Fourth Amended and Restated Limited Partnership Agreement of Warrington Fund L.P.
EXHIBIT 3.2(b)
Fourth Amended and Restated Limited Partnership Agreement
of Warrington Fund L.P.
of Warrington Fund L.P.
This Fourth Amended and Restated Limited Partnership Agreement (this “Agreement”), dated and
effective as of June 15, 2011, is by and among Ceres Managed Futures LLC (formerly Citigroup
Managed Futures LLC) (the “General Partner”), Warrington Trading, LLC (the “Special Limited
Partner”) and those other parties who shall execute this Agreement, whether in counterpart or by
attorney-in-fact, as limited partners. (The Special Limited Partner and such other parties who are
limited partners are hereinafter collectively referred to as the “Limited Partners.” The General
Partner and the Limited Partners may be collectively referred to herein as “Partners.”) This
Agreement amends and restates the Third Amended and Restated Limited Partnership Agreement dated as
of December 21, 2009 (the “Third Amended and Restated Limited Partnership Agreement”) by and among
the General Partner, the Special Limited Partner and the other limited partners party thereto.
W I T N E S S E T H :
WHEREAS, on November 28, 2005, Warrington Fund L.P. (formerly Xxxxx Xxxxxx Warrington Fund
L.P.) (the “Partnership”) was formed for the purpose of trading in commodity interests, as
described in Paragraph 3 hereof, pursuant to the Partnership’s limited partnership agreement, dated
as of November 28, 2005 (the “Initial Agreement” and together with the Amended and Restated Limited
Partnership Agreement dated as of June 30, 2008, the Second Amended and Restated Limited
Partnership Agreement dated as of June 30, 2009, and the Third Amended and Restated Limited
Partnership Agreement, the “Prior Agreement”)) by and among the General Partner, a special limited
partner, an initial limited partner (the “Initial Limited Partner”) and the other limited partners
party thereto; and
WHEREAS, the Partnership commenced trading on February 21, 2006; and
WHEREAS, this Agreement has been amended previously, among other things, (a) to name a
commodity trading advisor of the Partnership, (b) to admit a replacement special limited partner,
(c) to remove the requirement that a Limited Partner must hold Units of Limited Partnership
Interest (as defined below) for three (3) full months before such Units may be withdrawn and (d) to
reflect changes to the names of the General Partner and the Partnership; and
WHEREAS, the General Partner has deemed it advisable to amend the Prior Agreement to (i) offer
multiple classes of Units of Limited Partnership Interest, and (ii) reduce the notice period for
redemption requests; and
WHEREAS, the General Partner, consistent with the requirements of Paragraph 18(a) of the Prior
Agreement, has determined that such amendments are not adverse to and do not require the consent of
the Limited Partners; and
WHEREAS, the General Partner, consistent with the requirements of Paragraph 18(a) of the Prior
Agreement, has determined to make other conforming amendments to the Prior Agreement;
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NOW, THEREFORE, in consideration of the mutual premises and agreements herein made and
intending to be legally bound hereby, the parties hereto agree to amend and restate the Prior
Agreement in its entirety as follows:
1. Formation and Name.
The Partnership was formed as a limited partnership under the New York Revised Uniform Limited
Partnership Act (the “Partnership Act”) on November 28, 2005. The name of the limited partnership
is Warrington Fund L.P. The General Partner has executed and filed a Certificate of Limited
Partnership in accordance with the provisions of the Partnership Act and shall execute, file,
record and publish, as appropriate, such amendments, restatements and other documents as are or
become necessary or advisable, as determined by the General Partner.
2. Principal Office.
The principal office of the Partnership shall be 000 0xx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other place as the General Partner may designate from time
to time.
3. Business.
(a) The Partnership’s business and purpose is to trade, buy, sell or otherwise acquire, hold
or dispose of interests, directly or indirectly, in commodities of all descriptions (including
futures contracts, commodity options, forward contracts and any other rights or interests
pertaining thereto, including swaps and interests in commodity pools). The objective of the
Partnership business is appreciation of its assets through speculative trading.
(b) The Partnership shall not:
(1) engage in the pyramiding of its positions by using unrealized profits on existing
positions as margin for the purchase or sale of additional positions in the same or related
commodities;
(2) utilize borrowings except short-term borrowings if the Partnership takes delivery of cash
commodities; or
(3) permit the churning of its account.
(c) The Partnership shall make no loans. Assets of the Partnership will not be commingled
with assets of any other entity. Deposit of assets with a commodity broker or dealer as margin
shall not constitute commingling.
4. Term, Dissolution and Fiscal Year.
(a) Term. The term of the Partnership commenced on the date the Certificate of Limited
Partnership was filed in the office of the Secretary of State, State of New York, and shall end as
soon as practicable upon the first to occur of the following: (1) December 31, 2025; (2) receipt
by the General Partner of an election to dissolve the Partnership at a specified time by Limited
Partners owning more than 50% of all Classes (as defined below) of Units of Limited
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Partnership Interest then outstanding, notice of which is sent by registered mail to the
General Partner not less than 90 days prior to the effective date of such dissolution; (3)
assignment by the General Partner of all of its interest in the Partnership, withdrawal, removal,
bankruptcy or any other event that causes the General Partner to cease to be a general partner
under the Partnership Act (unless the Partnership is continued pursuant to Paragraph 18); (4) the
Net Asset Value per Unit of Limited Partnership Interest of any Class declines on any business day
after trading to less than $400; or (5) any event which shall make it unlawful for the existence of
the Partnership to be continued. In addition, the General Partner may, in its sole discretion,
cause the Partnership to dissolve if the aggregate Net Assets of the Partnership decline to less
than $1,000,000.
