THE MERRILL LYNCH FUTURESACCESSSM FUNDS GENERAL FORM of OPERATING AGREEMENT
Exhibit
4.1
THE
▇▇▇▇▇▇▇ ▇▇▇▇▇ FUTURESACCESSSM
FUNDS
GENERAL
FORM
of
_______________________________
THE
UNITS OF LIMITED LIABILITY COMPANY INTEREST CREATED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES ACT, AND
MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER
APPLICABLE SECURITIES LAWS AND WITH THE CONSENT OF THE
SPONSOR.
_______________________________
▇▇▇▇▇▇▇
▇▇▇▇▇ Alternative Investments LLC
Sponsor
April
1, 2007
THE
▇▇▇▇▇▇▇ ▇▇▇▇▇ FUTURESACCESSSM
FUNDS
GENERAL
FORM OF OPERATING AGREEMENT
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. APPOINTMENT OF THE TRADING ADVISOR; INVESTMENT OF CASH
RESERVES
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2
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SECTION
1.03. FISCAL YEAR; ACCOUNTING PERIODS
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3
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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. DURATION OF THIS FUTURESACCESS FUND
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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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7
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SECTION
2.04. NET ASSET VALUE
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7
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SECTION
2.05. SPONSOR’S FEES; MANAGEMENT AND PERFORMANCE FEES; TRANSACTION COSTS;
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 FUTURESACCESS FUND PROPERTY; REDEMPTIONS
AND
DISTRIBUTIONS
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|
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SECTION
3.01. NO UNDIVIDED INTERESTS IN FUTURESACCESS FUND
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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A-i
TABLE OF CONTENTS (cont.)
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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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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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15
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SECTION
4.03. STATUS AFTER WITHDRAWAL
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15
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ARTICLE
V MANAGEMENT
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SECTION
5.01. AUTHORITY OF THE SPONSOR.
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15
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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 TO THIS FUTURESACCESS FUND
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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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17
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SECTION
5.08. INVESTORS’ TRANSACTIONS
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18
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SECTION
5.09. RELIANCE BY THIRD PARTIES
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18
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SECTION
5.10. REGISTRATION OF ASSETS
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18
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SECTION
5.11. 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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18
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SECTION
6.02. PROCEDURE AS TO NEW MANAGERS
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18
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ARTICLE
VII BOOKS OF ACCOUNT; AUDITS; REPORTS TO
INVESTORS
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|
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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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19
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ARTICLE
VIII CONFLICTS OF INTEREST
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SECTION
8.01. INVESTORS’ CONSENT
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19
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ARTICLE
IX DISSOLUTION AND WINDING UP OF THIS FUTURESACCESS
FUND
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A-ii
TABLE OF CONTENTS (cont.)
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SECTION
9.01. EVENTS OF DISSOLUTION
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20
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SECTION
9.02. DISSOLUTION
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20
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ARTICLE
X MISCELLANEOUS PROVISIONS
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SECTION
10.01. INVESTORS NOT TO CONTROL
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21
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SECTION
10.02. POWER OF ATTORNEY
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21
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SECTION
10.03. AMENDMENTS; CONSENTS
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21
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SECTION
10.04. NOTICES
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22
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SECTION
10.05. LEGAL EFFECT; MANNER OF EXECUTION
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22
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SECTION
10.06. GOVERNING LAW
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22
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SECTION
10.07. CONSENT TO JURISDICTION
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22
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SECTION
10.08. “TAX MATTERS PARTNER”; TAX ELECTIONS
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22
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SECTION
10.09. DETERMINATION OF MATTERS NOT PROVIDED FOR IN THIS
AGREEMENT
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22
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SECTION
10.10. NO PUBLICITY
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22
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SECTION
10.11. SURVIVAL
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23
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SECTION
10.12. WAIVERS
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23
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SECTION
10.13. VOTING RIGHTS
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23
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SECTION
10.14. ISSUANCE OF DIFFERENT CLASSES.
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23
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SECTION
10.15. COMPLIANCE WITH THE INVESTMENT ADVISERS ACT OF 1940; SECURITIES
LAWS.
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23
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__________________
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TESTIMONIUM
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SIGNATURES
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A-iii
ALL DOMESTIC ▇▇▇▇▇▇▇ ▇▇▇▇▇ FUTURESACCESS FUNDS SHALL BE GOVERNED BY
THIS
GENERAL FORM OF OPERATING AGREEMENT FROM AND AFTER APRIL 1,
2007
THE
▇▇▇▇▇▇▇ ▇▇▇▇▇ FUTURESACCESSSM
FUNDS
GENERAL
FORM
of
as
of April 1, 2007
THIS
LIMITED LIABILITY COMPANY OPERATING AGREEMENT (“Agreement”) dated
______________, _____ of ______________________________ (this “FuturesAccess
Fund”) by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 “Investors”; provided, that for purposes of voting, Units
held by the Sponsor shall not be considered to be held by an
Investor).
WHEREAS,
the parties hereto desire to form or continue the FuturesAccess Fund, a limited
liability company under the provisions of the Delaware Limited Liability Company
Act (the “Act”), which shall be one of the funds included in the ▇▇▇▇▇▇▇ ▇▇▇▇▇
FuturesAccessSM
Program (“FuturesAccess”); such other funds to be hereinafter sometimes referred
to as “FuturesAccess Funds”).
WHEREAS,
units of limited liability company interest issued by the FuturesAccess Funds
in
general shall hereinafter be referred to as “Units.”
WHEREAS,
the Sponsor is the sponsor of the FuturesAccess Fund and the manager of the
FuturesAccess Fund for purposes of the Act.
WHEREAS,
in addition to FuturesAccess, the Sponsor also sponsors the HedgeAccessSM Program
(“HedgeAccess”) of private investment funds concentrating on securities, rather
than futures and forward trading (such funds being hereinafter referred to
as
“HedgeAccess Funds”).
WHEREAS,
the parties hereby desire to set forth the terms pursuant to which the
FuturesAccess Fund shall be governed.
NOW,
THEREFORE, in consideration of the premises, the mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
ORGANIZATION
SECTION
1.01. OBJECTIVES
AND PURPOSES.
