SYSTEMATIC MOMENTUM II LLC AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT
Exhibit
3.1
SYSTEMATIC
MOMENTUM II LLC
AMENDED
AND RESTATED LIMITED LIABILITY COMPANY
OPERATING
AGREEMENT
_________________________
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 AND WITH THE CONSENT OF THE MANAGER.
_________________________
Xxxxxxx
Xxxxx Alternative Investments LLC
Manager
DATED
AS OF DECEMBER 1, 2008
ML
APM GLOBAL COMMODITY FUTURESACCESS LLC AMENDED AND RESTATED LIMITED LIABILITY
COMPANY OPERATING AGREEMENT
TABLE
OF CONTENTS
ARTICLE
I
|
ORGANIZATION
|
2
|
SECTION
1.01.
|
FUND
NAME
|
2
|
SECTION
1.02.
|
OBJECTIVES
AND PURPOSES.
|
2
|
SECTION
1.03.
|
INVESTMENTS
|
3
|
SECTION
1.04.
|
FISCAL
YEAR; ACCOUNTING PERIODS
|
4
|
SECTION
1.05.
|
REGISTERED
AGENT AND OFFICE; PRINCIPAL OFFICE
|
4
|
SECTION
1.06.
|
DURATION
OF THIS FUND
|
4
|
SECTION
1.07.
|
ASSIGNABILITY
OF UNITS; SUBSTITUTED INVESTORS; LIMITED ASSIGNABILITY OF THE MANAGER’S
INTEREST.
|
4
|
SECTION
1.08.
|
LIABILITY
OF INVESTORS.
|
5
|
ARTICLE
II
|
CAPITAL
AND TAX ALLOCATIONS
|
5
|
SECTION
2.01.
|
CAPITAL
CONTRIBUTIONS
|
6
|
SECTION
2.02.
|
OPENING
CAPITAL ACCOUNTS.
|
9
|
SECTION
2.03.
|
FINANCIAL
ALLOCATIONS AMONG THE UNITS
|
9
|
SECTION
2.04.
|
NET
ASSET VALUE
|
9
|
SECTION
2.05.
|
FEES;
TRANSACTION COSTS; OPERATING EXPENSES.
|
11
|
SECTION
2.06.
|
ALLOCATION
OF PROFITS AND LOSSES FOR FINANCIAL PURPOSES
|
12
|
SECTION
2.07.
|
ALLOCATION
OF PROFITS AND LOSSES FOR INCOME TAX PURPOSES.
|
13
|
SECTION
2.08.
|
CHARGEBACKS
TO CURRENT OR FORMER INVESTORS
|
15
|
SECTION
2.09.
|
PROCESSING
OF SUBSCRIPTIONS.
|
15
|
SECTION
2.10.
|
VALUATION
OF ASSETS
|
16
|
SECTION
2.11.
|
USE
OF ESTIMATES
|
17
|
SECTION
2.12.
|
ACCOUNTING
PRACTICES
|
17
|
ARTICLE
III
|
PARTICIPATION
IN FUND PROPERTY; REDEMPTIONS AND DISTRIBUTIONS
|
18
|
SECTION
3.01.
|
NO
UNDIVIDED INTERESTS IN FUND PROPERTY
|
18
|
SECTION
3.02.
|
REDEMPTIONS
OF UNITS; EXCHANGES.
|
18
|
SECTION
3.03.
|
WITHDRAWALS
OF CAPITAL BY THE MANAGER
|
19
|
SECTION
3.04.
|
MANDATORY
REDEMPTIONS.
|
19
|
SECTION
3.05.
|
MANDATORY
REDEMPTIONS TO PAY TAXES
|
20
|
SECTION
3.06.
|
DISTRIBUTIONS
|
20
|
SECTION
3.07.
|
FORM
OF DISTRIBUTION AND REDEMPTION PAYMENTS
|
20
|
A-i
SECTION
3.08.
