LIMITED LIABILITY COMPANY OPERATING AGREEMENT
Exhibit
4.1
LIMITED
LIABILITY COMPANY
_______________________________
THE
UNITS OF LIMITED LIABILITY COMPANY INTEREST CREATED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
ACT, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS
PERMITTED UNDER APPLICABLE SECURITIES LAWS AND WITH THE CONSENT OF THE
SPONSOR.
_______________________________
Xxxxxxx
Xxxxx Alternative Investments LLC
Sponsor
March
8, 2007
EXHIBIT
A
TABLE
OF CONTENTS
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ARTICLE
I ORGANIZATION
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SECTION
1.01. OBJECTIVES AND PURPOSES.
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1
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SECTION
1.02. INVESTMENT OF CASH RESERVES
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2
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SECTION
1.03. FISCAL YEAR; ACCOUNTING PERIODS
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2
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SECTION
1.04. REGISTERED AGENT AND OFFICE; PRINCIPAL OFFICE
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3
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SECTION
1.05. TERM
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3
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SECTION
1.06. NON-ASSIGNABILITY OF UNITS; SUBSTITUTED INVESTORS; LIMITED
ASSIGNABILITY OF THE SPONSOR’S INTEREST.
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3
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SECTION
1.07. LIABILITY OF INVESTORS.
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3
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ARTICLE
II CAPITAL AND TAX ALLOCATIONS
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SECTION
2.01. CAPITAL CONTRIBUTIONS
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4
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SECTION
2.02. OPENING CAPITAL ACCOUNTS.
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6
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SECTION
2.03. FINANCIAL ALLOCATIONS AMONG THE UNITS
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6
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SECTION
2.04. NET ASSET VALUE
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6
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SECTION
2.05. SPONSOR’S FEES; OPERATING EXPENSES.
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8
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SECTION
2.06. ALLOCATION OF PROFITS AND LOSSES FOR FINANCIAL
PURPOSES
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9
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SECTION
2.07. ALLOCATION OF PROFITS AND LOSSES FOR INCOME TAX
PURPOSES.
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9
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SECTION
2.08. CHARGEBACKS TO CURRENT OR FORMER INVESTORS
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11
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SECTION
2.09. PROCESSING OF SUBSCRIPTIONS.
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11
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SECTION
2.10. VALUATION OF ASSETS
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11
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SECTION
2.11. USE OF ESTIMATES
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13
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SECTION
2.12. ACCOUNTING PRACTICES
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13
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ARTICLE
III PARTICIPATION IN SYSTEMATIC MOMENTUM FUTURESACCESS PROPERTY;
REDEMPTIONS AND DISTRIBUTIONS
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SECTION
3.01. NO UNDIVIDED INTERESTS IN SYSTEMATIC MOMENTUM FUTURESACCESS
PROPERTY
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13
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SECTION
3.02. REDEMPTIONS OF UNITS; EXCHANGES.
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13
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SECTION
3.03. WITHDRAWALS OF CAPITAL BY THE SPONSOR.
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14
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SECTION
3.04. MANDATORY REDEMPTIONS.
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14
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A-i
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TABLE
OF CONTENTS (cont.)
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SECTION
3.05. MANDATORY REDEMPTIONS TO PAY TAXES
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15
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SECTION
3.06. DISTRIBUTIONS
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15
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SECTION
3.07. FORM OF DISTRIBUTION AND REDEMPTION PAYMENTS
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15
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SECTION
3.08. REMOVAL OF THE SPONSOR
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15
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ARTICLE
IV WITHDRAWAL OF THE SPONSOR AND INVESTORS
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SECTION
4.01. WITHDRAWAL OF THE SPONSOR.
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15
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SECTION
4.02. WITHDRAWAL OF AN INVESTOR
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16
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SECTION
4.03. STATUS AFTER WITHDRAWAL
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16
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ARTICLE
V MANAGEMENT
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SECTION
5.01. AUTHORITY OF THE SPONSOR.
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16
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SECTION
5.02. SERVICE PROVIDERS; INVESTMENTS; ACCOUNTS
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16
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SECTION
5.03. ACTIVITIES OF THE SPONSOR PARTIES.
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16
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SECTION
5.04. SERVICES PERFORMED FOR SYSTEMATIC MOMENTUM
FUTURESACCESS
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17
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SECTION
5.05. INTERESTED PARTIES
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17
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SECTION
5.06. EXCULPATION
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17
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SECTION
5.07. INDEMNIFICATION
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18
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SECTION
5.08. FUTURESACCESS FUNDS’ STANDARD OF LIABILITY AND
INDEMNIFICATION
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18
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SECTION
5.09. INVESTORS’ TRANSACTIONS
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18
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SECTION
5.10. RELIANCE BY THIRD PARTIES
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18
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SECTION
5.11. REGISTRATION OF ASSETS
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18
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SECTION
5.12. LIMITATION ON AUTHORITY OF THE SPONSOR
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18
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ARTICLE
VI ADMISSION OF INVESTORS
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SECTION
6.01. PROCEDURE AS TO NEW INVESTORS
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19
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SECTION
6.02. PROCEDURE AS TO NEW MANAGERS
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19
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ARTICLE
VII BOOKS OF ACCOUNT; AUDITS; REPORTS TO
INVESTORS
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SECTION
7.01. BOOKS OF ACCOUNT
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19
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SECTION
7.02. ANNUAL AUDIT
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19
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SECTION
7.03. INTERIM REPORTS
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20
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ARTICLE
VIII CONFLICTS OF INTEREST
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SECTION
8.01. INVESTORS’ CONSENT
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20
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SECTION
8.02. INVESTORS’ REPRESENTATIVE.
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20
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A-ii
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TABLE
OF CONTENTS (cont.)
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ARTICLE
IX DISSOLUTION AND WINDING UP
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SECTION
9.01. EVENTS OF DISSOLUTION
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21
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SECTION
9.02. DISSOLUTION
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21
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ARTICLE
X MISCELLANEOUS PROVISIONS
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SECTION
10.01. INVESTORS NOT TO CONTROL
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22
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SECTION
10.02. POWER OF ATTORNEY
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22
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SECTION
10.03. AMENDMENTS; CONSENTS
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22
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SECTION
10.04. NOTICES
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23
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SECTION
10.05. LEGAL EFFECT; MANNER OF EXECUTION
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23
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SECTION
10.06. ENTIRE AGREEMENT
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23
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SECTION
10.07. GOVERNING LAW
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23
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SECTION
10.08. CONSENT TO JURISDICTION
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23
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SECTION
10.09. “TAX MATTERS PARTNER”; TAX ELECTIONS
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23
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SECTION
10.10. DETERMINATION OF MATTERS NOT PROVIDED FOR IN THIS
AGREEMENT
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24
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SECTION
10.11. NO PUBLICITY
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24
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SECTION
10.12. SURVIVAL
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24
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SECTION
10.13. WAIVERS
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24
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SECTION
10.14. VOTING RIGHTS
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24
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SECTION
10.15. ISSUANCE OF DIFFERENT CLASSES.
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24
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SECTION
10.16. COMPLIANCE WITH THE ADVISERS ACT; SECURITIES LAWS.
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24
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__________________
TESTIMONIUM
SIGNATURES
A-iii
LIMITED
LIABILITY COMPANY OPERATING AGREEMENT
THIS
LIMITED LIABILITY COMPANY OPERATING AGREEMENT (“Agreement”) dated March 8, 2007
of ML Systematic Momentum FuturesAccess LLC (“Systematic Momentum
FuturesAccess”) by and among Xxxxxxx Xxxxx Alternative Investments LLC, a
Delaware limited liability company (the “Sponsor”), and those persons who shall
invest in the units of limited liability company interest (“Units”) created
hereby — Class A, Class C, Class D and Class I — and shall execute this
Agreement, by power-of-attorney, as members (such members being hereinafter
sometimes referred to collectively as “Members” or “Investors”).
WHEREAS,
the parties hereto desire to form Systematic Momentum FuturesAccess, a limited
liability company under the provisions of the Delaware Limited Liability Company
Act (the “Act”), which shall allocate and reallocate its capital among the
single-advisor funds included in the Xxxxxxx Xxxxx FuturesAccessSM Program
(“FuturesAccess”); such other funds to be hereinafter sometimes referred to as
“FuturesAccess Funds”) under the direction of the Sponsor.
WHEREAS,
the Sponsor is the sponsor of Systematic Momentum FuturesAccess and the sponsor
and manager of each of the FuturesAccess Funds for purposes of the
Act.
NOW,
THEREFORE, in consideration of the premises, the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
ORGANIZATION
SECTION
1.01. OBJECTIVES AND PURPOSES.
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(a)
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Systematic
Momentum FuturesAccess shall have the following objectives and
purposes:
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(i)
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to
allocate and reallocate its capital among different FuturesAccess
Funds
under the direction of the Sponsor, attempting to achieve consistently
high risk-adjusted returns by implementing an active multi-advisor
managed
futures program.
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(ii)
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to
maintain such cash reserves as the Sponsor may from time to time
deem to
be appropriate and to invest and manage all such cash reserves;
and
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(iii)
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to
engage in any other lawful act or activity within and without the
United
States for which limited liability companies may be organized under
the
laws of the State of Delaware.
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(b)
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Systematic
Momentum FuturesAccess, and the Sponsor on behalf of Systematic Momentum
FuturesAccess, shall have the power to enter into, make and perform
all
contracts and other undertakings, and engage in all activities and
transactions as may be necessary or advisable to the carrying out
of the
foregoing purposes, including, without limitation, the
power:
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|
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(i)
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invest
in and redeem from FuturesAccess Funds, allocating and reallocating
its
capital among FuturesAccess Funds in the discretion of the
Sponsor;
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(ii)
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indirectly
to trade futures, forwards, options and other instruments, on margin
and
otherwise, through investing in FuturesAccess
Funds;
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(iii)
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to
borrow money from banks or brokers by hypothecation or pledge of
all or
part of the assets of Systematic Momentum
FuturesAccess;
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A-1
ML
Systematic Momentum FuturesAccess LLC
Limited
Liability Company Operating Agreement Dated as of March 8,
2007
|
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(iv)
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to
exercise, as applicable, all rights, powers, privileges and other
incidents of ownership or possession with respect to the assets of
Systematic Momentum FuturesAccess;
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(v)
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to
open, maintain and close bank, brokerage and other
accounts;
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(vi)
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to
prepare and file all tax returns required of Systematic Momentum
FuturesAccess and make any election or determination on behalf of
Systematic Momentum FuturesAccess in connection therewith or as otherwise
required or permitted by applicable tax
laws;
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(vii)
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to
bring, defend, compromise and settle legal actions or other claims
on
behalf of Systematic Momentum
FuturesAccess;
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(viii)
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to
maintain insurance on behalf of Systematic Momentum FuturesAccess,
including indemnification insurance;
and
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(ix)
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to
take any and all such actions as the Sponsor may deem to be necessary
or
advisable in connection with the
foregoing.
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SECTION
1.02. INVESTMENT OF CASH RESERVES. The Sponsor shall
allocate and reallocate Systematic Momentum FuturesAccess’ capital among
different FuturesAccess Funds, attempting to adapt Systematic Momentum
FuturesAccess’ overall portfolio to changing market conditions while also
achieving diversification in the trading strategies implemented for Systematic
Momentum FuturesAccess.
The
FuturesAccess Funds among which Systematic Momentum FuturesAccess allocates
its
capital may execute transactions in commodity interests, currency interests,
swap agreements, and any other manner of instruments, on either a principal
or
an agency basis, with or through affiliates of the Sponsor (the Sponsor and
such
affiliates being hereafter referred to as “Xxxxxxx Xxxxx”) or third
parties. The sole clearing broker and the principal forward trading
counterparty for Systematic Momentum FuturesAccess among which the Sponsor
allocates and reallocates Systematic Momentum FuturesAccess’ capital shall be
Xxxxxxx Xxxxx.