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(a)
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This
FuturesAccess Fund shall have the following objectives and
purposes:
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|
(i)
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to
retain a professional trading advisor (the “Trading Advisor”) to manage
this FuturesAccess Fund’s speculative trading in the futures, forward,
options and other markets as described in the Part One (A) Confidential
Program Disclosure Document: FuturesAccessSM
Program
General Information, the Part One (B): Confidential Program Disclosure
Document Trading Advisor
|
A-1
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
| Information and the Part Two Confidential Program Disclosure Document: Statement of Additional Information, as they may be amended from time to time (collectively, the “Confidential Program Disclosure Document”); |
|
(ii)
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to
maintain such futures brokerage, forward dealing and other counterparty
accounts, as well as 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)
|
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)
|
This
FuturesAccess Fund, and the Sponsor on behalf of this FuturesAccess
Fund,
shall have the power to enter into, make and perform all contracts
and
other undertakings, and engage in all activities and transactions
as may
be necessary or advisable to the carrying out of the foregoing purposes,
including, without limitation, the
power:
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(i)
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to
trade futures, forwards, options and other instruments, on margin
and
otherwise;
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(ii)
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to
borrow money from banks or brokers, and to secure the payment of
any
obligations of this FuturesAccess Fund by hypothecation or pledge
of all
or part of the assets of this FuturesAccess
Fund;
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|
(iii)
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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
this
FuturesAccess Fund;
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(iv)
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to
open, maintain and close bank, brokerage and other
accounts;
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(v)
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to
prepare and file all tax returns required of this FuturesAccess Fund
and
make any election or determination on behalf of this FuturesAccess
Fund in
connection therewith or as otherwise required or permitted by applicable
tax laws;
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(vi)
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to
bring, defend, compromise and settle legal actions or other claims
on
behalf of this FuturesAccess Fund;
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(vii)
|
to
maintain insurance on behalf of this FuturesAccess Fund, including
indemnification insurance; or
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(viii)
|
to
take any and all such actions as the Sponsor may deem to be necessary
or
advisable in connection with the
foregoing.
|
SECTION
1.02. APPOINTMENT
OF THE TRADING ADVISOR; INVESTMENT OF CASH RESERVES. The Sponsor
shall appoint the Trading Advisor to have discretionary authority over this
FuturesAccess Fund’s trading and investing as described in the Confidential
Program Disclosure Document. This FuturesAccess Fund 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 “▇▇▇▇▇▇▇ ▇▇▇▇▇”) or third parties. The sole
clearing broker and the principal forward trading counterparty for this
FuturesAccess Fund shall be ▇▇▇▇▇▇▇ ▇▇▇▇▇ unless the Sponsor otherwise
determines.
This
FuturesAccess Fund shall deposit all or substantially all of this FuturesAccess
Fund’s capital with ▇▇▇▇▇▇▇ ▇▇▇▇▇ or any other clearing brokers selected by the
Sponsor pursuant to the arrangements described in the Confidential Program
Disclosure Document, all Investors acknowledging that ▇▇▇▇▇▇▇ ▇▇▇▇▇ will not
only receive futures brokerage commissions and bid-ask spreads from this
FuturesAccess Fund but also will retain significant economic benefits from
the
possession of this FuturesAccess Fund’s assets (in addition to the interest
which ▇▇▇▇▇▇▇ ▇▇▇▇▇ will credit to this FuturesAccess Fund’s
A-2
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
account). In
addition, the Sponsor may maintain this FuturesAccess Fund’s assets 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 this FuturesAccess Fund’s cash so invested will be paid to this
FuturesAccess Fund. However, neither the Sponsor nor any of its
affiliates (or any third parties) will be obligated to account to this
FuturesAccess Fund or any Investor for any additional economic benefits which
the Sponsor or any such affiliate may derive from possession of this
FuturesAccess Fund’s assets.
SECTION
1.03. FISCAL
YEAR; ACCOUNTING PERIODS. The fiscal year of this FuturesAccess Fund
shall end on each December 31. This FuturesAccess Fund’s accounting
periods (“Accounting Periods”), as of the end of each of which increases and
decreases in this FuturesAccess Fund’s “Net Assets” (as defined in Section 2.04)
shall be calculated and reflected in the Net Asset Value of the Units issued
by
this FuturesAccess Fund, shall begin: (i) as of the day that this FuturesAccess
Fund first begins operations; (ii) as of the day that any Unit is issued; (iii)
as of the day immediately following any redemption of Units or withdrawal from
an Investor’s Capital Account; (iv) as of the beginning of each calendar month;
and (v) as of such other day as the 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. This FuturesAccess Fund shall
maintain in the State of Delaware a registered agent and office. The
identity and location of said registered agent and office shall be determined
by
the Sponsor, and may be changed from time to time by the Sponsor.
The
initial registered office of this FuturesAccess Fund in the State of Delaware
is
c/o The Corporation Trust Company, Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
The
principal office of this FuturesAccess Fund shall be located at the offices
of
the Sponsor, Princeton Corporate Campus, 800 Scudders Mill Road, Section 2G,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or such other place as the Sponsor may designate
from time to time.
SECTION
1.05. DURATION
OF THIS FUTURESACCESS FUND. The term of this FuturesAccess Fund
commenced as of the date its Certificate of Formation was filed with the
Secretary of State of the State of Delaware, and shall continue until terminated
by the dissolution and winding up of this FuturesAccess Fund as hereinafter
provided.
SECTION
1.06. NON-ASSIGNABILITY
OF UNITS; SUBSTITUTED INVESTORS; LIMITED ASSIGNABILITY OF THE SPONSOR’S
INTEREST.
|
(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 this FuturesAccess
Fund
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 this FuturesAccess Fund as provided in the Act,
regardless of whether his or her assignee becomes a substituted
Investor.
|
|
(b)
|
The
Sponsor may not assign, encumber, pledge, hypothecate or otherwise
transfer all or any portion of its manager’s interest in this
FuturesAccess Fund; 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.
A-3
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
|
(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 this FuturesAccess Fund 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 and
obligations of this FuturesAccess Fund only to the extent of the
Sponsor’s
or such Investor’s investment in this FuturesAccess Fund and not in excess
thereof.
|
ARTICLE
II
CAPITAL
AND TAX ALLOCATIONS
SECTION
2.01. CAPITAL
CONTRIBUTIONS. All Capital Contributions to this FuturesAccess Fund
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 shall initially be issued at $1.00 per Unit, and thereafter
at
Net Asset Value.
The
Sponsor (and/or any other ▇▇▇▇▇▇▇ ▇▇▇▇▇ entity) may, but need not, make Capital
Contributions as of any date that any Units are issued. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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 ▇▇▇▇▇▇▇ ▇▇▇▇▇
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 ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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’ ▇▇▇▇▇▇▇ ▇▇▇▇▇ customer
securities accounts.
Provided
the FuturesAccess Fund’s 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
the
FuturesAccess Fund 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:
A-4
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
(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 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 HedgeAccess
(private investment funds which primarily trade securities) shall be permitted
to aggregate their Investments in FuturesAccess and HedgeAccess for
purposes of determining such Investors’ Class I and Class D
eligibility.
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.
A-5
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
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 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.
▇▇▇▇▇▇▇
▇▇▇▇▇ 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
▇▇▇▇▇▇▇ ▇▇▇▇▇ clients may invest in Class I or a customized Class of Units
on
different terms than those described herein, depending on the type of ▇▇▇▇▇▇▇
▇▇▇▇▇ Account held by such clients. In addition, FuturesAccess Funds
may from time to time offer to certain ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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
▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 this FuturesAccess
Fund to carry out its objectives and purposes.