|
REMOVAL
OF THE MANAGER
|
20
|
ARTICLE
IV
|
WITHDRAWAL
OF THE MANAGER AND INVESTORS
|
20
|
SECTION
4.01.
|
WITHDRAWAL
OF THE MANAGER.
|
20
|
SECTION
4.02.
|
WITHDRAWAL
OF AN INVESTOR
|
21
|
SECTION
4.03.
|
STATUS
AFTER WITHDRAWAL
|
21
|
ARTICLE
V
|
MANAGEMENT
|
21
|
|
||
SECTION
5.01.
|
AUTHORITY
OF THE MANAGER.
|
21
|
SECTION
5.02.
|
SERVICE
PROVIDERS; INVESTMENTS; ACCOUNTS
|
21
|
SECTION
5.03.
|
ACTIVITIES
OF THE MANAGER PARTIES; OPERATING COSTS.
|
22
|
SECTION
5.04.
|
SERVICES
TO THIS FUND
|
22
|
SECTION
5.05.
|
INTERESTED
PARTIES
|
22
|
SECTION
5.06.
|
EXCULPATION
|
23
|
SECTION
5.07.
|
INDEMNIFICATION
|
23
|
SECTION
5.08.
|
INVESTORS’
TRANSACTIONS
|
24
|
SECTION
5.09.
|
RELIANCE
BY THIRD PARTIES
|
24
|
SECTION
5.10.
|
REGISTRATION
OF ASSETS
|
24
|
SECTION
5.11.
|
LIMITATION
ON AUTHORITY OF THE MANAGER
|
24
|
ARTICLE
VI
|
ADMISSION
OF INVESTORS
|
24
|
|
||
SECTION
6.01.
|
PROCEDURE
AS TO NEW INVESTORS
|
24
|
SECTION
6.02.
|
PROCEDURE
AS TO NEW MANAGERS
|
25
|
ARTICLE
VII
|
BOOKS
OF ACCOUNT; AUDITS; REPORTS TO INVESTORS
|
25
|
SECTION
7.01.
|
BOOKS
OF ACCOUNT
|
25
|
SECTION
7.02.
|
ANNUAL
AUDIT
|
25
|
SECTION
7.03.
|
INTERIM
REPORTS
|
26
|
ARTICLE
VIII
|
CONFLICTS
OF INTEREST
|
26
|
SECTION
8.01.
|
INVESTORS’
CONSENT
|
26
|
ARTICLE
IX
|
DISSOLUTION
AND WINDING UP OF THIS FUND
|
26
|
SECTION
9.01.
|
EVENTS
OF DISSOLUTION
|
26
|
SECTION
9.02.
|
DISSOLUTION
|
27
|
ARTICLE
X
|
MISCELLANEOUS
PROVISIONS
|
27
|
SECTION
10.01.
|
INVESTORS
NOT TO CONTROL
|
27
|
SECTION
10.02.
|
POWER
OF ATTORNEY
|
27
|
SECTION
10.03.
|
AMENDMENTS;
CONSENTS
|
28
|
SECTION
10.04.
|
NOTICES
|
28
|
SECTION
10.05.
|
LEGAL
EFFECT; MANNER OF EXECUTION
|
29
|
SECTION
10.06.
|
GOVERNING
LAW
|
29
|
SECTION
10.07.
|
CONSENT
TO JURISDICTION
|
29
|
SECTION
10.08.
|
“TAX
MATTERS PARTNER”; TAX ELECTIONS
|
29
|
A-ii
SECTION
10.09.
|
DETERMINATION
OF MATTERS NOT PROVIDED FOR IN THIS AGREEMENT
|
29
|
SECTION
10.10.
|
NO
PUBLICITY
|
30
|
SECTION
10.11.
|
SURVIVAL
|
30
|
SECTION
10.12.
|
WAIVERS
|
30
|
SECTION
10.13.
|
VOTING
RIGHTS
|
30
|
SECTION
10.14.
