HATTERAS MULTI-STRATEGY INSTITUTIONAL FUND, L.P. Amended and Restated Agreement of Limited Partnership Dated as of __________, 2008
Amended
and Restated Agreement of Limited Partnership
Dated
as
of __________, 2008
TABLE
OF
CONTENTS
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Page
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DEFINITIONS
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1
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ARTICLE
II
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ORGANIZATION;
ADMISSION OF PARTNERS; DIRECTORS
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5
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SECTION
2.1
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Formation
of Limited Partnership
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5
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SECTION
2.2
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Name
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5
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SECTION
2.3
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Principal
and Registered Office
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5
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SECTION
2.4
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Duration
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5
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SECTION
2.5
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Business
of the Partnership
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6
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SECTION
2.6
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General
Partner
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6
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SECTION
2.7
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Limited
Partners
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6
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SECTION
2.8
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Organizational
Limited Partner
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7
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SECTION
2.9
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Both
General and Limited Partner
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7
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SECTION
2.10
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Limited
Liability
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7
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SECTION
2.11
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Directors
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7
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ARTICLE
III
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MANAGEMENT;
ADVICE AND MANAGEMENT
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8
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SECTION
3.1
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Management
and Control
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8
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SECTION
3.2
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Powers
Reserved by the General Partner
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10
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SECTION
3.3
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Actions
by Directors
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11
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SECTION
3.4
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Meetings
of Partners
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12
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SECTION
3.5
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Custody
of Assets of the Partnership
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13
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SECTION
3.6
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Other
Activities
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13
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SECTION
3.7
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Duty
of Care
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14
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SECTION
3.8
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Indemnification
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15
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SECTION
3.9
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Fees,
Expenses and Reimbursement
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17
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ARTICLE
IV
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TERMINATION
OF STATUS OF GENERAL PARTNER; REMOVAL OF GENERAL PARTNER; TRANSFERS
AND
REPURCHASES
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19
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SECTION
4.1
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Termination
of Status of General Partner
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19
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SECTION
4.2
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Removal
of General Partner
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19
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SECTION
4.3
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Transfer
of Units of General Partner
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19
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SECTION
4.4
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Transfer
of Units of Limited Partners
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20
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SECTION
4.5
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Repurchase
of Units
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21
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ARTICLE
V
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CAPITAL
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25
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SECTION
5.1
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Contributions
to Capital
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25
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SECTION
5.2
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Rights
of Partners to Capital
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26
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SECTION
5.3
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Capital
Accounts
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26
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SECTION
5.4
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Allocation
of Certain Withholding Taxes and Other Expenditures
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27
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SECTION
5.5
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Reserves
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27
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SECTION
5.6
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Allocation
to Avoid Capital Account Deficits
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28
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SECTION
5.7
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Allocations
Prior to Closing Date
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28
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SECTION
5.8
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Tax
Allocations
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28
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SECTION
5.9
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Distributions
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29
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Page
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ARTICLE
VI
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DISSOLUTION
AND LIQUIDATION
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30
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SECTION
6.1
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Dissolution
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30
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SECTION
6.2
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Liquidation
of Assets
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31
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ARTICLE
VII
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ACCOUNTING,
VALUATIONS AND BOOKS AND RECORDS
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32
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SECTION
7.1
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Accounting
and Reports
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32
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SECTION
7.2
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Determinations
by General Partner
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32
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SECTION
7.3
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Valuation
of Assets
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33
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ARTICLE
VIII
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MISCELLANEOUS
PROVISIONS
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33
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SECTION
8.1
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Amendment
of Partnership Agreement
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33
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SECTION
8.2
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Special
Power of Attorney
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35
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SECTION
8.3
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Notices
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36
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SECTION
8.4
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Agreement
Binding Upon Successors and Assigns
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36
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SECTION
8.5
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Choice
of Law; Arbitration
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36
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SECTION
8.6
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Not
for Benefit of Creditors
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37
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SECTION
8.7
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Consents
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38
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SECTION
8.8
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Merger
and Consolidation
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38
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SECTION
8.9
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Pronouns
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38
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SECTION
8.10
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Confidentiality
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38
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SECTION
8.11
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Certification
of Non-Foreign Status
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39
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SECTION
8.12
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Severability
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39
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SECTION
8.13
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Entire
Agreement
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40
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SECTION
8.14
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Discretion
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40
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SECTION
8.15
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Conflicts
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40
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SECTION
8.16
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Counterparts
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40
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SECTION
8.17
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Headings
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40
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ii
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AMENDED
AND RESTATED
AGREEMENT
OF LIMITED PARTNERSHIP
AMENDED
AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of HATTERAS MULTI-STRATEGY
INSTITUTIONAL FUND, L.P. (the “Partnership”) dated as of __________, 2008 by and
among HATTERAS INVESTMENT MANAGEMENT LLC, as General Partner, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
as the Organizational Limited Partner and those Persons who execute this
Agreement and whose names are reflected on the books and records of the
Partnership as Limited Partners.
WHEREAS,
the General Partner and organizational limited partner were parties to the
Agreement of Limited Partnership of Hatteras Multi-Strategy Institutional Fund,
L.P. dated as of November 29, 2006 (the “Original Partnership Agreement”); and
WHEREAS, the Original Partnership Agreement is hereby amended and restated
in
its entirety as set forth herein;
NOW,
THEREFORE,
for and
in consideration of the mutual covenants and agreements herein contained, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
For
purposes of this Agreement:
“1933
Act” means the Securities Act of 1933 and the rules, regulations and orders
under the 1933 Act, as amended from time to time, or any successor law.
“1940
Act” means the Investment Company Act of 1940 and the rules, regulations and
orders under the 1940 Act, as amended from time to time, or any successor law.
“Advisers
Act” means the Investment Advisers Act of 1940 and the rules, regulations and
orders under the Advisers Act, as amended from time to time, or any successor
law.
“Advisor”
means any Person designated to manage a portion of the assets of the Partnership
and/or the Master Partnership, either directly or through the investment by
the
Partnership in an Advisor Fund.
“Advisor
Account” means an account directly managed by an Advisor for the Partnership or
the Master Partnership.
“Advisor
Fund” means an investment company, a general or limited partnership, a limited
liability company or other pooled investment vehicle in which the Partnership
or
the Master Partnership has invested and that is advised by an Advisor; whether
or not, in each case, the entity is registered under the 1940 Act, and includes
the Master Partnership and Advisor Funds that may be formed by the Partnership.
“Affiliate”
means affiliated person as that term is defined in the 1940 Act.
“Agreement”
means this Amended and Restated Agreement of Limited Partnership, as amended
and/or restated from time to time.
“Board
of
Directors” means the board of the Directors who have been delegated the
authority described in this Agreement.
“Business
Day” means any day when the New York Stock Exchange is open for business.
“Capital
Account” means, with respect to each Partner, the capital account established
and maintained on behalf of the Partner in accordance with Section 5.3 of this
Agreement.
“Capital
Contribution” means the contribution, if any, made, or to be made, as the
context requires, to the capital of the Partnership, after giving effect to
any
applicable placement agent fees, by a Partner or former Partner, as the case
may
be.
“Certificate”
means the Certificate of Limited Partnership of the Partnership as filed with
the office of the Secretary of State of the State of Delaware on July 20, 2006
and any amendments to the Certificate and/or restatements of the Certificate
as
filed with the office of the Secretary of State of the State of Delaware
pursuant to this Agreement.
“Closing
Date” means the first date on or as of which a Limited Partner other than the
Organizational Limited Partner is admitted to the Partnership.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor law.
“Commodity
Exchange Act” means the Commodity Exchange Act and the rules, regulations and
orders under the Commodity Exchange Act, as amended from time to time, or any
successor law.
“Delaware
Act” means the Delaware Revised Uniform Limited Partnership Act, as amended from
time to time, or any successor law.
“Directors”
means those natural Persons designated as “Directors” in accordance with this
Agreement who are delegated the authority provided for in this Agreement and
includes ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as the initial Director, or any other natural Persons
who, from time to time after the date of this Agreement, become Directors in
accordance with the terms and conditions of this Agreement.
“Fiscal
Period” means the period commencing on the Closing Date, and thereafter each
period commencing on the day immediately following the last day of the
immediately preceding Fiscal Period, and ending in each case at the close of
business on the first to occur of the following dates:
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(1) the
last
day of any calendar quarter, including the last day of the calendar year;
2) the
day
preceding the date as of which a contribution to the capital of the Partnership
is made by any Partner in accordance with Section 5.1 of this Agreement;
(3) the
day
on which the Partnership repurchases Units of any Partner in accordance with
Section 4.5 of this Agreement;
(4) the
day
as of which the Partnership admits a substituted Partner to whom or which Units
of a Partner have been Transferred (unless the Transfer of the Units results
in
no change of beneficial ownership of the Units);
(5) the
day
as of which any amount is credited to or debited against the Capital Account
of
any Partner, other than an amount that is credited to or debited against the
Capital Accounts of all Partners in accordance with their respective Investment
Percentages; or
(6) December
31, or any other date that is the last day of the taxable year of the
Partnership.
“Fiscal
Year” means the period commencing on the Closing Date and ending on March 31,
2007, and thereafter each period commencing on April 1 of each year and ending
on March 31 of that year (or on the date of a final distribution made in
accordance with Section 6.2 of this Agreement), unless the Directors designate
another fiscal year for the Partnership. The taxable year of the Partnership
will end on December 31 of each year, or on any other date designated by the
General Partner that is a permitted taxable year-end for tax purposes.
“Form
N-2” means the Partnership’s Registration Statement on Form N-2 filed with the
Securities and Exchange Commission, as amended from time to time.
“General
Partner” means Hatteras Investment Management LLC, a limited liability company
formed under the laws of the State of Delaware, and any other Person or Persons
admitted to the Partnership as a general partner of the Partnership,
collectively, in their capacities as general partners of the Partnership, and
“General Partner” means any of the General Partners. When the term General
Partner is used in this Agreement and the Partnership has more than one General
Partner, the term “General Partner” will refer to each General Partner.
“Independent
Directors” mean those Directors who are not “interested persons” of the
Partnership as that term is defined in the 1940 Act.
“Investment
Percentage” means a percentage established for each Partner on the Partnership’s
books determined by dividing the number of Units owned by such Partner by the
number of Units owned by all of the Partners.
