HATTERAS MASTER FUND, L.P. Amended and Restated Agreement of Limited Partnership Dated as of July 1, 2008
Amended
and Restated Agreement of Limited Partnership
Dated
as
of July 1, 2008
TABLE
OF CONTENTS
Page
| ARTICLE I | DEFINITIONS |
1
|
| ARTICLE II | ORGANIZATION; ADMISSION OF PARTNERS; DIRECTORS |
7
|
|
SECTION
2.1
|
FORMATION
OF LIMITED PARTNERSHIP
|
7
|
|
|
|
SECTION
2.2
|
NAME
|
8
|
|
|
SECTION
2.3
|
PRINCIPAL
AND REGISTERED OFFICE
|
8
|
|
|
SECTION
2.4
|
DURATION
|
8
|
|
|
SECTION
2.5
|
BUSINESS
OF THE PARTNERSHIP
|
8
|
|
|
SECTION
2.6
|
GENERAL
PARTNER
|
8
|
|
|
SECTION
2.7
|
LIMITED
PARTNERS
|
9
|
|
|
SECTION
2.8
|
ORGANIZATIONAL
LIMITED PARTNER
|
9
|
|
|
SECTION
2.9
|
BOTH
GENERAL AND LIMITED PARTNER
|
9
|
|
|
SECTION
2.10
|
LIMITED
LIABILITY
|
9
|
|
|
SECTION
2.11
|
DIRECTORS
|
10
|
| ARTICLE III | MANAGEMENT; ADVICE AND MANAGEMENT |
11
|
|
SECTION
3.1
|
MANAGEMENT
AND CONTROL
|
11
|
|
|
SECTION
3.2
|
POWERS
RESERVED BY THE GENERAL PARTNER
|
12
|
|
|
SECTION
3.3
|
ACTIONS
BY DIRECTORS
|
14
|
|
|
SECTION
3.4
|
MEETINGS
OF PARTNERS
|
14
|
|
|
SECTION
3.5
|
ADVICE
AND MANAGEMENT
|
15
|
|
|
SECTION
3.6
|
CUSTODY
OF ASSETS OF THE PARTNERSHIP
|
16
|
|
|
SECTION
3.7
|
OTHER
ACTIVITIES
|
16
|
|
|
SECTION
3.8
|
DUTY
OF CARE
|
17
|
|
|
SECTION
3.9
|
INDEMNIFICATION
|
17
|
|
|
SECTION
3.10
|
FEES,
EXPENSES AND REIMBURSEMENT
|
20
|
| ARTICLE IV | TERMINATION OF STATUS OF GENERAL PARTNER; REMOVAL OF GENERAL PARTNER; TRANSFERS AND REPURCHASES |
22
|
|
SECTION
4.1
|
TERMINATION
OF STATUS OF GENERAL PARTNER
|
22
|
|
|
SECTION
4.2
|
REMOVAL
OF GENERAL PARTNER
|
22
|
|
|
SECTION
4.3
|
TRANSFER
OF INTEREST OF GENERAL PARTNER
|
22
|
|
|
SECTION
4.4
|
TRANSFER
OF INTERESTS OF LIMITED PARTNERS
|
22
|
|
|
SECTION
4.5
|
REPURCHASE
OF INTERESTS
|
24
|
|
|
ARTICLE
V
|
CAPITAL
|
28
|
TABLE
OF CONTENTS
(continued)
Page
|
SECTION
5.1
|
CONTRIBUTIONS
TO CAPITAL
|
28
|
|
|
SECTION
5.2
|
RIGHTS
OF PARTNERS TO CAPITAL
|
29
|
|
|
SECTION
5.3
|
CAPITAL
ACCOUNTS
|
30
|
|
|
SECTION
5.4
|
ALLOCATION
OF NET PROFIT AND LOSS
|
30
|
|
|
SECTION
5.5
|
ALLOCATION
OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES
|
30
|
|
|
SECTION
5.6
|
PERFORMANCE
INCENTIVE.
|
31
|
|
|
SECTION
5.7
|
RESERVES
|
31
|
|
|
SECTION
5.8
|
ALLOCATION
TO AVOID CAPITAL ACCOUNT DEFICITS
|
32
|
|
|
SECTION
5.9
|
TAX
ALLOCATIONS
|
32
|
|
|
SECTION
5.10
|
DISTRIBUTIONS
|
33
|
| ARTICLE VI | DISSOLUTION AND LIQUIDATION |
34
|
|
SECTION
6.1
|
DISSOLUTION
|
34
|
|
|
SECTION
6.2
|
LIQUIDATION
OF ASSETS
|
35
|
| ARTICLE VII | ACCOUNTING, VALUATIONS AND BOOKS AND RECORDS |
36
|
|
SECTION
7.1
|
ACCOUNTING
AND REPORTS
|
36
|
|
|
SECTION
7.2
|
DETERMINATIONS
BY GENERAL PARTNER
|
37
|
|
|
SECTION
7.3
|
VALUATION
OF ASSETS
|
37
|
| ARTICLE VIII | MISCELLANEOUS PROVISIONS |
37
|
|
SECTION
8.1
|
AMENDMENT
OF PARTNERSHIP AGREEMENT
|
37
|
|
|
SECTION
8.2
|
SPECIAL
POWER OF ATTORNEY
|
39
|
|
|
SECTION
8.3
|
NOTICES
|
40
|
|
|
SECTION
8.4
|
AGREEMENT
BINDING UPON SUCCESSORS AND ASSIGNS
|
40
|
|
|
SECTION
8.5
|
CHOICE
OF LAW; ARBITRATION
|
40
|
|
|
SECTION
8.6
|
NOT
FOR BENEFIT OF CREDITORS
|
42
|
|
|
SECTION
8.7
|
CONSENTS
|
42
|
|
|
SECTION
8.8
|
MERGER
AND CONSOLIDATION
|
42
|
-ii-
TABLE
OF CONTENTS
(continued)
Page
|
SECTION
8.9
|
PRONOUNS
|
42
|
|
|
SECTION
8.10
|
CONFIDENTIALITY
|
42
|
|
|
SECTION
8.11
|
CERTIFICATION
OF NON-FOREIGN STATUS
|
43
|
|
|
SECTION
8.12
|
SEVERABILITY
|
43
|
|
|
SECTION
8.13
|
ENTIRE
AGREEMENT
|
44
|
|
|
SECTION
8.14
|
DISCRETION
|
44
|
|
|
SECTION
8.15
|
CONFLICTS
|
44
|
|
|
SECTION
8.16
|
COUNTERPARTS
|
44
|
|
|
SECTION
8.17
|
HEADINGS
|
45
|
-iii-
AMENDED
AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
THIS
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (the “AGREEMENT”) of
HATTERAS MASTER FUND, L.P., a Delaware limited partnership (the “PARTNERSHIP”),
dated as of July 1, 2008 by and among HATTERAS INVESTMENT MANAGEMENT LLC, a
Delaware limited liability company, as General Partner, and those Persons who
execute this Agreement and whose names are reflected on the books and records
of
the Partnership as Limited Partners.
WHEREAS,
the General Partner and the organizational limited partner were parties to
that
certain Agreement of Limited Partnership of Hatteras Master Fund, L.P. dated
as
of October 29, 2004 (the “Original Partnership Agreement”);
WHEREAS,
the Original Limited Partnership was amended and restated in its entirety on
March 31, 2005 (the “First Amended and Restated Partnership
Agreement”);
WHEREAS,
the current General Partner and Limited Partners of the Partnership wish to
amend and restate the First Amended and Restated Agreement in its entirety
as
set forth herein.
NOW,
THEREFORE, for and in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
DEFINITIONS
For
purposes of this Agreement:
“1933
ACT” means the Securities Act of 1933 and the rules, regulations and orders
under the 1933 Act, as amended from time to time, or any successor
law.
“1940
ACT” means the Investment Company Act of 1940 and the rules, regulations and
orders under the 1940 Act, as amended from time to time, or any successor
law.
“ADVISERS
ACT” means the Investment Advisers Act of 1940 and the rules, regulations and
orders under the Advisers Act, as amended from time to time, or any successor
law.
“ADVISOR”
means any Person designated by the Investment Manager to manage a portion of
the
assets of the Partnership, either directly or through the investment by the
Partnership in an Advisor Fund. For purposes of this Agreement, the term
“Advisor” includes Sub-advisers.
“ADVISOR
ACCOUNT” means an account directly managed by an Advisor for the
Partnership.
“ADVISOR
FUND” means an investment company, a general or limited partnership, a limited
liability company or other pooled investment vehicle in which the Partnership
has invested and that is advised by an Advisor, whether or not, in each case,
the entity is registered under the 1940 Act, and whether or not, in each case,
the entity is formed by the Partnership.
“AFFILIATE”
means affiliated person as that term is defined in the 1940 Act.
“AGREEMENT”
means this Amended and Restated Agreement of Limited Partnership.
“BOARD
OF
DIRECTORS” means the board of the Directors who have been delegated the
authority described in this Agreement.
“BUSINESS
DAY” means any day when the New York Stock Exchange is open for
business.
“CAPITAL
ACCOUNT” means, with respect to each Partner, the capital account established
and maintained on behalf of the Partner in accordance with SECTION 5.3 of this
Agreement.
“CAPITAL
CONTRIBUTION” means the contribution, if any, made, or to be made, as the
context requires, to the capital of the Partnership, after giving effect to
any
applicable placement agent fees, by a Partner or former Partner, as the case
may
be.
“CERTIFICATE”
means the Certificate of Limited Partnership of the Partnership as filed with
the office of the Secretary of State of the State of Delaware on October 29,
2004 and any amendments to the Certificate and/or restatements of the
Certificate as filed with the office of the Secretary of State of the State
of
Delaware pursuant to this Agreement.
“CLOSING
DATE” means the date as of which the Partnership commenced
operations.
“CODE”
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor law.
“COMMODITY
EXCHANGE ACT” means the Commodity Exchange Act and the rules, regulations and
orders under the Commodity Exchange Act, as amended from time to time, or any
successor law.
“DELAWARE
ACT” means the Delaware Revised Uniform Limited Partnership Act, as amended from
time to time, or any successor law.
-2-
“DIRECTORS”
means those natural Persons designated as “DIRECTORS” in accordance with this
Agreement who are delegated the authority provided for in this Agreement who,
from time to time after the date of this Agreement, become Directors in
accordance with the terms and conditions of this Agreement.
“FISCAL
PERIOD” means the period commencing on the Closing Date, and thereafter each
period commencing on the day immediately following the last day of the
immediately preceding Fiscal Period, and ending in each case at the close of
business on the first to occur of the following dates:
(1) the
last
day of any calendar quarter, including the last day of the calendar
year;
(2) the
day
preceding the date as of which a contribution to the capital of the Partnership
is made by any Partner in accordance with SECTION 5.1 of this
Agreement;
(3) the
day
on which the Partnership repurchases the Interest or portion of the Interest
of
any Partner in accordance with SECTION 4.5 of this Agreement;
(4) the
day
as of which the Partnership admits a substituted Partner to whom or which an
Interest or portion of an Interest of a Partner has been Transferred (unless
the
Transfer of the Interest or portion of the Interest results in no change of
beneficial ownership of the Interest or portion of the Interest);
(5) the
day
as of which any amount is credited to or debited against the Capital Account
of
any Partner, other than an amount that is credited to or debited against the
Capital Accounts of all Partners in accordance with their respective Investment
Percentages; or (6) December 31, or any other date that is the last day of
the
taxable year of the Partnership.
“FISCAL
YEAR” means the period commencing on the Closing Date and ending on March 31,
2005, and thereafter each period commencing on April 1 of each year and ending
on March 31 of that year (or on the date of a final distribution made in
accordance with SECTION 6.2 of this Agreement), unless the Directors designate
another fiscal year for the Partnership. The taxable year of the Partnership
will end on December 31 of each year, or on any other date designated by the
General Partner that is a permitted taxable year-end for tax
purposes.
“FORM
N-2” means the Partnership’s Registration Statement on Form N-2 filed with the
Securities and Exchange Commission, as amended from time to time.
“GENERAL
PARTNER” means Hatteras Investment Management LLC, a limited liability company
formed under the laws of the State of Delaware, and any other Person or Persons
admitted to the Partnership as a general partner of the Partnership,
collectively, in their capacities as general partners of the Partnership, and
“General Partner” means any of the General Partners. When the term General
Partner is used in this Agreement and the Partnership has more than one General
Partner, the term “General Partner” will refer to each General
Partner.
-3-
“HURDLE
RATE” means, with respect to the Incentive Period, that rate determined from
time to time by the Directors and approved in the manner contemplated by the
1940 Act; such rate initially to be the yield-to-maturity of the 90 day U.S.
Treasury Xxxx as reported by the Wall Street Journal for the last business
day
of the preceding calendar year of the Partnership. Hurdle Rates will not be
cumulative and will be recalculated with respect to each Incentive Period.
The
Hurdle Rate for a given Incentive Period will be adjusted with respect to any
contributions, transfers, distributions, withdrawals and repurchases applicable
to the Limited Partner’s Capital Account for that Incentive Period, or portion
thereof.
“HURTLE
RATE AMOUNT” means, with respect to each Limited Partner, an amount equal to the
balance of the Limited Partner’s Capital Account as of the first day of the
applicable Incentive Period, multiplied by the Hurdle Rate.
“INCENTIVE
PERIOD” means, with respect to a Partner’s Interest, a single Sub-Period or
multiple consecutive Sub-Periods. Both the Incentive Period and the last
Sub-Period within the Incentive Period terminate at the close of business on
the
earliest occurrence of: (1) the last day of the calendar year; (2) the date
immediately prior to the effective date of a full Transfer of Interests; or
(3)
the date on which the Partnership dissolves.
“INDEPENDENT
DIRECTORS” mean those Directors who are not “interested persons” of the
Partnership as that term is defined in the 1940 Act.
“INTEREST”
means the entire partnership interest in the Partnership at any particular
time
of a Partner or other Person to whom or which an Interest or portion of an
Interest has been Transferred in accordance with SECTION 4.3 or 4.4 of this
Agreement, including the rights and obligations of the Partner or other Person
under this Agreement and the Delaware Act.
“INVESTMENT
MANAGER” means Hatteras Investment Partners LLC, a limited liability company
formed under the laws of the State of Delaware, and any other Person or Persons
subsequently engaged to provide investment management services to the
Partnership in a similar capacity.
“INVESTMENT
PERCENTAGE” means a percentage established for each Partner on the Partnership’s
books as of the first day of each Fiscal Period. The Investment Percentage
of a
Partner for a Fiscal Period will be determined by dividing the balance of the
Partner’s Capital Account as of the commencement of the Fiscal Period by the sum
of the Capital Accounts of all of the Partners as of the commencement of the
Fiscal Period. The sum of the Investment Percentages of all Partners for each
Fiscal Period will equal 100%.
“LIMITED
PARTNER” means any Person admitted to the Partnership as a Limited Partner of
the Partnership (including any Person who or that is a General Partner when
acting in the Person’s capacity as a Limited Partner) until the Partnership
repurchases the entire Interest of the Person as a Limited Partner in accordance
with SECTION 4.5 of this Agreement, or a substituted Limited Partner or Partners
are admitted with respect to the Person’s entire Interest as a Limited Partner
in accordance with SECTION 4.4 of this Agreement, in the Person’s capacity as a
Limited Partner of the Partnership. For purposes of the Delaware Act, the
Limited Partners will constitute a single class or group.