|
ISSUANCE
OF DIFFERENT CLASSES.
|
30
|
SECTION
10.15.
|
COMPLIANCE
WITH THE INVESTMENT ADVISERS ACT OF 1940; SECURITIES LAWS.
|
30
|
___________________
TESTlMONIUM
SIGNATURES
A-iii
SYSTEMATIC
MOMENTUM II LLC
AMENDED
AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT
THIS
AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (“Agreement”)
of Systematic Momentum II LLC (the “Fund”) 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 Fund was formed as of July 5, 2006 by the filing of a Certificate of
Formation with the Secretary of State of the State of Delaware (“Certificate of
Formation”), as a limited liability company under the provisions of the Delaware
Limited Liability Company Act (the “Act”); the Fund is one of the funds included
in the Xxxxxxx Xxxxx FuturesAccessSM Program
(“FuturesAccess”); such other funds to be hereinafter sometimes referred to as
“FuturesAccess Funds”).
WHEREAS,
in addition to FuturesAccess, the Manager also sponsors the HedgeAccess® Program
(the “HedgeAccess Program”, and together with FuturesAccess, the “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 Fund was initially formed under the name
“ML APM Global Commodity FuturesAccess LLC”.
WHEREAS, the Fund’s name is being changed as of the date
hereof to “Systematic Momentum II LLC” by the filing of a Certificate of
Amendment to Certificate of Formation regarding such name change with the
Secretary of State of Delaware.
WHEREAS, the Manager wishes to amend and restate in the
entirety the original Limited Liability Company Operating Agreement of the Fund
dated as of July 31, 2006 (the “Original LLC Agreement”), to make the
modifications hereinafter set forth.
WHEREAS, pursuant to Section 10.03 of the Original LLC
Agreement the Manager approves such modifications.
WHEREAS,
subject to the Delaware Act, the Fund shall be governed by and operated pursuant
to this Agreement.
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 Systematic Momentum II 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
invest directly or indirectly with one or more professional trading
advisors to manage this Fund’s speculative trading in the futures,
forward, options and other markets through FuturesAccess Funds, including,
without limitation, the Fund investing in ML Systematic Momentum
FuturesAccess LLC (rather than the Fund directly engaging a trading
advisor) 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, as they may be amended from time to time, as applicable
(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.
|
(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;
|
A-2
(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. INVESTMENTS. The
Manager may cause the Fund to directly or indirectly invest with one or more
trading advisors with discretionary authority over this Fund’s trading and
investing, including the Fund’s carrying out such trading and investment by
being an investor in FutureAccess Funds, including, without limitation, ML
Systematic Momentum FuturesAccess LLC (rather than the Fund directly engaging a
trading advisor) (as described in the Confidential Program Disclosure Document,
as applicable). 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, as
applicable, 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.
A-3
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.
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 principal office of this Fund shall
be located at the offices of the Manager, Two World Financial Center,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 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
|
A-4
|
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.
|
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.
|
A-5
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, as applicable, 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 and in determining the Investor’s Class I and Class D
eligibility, as determined on the basis of an Investor’s total “FuturesAccess
Investment” (as defined below).
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 shall be 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.
Class
eligibility shall be determined on the basis of an Investor’s total
“FuturesAccess Investment” in FuturesAccess overall as well as, in the case of
Class D Units, in a particular FuturesAccess Fund. An Investor’s
“FuturesAccess Investment,” determined as of the beginning of each month, equals
the greater of:
(i) the
market value of all of an Investor’s outstanding Units (or in a particular
FuturesAccess Fund, as applicable) based on the most recently available Net
Asset Values, plus pending subscriptions; or
(ii) an
Investor’s net subscriptions to FuturesAccess overall (or to a particular
FuturesAccess Fund, as applicable). Net subscriptions means an
Investor’s aggregate subscriptions less aggregate redemptions (not including
pending redemptions).