No
Investor shall be obligated to make any additional Capital Contributions, except
as provided in Section 2.08.
No
provision of this Agreement shall be construed as guaranteeing the return,
by
any Sponsor Party or this FuturesAccess Fund, of all or any part of the Capital
Contribution(s) of any Investor.
SECTION
2.02. OPENING
CAPITAL ACCOUNTS.
|
(a)
|
There
shall be established for each Unit of each Class on the books of
this
FuturesAccess Fund, as of the first day of each Accounting Period,
an
Opening Capital Account which, for the Accounting Period as of the
beginning of which such Unit is issued, shall be the Capital Contribution
made in respect of such Unit and which, for each Accounting Period
thereafter, shall be an amount equal to the Closing Capital Account
(determined as set forth in Section 2.06) attributable to such Unit
for
the immediately preceding Accounting
Period.
|
|
(b)
|
The
Sponsor may, but shall not be required to, make Capital Contributions
to
this FuturesAccess Fund from time to time as new Units are issued,
which
shall be accounted for on a Unit-equivalent basis and shall participate
in
the profits and losses of the Units on the same basis as the Capital
Accounts of the Class D Units.
|
|
(c)
|
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).
|
A-6
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
SECTION
2.03. FINANCIAL
ALLOCATIONS AMONG THE UNITS. The net profits and losses are allocated
to each Class as provided in Section 2.06 and shall be allocated equally among
the Units of such Class. All Units of the same Class shall have the
same Net Asset Value.
SECTION
2.04. NET
ASSET
VALUE. For the purposes of this Agreement, unless the context
otherwise requires, “Net Assets” and “Net Asset Value” shall mean assets less
liabilities. For purposes of determining Opening Capital Accounts,
Net Asset Value shall be determined as of the beginning of, and for purposes
of
determining Closing Capital Accounts, Net Asset Value will be determined as
of
the close of, business on the relevant valuation date.
|
(a)
|
The
assets of this FuturesAccess Fund shall
include:
|
|
(i)
|
all
cash on hand or on deposit in bank or other interest-bearing accounts,
including any interest accrued
thereon;
|
|
(ii)
|
any
accrued gains on open positions which have not been settled by crediting
this FuturesAccess Fund’s account, as valued pursuant to Section
2.10;
|
|
(iii)
|
all
bills, demand notes and accounts
receivable;
|
|
(iv)
|
all
securities (including, without limitation, money-market funds, Treasury
bills and other short-term, interest-bearing instruments), commodity
interests, currency interests, swap agreements and all other instruments
owned or contracted for by this FuturesAccess
Fund;
|
|
(v)
|
all
interest accrued on any interest-bearing securities owned by this
FuturesAccess Fund except to the extent that the same is included
or
reflected in the valuation of such securities;
and
|
|
(vi)
|
all
other assets of every kind and nature, including prepaid
expenses.
|
|
(b)
|
The
liabilities of this FuturesAccess Fund shall be deemed to include
the
following (provided, however, that in determining the amount of such
liabilities, this FuturesAccess Fund may calculate expenses of a
regular
or recurring nature for any given period on an estimated basis in
advance,
and may accrue the same in such manner as the Sponsor may deem appropriate
over such period):
|
|
(i)
|
any
accrued losses on open positions which have not been settled by debiting
this FuturesAccess Fund’s account, as valued pursuant to Section
2.10;
|
|
(ii)
|
all
bills and accounts payable;
|
|
(iii)
|
all
expenses accrued, reimbursable or payable;
and
|
|
(iv)
|
all
other liabilities, present or future, including such reserves as
the
Sponsor may (as contemplated by Section 2.04(g)), deem
advisable.
|
|
(c)
|
The
Management, Performance and Sponsor’s Fees shall be determined, and Units’
Capital Accounts correspondingly reduced, after the allocation of
the
other components of Net Asset Value, as described
above.
|
|
(d)
|
Operating
expenses shall be allocated among the Units pro rata based on
their respective Net Asset Values as of the beginning of the
month.
|
|
(e)
|
Extraordinary
costs, if any, shall be allocated as incurred in such manner as the
Sponsor may deem to be fair and
equitable.
|
A-7
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
|
(f)
|
Organizational
and initial offering costs shall be deducted from Net Asset Value
in
installments as of the end of each of the first 60 calendar months
after
the initial issuance of the Units, as contemplated by Section 2.05(b)
(for
financial and performance reporting purposes, all such costs must
be
deducted from Net Asset Value as of the date of such initial
issuance).
|
|
(g)
|
All
Investors, by becoming party to this Agreement, hereby agree and
consent
to the 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. Any such
reserves shall, unless the Sponsor determines that such reserves
are
properly attributable to certain but less than all outstanding Units,
reduce the Net Asset Value of the Units of each Class pro rata
based on their respective Net Asset Values, after reduction for accrued
Sponsor’s Fees, operating expenses and extraordinary expenses until such
time, if any, as such reserves are reversed. Reserves, when
reversed, shall be similarly allocated among the Units then outstanding
pro rata based on their respective Net Asset Value (irrespective
of whether such Units were outstanding when the reserves were
established).
|
|
(h)
|
The
Sponsor may suspend the calculation of Net Asset Value during any
period
for which the Sponsor is unable to value a material portion of this
FuturesAccess Funds’ positions. The Sponsor will give notice of
any such suspension to all
Investors.
|
SECTION
2.05. SPONSOR’S
FEES; MANAGEMENT AND PERFORMANCE FEES; TRANSACTION COSTS; OPERATING
EXPENSES.
|
(a)
|
The
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.
|
|
(b)
|
This
FuturesAccess Fund shall reimburse the Sponsor for the organizational
and
initial offering costs incurred by this FuturesAccess Fund in respect
of
the initial offering of the Units (of all Classes combined) in
installments as of the end of each of the first 60 calendar months
of this
FuturesAccess Fund’s operation, beginning with the end of the first
calendar month after the initial issuance of the Units. This
FuturesAccess Fund shall expense such costs over the same 60-month
schedule. If this FuturesAccess Fund dissolves prior to the end of
such 60
calendar-month period, any remaining reimbursement obligation with
respect
to organizational and initial offering costs shall be
eliminated.
|
|
(c)
|
The
Sponsor’s Fees, as well as operating expenses due to the 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 this FuturesAccess Fund’s account and paid to the
Sponsor, where appropriate, as if to a third party, not credited
to the
Sponsor’s Capital Account.
|
|
(d)
|
This
FuturesAccess Fund shall pay all transaction costs (including futures
brokerage commissions and bid-ask spreads as well as interest on
foreign
currency borrowings), as well as all Management and Performance Fees,
as
incurred.
|
|
(e)
|
The
Sponsor’s Fees, but not reimbursement payments for organizational and
initial offering costs, shall be appropriately pro rated in the case
of
partial calendar months.