-4-
“LOSS
CARRYFORWARD AMOUNT” means, with respect to any Incentive Period, and to the
extent not subsequently offset by allocations of profits or otherwise reduced,
as described in this paragraph, the excess of: (1) a Limited Partner’s allocable
share of Net Losses calculated in accordance with Section 5.4 of this Agreement
(excluding amounts previously allocated to repurchased or distributed portions
of the Capital Account during the Incentive Period) over (2) the Partner’s
allocable share of Net Profits calculated in accordance with Section 5.4 of
this
Agreement (excluding amounts previously allocated to repurchased or distributed
portions of the Capital Account during the Incentive Period), in each case
for
the current and any prior Incentive Periods. If at the end of any subsequent
Incentive Period, profits allocated to a Limited Partner’s Capital Account
exceed the losses allocated during that period (excluding profits and losses
previously taken into account for this purpose by reason of a partial repurchase
or distribution during that period), any Loss Carryforward Amount for such
Partner will be reduced (but not below zero) by the amount of the excess. In
addition, if any Limited Partner participates in a repurchase or receives a
distribution after a Loss Carryforward Amount has been established for the
Limited Partner, the Limited Partner’s Loss Carryforward Amount will be reduced
on a proportionate basis by the amount by which the repurchase or distribution
bears to the Limited Partner’s total Capital Account. No transferee may succeed
to any portion of the Loss Carryforward Amount applicable to the Transferring
Limited Partner unless the Transfer of the Interest or portion of the Interest
results in no change in beneficial ownership in the Interest or portion of
the
Interest. The Loss Carryforward Amount for a given Incentive Period will be
adjusted with respect to any contributions, transfers, distributions,
withdrawals and repurchases applicable to the Limited Partner’s Capital Account
for that Incentive Period, or portion thereof.
“MANAGEMENT
FEE” means the fee paid by the Partnership to the Investment Manager out of the
Partnership’s assets, and debited against Limited Partners’ Capital Accounts, as
provided in SECTION 3.10(A) of this Agreement.
“NET
ASSETS” means the total value of all assets of the Partnership, less an amount
equal to all accrued debts, liabilities and obligations of the Partnership,
calculated before giving effect to any repurchases of Interests.
“NET
PROFIT” or “NET LOSS” means the amount by which the Net Assets as of the close
of business on the last day of a Fiscal Period exceed (in the case of Net
Profit) or are less than (in the case of Net Loss) the Net Assets as of the
commencement of the same Fiscal Period (or, with respect to the initial Fiscal
Period of the Partnership, at the close of business on the Closing Date), the
amount of any Net Profit or Net Loss to be adjusted to exclude any items to
be
allocated among the Capital Accounts of the Partners on a basis that is not
in
accordance with the Investment Percentages of all Partners as of the
commencement of the Fiscal Period in accordance with SECTION 5.8 of this
Agreement.
-5-
“OFFERING
MATERIALS” means subscription materials provided to prospective Limited Partners
in connection with an investment to be made in the Partnership.
“ORGANIZATIONAL
LIMITED PARTNER” means Xxxxx X. Xxxxxxx.
“PARTNERS”
means the General Partner(s) and the Limited Partners, collectively, and
“Partner” means any General Partner or Limited Partner.
“PARTNERSHIP”
means Hatteras Master Fund, L.P. and any partnership continuing the business
of
the Partnership after dissolution as provided in this Agreement.
“PARTNERSHIP
RETURN”, with respect to each Incentive Period applicable to a Limited Partner,
is determined by dividing: (a) the excess of the Limited Partner’s allocable
share of Net Profits calculated in accordance with Section 5.4 of this Agreement
(including amounts previously allocated to repurchased or distributed portions
of the Limited Partner’s Capital Account during the Incentive Period), over the
Limited Partner’s allocable share of Net Losses calculated in accordance with
Section 5.4 of this Agreement (including amounts previously allocated to
repurchased or distributed portions of the Limited Partner’s Capital Account
during the Incentive Period) by (b) the Limited Partner’s Capital Account
balance as of the opening of business of the first day of that Incentive Period.
The Partnership Return, for a given Incentive Period, will be adjusted with
respect to any contributions, transfers, distributions, withdrawals and
repurchases applicable to the Limited Partner’s Capital Account for that
Incentive Period, or portion thereof.
“PERFORMANCE
INCENTIVE” means, with respect to each Limited Partner, 10% of the amount,
determined as of the close of each Incentive Period, if any, of (1) the Limited
Partner’s allocable share of Net Profits calculated in accordance with Section
5.4 of this Agreement (excluding amounts previously allocated to repurchased
or
distributed portions of the Limited Partner’s Capital Account during the
Incentive Period), in excess of the Limited Partner’s allocable share of Net
Losses calculated in accordance with Section 5.4 of this Agreement (excluding
amounts previously allocated to repurchased or distributed portions of the
Limited Partner’s Capital Account during that Incentive Period), above (2) the
greater of (a) the Limited Partner’s Hurdle Rate Amount for a given Incentive
Period or (2) the Limited Partner’s Loss Carryforward Amount, if any, for a
given Incentive Period. The Performance Incentive for a given Incentive Period
will be adjusted with respect to any contributions, transfers, distributions,
withdrawals and repurchases applicable to the Limited Partner’s Capital Account
for that Incentive Period, or portion thereof.
“PERSON”
means any individual, entity, corporation, partnership, limited liability
company, joint stock company, trust, estate, joint venture, or unincorporated
organization.
“SECURITIES”
means securities (including, without limitation, equities, debt obligations,
options, and other “securities” as that term is defined in Section 2(a)(36) of
the 0000 Xxx) and any contracts for forward or future delivery of any security,
debt obligation, currency or commodity, all manner of derivative instruments
and
any contracts based on any index or group of securities, debt obligations,
currencies or commodities, and any options on those contracts.
-6-
“SUB-ADVISER”
means an Investment Manager responsible either (1) for directly managing a
portion of the assets of the Partnership or (2) for managing a special purpose
investment vehicle in which the Investment Manager and the Partnership are
the
sole limited partners, members or interest holders.
“SUB-PERIOD”
means, with respect to a Partner’s Interest in the Partnership, the initial
period that begins upon the Partnership’s commencement of investment operations
(or, with respect to subsequent contributions, at the time of those
contributions) and ends at the close of business on the earliest occurrence
of:
(1) the last day of the Fiscal Year, (2) the date immediately prior to the
effective date of additional purchases of Interests, (3) the date immediately
prior to the effective date of partial Transfers of Interests; or (4) the date
on which the Partnership dissolves. Each Sub-Period is followed by a subsequent
Sub-Period, with respect to a Partner’s then existing Interest in the
Partnership; provided that the Partner continues to hold an Interest in the
Partnership, the General Partner continues to serve as the general partner
of
the Partnership, and the Partnership is in existence. Each Sub-Period will
reflect each Partner’s appropriate Interest in the Partnership during the
Sub-Period.
“TRANSFER”
means the assignment, transfer, sale or other disposition of all or any portion
of an Interest, including any right to receive any allocations and distributions
attributable to an Interest. Verbs, adverbs or adjectives such as “Transfer,”
“Transferred” and “Transferring” have correlative meanings.
“VALUATION
DATE” means any date upon which the net asset value of the Interests are valued
for purposes of a repurchase, as determined by the Board of
Directors.
ARTICLE
II
ORGANIZATION;
ADMISSION OF PARTNERS; DIRECTORS
SECTION
2.1 FORMATION OF LIMITED PARTNERSHIP. (a)
The
Partnership is formed as a limited partnership pursuant to the Certificate
and
this Agreement. The Partners agree that their rights, duties and liabilities
will be as provided in the Delaware Act, except as otherwise provided in this
Agreement. The General Partner will cause the Certificate to be executed and
filed in accordance with the Delaware Act and will cause to be executed and
filed with applicable governmental authorities any other instruments, documents
and certificates that the General Partner concludes may from time to time be
required by the laws of the United States of America, the State of Delaware
or
any other jurisdiction in which the General Partner determines that the
Partnership should do business, or any political subdivision or agency of any
such jurisdiction, or that the General Partner determines is necessary or
appropriate to effectuate, implement and continue the valid existence and
business of the Partnership.
(b) The
Partnership is formed for the object and purpose of (and the nature of the
business to be conducted by the Partnership is) engaging in any lawful activity
for which limited partnerships may be formed under the Delaware Act and engaging
in any and all activities necessary or incidental to the foregoing.
-7-
SECTION
2.2 NAME. The name of the Partnership is “Hatteras Master Fund, L.P.” or any
other name that the General Partner may adopt after the date of this Agreement
upon (a) causing an appropriate amendment to this Agreement to be executed
and
to the Certificate to be filed in accordance with the Delaware Act and (b)
sending notice of the amendment to each Limited Partner.
SECTION
2.3 PRINCIPAL AND REGISTERED OFFICE. The Partnership will have its principal
office at the principal office of the General Partner or at any other place
designated from time to time by the General Partner. The Partnership’s
registered agent in the State of Delaware shall be The Corporation Trust
Company, and the Partnership’s registered office in the State of Delaware at
Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 unless
the General Partner designates a different registered agent or office from
time
to time in accordance with the Delaware Act.
SECTION
2.4 DURATION. The term of the Partnership will commence on the filing of the
Certificate and will continue until the Partnership is dissolved and wound
up
and the Certificate is canceled in accordance with SECTION 6.1 of this
Agreement.
SECTION
2.5 BUSINESS OF THE PARTNERSHIP. (a)
The
business of the Partnership is to purchase, sell, invest and trade in Securities
and engage in any financial or derivative transactions relating to Securities.
Portions of the Partnership’s assets (which may constitute, in the aggregate,
all of the Partnership’s assets) may be invested in Advisor Funds or Advisor
Accounts that invest and trade in Securities or in separate managed accounts
through which the Partnership may invest and trade in Securities, some or all
of
which may be advised by one or more Advisors. The Partnership may execute,
deliver and perform all contracts, agreements and other undertakings and engage
in all activities and transactions as the General Partner, the Directors or
the
Investment Manager may deem necessary or advisable to carry out its objective
or
business.
(b) The
Partnership will operate as a closed-end, management investment company in
accordance with the 1940 Act and subject to any fundamental policies and
investment restrictions described in the Form N-2.
(c) The
Partnership may designate from time to time persons to act as signatories for
the Partnership, including, without limitation, persons authorized to execute
and deliver any filings with the Securities and Exchange Commission (the “SEC”)
or applicable federal or state regulatory authorities or self-regulatory
organizations.
SECTION
2.6 GENERAL PARTNER. (a)
Hatteras
Investment Management LLC shall be admitted to the Partnership as the General
Partner upon its execution of this Agreement. The General Partner may admit
to
the Partnership as an additional General Partner any Person who agrees in
writing to be bound by all of the terms of this Agreement as a General Partner.
The General Partner may admit to the Partnership as a substituted General
Partner any Person to which it has Transferred its Interest as the General
Partner in accordance with SECTION 4.3 of this Agreement. Any substituted
General Partner will be admitted to the Partnership upon the Transferring
General Partner’s consenting to such admission and is authorized to, and will,
continue the business of the Partnership without dissolution. The name and
mailing address of the General Partner and the Capital Contribution of the
General Partner will be reflected on the books and records of the Partnership.
If at any time the Partnership has more than one General Partner, unless
otherwise provided in this Agreement, any action allowed to be taken, or
required to be taken, by the General Partners may be taken only with the
unanimous approval of all of the General Partners.
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(b) Each
General Partner will serve for the duration of the term of the Partnership,
unless the General Partner ceases to be a General Partner in accordance with
SECTION 4.1 of this Agreement.
SECTION
2.7 LIMITED PARTNERS. (a)
The
General Partner may, at any time and without advance notice to or consent from
any other Partner, admit to the Partnership any Person who agrees to be bound
by
all of the terms of this Agreement as an additional Limited Partner. The General
Partner may in its absolute discretion reject subscriptions for Interests (or
portions of Interests) and/or may suspend subscriptions. The admission of any
Person as an additional Limited Partner will be effective upon the General
Partner’s acceptance on behalf of the Partnership of such Person’s subscription
for Interests and the execution and delivery by, or on behalf of, the additional
Limited Partner of this Agreement or an instrument that constitutes the
execution and delivery of this Agreement. The General Partner will cause the
books and records of the Partnership to reflect the name and the required
contribution to the capital of the Partnership of the additional Limited
Partner.
(b) Subject
to SECTION 2.10 of this Agreement, when the entire Capital Contribution
attributable to an Interest for which a Partner has subscribed is paid for,
that
Interest will be deemed to be validly issued and fully paid and
non-assessable.
SECTION
2.8 ORGANIZATIONAL LIMITED PARTNER. Upon the admission to the Partnership of
any
Limited Partner, the Organizational Limited Partner shall withdraw from the
Partnership as the Organizational Limited Partner and shall be entitled to
the
return of his Capital Contribution, if any, without interest or deduction,
and
shall cease to be a limited partner of the Partnership.
SECTION
2.9 BOTH GENERAL AND LIMITED PARTNER. A Partner may be simultaneously a General
Partner and a Limited Partner, in which event the Partner’s rights and
obligations in each capacity will be determined separately in accordance with
the terms and provisions of this Agreement and as provided in the Delaware
Act.
SECTION
2.10 LIMITED LIABILITY. Except for payment obligations under this Agreement,
including Capital Contribution obligations, and as provided under applicable
law, a Limited Partner will not be liable for the Partnership’s obligations in
any amount in excess of the Limited Partner’s Capital Account balance, plus the
Limited Partner’s share of undistributed profits and assets. Subject to
applicable law, a Limited Partner may be obligated to return to the Partnership
certain amounts distributed to the Limited Partner.
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SECTION
2.11 DIRECTORS. (a)
The
number of Directors at the date of this Agreement is fixed at not more than
fourteen (14) Directors and no fewer than two (2). Thereafter, the number of
Directors will be fixed from time to time by the Directors then in office,
which
number may be greater, or lesser, than fourteen (14), but no fewer than the
minimum number of directors permitted to corporations organized under the laws
of the State of Delaware, except that no reduction in the number of Directors
will serve to effect the removal of any Director. Each Partner approves the
delegation by the General Partner to the Directors, in accordance with SECTION
3.1 of this Agreement, of certain of the General Partner’s rights and
powers.
(b) The
term
of office of each Director shall be from the time of such Director’s election
and qualification until his or her successor shall have been elected and shall
have qualified, or until his or her status as a Director is terminated sooner
in
accordance with SECTION 2.11(D) of this Agreement. Except to the extent the
1940
Act requires election by Limited Partners, if any vacancy in the position of
a
Director occurs, including by reason of an increase in the number of Directors
as contemplated by SECTION 2.11(A) of this Agreement, the remaining Directors
may appoint an individual to serve in that capacity in accordance with the
provisions of the 1940 Act. Independent Directors will at all times constitute
at least a majority (or more if required by the 0000 Xxx) of the Directors
then
serving. An Independent Director will be replaced by another Independent
Director selected and nominated by the remaining Independent Directors, or
in a
manner otherwise permissible under the 1940 Act.
(c) If
no
Director remains, the General Partner will promptly call a meeting of the
Partners, to be held within 60 days after the date on which the last Director
ceased to act in that capacity, for the purpose of determining whether to
continue the business of the Partnership and, if the business is to be
continued, approving the appointment of the requisite number of Directors.