“Limited
Partner” means any Person admitted to the Partnership as a Limited Partner of
the Partnership (including any Person who or that is a General Partner when
acting in the Person’s capacity as a Limited Partner) until the Partnership
repurchases all of the Units of the Person as a Limited Partner in accordance
with Section 4.5 of this Agreement, or a substituted Limited Partner or Partners
are admitted with respect to the Person’s Units in accordance with Section 4.4
of this Agreement, in the Person’s capacity as a Limited Partner of the
Partnership. For purposes of the Delaware Act, the Limited Partners will
constitute a single class or group.
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3 -
“Master
Partnership” means Hatteras Master Fund, L.P., a limited partnership organized
under the laws of the State of Delaware and any partnership continuing the
business of the Master Partnership after its dissolution.
“Memorandum”
means the Partnership’s Confidential Memorandum, as included in the Form N-2, as
amended or supplemented from time to time.
“NAV
per
Unit,” as of a particular date, shall be equal to the Net Assets of the Fund as
of such date, divided by the number of Units then outstanding.
“Net
Assets” means the total value of all assets of the Partnership, less an amount
equal to all accrued debts, liabilities and obligations of the Partnership,
calculated before giving effect to any repurchases of Units.
“Net
Profit” or “Net Loss” means the amount by which the Net Assets as of the close
of business on the last day of a Fiscal Period exceed (in the case of Net
Profit) or are less than (in the case of Net Loss) the Net Assets as of the
commencement of the same Fiscal Period (or, with respect to the initial Fiscal
Period of the Partnership, at the close of business on the Closing Date), the
amount of any Net Profit or Net Loss to be adjusted to exclude any items to
be
allocated among the Capital Accounts of the Partners on a basis that is not
in
accordance with the Investment Percentages of all Partners as of the
commencement of the Fiscal Period in accordance with Section 5.6 of this
Agreement.
“Offering
Materials” means the Memorandum and subscription materials provided to
prospective Limited Partners in connection with an investment to be made in
the
Partnership.
“Organizational
Limited Partner” means ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
“Partners”
means the General Partner(s) and the Limited Partners, collectively, and
“Partner” means any General Partner or Limited Partner.
“Partnership”
means Hatteras Multi-Strategy Institutional Fund, L.P. and any partnership
continuing the business of the Partnership after dissolution as provided in
this
Agreement.
“Person”
means any individual, entity, corporation, partnership, limited liability
company, joint stock company, trust, estate, joint venture, or unincorporated
organization.
“Securities”
means securities (including, without limitation, equities, debt obligations,
options, and other “securities” as that term is defined in Section 2(a)(36) of
the ▇▇▇▇ ▇▇▇) and any contracts for forward or future delivery of any security,
debt obligation, currency or commodity, all manner of derivative instruments
and
any contracts based on any index or group of securities, debt obligations,
currencies or commodities, and any options on those contracts.
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4 -
“Transfer”
means the assignment, transfer, sale or other disposition of all or any portion
of an Interest, including any right to receive any allocations and distributions
attributable to an Interest. Verbs, adverbs or adjectives such as “Transfer,”
“Transferred” and “Transferring” have correlative meanings.
“Valuation
Date” means any date upon which the net asset value of the Units are valued for
purposes of a repurchase, as determined by the Board of Directors.
ARTICLE
II
ORGANIZATION;
ADMISSION OF PARTNERS; DIRECTORS
SECTION
2.1 Formation
of Limited Partnership.
(1)
The
Partnership is formed as a limited partnership pursuant to the Certificate
and
this Agreement. The Partners agree that their rights, duties and liabilities
will be as provided in the Delaware Act, except as otherwise provided in this
Agreement. The General Partner will cause the Certificate to be executed and
filed in accordance with the Delaware Act and will cause to be executed and
filed with applicable governmental authorities any other instruments, documents
and certificates that the General Partner concludes may from time to time be
required by the laws of the United States of America, the State of Delaware
or
any other jurisdiction in which the General Partner determines that the
Partnership should do business, or any political subdivision or agency of any
such jurisdiction, or that the General Partner determines is necessary or
appropriate to effectuate, implement and continue the valid existence and
business of the Partnership.
(b) The
Partnership is formed for the object and purpose of (and the nature of the
business to be conducted by the Partnership is) engaging in any lawful activity
for which limited partnerships may be formed under the Delaware Act and engaging
in any and all activities necessary or incidental to the foregoing.
SECTION
2.2 Name.
The
name of the Partnership is “Hatteras Multi-Strategy Institutional Fund, L.P.” or
any other name that the General Partner may adopt after the date of this
Agreement upon (a) causing an appropriate amendment to this Agreement to be
executed and to the Certificate to be filed in accordance with the Delaware
Act
and (b) sending notice of the amendment to each Limited Partner.
SECTION
2.3 Principal
and Registered Office.
The
Partnership will have its principal office at the principal office of the
General Partner or at any other place designated from time to time by the
General Partner. The Partnership’s registered agent in the State of Delaware
shall be The Corporation Trust Company, and the Partnership’s registered office
in the State of Delaware at Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ unless the General Partner designates a different
registered agent or office from time to time in accordance with the Delaware
Act.
SECTION
2.4 Duration
. The
term of the Partnership will commence on the filing of the Certificate and
will
continue until the Partnership is dissolved and wound up and the Certificate
is
canceled in accordance with Section 6.1 of this Agreement.
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SECTION
2.5 Business
of the Partnership.
(2)
The
business of the Partnership is to purchase, sell, invest and trade in Securities
and engage in any financial or derivative transactions relating to Securities.
Portions of the Partnership’s assets (which may constitute, in the aggregate,
all of the Partnership’s assets) may be invested in Advisor Funds or Advisor
Accounts that invest and trade in Securities or in separate managed accounts
through which the Partnership may invest and trade in Securities, some or all
of
which may be advised by one or more Advisors. The Partnership may invest some
or
all of its assets directly or indirectly in the Master Partnership. The
Partnership may execute, deliver and perform all contracts, agreements and
other
undertakings and engage in all activities and transactions as the General
Partner, the Directors or the Investment Manager may deem necessary or advisable
to carry out its objective or business.
(b) The
Partnership will operate as a closed-end, management investment company in
accordance with the 1940 Act and subject to any fundamental policies and
investment restrictions described in the Form N-2.
(c) The
Partnership may designate from time to time persons to act as signatories for
the Partnership, including, without limitation, persons authorized to execute
and deliver any filings with the U.S. Securities and Exchange Commission (the
“SEC”) or applicable federal or state regulatory authorities or self-regulatory
organizations.
SECTION
2.6 General
Partner.
(3)
Hatteras
Investment Management LLC shall be admitted to the Partnership as the General
Partner upon its execution of this Agreement. The General Partner may admit
to
the Partnership as an additional General Partner any Person who agrees in
writing to be bound by all of the terms of this Agreement as a General Partner.
The General Partner may admit to the Partnership as a substituted General
Partner any Person to which it has Transferred its interest as the General
Partner in accordance with Section 4.3 of this Agreement. Any substituted
General Partner will be admitted to the Partnership upon the Transferring
General Partner’s consenting to such admission and is authorized to, and will,
continue the business of the Partnership without dissolution. The name and
mailing address of the General Partner and the Capital Contribution of the
General Partner will be reflected on the books and records of the Partnership.
If at any time the Partnership has more than one General Partner, unless
otherwise provided in this Agreement, any action allowed to be taken, or
required to be taken, by the General Partners may be taken only with the
unanimous approval of all of the General Partners.
(b) Each
General Partner will serve for the duration of the term of the Partnership,
unless the General Partner ceases to be a General Partner in accordance with
Section 4.1 of this Agreement.
SECTION
2.7 Limited
Partners.
(4)
The
General Partner may admit one or more Limited Partners as of the beginning
of
each calendar month or at such other times as the General Partner may determine.
A Person may be admitted to the Partnership as a Limited Partner without having
signed this Agreement. This Agreement shall not be unenforceable by reason
of it
not having been signed by a person being admitted as a Limited Partner. The
General Partner, in its sole and absolute discretion, may reject requests to
purchase Units in the Partnership. The General Partner may, in its sole
discretion, suspend or terminate the offering of the Units at any time. The
books and records of the Partnership shall be revised to reflect the name and
Capital Contribution of each Limited Partner that is admitted to the
Partnership.
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6 -
(b) Subject
to Section 2.10 of this Agreement, when the entire Capital Contribution
attributable to Units for which a Partner has subscribed is paid for, those
Units will be deemed to be validly issued and fully paid and
non-assessable.
SECTION
2.8 Organizational
Limited Partner.
Upon
the admission to the Partnership of any Limited Partner, the Organizational
Limited Partner shall withdraw from the Partnership as the Organizational
Limited Partner and shall be entitled to the return of his Capital Contribution,
if any, without interest or deduction, and shall cease to be a Limited Partner
of the Partnership.
SECTION
2.9 Both
General and Limited Partner.
A
Partner may be simultaneously a General Partner and a Limited Partner, in which
event the Partner’s rights and obligations in each capacity will be determined
separately in accordance with the terms and provisions of this Agreement and
as
provided in the Delaware Act.
SECTION
2.10 Limited
Liability.
Except
for payment obligations under this Agreement, including Capital Contribution
obligations, and as provided under applicable law, a Limited Partner will not
be
liable for the Partnership’s obligations in any amount in excess of the Limited
Partner’s Capital Account balance, plus the Limited Partner’s share of
undistributed profits and assets. Subject to applicable law, a Limited Partner
may be obligated to return to the Partnership certain amounts distributed to
the
Limited Partner.
SECTION
2.11 Directors.
(5)
The
number of Directors at the date of this Agreement is fixed at not more than
fourteen (14) Directors and no fewer than two (2). After the Closing Date,
the
number of Directors will be fixed from time to time by the Directors then in
office, which number may be greater, or lesser, than fourteen (14), but no
fewer
than the minimum number of directors permitted to corporations organized under
the laws of the State of Delaware, except that no reduction in the number of
Directors will serve to effect the removal of any Director. Each Partner
approves the delegation by the General Partner to the Directors, in accordance
with Section 3.1 of this Agreement, of certain of the General Partner’s rights
and powers.