|
|
(f)
|
This
FuturesAccess Fund shall pay all expenses, including administrative
and
ongoing offering costs, as well as any extraordinary expenses, incurred
in
its operations (including the expenses of any services
|
A-8
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
| provided by the Sponsor, other than in its capacity as Sponsor, or its affiliates); provided, that this FuturesAccess Fund shall not pay any allocable Sponsor overhead. |
|
(g)
|
The
Sponsor retains outside service providers to supply tax reporting,
custody
and accounting services to FuturesAccess. This FuturesAccess
Fund’s operating costs will include this FuturesAccess Fund’s allocable
share of the fees and expenses of such service providers, as well
as the
fees and expenses of any ▇▇▇▇▇▇▇ ▇▇▇▇▇ entity which may provide such
(or
other) services in the future.
|
|
(h)
|
The
Capital Account of the Sponsor (if any) shall not be subject to Sponsor’s
Fees.
|
SECTION
2.06. ALLOCATION
OF PROFITS AND LOSSES FOR FINANCIAL PURPOSES. As of the end of each
Accounting Period and before giving effect to any redemptions then being made,
the Closing Capital Account of each Class shall be determined by adjusting
the
Opening Capital Account of each such Class as of the beginning of such
Accounting Period in the following manner:
|
(a)
|
Any
increase or decrease in the Net Asset Value of this FuturesAccess
Fund,
after deduction of all Management and Performance Fees, transaction
costs
and operating expenses, but prior to accrual of the Sponsor’s Fees, during
such Accounting Period shall be credited pro rata, without any
order or priority, among: (i) each Class of Units; and (ii) the
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; provided that any amounts received by this
FuturesAccess Fund from the Trading Advisor for payment to the Sponsor
shall be allocated to the Capital Account of the
Sponsor. Extraordinary expenses shall be allocated as the
Sponsor may determine.
|
|
(b)
|
If
the Closing Capital Account per Unit of any Class is reduced to zero,
any
further decrease in the Net Asset Value per Unit shall be allocated
to the
Sponsor’s Capital Account, if any.
|
|
(c)
|
The
Sponsor’s Fee shall be debited from each Class, in each case after the
Section 2.06(a) and (b) allocations are
made.
|
|
(d)
|
The
Net Assets of each Class shall be divided equally among all Units
of such
Class.
|
SECTION
2.07. ALLOCATION
OF PROFITS AND LOSSES FOR INCOME TAX PURPOSES.
|
(a)
|
A
Tax Account shall be established for each Unit of each
Class. The Tax Accounts of all outstanding Units shall
initially be equal to each Unit’s net purchase price (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 this FuturesAccess Fund and decreased by such
Unit’s
share of the items of loss or expense and nondeductible items of
loss or
expense of this FuturesAccess Fund, as well as by any
distributions.
|
|
(b)
|
For
federal income tax purposes, items of ordinary income and loss, capital
gain and capital loss shall, unless the 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:
|
|
(i)
|
Items
of ordinary income and deduction generated by this FuturesAccess
Fund
shall be allocated pro rata among the Units which were
outstanding during the months in such year when such items of ordinary
income and deductions accrued.
|
|
(ii)
|
Gains
will be allocated FIRST, to Investors who have redeemed Units during
such
year (including as of December 31), to the extent of the positive
difference (if any) between the amounts received or receivable upon
redemption and the respective Tax Account balances of the redeemed
Units. SECOND, gains will be allocated to Investors to the
extent of the positive difference (if any) between the Capital Account
balance and the Tax Account balance attributable to their remaining
|
A-9
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
| Units. THIRD, gains will be allocated among all outstanding Units based on their respective Net Asset Values. |
|
(iii)
|
Losses
shall be allocated FIRST, to Investors who have redeemed Units during
such
year (including as of December 31), to the extent of the negative
difference (if any) between the amounts received or receivable upon
redemption and the respective Tax Account balances of the redeemed
Units. SECOND, losses shall be allocated to Investors to the
extent of the negative difference (if any) between the Capital Account
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.
|
|
(iv)
|
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.
|
|
(v)
|
Management,
Performance and Sponsor’s Fees, as well as the operating expenses (in each
case as adjusted to reflect the non-deductibility of all or a portion
of
such Sponsor’s Fees and operating expenses) and extraordinary expenses,
shall be allocated, for tax purposes, to the Tax Accounts of the
Units
based on the amount of the foregoing actually debited from the Units’
respective Capital Accounts.
|
|
(vi)
|
Items
of ordinary income and/or gain attributable to amounts received by
this
FuturesAccess Fund from the Trading Advisor for payment to the Sponsor
shall be specially allocated to the
Sponsor.
|
|
(c)
|
The
character of items of income, gain, loss or deduction (ordinary,
short-term and long-term) and of the items required to be separately
stated by Section 702(a) of the Code shall be allocated to the Investors
pursuant to this Section 2.07 so as equitably to reflect, without
discrimination or preference among Investors, the amounts credited
or
debited to the Units’ respective Capital Accounts pursuant to Section
2.06. 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.
|
|
(d)
|
In
the case of Units which are transferred during a fiscal year, the
tax
allocations shall be made to such Units as provided above. The
Tax Items so allocated will then be divided among the transferor(s)
and
the transferee(s) based on the number of months during such year
that each
held such Units, or in such other manner as the Sponsor may deem
equitable.
|
|
(e)
|
Having
in mind the principles of the allocations set forth above in this
Section
2.07 (to which all Investors consent by becoming Investors), the
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.
|
|
(f)
|
This
FuturesAccess Fund may, to the extent practicable, allocate Tax Items
on a
gross rather than a net basis.
|
A-10
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
|
(g)
|
Allocations
pursuant to this Section 2.07 are solely for purposes of federal,
state
and local taxes and shall not affect, or in any way be taken into
account
in computing, any Units’ Capital Account or share of net profits, net
losses, other items or
distributions.
|
|
(h)
|
The
tax allocations set forth in this Section 2.07 are intended to allocate
items of this FuturesAccess Fund’s income, gains, losses and deductions
(ordinary, short-term and long-term) in accordance with Sections
704(b)
and 704(c) of the Code, and the regulations thereunder, including,
without
limitation, the requirements set forth therein regarding a “qualified
income offset.”
|
|
(i)
|
The
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.
|
|
(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.
|
SECTION
2.08. CHARGEBACKS
TO CURRENT OR FORMER INVESTORS. Each Investor, by subscribing for
Units, agrees to repay, despite the fact that such Investor no longer remains
an
Investor, to this FuturesAccess Fund 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 this FuturesAccess Fund) which the
Sponsor may reasonably determine to be due to this FuturesAccess Fund from
such
Investor as a result, for example, of any claims arising (prior or subsequent
to
such Investor’s withdrawal from this FuturesAccess Fund) relating to events or
circumstances (whether known or unknown at the time of such Investor’s
withdrawal) in existence while such Investor was an Investor or, subject to
the
following paragraph, in the event that the Net Asset Value per Unit (of any
Class) at which such Investor was permitted to redeem is later determined to
have been overstated or otherwise miscalculated due to circumstances (whether
known or unknown at the time of such Investor’s redemption) in existence as of
the date of redemption. In no event shall any provision of this
Section 2.08 require an Investor to repay to this FuturesAccess Fund any amounts
in excess of the redemption proceeds received by such Investor from, or the
amounts distributed to such Investor by, this FuturesAccess Fund, plus interest
thereon as provided above.