(b) Dissolution. Upon dissolution of the Partnership, the assets of the Partnership shall be
distributed to creditors, including any Partners who may be creditors, to the extent otherwise
permitted by law, in satisfaction of liabilities of the Partnership (whether by payment or the
making of reasonable provision for payment thereof) other than liabilities for which reasonable
provision for payment has been made and liabilities for distributions to Partners; to Partners and
former Partners in satisfaction of liabilities for distributions; and to Partners in accordance
with Paragraph 7(b)(5). Following distributions of the assets of the Partnership, a Certificate of
Cancellation for the Partnership shall be filed as required by the Partnership Act.
(c) Fiscal Year. The fiscal year of the Partnership will commence on January 1 and end on
December 31 each year (“fiscal year”). Each fiscal year of the Partnership is divided into four
fiscal quarters commencing on the first day of January, April, July and October (“fiscal quarter”).
5. Net Worth of General Partner.
The General Partner shall not be obligated to maintain a Net Worth in excess of such amount,
if any, as may be required to ensure that the Partnership will continue to be treated as a
partnership for federal income tax purposes. For the purposes of this Paragraph 5, Net Worth shall
be based upon current fair market value of the assets of the General Partner.
6. Capital Contributions and Units of Partnership Interest.
The General Partner may, but shall not be obligated to, contribute capital to the Partnership
unless required to ensure that the Partnership will continue to be treated as a partnership for
federal income tax purposes. The General Partner’s contribution shall be evidenced by “Units of
General Partnership Interest.”
Interests in the Partnership, other than those of the General Partner, shall be evidenced by
Class A or Class D Units of Limited Partnership Interest which the General Partner on behalf of the
Partnership shall, in accordance with the Private Placement Offering Memorandum and Disclosure
Document (the “Memorandum”) referred to in Paragraph 12, sell to persons desiring to become Limited
Partners who satisfy the investment and minimum capital contribution requirements specific to each
Class. Identical rights, powers, duties and obligations attach to each class of Units of Limited
Partnership Interest, except that purchasers of Class D units may be subject to reduced brokerage
charges. The Class of units that a Limited Partner receives will generally depend upon the amount
invested in the Partnership, although the General Partner may
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determine to offer Class A or Class D units to a Limited Partner in its sole discretion,
regardless of investment amount. Generally, Limited Partners investing up to $4,999,999 in the
Partnership will receive Class A units, while Limited Partners investing $5,000,000 or more in the
Partnership will receive Class D units (the “Class D Account Minimum”). The General Partner may,
without the consent of the Limited Partners, offer additional classes of Units of Limited
Partnership Interest (together with Class A Units of Limited Partnership Interest and Class D Units
of Limited Partnership Interest, the “Classes”) as it may determine in its sole discretion from
time to time. Units of General Partnership Interest and Units of Limited Partnership Interest
allocated to the Special Limited Partner as the Profit Share (defined below) shall be subject to
the brokerage fees payable by Class A units. For any Unit (or partial unit rounded to four decimal
places) of Limited Partnership Interest purchased (except as noted below with respect to the
Special Limited Partner), a Limited Partner shall contribute to the capital of the Partnership an
amount equal to the Net Asset Value of such Unit of Limited Partnership Interest (or partial unit,
as the case may be) as of the close of business on the day preceding the effective date of such
purchase, and shall pay in addition the selling commission, if any, which must be paid with respect
to such purchase.
Notwithstanding the provisions of Paragraph 8, the Special Limited Partner shall make a
capital contribution to the Partnership (and shall maintain an interest in the Partnership for as
long as the Special Limited Partner is a special limited partner of the Partnership) in an amount
greater than or equal to either (i) one-quarter of 1% of the Net Assets of the Partnership (as such
term is defined in Paragraph 7(d)(2)); or (ii) $100,000, whichever is greater.
The Special Limited Partner will receive a quarterly Profit Share (as such term is defined
below) allocation in Units of Limited Partnership Interest as described in Paragraph 8. The
aggregate of all contributions shall be available to the Partnership to carry on its business, and
no interest shall be paid on any such contribution. All subscriptions for Units of Limited
Partnership Interest made pursuant to this private placement of the Units of Limited Partnership
Interest (the “Private Placement”) must be on the form provided in the Memorandum. All subscribers
who have been accepted by the General Partner shall be deemed admitted as Limited Partners at the
time they are reflected as such in the books and records of the Partnership.
7. Allocation of Profits and Losses.
(a) Capital Accounts. A capital account shall be established for each Partner. The initial
balance of each Partner’s capital account shall be the amount of his initial capital contribution
to the Partnership. A Partner’s capital account shall be increased by the amount of any additional
capital contributions to the Partnership by such Partner, and shall be further adjusted as provided
in Paragraph 7(b).
(b) Allocations. As of the close of business on the last day of each month during each
fiscal year of the Partnership, and on such other dates as the General Partner in its discretion
shall determine (each, an “Allocation Date”), the following determinations and allocations shall be
made:
(1) The Net Asset Value per Class (as defined in Paragraph 7(d)(1)) and the Net Assets of the
Partnership (as defined in Paragraph 7(d)(2)), but before any advisory and administrative fees or
Profit Share allocations as of such date shall be determined.
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(2) Monthly advisory fees, if any, payable by the Partnership as of such date shall then be
charged against the Net Asset Value per Class for each outstanding Class.
(3) Monthly administrative fees, if any, payable by the Partnership to the General Partner as
of such date shall then be charged against the Net Asset Value per Class for each outstanding
Class.