The
FuturesAccess Funds among which the Sponsor allocates and reallocates Systematic
Momentum FuturesAccess’ capital shall deposit all or substantially all of their
capital with Xxxxxxx Xxxxx or any other clearing brokers selected by the Sponsor
pursuant to the arrangements described in the FuturesAccess Confidential Program
Disclosure Document, as it may be amended from time to time (the “Confidential
Program Disclosure Document”), all Investors acknowledging that Xxxxxxx Xxxxx
will not only receive futures brokerage commissions and bid-ask spreads from
the
FuturesAccess Funds but also will retain significant economic benefits from
the
possession of the FuturesAccess Funds’ assets (including assets representing
Systematic Momentum FuturesAccess’ investment in such FuturesAccess Fund) in
addition to the interest which Xxxxxxx Xxxxx will credit to Systematic Momentum
FuturesAccess’ account. In addition, the Sponsor may maintain
Systematic Momentum FuturesAccess’ reserve assets (as well as those of the
FuturesAccess Funds) in deposit or similar accounts with one or more affiliates
of the Sponsor, which affiliates may benefit from the possession of such assets,
as well as with unaffiliated entities. The interest paid by such
affiliated and unaffiliated entities on Systematic Momentum FuturesAccess’ and
the FuturesAccess Funds’ cash so invested will be paid to Systematic Momentum
FuturesAccess or such FuturesAccess Funds, as the case may
be. However, neither the Sponsor nor any of its affiliates (or any
third parties) will be obligated to account to Systematic Momentum
FuturesAccess, any FuturesAccess Fund or any Investor for the additional
economic benefits which the Sponsor or any such affiliate may derive from
possession of Systematic Momentum FuturesAccess’ assets.
SECTION
1.03. FISCAL YEAR; ACCOUNTING PERIODS. The fiscal year of
Systematic Momentum FuturesAccess shall end on each December
31. Systematic Momentum FuturesAccess’ accounting periods
(“Accounting Periods”), as of the end of each of which increases and decreases
in Systematic Momentum FuturesAccess’ “Net Assets” (as defined in Section 2.04)
— as notified to the Sponsor by the FuturesAccess Funds in which the Sponsor
invests Systematic Momentum FuturesAccess’ capital — shall be calculated and
reflected in the Net Asset Value of the Units issued by
A-2
ML
Systematic Momentum FuturesAccess LLC
Limited
Liability Company Operating Agreement Dated as of March 8,
2007
Systematic
Momentum FuturesAccess, shall begin: (i) as of the day that Systematic Momentum
FuturesAccess first begins operations; (ii) as of the day that any Unit is
issued; (iii) as of the day immediately following any redemption of Units or
withdrawal from an Investor’s Capital Account; (iv) as of the beginning of each
calendar month; and (v) as of such other day as the Sponsor may
determine. An Accounting Period shall end on the day immediately
preceding the beginning of the next Accounting Period.
SECTION
1.04. REGISTERED AGENT AND OFFICE; PRINCIPAL
OFFICE. Systematic Momentum FuturesAccess shall maintain in the State
of Delaware a registered agent and office. The identity and location
of said registered agent and office shall be determined by the Sponsor, and
may
be changed from time to time by the Sponsor.
The
initial registered office of Systematic Momentum FuturesAccess in the State
of
Delaware is c/o The Corporation Trust Company, Corporation Trust Center, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
The
principal office of Systematic Momentum FuturesAccess shall be located at the
offices of the Sponsor, 000 Xxxxxxx Xxxxxx, 2 World Financial Center, Xxxxx
Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other place as
the Sponsor may designate from time to time.
SECTION
1.05. TERM. The term of Systematic Momentum FuturesAccess
commenced as of the date its Certificate of Formation was filed with the
Secretary of State of the State of Delaware, and shall continue until terminated
by the dissolution and winding up of Systematic Momentum FuturesAccess as
hereinafter provided.
SECTION
1.06. NON-ASSIGNABILITY OF UNITS; SUBSTITUTED INVESTORS; LIMITED
ASSIGNABILITY OF THE SPONSOR’S INTEREST.
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|
(a)
|
No
Investor shall assign, encumber, pledge, hypothecate or otherwise
transfer
any of such Investor’s Units without the consent of the Sponsor, and any
assignment, encumbrance, pledge, hypothecation or transfer of Units,
whether voluntary, involuntary or by operation of law, to which the
Sponsor does not consent shall result in the Units so assigned,
encumbered, pledged, hypothecated or otherwise transferred being
mandatorily redeemed as of the end of the month during which such
purported assignment, encumbrance, pledge, hypothecation or transfer
occurred. Any assignment, encumbrance, pledge, hypothecation or
transfer which shall result in the termination of Systematic Momentum
FuturesAccess for federal income tax purposes shall be null and void
ab
initio and of no legal force or effect whatsoever. An assigning
Investor shall remain liable to Systematic Momentum FuturesAccess
as
provided in the Act, regardless of whether his or her assignee becomes
a
substituted Investor.
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|
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(b)
|
The
Sponsor may not assign, encumber, pledge, hypothecate or otherwise
transfer all or any portion of its manager’s interest in Systematic
Momentum FuturesAccess; provided, that the Sponsor may assign such
interest to an affiliate of the Sponsor upon notice (which need not
be
prior notice) to the Investors or in connection with the sale or
transfer
of all or a material portion of the Sponsor’s equity or
assets. See Sections 4.01 and
6.02.
|
SECTION
1.07. LIABILITY OF INVESTORS.
|
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(a)
|
Nothing
herein shall require the Sponsor to maintain any minimum net worth
or
shall make any person associated with the Sponsor individually liable
for
any debt, liability or obligation of Systematic Momentum FuturesAccess
or
of the Sponsor
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(b)
|
No
Investor shall have any obligation to restore any negative balance
in such
Investor’s Capital Account.
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(c)
|
The
Sponsor shall have no obligation to restore any negative balance
in any
Investor’s or in the Sponsor’s Capital
Account.
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(d)
|
Except
as provided in Section 2.08 (providing for chargebacks to current
or
former Investors), the Sponsor and the Investors shall be liable
for the
repayment, satisfaction and discharge of debts,
liabilities
|
A-3
ML
Systematic Momentum FuturesAccess LLC
Limited
Liability Company Operating Agreement Dated as of March 8,
2007
|
|
and
obligations of Systematic Momentum FuturesAccess only to the extent
of the
Sponsor’s or such Investor’s investment in Systematic Momentum
FuturesAccess and not in excess
thereof.
|
ARTICLE
II
CAPITAL
AND TAX ALLOCATIONS
SECTION
2.01. CAPITAL CONTRIBUTIONS. All Capital Contributions to
Systematic Momentum FuturesAccess shall be made in cash. Capital
Contributions may be made in such amounts, and at such times, as the Sponsor
may
determine. The Sponsor may permit certain Investors to make smaller initial
or
subsequent Capital Contributions than is otherwise generally required by the
Sponsor without entitling any other Investor to make smaller initial or
subsequent Capital Contributions.
Investors
will receive Units in return for their Capital Contributions. Each
class of Units (“Class”) shall initially be issued at $1.00 per Unit, and
thereafter at Net Asset Value.
Systematic
Momentum FuturesAccess shall invest in each of the FuturesAccess Funds as a
single investor, irrespective of the different times that Investors subscribe
for Units.
The
Sponsor (and/or any other Xxxxxxx Xxxxx entity) may, but need not, make Capital
Contributions as of any date that any Units are issued. Xxxxxxx Xxxxx
may provide initial (“seed”) capital to enable the Fund to begin trading before
sufficient client capital has been raised to meet the Fund’s minimum
capitalization. Seed capital (if any) will be invested in Class D
Units. However, neither the Sponsor nor any other Xxxxxxx Xxxxx
entity has any obligation to “seed” the Fund (or any other FuturesAccess
Fund). The Units shall be issued in four Classes — Class A Units,
Class C Units, Class D Units and Class I Units. Units of a new Class
or Series may be issued in the Sponsor’s sole discretion.
Sales
commissions will be deducted from Class A, Class D and Class I subscriptions
as
described in the Confidential Program Disclosure Document, and the net amount
of
such subscriptions (after deducting applicable sales commissions) will be
invested in the Units. The Sponsor may waive or reduce sales
commissions for certain Investors without entitling any other Investor to any
such waiver or reduction.
Fractional
Units shall not be issued to Investors (but may be issued to the Sponsor or
any
other Xxxxxxx Xxxxx entity). Investors’ subscriptions shall be used
to purchase the largest whole number of Units of the appropriate Class
possible. Any subscription amount which cannot be used to purchase
whole Units will be credited (in cash) to Investors’ Xxxxxxx Xxxxx customer
securities accounts.
Provided
Systematic Momentum FuturesAccess’ overall minimum capitalization is met, there
is no minimum number of Units of a particular Class that must be sold in order
for Units of that particular Class to be issued.
Once
Systematic Momentum FuturesAccess has begun operations, there is no minimum
dollar amount of subscriptions that must be received as of the beginning of
any
calendar quarter in order for additional Units of any Class to be
issued. All Units will be issued only as the Sponsor may determine,
irrespective of how many subscriptions are received.
Class
eligibility shall be determined on the basis of an Investor’s total
“FuturesAccess Investment” (defined below) in FuturesAccess overall as well as,
in the case of Class D Units, in a particular FuturesAccess Fund. An
Investor’s “FuturesAccess Investment,” determined as of the beginning of each
month, equals the greater of:
(i) the
market value of all of an Investor’s outstanding Units (or in a particular
FuturesAccess Fund, as applicable) based on the most recently available Net
Asset Values, plus pending subscriptions; or
(ii) an
Investor’s net subscriptions to FuturesAccess overall (or to a particular
FuturesAccess Fund, as applicable). Net subscriptions means an
Investor’s aggregate subscriptions less aggregate redemptions (not including
pending redemptions).
Class
A
and Class C Units shall be assigned for FuturesAccess Investments up to
$5,000,000; Class I Units are assigned for FuturesAccess Investments
of $5,000,000 or more; and Class D Units are assigned for
FuturesAccess Investments in
A-4
ML
Systematic Momentum FuturesAccess LLC
Limited
Liability Company Operating Agreement Dated as of March 8,
2007
an
individual FuturesAccess Fund of $5,000,000 or more or aggregate FuturesAccess
Investments of $15,000,000 or more.
Except
for purposes of determining Class D eligibility in a particular FuturesAccess
Fund, the purchase and sale of Units in an exchange shall offset each other
and
shall have no effect on the amount of an Investor’s net subscriptions to
FuturesAccess overall.
FuturesAccess
Investments attributable to certain related accounts may be combined for
purposes of determining an Investor’s Class I and Class D
eligibility. In addition, Investors who participate in Xxxxxxx
Xxxxx’x HedgeAccess® Program, which is composed of private investment funds
which primarily trade securities (“HedgeAccess”), shall be permitted to
aggregate their Investments in FuturesAccess and HedgeAccess for purposes of
determining such Investors’ Class I and Class D eligibility.
Systematic
Momentum FuturesAccess will itself acquire Class D Units in the underlying
FuturesAccess Funds.
There
shall be no minimum FuturesAccess Investment required to invest in Class A
or
Class C Units (other than the minimum subscription amounts required to invest
in
a particular FuturesAccess Fund or FuturesAccess overall).
New
Investors whose initial subscription equals or exceeds $5,000,000 shall be
issued Class I Units in each FuturesAccess Fund in which they
invest. If an existing Investor, whose FuturesAccess Investment is
less than $5,000,000, makes an additional subscription which causes such
Investor’s FuturesAccess Investment to equal or exceed $5,000,000 (including the
new subscription), the entire new subscription shall be invested in Class I
Units. The Investor’s existing Units shall not be converted from
Class A or Class C (as the case may be) to Class I Units, but all subsequent
subscriptions and exchanges made by such Investor shall be for Class I
Units.