In
the
event that the Sponsor determines that an amount paid by this FuturesAccess
Fund
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.
|
(a)
|
The
Sponsor may admit new Investors to this FuturesAccess Fund at such
times
and upon such notice (if any) as the Sponsor may
determine. Investors’ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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 the
FuturesAccess Fund. No interest will be payable in respect of
any such subscriptions.
|
|
(b)
|
Pursuant
to Securities and Exchange Commission Rule 15c2-4, all subscriptions
while
held in escrow during the initial offering period pending release
to this
FuturesAccess Fund 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”).
|
SECTION
2.10. VALUATION
OF ASSETS. For all purposes of this Agreement, including, without
limitation, the determination of the Net Asset Value per Unit of each Class,
the
assets of this FuturesAccess Fund shall be valued according to the following
principles:
A-11
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ FuturesAccessSM
Funds
General
Form of Operating Agreement Dated as of April 1,
2007
|
(a)
|
Net
Assets of this FuturesAccess Fund are its assets less its liabilities
determined in accordance with generally accepted accounting principles
and
as described below. Accrued Performance Fees (as described in
the Confidential Program Disclosure Document) shall reduce Net Asset
Value, even though such Performance Fees may never, in fact, be
paid.
|
|
(b)
|
For
the avoidance of doubt, the Sponsor shall, in general, apply the
following
principles in valuing this FuturesAccess Fund’s
assets:
|
|
(i)
|
commodity
interests and currency interests which are traded on a United States
exchange shall be valued at their settlement on the date as of which
the
values are being determined;
|
|
(ii)
|
commodity
interests and currency interests not traded on a United States exchange
shall be valued based upon policies established by the Sponsor, generally
based on prices as reported by any reliable source selected by the
Sponsor, consistently applied for each variety of
interest;
|
|
(iii)
|
swap
agreements shall be valued in the good faith discretion of the Sponsor
based on quotations received from dealers deemed appropriate by the
Sponsor;
|
|
(iv)
|
bank
and other interest-bearing accounts, Treasury bills and other short-term,
interest-bearing instruments shall be valued at cost plus accrued
interest;
|
|
(v)
|
securities
which are traded on a national securities exchange shall be valued
at
their closing price on the date as of which their value is being
determined on the national securities exchange on which such securities
are principally traded or on a consolidated tape which includes such
exchange, whichever shall be selected by the 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)
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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)
|
the
Sponsor may reduce the valuation of any asset (or of the 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 this FuturesAccess Fund as a whole in the case
of
reserves not specifically attributable to any particular
asset).
|
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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The
Sponsor may suspend the calculation of Net Asset Value during any period in
which the Sponsor believes that it is reasonably impracticable to value a
material portion of this FuturesAccess Fund’s assets.
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. 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, this FuturesAccess
Fund in such circumstances.
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 FUTURESACCESS FUND PROPERTY; REDEMPTIONS AND
DISTRIBUTIONS
SECTION
3.01. NO
UNDIVIDED INTERESTS IN FUTURESACCESS FUND PROPERTY. Each Unit shall
represent an interest in this FuturesAccess Fund, not an undivided interest
in
any property of this FuturesAccess Fund. The Units shall constitute
personal property for all purposes.
SECTION
3.02. REDEMPTIONS
OF UNITS; EXCHANGES.
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(a)
|
Timing
and Amount of Redemptions. Subject to this Section 3.02,
an Investor shall be entitled to redeem as of the end of any calendar
month all or part of such Investor’s Units, upon giving at least 10 days’
written or oral notice. Investors who have ▇▇▇▇▇▇▇ ▇▇▇▇▇
customer securities accounts may give such notice by contacting their
▇▇▇▇▇▇▇ ▇▇▇▇▇ Financial Advisor, orally or in writing; Investors
who no
longer have a ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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. This FuturesAccess Fund shall not charge
a redemption fee.
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(c)
|
Payment
of Redemptions. The Sponsor shall cause this FuturesAccess
Fund to distribute to redeeming Investors the estimated Net Asset
Value of
the Units redeemed by them, generally approximately 10 business days
after
the effective date of redemption, although there can be no assurance
of
the timing of such payment.
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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. This FuturesAccess Fund shall retain any such
interest.
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(▇)
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Suspension
of Redemptions. In the event that this FuturesAccess Fund
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 this FuturesAccess
Fund is
able to determine Net Asset Value. All Units subject to
suspended redemption requests shall continue to be treated as outstanding
for all purposes hereunder, as if no redemption requests relating
thereto
had been submitted, until the effective date of their suspended
redemption. During any period in which this FuturesAccess Fund
is suspending redemptions, Investors will not be able to exchange
Units
for units of other FuturesAccess Funds. The Sponsor shall
suspend redemptions during any period when the calculation of Net
Asset
Value has been suspended.
|
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)
|
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
this FuturesAccess Fund shall have a corresponding effect on Investors’
exercise of their Exchange Privileges relating to this FuturesAccess
Fund.
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SECTION
3.03. WITHDRAWALS
OF CAPITAL BY THE SPONSOR.
|
(a)
|
The
Sponsor may withdraw capital from its Capital Account(s), if any,
without
notice to the Investors.
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(b)
|
To
the extent ▇▇▇▇▇▇▇ ▇▇▇▇▇ has provided any “seed” capital to the Fund,
▇▇▇▇▇▇▇ ▇▇▇▇▇ 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,
▇▇▇▇▇▇▇ ▇▇▇▇▇ may vary the foregoing redemption schedule upon advance
agreement with the Trading Advisor (e.g., ▇▇▇▇▇▇▇ ▇▇▇▇▇ 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.
|
SECTION
3.04. MANDATORY
REDEMPTIONS.
|
(a)
|
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
this
FuturesAccess Fund, (ii) such Investor has a history of excessive
exchanges between different FuturesAccess Funds and/or HedgeAccess
Funds
that is contrary to the purpose and/or efficient management of the
Programs, (iii) such Investor’s investment in the Units, or aggregate
investment in 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)
|
The
Sponsor will mandatorily redeem all of a FuturesAccess Fund’s outstanding
Units in the event that the Sponsor concludes that it is no longer
advisable to place client capital with the Trading Advisor or if
the
amount of assets invested in this FuturesAccess Fund declines to
a level
that the Sponsor believes makes the continued operation of such
FuturesAccess Fund 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
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on
the part of the affected Investor, and the provisions of Sections
3.02 and
3.07 shall apply. In the event that the 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 this FuturesAccess Fund
is required to pay or withhold state, local or other taxes with respect to
a
particular Investor or Investors, this FuturesAccess Fund may redeem an
appropriate number of such Investor’s or Investors’ Units as of the end of the
Accounting Period immediately following such payment in order to reimburse
this
FuturesAccess Fund for the amount of such payment, together with interest on
the
amounts so paid at the 91-day Treasury ▇▇▇▇ 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. FuturesAccess
Fund 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 this FuturesAccess Fund, the Sponsor may be required to
withdraw as manager of this FuturesAccess Fund by a vote of Investors owning
not
less than 50% of the Units of this FuturesAccess Fund. Any such
removal shall be effective as of the end of the calendar quarter in which such
vote occurs.