(b) The
term
of office of each Director shall be from the time of such Director’s election
and qualification until his or her successor shall have been elected and shall
have qualified, or until his or her status as a Director is terminated sooner
in
accordance with Section 2.11(d) of this Agreement. Except to the extent the
1940
Act requires election by Limited Partners, if any vacancy in the position of
a
Director occurs, including by reason of an increase in the number of Directors
as contemplated by Section 2.11(a) of this Agreement, the remaining Directors
may appoint an individual to serve in that capacity in accordance with the
provisions of the 1940 Act. Independent Directors will at all times constitute
at least a majority (or more if required by the ▇▇▇▇ ▇▇▇) of the Directors
then
serving. An Independent Director will be replaced by another Independent
Director selected and nominated by the remaining Independent Directors, or
in a
manner otherwise permissible under the 1940 Act.
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(c) If
no
Director remains, the General Partner will promptly call a meeting of the
Partners, to be held within 60 days after the date on which the last Director
ceased to act in that capacity, for the purpose of determining whether to
continue the business of the Partnership and, if the business is to be
continued, approving the appointment of the requisite number of Directors.
If
the Partners determine at the meeting not to continue the business of the
Partnership, or if the approval of the appointment of the requisite number
of
Directors is not approved within 60 days after the date on which the last
Director ceased to act in that capacity, then the Partnership will be dissolved
in accordance with Section 6.1 of this Agreement and the assets of the
Partnership will be liquidated and distributed in accordance with Section 6.2
of
this Agreement.
(d) The
status of a Director will terminate (1) if the Director dies; (2) if the
Director resigns as a Director; or (3) if the Director is removed in accordance
with Section 2.11(e) of this Agreement.
(e) Any
Director may be removed with or without cause by a vote of a majority of the
other Directors or by the vote or written consent of Limited Partners holding
not less than two-thirds of the total number of votes eligible to be cast by
all
Limited Partners.
(f) The
Directors may establish and maintain committees of the Board of Directors,
and
the Directors may grant to such committees the authority to, among other things:
value the assets of the Partnership; select and nominate the Independent
Directors of the Partnership; recommend to the Board of Directors the
compensation to be paid to the Independent Directors; and recommend to the
Board
of Directors the firm of certified public accountants that will conduct the
Partnership’s audits.
(g) The
Directors may establish or designate committees of the Board of Directors or
the
Partnership, whose members may include the Directors and/or other Persons who
are not Directors, to provide advice and other services to the Partnership,
which committees may include (but are not limited to) a committee that will
value the assets of the Partnership.
(h) The
Independent Directors will receive compensation for their services as
Independent Directors, as determined by the Board of Directors.
ARTICLE
III
MANAGEMENT;
ADVICE AND MANAGEMENT
SECTION
3.1 Management
and Control.
(6)
The
General Partner delegates to the Directors those rights and powers of the
General Partner necessary for the Directors to manage and control the business
affairs of the Partnership and to carry out their oversight obligations with
respect to the Partnership required under the 1940 Act, state law, and any
other
applicable laws or regulations. Rights and powers delegated to the Directors
include, without limitation, the authority as Directors to oversee and to
establish policies regarding the management, conduct and operation of the
Partnership’s business, and to do all things necessary and proper as Directors
to carry out the objective and business of the Partnership, including, without
limitation, the power to engage an investment manager to provide advice and
management and to remove such an investment manager, as well as to exercise
any
other rights and powers expressly given to the Directors under this Agreement.
The Partners intend that, to the fullest extent permitted by law, and except
to
the extent otherwise expressly provided in this Agreement, (1) each Director
is
vested with the same powers and authority on behalf of the Partnership as are
customarily vested in each director of a Delaware corporation and (2) each
Independent Director is vested with the same powers and authority on behalf
of
the Partnership as are customarily vested in each director who is not an
“interested person” (as that term is defined in the ▇▇▇▇ ▇▇▇) of a closed-end,
management investment company registered under the 1940 Act that is organized
as
a Delaware corporation. During any period in which the Partnership has no
Directors, the General Partner will manage and control the Partnership. Each
Director will be the agent of the Partnership but will not, for any purpose,
be
a General Partner. Notwithstanding the delegation described in this Section
3.1(a), the General Partner will not cease to be the General Partner and will
continue to be liable as such and in no event will a Director be considered
a
General Partner by agreement, estoppel or otherwise as a result of the
performance of his or her duties under this Agreement or otherwise. The General
Partner retains those rights, powers and duties that have not been delegated
under this Agreement. Any Director may be admitted to the Partnership in
accordance with Section 2.7 of this Agreement and make Capital Contributions
and
own Units, in which case the Director will also become a Limited Partner.
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(b) The
Partnership will file a tax return as a Partnership for U.S. federal income
tax
purposes. All decisions for the Partnership relating to tax matters including,
without limitation, whether to make any tax elections (including the election
under Section 754 of the Code), the positions to be made on the Partnership’s
tax returns and the settlement or further contest or litigation of any audit
matters raised by the Internal Revenue Service or any other taxing authority,
will be made by the Directors. All actions (other than ministerial actions)
taken by the tax matters Partner, as designated in Section 3.1(c) below, will
be
subject to the approval of the Directors.
(c) The
General Partner will be the designated tax matters Partner for purposes of
the
Code. Each Partner agrees not to treat, on his, her or its personal income
tax
return or in any claim for a refund, any item of income, gain, loss, deduction
or credit in a manner inconsistent with the treatment of the item by the
Partnership. The tax matters Partner will have the exclusive authority and
discretion to make any elections required or permitted to be made by the
Partnership under any provisions of the Code or any other revenue laws.
(d) No
Limited Partner will have any right to participate in or take any part in the
management or control of the Partnership’s business, and no Limited Partner will
have any right, power or authority to act for or bind the Partnership. Limited
Partners will have the right to vote on any matters only as provided in this
Agreement or on any matters that require the approval of the holders of voting
securities under the 1940 Act and will have no right to exercise any other
vote
granted to Limited Partners under the Delaware Act, any such rights being vested
in the Directors (or the General Partner if there are no Directors) and may
be
exercised without requiring the approval of the Limited Partners.
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SECTION
3.2 Powers
Reserved by the General Partner.
Notwithstanding anything in this Agreement to the contrary, the General Partner
retains all rights, duties and powers to manage the affairs of the Partnership
that may not be delegated under Delaware law, and that are not otherwise
delegated by the General Partner to the Directors or assumed by any investment
manager engaged pursuant to Section 3.1(a) of this Agreement or any other Person
under the terms of any agreement between the Partnership and such investment
manager or any other Person. Specifically, and without limitation, the General
Partner will retain full power and authority on behalf of and in the name of
the
Partnership:
(1) to
issue
to any Partner an instrument certifying that the Partner is the owner of
Units;
(2) to
call
and conduct meetings of Partners at the Partnership’s principal office or
elsewhere as it may determine, and to assist the Directors in calling and
conducting meetings of the Directors;
(3) to
engage
and terminate attorneys, accountants (subject to the provisions of the ▇▇▇▇
▇▇▇)
and other professional advisers and consultants as the General Partner deems
necessary or advisable in connection with the affairs of the Partnership or
as
may be directed by the Directors;
(4) to
act as
tax matters Partner in accordance with Section 3.1(c) of this Agreement, and
to
assist in the preparation and filing of any required tax or information returns
to be made by the Partnership;
(5) as
directed by the Directors, to commence, defend and conclude any action, suit,
investigation or other proceeding that pertains to the Partnership or any assets
of the Partnership;
(6) as
directed by the Directors, to arrange for the purchase of any insurance covering
the potential liabilities of the Partnership or relating to the performance
of
the Directors, the General Partner, any investment manager engaged pursuant
to
Section 3.1(a) of this Agreement or any of their principals, Partners,
directors, officers, members, employees and agents;
(7) to
execute, deliver and perform any contracts, agreements and other undertakings,
and to engage in activities and transactions that are necessary or appropriate
for the conduct of the business of the Partnership and to bind the Partnership
by those contracts, agreements, and other undertakings, provided that any
persons approved as officers of the Partnership pursuant to Section 3.3(c)
of
this Agreement, as directed by the Directors, may execute and deliver contracts
and agreements on behalf of the Partnership and bind the Partnership to those
contracts and agreements;
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(8) to
make
determinations regarding subscriptions for and/or the Transfer of Units,
including, without limitation, determinations regarding the suspension of
subscriptions, and to execute, deliver and perform subscription agreements,
selling agreements relating to the sale of Units, administration agreements
appointing an administrator to perform various administrative action on behalf
of the Partnership, escrow agreements and custodial agreements without the
consent of or notice to any other Person, notwithstanding any other provision
of
this Agreement;
(9) to
make
determinations regarding appropriate reserves to be created for the contingent,
conditional or unmatured liabilities of the Partnership;
(10) as
provided in Section 7.2 of this Agreement, to make determinations regarding
adjustments to the computation of Net Profit or Net Loss and allocations among
the Partners under Article V of this Agreement;
(11) to
manage
or oversee the general administrative and operational aspects of the
Partnership; and
(12) as
directed by the Directors, to establish additional classes of Limited Partners,
General Partners, or Units having separate rights, powers, or duties with
respect to specified property or obligations of the Partnership or profits
or
losses associated with specified property or obligations of the Partnership,
and
having separate business purposes or investment objectives as the Directors
may
determine, consistent with the 1940 Act and the Delaware Act, so long as the
assets and liabilities of one class is limited to the assets and liabilities
of
such class.
SECTION
3.3 Actions
by Directors.
(7)
Unless
provided otherwise in this Agreement, the Directors will act only: (1) by the
affirmative vote of a majority of the Directors (which majority will include
any
requisite number of Independent Directors required by the ▇▇▇▇ ▇▇▇) present
at a
meeting duly called at which a quorum of the Directors is present either in
person or, to the extent consistent with the provisions of the 1940 Act, by
conference telephone or other communications equipment by means of which all
Persons participating in the meeting can hear each other; or (2) by unanimous
written consent of all of the Directors without a meeting, if permissible under
the 1940 Act. A majority of the Directors then in office will constitute a
quorum at any meeting of Directors.
(b) The
Directors may designate from time to time a Director or any person approved
as
an officer of the Partnership pursuant to Section 3.3(c) of this Agreement
or
the General Partner who will preside at all meetings. Meetings of the Directors
may be called by the General Partner, the Chairman of the Board of Directors,
or
any two Directors, and may be held on any date and at any time and place
determined by the Directors. Each Director will be entitled to receive written
notice of the date, time and place of a meeting within a reasonable time in
advance of the meeting. Notice need not be given to any Director who attends
a
meeting without objecting to the lack of notice or who executes a written waiver
of notice with respect to the meeting.