Class
D
eligibility is determined on both an individual FuturesAccess Fund and an
overall FuturesAccess basis.
Investors
whose initial subscription to any one FuturesAccess Fund equals or exceeds
$5,000,000 shall be issued Class D Units in that FuturesAccess
Fund. If an Investor, whose FuturesAccess Investment in a particular
FuturesAccess Fund is less than $5,000,000, makes an additional subscription
or
exchange into that FuturesAccess Fund which causes such Investor’s FuturesAccess
Investment to equal or exceed $5,000,000 (including the new subscription or
exchange), the entire new subscription or exchange into that FuturesAccess
Fund
shall be invested in Class D Units. The Investor’s existing Units in
that FuturesAccess Fund shall not be converted to Class D Units, but all
subsequent subscriptions or exchanges made by such Investor into the same
FuturesAccess Fund shall be for Class D Units. However,
notwithstanding the fact that an Investor’s FuturesAccess Investment in a
particular FuturesAccess Fund equals or exceeds $5,000,000, if that Investor
invests or exchanges into another FuturesAccess Fund in which such Investor’s
FuturesAccess Investment is less than $5,000,000, such Investor shall not
receive Class D Units in such other FuturesAccess Fund (except as described
immediately below).
New
Investors whose initial subscription equals or exceeds $15,000,000 shall be
issued Class D Units in each FuturesAccess Fund in which they invest,
irrespective of whether such Investor’s FuturesAccess Investments in any one
FuturesAccess Fund equals or exceeds $5,000,000. If an existing
Investor, whose FuturesAccess Investment is less than $15,000,000, makes an
additional subscription immediately after which such Investor’s FuturesAccess
Investment equals or exceeds $15,000,000 (including the new subscription),
the
entire new subscription shall be invested in Class D Units. The
Investor’s existing Units shall not be converted to Class D Units, but all
subsequent subscriptions and exchanges made by such Investor will be for Class
D
Units.
Subscriptions
made to all FuturesAccess Funds shall be aggregated for purposes of determining
whether an Investor is eligible to invest in Class D or Class I
Units.
Once
an
Investor is issued Class I or Class D Units, such Investor shall continue to
be
issued Class I or Class D Units (as applicable) irrespective of subsequent
redemptions or Unit value depreciation; provided that, if an Investor withdraws
entirely from FuturesAccess or a particular FuturesAccess Fund and subsequently
reinvests, such Investor’s Class I
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Systematic Momentum FuturesAccess LLC
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and/or
Class D Unit eligibility shall be determined from the date of such reinvestment
as if such Investor had never previously participated in FuturesAccess or such
FuturesAccess Fund.
Xxxxxxx
Xxxxx officers and employees invest in Class I Units without regard to the
$5,000,000 minimum “Program Investment” requirement. Such exemption
from the minimum FuturesAccess Investment requirement shall not be generally
available to other Investors.
Certain
Xxxxxxx Xxxxx clients may invest in Class I or a customized Class of Units
on
different terms than those described herein, depending on the type of Xxxxxxx
Xxxxx Account held by such clients. In addition, Systematic Momentum
FuturesAccess may from time to time offer to certain Xxxxxxx Xxxxx clients
a
customized Class of Units having different financial terms than those described
herein or the Confidential Program Disclosure Document, provided that doing
so
does not have a material adverse effect on existing Investors. Such
customized Classes will generally be designed for Investors who are subject
to
additional fees on their investments in the FuturesAccess Funds depending on
the
type of Xxxxxxx Xxxxx Account held by such Investors or other reasons, and
shall
not be generally available to other Investors.
The
amount of each Investor’s Capital Contribution shall be set forth in such
Investor’s FuturesAccess Program Subscription and Exchange Agreement Signature
Page. A FuturesAccess Program Subscription and Exchange Agreement
(including the FuturesAccess Program Subscription and Exchange Agreement
Signature Page) must be completed and accepted by the Sponsor prior to an
Investor’s initial Capital Contribution if such Investor is not already an
investor in FuturesAccess. A new Program Subscription and Exchange
Agreement Signature Page must be submitted each time an existing Investor makes
a Capital Contribution or exchange.
The
aggregate of all Capital Contributions shall be available to Systematic Momentum
FuturesAccess to carry out its objectives and purposes.
No
Investor shall be obligated to make any additional Capital Contributions, except
as provided in Section 2.08.
No
provision of this Agreement shall be construed as guaranteeing the return,
by
any Sponsor Party or Systematic Momentum FuturesAccess, of all or any part
of
the Capital Contribution(s) of any Investor.
SECTION
2.02. OPENING CAPITAL ACCOUNTS.
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(a)
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There
shall be established for each Unit of each Class on the books of
Systematic Momentum FuturesAccess, as of the first day of each Accounting
Period, an Opening Capital Account which, for the Accounting Period
as of
the beginning of which such Unit is issued, shall be the Capital
Contribution made in respect of such Unit and which, for each Accounting
Period thereafter, shall be an amount equal to the Closing Capital
Account
(determined as set forth in Section 2.06) attributable to such Unit
for
the immediately preceding Accounting
Period.
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(b)
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The
Sponsor may, but shall not be required to, make Capital Contributions
to
Systematic Momentum FuturesAccess from time to time as new Units
are
issued, which shall be accounted for on a Unit-equivalent basis and
shall
participate in the profits and losses of the Units on the same basis
as
the Capital Accounts of the Class D
Units.
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(c)
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For
all purposes of this Agreement, references to Units shall be deemed
to
include the Sponsor’s Capital Account on a Unit-equivalent basis (unless
the context otherwise requires or the reference is made explicit
for
greater certainty).
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SECTION
2.03. FINANCIAL ALLOCATIONS AMONG THE UNITS. The net
profits and losses are allocated to each Class as provided in Section 2.06
and
shall be allocated equally among the Units of such Class. All Units
of the same Class shall have the same Net Asset Value.
SECTION
2.04. NET ASSET VALUE. For the purposes of this Agreement,
unless the context otherwise requires, “Net Assets” and “Net Asset Value” shall
mean assets less liabilities. For purposes of determining Opening
Capital Accounts,
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Systematic Momentum FuturesAccess LLC
Limited
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Net
Asset
Value shall be determined as of the beginning of, and for purposes of
determining Closing Capital Accounts, Net Asset Value will be determined as
of
the close of, business on the relevant valuation date.
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(a)
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The
assets of Systematic Momentum FuturesAccess shall
include:
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(i)
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all
FuturesAccess Fund investments held by Systematic Momentum
FuturesAccess;
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(ii)
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all
cash on hand or on deposit in bank or other interest-bearing accounts,
including any interest accrued
thereon;
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(iii)
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all
bills, demand notes and accounts
receivable;
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(iv)
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all
securities (including, without limitation, money-market funds, Treasury
bills and other short-term, interest-bearing instruments), commodity
interests, currency interests, swap agreements and all other instruments
owned or contracted for by Systematic Momentum
FuturesAccess;
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(v)
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all
interest accrued on any interest-bearing securities owned by Systematic
Momentum FuturesAccess except to the extent that the same is included
or
reflected in the valuation of such securities;
and
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(vi)
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all
other assets of every kind and nature, including prepaid
expenses.
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(b)
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The
liabilities of Systematic Momentum FuturesAccess shall be deemed
to
include the following (provided, however, that in determining the
amount
of such liabilities, Systematic Momentum FuturesAccess may calculate
expenses of a regular or recurring nature for any given period on
an
estimated basis in advance, and may accrue the same in such manner
as the
Sponsor may deem appropriate over such
period):
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(i)
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all
bills and accounts payable;
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(ii)
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all
expenses accrued, reimbursable or payable;
and
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(iii)
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all
other liabilities, present or future, including such reserves as
the
Sponsor may (as contemplated by Section 2.04(g)), deem
advisable.
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(c)
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The
Sponsor’s Fees shall be determined, and Units’ Capital Accounts
correspondingly reduced, after the allocation of the other components
of
Net Asset Value, as described
above.
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(d)
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Operating
expenses shall be allocated among the Units pro rata based on their
respective Net Asset Values as of the beginning of the
month.
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(e)
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Extraordinary
costs, if any, shall be allocated as incurred in such manner as the
Sponsor may deem to be fair and
equitable.
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(f)
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Organizational
and initial offering costs shall be deducted from Net Asset Value
in
installments as of the end of each of the first 60 calendar months
after
the initial issuance of the Units, as contemplated by Section 2.05(b)
(for
financial and performance reporting purposes, all such costs must
be
deducted from Net Asset Value as of the date of such initial
issuance).
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(g)
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All
Investors, by becoming party to this Agreement, hereby agree and
consent
to the Sponsor’s authority to establish whatever reserves the Sponsor may
determine to be appropriate in order to cover losses, contingencies,
liabilities, uncertain valuations and other factors. Such
authority shall extend to the Sponsor establishing such reserves
as the
sponsor of underlying FuturesAccess Funds. Any such reserves
shall, unless the Sponsor determines that such reserves are properly
attributable to certain but
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less
than all outstanding Units, reduce the Net Asset Value of the Units
of
each Class pro rata based on their respective Net Asset Values, after
reduction for accrued Sponsor’s Fees, operating expenses and extraordinary
expenses until such time, if any, as such reserves are
reversed. Reserves, when reversed, shall be similarly allocated
among the Units then outstanding pro rata based on their
respective Net Asset Value (irrespective of whether such Units were
outstanding when the reserves were
established).
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(h)
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The
Sponsor may suspend the calculation of Net Asset Value during any
period
when one or more of the FuturesAccess Funds in which Systematic Momentum
FuturesAccess is invested is not reporting its Net Asset
Value. The Sponsor will give notice of any such suspension to
all Investors.
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SECTION
2.05. SPONSOR’S FEES; OPERATING EXPENSES.
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(a)
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The
Sponsor shall receive monthly Sponsor’s Fees, payable in arrears of 1/12
of 1.50%, 2.50%, 0% and 1.10%, respectively, of the aggregate Net
Asset
Value of the Class A, Class C, Class D and Class I Units, in each
case as
of the close of business (as determined by the Sponsor) on the last
business day of each calendar month (Net Asset Value for purposes
of
calculating the Sponsor’s Fees shall not be reduced by the accrued
Sponsor’s Fees being calculated). The Sponsor’s Fees shall be
accrued monthly. The Sponsor may waive or reduce Sponsor’s Fees
for certain Investors without entitling any other Investor to any
such
waiver or reduction.
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(b)
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Systematic
Momentum FuturesAccess shall reimburse the Sponsor for the organizational
and initial offering costs incurred by Systematic Momentum FuturesAccess
in respect of the initial offering of the Units (of all Classes combined)
in installments as of the end of each of the first 60 calendar months
of
Systematic Momentum FuturesAccess’ operation, beginning with the end of
the first calendar month after the initial issuance of the
Units. Systematic Momentum FuturesAccess shall expense such
costs over the same 60-month schedule. If Systematic
Momentum FuturesAccess dissolves prior to the end of such 60
calendar-month period, any remaining reimbursement obligation with
respect
to organizational and initial offering costs shall be
eliminated.
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(c)
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The
Sponsor’s Fees, as well as operating expenses due to the Sponsor
(including: organizational and initial offering costs; ongoing
offering costs; administrative, custody, transfer, exchange and redemption
processing, legal, regulatory, filing, tax, audit, escrow, accounting
and
printing costs; and extraordinary expenses), shall be debited by
the
Sponsor directly from Systematic Momentum FuturesAccess’ account and paid
to the Sponsor, where appropriate, as if to a third party, not credited
to
the Sponsor’s Capital Account.