ARTICLE
IV
WITHDRAWAL
OF THE SPONSOR AND INVESTORS
SECTION
4.01. WITHDRAWAL
OF THE SPONSOR.
|
(a)
|
The
Sponsor may withdraw from this FuturesAccess Fund 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 this
FuturesAccess Fund if at the time there is at least one other manager
remaining; however, all Investors shall be entitled to redeem their
Units,
in total and not in part, as of the effective date of any such withdrawal
by the Sponsor, unless an entity affiliated with the Sponsor remains
as a
manager of this FuturesAccess Fund. 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)
|
Withdrawal
of the last remaining manager shall dissolve this FuturesAccess
Fund.
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SECTION
4.02. WITHDRAWAL
OF AN INVESTOR. An Investor shall withdraw from this FuturesAccess
Fund upon redemption of all of such Investor’s outstanding
Units. Withdrawal of an Investor shall not be a cause for dissolution
of this FuturesAccess Fund.
SECTION
4.03. STATUS
AFTER WITHDRAWAL. Except to the extent provided in Section 2.08 or
Section 7.02, each Investor upon redemption of the last of such Investor’s Units
shall cease to have any rights under this Agreement.
ARTICLE
V
MANAGEMENT
SECTION
5.01. AUTHORITY
OF THE SPONSOR.
|
(a)
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The
management and operation of this FuturesAccess Fund 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
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| name of this FuturesAccess Fund to carry out any and all of the objectives and purposes of this FuturesAccess Fund 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; provided, that the Trading Advisor shall at all times have discretionary authority over the trading and investing of this FuturesAccess Fund. 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)
|
The
Sponsor is specifically authorized to manage this FuturesAccess Fund’s
cash flow, pay 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 this FuturesAccess Fund, including and without limiting the
generality of the foregoing:
|
(a)
|
to
place capital under the management of, and withdraw capital from,
the
discretionary control of the Trading Advisor; provided, that this
FuturesAccess Fund shall not retain any other Trading Advisor (although
the Sponsor may dissolve this FuturesAccess Fund at any
time).
|
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(b)
|
to
engage attorneys, accountants, agents and other persons as the Sponsor
may
deem necessary or advisable;
|
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(c)
|
to
open, maintain and close accounts, including margin, discretionary
and
cash management accounts, with brokers, dealers, counterparties or
other
persons (in each case, including affiliates of the Sponsor) and to
pay the
customary fees and charges applicable to transactions in, or the
maintenance of, all such accounts;
|
|
(d)
|
to
invest in money-market funds (including funds sponsored by affiliates
of
the Sponsor), Treasury bills or other short-term, interest-bearing
instruments;
|
|
(e)
|
to
open, maintain and close bank and other interest-bearing and
non-interest-bearing accounts; and
|
|
(f)
|
to
enter into, make and perform such contracts, agreements and other
undertakings as the Sponsor may deem necessary, advisable or incidental
to
the conduct of the business of this FuturesAccess
Fund.
|
SECTION
5.03. ACTIVITIES
OF THE SPONSOR PARTIES.
|
(a)
|
The
respective Sponsor Parties will not devote their full business time,
or
any material portion of their business time, to this FuturesAccess
Fund,
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 this FuturesAccess Fund
such
amount of the business time of its officers and employees as the
Sponsor
shall deem necessary for the management of the affairs of this
FuturesAccess Fund; 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)
|
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 this FuturesAccess
Fund’s 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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2007
SECTION
5.04. SERVICES
TO THIS FUTURESACCESS FUND. Any Sponsor Party may perform
administrative services for this FuturesAccess Fund, 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 this FuturesAccess Fund or a related
party with which or with whom this FuturesAccess Fund has dealings, including
but not limited to the Sponsor’s sharing in the Management Fees paid and
Performance Fee paid by this FuturesAccess Fund to the Trading Advisor (such
sharing to be effected either by the Trading Advisor making a direct payment
to
the Sponsor or by the Trading Advisor making payments to this FuturesAccess
Fund
which are specially allocated solely to the Sponsor), the receipt or rebate
of
other advisory and/or management fees, brokerage commissions, “bid-ask” spreads,
▇▇▇▇-ups or other expenses, shall not preclude such dealings or make them void
or voidable; and neither this FuturesAccess Fund nor any of the Investors shall
have any rights in or to any such dealings or in or to any profits derived
therefrom.
SECTION
5.06. EXCULPATION. The
Sponsor Parties shall not be liable to this FuturesAccess Fund 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 this
FuturesAccess Fund, this FuturesAccess Fund in general or the offering of the
Units, for any conduct undertaken or omitted in good faith, and in the belief
that such conduct or omission was in, or not opposed to, the best interests
of
this FuturesAccess Fund; 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 the FuturesAccess Fund or any Investor for
failure to obtain for the FuturesAccess Fund, or to require the FuturesAccess
Fund to obtain, 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 the FuturesAccess Fund, or for
the
failure to recapture, directly or indirectly, any brokerage commissions for
the
benefit of the FuturesAccess Fund.
No
Sponsor Party shall be liable to this FuturesAccess Fund 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 this FuturesAccess
Fund or any Investor for any actions or omissions of: (i) the Trading
Advisor; (ii) any broker, dealer or counterparty unaffiliated with ▇▇▇▇▇▇▇
▇▇▇▇▇
chosen by a Sponsor Party in good faith; or (iii) any broker, dealer or
counterparty chosen by the Trading Advisor.
Affiliates
of the Sponsor will provide this FuturesAccess Funds with futures brokerage,
forward dealing and other counterparty and dealer services, and shall receive
compensation in connection therewith.
SECTION
5.07. INDEMNIFICATION. This
FuturesAccess Fund 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 this
FuturesAccess Fund; provided, that the conduct or omission which led to such
claim, cost, expense, damage or loss met the standard of exculpation set forth
in Section 5.06 above.