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(c) The
Directors may appoint from time to time agents and employees of the Partnership
who will have the same powers and duties on behalf of the Partnership as are
customarily vested in officers of a corporation incorporated under Delaware
law,
or such other powers and duties as may be designated by the Directors, in their
sole discretion, and designate them as officers or agents of the Partnership
by
resolution of the Directors specifying their titles or functions.
SECTION
3.4 Meetings
of Partners.
(8)
Actions
requiring the vote of the Partners may be taken at any duly constituted meeting
of the Partners at which a quorum is present or by means of a written consent.
Meetings of the Partners may be called by the General Partner, by the
affirmative vote of a majority of Directors then in office, or by Partners
holding at least a majority of the total number of votes eligible to be cast
by
all Partners, and may be held at any time, date and place determined by the
General Partner in the case of meetings called by the General Partner or the
Partners and at any time, date and place determined by the Directors in the
case
of meetings called by the Directors. In each case, the General Partner will
provide notice of the meeting, stating the date, time and place of the meeting
and the record date for the meeting, to each Partner entitled to vote at the
meeting within a reasonable time prior to the meeting. Failure to receive notice
of a meeting on the part of any Partner will not affect the validity of any
act
or proceeding of the meeting, so long as a quorum is present at the meeting.
Except as otherwise required by applicable law, only matters set out in the
notice of a meeting may be voted on by the Partners at the meeting. The presence
in person or by proxy of Partners holding a majority of the total number of
votes eligible to be cast by all Partners as of the record date will constitute
a quorum at any meeting of Partners. In the absence of a quorum, a meeting
may
be adjourned to the time or times as determined by the General Partner and
communicated to the Directors in the manner described above in this Section
3.4(a). Except as otherwise required by any provision of this Agreement or
of
the 1940 Act, (1) those candidates receiving a plurality of the votes cast
at
any meeting of Partners called pursuant to Section 2.11(c) of this Agreement
or
elected pursuant to the requirement of Section 2.11(b) will be elected as
Directors and (2) all other actions of the Partners taken at a meeting will
require the affirmative vote of Partners holding a majority of the total number
of votes eligible to be cast by those Partners who are present in person or
by
proxy at the meeting.
(b) Each
Partner will be entitled to cast at any meeting of Partners or pursuant to
written consent a number of votes equivalent to the Partner’s Investment
Percentage as of the record date for the meeting or the date of the written
consent. The General Partner will establish a record date not less than 10
nor
more than 60 days prior to the date of any meeting of Partners or mailing
(including by electronic transmission) to the Partners of any written consent,
to determine eligibility to vote at the meeting and the number of votes that
each Partner will be entitled to cast at the meeting, and will maintain for
each
record date a list setting out the name of each Partner and the number of votes
that each Partner will be entitled to cast at the meeting.
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(c) A
Partner
may vote at any meeting of Partners by a properly executed proxy transmitted
to
the Partnership at any time at or before the time of the meeting by telegram,
telecopier or other means of electronic communication or other readable
reproduction as contemplated by the provisions relating to proxies applicable
to
corporations incorporated under the laws of Delaware now or in the future in
effect. A proxy may be suspended or revoked, as the case may be, by the Partner
executing the proxy by a later writing delivered to the Partnership at any
time
prior to exercise of the proxy or if the Partner executing the proxy is present
at the meeting and votes in person. Any action of the Partners that is permitted
to be taken at a meeting of the Partners may be taken without a meeting if
consents in writing, setting out the action to be taken, are signed by Partners
holding a majority of the total number of votes eligible to be cast or any
greater percentage as may be required under this Agreement to approve the
action.
SECTION
3.5 Custody
of Assets of the Partnership.
(9)
Notwithstanding anything to the contrary in this Agreement, the General Partner
will not have any authority to hold or have possession or custody of any funds,
Securities or other property of the Partnership. The physical possession of
all
funds, Securities or other property of the Partnership will at all times be
held, controlled and administered by one or more custodians retained by the
Partnership. The General Partner will have no responsibility, other than that
associated with the oversight and supervision of custodians retained by the
Partnership, with respect to the collection of income or the physical
acquisition or safekeeping of the funds, Securities or other property of the
Partnership, all duties of collection, physical acquisition or safekeeping
being
the sole obligation of such custodians.
(b) With
respect to any Advisor Fund securities held by the Partnership as of the date
on
which the Partnership becomes registered with the SEC as an investment company
under the 1940 Act, and during any period of time in which the Partnership
remains so registered, such securities shall be under the control of one or
more
of the Partnership’s custodian(s), as may be engaged from time to time, pursuant
to Section 17(f) of the 1940 Act and the rules thereunder, and no person shall
be authorized or permitted to have access to such securities except in
accordance with Section 17(f) of the 1940 Act and the rules thereunder, and
consistent with the terms of the Partnership’s agreement with the relevant
Partnership custodian.
SECTION
3.6 Other
Activities.
(10)
Neither
the General Partner nor its principals, Partners, directors, officers, members,
employees and beneficial owners nor the Directors will be required to devote
full time to the affairs of the Partnership, but each will devote such time
as
each may reasonably be required to perform its obligations under this Agreement
and under the ▇▇▇▇ ▇▇▇.
(b) The
Directors, any Partner, and any Affiliate of any Partner may engage in or
possess an interest in other business ventures or commercial dealings of every
kind and description, independently or with others, including, but not limited
to, acquisition and disposition of Securities, provision of investment advisory
or brokerage services, serving as directors, officers, employees, advisors
or
agents of other companies, Partners of any Partnership, members of any limited
liability company, or trustees of any trust, or entering into any other
commercial arrangements. No Partner will have any rights in or to such
activities of any other Partner, the Directors or any Affiliate of any Partner
or any profits derived from these activities.
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(c) The
General Partner and its principals, Partners, directors, officers, members,
employees and beneficial owners and the Directors, from time to time may
acquire, possess, manage, hypothecate and dispose of Securities or other
investment assets, and engage in any other investment transaction for any
account over which they exercise discretionary authority, including their own
accounts, the accounts of their families, the account of any entity in which
they have a beneficial interest or the accounts of others for whom or which
they
may provide investment advisory or other services.
(d) To
the
extent that at law or in equity the Directors or the General Partner have duties
(including fiduciary duties) and liabilities relating to those duties to the
Partnership or to any other Partner or other Person bound by this Agreement,
any
such Person acting under this Agreement will not be liable to the Partnership
or
to any other Partner or other Person bound by this Agreement for its good faith
reliance on the provisions of this Agreement. The provisions of this Agreement,
to the extent that they restrict the duties and liabilities of the General
Partner or the Directors otherwise existing at law or in equity, are agreed
by
the Partners to replace the other duties and liabilities of the General Partner
or the Directors.
SECTION
3.7 Duty
of Care.
(11)
The
Directors and the General Partner, including any officer, director, Partner,
member, principal, employee or agent of any of them, will not be liable to
the
Partnership or to any of its Partners for any loss or damage occasioned by
any
act or omission in the performance of the Person’s services under this
Agreement, in the absence of a final judicial decision on the merits from which
no further right to appeal may be taken that the loss is due to an act or
omission of the Person constituting willful misfeasance, bad faith, gross
negligence or reckless disregard of the Person’s duties under this Agreement.
(b) No
Director who has been designated an “audit committee financial expert” (for
purposes of Section 407 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 or any successor
provision thereto, and any rules issued thereunder by the SEC) in the
Partnership’s Form N-2 or other reports required to be filed with the SEC shall
be subject to any greater duty of care in discharging such Director’s duties and
responsibilities by virtue of such designation than is any Director who has
not
been so designated.
(c) Limited
Partners not in breach of any obligation under this Agreement or under any
agreement pursuant to which the Limited Partner subscribed for Units will be
liable to the Partnership, any Partner or third parties only as required by
this
Agreement or applicable law.
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SECTION
3.8 Indemnification.
(12)
To the
fullest extent permitted by law, the Partnership will, subject to Section 3.8(c)
of this Agreement, indemnify each General Partner (including for this purpose
each officer, director, member, Partner, principal, employee or agent of, or
any
Person who controls, is controlled by or is under common control with, a General
Partner (including, without limitation, Hatteras Investment Partners, LLC)
or
Partner of a General Partner, and their executors, heirs, assigns, successors
or
other legal representatives) and each Director (and his executors, heirs,
assigns, successors or other legal representatives) (each such Person being
referred to as an “indemnitee”) against all losses, claims, damages,
liabilities, costs and expenses arising by reason of being or having been a
General Partner or Director of the Partnership, or the past or present
performance of services to the Partnership by the indemnitee, except to the
extent that the loss, claim, damage, liability, cost or expense has been finally
determined in a judicial decision on the merits from which no further right
to
appeal may be taken in any such action, suit, investigation or other proceeding
to have been incurred or suffered by the indemnitee by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of the indemnitee’s office. These losses, claims,
damages, liabilities, costs and expenses include, but are not limited to,
amounts paid in satisfaction of judgments, in compromise, or as fines or
penalties, and counsel fees and expenses incurred in connection with the defense
or disposition of any action, suit, investigation or other proceeding, whether
civil or criminal, before any judicial, arbitral, administrative or legislative
body, in which the indemnitee may be or may have been involved as a party or
otherwise, or with which such indemnitee may be or may have been threatened,
while in office or thereafter. The rights of indemnification provided under
this
Section 3.8 are not to be construed so as to provide for indemnification of
an
indemnitee for any liability (including liability under U.S. Federal securities
laws which, under certain circumstances, impose liability even on Persons that
act in good faith) to the extent (but only to the extent) that indemnification
would be in violation of applicable law, but will be construed so as to
effectuate the applicable provisions of this Section 3.8.