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(d)
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Systematic
Momentum FuturesAccess shall pay all transaction costs relating to
any
direct investing done by it, as
incurred.
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(e)
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The
Sponsor’s Fees, but not reimbursement payments for organizational and
initial offering costs, shall be appropriately pro rated in the case
of
partial calendar months.
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(f)
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Systematic
Momentum FuturesAccess shall pay all expenses, including administrative
and ongoing offering costs, as well as any extraordinary expenses,
incurred in its operations (including the expenses of any services
provided by the Sponsor, other than in its capacity as Sponsor, or
its
affiliates); provided, that Systematic Momentum FuturesAccess shall
not
pay any allocable Sponsor overhead.
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(g)
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The
Sponsor retains outside service providers to supply tax reporting,
custody
and accounting services to FuturesAccess. Systematic Momentum
FuturesAccess’ operating costs will include Systematic Momentum
FuturesAccess’ allocable share of the fees and expenses of such service
providers, as well as the fees and expenses of any Xxxxxxx Xxxxx
entity
which may provide such (or other) services in the
future.
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(h)
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The
Capital Account of the Sponsor (if any) shall not be subject to Sponsor’s
Fees.
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Systematic Momentum FuturesAccess LLC
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SECTION
2.06. ALLOCATION OF PROFITS AND LOSSES FOR FINANCIAL
PURPOSES. As of the end of each Accounting Period and before giving
effect to any redemptions then being made, the Closing Capital Account of each
Class shall be determined by adjusting the Opening Capital Account of each
such
Class as of the beginning of such Accounting Period in the following
manner:
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(a)
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Any
increase or decrease in the Net Asset Value of Systematic Momentum
FuturesAccess, after deduction of all operating expenses, but prior
to
accrual of the Sponsor’s Fees, during such Accounting Period shall be
credited pro rata, without any order or priority,
among: (i) each Class of Units; and (ii) the Sponsor’s Capital
Account, if any, based in each case on the aggregate Opening Capital
Accounts attributable to each such Class of Units and the Sponsor’s
Capital Account. Extraordinary expenses shall be allocated as
the Sponsor may determine.
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(b)
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If
the Closing Capital Account per Unit of any Class is reduced to zero,
any
further decrease in the Net Asset Value per Unit shall be allocated
to the
Sponsor’s Capital Account, if any.
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(c)
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The
Sponsor’s Fee shall be debited from each Class, in each case after the
Section 2.06(a) and (b) allocations are
made.
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(d)
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The
Net Assets of each Class shall be divided equally among all Units
of such
Class.
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SECTION
2.07. ALLOCATION OF PROFITS AND LOSSES FOR INCOME TAX
PURPOSES.
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(a)
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A
Tax Account shall be established for each Unit of each
Class. The Tax Accounts of all outstanding Units shall
initially be equal to each Unit’s net purchase price (i.e., the
subscription price for such Unit reduced by any sales commissions)
and
shall subsequently be increased by such Unit’s share of the taxable and
tax-exempt income of Systematic Momentum FuturesAccess and decreased
by
such Unit’s share of the items of loss or expense and nondeductible items
of loss or expense of Systematic Momentum FuturesAccess, as well
as by any
distributions.
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(b)
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For
federal income tax purposes, items of ordinary income and loss, capital
gain and capital loss shall, unless the Sponsor believes that doing
so
would not equitably reflect the economic experience of the Units,
be
allocated as of December 31 of each year among the Units, in the
following
order and priority:
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(i)
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Items
of ordinary income and deduction generated by Systematic Momentum
FuturesAccess (as reported to it by the FuturesAccess Funds in which
it
invests shall be allocated pro rata among the Units which were
outstanding during the months in such year when such items of ordinary
income and deductions accrued.
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(ii)
|
Gains
will be allocated FIRST, to Investors who have redeemed Units during
such
year (including as of December 31), to the extent of the positive
difference (if any) between the amounts received or receivable upon
redemption and the respective Tax Account balances of the redeemed
Units. SECOND, gains will be allocated to Investors to the
extent of the positive difference (if any) between the Capital Account
balance and the Tax Account balance attributable to their remaining
Units. THIRD, gains will be allocated among all outstanding
Units based on their respective Net Asset
Values.
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(iii)
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Losses
shall be allocated FIRST, to Investors who have redeemed Units during
such
year (including as of December 31), to the extent of the negative
difference (if any) between the amounts received or receivable upon
redemption and the respective Tax Account balances of the redeemed
Units. SECOND, losses shall be allocated to Investors to the
extent of the negative difference (if any) between the Capital Account
balance and Tax Account balance attributable to their remaining
Units. THIRD, losses shall be allocated among all
outstanding Units based on their respective Net Asset
Values.
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Systematic Momentum FuturesAccess LLC
Limited
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(iv)
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In
the case of each of the FIRST and SECOND allocation levels set forth
in
Sections 2.07(b)(ii) and (iii), if there is insufficient gain or
loss to
make the complete allocation required at such level, such allocation
will
be made pro rata among all Units which are subject to an
allocation at such level in accordance with the respective amounts
which
would have been allocated had a complete allocation been
possible.
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(v)
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Sponsor’s
Fees, as well as the operating expenses (in each case as adjusted
to
reflect the non-deductibility of all or a portion of such Sponsor’s Fees
and operating expenses) and extraordinary expenses, shall be allocated,
for tax purposes, to the Tax Accounts of the Units based on the amount
of
the foregoing actually debited from the Units’ respective Capital
Accounts.
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(vi)
|
Items
of ordinary income and/or gain attributable to amounts received by
Systematic Momentum FuturesAccess from the Trading Advisor for payment to
the Sponsor shall be specially allocated to the
Sponsor.
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(c)
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The
character of items of income, gain, loss or deduction (ordinary,
short-term and long-term) and of the items required to be separately
stated by Section 702(a) of the Code shall be allocated to the Investors
pursuant to this Section 2.07 so as equitably to reflect, without
discrimination or preference among Investors, the amounts credited
or
debited to the Units’ respective Capital Accounts pursuant to Section
2.06. Furthermore, to the extent that the FuturesAccess Fund
has a net long-term capital gain or loss that may be subject to more
than
one maximum federal income tax rate, allocations of such gain or
loss
shall be made pro rata from among the amounts subject to each
maximum tax rate.
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(d)
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In
the case of Units which are transferred during a fiscal year, the
tax
allocations shall be made to such Units as provided above. The
Tax Items so allocated will then be divided among the transferor(s)
and
the transferee(s) based on the number of months during such year
that each
held such Units, or in such other manner as the Sponsor may deem
equitable.
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(e)
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Having
in mind the principles of the allocations set forth above in this
Section
2.07 (to which all Investors consent by becoming Investors), the
Sponsor
may nevertheless make such allocations of items of ordinary income
and
gain, ordinary deduction and loss and any items required to be separately
stated by Section 702(a) of the Code, as the Sponsor may deem fair
and
equitable — even if not consistent with the foregoing allocations — in
order to cause the Tax Items allocated to the Investors, respectively,
better to take into account (as determined by the Sponsor) the Units’
respective Opening Capital Accounts and distributive shares of net
profit
and net loss, any entry of new Investors, any redemptions, any differences
between income for tax purposes and for Net Asset Value purposes,
the
differences between the Classes of Units and any other special
circumstances which may arise; provided, however, that no such allocation
by the Sponsor shall discriminate unfairly against any Investor;
and
provided further, that the Sponsor shall be under no obligation whatsoever
to deviate from the allocations set forth
above.
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(f)
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Systematic
Momentum FuturesAccess may, to the extent practicable (i.e., to
the extent that Systematic Momentum FuturesAccess receives gross
tax
allocations from the FuturesAccess Funds in which it invests) allocate
Tax
Items on a gross rather than a net
basis.
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(g)
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Allocations
pursuant to this Section 2.07 are solely for purposes of federal,
state
and local taxes and shall not affect, or in any way be taken into
account
in computing, any Units’ Capital Account or share of net profits, net
losses, other items or
distributions.
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(h)
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The
tax allocations set forth in this Section 2.07 are intended to allocate
items of Systematic Momentum FuturesAccess’ income, gains, losses and
deductions (ordinary, short-term and long-term) in accordance with
Sections 704(b) and 704(c) of the Code, and the regulations thereunder,
including, without limitation, the requirements set forth therein
regarding a “qualified income
offset.”
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Systematic Momentum FuturesAccess LLC
Limited
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2007
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(i)
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The
Sponsor may make such modifications to this Agreement as the Sponsor
believes may be required to comply with Section 704(c) of the Code
and the
regulations thereunder.
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(j)
|
In
the event that the Sponsor determines to issue a new Class of Units,
the
foregoing tax allocations shall be adjusted so as equitably to allocate
tax items between or among the different
Classes.
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SECTION
2.08. CHARGEBACKS TO CURRENT OR FORMER INVESTORS. Each
Investor, by subscribing for Units, agrees to repay, despite the fact that
such
Investor no longer remains an Investor, to Systematic Momentum FuturesAccess
any
amount (including interest at the rate set by the Sponsor in good faith from
the
date of any payment of redemption or distribution proceeds to such Investor
by
Systematic Momentum FuturesAccess) which the Sponsor may reasonably determine
to
be due to Systematic Momentum FuturesAccess from such Investor as a result,
for
example, of any claims arising (prior or subsequent to such Investor’s
withdrawal from Systematic Momentum FuturesAccess) relating to events or
circumstances (whether known or unknown at the time of such Investor’s
withdrawal) in existence while such Investor was an Investor or, subject to
the
following paragraph, in the event that the Net Asset Value per Unit (of any
Class) at which such Investor was permitted to redeem is later determined to
have been overstated or otherwise miscalculated due to circumstances (whether
known or unknown at the time of such Investor’s redemption) in existence as of
the date of redemption (either of the level of Systematic Momentum FuturesAccess
or at that of one of the underlying FuturesAccess Fund in which it
invest. In no event shall any provision of this Section 2.08 require
an Investor to repay to Systematic Momentum FuturesAccess any amounts in excess
of the redemption proceeds received by such Investor from, or the amounts
distributed to such Investor by, Systematic Momentum FuturesAccess, plus
interest thereon as provided above.
In
the
event that the Sponsor determines that an amount paid by Systematic Momentum
FuturesAccess to a withdrawn or continuing Investor was less or more than the
amount which such Investor was, in fact, entitled to receive, the Sponsor shall
not (unless the Sponsor otherwise determines) attempt to make appropriate
adjusting payments to, or formally request appropriate adjusting payments from,
such withdrawn Investor or make retroactive adjustments to such continuing
Investor’s Units in order to reflect such discrepancy, but rather shall reflect
such adjustments in the Accounting Period in which they become
known.
SECTION
2.09. PROCESSING OF SUBSCRIPTIONS.
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(a)
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The
Sponsor may admit new Investors to Systematic Momentum FuturesAccess
at
such times and upon such notice (if any) as the Sponsor may
determine. Investors’ Xxxxxxx Xxxxx Accounts will be debited on
or about the issuance date of such Units, and the amount so debited,
less
any applicable sales commission, will be invested directly in Systematic
Momentum FuturesAccess. No interest will be payable in respect
of any such subscriptions.
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(b)
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Members
acknowledge that the admission of new Members may change the overall
allocation of Systematic Momentum FuturesAccess’ portfolio among the
underlying FuturesAccess Funds.
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(c)
|
Pursuant
to Securities and Exchange Commission Rule 15c2-4, any subscriptions
held
in escrow during the initial offering period pending release to Systematic
Momentum FuturesAccess shall be held by a bank independent of the
Sponsor,
its affiliates, and their respective officers, employees, representatives
and agents (each, a “Sponsor Party” and, collectively, the “Sponsor
Parties”).