(4) Any increase or decrease in the Net Asset Value per Class from the previous Allocation
Date (or, with respect to the first calendar month of operations, from the first day of operations)
allocable to Limited Partners or the General Partner, as the case may be, shall then be credited or
charged to the capital accounts of the Limited Partners or the General Partner, as the case may be,
in the ratio that the balance of each such Partner’s capital account bears to the balance of all
such relevant Partners’ capital accounts. For the purpose of this Paragraph 7(b)(4), Net Asset
Value per Class shall be determined without regard to (A) any Profit Share allocations to the
Special Limited Partner pursuant to Paragraph 7(b)(5), (B) distributions and withdrawals described
in Paragraph 7(b)(6), and (C) any contributions made to the Partnership by a Partner during such
month.
(5) As of each calendar quarter-end, the aggregate amount of net increase in the Net Asset
Value per Class allocated pursuant to Paragraph 7(b)(4) shall be adjusted by charging the capital
accounts of the Partners, in the ratio that the balance of each such Partner’s capital account
bears to the balance of all such relevant Partners’ capital accounts, an amount equal to the
Special Limited Partner’s Profit Share allocation to be made as of such calendar quarter-end,
pursuant to Paragraph 8 and by crediting such amount to the Special Limited Partner’s capital
account.
(6) The amount of any distribution to a Partner and any amount paid to a Partner upon
withdrawal of capital from the Partnership with respect to such month shall be charged against the
Partner’s capital account. Upon liquidation of the Partnership, the balance of the proceeds of
liquidation after payment of Partnership obligations shall be distributed to the Partners in
proportion to their remaining positive capital account balances after adjustment for prior
distributions and allocations.
(c) Allocations for Tax Purposes. All items of income, gains, losses, deductions and
credits of the Partnership for each fiscal year will be allocated among the Partners for income tax
purposes in a manner that reflects, as closely as possible, the amounts and the components credited
or debited to each Partner’s capital account pursuant to this Paragraph 7. Allocations pursuant to
this Paragraph 7(c) will not be credited or debited to capital accounts.
(d) Definitions.
(1) Net Assets per Class. Net Assets per Class shall mean the total assets attributable to
each Class, as determined by the General Partner, including all cash, Treasury bills, accrued
interest and the market value of all open commodity positions maintained by the Partnership for
such Class, less all liabilities attributable to each Class, as determined by the General Partner,
including brokerage charges accrued and other liabilities, determined in accordance with generally
accepted accounting principles under the accrual basis of accounting. The value of a
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commodity futures or option contract is the unrealized gain or loss on the contract that is
determined by marking it to the current settlement price for a like contract acquired on the
valuation date. Physical commodities, options, forward contracts, futures contracts and swaps,
when no market quote is available, will be valued at their fair market value as determined in good
faith by the General Partner. U.S. Treasury securities and other interest bearing obligations will
be valued at cost plus accrued interest. Interests in other commodity pools will be valued at
their net asset value as determined by the pool operator, or, if the General Partner has not
received such determination or believes that fairness so requires, at fair value determined by the
General Partner. Net Assets per Class equals Net Asset Value per Class.
(2) Net Assets of the Partnership. The Net Assets of the Partnership equals the sum of Net
Assets per Class, of all outstanding Classes.
(3) Net Asset Value per Unit. The Net Asset Value per Unit of each Unit of Limited
Partnership Interest and each Unit of General Partnership Interest for each Class shall be
determined by dividing the Net Asset Value per Class by the aggregate number of Units of Limited
and General Partnership Interest outstanding in such Class.
(e) Expenses and Limitation Thereof. The Partnership shall be obligated to pay all
liabilities incurred by it, including, without limitation, all expenses incurred in connection with
its trading activities, and any advisory fees or other expenses. The General Partner shall bear
all other operating expenses except legal, accounting, filing, data processing and reporting fees
and extraordinary expenses. Appropriate reserves may be created, accrued and charged against Net
Assets of the Partnership for contingent liabilities, if any, as of the date any such contingent
liability becomes known to the General Partner.
(f) Limited Liability of Limited Partners.
(1) Each Unit of Limited Partnership Interest, when purchased by a Limited Partner (or
allocated to the Special Limited Partner), subject to the qualifications set forth below, shall be
fully paid and non-assessable.
(2) A Limited Partner shall have no liability in excess of his obligation to make
contributions to the capital of the Partnership and his share of the Partnership’s assets and
undistributed profits, subject to the qualifications provided in the Partnership Act.
(g) Return of Limited Partner’s Capital Contribution. Except to the extent that a Limited
Partner shall have the right to withdraw capital through redemption of Units of Limited Partnership
Interest, no Limited Partner shall have any right to demand the return of his capital contribution
or any profits added thereto, except upon dissolution and termination of the Partnership in
accordance with Paragraph 7(b)(5). In no event shall a Limited Partner be entitled to demand and
receive property other than cash.
8. Profit Share Allocation to the Special Limited Partner.
The Special Limited Partner shall receive a quarterly profit share (a “Profit Share”)
allocation to its capital account in the Partnership in the form of additional Units and/or partial
Units of Limited Partnership Interest, the value of which shall be equal to 20% of New Trading
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Profits of the Partnership as of each calendar quarter-end. The Profit Share allocation shall
be made to the Special Limited Partner within 10 business days following the end of each calendar
quarter.