(b) Expenses,
including counsel fees and expenses, incurred by any indemnitee (but excluding
amounts paid in satisfaction of judgments, in compromise, or as fines or
penalties) may be paid from time to time by the Partnership in advance of the
final disposition of any action, suit, investigation or other proceeding upon
receipt of an undertaking by or on behalf of the indemnitee to repay to the
Partnership amounts paid if a determination is made that indemnification of
the
expenses is not authorized under Section 3.8(a) of this Agreement, so long
as
(1) the indemnitee provides security for the undertaking, (2) the Partnership
is
insured by or on behalf of the indemnitee against losses arising by reason
of
the indemnitee’s failure to fulfill his, her or its undertaking, or (3) a
majority of the Independent Directors (excluding any Director who is either
seeking advancement of expenses under this Agreement or is or has been a party
to any other action, suit, investigation or other proceeding involving claims
similar to those involved in the action, suit, investigation or proceeding
giving rise to a claim for advancement of expenses under this Agreement) or
independent legal counsel in a written opinion determines, based on a review
of
readily available facts (as opposed to a full trial-type inquiry), that reason
exists to believe that the indemnitee ultimately will be entitled to
indemnification.
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(c) As
to the
disposition of any action, suit, investigation or other proceeding (whether
by a
compromise payment, pursuant to a consent decree or otherwise) without an
adjudication or a decision on the merits by a court, or by any other body before
which the proceeding has been brought, that an indemnitee is liable to the
Partnership or its Partners by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
the
indemnitee’s office, indemnification will be provided in accordance with Section
3.8(a) of this Agreement if (1) approved as in the best interests of the
Partnership by a majority of the Independent Directors (excluding any Director
who is either seeking indemnification under this Agreement or is or has been
a
party to any other action, suit, investigation or proceeding involving claims
similar to those involved in the action, suit, investigation or proceeding
giving rise to a claim for indemnification under this Agreement) upon a
determination, based upon a review of readily available facts (as opposed to
a
full trial-type inquiry), that the indemnitee acted in good faith and in the
reasonable belief that the actions were in the best interests of the Partnership
and that the indemnitee is not liable to the Partnership or its Partners by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of the indemnitee’s office, or
(2) the Directors secure a written opinion of independent legal counsel, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), to the effect that indemnification would not protect the indemnitee
against any liability to the Partnership or its Partners to which the indemnitee
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
the
indemnitee’s office.
(d) Any
indemnification or advancement of expenses made in accordance with this Section
3.8 will not prevent the recovery from any indemnitee of any amount if the
indemnitee subsequently is determined in a final judicial decision on the merits
in any action, suit, investigation or proceeding involving the liability or
expense that gave rise to the indemnification or advancement of expenses to
be
liable to the Partnership or its Partners by reason of willful misfeasance,
bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of the indemnitee’s office. In any suit brought by an indemnitee to
enforce a right to indemnification under this Section 3.8, it will be a defense
that the indemnitee has not met the applicable standard of conduct described
in
this Section 3.8. In any suit in the name of the Partnership to recover any
indemnification or advancement of expenses made in accordance with this Section
3.8, the Partnership will be entitled to recover the expenses upon a final
adjudication from which no further right of appeal may be taken. In any suit
brought to enforce a right to indemnification or to recover any indemnification
or advancement of expenses made in accordance with this Section 3.8, the burden
of proving that the indemnitee is not entitled to be indemnified, or to any
indemnification or advancement of expenses, under this Section 3.8 will be
on
the Partnership (or any Partner acting derivatively or otherwise on behalf
of
the Partnership or its Partners).
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(e) An
indemnitee may not satisfy any right of indemnification or advancement of
expenses granted in this Section 3.8 or to which he, she or it may otherwise
be
entitled except out of the assets of the Partnership, and no Partner will be
personally liable with respect to any such claim for indemnification or
advancement of expenses.
(f) The
rights of indemnification provided in this Section 3.8 will not be exclusive
of
or affect any other rights to which any Person may be entitled by contract
or
otherwise under law. Nothing contained in this Section 3.8 will affect the
power
of the Partnership to purchase and maintain liability insurance on behalf of
any
General Partner, any Director, the Investment Manager or other Person.
(g) The
General Partner may enter into agreements indemnifying Persons providing
services to the Partnership to the same, lesser or greater extent as set out
in
this Section 3.8.
SECTION
3.9 Fees,
Expenses and Reimbursement.
(13)
The
Partnership will compensate each Independent Director for his or her services
rendered in connection with the Partnership as may be agreed to by the
Independent Directors and the General Partner, and as described in the
Memorandum. In addition, the Partnership will reimburse the Directors for
reasonable out-of-pocket expenses incurred by them in performing their duties
with respect to the Partnership.
(b) The
Partnership will bear all expenses incurred in connection with its business.
Expenses to be borne by the Partnership include, but are not limited to, the
following:
(1) The
Partnership’s pro rata share of the management fee, performance allocation and
other fees and expenses, of the Master Partnership;
(2) all
investment-related expenses, including, but not limited to, fees paid and
expenses reimbursed, directly or indirectly, to Advisors (including management
fees, performance or incentive fees or allocations and redemption or withdrawal
fees, however titled or structured), all costs and expenses directly related
to
portfolio transactions and positions for the Partnership’s account, such as
direct and indirect expenses associated with the Partnership’s investments,
including its investments in Advisor Funds (whether or not consummated), and
enforcing the Partnership’s rights in respect of such investments, transfer
taxes and premiums, taxes withheld on non-U.S. dividends, costs and fees for
data and software (including software providers and dedicated software employed
by the Partnership and designed to assist an investment manager to keep track
of
the investments in the Advisor Funds and Advisor Accounts), research expenses,
professional fees (including, without limitation, the fees and expenses of
consultants, attorneys and experts) and, if applicable, in connection with
the
Partnership’s temporary or cash management investments, brokerage commissions,
interest and commitment fees on loans and debit balances, borrowing charges
on
Securities sold short, dividends on Securities sold but not yet purchased and
margin fees;
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(3) costs
associated with the registration of the Partnership, including the costs of
compliance with any applicable U.S. federal and state laws;
(4) a
servicing fee to be paid to the servicing agent;
(5) any
non-investment-related interest expense;
(6) attorneys’
fees and disbursements associated with preparing and updating any Offering
Materials and with reviewing subscription materials in connection with
qualifying prospective investors or prospective holders of Transferred
Units;
(7) fees
and
disbursements of any accountants engaged by the Partnership, and expenses
related to the annual audit of the Partnership and compliance with any
applicable U.S. Federal or state laws;
(8) fees
paid
and out-of-pocket expenses reimbursed to the Partnership’s
administrator;
(9) recordkeeping,
accounting, escrow, and custody fees and expenses;
(10) the
costs
of an errors and omissions/directors’ and officers’ liability insurance policy
and a fidelity bond;
(11) the
costs
of preparing and mailing reports and other communications, including proxy,
tender offer correspondence or similar materials, to Limited
Partners;
(12) fees
of
Independent Directors and travel expenses of Directors relating to meetings
of
the Board of Directors and committees thereof, and costs and expenses of holding
meetings of the Board of Directors and meetings of the Partners;
(13) all
costs
and charges for equipment or services used in preparing or communicating
information regarding the Partnership’s transactions or the valuation of its
assets between the General Partner and any custodian, administrator or other
agent engaged by the Partnership;
(14) any
extraordinary expenses, including indemnification expenses as provided for
in
Section 3.8 of this Agreement;
(15) the
Fund’s proportionate share of the fees and expenses of the Master Partnership
and the fees and expenses of the Advisor Funds and Advisor Accounts (borne
indirectly by the Fund through its investment in the Master
Partnership);
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(16) any
other
expenses as may be approved from time to time by the Directors, other than
those
required to be borne by an investment manager or the General Partner;
and
(17) the
organizational and offering expenses of the Partnership which will initially
be
borne by Hatteras Investment Partners, LLC or an affiliate thereof and will
be
expensed by the Partnership upon commencement of operations. The Partnership
will account for these expenditures, through monthly expense allocations (or
at
such other frequency or times as the Board of Directors may direct) to Limited
Partners’ Capital Accounts, for a period not to exceed the first sixty months
after the Closing Date. The amount of each such expense allocation to the
Limited Partners’ Capital Accounts will be determined by the Directors and
Hatteras Investment Partners, LLC and will equal an amount sufficient to
reimburse the Investment Manager or affiliate thereof within a sixty-month
period.
(c) The
General Partner will be entitled to reimbursement from the Partnership for
any
of the above expenses that it pays on behalf of the Partnership, other than
as
provided in Section 3.9(b)(14) above.
ARTICLE
IV
TERMINATION
OF STATUS OF GENERAL PARTNER;
REMOVAL
OF GENERAL PARTNER; TRANSFERS AND REPURCHASES
SECTION
4.1 Termination
of Status of General Partner.
A
General Partner will cease to be a general partner of the Partnership if the
General Partner (a) is dissolved or otherwise terminates its existence; (b)
voluntarily withdraws as General Partner (which it may do at any time in its
sole discretion); (c) is removed; (d) Transfers all of its Units held as General
Partner as permitted under Section 4.3 of this Agreement and the Person to
which
the Units are Transferred is admitted as a substituted General Partner under
Section 2.6(a) of this Agreement; or (e) otherwise ceases to be a General
Partner under the Delaware Act.
SECTION
4.2 Removal
of General Partner.
Any
General Partner may be removed by the vote or written consent of Partners
holding not less than 80% of the total number of votes eligible to be cast
by
all Partners.
SECTION
4.3 Transfer
of Units of General Partner.
A
General Partner may not Transfer all or any of its Units held as the General
Partner except to Persons who have agreed to be bound by all of the terms of
this Agreement and applicable law. If a General Partner Transfers all of its
Units held as General Partner, it will not cease to be a General Partner unless
and until the transferee is admitted to the Partnership as a substituted General
Partner pursuant to Section 2.6(a) of this Agreement. In executing this
Agreement, each Partner is deemed to have consented to any Transfer contemplated
by this Section 4.3.
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SECTION
4.4 Transfer
of Units of Limited Partners.
