
INVESTORS: MANAGER:
By: Xxxxxxx Xxxxx Alternative Investments LLC Xxxxxxx Xxxxx Alternative Investments LLC
Attorney-in-Fact
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------------------- -------------------------------------------
Xxxxxx X. Xxxxx Xxxxxx X. Xxxxx
Vice President, Chief Operating Officer and Vice President, Chief Operating Officer and
Manager Manager
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Limited Liability Company Operating Agreement