New Trading Profits means the excess, if any, of Net Assets of the Partnership managed by the
Advisor at the end of the calendar quarter over Net Assets of the Partnership managed by the
Advisor at the end of the highest previous calendar quarter or Net Assets of the Partnership
allocated to the Advisor at the date trading commences, whichever is higher, and as further
adjusted to eliminate the effect on Net Assets of the Partnership resulting from new capital
contributions, redemptions, reallocations or capital distributions, if any, made during the
calendar quarter decreased by interest or other income not directly related to trading activity,
earned on the Partnership’s assets during the calendar quarter whether the assets are held
separately or in margin accounts. Ongoing expenses will be attributed to the Advisor based on the
Advisor’s proportionate share of Net Assets of the Partnership. Ongoing expenses above shall not
include expenses of litigation not involving the activities of the Advisor on behalf of the
Partnership. Ongoing expenses above shall include offering and organizational expenses of the
Partnership. No Profit Share shall be allocable until the end of the first full calendar quarter
of trading, which allocation shall be based on New Trading Profits earned from the commencement of
trading operations by the Partnership through the end of the first full calendar quarter. Interest
income earned, if any, will not be taken into account in computing New Trading Profits.
If any Profit Share allocation is made to the Special Limited Partner with respect to New
Trading Profits, and the Partnership thereafter incurs a net loss for a subsequent period, the
Special Limited Partner will retain the Profit Share previously allocated in respect of New Trading
Profits. If Net Assets of the Partnership allocated to the Advisor are reduced due to net
redemptions, distributions or reallocations (net of additions), there will be a corresponding
proportional reduction in the related loss carryforward amount that must be recouped before the
Special Limited Partner is eligible to receive another Profit Share. However, the Special Limited
Partner would not be allocated any Profit Share thereafter until all of such losses were recovered
and the Partnership achieved additional New Trading Profits.
If the Partnership is terminated or the Advisor is removed as Advisor of the Partnership on a
date other than a calendar quarter-end, the Profit Share allocation described above shall be
determined and made as if such date were a calendar quarter-end.
9. Management of the Partnership.
The General Partner, to the exclusion of all Limited Partners, shall conduct, control and
manage the business of the Partnership, including, without limitation, the investment of the funds
of the Partnership. The General Partner may, but is not obliged to, delegate its rights, duties
and powers hereunder, including but not limited to the duty to make trading decisions for the
Partnership. The General Partner has selected the Advisor to make trading decisions for the
Partnership pursuant to a management agreement dated June 30, 2008 by and among the General
Partner, the Partnership and the Advisor (the “Management Agreement”). Except as provided herein,
no Partner shall be entitled to any salary, draw or other compensation from the Partnership. Each
Limited Partner hereby undertakes to advise the General Partner of such additional information as
may be deemed by the General Partner to be required or appropriate to open and
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maintain an account or accounts with commodity brokerage firms for the purpose of trading in
commodity futures contracts.
Subject to Paragraph 5 hereof, the General Partner may engage in other business activities and
shall not be required to refrain from any other activity nor disgorge any profits from any such
activity, whether as general partner of additional partnerships for investment in commodity futures
contracts or otherwise. The General Partner may engage and compensate on behalf of the Partnership
from funds of the Partnership, such persons, firms or corporations, including any affiliated person
or entity, as the General Partner in its sole judgment shall deem advisable for the conduct and
operation of the business of the Partnership.
No person dealing with the General Partner shall be required to determine its authority to
make any undertaking on behalf of the Partnership, nor to determine any fact or circumstance
bearing upon the existence of its authority.
The General Partner shall monitor the trading and performance of any trading advisor for the
Partnership and shall not permit the “churning” of the Partnership’s account. The General Partner
has been authorized to enter into the Agency Agreement with Citigroup Global Markets Inc. (“CGM”),
the Management Agreement with the Advisor, and the Customer Agreement with CGM, each as described
in the Memorandum and to cause the Partnership to pay the fees and/or make the allocations
described therein and to negotiate agency, customer and management agreements with other selling
agents, brokers or futures commission merchants, and advisors, respectively, in the future on those
or other terms. The General Partner may take such other actions as it deems necessary or desirable
to manage the business of the Partnership, including, but not limited to, the following: opening
bank accounts with state or national banks; paying, or authorizing the payment of expenses of the
Partnership, such as advisory fees, legal and accounting fees, printing and reporting fees, and
registration and other fees of governmental agencies; and investing or directing the investment of
funds of the Partnership not being utilized as margin deposits.
The General Partner shall maintain a list of the names and addresses of, and interests owned
by, all Partners, a copy of which shall be furnished to Limited Partners upon request either in
person or by mail and upon payment of the cost of reproduction and mailing for a purpose reasonably
related to such Limited Partner’s interest as a limited partner in the Partnership, and such other
books and records relating to the business of the Partnership as it deems necessary or advisable at
the principal office of the Partnership. The General Partner shall retain such records for a
period of not less than six years. The Limited Partners shall be given reasonable access to the
books and records of the Partnership for a purpose reasonably related to such Limited Partner’s
interest as a limited partner in the Partnership.
The Partnership shall pay the General Partner a monthly administrative fee in return for its
services to the Partnership. The administrative fee shall equal 1/12 of 1/2% (1/2% per year) of
month-end adjusted Net Assets per Class for each outstanding Class. The fee may be increased or
decreased at the discretion of the General Partner. For purposes of calculating the administrative
fee, adjusted Net Assets per Class are “Net Assets per Class” increased by the current month’s
advisory fee, Profit Share allocation accrual, the general partner’s administrative fee and any
redemptions or distributions as of the end of such month.