(14)
Any
Units or portion of any Units held by a Limited Partner may be Transferred
only
(1) by operation of law pursuant to the death, bankruptcy, insolvency,
adjudicated incompetence, or dissolution of the Limited Partner; or (2) under
certain limited instances set out in this Agreement, with the written consent
of
the General Partner (which may be withheld in the General Partner’s sole and
absolute discretion). Unless the Partnership consults with legal counsel to
the
Partnership and counsel confirms that the Transfer will not cause the
Partnership to be treated as a “publicly traded partnership” taxable as a
corporation, however, the General Partner may not consent to a Transfer unless
the following conditions are met: (i) the Transferring Limited Partner has
been
a Limited Partner for at least six months; (ii) the proposed Transfer is to
be
made on the effective date of an offer by the Partnership to repurchase Units;
and (iii) the Transfer is (A) one in which the tax basis of the Units in the
hands of the transferee is determined, in whole or in part, by reference to
its
tax basis in the hands of the Transferring Limited Partner (e.g., certain
Transfers to affiliates, gifts and contributions to family entities), (B) to
members of the Transferring Limited Partner’s immediate family (siblings,
spouse, parents and children), or (C) a distribution from a qualified retirement
plan or an individual retirement account. In addition, the General Partner
may
not consent to a Transfer unless the Person to whom or which Units are
Transferred (or each of the Person’s equity owners if the Person is a “private
investment company” as defined in Rule 205-3(d)(3) under the Advisers Act, an
investment company registered under the 1940 Act, or a business development
company as defined under the Advisers Act) is a Person whom or which the General
Partner believes meets the requirements of paragraph (d)(1) of Rule 205-3 under
the Advisers Act or successor provision of any of those rules, or is otherwise
exempt from the requirements of those rules. In the event that other investor
eligibility requirements are established by the Partnership, the Person to
whom
or which Units are Transferred must satisfy these other requirements. If any
transferee does not meet the investor eligibility requirements described in
this
Section 4.4(a), the General Partner may not consent to the Transfer. In
addition, no Limited Partner will be permitted to Transfer his, her or its
Units
unless after the Transfer the balance of the Capital Account of the transferee,
and of the Limited Partner Transferring less than all of such Partner’s Units,
is at least equal to the amount of the Limited Partner’s initial Capital
Contribution. Any permitted transferee will be entitled to the allocations
and
distributions allocable to the Units so acquired and to Transfer the Units
in
accordance with the terms of this Agreement, but will not be entitled to the
other rights of a Limited Partner unless and until the transferee becomes a
substituted Limited Partner. If a Limited Partner Transfers Units with the
approval of the General Partner, the General Partner will promptly take all
necessary actions so that each transferee or successor to whom or to which
the
Units are Transferred is admitted to the Partnership as a Limited Partner.
The
admission of any transferee as a substituted Limited Partner will be effective
upon the execution and delivery by, or on behalf of, the substituted Limited
Partner of this Agreement or an instrument that constitutes the execution and
delivery of this Agreement. Each Limited Partner and transferee agrees to pay
all expenses, including attorneys’ and accountants’ fees, incurred by the
Partnership in connection with any Transfer. In connection with any request
to
Transfer Units, the Partnership may require the Limited Partner requesting
the
Transfer to obtain, at the Limited Partner’s expense, an opinion of counsel
selected by the General Partner as to such matters as the General Partner may
reasonably request. If a Limited Partner Transfers all of its Units, it will
not
cease to be a Limited Partner unless and until the transferee is admitted to
the
Partnership as a substituted Limited Partner in accordance with this Section
4.4(a).
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(b) Each
Limited Partner will indemnify and hold harmless the Partnership, the General
Partner, the Directors, each other Limited Partner and any Affiliate of the
Partnership, the General Partner (including, without limitation, Hatteras
Investment Partners, LLC), the Director and each of the other Limited Partners
against all losses, claims, damages, liabilities, costs and expenses (including
legal or other expenses incurred in investigating or defending against any
losses, claims, damages, liabilities, costs and expenses or any judgments,
fines
and amounts paid in settlement), joint or several, to which these Persons may
become subject by reason of or arising from (1) any Transfer made by the Limited
Partner in violation of this Section 4.4(b) and (2) any misrepresentation by
the
Transferring Limited Partner or substituted Limited Partner in connection with
the Transfer. A Limited Partner Transferring Units may be charged reasonable
expenses, including attorneys’ and accountants’ fees, incurred by the
Partnership in connection with the Transfer.
SECTION
4.5 Repurchase
of Units.
(15)
Except
as otherwise provided in this Agreement, no Partner or other Person holding
Units will have the right to withdraw or tender for repurchase any of its Units.
The Directors may, from time to time, in their complete and exclusive discretion
and on terms and conditions as they may determine, cause the Partnership to
repurchase Units in accordance with written tenders. The Partnership will not
offer, however, to repurchase Units on more than four occasions during any
one
Fiscal Year, unless the Partnership has been advised by its legal counsel that
more frequent offers would not cause any adverse tax consequences to the
Partnership or the Partners. In determining whether to cause the Partnership
to
repurchase Units, pursuant to written tenders, the Directors will consider
the
following factors, among others:
(1) whether
any Partners have requested to tender Units;
(2) the
liquidity of the Partnership’s assets (including fees and costs associated with
withdrawing from Advisor Funds);
(3) the
investment plans and working capital and reserve requirements of the
Partnership;
(4) the
relative economies of scale with respect to the size of the
Partnership;
(5) the
history of the Partnership in repurchasing Units;
(6) the
availability of information as to the value of the Partnership’s interests in
the Advisor Funds and Advisor Accounts;
(7) existing
conditions of the securities markets and the economy generally, as well as
political, national or international developments or current
affairs;
(8) the
anticipated tax consequences to the Partnership of any proposed repurchases
of
Units;
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(9) and
the
recommendations of the General Partner.
The
Directors will cause the Partnership to repurchase Units in accordance with
written tenders only on terms fair to the Partnership and to all Partners and
Persons holding Units acquired from Partners.
(b) Upon
the
commencement of an offer to repurchase Units, the Partnership will send an
advance notification of the offer (the “Notice”) to the Partners via their
financial intermediaries. The Notice will specify, among other
things:
(1) the
number of Units that the Partnership is offering to repurchase;
(2) the
date
on which a Partner’s repurchase request is due;
(3) the
Valuation Date (as defined in Section 4.5(d) below) applicable to the repurchase
offer;
(4) the
date
the proceeds from their Unit sales shall be due to the Partners;
and
(5) the
NAV
per Unit as of the date of the Notice.
(c) Each
repurchase offer will be limited to the repurchase of approximately 5% of the
Units (but in no event to exceed the repurchase of more than 20% of the Units
per quarter). A Partner who has been a Partner for less than 12 consecutive
months prior to the Valuation Date of such repurchase offer, may participate
in
such offer subject to a penalty of up to 5% of the amount requested to be
repurchased (to be netted against withdrawal proceeds). The minimum value of
a
repurchase is $50,000, subject to the discretion of the General Partner to
allow
otherwise. A Partner whose Units are repurchased by the Partnership will not
be
entitled to a return of any placement fee that was charged in connection with
the Partner’s purchase of the Units.
(d) Units
are
expected to be repurchased at their net asset value determined as of
approximately June 30, September 30, December 31 and March 31, as applicable
(each such date, a “Valuation Date”). Partners tendering Units for repurchase
shall provide written notice of their intent to so tender by the date specified
in the Notice, which date shall be approximately 65 days prior to the date
of
repurchase by the Partnership. Partners tendering their Units may not have
all
such Units accepted for repurchase by the Partnership. The Partnership may
elect
to repurchase less than the full amount a Partner requests to be repurchased.
If
a repurchase offer is oversubscribed, the Partnership may repurchase only a
pro
rata portion of the amount tendered by each Partner.
(e) The
Directors may under certain circumstances elect to postpone, suspend or
terminate an offer to repurchase Units.
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(f) A
Limited
Partner tendering only some of its Units for repurchase will be required to
maintain a minimum capital account balance of $100,000. The Partnership may
reduce the number of Units to be purchased from a Limited Partner to maintain
the required minimum balance. Such minimum balance requirement may be waived
by
the General Partner in its sole discretion, subject to applicable federal
securities laws. Additionally, the General Partner may, in its discretion,
cause
the Partnership to repurchase all of a Limited Partner’s Units if the Limited
Partner’s Capital Account balance in the Partnership, as a result of repurchase
or Transfer requests by the Limited Partner, is less than $100,000 or such
other
minimum amount established by the General Partner from time to time in its
sole
discretion.
(g) Except
as
provided in Section 4.5(h) of this Agreement, a General Partner may tender
its
Units under Section 4.5(a) of this Agreement only if and to the extent that
(1)
the repurchase would not cause the value of the Capital Account of the General
Partner to be less than the value required to be maintained under Section 5.1(b)
of this Agreement and (2) in the view of legal counsel to the Partnership,
the
repurchase would not jeopardize the classification of the Partnership as a
partnership for U.S. federal income tax purposes.
(h) If
a
General Partner ceases to serve in that capacity under Section 4.1 of this
Agreement (other than pursuant to Section 4.1(i)) and the business of the
Partnership is continued in accordance with Section 6.1(a)(2)(B) of this
Agreement, the former General Partner (or its trustee or other legal
representative) may, by written notice to the Directors within 60 days of the
action resulting in the continuation of the Partnership under Section
6.1(a)(2)(B), tender to the Partnership all or any of its Units. Within 30
days
after the receipt of notice, the Directors will cause the Units to be
repurchased by the Partnership for cash in an amount equal to the balance of
the
former General Partner’s Capital Account or applicable portion of the Capital
Account. If the former General Partner does not tender to the Partnership all
of
its Units as permitted by this Section 4.5(h), the Units will automatically
convert to and will be treated in all respects as the Units of a Limited
Partner. If the General Partner ceases to serve in this capacity under Section
4.1 of this Agreement (other than pursuant to Section 4.1(i)) and the
Partnership is not continued under Section 6.1(a)(2)(B) of this Agreement,
the
liquidation and distribution provisions of Article VI of this Agreement will
apply to the General Partner’s Units.