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SECTION
2.10. VALUATION OF ASSETS. For all purposes of this
Agreement, including, without limitation, the determination of the Net Asset
Value per Unit of each Class, the assets of Systematic Momentum FuturesAccess
shall be valued according to the following principles:
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(a)
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The
Net Assets of Systematic Momentum FuturesAccess are its assets less
its
liabilities determined in accordance with generally accepted accounting
principles and as described below.
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Systematic Momentum FuturesAccess LLC
Limited
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(x)
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Systematic
Momentum FuturesAccess’ investments in the FuturesAccess Funds shall be
valued by such FuturesAccess Funds.
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(c)
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The
Sponsor shall value any asset of Systematic Momentum FuturesAccess
not
invested in a FuturesAccess Fund by applying the following general
principles:
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(i)
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commodity
interests and currency interests which are traded on a United States
exchange shall be valued at their settlement on the date as of which
the
values are being determined;
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(ii)
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commodity
interests and currency interests not traded on a United States exchange
shall be valued based upon policies established by the Sponsor, generally
based on prices as reported by any reliable source selected by the
Sponsor, consistently applied for each variety of
interest;
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(iii)
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swap
agreements shall be valued in the good faith discretion of the Sponsor
based on quotations received from dealers deemed appropriate by the
Sponsor;
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(iv)
|
bank
and other interest-bearing accounts, Treasury bills and other short-term,
interest-bearing instruments shall be valued at cost plus accrued
interest;
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(v)
|
securities
which are traded on a national securities exchange shall be valued
at
their closing price on the date as of which their value is being
determined on the national securities exchange on which such securities
are principally traded or on a consolidated tape which includes such
exchange, whichever shall be selected by the Sponsor, or, if there
is no
closing price on such date on such exchange or consolidated tape,
at the
prior day’s closing price;
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(vi)
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securities
not traded on a national securities exchange but traded over-the-counter
shall be valued based on prices as reported by any reliable source
selected by the Sponsor;
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(vii)
|
money-market
funds shall be valued at their net asset value on the date as of
which
their value is being determined;
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(viii)
|
if
on the date as of which any valuation is being made, the exchange
or
market herein designated for the valuation of any given assets is
not open
for business, the basis for valuing such assets shall be such value
as the
Sponsor may deem fair and
reasonable;
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(ix)
|
all
other assets, including securities traded on foreign exchanges, and
liabilities shall be valued in good faith by the Sponsor, including
assets
and liabilities for which there is no readily identifiable market
value;
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(x)
|
the
foregoing valuations may be modified by the Sponsor if and to the
extent
that it shall determine that modifications are advisable in order
better
to reflect the true value of any asset;
and
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(xi)
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the
Sponsor, as sponsor of each FuturesAccess Fund, may reduce the valuation
of any asset (or of a FuturesAccess Fund) by reserves established,
as
contemplated by Section 2.04(g), to reflect losses, contingencies,
liabilities, uncertain valuations or other factors, which the Sponsor
determines reduce, or might reduce, the value of such asset (or of
a
FuturesAccess Fund as a whole in the case of reserves not specifically
attributable to any particular
asset).
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All
determinations of value by the Sponsor shall be final and conclusive as to
all
Investors, in the absence of manifest error, and the Sponsor shall be absolutely
protected in relying upon valuations furnished to the Sponsor by third parties,
provided that such reliance is in good faith.
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Systematic Momentum FuturesAccess LLC
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The
Sponsor may suspend the calculation of Net Asset Value during any period when
any of the FuturesAccess Funds in which Systematic Momentum FuturesAccess
invests has done so.
SECTION
2.11. USE OF ESTIMATES. The Sponsor is authorized to make
all Net Asset Value determinations (including, without limitation, for purposes
of determining redemption payments and calculating Sponsor’s Fees) on the basis
of estimated numbers (in most cases as estimated by the Sponsor itself as
sponsor of the respective FuturesAccess Funds). The Sponsor shall not
(unless the Sponsor otherwise determines) attempt to make any retroactive
adjustments in order to reflect the differences between such estimated and
the
final numbers, but rather shall reflect such differences in the Accounting
Period in which final numbers become available. The Sponsor also
shall not (unless the Sponsor otherwise determines) revise Sponsor’s Fee
calculations to reflect differences between estimated and final numbers
(including differences which have resulted in economic benefit to a Sponsor
Party).
If,
after
payment of redemption proceeds, the Sponsor determines that adjustment to the
Net Asset Value of the redeemed Units is necessary, the redeeming Investor
(if
the Net Asset Value is adjusted upwards) or the remaining Investors (if the
Net
Asset Value is adjusted downwards) will bear the risk of such
adjustment. The redeeming Investor will neither receive further
distributions from, nor will it be required to reimburse, Systematic Momentum
FuturesAccess in such circumstances.
All
Members acknowledge and agree that because Systematic Momentum FuturesAccess
will invest in multiple FuturesAccess Funds the likelihood of there being
material discrepancies between estimated and final Net Asset Values is greater
in the case of Systematic Momentum FuturesAccess than in the case of any single
FuturesAccess Fund.
SECTION
2.12. ACCOUNTING PRACTICES. All matters concerning
FuturesAccess Fund accounting practices shall be determined by the Sponsor
on a
fair and equitable basis, and all such determinations shall be final and
conclusive as to all Investors. However, the Sponsor shall be under
no obligation whatsoever to make any deviations from the allocations set forth
in this Article II.
In
reporting Net Asset Values to Investors and third parties on an interim basis,
the Sponsor shall be entitled to accrue fees and payments due at the end of
a
period as if such fees or payments were due (on a pro rata basis, if
appropriate) as of the end of an interim period within such period.
ARTICLE
III
PARTICIPATION
IN SYSTEMATIC MOMENTUM FUTURESACCESS PROPERTY;
REDEMPTIONS
AND DISTRIBUTIONS
SECTION
3.01. NO UNDIVIDED INTERESTS IN SYSTEMATIC MOMENTUM FUTURESACCESS
PROPERTY. Each Unit shall represent an interest in Systematic
Momentum FuturesAccess, not an undivided interest in any property of the
Systematic Momentum FuturesAccess (including its investments in FuturesAccess
Funds). The Units shall constitute personal property for all
purposes.
SECTION
3.02. REDEMPTIONS OF UNITS; EXCHANGES.
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(a)
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Timing
and Amount of Redemptions. Subject to this Section 3.02,
an Investor shall be entitled to redeem all or part of such Investor’s
Units as of the end of any calendar month, upon giving at least 10
days’
written or oral notice. Investors who have Xxxxxxx Xxxxx
customer securities accounts may give such notice by contacting their
Xxxxxxx Xxxxx Financial Advisor, orally or in writing; Investors
who no
longer have a Xxxxxxx Xxxxx customer securities account must submit
written notice of redemption, with the signature guaranteed by a
United
States bank or broker-dealer, to the
Sponsor.
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(b)
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No
Redemption Fees. Systematic Momentum FuturesAccess shall
not charge any redemption fees.
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(c)
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Payment
of Redemptions. The Sponsor shall cause Systematic
Momentum FuturesAccess to distribute to redeeming Investors the estimated
Net Asset Value of the Units redeemed by them,
generally
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Systematic Momentum FuturesAccess LLC
Limited
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2007
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approximately
10 business days after the effective date of redemption, although
there
can be no assurance of the timing of such
payment.
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Units
which have been redeemed, but the proceeds of which have not yet been paid,
shall nevertheless be deemed to have ceased to be outstanding from the effective
date of redemption for all other purposes hereunder.
No
interest shall be paid to Investors on redemption proceeds held pending
distribution. Systematic Momentum FuturesAccess shall retain any such
interest.
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(d)
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Suspension
of Redemptions. In the event that Systematic Momentum
FuturesAccess suspends the calculation of Net Asset Value, the Sponsor
shall, upon written notice to all affected Investors, suspend any
or all
redemption requests (as well as any request to exchange Units for
units of
other funds included in FuturesAccess). Any unsatisfied
redemption requests shall be suspended until such time as Systematic
Momentum FuturesAccess is again able to calculate Net Asset
Value. All Units subject to suspended redemption requests shall
continue to be treated as outstanding for all purposes hereunder,
as if no
redemption requests relating thereto had been submitted, until the
effective date of their suspended redemption. During any period
in which Systematic Momentum FuturesAccess has suspended redemptions,
Investors will not be able to exchange Units for units of other
FuturesAccess Funds.
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If
the
Sponsor determines that a portion, but not all, of pending redemption requests
can be processed in due course, the requests of all Investors submitting timely
redemption requests with respect to any given redemption date shall be satisfied
pro rata (based on the aggregate Net Asset Value of the Units requested
to be redeemed by all Investors) from such funds as the Sponsor determines
are
available for distribution.
In
addition to the foregoing provisions of this Section 3.02(d), the Sponsor may
delay or suspend both the payment of redemption proceeds and the effective
date
of redemptions if the Sponsor determines that not doing so would have adverse
consequences for the non-redeeming Investors.
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(e)
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Exchanges. Investors
may generally exchange Units for units in other FuturesAccess Funds
as
described in the FuturesAccess Program Subscription and Exchange
Agreement
and Signature Pages thereto, as supplemented and amended from time
to
time. Any circumstance leading to a delay or suspension of
either redemption dates or the receipt of the proceeds of redemptions
from
Systematic Momentum FuturesAccess shall have a corresponding effect
on
Investors’ exercise of their Exchange Privileges relating to Systematic
Momentum FuturesAccess.
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SECTION
3.03. WITHDRAWALS OF CAPITAL BY THE SPONSOR.
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(a)
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The
Sponsor may withdraw capital from its Capital Account(s), if any,
without
notice to the Investors.
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(b)
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To
the extent Xxxxxxx Xxxxx has provided any “seed” capital to the Fund,
Xxxxxxx Xxxxx will redeem $50,000 of its Units (by aggregate Net
Asset
Value) for each $50,000 in net client investments (i.e.,
subscriptions minus client redemptions and exchanges) received by
the Fund
after it begins operation. Notwithstanding the foregoing,
Xxxxxxx Xxxxx may vary the foregoing redemption schedule upon advance
agreement with the Trading Advisor (e.g., Xxxxxxx Xxxxx may agree
not to begin withdrawing all or a portion of its initial seed capital
for
a specified period of time) and may withdraw seed capital at different
times and on different terms than are available to
Investors.
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SECTION
3.04. MANDATORY REDEMPTIONS.
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(a)
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The
Sponsor may mandatorily redeem part or all of the Units held by a
particular Investor if the Sponsor determines that (i) such Investor’s
continued holding of Units could result in adverse consequences to
Systematic Momentum FuturesAccess, (ii) such Investor has a history
of
excessive exchanges between different FuturesAccess Funds and/or
HedgeAccess funds that is contrary to the purpose and/or efficient
management of the Programs, (iii) such Investor’s investment in the Units,
or aggregate investment in
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Systematic Momentum FuturesAccess LLC
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2007
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FuturesAccess,
is below the minimum level established by the Sponsor (including
any
increase in such minimum level that the Sponsor may implement in
the
future) or (iv) for any other
reason.
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(b)
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The
Sponsor will mandatorily redeem all of Systematic Momentum FuturesAccess’
outstanding Units in the event that the Sponsor concludes that it
is no
longer advisable to operate Systematic Momentum FuturesAccess or
if the
amount of assets invested in Systematic Momentum FuturesAccess declines
to
a level that the Sponsor believes makes the continued operation of
Systematic Momentum FuturesAccess impracticable or
uneconomical.
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(c)
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Units
mandatorily redeemed shall be redeemed as of the specified month-end
without any further action on the part of the affected Investor,
and the
provisions of Sections 3.02 and 3.07 shall apply. In the event
that the Sponsor mandatorily redeems any of an Investor’s Units, such
Investor shall have the option to redeem all of such Investor’s Units as
of the date fixed for redemption.