If
the Partners determine at the meeting not to continue the business of the
Partnership, or if the approval of the appointment of the requisite number
of
Directors is not approved within 60 days after the date on which the last
Director ceased to act in that capacity, then the Partnership will be dissolved
in accordance with SECTION 6.1 of this Agreement and the assets of the
Partnership will be liquidated and distributed in accordance with SECTION 6.2
of
this Agreement.
(d) The
status of a Director will terminate (1) if the Director dies; (2) if the
Director resigns as a Director; or (3) if the Director is removed in accordance
with SECTION 2.11(E) of this Agreement.
(e) Any
Director may be removed with or without cause by a vote of a majority of the
other Directors or by the vote or written consent of Limited Partners holding
not less than two-thirds of the total number of votes eligible to be cast by
all
Limited Partners.
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(f) The
Directors may establish and maintain committees of the Board of Directors,
and
the Directors may grant to such committees the authority to, among other things:
value the assets of the Partnership; select and nominate the Independent
Directors of the Partnership; recommend to the Board of Directors the
compensation to be paid to the Independent Directors; and recommend to the
Board
of Directors the firm of certified public accountants that will conduct the
Partnership’s audits.
(g) The
Directors may establish or designate committees of the Board of Directors or
the
Partnership, whose members may include the Directors and/or other Persons who
are not Directors, to provide advice and other services to the Partnership,
which committees may include (but are not limited to) a committee that will
value the assets of the Partnership.
(h) The
Independent Directors will receive compensation for their services as
Independent Directors, as determined by the Board of Directors.
ARTICLE
III
MANAGEMENT;
ADVICE AND MANAGEMENT
SECTION
3.1 MANAGEMENT AND CONTROL. (a)
The
General Partner delegates to the Directors those rights and powers of the
General Partner necessary for the Directors to manage and control the business
affairs of the Partnership and to carry out their oversight obligations with
respect to the Partnership required under the 1940 Act, state law, and any
other
applicable laws or regulations. Rights and powers delegated to the Directors
include, without limitation, the authority as Directors to oversee and to
establish policies regarding the management, conduct and operation of the
Partnership’s business, and to do all things necessary and proper as Directors
to carry out the objective and business of the Partnership, including, without
limitation, the power to engage an investment manager to provide advice and
management and to remove such an investment manager, as well as to exercise
any
other rights and powers expressly given to the Directors under this Agreement.
The Partners intend that, to the fullest extent permitted by law, and except
to
the extent otherwise expressly provided in this Agreement, (1) each Director
is
vested with the same powers and authority on behalf of the Partnership as are
customarily vested in each director of a Delaware corporation and (2) each
Independent Director is vested with the same powers and authority on behalf
of
the Partnership as are customarily vested in each director who is not an
“interested person” (as that term is defined in the 0000 Xxx) of a closed-end,
management investment company registered under the 1940 Act that is organized
as
a Delaware corporation. During any period in which the Partnership has no
Directors, the General Partner will manage and control the Partnership. Each
Director will be the agent of the Partnership but will not, for any purpose,
be
a General Partner. Notwithstanding the delegation described in this SECTION
3.1(A), the General Partner will not cease to be the General Partner and will
continue to be liable as such and in no event will a Director be considered
a
General Partner by agreement, estoppel or otherwise as a result of the
performance of his or her duties under this Agreement or otherwise. The General
Partner retains those rights, powers and duties that have not been delegated
under this Agreement. Any Director may be admitted to the Partnership in
accordance with SECTION 2.7 of this Agreement and make Capital Contributions
and
own an Interest, in which case the Director will also become a Limited
Partner.
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(b) The
Partnership will file a tax return as a Partnership for U.S. federal income
tax
purposes. All decisions for the Partnership relating to tax matters including,
without limitation, whether to make any tax elections (including the election
under Section 754 of the Code), the positions to be made on the Partnership’s
tax returns and the settlement or further contest or litigation of any audit
matters raised by the Internal Revenue Service or any other taxing authority,
will be made by the Directors. All actions (other than ministerial actions)
taken by the tax matters Partner, as designated in SECTION 3.1(C) below, will
be
subject to the approval of the Directors.
(c) The
General Partner will be the designated tax matters Partner for purposes of
the
Code. Each Partner agrees not to treat, on his, her or its personal income
tax
return or in any claim for a refund, any item of income, gain, loss, deduction
or credit in a manner inconsistent with the treatment of the item by the
Partnership. The tax matters Partner will have the exclusive authority and
discretion to make any elections required or permitted to be made by the
Partnership under any provisions of the Code or any other revenue
laws.
(d) No
Limited Partner will have any right to participate in or take any part in the
management or control of the Partnership’s business, and no Limited Partner will
have any right, power or authority to act for or bind the Partnership. Limited
Partners will have the right to vote on any matters only as provided in this
Agreement or on any matters that require the approval of the holders of voting
securities under the 1940 Act and will have no right to exercise any other
vote
granted to Limited Partners under the Delaware Act, any such rights being vested
in the Directors (or the General Partner if there are no Directors) and may
be
exercised without requiring the approval of the Limited Partners.
SECTION
3.2 POWERS RESERVED BY THE GENERAL PARTNER. Notwithstanding anything in this
Agreement to the contrary, the General Partner retains all rights, duties and
powers to manage the affairs of the Partnership that may not be delegated under
Delaware law, and that are not otherwise delegated by the General Partner to
the
Directors or assumed by any investment manager engaged pursuant to Section
3.1(a) of this Agreement or any other Person under the terms of any agreement
between the Partnership and such investment manager or any other Person.
Specifically, and without limitation, the General Partner will retain full
power
and authority on behalf of and in the name of the Partnership:
(1) to
issue
to any Partner an instrument certifying that the Partner is the owner of an
Interest;
(2) to
call
and conduct meetings of Partners at the Partnership’s principal office or
elsewhere as it may determine, and to assist the Directors in calling and
conducting meetings of the Directors;
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(3) to
engage
and terminate attorneys, accountants (subject to the provisions of the 0000
Xxx)
and other professional advisers and consultants as the General Partner deems
necessary or advisable in connection with the affairs of the Partnership or
as
may be directed by the Directors;
(4) to
act as
tax matters Partner in accordance with SECTION 3.1(C) of this Agreement, and
to
assist in the preparation and filing of any required tax or information returns
to be made by the Partnership;
(5) as
directed by the Directors, to commence, defend and conclude any action, suit,
investigation or other proceeding that pertains to the Partnership or any assets
of the Partnership;
(6) as
directed by the Directors, to arrange for the purchase of any insurance covering
the potential liabilities of the Partnership or relating to the performance
of
the Directors, the General Partner, any investment manager engaged pursuant
to
Section 3.1(a) of this Agreement or any of their principals, Partners,
directors, officers, members, employees and agents;
(7) to
execute, deliver and perform any contracts, agreements and other undertakings,
and to engage in activities and transactions that are necessary or appropriate
for the conduct of the business of the Partnership and to bind the Partnership
by those contracts, agreements, and other undertakings, PROVIDED that any
persons appointed as officers of the Partnership pursuant to Section 3.3(c)
of
this Agreement, as directed by the Directors, may execute and deliver contracts
and agreements on behalf of the Partnership and bind the Partnership to those
contracts and agreements;
(8) to
make
determinations regarding subscriptions for and/or the Transfer of Interests,
including, without limitation, determinations regarding the suspension of
subscriptions, and to execute, deliver and perform subscription agreements,
placement agency agreements relating to the placement of Interests,
administration agreements appointing an administrator to perform various
administrative action on behalf of the Partnership, escrow agreements and
custodial agreements without the consent of or notice to any other Person,
notwithstanding any other provision of this Agreement;
(9) to
make
determinations regarding appropriate reserves to be created for the contingent,
conditional or unmatured liabilities of the Partnership;
(10) as
provided in SECTION 7.2 of this Agreement, to make determinations regarding
adjustments to the computation of Net Profit or Net Loss and allocations among
the Partners under ARTICLE V of this Agreement;
(11) to
manage
or oversee the general administrative and operational aspects of the
Partnership; and
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(12) as
directed by the Directors, to establish additional classes of Limited Partners,
General Partners, or Interests having separate rights, powers, or duties with
respect to specified property or obligations of the Partnership or profits
or
losses associated with specified property or obligations of the Partnership,
and
having separate business purposes or investment objectives as the Directors
may
determine, consistent with the 1940 Act and the Delaware Act, so long as the
assets and liabilities of one class is limited to the assets and liabilities
of
such class.
SECTION
3.3 ACTIONS BY DIRECTORS. (a)
Unless
provided otherwise in this Agreement, the Directors will act only: (1) by the
affirmative vote of a majority of the Directors (which majority will include
any
requisite number of Independent Directors required by the 0000 Xxx) present
at a
meeting duly called at which a quorum of the Directors is present either in
person or, to the extent consistent with the provisions of the 1940 Act, by
conference telephone or other communications equipment by means of which all
Persons participating in the meeting can hear each other; or (2) by unanimous
written consent of all of the Directors without a meeting, if permissible under
the 1940 Act. A majority of the Directors then in office will constitute a
quorum at any meeting of Directors.
(b) The
Directors may designate from time to time a Director or any person appointed
as
an officer of the Partnership pursuant to Section 3.3(c) of this Agreement
or
the General Partner who will preside at all meetings. Meetings of the Directors
may be called by the General Partner, the Chairman of the Board of Directors,
or
any two Directors, and may be held on any date and at any time and place
determined by the Directors. Each Director will be entitled to receive written
notice of the date, time and place of a meeting within a reasonable time in
advance of the meeting. Notice need not be given to any Director who attends
a
meeting without objecting to the lack of notice or who executes a written waiver
of notice with respect to the meeting.
(c) The
Directors may appoint from time to time agents and employees of the Partnership
who will have the same powers and duties on behalf of the Partnership as are
customarily vested in officers of a corporation incorporated under Delaware
law,
or such other powers and duties as may be designated by the Directors, in their
sole discretion, and designate them as officers or agents of the Partnership
by
resolution of the Directors specifying their titles or functions.
SECTION
3.4 MEETINGS OF PARTNERS. (a)
Actions
requiring the vote of the Partners may be taken at any duly constituted meeting
of the Partners at which a quorum is present or by means of a written consent.
Meetings of the Partners may be called by the General Partner, by the
affirmative vote of a majority of Directors then in office, or by Partners
holding at least a majority of the total number of votes eligible to be cast
by
all Partners, and may be held at any time, date and place determined by the
General Partner in the case of meetings called by the General Partner or the
Partners and at any time, date and place determined by the Directors in the
case
of meetings called by the Directors. In each case, the General Partner will
provide notice of the meeting, stating the date, time and place of the meeting
and the record date for the meeting, to each Partner entitled to vote at the
meeting within a reasonable time prior to the meeting. Failure to receive notice
of a meeting on the part of any Partner will not affect the validity of any
act
or proceeding of the meeting, so long as a quorum is present at the meeting.
Except as otherwise required by applicable law, only matters set out in the
notice of a meeting may be voted on by the Partners at the meeting. The presence
in person or by proxy of Partners holding a majority of the total number of
votes eligible to be cast by all Partners as of the record date will constitute
a quorum at any meeting of Partners. In the absence of a quorum, a meeting
may
be adjourned to the time or times as determined by the General Partner and
communicated to the Directors in the manner described above in this SECTION
3.4(A). Except as otherwise required by any provision of this Agreement or
of
the 1940 Act, (1) those candidates receiving a plurality of the votes cast
at
any meeting of Partners called pursuant to SECTION 2.11(C) of this Agreement
or
elected pursuant to the requirement of SECTION 2.11(B) will be elected as
Directors and (2) all other actions of the Partners taken at a meeting will
require the affirmative vote of Partners holding a majority of the total number
of votes eligible to be cast by those Partners who are present in person or
by
proxy at the meeting.
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(b) Each
Partner will be entitled to cast at any meeting of Partners or pursuant to
written consent a number of votes equivalent to the Partner’s Investment
Percentage as of the record date for the meeting or the date of the written
consent. The General Partner will establish a record date not less than 10
nor
more than 60 days prior to the date of any meeting of Partners or mailing
(including by electronic transmission) to the Partners of any written consent,
to determine eligibility to vote at the meeting and the number of votes that
each Partner will be entitled to cast at the meeting, and will maintain for
each
record date a list setting out the name of each Partner and the number of votes
that each Partner will be entitled to cast at the meeting.
(c) A
Partner
may vote at any meeting of Partners by a properly executed proxy transmitted
to
the Partnership at any time at or before the time of the meeting by telegram,
telecopier or other means of electronic communication or other readable
reproduction as contemplated by the provisions relating to proxies applicable
to
corporations incorporated under the laws of Delaware now or in the future in
effect. A proxy may be suspended or revoked, as the case may be, by the Partner
executing the proxy by a later writing delivered to the Partnership at any
time
prior to exercise of the proxy or if the Partner executing the proxy is present
at the meeting and votes in person. Any action of the Partners that is permitted
to be taken at a meeting of the Partners may be taken without a meeting if
consents in writing, setting out the action to be taken, are signed by Partners
holding a majority of the total number of votes eligible to be cast or any
greater percentage as may be required under this Agreement to approve the
action.
SECTION
3.5 ADVICE AND MANAGEMENT. (a)
The
Directors will, among their powers, have the authority to cause the Partnership
to engage the Investment Manager to provide Advice and Management to the
Partnership under their direction, subject to the initial approval of any such
engagement prior to the Closing Date by the Directors as required under the
1940
Act (including the vote of a majority of the Independent Directors at a meeting
called for such purpose) and by the Organizational Limited Partner. As directed
by the Directors, the Partnership and the General Partner, on behalf of the
Partnership, among its powers described in SECTION 3.2 of this Agreement, will
have the authority to execute, deliver and monitor the performance of any
contract or agreement to provide Advice and Management to the Partnership (each,
an “INVESTMENT ADVISORY AGREEMENT”). Any such Investment Advisory Agreement will
require that the Investment Manager acknowledge its obligations under this
Agreement.
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SECTION
3.6 CUSTODY OF ASSETS OF THE PARTNERSHIP. (a)
Notwithstanding anything to the contrary in this Agreement, the General Partner
will not have any authority to hold or have possession or custody of any funds,
Securities or other property of the Partnership. The physical possession of
all
funds, Securities or other property of the Partnership will at all times be
held, controlled and administered by one or more custodians retained by the
Partnership. The General Partner will have no responsibility, other than that
associated with the oversight and supervision of custodians retained by the
Partnership, with respect to the collection of income or the physical
acquisition or safekeeping of the funds, Securities or other property of the
Partnership, all duties of collection, physical acquisition or safekeeping
being
the sole obligation of such custodians.
(b) With
respect to any Advisor Fund securities held by the Partnership as of the date
on
which the Partnership becomes registered with the SEC as an investment company
under the 1940 Act, and during any period of time in which the Partnership
remains so registered, such securities shall be under the control of one or
more
of the Partnership’s custodian(s), as may be engaged from time to time, pursuant
to Section 17(f) of the 1940 Act and the rules thereunder, and no person shall
be authorized or permitted to have access to such securities except in
accordance with Section 17(f) of the 1940 Act and the rules thereunder, and
consistent with the terms of the Partnership’s agreement with the relevant
Partnership custodian.