A-6
Class A
and Class C Units shall be assigned for FuturesAccess Investments up to
$5,000,000; Class I Units are assigned for FuturesAccess Investments of
$5,000,000 or more; and Class D Units are assigned for FuturesAccess Investments
in an individual FuturesAccess Fund of $5,000,000 or more or aggregate
FuturesAccess Investments of $15,000,000 or more.
Except
for purposes of determining Class D eligibility in a particular FuturesAccess
Fund, the purchase and sale of Units in an exchange shall offset each other and
shall have no effect on the amount of an Investor’s net subscriptions to
FuturesAccess overall.
The
FuturesAccess Investments attributable to certain related accounts may be
combined for purposes of determining an Investor’s Class I and Class D
eligibility.
In
addition, Investors who participate in the Manager’s HedgeAccess Program
(private investment funds that primarily trade futures rather than securities)
shall be permitted to aggregate their investments in FuturesAccess with their
investments in HedgeAccess for purposes of determining such Investors’ Class I
and Class D eligibility.
There
shall be no minimum FuturesAccess Investment or Net Asset Value required to
invest in Class A or Class C Units (other than the $10,000 minimum subscription
amounts required to invest in a particular FuturesAccess Fund and FuturesAccess
overall).
New
Investors whose initial subscription equals or exceeds $5,000,000 shall be
issued Class I Units in each FuturesAccess Fund in which they
invest. If an existing Investor, whose FuturesAccess Investment is
less than $5,000,000, makes an additional subscription which causes such
Investor’s FuturesAccess Investment to equal or exceed $5,000,000 (including the
new subscription), the entire new subscription shall be invested in Class I
Units. The Investor’s existing Units shall not be converted from
Class A or Class C (as the case may be) to Class I Units, but all subsequent
subscriptions and exchanges made by such Investor shall be for Class I
Units.
Class D
eligibility is determined on both an individual FuturesAccess Fund and an
overall FuturesAccess basis. Investors whose initial subscription to
any one FuturesAccess Fund equals or exceeds $5,000,000 shall be issued Class D
Units in that FuturesAccess Fund. If an Investor, whose FuturesAccess
Investment in a particular FuturesAccess Fund is less than $5,000,000, makes an
additional subscription or exchange into that FuturesAccess Fund which causes
such Investor’s FuturesAccess Investment to equal or exceed $5,000,000
(including the new subscription or exchange), the entire new subscription or
exchange into that FuturesAccess Fund shall be invested in Class D
Units. The Investor’s existing Units in that FuturesAccess Fund shall
not be converted to Class D Units, but all subsequent subscriptions or exchanges
made by such Investor into the same FuturesAccess Fund shall be for Class D
Units. However, notwithstanding the fact that an Investor’s
FuturesAccess Investment in a particular FuturesAccess Fund equals or exceeds
$5,000,000, if that Investor invests or exchanges into another FuturesAccess
Fund in which such Investor’s FuturesAccess Investment is less than $5,000,000,
such Investor shall not receive Class D Units in such other FuturesAccess Fund
(except as described in the next paragraph).
A-7
New
Investors whose initial subscription equals or exceeds $15,000,000 shall be
issued Class D Units in each FuturesAccess Fund in which they invest,
irrespective of whether such Investor’s FuturesAccess Investments in any one
FuturesAccess Fund equals or exceeds $5,000,000. If an existing
Investor, whose FuturesAccess Investment is less than $15,000,000, makes an
additional subscription immediately after which such Investor’s FuturesAccess
Investment equals or exceeds $15,000,000 (including the new subscription), the
entire new subscription shall be invested in Class D Units. The
Investor’s existing Units shall not be converted to Class D Units, but all
subsequent subscriptions and exchanges made by such Investor will be for Class D
Units.
Subscriptions
made to all FuturesAccess Funds shall be aggregated for purposes of determining
whether an investor is eligible to invest in Class D or Class I
Units.