(i) The
General Partner may cause the Partnership to repurchase Units of a Limited
Partner or any Person acquiring Units from or through a Limited Partner, on
terms fair to the Partnership and to the Limited Partner or Person acquiring
Units from or through such Limited Partner, in the event that the General
Partner, in its sole discretion, determines or has reason to believe
that:
(1) the
Units
have been Transferred in violation of Section 4.4 of this Agreement, or the
Units have vested in any Person other than by operation of law as the result
of
the death, dissolution, bankruptcy, insolvency or adjudicated incompetence
of
the Limited Partner;
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(2) ownership
of Units by a Partner or other Person is likely to (A) cause the Partnership
to
be in violation of, or (B) (x) require registration of any Units under, or
(y)
subject the Partnership to additional registration or regulation under, the
securities, commodities or other laws of the United States or any other relevant
jurisdiction;
(3) continued
ownership of the Units may be harmful or injurious to the business or reputation
of the Partnership, the Directors, the General Partner or any of their
Affiliates, or may subject the Partnership or any of the Partners to an undue
risk of adverse tax or other fiscal or regulatory consequences;
(4) any
of
the representations and warranties made by a Partner or other Person in
connection with the acquisition of the Units was not true when made or has
ceased to be true;
(5) with
respect to a Limited Partner subject to special regulatory or compliance
requirements, such as those imposed by ERISA, the Bank Holding Company Act
or
certain Federal Communication Commission regulations (collectively, “Special
Laws or Regulations”), such Limited Partner will likely be subject to additional
regulatory or compliance requirements under these Special Laws or Regulations
by
virtue of continuing to hold Units;
(6) or
it
would be in the best interests of the Partnership, as determined by the General
Partner or the Directors, for the Partnership to repurchase the
Units.
(j) Payments
for accepted repurchases of Units of less than 95% of a Partner’s Units
generally will be paid approximately 90 days after the Valuation Date (after
adjusting for fees, expenses, reserves or other allocations or repurchase)
and
will be subject to adjustment within 45 days after completion of the annual
audit of the Partnership for the applicable Fiscal Year. Such annual audit
may
be delayed in the event that information necessary to complete the annual audit
is not received on a timely basis from the Master Partnership or the Advisors.
Payments for accepted repurchases of Units for 95% or more of a Partner’s Units
may be paid in two installments. Payment of an amount equal to at least 95%
of
the Units repurchased (after adjusting for fees, expenses, reserves or other
allocations or repurchase) generally will be made approximately 90 days after
the Valuation Date. Final settlement of payments in connection with the
repurchased Units generally will be made within 45 days after completion of
the
annual audit of the Partnership for the applicable Fiscal Year. Payments in
connection with repurchased Units may be delayed if such information is delayed.
Notwithstanding anything to the contrary in this Section 4.5(j), the Directors,
in their discretion, may cause the Partnership to pay all or any portion of
the
repurchase price in Securities (or any combination of Securities and cash)
having a value, determined as of the date of repurchase, equal to the amount
to
be repurchased. All repurchases of Units will be subject to any and all
conditions as the Directors may impose in their sole discretion. The General
Partner may, in its discretion, cause the Partnership to repurchase all of
a
Limited Partner’s Units, if the Limited Partner’s Capital Account balance in the
Partnership, as a result of repurchase or Transfer requests by the Limited
Partner, is less than a minimum amount that may be established by the General
Partner from time to time in its sole discretion. Subject to the procedures
of
this Section 4.5(j), the amount due to any Partner whose Units are repurchased
will be equal to the value of the Partner’s Capital Account or portion of such
Capital Account, as of the applicable Valuation Date, after giving effect to
all
allocations to be made to the Partner’s Capital Account as of that date. If all
of a Limited Partner’s Units are repurchased, that Limited Partner will cease to
be a Limited Partner.
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ARTICLE
V
CAPITAL
SECTION
5.1 Contributions
to Capital.
(16)
The
minimum initial Capital Contribution of each Limited Partner will be $100,000
or
such other amount as the General Partner determines from time to time. The
amount of the initial Capital Contribution of each Partner will be recorded
by
the Partnership upon acceptance as a contribution to the capital of the
Partnership. Each Limited Partner’s entire initial Capital Contribution will be
paid to the Partnership immediately prior to the Partnership’s acceptance of the
Limited Partner’s subscription for Units, unless otherwise agreed by the
Partnership and such Limited Partner.
(b) The
Limited Partners may make additional Capital Contributions effective as of
those
times and in amounts as the General Partner may permit, but no Limited Partner
will be obligated to make any additional Capital Contribution except to the
extent provided in Sections 5.4 and 5.5 of this Agreement. Each additional
Capital Contribution made by a Limited Partner (other than a contribution made
pursuant to Section 5.3 or Section 5.5 of this Agreement) will be in the minimum
amount of $25,000 or such other amount as the General Partner determines from
time to time.
(c) A
General
Partner may make additional Capital Contributions effective as of those times
and in such amounts as it determines, and will be required to make additional
Capital Contributions from time to time to the extent necessary to maintain
the
balance of its Capital Account at an amount, if any, necessary to ensure that
the Partnership will be treated as a Partnership for U.S. federal income tax
purposes. Except as provided in this Section 5.1 or in the Delaware Act, no
General Partner will be required or obligated to make any additional
contributions to the capital of the Partnership.
(d) Subject
to the provisions of the 1940 Act, and except as otherwise permitted by the
General Partner, (1) initial and any additional Capital Contributions by any
Partner will be payable in cash or in Securities that the General Partner,
in
its absolute discretion, causes the Partnership to accept, and (2) initial
and
any additional Capital Contributions in cash will be payable in readily
available funds at the date of the proposed acceptance of the contribution.
The
Partnership will charge each Partner making a Capital Contribution in Securities
to the capital of the Partnership an amount as may be determined by the General
Partner to reimburse the Partnership for any costs incurred by the Partnership
by reason of accepting the Securities, and any charge will be due and payable
by
the contributing Partner in full at the time the Capital Contribution to which
the charges relate is due. The value of contributed Securities will be
determined in accordance with Section 7.3 of this Agreement as of the date
of
contribution.
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(e) An
Advisor may make Capital Contributions and own Units in the Partnership and,
in
so doing, will become a Limited Partner with respect to the
contributions.
(f) The
minimum initial and additional contributions set out in paragraphs (a) and
(b)
of this Section 5.1 may be increased or reduced by the General Partner from
time
to time. Reductions may be applied to all investors, individual investors or
to
classes of investors, in each case in the sole discretion of the General
Partner.
SECTION
5.2 Rights
of Partners to Capital.
No
Partner will be entitled to interest on the Partner’s Capital Contribution, nor
will any Partner be entitled to the return of any capital of the Partnership
except (a) upon the repurchase by the Partnership of the Partner’s Units in
accordance with Section 4.5 of this Agreement, (b) in accordance with the
provisions of Section 5.5(b) of this Agreement or (c) upon the liquidation
of
the Partnership’s assets in accordance with Section 6.2 of this Agreement.
Except as specified in the Delaware Act, or with respect to distributions or
similar disbursements made in error, no Partner will be liable for the return
of
any such amounts. To the fullest extent permitted by applicable law, no Partner
will have the right to require partition of the Partnership’s property or to
compel any sale or appraisal of the Partnership’s assets.
SECTION
5.3 Capital
Accounts.
The
Partnership shall maintain a separate Capital Account on its books for each
Partner. As of any date, the Capital Account of a Partner shall be equal to
the
NAV per Unit as of such date, multiplied by the number of Units then held by
such Partner. Any amounts charged or debited against a Partner’s Capital Account
under Sections 5.4 and 5.5, other than among all Partners in accordance with
the
number of Units held by each such Partner, shall be treated as a partial
redemption of such Partner’s Units for no additional consideration as of the
date on which the Board of Directors determines such charge or debit is required
to be made, and such Partner’s Units shall be reduced thereby as appropriately
determined by the Partnership. Any amounts credited to a Partner’s Capital
Account under Sections 5.4 and 5.5, other than among all Partners in accordance
with the number of Units held by each such Partner, shall be treated as an
issuance of additional Units to such Partner for no additional consideration
as
of the date on which the Board of Directors determines such credit is required
to be made, and such Partner’s Units shall be increased thereby as appropriately
determined by the Partnership.
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SECTION
5.4 Allocation
of Certain Withholding Taxes and Other Expenditures.
(17)
If the
Partnership incurs a withholding tax or other tax obligation with respect to
the
share of Partnership income allocable to any Partner, then the General Partner,
without limitation of any other rights of the Partnership or the General
Partner, will cause the amount of the obligation to be debited against the
Capital Account of the Partner when the Partnership pays the obligation, and
any
amounts then or in the future distributable to the Partner will be reduced
by
the amount of the taxes. If the amount of the taxes is greater than any
distributable amounts, then the Partner and any successor to the Partner’s Units
will pay to the Partnership as a Capital Contribution, upon demand by the
General Partner, the amount of the excess. A General Partner will not be
obligated to apply for or obtain a reduction of or exemption from withholding
tax on behalf of any Partner that may be eligible for the reduction or
exemption, except that, in the event that the General Partner determines that
a
Partner is eligible for a refund of any withholding tax, the General Partner
may, at the request and expense of the Partner, assist the Partner in applying
for such refund.
(b) Except
as
otherwise provided for in this Agreement and unless prohibited by the 1940
Act,
any expenditures payable by the Partnership, to the extent determined by the
General Partner to have been paid or withheld on behalf of, or by reason of
particular circumstances applicable to, one or more but fewer than all of the
Partners, will be charged to only those Partners on whose behalf the payments
are made or whose particular circumstances gave rise to such payments. The
charges will be debited from the Capital Accounts of the Partners as of the
close of the Fiscal Period during which the items were paid or accrued by the
Partnership.
SECTION
5.5 Reserves.
(18)
The
General Partner may cause appropriate reserves to be created, accrued and
charged by the Partnership against Net Assets and proportionately against the
Capital Accounts of the Partners for contingent liabilities, if any, as of
the
date any contingent liability becomes known to the General Partner, the reserves
to be in the amounts that the General Partner in its sole discretion deems
necessary or appropriate. The General Partner may increase or reduce any
reserves from time to time by amounts as it in its sole discretion deems
necessary or appropriate. The amount of any reserve, or any increase or decrease
in a reserve, will be proportionately charged or credited to the Capital
Accounts of those Persons who or that are Partners at the time the reserve
is
created, or increased or decreased, except that if any individual reserve item,
adjusted by any increase in the item, exceeds the lesser of $500,000 or 1%
of
the aggregate value of the Units of all of those Partners, then the amount
of
the reserve, increase or decrease may instead, at the discretion of the General
Partner, be charged or credited to the Capital Accounts of those Persons who
or
that were Partners at the time, as determined by the General Partner in its
sole
discretion, of the act or omission giving rise to the contingent liability
for
which the reserve was established, increased or decreased in proportion to
their
Capital Accounts.