SECTION
3.7 OTHER ACTIVITIES. (a)
Neither
the General Partner, its principals, Partners, directors, officers, members,
employees and beneficial owners nor the Directors will be required to devote
full time to the affairs of the Partnership, but each will devote such time
as
each may reasonably be required to perform its obligations under this Agreement
and under the 1940 Act.
(b) The
Investment Manager, the Directors, any Partner, and any Affiliate of any Partner
may engage in or possess an interest in other business ventures or commercial
dealings of every kind and description, independently or with others, including,
but not limited to, acquisition and disposition of Securities, provision of
investment advisory or brokerage services, serving as directors, officers,
employees, advisors or agents of other companies, Partners of any Partnership,
members of any limited liability company, or trustees of any trust, or entering
into any other commercial arrangements. No Partner will have any rights in
or to
such activities of any other Partner, the Investment Manager, the Directors
or
any Affiliate of any Partner or any profits derived from these
activities.
(c) The
General Partner, the Investment Manager and their principals, Partners,
directors, officers, members, employees and beneficial owners and the Directors,
from time to time may acquire, possess, manage, hypothecate and dispose of
Securities or other investment assets, and engage in any other investment
transaction for any account over which they exercise discretionary authority,
including their own accounts, the accounts of their families, the account of
any
entity in which they have a beneficial interest or the accounts of others for
whom or which they may provide investment advisory or other
services.
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(d) To
the
extent that at law or in equity the Directors, the Investment Manager or the
General Partner has duties (including fiduciary duties) and liabilities relating
to those duties to the Partnership or to any other Partner or other Person
bound
by this Agreement, any such Person acting under this Agreement will not be
liable to the Partnership or to any other Partner or other Person bound by
this
Agreement for its good faith reliance on the provisions of this Agreement.
The
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of the General Partner, the Investment Manager or the Directors
otherwise existing at law or in equity, are agreed by the Partners to replace
the other duties and liabilities of the General Partner, the Investment Manager
or the Directors.
SECTION
3.8 DUTY OF CARE. (a)
The
Directors, the Investment Manager and the General Partner, including any
officer, director, Partner, member, principal, employee or agent of any of
them,
will not be liable to the Partnership or to any of its Partners for any loss
or
damage occasioned by any act or omission in the performance of the Person’s
services under this Agreement, in the absence of a final judicial decision
on
the merits from which no further right to appeal may be taken that the loss
is
due to an act or omission of the Person constituting willful misfeasance, bad
faith, gross negligence or reckless disregard of the Person’s duties under this
Agreement.
(b) No
Director who has been designated an “audit committee financial expert” (for
purposes of Section 407 of the Xxxxxxxx-Xxxxx Act of 2002 or any successor
provision thereto, and any rules issued thereunder by the SEC) in the
Partnership’s Form N-2 or other reports required to be filed with the SEC shall
be subject to any greater duty of care in discharging such Director’s duties and
responsibilities by virtue of such designation than is any Director who has
not
been so designated.
(c) Limited
Partners not in breach of any obligation under this Agreement or under any
agreement pursuant to which the Limited Partner subscribed for Interests will
be
liable to the Partnership, any Partner or third parties only as required by
this
Agreement or applicable law.
SECTION
3.9 INDEMNIFICATION. (a)
To the
fullest extent permitted by law, the Partnership will, subject to SECTION 3.9(C)
of this Agreement, indemnify each General Partner (including for this purpose
each officer, director, member, Partner, principal, employee or agent of, or
any
Person who controls, is controlled by or is under common control with, a General
Partner (including without limitation, Hatteras Investment Partners, LLC) or
Partner of a General Partner, and their executors, heirs, assigns, successors
or
other legal representatives) and each Director (and his executors, heirs,
assigns, successors or other legal representatives) (each such Person being
referred to as an “INDEMNITEE”) against all losses, claims, damages,
liabilities, costs and expenses arising by reason of being or having been a
General Partner or Director of the Partnership, or the past or present
performance of services to the Partnership by the indemnitee, except to the
extent that the loss, claim, damage, liability, cost or expense has been finally
determined in a judicial decision on the merits from which no further right
to
appeal may be taken in any such action, suit, investigation or other proceeding
to have been incurred or suffered by the indemnitee by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of the indemnitee’s office. These losses, claims,
damages, liabilities, costs and expenses include, but are not limited to,
amounts paid in satisfaction of judgments, in compromise, or as fines or
penalties, and counsel fees and expenses incurred in connection with the defense
or disposition of any action, suit, investigation or other proceeding, whether
civil or criminal, before any judicial, arbitral, administrative or legislative
body, in which the indemnitee may be or may have been involved as a party or
otherwise, or with which such indemnitee may be or may have been threatened,
while in office or thereafter. The rights of indemnification provided under
this
SECTION 3.9 are not to be construed so as to provide for indemnification of
an
indemnitee for any liability (including liability under U.S. Federal securities
laws which, under certain circumstances, impose liability even on Persons that
act in good faith) to the extent (but only to the extent) that indemnification
would be in violation of applicable law, but will be construed so as to
effectuate the applicable provisions of this SECTION 3.9.
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(b) Expenses,
including counsel fees and expenses, incurred by any indemnitee (but excluding
amounts paid in satisfaction of judgments, in compromise, or as fines or
penalties) may be paid from time to time by the Partnership in advance of the
final disposition of any action, suit, investigation or other proceeding upon
receipt of an undertaking by or on behalf of the indemnitee to repay to the
Partnership amounts paid if a determination is made that indemnification of
the
expenses is not authorized under SECTION 3.9(A) of this Agreement, so long
as
(1) the indemnitee provides security for the undertaking, (2) the Partnership
is
insured by or on behalf of the indemnitee against losses arising by reason
of
the indemnitee’s failure to fulfill his, her or its undertaking, or (3) a
majority of the Independent Directors (excluding any Director who is either
seeking advancement of expenses under this Agreement or is or has been a party
to any other action, suit, investigation or other proceeding involving claims
similar to those involved in the action, suit, investigation or proceeding
giving rise to a claim for advancement of expenses under this Agreement) or
independent legal counsel in a written opinion determines, based on a review
of
readily available facts (as opposed to a full trial-type inquiry), that reason
exists to believe that the indemnitee ultimately will be entitled to
indemnification.
(c) As
to the
disposition of any action, suit, investigation or other proceeding (whether
by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication or a decision on the merits by a court, or by any other body before
which the proceeding has been brought, that an indemnitee is liable to the
Partnership or its Partners by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
the
indemnitee’s office, indemnification will be provided in accordance with SECTION
3.9(A) of this Agreement if (1) approved as in the best interests of the
Partnership by a majority of the Independent Directors (excluding any Director
who is either seeking indemnification under this Agreement or is or has been
a
party to any other action, suit, investigation or proceeding involving claims
similar to those involved in the action, suit, investigation or proceeding
giving rise to a claim for indemnification under this Agreement) upon a
determination, based upon a review of readily available facts (as opposed to
a
full trial-type inquiry), that the indemnitee acted in good faith and in the
reasonable belief that the actions were in the best interests of the Partnership
and that the indemnitee is not liable to the Partnership or its Partners by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the indemnitee’s office, or
(2) the Directors secure a written opinion of independent legal counsel, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), to the effect that indemnification would not protect the indemnitee
against any liability to the Partnership or its Partners to which the indemnitee
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
the
indemnitee’s office.
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(d) Any
indemnification or advancement of expenses made in accordance with this SECTION
3.9 will not prevent the recovery from any indemnitee of any amount if the
indemnitee subsequently is determined in a final judicial decision on the merits
in any action, suit, investigation or proceeding involving the liability or
expense that gave rise to the indemnification or advancement of expenses to
be
liable to the Partnership or its Partners by reason of willful misfeasance,
bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of the indemnitee’s office. In any suit brought by an indemnitee to
enforce a right to indemnification under this SECTION 3.9, it will be a defense
that the indemnitee has not met the applicable standard of conduct described
in
this SECTION 3.9. In any suit in the name of the Partnership to recover any
indemnification or advancement of expenses made in accordance with this SECTION
3.9, the Partnership will be entitled to recover the expenses upon a final
adjudication from which no further right of appeal may be taken. In any suit
brought to enforce a right to indemnification or to recover any indemnification
or advancement of expenses made in accordance with this SECTION 3.9, the burden
of proving that the indemnitee is not entitled to be indemnified, or to any
indemnification or advancement of expenses, under this SECTION 3.9 will be
on
the Partnership (or any Partner acting derivatively or otherwise on behalf
of
the Partnership or its Partners).
(e) An
indemnitee may not satisfy any right of indemnification or advancement of
expenses granted in this SECTION 3.9 or to which he, she or it may otherwise
be
entitled except out of the assets of the Partnership, and no Partner will be
personally liable with respect to any such claim for indemnification or
advancement of expenses.
(f) The
rights of indemnification provided in this SECTION 3.9 will not be exclusive
of
or affect any other rights to which any Person may be entitled by contract
or
otherwise under law. Nothing contained in this SECTION 3.9 will affect the
power
of the Partnership to purchase and maintain liability insurance on behalf of
any
General Partner, any Director, the Investment Manager or other
Person.
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(g) The
General Partner may enter into agreements indemnifying Persons providing
services to the Partnership to the same, lesser or greater extent as set out
in
this SECTION 3.9.
SECTION
3.10 FEES, EXPENSES AND REIMBURSEMENT. (a)
Subject
to applicable law, the Investment Manager shall be entitled to receive such
fees
for services provided to the Partnership as may be agreed by the Investment
Manager and the Fund pursuant to the Investment Advisory Agreement or such
other
agreements relating to such services.
(b) The
Partnership will compensate each Independent Director for his or her services
rendered in connection with the Partnership as may be agreed to by the
Independent Directors and the General Partner. In addition, the Partnership
will
reimburse the Directors for reasonable out-of-pocket expenses incurred by them
in performing their duties with respect to the Partnership.
(c) The
Partnership will add to all subscriptions for Interests or portions of Interests
any sales charge or fee, in form and amount as determined by the General
Partner, subject to approval by the Directors, payable to Placement Agents
for
the placement of such Interests or portions of Interests. Any sales charge
or
fee paid in accordance with this SECTION 3.10(C) will not constitute a Capital
Contribution made by the Partner to the Partnership nor part of the assets
of
the Partnership.
(d) The
Partnership will bear all expenses incurred in connection with its business
other than those specifically required to be borne by the Investment Manager
under this Agreement or an Investment Advisory Agreement. Expenses to be borne
by the Partnership include, but are not limited to, the following:
(1) all
investment-related expenses, including, but not limited to, fees paid and
expenses reimbursed, directly or indirectly, to Advisors (including management
fees, performance or incentive fees or allocations and redemption or withdrawal
fees, however titled or structured), all costs and expenses directly related
to
portfolio transactions and positions for the Partnership’s account, such as
direct and indirect expenses associated with the Partnership’s investments,
including its investments in Advisor Funds (whether or not consummated), and
enforcing the Partnership’s rights in respect of such investments, transfer
taxes and premiums, taxes withheld on non-U.S. dividends, costs and fees for
data and software (including software providers and dedicated software employed
by the Partnership and designed to assist an investment manager to keep track
of
the investments in the Advisor Funds and Advisor Accounts), research expenses,
professional fees (including, without limitation, the fees and expenses of
consultants, attorneys and experts) and, if applicable, in connection with
the
Partnership’s temporary or cash management investments), brokerage commissions,
interest and commitment fees on loans and debit balances, borrowing charges
on
Securities sold short, dividends on Securities sold but not yet purchased and
margin fees;
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(2) costs
associated with the registration of the Partnership, including the costs of
compliance with any applicable U.S. federal and state laws;
(3) any
non-investment-related interest expense;
(4) attorneys’
fees and disbursements associated with preparing and updating any Offering
Materials and with reviewing subscription materials in connection with
qualifying prospective investors or prospective holders of Transferred
Interests;
(5) fees
and
disbursements of any accountants engaged by the Partnership, and expenses
related to the annual audit of the Partnership and compliance with any
applicable U.S. Federal or state laws;
(6) fees
paid
and out-of-pocket expenses reimbursed to the Partnership’s
administrator;
(7) recordkeeping,
accounting, escrow and custody fees and expenses;
(8) the
costs
of an errors and omissions/directors’ and officers’ liability insurance policy
and a fidelity bond;
(9) the
costs
of preparing and mailing reports and other communications, including proxy,
tender offer correspondence or similar materials, to Limited
Partners;
(10) the
Management Fee;
(11) fees
of
Independent Directors and travel expenses of Directors relating to meetings
of
the Board of Directors and committees thereof, and costs and expenses of holding
meetings of the Board of Directors and meetings of the Partners;
(12) all
costs
and charges for equipment or services used in preparing or communicating
information regarding the Partnership’s transactions or the valuation of its
assets between the General Partner and any custodian, administrator or other
agent engaged by the Partnership;
(13) any
extraordinary expenses, including indemnification expenses as provided for
in
SECTION 3.9 of this Agreement;
(14) any
other
expenses as may be approved from time to time by the Directors, other than
those
required to be borne by an investment manager or the General Partner; and
(15) the
Partnership’s organization expenses and offering costs, which will initially be
borne by Hatteras Investment Partners, LLC or an affiliate thereof and will
be
expensed by the Partnership upon commencement of operations. The Partnership
will account for these expenditures, through monthly expense allocations to
Limited Partners’ Capital Accounts (or at such other frequency or times as the
Board of Directors may direct), for a period not to exceed the first sixty
months after the Closing Date. The amount of each such expense allocation to
the
Limited Partners’ Capital Accounts will be determined by the Directors and
Hatteras Investment Partners, LLC and will equal an amount sufficient to
reimburse the Investment Manager or affiliate thereof within a sixty-month
period.
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(e) Each
of
the Investment Manager and the General Partner will be entitled to reimbursement
from the Partnership for any of the above expenses that it pays on behalf of
the
Partnership, other than as provided in SECTION 3.10(D)(10) above.
ARTICLE
IV
TERMINATION
OF STATUS OF GENERAL PARTNER;
REMOVAL
OF GENERAL PARTNER; TRANSFERS AND REPURCHASES
SECTION
4.1 TERMINATION OF STATUS OF GENERAL PARTNER. A General Partner will cease
to be
a general partner of the Partnership if the General Partner (a) is dissolved
or
otherwise terminates its existence; (b) voluntarily withdraws as General Partner
(which it may do at any time in its sole discretion); (c) is removed; (d)
Transfers its entire Interest as General Partner as permitted under SECTION
4.3
of this Agreement and the Person to which the Interest is Transferred is
admitted as a substituted General Partner under SECTION 2.6(A) of this
Agreement; or (e) otherwise ceases to be a General Partner under the Delaware
Act.
SECTION
4.2 REMOVAL OF GENERAL PARTNER. Any General Partner may be removed by the vote
or written consent of Partners holding not less than a majority of the total
number of votes eligible to be cast by all Partners.
SECTION
4.3 TRANSFER OF INTEREST OF GENERAL PARTNER. A General Partner may not Transfer
all or any portion of its Interest as the General Partner except to Persons
who
have agreed to be bound by all of the terms of this Agreement and applicable
law
and with the affirmative vote of Partners holding at least a majority of the
total number of votes eligible to be cast by all Partners. If a General Partner
Transfers its entire Interest as General Partner, it will not cease to be a
General Partner unless and until the transferee is admitted to the Partnership
as a substituted General Partner pursuant to SECTION 2.6(A) of this Agreement.