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Except as provided herein and in the Memorandum, the Partnership shall not enter into any
contract with any of its affiliates or with any trading advisor which has a term of more than one
year. Except as provided herein and in the Memorandum: (a) no person may receive, directly or
indirectly, any advisory fee for investment advice or management who shares or participates in
commodity brokerage commissions or fees from transactions for the Partnership; (b) no broker may
pay, directly or indirectly, rebates or give ups to any trading advisor; and (c) such prohibitions
shall not be circumvented by any reciprocal business arrangements. On loans made available to the
Partnership by the General Partner or any of its affiliates, the lender may not receive interest in
excess of its interest costs, nor may the lender receive interest in excess of the amounts which
would be charged the Partnership (without reference to the lender’s financial abilities or
guarantees) by unrelated banks on comparable loans for the same purpose and the lender shall not
receive points or other financing charges or fees regardless of the amounts.
10. Audits and Reports to Limited Partners.
The Partnership’s books and records shall be audited annually by independent accountants. The
Partnership will cause each Partner to receive (a) within 90 days after the close of each fiscal
year, audited financial statements, including a balance sheet and statements of income and
partners’ equity for the fiscal year then ended, and (b) within 75 days after the close of each
fiscal year such tax information as is necessary for him to complete his federal income tax return.
In addition, within 30 days of the end of each month the Partnership will provide each Limited
Partner with reports showing Net Assets of the Partnership, Net Asset Value per Class and Net Asset
Value per Unit of Limited Partnership Interest for each Class as of the end of such month, as well
as information relating to the fees and other expenses incurred by the Partnership during such
month. Both annual and monthly reports shall include such additional information as the Commodity
Futures Trading Commission may require under the Commodity Exchange Act to be given to participants
in commodity pools such as the Partnership. The General Partner shall calculate the Net Asset
Value per Unit of Limited and General Partnership Interest for each Class daily and shall make such
information available upon the request of a Limited Partner for a purpose reasonably related to
such Limited Partner’s interest as a Limited Partner in the Partnership.
In addition, if any of the following events occur, notice of such event shall be mailed to
each Limited Partner within seven business days of the occurrence of the event: (1) a decrease in
the Net Asset Value of a Unit of Limited Partnership Interest of any Class to $400 or less as of
the end of any trading day; (2) any change in trading advisor(s); (3) any change in the General
Partner; (4) any change in commodity broker(s); or (5) any material change in the Partnership’s
trading policies or in an advisor’s trading strategies.
11. Transfer, Redemption and Conversion of Units.
(a) Initial Limited Partner. The Initial Agreement allowed the Initial Limited Partner to
redeem his Unit of Limited Partnership Interest for $1,000 and withdraw from the Partnership.
(b) Transfer. Each Limited Partner expressly agrees that he will not assign, transfer or
dispose of, by gift or otherwise, any of his Units of Limited Partnership Interest or any
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part or all of his right, title and interest in the capital or profits of the Partnership
without giving written notice of the assignment, transfer or disposition to the General Partner and
that no assignment, transfer or disposition shall be effective against the Partnership or the
General Partner until the first day of the month next succeeding the month in which the General
Partner receives the written notice described below. Any assignment, transfer or disposition by an
assignee of Units of Limited Partnership Interest of his interest in the capital or profits of the
Partnership shall not be effective against the Partnership or the General Partner until the first
day of the month next succeeding the month in which the General Partner receives the written notice
described below.
If the General Partner receives an opinion of counsel to the effect that a transfer should be
prohibited in order to protect the Partnership from being treated as a publicly traded partnership,
such transfer shall be prohibited. Upon advice of counsel, the General Partner shall eliminate or
modify any restrictions on substitutions or assignment at such time as the restriction is no longer
necessary. If an assignment, transfer or disposition occurs by reason of the death or by
termination of a Limited Partner or assignee, such written notice may be given by the duly
authorized representative of the estate of the Limited Partner or assignee and shall be supported
by such proof of legal authority and valid assignment as may reasonably be requested by the General
Partner. The written notice required by this paragraph shall specify the name and residence
address of the assignee and the date of the assignment, shall include a statement by the assignee
that he agrees to give the above-described written notice to the General Partner upon any
subsequent assignment, and shall be signed by the assignor and assignee. The General Partner may,
in its sole discretion, waive receipt of the above-described notice or waive any defect therein.
Any such assignee shall become a substituted Limited Partner only upon the consent of the General
Partner (which consent may only be withheld for the purpose of preserving the Partnership’s tax
status or to avoid adverse legal consequences to the Partnership), upon the execution of a Power of
Attorney by such assignee appointing the General Partner as his attorney-in-fact in the form
contained in Paragraph 14 hereof. The estate or any beneficiary of a deceased Limited Partner or
assignee shall have no right to withdraw any capital or profits from the Partnership except by
redemption of Units of Limited Partnership Interest. Upon the death of a Limited Partner, his
estate shall have any rights of inventory, accounting, appraisal or examination of Partnership
records as are granted by law. A substituted Limited Partner shall have all the rights and powers
and shall be subject to all the restrictions and liabilities of a limited partner of the
Partnership. A substituted Limited Partner is also liable for the obligations of his assignor to
make contributions to the Partnership, but shall not be liable for the obligations of his assignor
under the Partnership Act to return distributions received by the assignor; provided, however, that
a substituted Limited Partner shall not be obligated for liabilities unknown to him at the time he
became a substituted Limited Partner and which could not be ascertained from this Agreement. Each
Limited Partner agrees that with the consent of the General Partner any assignee may become a
substituted Limited Partner without the further act or approval of any Limited Partner. If the
General Partner withholds consent, an assignee shall not become a substituted Limited Partner and
shall not have any of the rights of a Limited Partner except that the assignee shall be entitled to
receive that share of capital or profits and shall have that right of redemption to which his
assignor would otherwise have been entitled. An assigning Limited Partner shall remain liable to
the Partnership as provided in the Partnership Act, regardless of whether his assignee becomes a
substituted Limited Partner. The transfer of Units of Limited Partnership Interest shall be
subject to all applicable securities laws. The transferor or assignor shall bear the cost related
to such transfer or assignment. Certificates representing Units of Limited Partnership Interest
may bear appropriate legends to the foregoing effect. Except for transfers by
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gift, inheritance, intrafamily transfers, family dissolutions and transfers to affiliates, no
transfer may be made that results in either the transferor or the transferee holding fewer than
three Units.