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SECTION
3.05. MANDATORY REDEMPTIONS TO PAY TAXES. In the event
that Systematic Momentum FuturesAccess is required to pay or withhold state,
local or other taxes with respect to a particular Investor or Investors,
Systematic Momentum FuturesAccess may redeem an appropriate number of such
Investor’s or Investors’ Units as of the end of the Accounting Period
immediately following such payment in order to reimburse Systematic Momentum
FuturesAccess for the amount of such payment, together with interest on the
amounts so paid at the 91-day Treasury xxxx rate as in effect as of the
beginning of each calendar month, starting with the calendar month in which
such
payment is made, through the end of such Accounting Period.
SECTION
3.06. DISTRIBUTIONS. Systematic Momentum FuturesAccess
distributions shall be made in the sole discretion of the Sponsor. No
distributions are required.
SECTION
3.07. FORM OF DISTRIBUTION AND REDEMPTION PAYMENTS. No
Investor shall have the right to demand or receive any property other than
cash
upon redemption. Distributions or payouts made to Investors shall be
made in cash.
SECTION
3.08. REMOVAL OF THE SPONSOR. Upon at least 60 days
written notice to the Sponsor and all Investors in Systematic Momentum
FuturesAccess, the Sponsor may be required to withdraw as manager of Systematic
Momentum FuturesAccess by a vote of Investors owning not less than 50% of the
outstanding Units (by Net Asset Value), not including Units held by Sponsor
Parties. Any such removal shall be effective as of the end of the
calendar quarter in which such vote occurs.
ARTICLE
IV
WITHDRAWAL
OF THE SPONSOR AND INVESTORS
SECTION
4.01. WITHDRAWAL OF THE SPONSOR.
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(a)
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The
Sponsor may withdraw from Systematic Momentum FuturesAccess at any
time,
without any breach of this Agreement, upon 90 calendar days’ written
notice to the Investors. Withdrawal of the Sponsor shall not
dissolve Systematic Momentum FuturesAccess if at the time there is
at
least one other manager remaining; however, all Investors shall be
entitled to redeem their Units, in total and not in part, as of the
effective date of any such withdrawal by the Sponsor, unless an entity
affiliated with the Sponsor remains as a manager of Systematic Momentum
FuturesAccess. Nothing in this Section 4.01(a) shall, however,
restrict the Sponsor from assigning and delegating its rights and
obligations under this Agreement to an affiliate of the Sponsor upon
notice (which need not be prior notice) to the Investors or in connection
with the sale of all or a material portion of the Sponsor’s equity or
assets.
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(b)
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Withdrawal
of the last remaining manager shall dissolve Systematic Momentum
FuturesAccess.
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Systematic Momentum FuturesAccess LLC
Limited
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2007
SECTION
4.02. WITHDRAWAL OF AN INVESTOR. An Investor shall
withdraw from Systematic Momentum FuturesAccess upon redemption of all of such
Investor’s outstanding Units. Withdrawal of an Investor shall not be
a cause for dissolution of Systematic Momentum FuturesAccess.
SECTION
4.03. STATUS AFTER WITHDRAWAL. Except to the extent
provided in Section 2.08 or Section 7.02, each Investor upon redemption of
the
last of such Investor’s Units shall cease to have any rights under this
Agreement.
ARTICLE
V
MANAGEMENT
SECTION
5.01. AUTHORITY OF THE SPONSOR.
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(a)
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The
management and operation of Systematic Momentum FuturesAccess and
the
determination of its policies shall be vested exclusively in the
Sponsor. The Sponsor shall have the authority and power on
behalf and in the name of Systematic Momentum FuturesAccess to carry
out
any and all of the objectives and purposes of Systematic Momentum
FuturesAccess set forth in Section 1.01, and to perform all acts
and enter
into and perform all contracts and other undertakings which the Sponsor
may deem necessary or advisable in connection with such objectives
and
purposes or incidental thereto. All actions and determinations
to be made by the Sponsor hereunder shall, unless otherwise expressly
provided, be made in the Sponsor’s sole and absolute
discretion.
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(b)
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The
Sponsor is specifically authorized to manage Systematic Momentum
FuturesAccess’ cash flow, including through paying its costs by bank or
other borrowings.
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SECTION
5.02. SERVICE PROVIDERS; INVESTMENTS; ACCOUNTS. The
Sponsor is hereby authorized and empowered to carry out and implement any and
all of the objectives and purposes of Systematic Momentum FuturesAccess,
including and without limiting the generality of the foregoing:
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(a)
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to
invest in and redeem from, allocating and reallocating Systematic
Momentum
FuturesAccess’ capital among, the various FuturesAccess
Funds;
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(b)
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to
engage attorneys, accountants, agents and other persons as the Sponsor
may
deem necessary or advisable;
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(c)
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to
open, maintain and close accounts, including margin, discretionary
and
cash management accounts, with brokers, dealers, counterparties or
other
persons (in each case, including affiliates of the Sponsor) and to
pay the
customary fees and charges applicable to transactions in, or the
maintenance of, all such accounts;
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(d)
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to
invest in money-market funds (including funds sponsored by affiliates
of
the Sponsor), Treasury bills or other short-term, interest-bearing
instruments;
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(e)
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to
open, maintain and close bank and other interest-bearing and
non-interest-bearing accounts; and
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(f)
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to
enter into, make and perform such contracts, agreements and other
undertakings as the Sponsor may deem necessary, advisable or incidental
to
the conduct of the business of Systematic Momentum
FuturesAccess.
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SECTION
5.03. ACTIVITIES OF THE SPONSOR PARTIES.
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(a)
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The
respective Sponsor Parties will not devote their full business time,
or
any material portion of their business time, to Systematic Momentum
FuturesAccess, as each is involved in the management of numerous
other
client and proprietary accounts. However, the Sponsor hereby
agrees to devote to the objectives and purposes of Systematic Momentum
FuturesAccess such amount of the business time of its officers and
employees as the Sponsor shall deem necessary for the management
of the
affairs of
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Systematic Momentum FuturesAccess LLC
Limited
Liability Company Operating Agreement Dated as of March 8,
2007
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Systematic
Momentum FuturesAccess; provided, however, that nothing contained
in this
Section 5.03(a) shall preclude any Sponsor Party from acting as a
director, stockholder, officer or employee of any corporation, a
trustee
of any trust, a partner of any partnership, a manager or member of
any
other limited liability company or an administrative official of
any other
business or governmental entity, or from receiving compensation for
services rendered thereto, from participating in profits derived
from
investments in any such entity or from investing in any securities
or
other property for such person’s own
account.
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(b)
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As
contemplated by Section 2.05(g), the Sponsor retains outside service
providers to supply certain services to FuturesAccess, including,
but not
limited to: tax reporting, custody, accounting and escrow services
to
FuturesAccess. Operating costs include Systematic Momentum
FuturesAccess’ allocable share of the fees and expenses of such (or other)
service providers, as well as the fees and expenses of any Sponsor
Party
which may provide such (or other) services in the
futures.
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SECTION
5.04. SERVICES PERFORMED FOR SYSTEMATIC MOMENTUM
FUTURESACCESS. Any Sponsor Party may perform administrative services
for Systematic Momentum FuturesAccess, without such Sponsor Party waiving its
fees for such services.
SECTION
5.05. INTERESTED PARTIES. The fact that a Sponsor Party or
an Investor is directly or indirectly interested in or connected with Systematic
Momentum FuturesAccess or a related party with which or with whom Systematic
Momentum FuturesAccess has dealings, including but not limited to the Sponsor’s
sharing in the Management Fees paid and Performance Fee paid by the underlying
FuturesAccess Funds in which the Sponsor invests, the receipt or rebate of
other
advisory and/or management fees, brokerage commissions, “bid-ask” spreads,
xxxx-ups or other expenses, shall not preclude such dealings or make them void
or voidable; and neither Systematic Momentum FuturesAccess nor any of the
Investors shall have any rights in or to any such dealings or in or to any
profits derived therefrom.
SECTION
5.06. EXCULPATION. The Sponsor Parties shall not be liable
to Systematic Momentum FuturesAccess or any Investor for any claims, costs,
expenses, damages or losses arising out of or in connection with this Agreement,
the Sponsor acting as manager of Systematic Momentum FuturesAccess, Systematic
Momentum FuturesAccess in general or the offering of the Units, for any conduct
undertaken or omitted in good faith, and in the belief that such conduct or
omission was in, or not opposed to, the best interests of Systematic Momentum
FuturesAccess; provided, that such conduct or omission did not constitute gross
negligence or intentional misconduct on the part of such Sponsor
Party.
No
Sponsor Party shall be liable to Systematic Momentum FuturesAccess or any
Investor for failure to obtain for any FuturesAccess Fund or Systematic Momentum
FuturesAccess the lowest negotiated brokerage commission rates, or to combine
or
arrange trading orders so as to obtain the lowest brokerage commission rates
with respect to any transaction on behalf of any FuturesAccess Fund or for
the
failure to recapture, directly or indirectly, any brokerage commissions for
the
benefit of the FuturesAccess Fund or Systematic Momentum
FuturesAccess.
No
Sponsor Party shall be liable to Systematic Momentum FuturesAccess or any
Investor for claims, costs, expenses, damages or losses due to circumstances
beyond any Sponsor Party’s control, or due to the negligence, dishonesty, bad
faith or misfeasance of any third party chosen by a Sponsor Party in good
faith.
In
no
respect by way of limiting the foregoing exculpatory provisions but rather
by
way of greater certainty, no Sponsor Party shall be liable to Systematic
Momentum FuturesAccess or any Investor for any actions or omissions
of: (i) the trading advisor for any FuturesAccess Fund; (ii) any
broker, dealer or counterparty unaffiliated with Xxxxxxx Xxxxx chosen by a
Sponsor Party in good faith; or (iii) any broker, dealer or counterparty chosen
by the trading advisor for any FuturesAccess Fund.
Affiliates
of the Sponsor will provide Systematic Momentum FuturesAccess with futures
brokerage, forward dealing and other counterparty and dealer services, and
shall
receive compensation in connection therewith.
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Systematic Momentum FuturesAccess LLC
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SECTION
5.07. INDEMNIFICATION. Systematic Momentum FuturesAccess
shall indemnify and hold harmless the Sponsor Parties from and against any
claims, costs, expenses, damages or losses (including, without limitation,
from
and against any judgment, settlement, attorneys’ fees and other costs or
expenses incurred in connection with the defense of any actual or threatened
action or proceeding) suffered or sustained by any of them by reason of the
fact
that a Sponsor Party is or was connected in any respect with Systematic Momentum
FuturesAccess; provided, that the conduct or omission which led to such claim,
cost, expense, damage or loss met the standard of exculpation set forth in
Section 5.06 above.
Systematic
Momentum FuturesAccess shall advance payments asserted by a Sponsor Party to
be
due under the preceding paragraph pending a final determination of whether
such
indemnification is, in fact, due; provided, that such Sponsor Party agrees
in
writing to return any amounts so advanced (without interest) in the event such
indemnification is finally determined not to be due.
Whether
or not a Sponsor Party is entitled to indemnification hereunder shall be
determined by the judgment of independent counsel as to whether such Sponsor
Party has reasonable grounds for asserting that indemnification is so due,
unless otherwise determined by a court, arbitral tribunal or administrative
forum.
In
the
event Systematic Momentum FuturesAccess is made a party to any claim, dispute
or
litigation, or otherwise incurs any loss or expense, as a result of or in
connection with any Investor’s activities, obligations or liabilities unrelated
to Systematic Momentum FuturesAccess’ business, such Investor shall indemnify
and reimburse Systematic Momentum FuturesAccess for all loss and expense
incurred, including attorneys’ fees.