In executing this Agreement, each Partner is deemed to have consented to any
Transfer contemplated by this SECTION 4.3.
SECTION
4.4 TRANSFER OF INTERESTS OF LIMITED PARTNERS. (a)
Any
Interest or portion of any Interest held by a Limited Partner may be Transferred
only (1) by operation of law pursuant to the death, bankruptcy, insolvency,
adjudicated incompetence, or dissolution of the Limited Partner; or (2) under
certain limited instances set out in this Agreement, with the written consent
of
the General Partner (which may be withheld in the General Partner’s sole and
absolute discretion). Unless the Partnership consults with legal counsel to
the
Partnership and counsel confirms that the Transfer will not cause the
Partnership to be treated as a “publicly traded partnership” taxable as a
corporation, however, the General Partner may not consent to a Transfer unless
the following conditions are met: (i) the Transferring Limited Partner has
been
a Limited Partner for at least six months; (ii) the proposed Transfer is to
be
made on the effective date of an offer by the Partnership to repurchase
Interests; and (iii) the Transfer is (A) one in which the tax basis of the
Interest in the hands of the transferee is determined, in whole or in part,
by
reference to its tax basis in the hands of the Transferring Limited Partner
(e.g., certain Transfers to affiliates, gifts and contributions to family
entities), (B) to members of the Transferring Limited Partner’s immediate family
(siblings, spouse, parents and children), or (C) a distribution from a qualified
retirement plan or an individual retirement account. In addition, the General
Partner may not consent to a Transfer unless the Person to whom or which an
Interest or portion of an Interest is Transferred (or each of the Person’s
equity owners if the Person is a “private investment company” as defined in Rule
205-3(d)(3) under the Advisers Act, an investment company registered under
the
1940 Act, or a business development company as defined under the Advisers Act)
is a Person whom or which the General Partner believes is an “accredited
investor” as defined in Regulation D under the 1933 Act and meets the
requirements of paragraph (d)(1) of Rule 205-3 under the Advisers Act or
successor provision of any of those rules, or is otherwise exempt from the
requirements of those rules. In the event that other investor eligibility
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requirements
are established by the Partnership, the Person to whom or which an Interest
or
portion of an Interest is Transferred must satisfy these other requirements.
If
any transferee does not meet the investor eligibility requirements described
in
this SECTION 4.4(A), the General Partner may not consent to the Transfer. In
addition, no Limited Partner will be permitted to Transfer his, her or its
Interest or portion of an Interest unless after the Transfer the balance of
the
Capital Account of the transferee, and of the Limited Partner Transferring
less
than such Partner’s entire Interest, is at least equal to the amount of the
Limited Partner’s initial Capital Contribution. Any permitted transferee will be
entitled to the allocations and distributions allocable to the Interest or
portion of an Interest so acquired and to Transfer the Interest or portion
of an
Interest in accordance with the terms of this Agreement, but will not be
entitled to the other rights of a Limited Partner unless and until the
transferee becomes a substituted Limited Partner. If a Limited Partner Transfers
an Interest or portion of an Interest with the approval of the General Partner,
the General Partner will promptly take all necessary actions so that each
transferee or successor to whom or to which the Interest or portion of an
Interest is Transferred is admitted to the Partnership as a Limited Partner.
The
admission of any transferee as a substituted Limited Partner will be effective
upon the execution and delivery by, or on behalf of, the substituted Limited
Partner of this Agreement or an instrument that constitutes the execution and
delivery of this Agreement. Each Limited Partner and transferee agrees to pay
all expenses, including attorneys’ and accountants’ fees, incurred by the
Partnership in connection with any Transfer. In connection with any request
to
Transfer an Interest or portion of an Interest, the Partnership may require
the
Limited Partner requesting the Transfer to obtain, at the Limited Partner’s
expense, an opinion of counsel selected by the General Partner as to such
matters as the General Partner may reasonably request. If a Limited Partner
Transfers its entire Interest as a Limited Partner, it will not cease to be
a
Limited Partner unless and until the transferee is admitted to the Partnership
as a substituted Limited Partner in accordance with this SECTION
4.4(A).
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(b) Each
Limited Partner will indemnify and hold harmless the Partnership, the General
Partner, the Investment Manager, the Directors, each other Limited Partner
and
any Affiliate of the Partnership, the General Partner (including, without
limitation, the Investment Manager, the Directors and each of the other Limited
Partners against all losses, claims, damages, liabilities, costs and expenses
(including legal or other expenses incurred in investigating or defending
against any losses, claims, damages, liabilities, costs and expenses or any
judgments, fines and amounts paid in settlement), joint or several, to which
these Persons may become subject by reason of or arising from (1) any Transfer
made by the Limited Partner in violation of this SECTION 4.4(B) and (2) any
misrepresentation by the Transferring Limited Partner or substituted Limited
Partner in connection with the Transfer. A Limited Partner Transferring an
Interest may be charged reasonable expenses, including attorneys’ and
accountants’ fees, incurred by the Partnership in connection with the
Transfer.
SECTION
4.5 REPURCHASE OF INTERESTS. (a)
Except
as otherwise provided in this Agreement, no Partner or other Person holding
an
Interest or portion of an Interest will have the right to withdraw or tender
an
Interest or portion of an Interest to the Partnership for redemption or
repurchase. The Directors may, from time to time, in their complete and
exclusive discretion and on terms and conditions as they may determine, cause
the Partnership to repurchase Interests or portions of Interests in accordance
with written tenders. The Partnership will not offer, however, to repurchase
Interests or portions of Interests on more than four occasions during any one
Fiscal Year, unless the Partnership has been advised by its legal counsel that
more frequent offers would not cause any adverse tax consequences to the
Partnership or the Partners. In determining whether to cause the Partnership to
repurchase Interests or portions of Interests, pursuant to written tenders,
the
Directors will consider the following factors, among others:
(1) whether
any Partners have requested to tender Interests or portions of
Interests;
(2) the
liquidity of the Partnership’s assets (including fees and costs associated with
withdrawing from Advisor Funds);
(3) the
investment plans and working capital and reserve requirements of the
Partnership;
(4) the
relative economies of scale with respect to the size of the
Partnership;
(5) the
history of the Partnership in repurchasing Interests or portions of
Interests;
(6) the
availability of information as to the value of the Partnership’s interests in
the Advisor Funds and Advisor Accounts;
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(7) existing
conditions of the securities markets and the economy generally, as well as
political, national or international developments or current
affairs;
(8) the
anticipated tax consequences to the Partnership of any proposed repurchases
of
Interests or portions of Interests; and
(9) the
recommendations of the General Partner and/or the Investment
Manager.
The
Directors will cause the Partnership to repurchase Interests or portions of
Interests in accordance with written tenders only on terms fair to the
Partnership and to all Partners and Persons holding Interests or portions of
Interests acquired from Partners.
(b) Each
repurchase offer will be limited to the repurchase of approximately 5% of the
Interests (but in no event to exceed the repurchase of more than 20% of the
Interests per quarter). Interests are expected to be repurchased at their net
asset value determined as of approximately June 30, September 30, December
31
and March 31, as applicable (each such date, a “Valuation Date”). Partners
tendering Interests for repurchase shall provide written notice of their intent
to so tender by a date to be specified by the General Partner, which date shall
be approximately 65 days (but in no event less than 60 days) prior to the date
of repurchase by the Partnership. Partners tendering their Interests may not
have all such Interests accepted for repurchase by the Partnership. The
Partnership may elect to repurchase less than the full amount a Partner requests
to be repurchased. If a repurchase offer is oversubscribed, the Partnership
will
repurchase only a pro rata portion of the amount tendered by each Partner.
The
minimum value of a repurchase is $50,000, subject to the discretion of the
General Partner to allow otherwise.
(c) The
General Partner may permit repurchases at such other times and on such other
terms as it may determine in its sole and absolute discretion, varying the
requirements set forth in this Section 4.5; provided that such non-conforming
repurchases may be subject to a penalty of up to 5% of the amount requested
to
be repurchased (to be netted against withdrawal proceeds).
(d) The
Directors may under certain circumstances elect to postpone, suspend or
terminate an offer to repurchase Interests.
(e) Except
as
provided in SECTION 4.5(F) of this Agreement, a General Partner may tender
its
Interest or portion of an Interest under SECTION 4.5(A) of this Agreement only
if and to the extent that, in the view of legal counsel to the Partnership,
the
repurchase would not jeopardize the classification of the Partnership as a
partnership for U.S. federal income tax purposes.
(f) If
a
General Partner ceases to serve in that capacity under SECTION 4.1 of this
Agreement (other than pursuant to SECTION 4.1(D)) and the business of the
Partnership is continued in accordance with SECTION 6.1(A)(2)(B) of this
Agreement, the former General Partner (or its trustee or other legal
representative) may, by written notice to the Directors within 60 days of the
action resulting in the continuation of the Partnership under SECTION
6.1(A)(2)(B), tender to the Partnership all or any portion of its Interest.
Within 30 days after the receipt of notice, the Directors will cause the
Interest or portion of an Interest to be repurchased by the Partnership for
cash
in an amount equal to the balance of the former General Partner’s Capital
Account or applicable portion of the Capital Account. If the former General
Partner does not tender to the Partnership all of its Interest as permitted
by
this SECTION 4.5(F), the Interest will automatically convert to and will be
treated in all respects as the Interest of a Limited Partner. If the General
Partner ceases to serve in this capacity under SECTION 4.1 of this Agreement
(other than pursuant to SECTION 4.1(D)) and the Partnership is not continued
under SECTION 6.1(A)(2)(B) of this Agreement, the liquidation and distribution
provisions of ARTICLE VI of this Agreement will apply to the General Partner’s
Interest.
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(g) The
General Partner may cause the Partnership to repurchase an Interest or portion
of an Interest of a Limited Partner or any Person acquiring an Interest from
or
through a Limited Partner, on terms fair to the Partnership and to the Limited
Partner or Person acquiring an Interest from or through such Limited Partner,
in
the event that the General Partner, in its sole discretion, determines or has
reason to believe that:
(1) the
Interest or portion of an Interest has been Transferred in violation of SECTION
4.4 of this Agreement, or the Interest or portion of an Interest has vested
in
any Person other than by operation of law as the result of the death,
dissolution, bankruptcy, insolvency or adjudicated incompetence of the Limited
Partner;
(2) ownership
of the Interest or portion of an Interest by a Partner or other Person is likely
to (A) cause the Partnership to be in violation of, or (B) (x) require
registration of any Interest or portion of any Interest under, or (y) subject
the Partnership to additional registration or regulation under, the securities,
commodities or other laws of the United States or any other relevant
jurisdiction;
(3) continued
ownership of the Interest or portion of an Interest may be harmful or injurious
to the business or reputation of the Partnership, the Directors, the General
Partner or the Investment Manager or any of their Affiliates, or may subject
the
Partnership or any of the Partners to an undue risk of adverse tax or other
fiscal or regulatory consequences;
(4) any
of
the representations and warranties made by a Partner or other Person in
connection with the acquisition of the Interest or portion of an Interest was
not true when made or has ceased to be true;
(5) with
respect to a Limited Partner subject to special regulatory or compliance
requirements, such as those imposed by the Bank Holding Company Act or certain
Federal Communication Commission regulations (collectively, “SPECIAL LAWS OR
REGULATIONS”), such Limited Partner will likely be subject to additional
regulatory or compliance requirements under these Special Laws or Regulations
by
virtue of continuing to hold an Interest or portion of an Interest; or
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(6) it
would
be in the best interests of the Partnership, as determined by the General
Partner or the Directors, for the Partnership to repurchase the Interest or
portion of an Interest.
(h) Payments
for accepted repurchases of Interests of less than 95% of a Partner’s Capital
Account generally will be paid approximately 90 days after the Valuation Date
(after adjusting for fees, expenses, reserves or other allocations or
repurchase) and will be subject to adjustment within 45 days after completion
of
the annual audit of the Partnership for the applicable Fiscal Year. Such annual
audit may be delayed in the event that information necessary to complete the
annual audit is not received on a timely basis from the Advisors. Payments
for
accepted repurchases of interests for 95% or more of a Partner’s Capital Account
may be paid in two installments. Payment of an amount equal to at least 95%
of
the interests repurchased (after adjusting for fees, expenses, reserves or
other
allocations or repurchase) generally will be made approximately 90 days after
the Valuation Date. Final settlement of payments in connection with the
repurchased Interests generally will be made within 45 days after completion
of
the annual audit of the Partnership for the applicable Fiscal Year if sufficient
information is received on a timely basis from the Advisors. Payments in
connection with repurchased interests may be delayed if such information is
delayed. Notwithstanding anything to the contrary in this SECTION 4.5(H), the
Directors, in their discretion, may cause the Partnership to pay all or any
portion of the repurchase price in Securities (or any combination of Securities
and cash) having a value, determined as of the date of repurchase, equal to
the
amount to be repurchased. All repurchases of Interests or portions of Interest
will be subject to any and all conditions as the Directors may impose in their
sole discretion. The General Partner may, in its discretion, cause the
Partnership to repurchase a Limited Partner’s entire Interest, if the Limited
Partner’s Capital Account balance in the Partnership, as a result of repurchase
or Transfer requests by the Limited Partner, is less than a minimum amount
that
may be established by the General Partner from time to time in its sole
discretion. Subject to the procedures of this SECTION 4.5(H), the amount due
to
any Partner whose Interest or portion of an Interest is repurchased will be
equal to the value of the Partner’s Capital Account or portion of such Capital
Account, as of the applicable Valuation Date, after giving effect to all
allocations to be made to the Partner’s Capital Account as of that date. If a
Limited Partner’s entire Interest is repurchased, that Limited Partner will
cease to be a Limited Partner.
(i) SPECIAL
RIGHT OF REDEMPTION FOR LIMITED PARTNERS. Any Limited Partner may, in connection
with the dissolution and liquidation of such Limited Partner, tender to the
Partnership for redemption all of such Limited Partner’s Interest by delivering
to the General Partner a written notice (in a form approved by the General
Partner) stating the Limited Partner’s request to redeem all of its Interest and
the effective date of such redemption. The effective date of such redemption
shall be the last Business Day of any calendar quarter, PROVIDED that such
effective date shall not occur within 90 days after the General Partner actually
receives the redeeming Limited Partner’s notice of redemption. In the event of
such a tender for redemption, the Partnership, subject always to (a) the
Partnership’s ability to liquidate sufficient Partnership investments in an
orderly fashion determined by the Directors to be fair and reasonable to the
Partnership and all of the Limited Partners, (b) the right of the General
Partner to retain assets to pay Partnership liabilities and set aside reserves
for contingencies, and (c) the General Partner’s ability to determine the value
of the redeeming Limited Partner’s Interest, shall pay to such redeeming Limited
Partner (i) within 90 days, or as soon as practicable thereafter, 95% of the
proceeds of such redemption (such proceeds being the amount in the redeeming
Limited Partner’s Capital Account as of the effective date of the redemption,
less any fees and expenses incurred by the Partnership as a result of such
redemption and any amounts owed by the redeeming Limited Partner to the
Partnership) and (ii) promptly following the completion of the audit of the
Partnership for the Fiscal Year during which the effective date of the
redemption occurs, the balance of such proceeds (with interest thereon at the
money market rate then in effect at the depository with which the Partnership
maintains its liquid cash accounts), PROVIDED that such proceeds in either
instance may be paid in cash (in U.S. dollars), by means of in-kind distribution
of Partnership investments, or as a combination of cash and in-kind distribution
of Partnership investments. Notwithstanding any other provision of this
Agreement, the General Partner may, in its absolute discretion, refuse to pay
any redemption proceeds to a redeeming Limited Partner if the General Partner
suspects or is advised that the payment of any redemption proceeds to such
redeeming Limited Partner may result in a breach or violation of any anti-money
laundering law by any Person in any relevant jurisdiction or if such refusal
is
necessary to ensure compliance by the Partnership, the General Partner, the
Investment Manager, or any of the Directors with any anti-money laundering
law
in any relevant jurisdiction.