(c) Redemption. A Limited Partner (or any assignee thereof) may withdraw all or part of his
capital contribution and undistributed profits, if any, from the Partnership in multiples of the
Net Asset Value per Unit of a Class of Limited Partnership Interest (such withdrawal being herein
referred to as “redemption”) as of the last day of a month (the “Redemption Date”) after a request
for redemption has been made to the General Partner; provided that all liabilities, contingent or
otherwise, of the Partnership, except any liability to Partners on account of their capital
contributions, have been paid or there remains property of the Partnership sufficient to pay them.
If a Limited Partner redeems less than its entire capital contribution and, after the redemption,
the amount of such Limited Partner’s aggregate capital contributions is less than the Class D
Account Minimum, any Class D Units of Limited Partnership Interest held by such Limited Partner
shall be converted to Class A Units of Limited Partnership Interest as described in Section 10(d)
below. As used herein, “request for redemption” shall mean a written or oral request in a form
specified by the General Partner and received by the General Partner at least three business days
in advance of the Redemption Date, or such other notice period as the General Partner shall
determine. The General Partner, in its discretion, may waive the three business day notice
requirement. A form of Request for Redemption may be obtained by written request to the General
Partner. Redemption of partial Units of Limited Partnership Interest will be permitted at the
General Partner’s discretion. Upon redemption, a Limited Partner (or any assignee thereof) shall
receive, per Unit of Limited Partnership Interest redeemed, an amount equal to the Net Asset Value
per Unit of Limited Partnership Interest for such Class as of the Redemption Date, less any amount
owing by such Partner (and his assignee, if any) to the Partnership. If redemption is requested by
an assignee, all amounts owed by the Partner to whom such Unit of Limited Partnership Interest was
sold by the Partnership as well as all amounts owed by all assignees of such Unit of Limited
Partnership Interest shall be deducted from the Net Asset Value per Unit of Limited Partnership
Interest for such Class upon redemption by any assignee. Payment will be made within 10 business
days after the Redemption Date. The General Partner may temporarily suspend redemptions if
necessary in order to liquidate commodity positions in an orderly manner and may permit less
frequent redemptions if it has received an opinion from counsel that such action is advisable to
prevent the Partnership from being considered a publicly traded partnership by the Internal Revenue
Service.
The General Partner may, at its sole discretion and upon notice to the Limited Partners,
declare a special Redemption Date on which date Limited Partners may redeem their Units of Limited
Partnership Interest at Net Asset Value per Unit of such Class, provided that the Limited Partners
submit requests for redemption in a form acceptable to the General Partner.
The General Partner may require that any Limited Partner redeem his Units of Limited
Partnership Interest on 10 days’ notice to the Limited Partner if, in the sole discretion of the
General Partner, it is in the best interests of the Partnership to require such redemption.
(d) Conversion. As of the close of business on the last day of each month during each fiscal
year:
(1) Class A Units of Limited Partnership Interest will be converted to an economically
equivalent amount of Class D Units of Limited Partnership Interest when the amount
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of a Limited Partner’s aggregate capital contributions is equal to or greater than the Class D
Account Minimum.
(2) Class D Units of Limited Partnership Interest will be converted to an economically
equivalent amount of Class A Units of Limited Partnership Interest when the amount of a Limited
Partner’s aggregate capital contributions is less than the Class D Account Minimum.
Each such conversion of Units of Limited Partnership Interest shall be converted at the Net
Asset Value per Unit of Class A and Class D Units of Limited Partnership Interest as of the last
day of each month and is subject to the terms and restrictions described herein and in the
Memorandum.
12. Private Placement of Units of Limited Partnership Interest.
The General Partner on behalf of the Partnership shall (a) cause to be filed a Private
Placement Offering Memorandum and Disclosure Document, and such amendments thereto as the General
Partner deems advisable, with the United States Commodity Futures Trading Commission and/or the
National Futures Association for private placement of the Units of Limited Partnership Interest,
and (b) qualify the Units of Limited Partnership Interest for sale under the securities laws of
such States of the United States as the General Partner shall deem advisable. The General Partner
may make such other arrangements for the sale of the Units of Limited Partnership Interest as it
deems appropriate including, without limitation, the execution on behalf of the Partnership of an
agency agreement with CGM as an agent of the Partnership for the offer and sale of the Units of
Limited Partnership Interest as contemplated in the Memorandum.
13. Admission of Additional Partners.
After the Private Placement of the Units of Limited Partnership Interest has been terminated
by the General Partner, no additional General Partner will be admitted to the Partnership except as
described in Paragraph 18(c). The General Partner may take such actions as may be necessary or
appropriate at any time to offer new Units or partial Units of Limited Partnership Interest and to
admit new or substituted Limited Partners to the Partnership. All subscribers who have been
accepted by the General Partner shall be deemed admitted as Limited Partners at the time they are
reflected as such in the books and records of the Partnership.