SECTION
5.08. FUTURESACCESS FUNDS’ STANDARD OF LIABILITY AND
INDEMNIFICATION. The Members acknowledge and agree that each
FuturesAccess Fund in which Systematic Momentum FuturesAccess invests will
apply
the same standard of liability and indemnification to the Sponsor in its
capacity as sponsor of such FuturesAccess Fund.
SECTION
5.09. INVESTORS’ TRANSACTIONS. Nothing in this Agreement
is intended to prohibit any Investor from buying, selling or otherwise
transacting in securities, commodity interests, currency interests, swap
agreements or other instruments for such Investor’s own account, including
commodity interests, currency interests, swap agreements, securities or other
instruments which are the same as those held by Systematic Momentum
FuturesAccess or any FuturesAccess Fund in which Systematic Momentum
FuturesAccess invests.
SECTION
5.10. RELIANCE BY THIRD PARTIES. In dealing with the
Sponsor acting on behalf of Systematic Momentum FuturesAccess, no person shall
be required to inquire into the authority of the Sponsor to bind Systematic
Momentum FuturesAccess. Persons dealing with Systematic Momentum
FuturesAccess shall also be entitled to rely on a certification by the Sponsor
with regard to the authority of other persons to act on behalf of Systematic
Momentum FuturesAccess in any matter.
SECTION
5.11. REGISTRATION OF ASSETS. Any assets owned by
Systematic Momentum FuturesAccess may be registered in Systematic Momentum
FuturesAccess’ name, in the name of a nominee or in “street name.”
SECTION
5.12. LIMITATION ON AUTHORITY OF THE SPONSOR. The Sponsor
shall not have the authority without the consent of Investors holding more
than
50% of the outstanding Units (by Net Asset Value), not including Units held
by
Sponsor Parties, then held by Investors to:
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(a)
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do
any act in contravention of this Agreement (other than pursuant to
the
Sponsor’s authority to unilaterally amend this Agreement, as provided in
Section 10.03);
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(b)
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confess
a judgment against Systematic Momentum FuturesAccess;
or
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(c)
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possess
Systematic Momentum FuturesAccess property or assign rights to specific
FuturesAccess Fund property for other than a FuturesAccess Fund
purpose.
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Systematic Momentum FuturesAccess LLC
Limited
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2007
ARTICLE
VI
ADMISSION
OF INVESTORS
SECTION
6.01. PROCEDURE AS TO NEW INVESTORS. The Sponsor may, as
of the beginning of any calendar month (or as of such other times as the Sponsor
may deem appropriate), admit one or more new Investors by issuing to such
Investor(s) Units of the appropriate Class. Each new Investor to
FuturesAccess shall execute and deliver an appropriate FuturesAccess Program
Subscription and Exchange Agreement, and each additional Capital Contribution
(whether a new subscription or an exchange) shall be accompanied by a new
FuturesAccess Program Subscription and Exchange Agreement Signature
Page. Systematic Momentum FuturesAccess may charge an Investor such
amount as may be deemed appropriate by the Sponsor to compensate Systematic
Momentum FuturesAccess in the case of any Capital Contribution received by
Systematic Momentum FuturesAccess after the day as of which the new Investor
making such Capital Contribution is admitted to Systematic Momentum
FuturesAccess and such Investor’s Units are deemed to have been
issued.
Admission
of a new Investor shall not result in a dissolution of Systematic Momentum
FuturesAccess.
SECTION
6.02. PROCEDURE AS TO NEW MANAGERS. One or more additional
managers may be admitted to Systematic Momentum FuturesAccess by the Sponsor,
without the consent of any Investor, if, but only if, the additional manager
or
managers are affiliates of the Sponsor or successors to all or a material
portion of the Sponsor’s equity or assets. The Sponsor shall promptly
notify the Investors of the admission of any such affiliated manager or managers
(such notice need not, however, be prior notice). No manager or
managers which is not or are not affiliated with the Sponsor may be admitted
to
Systematic Momentum FuturesAccess without the consent of Investors holding
more
than 50% of the outstanding Units (by Net Asset Value), not including Units
held
by Sponsor Parties, then held by Investors; provided, that the foregoing
restriction shall not apply in the case of a sale of all or a material portion
of the Sponsor’s equity or assets.
ARTICLE
VII
BOOKS
OF ACCOUNT; AUDITS; REPORTS TO INVESTORS
SECTION
7.01. BOOKS OF ACCOUNT. The books of account of Systematic
Momentum FuturesAccess shall be maintained in accordance with generally accepted
accounting principles under the accrual basis of accounting by or under the
supervision of the Sponsor and shall be open to inspection by any Investor
or
such Investor’s representative during regular business hours; provided, however,
that such books and records shall only be available for inspection pursuant
to a
valid, non-commercial purpose related to an Investor’s status as an
Investor.
SECTION
7.02. ANNUAL AUDIT. The accounts of Systematic Momentum
FuturesAccess shall be audited as of the close of each fiscal year by an
independent public accounting firm (the “Accountant”) selected by the Sponsor
and in accordance with the applicable Commodity Futures Trading Commission
regulations.
The
Sponsor or its agents shall cause to be prepared and mailed to each Investor,
including Investors who have redeemed all of their Units and withdrawn but
who
were Investors at any time during a fiscal year, audited financial statements
and a report prepared by the Accountant, setting forth as of the end of such
fiscal year:
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(a)
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the
assets and liabilities of Systematic Momentum
FuturesAccess;
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(b)
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the
net capital appreciation or depreciation of Systematic Momentum
FuturesAccess for such fiscal year;
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(c)
|
the
Net Asset Value of Systematic Momentum FuturesAccess as of the end
of such
fiscal year; and
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(d)
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the
Net Asset Value per Unit of each Class as of the end of such fiscal
year.
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Systematic Momentum FuturesAccess LLC
Limited
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2007
The
Sponsor shall not be required to provide Investors with an annual audit in
respect of any given year by any particular date in the following year, nor
shall the Net Asset Value of the Units be audited as of any date other than
the
end of a fiscal year.
The
Investors acknowledge that the Sponsor will be unable to provide the Investors
with Systematic Momentum FuturesAccess’ audited financial statements until the
Sponsor has received the audited financial statements from the underlying
FuturesAccess Funds in which Systematic Momentum FuturesAccess
invests.
The
Sponsor or its agents shall cause each Investor, including former Investors
who
were Investors at any time during such fiscal year, to be furnished with all
information relating to Systematic Momentum FuturesAccess necessary to enable
such Investor to prepare such Investor’s federal income tax return; provided,
that all Investors acknowledge and agree that such information may initially
be
provided in the form of estimates pending completion of Systematic Momentum
FuturesAccess’ audit for such fiscal year, and that Investors may be required to
obtain extensions of the date by which their federal and state income tax
returns must be filed. The Sponsor will have no liability to any
Investor as a result of such Investor being required to obtain any such
extensions.
SECTION
7.03. INTERIM REPORTS. From time to time, but no less
frequently than monthly, the Sponsor shall cause to be prepared and delivered
(at the expense of Systematic Momentum FuturesAccess), to each Investor interim
reports indicating Systematic Momentum FuturesAccess’ estimated results of
operations and presenting such other matters concerning Systematic Momentum
FuturesAccess’ operations as the Sponsor may deem appropriate as well as those
required by the applicable Commodity Futures Trading Commission
regulations. The estimated performance of Systematic Momentum
FuturesAccess will be available upon request to the Sponsor by any
Investor.
ARTICLE
VIII
CONFLICTS
OF INTEREST
SECTION
8.01. INVESTORS’ CONSENT. Each Investor, by subscribing
for Units, gives full and informed consent to the conflicts of interest to
which
the Sponsor Parties are subject in their operation of Systematic Momentum
FuturesAccess, as disclosed in the Memorandum and as contemplated herein
(including without limitation the Sponsor sharing in the management fees paid
and the performance allocations made with respect to Systematic Momentum
FuturesAccess’ investment in the FuturesAccess Funds, whether such sharing is
achieved directly or through the FuturesAccess Fund’s special allocation to the
Sponsor of such shared Management Fees and Performance Fees), and covenants
not
to object to or bring any proceedings against any Sponsor Party relating to
any
such conflicts of interest; provided, that such Sponsor Party complies with
the
standard of exculpation set forth in Section 5.06.
In
addition to the provisions of the preceding paragraph, the Sponsor is hereby
specifically authorized to invest Systematic Momentum FuturesAccess’ assets
in FuturesAccess Funds which direct transactions to Sponsor
Parties.
SECTION
8.02. INVESTORS’ REPRESENTATIVE.
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(a)
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An
Investors’ Representative — a professional services firm that is
independent of the Sponsor and its affiliates and that does not otherwise
perform material services for the Sponsor or any affiliated entities
(other than as an Investors’ Representative for other funds) — may be
appointed by the Sponsor from time to time as a means of providing
(or
withholding) the informed consent of Investors required for Systematic
Momentum FuturesAccess to enter into certain transactions which otherwise
may be inappropriate or impermissible due to the conflicts of interest
involved (for example, allocations to FuturesAccess Funds in which
the
Sponsor or its affiliates have a substantial proprietary
interest). The transactions submitted to the Investors’
Representative for consent will typically be transactions which the
Sponsor believes to be in the best interests of Systematic Momentum
FuturesAccess but which, nevertheless, may require Investor consent
under
Section 206(3) or other applicable provisions of the Investment Advisers
Act of 1940 (the “Advisers Act”). The role of the Investors’
Representative will not be to make investment recommendations or
pricing
determinations nor to review the merits of any transaction presented
to
it, but only to confirm that the conflicts of interest involved have
been
resolved and that Systematic Momentum FuturesAccess enters into such
transactions on an arm’s length
basis.
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The
Investors’ Representative would be exculpated and indemnified to the same
extent as the Sponsor.
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(b)
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The
Sponsor has initially appointed Xxxxxx X. Xxxx, Xx. & Associates,
L.L.C. to act as the Investors’ Representative. The Sponsor
will notify Investors of any change in the appointment of the Investors’
Representative and will report annually to Investors all transactions
approved by the Investors’ Representative during the fiscal-year period
then ended. The Sponsor may resolve conflict of interest
situations itself without referring the matter to the Investors’
Representative, unless otherwise required by
law.
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(c)
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By
subscribing for Units in Systematic Momentum FuturesAccess, each
Investor
expressly authorizes the Sponsor to appoint an Investors’ Representative
to act as their agent in consenting (or withholding consent) to
transactions presented to it.
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ARTICLE
IX
DISSOLUTION
AND WINDING UP
SECTION
9.01. EVENTS OF DISSOLUTION. Systematic Momentum
FuturesAccess will be dissolved, the affairs of Systematic Momentum
FuturesAccess will be wound up and Systematic Momentum FuturesAccess will be
liquidated upon the occurrence of any of the following events:
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(a)
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bankruptcy,
dissolution, withdrawal or other termination of the last remaining
manager
of Systematic Momentum
FuturesAccess;
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(b)
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any
event which would make unlawful the continued existence of Systematic
Momentum FuturesAccess;
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(c)
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withdrawal
of the Sponsor unless at such time there is at least one remaining
manager; or
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(d)
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the
determination by the Sponsor to liquidate the FuturesAccess Fund
and wind
up its affairs.
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Nothing
in this Section 9.01 shall impair the right of Investors holding more than
50%
of the outstanding Units then held by Investors to vote within 90 calendar
days
of any of the foregoing events of dissolution to continue Systematic Momentum
FuturesAccess on the terms set forth herein (if it is lawful to do so), and
to
appoint one or more managers for Systematic Momentum FuturesAccess.