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ARTICLE V
CAPITAL
SECTION
5.1 CONTRIBUTIONS TO CAPITAL. (a)
The
amount of the initial Capital Contribution of each Partner will be recorded
by
the Partnership upon acceptance as a contribution to the capital of the
Partnership. Each Limited Partner’s entire initial Capital Contribution will be
paid to the Partnership immediately prior to the Partnership’s acceptance of the
Limited Partner’s subscription for Interests, unless otherwise agreed by the
Partnership and such Limited Partner. The minimum initial Capital Contribution
of each Limited Partner will be $100,000 or such other amount as the General
Partner determines from time to time.
(b) The
Limited Partners may make additional Capital Contributions effective as of
those
times and in amounts as the General Partner may permit, but no Limited Partner
will be obligated to make any additional Capital Contribution except to the
extent provided in SECTIONS 5.5 and 5.7 of this Agreement. Each additional
Capital Contribution made by a Limited Partner (other than a contribution made
pursuant to SECTIONS 5.5 and 5.7 of this Agreement) will be in the minimum
amount of $25,000 or such other amount as the General Partner determines from
time to time.
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(c) A
General
Partner may make additional Capital Contributions effective as of those times
and in such amounts as it determines, and will be required to make additional
Capital Contributions from time to time to the extent necessary to maintain
the
balance of its Capital Account at an amount, if any, necessary to ensure that
the Partnership will be treated as a Partnership for U.S. federal income tax
purposes. Except as provided in this SECTION 5.1 or in the Delaware Act, no
General Partner will be required or obligated to make any additional
contributions to the capital of the Partnership.
(d) Subject
to the provisions of the 1940 Act, and except as otherwise permitted by the
General Partner, (1) initial and any additional Capital Contributions by any
Partner will be payable in cash or in Securities that the General Partner,
in
its absolute discretion, causes the Partnership to accept, and (2) initial
and
any additional Capital Contributions in cash will be payable in readily
available funds at the date of the proposed acceptance of the contribution.
The
Partnership will charge each Partner making a Capital Contribution in Securities
to the capital of the Partnership an amount as may be determined by the General
Partner to reimburse the Partnership for any costs incurred by the Partnership
by reason of accepting the Securities, and any charge will be due and payable
by
the contributing Partner in full at the time the Capital Contribution to which
the charges relate is due. The value of contributed Securities will be
determined in accordance with SECTION 7.3 of this Agreement as of the date
of
contribution.
(e) An
Advisor may make Capital Contributions and own Interests in the Partnership
and,
in so doing, will become a Limited Partner with respect to the
contributions.
(f) The
minimum initial and additional contributions set out in paragraphs (a) and
(b)
of this SECTION 5.1 may be increased or reduced by the General Partner from
time
to time. Reductions may be applied to all investors, individual investors or
to
classes of investors, in each case in the sole discretion of the General
Partner.
SECTION
5.2 RIGHTS OF PARTNERS TO CAPITAL. No Partner will be entitled to interest
on
the Partner’s Capital Contribution, nor will any Partner be entitled to the
return of any capital of the Partnership except (a) upon the repurchase by
the
Partnership of all or a portion of the Partner’s Interest in accordance with
SECTION 4.5 of this Agreement, (b) in accordance with the provisions of SECTION
5.7 of this Agreement or (c) upon the liquidation of the Partnership’s assets in
accordance with SECTION 6.2 of this Agreement. Except as specified in the
Delaware Act, or with respect to distributions or similar disbursements made
in
error, no Partner will be liable for the return of any such amounts. To the
fullest extent permitted by applicable law, no Partner will have the right
to
require partition of the Partnership’s property or to compel any sale or
appraisal of the Partnership’s assets.
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SECTION
5.3 CAPITAL ACCOUNTS. (a)
The
Partnership will maintain a separate Capital Account for each
Partner.
(b) Each
Partner’s Capital Account will have an initial balance equal to the amount of
cash and the value of any Securities (determined in accordance with SECTION
7.3
of this Agreement) constituting the Partner’s initial Capital
Contribution.
(c) Each
Partner’s Capital Account will be increased by the sum of (1) the amount of cash
and the value of any Securities (determined in accordance with SECTION 7.3
of
this Agreement) constituting additional Capital Contributions by the Partner
permitted under SECTION 5.1 of this Agreement, plus (2) any amount credited
to
the Partner’s Capital Account under SECTIONS 5.4 through 5.8 of this
Agreement.
(d) Each
Partner’s Capital Account will be reduced by the sum of (1) the amount of any
repurchase of the Interest or portion of the Interest of the Partner or
distributions to the Partner under SECTION 4.5, 5.10 or 6.2 of this Agreement
that are not reinvested, plus (2) any amounts debited against the Partner’s
Capital Account under SECTIONS 5.4 through 5.8 of this Agreement.
(e) In
the
event all or a portion of the Interest of a Partner is Transferred in accordance
with the terms of this Agreement, the transferee will succeed to the Capital
Account of the transferor to the extent of the Transferred Interest or portion
of an Interest.
(f) Subject
to SECTION 5.7 of this Agreement, no Partner will be required to pay to the
Partnership or any other Partner any deficit in such Partner’s Capital Account
upon dissolution of the Partnership or otherwise.
SECTION
5.4 ALLOCATION OF NET PROFIT AND LOSS. Subject to Sections 5.6 and 5.8 of this
Agreement, as of the last day of each Fiscal Period, any Net Profit or Net
Loss
for the Fiscal Period will be allocated among and credited to or debited against
the Capital Accounts of the Partners in accordance with their respective
Investment Percentages for the Fiscal Period.
SECTION
5.5 ALLOCATION OF CERTAIN WITHHOLDING TAXES AND OTHER EXPENDITURES. (a)
If the
Partnership incurs a withholding tax or other tax obligation with respect to
the
share of Partnership income allocable to any Partner, then the General Partner,
without limitation of any other rights of the Partnership or the General
Partner, will cause the amount of the obligation to be debited against the
Capital Account of the Partner when the Partnership pays the obligation, and
any
amounts then or in the future distributable to the Partner will be reduced
by
the amount of the taxes. If the amount of the taxes is greater than any
distributable amounts, then the Partner and any successor to the Partner’s
Interest or portion of an Interest will pay to the Partnership as a Capital
Contribution, upon demand by the General Partner, the amount of the excess.
A
General Partner will not be obligated to apply for or obtain a reduction of
or
exemption from withholding tax on behalf of any Partner that may be eligible
for
the reduction or exemption, except that, in the event that the General Partner
determines that a Partner is eligible for a refund of any withholding tax,
the
General Partner may, at the request and expense of the Partner, assist the
Partner in applying for such refund.
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(b) Except
as
otherwise provided for in this Agreement and unless prohibited by the 1940
Act,
any expenditures payable by the Partnership, to the extent determined by the
General Partner to have been paid or withheld on behalf of, or by reason of
particular circumstances applicable to, one or more but fewer than all of the
Partners, will be charged to only those Partners on whose behalf the payments
are made or whose particular circumstances gave rise to such payments. The
charges will be debited from the Capital Accounts of the Partners as of the
close of the Fiscal Period during which the items were paid or accrued by the
Partnership.
SECTION
5.6 PERFORMANCE INCENTIVE.
(a) So
long
as the General Partner continues to serve in that capacity, and for each Limited
Partner for which the Partnership Return earned by the Limited Partner for
the
applicable Incentive Period exceeds the greater of the Hurdle Rate for that
Incentive Period or (2) the Loss Carryforward Amount, if any, the Performance
Incentive will be debited against the Capital Account of that Limited Partner
as
of the last day of the Incentive Period, and the amount so debited will be
credited simultaneously to the Capital Account of the General Partner, or,
subject to compliance with the 1940 Act and the Advisers Act, to the Capital
Accounts of the Partners as have been designated in any written notice delivered
by the General Partner to the Partnership within 90 days after the close of
the
Incentive Period.
(b) Within
30
days after the close of each Incentive Period with respect to each Limited
Partner, the General Partner may withdraw up to 100% of the Performance
Incentive (computed on the basis of unaudited data) that was credited to the
Capital Account of the General Partner, and debited from the Limited Partner’s
Capital Account with respect to the Incentive Period. The Partnership may pay
the General Partner the undrawn balance, if any, of the Performance Incentive
(subject to audit adjustments) within 30 days after the completion of the audit
of the Partnership’s accounts pursuant to Section 7.1 of this
Agreement.
SECTION
5.7 RESERVES. (a)
The
General Partner may cause appropriate reserves to be created, accrued and
charged by the Partnership against Net Assets and proportionately against the
Capital Accounts of the Partners for contingent liabilities, if any, as of
the
date any contingent liability becomes known to the General Partner, the reserves
to be in the amounts that the General Partner in its sole discretion deems
necessary or appropriate. The General Partner may increase or reduce any
reserves from time to time by amounts as it in its sole discretion deems
necessary or appropriate. The amount of any reserve, or any increase or decrease
in a reserve, will be proportionately charged or credited to the Capital
Accounts of those Persons who or that are Partners at the time the reserve
is
created, or increased or decreased, except that if any individual reserve item,
adjusted by any increase in the item, exceeds the lesser of $500,000 or 1%
of
the aggregate value of the Capital Accounts of all of those Partners, then
the
amount of the reserve, increase or decrease may instead, at the discretion
of
the General Partner, be charged or credited to those Persons who or that were
Partners at the time, as determined by the General Partner in its sole
discretion, of the act or omission giving rise to the contingent liability
for
which the reserve was established, increased or decreased in proportion to
their
Capital Accounts.
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(b) If
any
amount is required by SECTION 5.7(A) of this Agreement to be charged or credited
to a Person who or that is no longer a Partner, the amount will be paid by
or to
the party, in cash, with interest from the date on which the General Partner
determines that the charge or credit is required. In the case of a charge,
the
former Partner will be obligated to pay as a Capital Contribution the amount
of
the charge, plus interest as provided in this SECTION 5.7(B), to the Partnership
on demand, except that (1) in no event will a former Partner be obligated to
make a payment exceeding the amount of the Partner’s Capital Account at the time
to which the charge relates and (2) no demand will be made after the expiration
of three years from the date on which the Person ceased to be a Partner. To
the
extent that a former Partner fails to pay to the Partnership, in full, any
amount required to be charged to the former Partner under SECTION 5.7 of this
Agreement, the deficiency will be charged proportionately to the Capital
Accounts of the Partners at the time of the act or omission giving rise to
the
charge to the extent feasible, and otherwise proportionately to the Capital
Accounts of the current Partners.
SECTION
5.8 ALLOCATION TO AVOID CAPITAL ACCOUNT DEFICITS. To the extent that any debits
under SECTIONS 5.4 through 5.7 of this Agreement would reduce the balance of
the
Capital Account of any Limited Partner below zero, that portion of any such
debits will be allocated instead to the Capital Account of the General Partner.
Any credits in any subsequent Fiscal Period that otherwise would be allocable
under SECTIONS 5.4 through 5.7 of this Agreement to the Capital Account of
any
Limited Partner previously affected by the application of this SECTION 5.8
will
instead be allocated to the Capital Account of the General Partner in amounts
necessary to offset all previous debits attributable to the Limited Partner,
made in accordance with this SECTION 5.8, that have not been
recovered.
SECTION
5.9 TAX ALLOCATIONS. For each taxable year of the Partnership, items of income,
deduction, gain, loss or credit will be allocated for income tax purposes among
the Partners in a manner so as to reflect equitably amounts credited or debited
to each Partner’s Capital Account for the current and prior taxable years (or
relevant portions of those years). Allocations under this SECTION 5.9 will
be
made in accordance with the principles of Sections 704(b) and 704(c) of the
Code, and in conformity with Treasury Regulations promulgated under these
Sections, or the successor provisions to such Sections and Regulations.
Notwithstanding anything to the contrary in this Agreement, the Partnership
will
allocate to the Partners those gains or income necessary to satisfy the
“qualified income offset” requirement of Treasury Regulations Section
1.704-1(b)(2)(ii)(d). If the Partnership realizes net capital gains for U.S.
federal income tax purposes for any taxable year during or as of the end of
which one or more Positive Basis Partners (as defined in this SECTION 5.9)
withdraw from the Partnership under ARTICLE IV or VI of this Agreement, the
General Partner may elect to allocate net gains as follows: (a) to allocate
net
gains among Positive Basis Partners, in proportion to the Positive Basis (as
defined in this SECTION 5.9) of each Positive Basis Partner, until either the
full amount of the net gains has been so allocated or the Positive Basis of
each
Positive Basis Partner has been eliminated, and (b) to allocate any net gains
not so allocated to Positive Basis Partners to the other Partners in a manner
that reflects equitably the amounts credited to the Partners’ Capital Accounts.
If the Partnership realizes capital losses for U.S. federal income tax purposes
for any Fiscal Year during or as of the end of which one or more Negative Basis
Partners (as defined in this SECTION 5.9) withdraw from the Partnership under
ARTICLE IV or VI of this Agreement, the General Partner may elect to allocate
net losses as follows: (i) to allocate net losses among Negative Basis Partners,
in proportion to the Negative Basis (as defined in this SECTION 5.9) of each
Negative Basis Partner, until either the full amount of net losses will have
been so allocated or the Negative Basis of each Negative Basis Partner has
been
eliminated, and (ii) to allocate any net losses not so allocated to Negative
Basis Partners, to the other Partners in a manner that reflects equitably the
amounts credited to the Partners’ Capital Accounts. As used in this SECTION 5.9,
the term “POSITIVE BASIS” means, with respect to any Partner and as of any time
of calculation, the amount by which the total of the Partners’ Capital Accounts
as of that time exceeds the Partner’s “adjusted tax basis,” for U.S. federal
income tax purposes, in the Partner’s Interest in the Partnership as of that
time (determined without regard to any adjustments made to the “adjusted tax
basis” by reason of any Transfer or assignment of the Interest, including by
reason of death). As used in this SECTION 5.9, the term “POSITIVE BASIS PARTNER”
means any Partner who or that withdraws from the Partnership and who or that
has
a Positive Basis as of the effective date of the Partner’s withdrawal. As used
in this SECTION 5.9, the term “NEGATIVE BASIS” means, with respect to any
Partner and as of any time of calculation, the amount by which the Partner’s
“adjusted tax basis,” for U.S. federal income tax purposes, in the Partner’s
Interest in the Partnership as of that time (determined without regard to any
adjustments made to the “adjusted tax basis” by reason of any Transfer or
assignment of the Interest, including by reason of death, and without regard
to
such Partner’s share of the liabilities of the Partnership under section 752 of
the Code) exceeds the Partner’s Capital Account as of such time. As used in this
SECTION 5.9, the term “NEGATIVE BASIS PARTNER” means any Partner who or that
withdraws from the Partnership and who or that has a Negative Basis as of the
effective date of the Partner’s withdrawal.