14. Special Power of Attorney.
Each Limited Partner does irrevocably constitute and appoint the General Partner, and each
other person or entity that shall after the date of this Agreement become a general partner of the
Partnership, with the power of substitution, as his true and lawful attorney-in-fact, in his name,
place and xxxxx, to execute, acknowledge, swear to, file and record in his behalf in the
appropriate public offices and publish (a) this Agreement and a Certificate of Limited Partnership,
including amendments and/or restatements thereto; (b) all instruments which the General Partner
deems necessary or appropriate to reflect any amendment, change or modification of the Partnership
in accordance with the terms of this Agreement, including any instruments necessary to dissolve the
Partnership; (c) Certificates of Assumed Name; (d) management agreements with Warrington Advisors,
LLC, or other advisory firms; and (e) customer agreements with CGM or other commodity brokerage
firms. The Power of Attorney granted herein shall be irrevocable and
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deemed to be a power coupled with an interest and shall survive and not be affected by the
subsequent incapacity, disability or death of a Limited Partner. Each Limited Partner hereby
agrees to be bound by any representation made by the General Partner and by any successor thereto,
acting in good faith pursuant to such Power of Attorney and each Limited Partner hereby waives any
and all defenses which may be available to contest, negate or disaffirm the action of the General
Partner and any successor thereto, taken in good faith under such Power of Attorney. In the event
of any conflict between this Agreement and any instruments filed by such attorney pursuant to the
Power of Attorney granted in this Paragraph, this Agreement shall control.
15. Withdrawal of a Partner.
The Partnership shall be dissolved and its affairs wound up upon the assignment by the General
Partner of all of its interest in the Partnership, withdrawal, removal, bankruptcy, or any other
event that causes the General Partner to cease to be a general partner under the Partnership Act
(unless the Partnership is continued pursuant to Paragraph 18). The General Partner shall not
withdraw from the Partnership without giving the Limited Partners 90 days’ prior written notice.
The death, incompetency, withdrawal, insolvency or dissolution of a Limited Partner shall not (in
and of itself) dissolve the Partnership, and such Limited Partner, his estate, custodian or
personal representative shall have no right to withdraw or value such Limited Partner’s interest in
the Partnership except as provided in Paragraph 11 hereof. Each Limited Partner (and any assignee
of such Partner’s interest) expressly agrees that, in the event of his death, he waives on behalf
of himself and his estate, and he directs the legal representative of his estate and any person
interested therein to waive, the furnishing of any inventory, accounting, or appraisal of the
assets of the Partnership and any right to an audit or examination of the books of the Partnership;
provided, however, that this waiver in no way limits the rights of the Limited Partners or their
representatives to have access to the Partnership’s books and records as described in Paragraph 9
hereof.
16. No Personal Liability for Return of Capital.
The General Partner, subject to Paragraph 17 hereof, shall not be personally liable for the
return or repayment of all or any portion of the capital or profits of any Partner (or assignee),
it being expressly agreed that any such return of capital or profits made pursuant to this
Agreement shall be made solely from the assets (which shall not include any right of contribution
from the General Partner) of the Partnership.
17. Indemnification.
(a) The General Partner and its Affiliates shall have no liability to the Partnership or to
any Partner for any loss suffered by the Partnership which arises out of any action or inaction of
the General Partner or its Affiliates if the General Partner or its Affiliates in good faith
determined that such course of conduct was in the best interest of the Partnership and such course
of conduct did not constitute negligence or misconduct of the General Partner or its Affiliates.
To the fullest extent permitted by law, the General Partner and its Affiliates shall be indemnified
by the Partnership against any losses, judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained by them in connection with the Partnership, provided that the
same were not the result of negligence or misconduct on the part of the General Partner or its
Affiliates.
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(b) Notwithstanding subparagraph (a) above, the General Partner and its Affiliates shall not
be indemnified for any losses, liabilities or expenses arising from or out of an alleged violation
of federal or state securities laws in connection with the offer or sale of Units of Limited
Partnership Interest.
(c) The Partnership shall not incur the cost of that portion of any insurance which insures
any party against any liability the indemnification of which is herein prohibited.
(d) For purposes of this Paragraph 17, the term “Affiliates” shall mean any person performing
services on behalf of the Partnership and acting within the scope of the General Partner’s
authority as set forth in this Agreement who: (1) directly or indirectly controls, is controlled
by, or is under common control with the General Partner; or (2) owns or controls 10% or more of the
outstanding voting securities of the General Partner; or (3) is an officer or director of the
General Partner.
(e) The provision of advances from Partnership funds to the General Partner and its
Affiliates for legal expenses and other costs incurred as a result of any legal action initiated
against the General Partner by a Limited Partner of the Partnership is prohibited.
(f) Any indemnification under subparagraph (a) above, unless ordered by a court, shall be
made by the Partnership only as authorized in the specific case and only upon a determination by
independent legal counsel in a written opinion that indemnification of the General Partner or its
Affiliates is proper in the circumstances because it has met the applicable standard of conduct set
forth in subparagraph (a) above.
18. Amendments; Meetings.
(a) Amendments with Consent of the General Partner. If at any time during the term of the
Partnership the General Partner shall deem it necessary or desirable to amend this Agreement
(including the Partnership’s basic investment policies set forth in Paragraph 3(b) hereof), such
amendment shall be effective only if approved in writing by the General Partner and, except as
specified in this subparagraph (a), by Limited Partners owning more than 50% of each Class of Units
of Limited Partnership Interest then outstanding and if made in accordance with the Partnership
Act. Any such supplemental or amendatory agreement shall be adhered to and have the same effect
from and after its effective date as if the same had originally been embodied in and formed a part
of this Agreement.