Once an
Investor is issued Class D or Class I Units, such Investor shall continue to be
issued Class D or Class I Units (as applicable) irrespective of subsequent
redemptions or Unit value depreciation. However, if an Investor
withdraws entirely from FuturesAccess or a particular FuturesAccess Fund and
subsequently reinvests, such Investor’s Class D and/or Class I Unit eligibility
shall be determined from the date of such reinvestment as if such Investor had
never previously participated in FuturesAccess or such FuturesAccess
Fund.
Xxxxxxx
Xxxxx officers and employees invest in Class I Units without regard to the
$5,000,000 minimum FuturesAccess Investment requirement.
Certain
Xxxxxxx Xxxxx clients may invest in Class I Units on different terms than those
described herein, depending on the type of Xxxxxxx Xxxxx Account held by such
clients. In addition, FuturesAccess Funds may from time to time offer
to certain Xxxxxxx Xxxxx clients a customized Class of Units having different
financial terms than those described herein or in the Confidential Program
Disclosure Document, as applicable, provided that doing so does not have a
material adverse effect on existing Investors. Such customized
Classes will generally be designed for Investors who are subject to additional
fees on their investments in the FuturesAccess Funds depending on the type of
Xxxxxxx Xxxxx Account held by such Investors or other reasons, and will not be
generally available to other 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
FuturesAccess. When an existing investor in FuturesAccess 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.
A-8
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 (as defined in Section 2.09) or this Fund, of all or any part
of the Capital Contribution(s) of any Investor.
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;
|
A-9
(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;
|
(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 (as applicable) 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,
|
A-10
|
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. 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.l0%, 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
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
(as applicable).
|
A-11
(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 FuturesAccess. 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 (as applicable), 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.
|
A-12
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.
|
A-13
(v)
|
Management,
Performance and Sponsor’s Fees (as applicable), 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 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, to the extent practicable, 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.
|
A-14
(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, despite the fact that such Investor no longer 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 an 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 rather shall reflect such adjustments in
the Accounting Period in which they become known.
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
|
A-15
|
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 applicable) (as described
in the Confidential Program Disclosure Document, as applicable), shall
reduce Net Asset Value, even though such Performance Fees (as applicable)
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;
|
A-16
(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 good faith by the Manager, including assets
and liabilities for which there is no readily identifiable market
value;
|
(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 ail 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
A-17
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.
|
(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
FuturesAccess). 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
|
A-18
|
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
(such right, the “Exchange Privilege”). 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. The Manager reserves the right to restrict or
terminate the Exchange Privilege at any
time.
|
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 Program, (iii) such
Investor’s investment in the Units, or aggregate investment in
FuturesAccess, 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 may 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.
|
A-19
(c)
|
Units
mandatorily redeemed shall be redeemed as of the specified month-end
without any further action 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.
|
A-20
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 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;
|
A-21
(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; OPERATING COSTS.
(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 FuturesAccess, including, but not
limited to: tax reporting, custody, accounting and escrow
services to FuturesAccess. 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.
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 (as applicable) 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.
A-22
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.
A-23
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
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
FuturesAccess 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.
A-24
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.
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
A-25
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, as applicable, 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 (as applicable) 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:
(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
|
A-26
(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, or deemed advisable
by the Manager under, 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.
A-27
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.
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 (as
applicable);
|
(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 FuturesAccess 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
A-28
notice to
the Manager. Unless otherwise specifically provided in this
Agreement, 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.
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
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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. The voting rights of the Units shall be determined by their
respective Net Asset Values. 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)
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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.
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(b)
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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.
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SECTION
10.15. COMPLIANCE
WITH THE INVESTMENT ADVISERS ACT OF 1940; SECURITIES LAWS.
(a)
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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
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Advisers
Act in all respects (even if doing so effectively amends the terms of this
Agreement).
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(b)
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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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* * * * *
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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:
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MANAGER:
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By:
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Xxxxxxx
Xxxxx Alternative
Investments
LLC
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Xxxxxxx
Xxxxx Alternative Investments LLC
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By:
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