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SECTION
5.10 DISTRIBUTIONS. (21)
The
General Partner may cause the Partnership to make distributions in cash or
in
kind at any time to all of the Partners on a proportionate basis in accordance
with the Partners’ Investment Percentages.
(b) The
General Partner may withhold taxes from any distribution to any Partner to
the
extent required by the Code or any other applicable law. For purposes of this
Agreement, any taxes so withheld by the Partnership with respect to any amount
distributed by the Partnership to any Partner will be deemed to be a
distribution or payment to the Partner, reducing the amount otherwise
distributable to the Partner under this Agreement and reducing the Capital
Account of the Partner. Neither the General Partner nor the Directors will
be
obligated to apply for or obtain a reduction of or exemption from withholding
tax on behalf of any Partner that may be eligible for reduction or exemption.
To
the extent that a Partner claims to be entitled to a reduced rate of, or
exemption from, a withholding tax pursuant to an applicable income tax treaty,
or otherwise, the Partner will furnish the Partnership with any information
and
forms that the Partner may be required to complete if necessary to comply with
any and all laws and regulations governing the obligations of withholding tax
agents. Each Partner represents and warrants that any information and forms
furnished by the Partner will be true and accurate and agrees to indemnify
the
Partnership and each of the Partners from any and all losses, claims, damages,
liabilities costs and expenses resulting from the filing of inaccurate or
incomplete information or forms relating to the withholding taxes (including
legal or other expenses incurred in investigating or defending against any
such
losses, claims, damages, liabilities, costs and expenses).
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(c) Notwithstanding
any provision to the contrary contained in this Agreement, the Partnership
and
the General Partner on behalf of the Partnership will not repurchase any
Interest or portion of an Interest or make a distribution to any Partner on
account of the Partner’s Interest or portion of an Interest, if such repurchase
or distribution would violate the Delaware Act or other applicable
law.
ARTICLE
VI
DISSOLUTION
AND LIQUIDATION
SECTION
6.1 DISSOLUTION. (a)
The
Partnership will be dissolved if at any time it has no Limited Partners or
upon
the occurrence of any of the following events:
(1) upon
the
affirmative vote to dissolve the Partnership by both (A) a majority of the
Directors (including the vote of a majority of the Independent Directors) and
(B) Partners holding at least two-thirds of the total number of votes eligible
to be cast by all Partners;
(2) upon
either of: (A) an election by the General Partner to dissolve the Partnership,
which election the General Partner may make in its absolute discretion without
being required to give any reason therefor, or (B) a General Partner’s ceasing
to be a General Partner in accordance with SECTION 4.1 of this Agreement (other
than in conjunction with a Transfer of the Interest of a General Partner in
accordance with SECTION 4.3 of this Agreement to a Person who or that is
admitted as a substituted General Partner under SECTION 2.6(A) of this
Agreement), unless, as to the event described in clause (B) of this SECTION
6.1(A)(2), (i) the Partnership has at least one other General Partner who or
that is authorized to and does carry on the business of the Partnership, or
(ii)
both the Directors and Partners holding not less than three-fifths of the total
number of votes eligible to be cast by all Partners elect within 60 days after
the event to continue the business of the Partnership and a Person to be
admitted to the Partnership, effective as of the date of the event, as an
additional General Partner who has agreed to make the contributions to the
capital of the Partnership required to be made under SECTION 5.1(C) of this
Agreement;
(3) upon
the
failure of Partners to approve successor Directors at a meeting called by the
General Partner in accordance with SECTION 2.11(C) of this Agreement when no
Director remains to continue the business of the Partnership; or
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(4) as
otherwise required by operation of law.
Dissolution
of the Partnership will be effective on the later of the day on which the event
giving rise to the dissolution occurs or, to the extent permitted by the
Delaware Act, the conclusion of any applicable 60-day period during which the
Directors and Partners elect to continue the business of the Partnership as
provided in SECTION 6.1(A)(2), but the Partnership will not terminate until
the
assets of the Partnership have been liquidated in accordance with SECTION 6.2
of
this Agreement and the Certificate has been canceled.
(b) Except
as
provided in SECTION 6.1(A) of this Agreement or in the Delaware Act, the death,
adjudicated incompetence, dissolution, termination, liquidation, bankruptcy,
reorganization, merger, sale of substantially all of the stock or assets of,
or
other change in the ownership or nature of a Partner, the admission to the
Partnership of a new Partner, the withdrawal of a Partner from the Partnership,
or the Transfer by a Partner of the Partner’s Interest or a portion of the
Interest to a third party will not cause the Partnership to
dissolve.
SECTION
6.2 LIQUIDATION OF ASSETS. (a)
Upon the
dissolution of the Partnership as provided in SECTION 6.1 of this Agreement,
the
General Partner will promptly liquidate the business and administrative affairs
of the Partnership, except that if the General Partner is unable to perform
this
function, a liquidator elected by Partners holding a majority of the total
number of votes eligible to be cast by all Partners and whose fees and expenses
will be paid by the Partnership will promptly liquidate the business and
administrative affairs of the Partnership. Net Profit and Net Loss during the
period of liquidation will be allocated in accordance with ARTICLE V of this
Agreement. Subject to the Delaware Act, the proceeds from liquidation (after
establishment of appropriate reserves for all claims and obligations, including
all contingent, conditional or unmatured claims and obligations in an amount
that the General Partner or liquidator deems appropriate in its sole discretion
as applicable) will be distributed in the following manner:
(1) the
debts
of the Partnership, other than debts, liabilities or obligations to Limited
Partners, and the expenses of liquidation (including legal and accounting fees
and expenses incurred in connection with the liquidation), up to and including
the date on which distribution of the Partnership’s assets to the Partners has
been completed, will first be paid on a proportionate basis;
(2) any
debts, liabilities or obligations owing to the Limited Partners will be paid
next in their order of seniority and on a proportionate basis; and
(3) the
Partners are paid next on a proportionate basis the positive balances of their
Capital Accounts after giving effect to all allocations to be made to the
Partners’ Capital Accounts for the Fiscal Period ending on the date of the
distributions under this SECTION 6.2(A)(3).
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(b) Notwithstanding
the provisions of this SECTION 6.2, upon dissolution of the Partnership, subject
to the Delaware Act and the priorities set out in SECTION 6.2(A) of this
Agreement, the General Partner or liquidator may distribute ratably in kind
any
assets of the Partnership. If any in-kind distribution is to be made under
this
SECTION 6.2(B), (1) the assets distributed in kind will be valued in accordance
with SECTION 7.3 of this Agreement as of the actual date of their distribution
and charged as so valued and distributed against amounts to be paid under
SECTION 6.2(A) of this Agreement, and (2) any profit or loss attributable to
property distributed in kind will be included in the Net Profit or Net Loss
for
the Fiscal Period ending on the date of the distribution. Notwithstanding any
provision of this Agreement to the contrary, the General Partner may compel
a
Partner to accept a distribution of any asset in kind from the Partnership
even
if the percentage of the asset distributed to the Partner exceeds a percentage
of the asset that is equal to the percentage in which the Partner shares in
distributions from the Partnership.
ARTICLE
VII
ACCOUNTING,
VALUATIONS AND BOOKS AND RECORDS
SECTION
7.1 ACCOUNTING AND REPORTS. (a)
The
Partnership will adopt for tax accounting purposes any accounting method that
the General Partner decides in its sole discretion is in the best interests
of
the Partnership. The Partnership’s accounts will be maintained in U.S.
currency.
(b) As
soon
as practicable after the end of each taxable year of the Partnership, the
Partnership will furnish to Partners information regarding the operation of
the
Partnership and the Partners’ Interests as is necessary for Partners to complete
U.S. Federal and state income tax or information returns and any other tax
information required by U.S. Federal or state law. To the extent such
information may be delayed due to delayed reporting by Advisors with whom the
Partnership invests, the Partners may be required to file extensions of the
filing dates for their income tax returns at the Federal, state and local
levels.
(c) Except
as
otherwise required by the 1940 Act, or as may otherwise be permissible under
other applicable law, the Partnership will furnish to each Limited Partner
a
semiannual report and an annual report containing the information required
by
the 1940 Act as soon as practicable. The Partnership will cause financial
statements contained in each annual report furnished under this SECTION 7.1
to
be accompanied by a certificate of independent public accountants based upon
an
audit performed in accordance with generally accepted accounting principles.
The
Partnership may furnish to each Partner any other periodic reports the General
Partner deems necessary or appropriate in its discretion.
(d) The
General Partner will notify the Directors of any change in the holders of
interests of the General Partner within a reasonable time after the
change.
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SECTION
7.2 DETERMINATIONS BY GENERAL PARTNER. (a)
All
matters concerning the determination and allocation among the Partners of the
amounts to be determined and allocated pursuant to ARTICLE V of this Agreement,
including any taxes on those amounts and accounting procedures applicable with
respect to those amounts, will be determined by the General Partner unless
specifically and expressly otherwise provided for by the provisions of this
Agreement or as required by law. Any such determinations and allocations will
be
final and binding on all of the Partners.
(b) The
General Partner may make any adjustments to the computation of Net Profit and/or
Net Loss, or any components (withholding any items of income, gain, loss or
deduction) constituting Net Profit and/or Net Loss as the General Partner deems
appropriate to reflect fairly and accurately the financial results of the
Partnership and the intended allocation of Net Profit and/or Net Loss among
the
Partners.
SECTION
7.3 VALUATION OF ASSETS. (a)
Except
as may be required by the 1940 Act, the Directors will value or cause to have
valued any Securities or other assets and liabilities of the Partnership as
of
the close of business on the last day of each Fiscal Period and at such other
times as the Directors may determine, in their discretion, in accordance with
valuation procedures as established from time to time by the Directors. Assets
of the Partnership invested in an Advisor Fund or Advisor Account will be valued
in accordance with the terms and conditions of the agreement or other document
governing the operation of the Advisor Fund or Advisor Account. In determining
the value of the assets of the Partnership, no value will be placed on the
goodwill or name of the Partnership, or the office records, files, statistical
data or any similar intangible assets of the Partnership not normally reflected
in the Partnership’s accounting records. Any items of income earned but not
received, expenses incurred but not yet paid, liabilities fixed or contingent,
and any other prepaid expenses to the extent not otherwise reflected in the
books of account, and the value of options or commitments to purchase or sell
Securities or commodities pursuant to agreements entered into prior to the
valuation date will, however, be taken into account in determining the value
of
the Partnership’s assets.
(b) Subject
to the provisions of the 1940 Act, the value of Securities and other assets
of
the Partnership and the net asset value of the Partnership as a whole determined
pursuant to this SECTION 7.3 will be conclusive and binding on all of the
Partners and all Persons claiming through or under them.
ARTICLE
VIII
MISCELLANEOUS
PROVISIONS
SECTION
8.1 AMENDMENT OF PARTNERSHIP AGREEMENT. (a)
Except
as otherwise provided in this SECTION 8.1, this Agreement may be amended, in
whole or in part, with the approval of a majority of the Directors (including
the vote of a majority of the Independent Directors, but only if such vote
is
required by the 1940 Act), except that any amendment also must be approved
by a
majority (as defined in the 0000 Xxx) of the outstanding voting securities
of
the Partnership if such vote is required by the 1940 Act.
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(b) Any
amendment that would:
(1) increase
the obligation of a Partner to make any Capital Contribution,
(2) reduce
the Capital Account of a Partner other than in accordance with ARTICLE V of
this
Agreement, or
(3) modify
the events causing the dissolution of the Partnership,
may
be
made only if (A) the written consent of each Partner adversely affected by
the
proposed action is obtained prior to the effectiveness of the action or (B)
the
amendment does not become effective until (i) each Limited Partner has received
written notice of the amendment and (ii) any Limited Partner objecting to the
amendment has been afforded a reasonable opportunity (under procedures
prescribed by the General Partner in its sole discretion) to tender the
Partner’s entire Interest for repurchase by the Partnership. Notwithstanding the
preceding sentence or the provisions of SUBSECTION 8.1(C), any amendment that
would alter the provisions of SECTION 8.1 relating to the material amendment
of
this Agreement or the provisions of SECTION 3.8 of this Agreement relating
to
indemnification may be made only with the unanimous consent of the Partners
and,
to the extent required by the 1940 Act, approval of a majority of the Directors
(and, if so required, a majority of the Independent Directors).
(c) Notwithstanding
the provisions of SECTIONS 8.1(A) and 8.1(B) of this Agreement, the General
Partner, at any time without the consent of any other Partner, may:
(1) restate
this Agreement, together with any amendments to this Agreement that have been
duly adopted in accordance with the provisions of this Agreement to incorporate
the amendments in a single, integrated document;
(2) amend
this Agreement (other than with respect to the matters described in SECTION
8.1(B) of this Agreement) to change the name of the Partnership in accordance
with SECTION 2.2 hereof or to effect compliance with any applicable law or
regulation, including, without limitation, to satisfy the requirements of
applicable U.S. banking law or regulation, or to cure any ambiguity or to
correct or supplement any provision of this Agreement that may be inconsistent
with any other provision of this Agreement, so long as the action does not
adversely affect the rights of any Partner in any material respect;
and
(3) amend
this Agreement to make any changes necessary or desirable, based on advice
of
legal counsel to the Partnership, to assure the Partnership’s continuing
eligibility to be classified for U.S. federal income tax purposes as a
Partnership that is not treated as a corporation for tax purposes under the
Code; subject, however, to the limitation that any material amendment to this
Agreement under SECTION 8.1(c)(2) or (3) of this Agreement will be valid only
if
approved by a majority of the Directors (including the vote of a majority of
the
Independent Directors, if required by the 1940 Act).
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(d) The
General Partner will give prior written notice of any proposed amendment to
this
Agreement (other than any amendment of the type contemplated by SECTION
8.1(C)(1) of this Agreement) to each Partner, which notice sets out (1) the
text
of the proposed amendment or (2) a summary of the amendment and a statement
that
the text of the amendment will be furnished to any Partner upon
request.
SECTION
8.2 SPECIAL POWER OF ATTORNEY. (a) Each Partner irrevocably makes, constitutes
and appoints the General Partner and each of the Directors, acting severally,
and any liquidator of the Partnership’s assets appointed pursuant to SECTION 6.2
of this Agreement with full power of substitution, the true and lawful
representatives and attorneys-in-fact of, and in the name, place and stead
of,
the Partner, with the power from time to time to make, execute, sign,
acknowledge, swear to, verify, deliver, record, file and/or
publish:
(1) any
amendment to this Agreement;
(2) any
amendment to the Certificate, including, without limitation, any such amendment
required to reflect any amendments to this Agreement, and including, without
limitation, an amendment to effectuate any change in the membership of the
Partnership; and
(3) all
other
such instruments, documents and certificates that, in the view of legal counsel
to the Partnership, from time to time may be required by the laws of the United
States of America, the State of Delaware or any other jurisdiction in which
the
General Partner determines that the Partnership should do business, or any
political subdivision or agency of any such jurisdiction, or that legal counsel
may deem necessary or appropriate to effectuate, implement and continue the
valid existence and business of the Partnership as a limited partnership under
the Delaware Act.