SECTION
9.02. DISSOLUTION. Upon the dissolution of Systematic
Momentum FuturesAccess, the Sponsor (or, if the Sponsor has withdrawn, such
other liquidator as the Investors may — by vote of more than 50% of the
outstanding Units (by Net Asset Value), not including Units held by Sponsor
Parties, select — shall wind up Systematic Momentum FuturesAccess’ affairs and,
in connection therewith, shall distribute Systematic Momentum FuturesAccess’
assets in the following manner and order:
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(a)
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FIRST,
to the payment and discharge of all claims of creditors of Systematic
Momentum FuturesAccess (including creditors who are
Investors);
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(b)
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SECOND,
to the establishment of such reserves as the Sponsor (or such other
liquidator) may consider reasonably necessary or appropriate for
any
losses, contingencies, liabilities or other matters of or relating
to
Systematic Momentum FuturesAccess; provided, however, that if and
when the
Sponsor (or such other liquidator) determines that the causes for
such
reserves have ceased to exist, the monies, if any, then held in reserve
shall be distributed in the manner hereinafter provided;
and
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(c)
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THIRD,
after making all final allocations contemplated by Article II (and
for
such purposes treating the date of dissolution as if it were a December
31), to the distribution in cash of the remaining assets of Systematic
Momentum FuturesAccess among the Investors in accordance with the
positive
balance in each such Investor’s Closing Capital Account as of the last day
of the Accounting Period in which Systematic Momentum FuturesAccess’
dissolution occurs. Any assets distributed in kind in the
liquidation
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shall
be valued, for purposes of such distribution, in accordance with
Section
2.10 as of the date of distribution, and any difference between such
value
and the carrying value of such assets shall, to the extent not otherwise
taken into account in determining Net Asset Value, be deemed to constitute
income or loss to Systematic Momentum
FuturesAccess.
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ARTICLE
X
MISCELLANEOUS
PROVISIONS
SECTION
10.01. INVESTORS NOT TO CONTROL. The Investors shall take
no part in the conduct or control of Systematic Momentum FuturesAccess’ business
and shall have no authority or power to act for or to bind Systematic Momentum
FuturesAccess.
SECTION
10.02. POWER OF ATTORNEY. Each Investor, by subscribing
for Units, does hereby constitute and appoint the Sponsor, as such Investor’s
true and lawful representative and attorney-in-fact, with authority in such
Investor’s name, place and stead to make, execute, sign and file a Certificate
of Formation of Systematic Momentum FuturesAccess, any amendments thereto
authorized herein, any amendments to this Agreement authorized herein, and
all
such other instruments, documents and certificates which may, from time to
time,
be required by, or deemed advisable by the Sponsor under, the laws of the United
States of America, the State of Delaware, the State of New Jersey, the State
of
New York or any other state or political subdivision in which the Sponsor shall
determine that Systematic Momentum FuturesAccess shall do business, to
effectuate, implement and continue the valid existence of Systematic Momentum
FuturesAccess.
SECTION
10.03. AMENDMENTS; CONSENTS. This Agreement may not be
modified or amended without the written consent of the Sponsor.
This
Agreement may be modified or amended at any time with the consent of the Sponsor
and by Investors holding more than 50% of the outstanding Units (by Net Asset
Value), not including Units held by Sponsor Parties.
For
all
purposes of this Agreement, except as provided in the last paragraph of this
Section 10.03, when the consent of Investors is required, the affirmative
consent of Investors is not required; “negative consent” by failure to object in
writing after reasonable notice of a proposed modification or amendment is
sufficient — 30 calendar days to be conclusively presumed to constitute
“reasonable notice” for such purposes.
The
Sponsor may, without the consent of the Investors, modify or amend any provision
of this Agreement for any of the following purposes:
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(a)
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to
add to this Agreement any further covenants, restrictions, undertakings
or
other provisions for the protection or benefit of
Investors;
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(b)
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to
cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions
contained herein or in the Confidential Program Disclosure
Document;
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(c)
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to
cause the allocations contained in Article II to comply with Section
704
of the Code or any other statutory provisions or regulations relating
to
such allocations;
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(d)
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to
provide for the issuance of new Classes of Units, or to amend the
manner
in which Units may be exchanged among funds in FuturesAccess or between
different Classes of Units, provided that doing so is not adverse
to
outstanding Units (as contemplated by Section 10.13);
or
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(e)
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to
make any other change not materially adverse to the interests of
the
Investors.
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Notwithstanding
anything in this Section 10.03 to the contrary, without the affirmative written
consent of each Investor affected thereby, no such modification or amendment
shall: reduce the liabilities, obligations or responsibilities of
the
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Sponsor
(except that the Sponsor may take action to admit any person or entity which
is
an affiliate of the Sponsor as a substitute manager, and to provide for the
Sponsor subsequently to withdraw from Systematic Momentum FuturesAccess or
to
provide for the Sponsor to withdraw from Systematic Momentum FuturesAccess
without admitting any such substitute manager to Systematic Momentum
FuturesAccess); increase the liabilities of Investors; or reduce the
participation of Investors in the profits and losses of Systematic Momentum
FuturesAccess or in any distributions made by Systematic Momentum FuturesAccess
as set forth herein.
SECTION
10.04. NOTICES. Any notice to Systematic Momentum
FuturesAccess or the Sponsor relating to this Agreement shall be in writing
and
delivered in person or by registered or certified mail and addressed to the
Sponsor at the principal office of Systematic Momentum
FuturesAccess. All notices and reports sent to the Investors shall be
addressed to each Investor at the address set forth in such Investor’s
FuturesAccess Program Subscription and Exchange Agreement (including the
FuturesAccess Program Subscription and Exchange Agreement Signature
Page). Any Investor may designate a new address by written notice to
the Sponsor. Unless otherwise specifically provided in this
Agreement, a notice shall be deemed to have been given to Systematic Momentum
FuturesAccess or the Sponsor when actually received by the Sponsor, and to
have
been given to an Investor three business days after being deposited in a post
office or regularly maintained mailbox or when delivered in
person. The Sponsor may waive any notice requirement relating to
notice to Systematic Momentum FuturesAccess or to itself, but no such waiver
shall constitute a continuing waiver.
SECTION
10.05. LEGAL EFFECT; MANNER OF EXECUTION. This Agreement
shall be binding upon the Investors, the Sponsor and their respective permitted
successors and assigns. This Agreement shall inure to the benefit of
the foregoing parties as well as to the benefit of the Sponsor
Parties.
This
Agreement may be executed by power-of-attorney embodied in a FuturesAccess
Program Subscription and Exchange Agreement (including the FuturesAccess Program
Subscription and Exchange Agreement Signature Page) or similar instrument with
the same effect as if the parties executing the FuturesAccess Program
Subscription and Exchange Agreement (including the FuturesAccess Program
Subscription and Exchange Agreement Signature Page) or similar instrument had
all executed one counterpart of this Agreement; provided, that this Agreement
may also be executed in separate counterparts.
SECTION
10.06. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties hereto and amends, restates, and supersedes
all prior agreements among any of the parties hereto with respect to the matters
referred to herein, and no other agreement, verbal or otherwise, shall be
binding as between the parties unless it shall be in writing and signed by
the
party against whom enforcement is sought.
SECTION
10.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. THE RIGHTS AND LIABILITIES
OF THE INVESTORS SHALL BE AS PROVIDED IN THE ACT, EXCEPT AS HEREIN OTHERWISE
EXPRESSLY PROVIDED.
SECTION
10.08. CONSENT TO JURISDICTION. All controversies arising
hereunder or in connection with the affairs of Systematic Momentum FuturesAccess
shall be brought in the state or federal courts located in New York, New York,
and all Investors hereby irrevocably consent to such jurisdiction and
venue.
SECTION
10.09. “TAX MATTERS PARTNER”; TAX ELECTIONS. The Sponsor
is designated as the “Tax Matters Partner” for Systematic Momentum FuturesAccess
and shall be empowered to make or revoke any elections now or hereafter required
or permitted to be made by the Code or any state or local tax law.
Each
Investor, by subscribing for Units, agrees not to treat any tax item on such
Investor’s individual tax return in a manner inconsistent with the treatment of
such item by Systematic Momentum FuturesAccess, as reflected on the Schedule
K-1
or other information statement furnished by Systematic Momentum FuturesAccess
to
such Investor, or to file any claim for refund relating to any such Tax Item
which would result in such inconsistent treatment.
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SECTION
10.10. DETERMINATION OF MATTERS NOT PROVIDED FOR IN THIS
AGREEMENT. The Sponsor shall be empowered to decide, in its good
faith judgment, any questions arising with respect to Systematic Momentum
FuturesAccess or to this Agreement, and to provide for matters arising hereunder
but which are not specifically set forth herein, as the Sponsor may deem to
be
in, or not opposed to, the best interests of Systematic Momentum
FuturesAccess.
SECTION
10.11. NO PUBLICITY. Each Investor agrees that such
Investor will in no event provide information concerning Systematic Momentum
FuturesAccess to any third party, knowing that such third party may use such
information in any form of publication, newsletter or circular, whether publicly
or privately distributed. Each Investor’s investment in Systematic
Momentum FuturesAccess, as well as the performance of such investment, shall
be
maintained on a strictly confidential basis; provided, that the Sponsor may
make
use of Systematic Momentum FuturesAccess’ performance record in the ordinary
course of the Sponsor’s business activities.
SECTION
10.12. SURVIVAL. The indemnity and exculpation provisions
hereof, as well as the obligations to settle accounts, shall survive the
withdrawal of any Investor as well as the dissolution of Systematic Momentum
FuturesAccess.
SECTION
10.13. WAIVERS. The Sponsor may waive any provision of
this Agreement restricting the actions of Investors in respect of certain but
not all Investors provided that doing so will have no adverse effect on other
Investors.
SECTION
10.14. VOTING RIGHTS. The voting rights of the Units shall
be determined by their respective Net Asset Values. In determining
the number of Units entitled to vote or consent and the number of votes or
consents needed for approval of any matter for which such a vote or consent
is
provided for herein, Units held by any Sponsor Party (including, without
limitation, the Sponsor’s Capital Account, if any, on a Unit-equivalent basis)
shall not be counted.
SECTION
10.15. ISSUANCE OF DIFFERENT CLASSES.
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(a)
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The
Sponsor may, at any time and from time to time, issue different Classes
of
Units, and may adjust the allocation, voting and other provisions
of this
Agreement so as equitably to reflect the issuance of such additional
Classes. The Sponsor may also alter the terms on which Units of
any Class are sold, provided that doing so does not adversely affect
existing Investors.
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(b)
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The
fact that, for purposes of convenience, Units issued by Systematic
Momentum FuturesAccess shall be designated as being Units of different
“Classes” shall in no respect imply that these Units constitute different
classes of equity interests as opposed to simply being subject to
different fees.
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SECTION
10.16. COMPLIANCE WITH THE ADVISERS ACT; SECURITIES
LAWS.
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(a)
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To
the extent that any provision hereof may be construed in a manner
inconsistent with the Advisers Act, it is the express intent of the
Sponsor and the Investors that such provision be interpreted and
applied
ab initio so as to comply with the Advisers Act in all
respects (even if doing so effectively amends the terms of this
Agreement).
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(b)
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Nothing
in this Agreement shall be deemed to constitute a waiver by any Investor
of such Investor’s rights under any federal or state securities
laws.
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IN
WITNESS WHEREOF, the undersigned have executed this
Agreement by their respective representatives thereunto duly
authorized.
| INVESTORS: | SPONSOR: | |||||
| By: | Xxxxxxx Xxxxx Alternative Investments LLC | Xxxxxxx Xxxxx Alternative Investments LLC | ||||
| Attorney-in-Fact | ||||||
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By:
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/s/ Xxxx Xxxxxxxxxx |
By:
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/s/ Xxxx Xxxxxxxxxx | |||
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Xxxx Xxxxxxxxxx |
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Xxxx Xxxxxxxxxx | |||
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Vice President and Manager |
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Vice President and Manager | |||
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