The General Partner may amend this Agreement without the consent of the Limited Partners in
order (1) to clarify any clerical inaccuracy or ambiguity or reconcile any inconsistency (including
any inconsistency between this Agreement and the Memorandum); (2) to delete or add any provision of
or to this Agreement required to be deleted or added by the staff of any federal or state agency;
or (3) to make any amendment to this Agreement which the General Partner deems advisable (including
but not limited to amendments necessary to effect the allocations proposed herein) provided that
such amendment is not adverse to the Limited Partners, or is required by law.
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The General Partner may, however, change the trading policies in Paragraph 3(b) of this
Agreement without the approval of the Limited Partners when such change is deemed to be in the best
interests of the Partnership. In addition, if the General Partner determines to offer Units of
Limited Partnership Interest to the public in the future, the General Partner may amend this
Agreement as necessary to effect such public offering without obtaining the consent of the Limited
Partners, provided, however, that such amendments are deemed to be in the best interests of the
Limited Partners. (Amendments that are consistent with the North American Securities
Administrators Association’s Guidelines for the Registration of Commodity Pools will be presumed to
be in the best interests of the Limited Partners.)
(b) Meetings. Upon receipt of a written request, signed by Limited Partners owning at least
10% of each Class of Units of Limited Partnership Interest then outstanding, that a meeting of the
Partnership be called to vote upon any matter which the Limited Partners may vote upon pursuant to
this Agreement, the General Partner shall, by written notice to each Limited Partner of record
mailed within 15 days after receipt of such request, call a meeting of the Partnership. Such
meeting shall be held at least 30 but not more than 60 days after the mailing of such notice, and
such notice shall specify the date, a reasonable place and time, and the purpose of such meeting.
(c) Amendments and Actions without Consent of the General Partner. At any meeting called
pursuant to Paragraph 18(b), upon the approval by an affirmative vote (which may be in person or by
proxy) of Limited Partners owning more than 50% of each Class of Units of Limited Partnership
Interest then outstanding, the following actions may be taken: (1) this Agreement may be amended
in accordance with and only to the extent permissible under the Partnership Act; (2) the
Partnership may be dissolved; (3) the General Partner may be removed and a new general partner may
be admitted immediately prior to the removal of the General Partner provided that the new general
partner of the Partnership shall continue the business of the Partnership without dissolution; (4)
if the General Partner elects to withdraw from the Partnership, a new general partner or general
partners may be admitted immediately prior to the withdrawal of the General Partner provided that
the new general partner of the Partnership shall continue the business of the Partnership without
dissolution; (5) any contracts with the General Partner, any of its Affiliates or any commodity
trading advisor to the Partnership may be terminated on sixty days’ notice without penalty; and (6)
the sale of all of the assets of the Partnership may be approved; provided, however, that no such
action may be taken unless the Partnership has been furnished with an opinion of counsel that the
action to be taken will not adversely affect the liability of the Limited Partners and that the
action is permitted by the Partnership Act.
(d) Continuation. Upon the assignment by the General Partner of all of its interest in the
Partnership, the withdrawal, removal, bankruptcy or any other event that causes the General Partner
to cease to be a general partner under the Partnership Act, the Partnership is not dissolved and is
not required to be wound up by reason of such event if, (1) there is a remaining general partner
who continues the business of the Partnership or (2) within 90 days after such event, all remaining
Partners agree in writing to continue the business of the Partnership and to the appointment,
effective as of the date of such event, of a successor General Partner.
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19. Governing Law.
The validity and construction of this Agreement shall be determined and governed by the laws
of the State of New York.
20. Miscellaneous.
(a) Priority among Limited Partners. With the exception of the Profit Share allocation to
the Special Limited Partner, no Limited Partner shall be entitled to any priority or preference
over any other Limited Partner with regard to the return of contributions of capital or to the
distribution of any profits or otherwise in the affairs of the Partnership.
(b) Notices. All notices under this Agreement, other than reports by the General Partner to
the Limited Partners, shall be in writing and shall be effective upon personal delivery, or, if
sent by registered or certified mail, postage prepaid, addressed to the last known address of the
party to whom such notice is to be given, upon the deposit of such notice in the United States
mail. Reports by the General Partner to the Limited Partners shall be in writing and shall be sent
by first class mail to the last known address of each Limited Partner.
(c) Binding Effect. This Agreement shall inure to and be binding upon all of the parties,
their successors, permitted assigns, custodians, estates, heirs and personal representatives. For
purposes of determining the rights of any Partner or assignee hereunder, the Partnership and the
General Partner may rely upon the Partnership records as to who are Partners and assignees and all
Partners and assignees agree that their rights shall be determined and that they shall be bound
thereby, including all rights which they may have under Paragraph 18 hereof.
(d) Captions. Captions in no way define, limit, extend or describe the scope of this
Agreement nor the effect of any of its provisions.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day first
mentioned above.
|
General Partner: Ceres Managed Futures LLC |
||||
| By: | /s/ Xxxxxx Xxxxx | |||
| Xxxxxx Xxxxx | ||||
| President and Director | ||||
|
Special Limited Partner: Warrington Trading, LLC |
||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Xxxxx X. Xxxxxx | ||||
| President | ||||
Limited Partners:
All Limited Partners now and hereafter admitted as limited partners of the Partnership pursuant to
powers of attorney now and hereafter executed in favor of and delivered to the General Partner.
| By: | CERES MANAGED FUTURES LLC | |||
| ATTORNEY-IN-FACT | ||||
| By: | /s/ Xxxxxx Xxxxx | |||
| Xxxxxx Xxxxx | ||||
| President and Director | ||||
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