(b) Each
Partner is aware that the terms of this Agreement permit certain amendments
to
this Agreement to be effected and certain other actions to be taken or omitted
by or with respect to the Partnership without the Partner’s consent. Each
Partner agrees that if an amendment to the Certificate or this Agreement or
any
action by or with respect to the Partnership is taken in the manner contemplated
by this Agreement, notwithstanding any objection that the Partner may assert
with respect to the action, the attorneys-in-fact appointed under this Agreement
are authorized and empowered, with full power of substitution, to exercise
the
authority granted in this SECTION 8.2 in any manner that may be necessary or
appropriate to permit the amendment to be made or action lawfully taken or
omitted. Each Partner is fully aware that each Partner will rely on the
effectiveness of this special power of attorney with a view to the orderly
administration of the affairs of the Partnership.
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(c) The
power
of attorney contemplated by this SECTION 8.2 is a special power of attorney
and
is coupled with an interest in favor of the General Partner and each of the
Directors, acting severally, and any liquidator of the Partnership’s assets
appointed under SECTION 6.2 of this Agreement, and as such the power of
attorney:
(1) will
be
irrevocable and continue in full force and effect notwithstanding the subsequent
death or incapacity of any Person granting the power of attorney, regardless
of
whether the Partnership, the General Partner, the Directors or any liquidator
has had notice of the death or incapacity; and
(2) will
survive the delivery of a Transfer by a Partner of the whole or any portion
of
the Partner’s Interest, except that, when the transferee of an Interest or
portion of an Interest has been approved by the General Partner for admission
to
the Partnership as a substituted Partner, the power of attorney given by the
transferor will survive the delivery of the assignment for the sole purpose
of
enabling the General Partner, the Directors or any liquidator to execute,
acknowledge and file any instrument necessary to effect the
substitution.
SECTION
8.3 NOTICES. Notices that may or are required to be provided under this
Agreement will be made to a Partner by hand delivery, regular mail (registered
or certified mail return receipt requested in the case of notice to the General
Partner), commercial courier service, telecopier, or electronic mail (with
a
confirmation copy by registered or certified mail in the case of notices to
the
General Partner by telecopier or electronic mail), and will be addressed to
the
Partner at his, her or its address as set out in the books and records of the
Partnership (or to any other address as may be designated by any Partner by
notice addressed to the General Partner in the case of notice given to any
Partner, and to each of the Partners in the case of notice given to the General
Partner). Notices will be deemed to have been provided when delivered by hand,
on the date indicated as the date of receipt on a return receipt or when
received if sent by regular mail, commercial courier service, telecopier or
by
electronic mail. A document that is not a notice and that is required to be
provided under this Agreement by any party to another party may be delivered
by
any reasonable means.
SECTION
8.4 AGREEMENT BINDING UPON SUCCESSORS AND ASSIGNS. This Agreement will be
binding upon and inure to the benefit of the Partners and their respective
heirs, successors, assigns, executors, trustees or other legal representatives,
but the rights and obligations of the Partners may not be Transferred or
delegated except as provided in this Agreement, and any attempted Transfer
or
delegation of those rights and obligations that is not made in accordance with
the terms of this Agreement will be void.
SECTION
8.5 CHOICE OF LAW; ARBITRATION. (a)
Notwithstanding the location at which this Agreement is executed by any of
the
Partners, the Partners expressly agree that all the terms and provisions of
this
Agreement are governed by and will be construed under the laws of the State
of
Delaware, including the Delaware Act, without regard to the conflict of law
principles of the State of Delaware.
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(b) To
the
extent such action is consistent with the provisions of the 1940 Act and any
other applicable law, except as provided in SECTION 8.10(B) of this Agreement,
each Partner agrees to submit all controversies arising between or among
Partners or one or more Partners and the Partnership in connection with the
Partnership or its businesses or concerning any transaction, dispute or the
construction, performance or breach of this Agreement or any other agreement
relating to the Partnership, whether entered into prior to, on or subsequent
to
the date of this Agreement, to arbitration in accordance with the provisions
set
out in this SECTION 8.5. EACH PARTNER UNDERSTANDS THAT ARBITRATION IS FINAL
AND
BINDING ON THE PARTNERS AND THAT THE PARTNERS IN EXECUTING THIS AGREEMENT ARE
WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO JURY
TRIAL.
(c) Controversies
will be finally settled by, and only by, arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association (the “AAA”)
to the fullest extent permitted by law. The place of arbitration will be
Raleigh, North Carolina. Any arbitration under this SECTION 8.5 will be
conducted before a panel of three arbitrators. The Partner or Partners
initiating arbitration under this SECTION 8.5 will appoint one arbitrator in
the
demand for arbitration. The Partner or Partners against whom or which
arbitration is sought will jointly appoint one arbitrator within 30 Business
Days after notice from the AAA of the filing of the demand for arbitration.
The
two arbitrators nominated by the Partners will attempt to agree on a third
arbitrator within 30 Business Days of the appointment of the second arbitrator.
If the two arbitrators fail to agree on the third arbitrator within the 30-day
period, then the AAA will appoint the third arbitrator within 30 Business Days
following the expiration of the 30-day period. Any award rendered by the
arbitrators will be final and binding on the Partners, and judgment upon the
award may be entered in the supreme court of the state of New York and/or the
U.S. District Court for the Southern District of New York, or any other court
having jurisdiction over the award or having jurisdiction over the Partners
or
their assets. The arbitration agreement contained in this SECTION 8.5 will
not
be construed to deprive any court of its jurisdiction to grant provisional
relief (including by injunction or order of attachment) in aid of arbitration
proceedings or enforcement of an award. In the event of arbitration as provided
in this SECTION 8.5, the arbitrators will be governed by and will apply the
substantive (but not procedural) law of Delaware, to the exclusion of the
principles of the conflicts of law of Delaware. The arbitration will be
conducted in accordance with the procedures set out in the commercial
arbitration rules of the AAA. If those rules are silent with respect to a
particular matter, the procedure will be as agreed by the Partners, or in the
absence of agreement among or between the Partners, as established by the
arbitrators. Notwithstanding any other provision of this Agreement, this SECTION
8.5(C) will be construed to the maximum extent possible to comply with the
laws
of the State of Delaware, including the Uniform Arbitration Act (10 Del. C.
ss.
5701 ET SEQ.) (the “DELAWARE ARBITRATION ACT”). If, nevertheless, it is
determined by a court of competent jurisdiction that any provision or wording
of
this SECTION 8.5(C), including any rules of the AAA, are invalid or
unenforceable under the Delaware Arbitration Act or other applicable law, such
invalidity will not invalidate all of this SECTION 8.5(C). In that case, this
SECTION 8.5(C) will be construed so as to limit any term or provision so as
to
make it valid or enforceable within the requirements of the Delaware Arbitration
Act or other applicable law, and, in the event such term or provision cannot
be
so limited, this SECTION 8.5(C) will be construed to omit such invalid or
unenforceable provision.
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SECTION
8.6 NOT FOR BENEFIT OF CREDITORS. The provisions of this Agreement are intended
only for the regulation of relations among past, existing and future Partners,
their assignees and the Partnership. This Agreement is not intended for the
benefit of non-Partner creditors and, except to the extent provided in SECTION
3.8 of this Agreement, no rights are granted to non-Partner creditors under
this
Agreement.
SECTION
8.7 CONSENTS. Any and all consents, agreements or approvals provided for or
permitted by this Agreement (including minutes of any meeting) must be in
writing and a signed copy of any such consent, agreement or approval will be
filed and kept with the books of the Partnership.
SECTION
8.8 MERGER AND CONSOLIDATION. (a)
The
Partnership may merge or consolidate with or into one or more limited
partnerships formed under the Delaware Act or other business entities under
an
agreement of merger or consolidation that has been approved in the manner
contemplated by the Delaware Act.
(b) Notwithstanding
anything to the contrary in this Agreement, an agreement of merger or
consolidation approved in accordance with the Delaware Act may, to the extent
permitted by the Delaware Act, (1) effect any amendment to this Agreement,
(2)
effect the adoption of a new Partnership agreement for the Partnership if it
is
the surviving or resulting limited partnership in the merger or consolidation,
or (3) provide that the Partnership agreement of any other constituent
Partnership to the merger or consolidation (including a limited partnership
formed for the purpose of consummating the merger or consolidation) will be
the
Partnership agreement of the surviving or resulting limited
partnership.
(c) The
Partnership may convert to another Delaware business entity in accordance with
the Delaware Act upon the approval of the Partners representing a majority
(as
defined in the 0000 Xxx) of the outstanding voting securities of the
Partnership.
SECTION
8.9 PRONOUNS. All pronouns used in this Agreement will be deemed to refer to
the
masculine, feminine, neuter, singular or plural, as the identity of the Person
or Persons, firm or entity may require in the context in which they are
used.
SECTION
8.10 CONFIDENTIALITY. (a)
A
Limited Partner may obtain from the General Partner, upon reasonable demand
for
any purpose reasonably related to the Limited Partner’s Interest in the
Partnership, information regarding the affairs of the Partnership as is just
and
reasonable under the Delaware Act, subject to reasonable standards (including
standards governing the information and documents to be furnished, at what
time
and location and at whose expense) established by the General Partner in its
sole discretion.
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(b) Each
Limited Partner agrees in executing this Agreement that, except as required
by
applicable law or any regulatory body, the Limited Partner will not divulge,
furnish or make accessible to any other Person the name or address (whether
business, residence or mailing) of any Limited Partner (collectively,
“CONFIDENTIAL INFORMATION”) without the prior written consent of the General
Partner, which consent may be withheld in its sole discretion.
(c) Each
Partner recognizes that in the event that this SECTION 8.10 is breached by
any
Partner or any of its principals, Partners, members, directors, officers,
employees or agents or any of the Partner’s Affiliates, including any of the
Affiliate’s principals, Partners, members, directors, officers, employees or
agents, irreparable injury may result to the non-breaching Partners and the
Partnership. In recognition of that irreparable injury, any non-breaching
Partner may have, in addition to any and all other remedies at law or in equity
to which the non-breaching Partner and the Partnership may be entitled, the
right to obtain equitable relief, including, without limitation, injunctive
relief, to prevent any disclosure of Confidential Information, plus reasonable
attorneys’ fees and other litigation expenses incurred in connection with
obtaining the equitable relief. If any non-breaching Partner or the Partnership
(“INITIATING NON-BREACHING PARTY”) determines that any other Partner or any of
that Partner’s principals, Partners, members, directors, officers, employees or
agents or any of the Partner’s Affiliates, including any of the Affiliates’
principals, Partners, members, directors, officers, employees or agents, should
be enjoined from or required to take any action to prevent the disclosure of
Confidential Information, each of the other non-breaching Partners agrees to
join the non-breaching Initiating Non-Breaching Party in pursuing injunctive
relief in a court of appropriate jurisdiction.
(d) The
General Partner will have the right to keep confidential from the Limited
Partners, for any period of time as the General Partner deems reasonable in
its
sole discretion, any information that the General Partner reasonably believes
to
be in the nature of trade secrets or other information the disclosure of which
the General Partner in good faith believes is not in the best interest of the
Partnership or could damage the Partnership or its business or that the
Partnership is required by law or by agreement with a third party to keep
confidential.
SECTION
8.11 CERTIFICATION OF NON-FOREIGN STATUS. Each Limited Partner or transferee
of
an Interest or a portion of an Interest from a Limited Partner who or that
is
admitted to the Partnership in accordance with this Agreement will certify,
upon
admission to the Partnership and at any other time as the General Partner may
request, whether the Limited Partner or transferee is a “United States Person”
within the meaning of the Code on forms to be provided by the Partnership,
and
will notify the Partnership within 30 days of any change in the status of the
Limited Partner or transferee. Any Limited Partner or transferee who or that
fails to provide certification when requested to do so by the General Partner
may be treated as a non-United States Person for purposes of U.S. Federal tax
withholding.
SECTION
8.12 SEVERABILITY. Each Partner agrees that the Partner intends that, if any
provision of this Agreement is determined by a court of competent jurisdiction
or regulatory authority with jurisdiction over the Partnership, the General
Partner or the Investment Manager not to be enforceable in the manner set out
in
this Agreement, then the provision should be enforceable to the maximum extent
possible under applicable law. If any provision of this Agreement is held to
be
invalid or unenforceable, the invalidation or unenforceability will not affect
the validity or enforceability of any other provision of this Agreement (or
portion of the provision).
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SECTION
8.13 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the
Partners pertaining to the subject matter of this Agreement and supersedes
all
prior agreements and understandings pertaining to that subject
matter.
Notwithstanding
any other provision of this Agreement, including SECTION 8.1, each Partner,
in
executing this Agreement, acknowledges and agrees that the General Partner,
on
its own behalf or on behalf of the Partnership, without the approval of the
Limited Partners or any other Person, may enter into a written agreement or
agreements with any other Partner, executed contemporaneously with the admission
of the other Partner to the Partnership, affecting or modifying the terms of,
or
establishing rights under, this Agreement or any subscription agreement. Each
Partner agrees that any terms contained in any such other agreement with another
Partner will govern with respect to the other Partner notwithstanding the
provisions of this Agreement or any subscription agreement, and that the Partner
will have no rights in respect of those granted in favor of such other
Partner.
SECTION
8.14 DISCRETION. To the fullest extent permitted by law, whenever in this
Agreement a Person is permitted or required to make a decision (a) in its “sole
discretion” or “discretion” or under a grant of similar authority or latitude,
the Person will be entitled to consider only those interests and factors as
he,
she or it desires, including his, her or its own interests, and, to the fullest
extent permitted by law, will have no duty or obligation to give any
consideration to any interest of or factors affecting the Partnership or the
Limited Partners, or (b) in its “good faith” or under another express standard,
then the Person will act under the express standard and will not be subject
to
any other or different standards imposed by this Agreement or any other
agreement contemplated by this Agreement or by relevant provisions of law or
in
equity or otherwise.
SECTION
8.15 CONFLICTS. The Partners acknowledge and agree that the General Partner
and
its Affiliates may engage in activities in which their respective interests
or
the interests of their clients may conflict with the interests of the
Partnership or the Limited Partners, and that the resolution of such conflicts
may not always be resolved by the General Partner or its Affiliates in favor
of
the Partnership or the Limited Partners.
SECTION
8.16 COUNTERPARTS. This Agreement may be executed in several counterparts,
all
of which together will constitute one agreement binding on all Partners,
notwithstanding that all the Partners have not signed the same
counterpart.
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SECTION
8.17 HEADINGS. The headings in this Agreement are included for convenience
of
reference only and in no way define or delimit any of the provisions of this
Agreement or otherwise affect their construction or effect.
[Remainder
of Page Intentionally Left Blank]
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IN
EXECUTING THIS AGREEMENT, EACH PARTNER ACKNOWLEDGES HAVING READ THIS AGREEMENT
IN ITS ENTIRETY BEFORE SIGNING, INCLUDING THE PRE-DISPUTE ARBITRATION CLAUSES
SET OUT IN SECTION 8.5 AND THE CONFIDENTIALITY CLAUSES SET OUT IN SECTION
8.10.
The
Partners have executed this Agreement as of the day and year first above
written.
GENERAL
PARTNER:
Hatteras
Investment Management LLC
By:
/s/ Xxxxx X.
Xxxxxxx
Name:
Xxxxx X. Xxxxxxx
Title:
Managing Member
LIMITED
PARTNERS:
Each
Person who or that has
signed,
or has had signed
on
the
Person’s behalf, a
Limited
Partner Signature
Page,
which will constitute
a
counterpart of this
Agreement.