This
FuturesAccess Fund 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.
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2007
In
the
event this FuturesAccess Fund is made a party to any claim, dispute or
litigation, or otherwise incurs any loss or expense, as a result of or in
connection with any Investor’s activities, obligations or liabilities unrelated
to this FuturesAccess Fund’s business, such Investor shall indemnify and
reimburse this FuturesAccess Fund for all loss and expense incurred, including
attorneys’ fees.
SECTION
5.08. INVESTORS’
TRANSACTIONS. Nothing in this Agreement is intended to prohibit any
Investor from buying, selling or otherwise transacting in securities, commodity
interests, currency interests, swap agreements or other instruments for such
Investor’s own account, including commodity interests, currency interests, swap
agreements, securities or other instruments which are the same as those held
by
this FuturesAccess Fund.
SECTION
5.09. RELIANCE
BY THIRD PARTIES. In dealing with the Sponsor acting on behalf of
this FuturesAccess Fund, no person shall be required to inquire into the
authority of the Sponsor to bind this FuturesAccess Fund. Persons
dealing with this FuturesAccess Fund 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 this FuturesAccess Fund in any matter.
SECTION
5.10. REGISTRATION
OF ASSETS. Any assets owned by this FuturesAccess Fund may be
registered in this FuturesAccess Fund’s name, in the name of a nominee or in
“street name.”
SECTION
5.11. 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) then held by Investors to:
|
(a)
|
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)
|
confess
a judgment against this FuturesAccess Fund;
or
|
|
(c)
|
possess
FuturesAccess Fund property or assign rights to specific FuturesAccess
Fund property for other than a FuturesAccess Fund
purpose.
|
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. This FuturesAccess Fund may
charge an Investor such amount as may be deemed appropriate by the Sponsor
to
compensate this FuturesAccess Fund in the case of any Capital Contribution
received by this FuturesAccess Fund after the day as of which the new Investor
making such Capital Contribution is admitted to this FuturesAccess Fund and
such
Investor’s Units are deemed to have been issued.
Admission
of a new Investor shall not result in a dissolution of this FuturesAccess
Fund.
SECTION
6.02. PROCEDURE
AS TO NEW MANAGERS. One or more additional managers may be admitted
to this FuturesAccess Fund 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 this FuturesAccess Fund
without the consent of Investors holding more than 50% of the outstanding Units
(by Net Asset Value) 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.
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2007
ARTICLE
VII
BOOKS
OF ACCOUNT; AUDITS; REPORTS TO INVESTORS
SECTION
7.01. BOOKS
OF
ACCOUNT. The books of account of this FuturesAccess Fund 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. This FuturesAccess
Fund’s books of account shall not, however, for such purpose include any record
of the particular transactions entered into by this FuturesAccess
Fund.
SECTION
7.02. ANNUAL
AUDIT. The accounts of this FuturesAccess Fund 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 this FuturesAccess
Fund;
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(b)
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the
net capital appreciation or depreciation of this FuturesAccess Fund
for
such fiscal year;
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(c)
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the
Net Asset Value of this FuturesAccess Fund 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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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
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 this FuturesAccess Fund necessary to enable such
Investor to prepare such Investor’s federal income tax return; provided, that
all Investors acknowledge and agree that such information may initially be
provided in the form of estimates pending completion of this FuturesAccess
Fund’s 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 this
FuturesAccess Fund), to each Investor interim reports indicating this
FuturesAccess Fund’s estimated results of operations and presenting such other
matters concerning this FuturesAccess Fund’s operations as the Sponsor may deem
appropriate as well as those required by the applicable Commodity Futures
Trading Commission regulations. The estimated performance of this
FuturesAccess Fund 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 this FuturesAccess Fund, as disclosed in the
Confidential Program Disclosure Document and as contemplated herein (including
without limitation ▇▇▇▇▇▇▇ ▇▇▇▇▇ acting as exclusive clearing broker and
principal forward contract and swap dealer at rates and dealer spreads
which
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have
not
been negotiated at arm’s-length as well as the Sponsor sharing in the Management
and Performance Fees paid to the Trading Advisor by this FuturesAccess Fund)
and
covenants not to object to or bring any proceedings against any Sponsor Party
relating to any such conflict of interest; provided, that such Sponsor Party
complies with the standard of exculpation set forth in Section
5.06.
The
Sponsor is hereby specifically authorized by all Investors to cause this
FuturesAccess Fund to use ▇▇▇▇▇▇▇ ▇▇▇▇▇ as this FuturesAccess Fund’s exclusive
clearing broker and primary forward contract and swap counterparty, and all
Investors acknowledge and agree that the brokerage rates and dealer spreads
charged by ▇▇▇▇▇▇▇ ▇▇▇▇▇ to this FuturesAccess Fund are higher than those
charged to other ▇▇▇▇▇▇▇ ▇▇▇▇▇ clients; in addition, ▇▇▇▇▇▇▇ ▇▇▇▇▇ will retain
significant additional economic benefit from possession of this FuturesAccess
Fund’s assets.
ARTICLE
IX
DISSOLUTION
AND WINDING UP OF THIS FUTURESACCESS FUND
SECTION
9.01. EVENTS
OF
DISSOLUTION. This FuturesAccess Fund will be dissolved, the affairs
of this FuturesAccess Fund will be wound up and this FuturesAccess Fund will
be
liquidated upon the occurrence of any of the following events:
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(a)
|
bankruptcy,
dissolution, withdrawal or other termination of the last remaining
manager
of this FuturesAccess Fund;
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(b)
|
any
event which would make unlawful the continued existence of this
FuturesAccess Fund;
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(c)
|
withdrawal
of the Sponsor unless at such time there is at least one remaining
manager; or
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(d)
|
the
determination by the Sponsor to liquidate the FuturesAccess Fund
and wind
up its affairs.
|
Nothing
in this Section 9.01 shall impair the right of Investors holding more than
50%
of the outstanding Units then held by Investors to vote within 90 calendar
days
of any of the foregoing events of dissolution to continue this FuturesAccess
Fund on the terms set forth herein (if it is lawful to do so), and to appoint
one or more managers for this FuturesAccess Fund.
SECTION
9.02. DISSOLUTION. Upon
the dissolution of this FuturesAccess Fund, 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, then held by Investors, select)
shall wind up this FuturesAccess Fund’s affairs and, in connection therewith,
shall distribute this FuturesAccess Fund’s 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 this
FuturesAccess Fund (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 this
FuturesAccess Fund; 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)
|
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 this
FuturesAccess Fund among the Investors in accordance with the positive
balance in each such Investor’s Closing Capital Account as of the last day
of the Accounting Period in which this FuturesAccess Fund’s dissolution
occurs. Any assets distributed in kind in the liquidation shall
be valued, for purposes of such distribution, in accordance with
Section
2.11 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 this FuturesAccess
Fund.
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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 this FuturesAccess Fund’s business and shall have no authority or
power to act for or to bind this FuturesAccess Fund.
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
this FuturesAccess Fund, any amendments thereto authorized herein, any
amendments to this Agreement authorized herein, and all such other instruments,
documents and certificates which may, from time to time, be required by, or
deemed advisable by the 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
this FuturesAccess Fund shall do business, to effectuate, implement and continue
the valid existence of this FuturesAccess Fund.
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) then held by Investors.
For
all
purposes of this Agreement, except as provided in the last paragraph of this
Section 10.03, when the consent of Investors is required, the affirmative
consent of Investors is not required; “negative consent” by failure to object in
writing after reasonable notice of a proposed modification or amendment is
sufficient — 30 calendar days to be conclusively presumed to constitute
“reasonable notice” for such purposes.
The
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)
|
to
add to this Agreement any further covenants, restrictions, undertakings
or
other provisions for the protection or benefit of
Investors;
|
|
(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)
|
to
cause the allocations contained in Article II to comply with Section
704
of the Code or any other statutory provisions or regulations relating
to
such allocations;
|
|
(d)
|
to
provide for the issuance of new Classes of Units, or to amend the
manner
in which Units may be exchanged among funds in FuturesAccess or between
different Classes of Units, provided that doing so is not adverse
to
outstanding Units (as contemplated by Section 10.14);
or
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(e)
|
to
make any other change not materially adverse to the interests of
the
Investors.
|
Notwithstanding
anything in this Section 10.03 to the contrary, without the affirmative written
consent of each Investor affected thereby, no such modification or amendment
shall: reduce the liabilities, obligations or responsibilities of the 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 this FuturesAccess Fund or to provide
for
the Sponsor to withdraw from this FuturesAccess Fund without admitting any
such
substitute manager to this FuturesAccess Fund); increase the liabilities of
Investors; or reduce the participation of Investors in the profits and losses
of
this FuturesAccess Fund or in any distributions made by this FuturesAccess
Fund
as set forth herein.
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SECTION
10.04. NOTICES. Any
notice to this FuturesAccess Fund 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 this FuturesAccess
Fund. All notices and reports sent to the Investors shall be
addressed to each Investor at the address set forth in such Investor’s
FuturesAccess Program Subscription and Exchange Agreement (including the
FuturesAccess Program Subscription and Exchange Agreement Signature
Page). Any Investor may designate a new address by written notice to
the Sponsor. Unless otherwise specifically provided in this
Agreement, a notice shall be deemed to have been given to this FuturesAccess
Fund 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 this
FuturesAccess Fund or to itself, but no such waiver shall constitute a
continuing waiver.
SECTION
10.05. LEGAL
EFFECT; MANNER OF EXECUTION. This Agreement shall be binding upon the
Investors, the 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. 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
10.07. CONSENT
TO JURISDICTION. All controversies arising hereunder or in connection
with the affairs of this FuturesAccess Fund shall be brought in the state or
federal courts located in New York, New York, and all Investors hereby
irrevocably consent to such jurisdiction and venue.
SECTION
10.08. “TAX
MATTERS PARTNER”; TAX ELECTIONS. The Sponsor is designated as the
“Tax Matters Partner” for this FuturesAccess Fund and shall be empowered to make
or revoke any elections now or hereafter required or permitted to be made by
the
Code or any state or local tax law.
Unless
the Sponsor otherwise consents, each Investor, by subscribing for Units, agrees
not to treat any tax item on such Investor’s individual tax return in a manner
inconsistent with the treatment of such item by this FuturesAccess Fund, as
reflected on the Schedule K-1 or other information statement furnished by this
FuturesAccess Fund to such Investor, or to file any claim for refund relating
to
any such Tax Item which would result in such inconsistent
treatment.
SECTION
10.09. DETERMINATION
OF MATTERS NOT PROVIDED FOR IN THIS AGREEMENT. The Sponsor shall be
empowered to decide, in its good faith judgment, any questions arising with
respect to this FuturesAccess Fund 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 this
FuturesAccess Fund.
SECTION
10.10. NO
PUBLICITY. Each Investor agrees that such Investor will in no event
provide information concerning this FuturesAccess Fund to any third party,
knowing that such third party may use such information in any form of
publication, newsletter or circular, whether publicly or privately
distributed. Each Investor’s investment in this FuturesAccess Fund,
as well as the performance of such investment, shall be maintained on a strictly
confidential basis; provided, that the Sponsor may make use of this
FuturesAccess Fund’s performance record in the ordinary course of the Sponsor’s
business activities.
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SECTION
10.11. SURVIVAL. The
indemnity and exculpation provisions hereof, as well as the obligations to
settle accounts, shall survive the withdrawal of any Investor as well as the
dissolution of this FuturesAccess Fund.
SECTION
10.12. 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
10.13. VOTING
RIGHTS. The voting rights of the Units shall be determined by their
respective Net Asset Values. In determining the number of Units
entitled to vote or consent and the number of votes or consents needed for
approval of any matter for which such a vote or consent is provided for herein,
Units held by any Sponsor Party (including, without limitation, the Sponsor’s
Capital Account, if any, on a Unit-equivalent basis) shall not be
counted.
SECTION
10.14. ISSUANCE
OF DIFFERENT CLASSES.
|
(a)
|
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.
|
|
(b)
|
The
fact that, for purposes of convenience, Units issued by this FuturesAccess
Fund shall be designated as being Units of different “Classes” shall in no
respect imply that these Units constitute different classes of equity
interests as opposed to simply being subject to different
fees.
|
SECTION
10.15. COMPLIANCE
WITH THE INVESTMENT ADVISERS ACT OF 1940; SECURITIES LAWS.
|
(a)
|
This
FuturesAccess Fund is not an “advisory client” of the Sponsor for purposes
of the Investment Advisers Act of 1940 (the “Advisers Act”) due to this
FuturesAccess Fund trading futures, forward and options contracts
other
than securities. Nevertheless, to the extent that any provision
hereof may be construed in a manner inconsistent with the Advisers
Act, it
is the express intent of the 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).
|
|
(b)
|
Nothing
in this Agreement shall be deemed to constitute a waiver by any Investor
of such Investor’s rights under any federal or state securities
laws.
|
* * * * * * *
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2007
IN
WITNESS WHEREOF, the undersigned have executed this
Agreement by their respective representatives thereunto duly
authorized.
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INVESTORS:
|
SPONSOR:
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By:
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▇▇▇▇▇▇▇
▇▇▇▇▇ Alternative Investments LLC
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▇▇▇▇▇▇▇
▇▇▇▇▇ Alternative Investments LLC
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||
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Attorney-in-Fact
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||||
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By:
|
/s/
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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By:
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/s/
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
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|||
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Vice
President and Manager
|
Vice
President and Manager
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Form of Operating Agreement Dated as of April 1,
2007