(b) If
any
amount is required by Section 5.5(a) of this Agreement to be charged or credited
to a Person who or that is no longer a Partner, the amount will be paid by
or to
the party, in cash, with interest from the date on which the General Partner
determines that the charge or credit is required. In the case of a charge,
the
former Partner will be obligated to pay as a Capital Contribution the amount
of
the charge, plus interest as provided in this Section 5.5(b), to the Partnership
on demand, except that (1) in no event will a former Partner be obligated to
make a payment exceeding the amount of the Partner’s Capital Account at the time
to which the charge relates and (2) no demand will be made after the expiration
of three years from the date on which the Person ceased to be a Partner. To
the
extent that a former Partner fails to pay to the Partnership, in full, any
amount required to be charged to the former Partner under Section 5.5(a) of
this
Agreement, the deficiency will be charged proportionately to the Capital
Accounts of the Partners at the time of the act or omission giving rise to
the
charge to the extent feasible, and otherwise proportionately to the Capital
Accounts of the current Partners.
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SECTION
5.6 Allocation
to Avoid Capital Account Deficits.
To the
extent that any debits under Sections 5.4 through 5.5 of this Agreement would
reduce the balance of the Capital Account of any Limited Partner below zero,
that portion of any such debits will be allocated instead to the Capital Account
of the General Partner. Any credits in any subsequent Fiscal Period that
otherwise would be allocable under Sections 5.4 through 5.5 of this Agreement
to
the Capital Account of any Limited Partner previously affected by the
application of this Section 5.6 will instead be allocated to the Capital Account
of the General Partner in amounts necessary to offset all previous debits
attributable to the Limited Partner, made in accordance with this Section 5.6,
that have not been recovered.
SECTION
5.7 Allocations
Prior to Closing Date.
Any net
cash profits or any net cash losses realized by the Partnership from the
purchase or sale of Securities during the period ending on the day prior to
the
Closing Date will be allocated to the Capital Account of the General Partner.
No
unrealized item of profit or loss will be allocated under this Section 5.7
to
the Capital Account of any Partner.
SECTION
5.8 Tax
Allocations.
For
each taxable year of the Partnership, items of income, deduction, gain, loss
or
credit will be allocated for income tax purposes among the Partners in a manner
so as to reflect equitably amounts credited or debited to each Partner’s Capital
Account for the current and prior taxable years (or relevant portions of those
years). Allocations under this Section 5.8 will be made in accordance with
the
principles of Sections 704(b) and 704(c) of the Code, and in conformity with
Treasury Regulations promulgated under these Sections, or the successor
provisions to such Sections and Regulations. Notwithstanding anything to the
contrary in this Agreement, the Partnership will allocate to the Partners those
gains or income necessary to satisfy the “qualified income offset” requirement
of Treasury Regulations Section 1.704-1(b)(2)(ii)(d). If the Partnership
realizes net capital gains for U.S. federal income tax purposes for any taxable
year during or as of the end of which one or more Positive Basis Partners (as
defined in this Section 5.8) withdraw from the Partnership under Article IV
or
VI of this Agreement, the General Partner may elect to allocate net gains as
follows: (a) to allocate net gains among Positive Basis Partners, in proportion
to the Positive Basis (as defined in this Section 5.8) of each Positive Basis
Partner, until either the full amount of the net gains has been so allocated
or
the Positive Basis of each Positive Basis Partner has been eliminated, and
(b)
to allocate any net gains not so allocated to Positive Basis Partners to the
other Partners in a manner that reflects equitably the amounts credited to
the
Partners’ Capital Accounts. If the Partnership realizes capital losses for U.S.
federal income tax purposes for any Fiscal Year during or as of the end of
which
one or more Negative Basis Partners (as defined in this Section 5.8) withdraw
from the Partnership under Article IV or VI of this Agreement, the General
Partner may elect to allocate net losses as follows: (i) to allocate net losses
among Negative Basis Partners, in proportion to the Negative Basis (as defined
in this Section 5.8) of each Negative Basis Partner, until either the full
amount of net losses will have been so allocated or the Negative Basis of each
Negative Basis Partner has been eliminated, and (ii) to allocate any net losses
not so allocated to Negative Basis Partners, to the other Partners in a manner
that reflects equitably the amounts credited to the Partners’ Capital Accounts.
As used in this Section 5.8, the term “Positive Basis” means, with respect to
any Partner and as of any time of calculation, the amount by which the total
of
the Partners’ Capital Accounts as of that time exceeds the Partner’s “adjusted
tax basis,” for U.S. federal income tax purposes, in the Partner’s Units in the
Partnership as of that time (determined without regard to any adjustments made
to the “adjusted tax basis” by reason of any Transfer or assignment of Units,
including by reason of death). As used in this Section 5.8, the term “Positive
Basis Partner” means any Partner who or that withdraws from the Partnership and
who or that has a Positive Basis as of the effective date of the Partner’s
withdrawal. As used in this Section 5.8, the term “Negative Basis” means, with
respect to any Partner and as of any time of calculation, the amount by which
the Partner’s “adjusted tax basis,” for U.S. federal income tax purposes, in the
Partner’s Units in the Partnership as of that time (determined without regard to
any adjustments made to the “adjusted tax basis” by reason of any Transfer or
assignment of Unitst, including by reason of death, and without regard to such
Partner’s share of the liabilities of the Partnership under section 752 of the
Code) exceeds the Partner’s Capital Account as of such time. As used in this
Section 5.8, the term “Negative Basis Partner” means any Partner who or that
withdraws from the Partnership and who or that has a Negative Basis as of the
effective date of the Partner’s withdrawal.
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SECTION
5.9 Distributions.
(19)
The
General Partner may cause the Partnership to make distributions in cash or
in
kind at any time to all of the Partners on a proportionate basis in accordance
with the Partners’ Investment Percentages.
(b) The
General Partner may withhold taxes from any distribution to any Partner to
the
extent required by the Code or any other applicable law. For purposes of this
Agreement, any taxes so withheld by the Partnership with respect to any amount
distributed by the Partnership to any Partner will be deemed to be a
distribution or payment to the Partner, reducing the amount otherwise
distributable to the Partner under this Agreement and reducing the Capital
Account of the Partner. Neither the General Partner nor the Directors will
be
obligated to apply for or obtain a reduction of or exemption from withholding
tax on behalf of any Partner that may be eligible for reduction or exemption.
To
the extent that a Partner claims to be entitled to a reduced rate of, or
exemption from, a withholding tax pursuant to an applicable income tax treaty,
or otherwise, the Partner will furnish the Partnership with any information
and
forms that the Partner may be required to complete if necessary to comply with
any and all laws and regulations governing the obligations of withholding tax
agents. Each Partner represents and warrants that any information and forms
furnished by the Partner will be true and accurate and agrees to indemnify
the
Partnership and each of the Partners from any and all losses, claims, damages,
liabilities costs and expenses resulting from the filing of inaccurate or
incomplete information or forms relating to the withholding taxes (including
legal or other expenses incurred in investigating or defending against any
such
losses, claims, damages, liabilities, costs and expenses).
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(c) Notwithstanding
any provision to the contrary contained in this Agreement, the Partnership
and
the General Partner on behalf of the Partnership will not repurchase any Units
or make a distribution to any Partner on account of the Partner’s Units, if such
repurchase or distribution would violate the Delaware Act or other applicable
law.
ARTICLE
VI
DISSOLUTION
AND LIQUIDATION
SECTION
6.1 Dissolution.
(20)
The
Partnership will be dissolved if at any time it has no Limited Partners or
upon
the occurrence of any of the following events:
(1) upon
the
affirmative vote to dissolve the Partnership by both (A) a majority of the
Directors (including the vote of a majority of the Independent Directors) and
(B) Partners holding at least two-thirds of the total number of votes eligible
to be cast by all Partners;
(2) upon
either of: (A) an election by the General Partner to dissolve the Partnership
or
(B) a General Partner’s ceasing to be a General Partner in accordance with
Section 4.1 of this Agreement (other than in conjunction with a Transfer of
the
Units of a General Partner in accordance with Section 4.3 of this Agreement
to a
Person who or that is admitted as a substituted General Partner under Section
2.6(a) of this Agreement), unless, as to the event described in clause (B)
of
this Section 6.1(a)(2), (i) the Partnership has at least one other General
Partner who or that is authorized to and does carry on the business of the
Partnership, or (ii) both the Directors and Partners holding not less than
two-thirds of the total number of votes eligible to be cast by all Partners
elect within 60 days after the event to continue the business of the Partnership
and a Person to be admitted to the Partnership, effective as of the date of
the
event, as an additional General Partner who has agreed to make the contributions
to the capital of the Partnership required to be made under Section 5.1(c)
of
this Agreement;
(3) upon
the
failure of Partners to approve successor Directors at a meeting called by the
General Partner in accordance with Section 2.11(c) of this Agreement when no
Director remains to continue the business of the Partnership; or
(4) as
otherwise required by operation of law.
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Dissolution
of the Partnership will be effective on the later of the day on which the event
giving rise to the dissolution occurs or, to the extent permitted by the
Delaware Act, the conclusion of any applicable 60-day period during which the
Directors and Partners elect to continue the business of the Partnership as
provided in Section 6.1(a)(2), but the Partnership will not terminate until
the
assets of the Partnership have been liquidated in accordance with Section 6.2
of
this Agreement and the Certificate has been canceled.
(b) Except
as
provided in Section 6.1(a) of this Agreement or in the Delaware Act, the death,
adjudicated incompetence, dissolution, termination, liquidation, bankruptcy,
reorganization, merger, sale of substantially all of the stock or assets of,
or
other change in the ownership or nature of a Partner, the admission to the
Partnership of a new Partner, the withdrawal of a Partner from the Partnership,
or the Transfer by a Partner of the Partner’s Units to a third party will not
cause the Partnership to dissolve.
SECTION
6.2 Liquidation
of Assets.
(21)
Upon the
dissolution of the Partnership as provided in Section 6.1 of this Agreement,
the
General Partner will promptly liquidate the business and administrative affairs
of the Partnership, except that if the General Partner is unable to perform
this
function, a liquidator elected by Partners holding a majority of the total
number of votes eligible to be cast by all Partners and whose fees and expenses
will be paid by the Partnership will promptly liquidate the business and
administrative affairs of the Partnership. Subject to the Delaware Act, the
proceeds from liquidation (after establishment of appropriate reserves for
all
claims and obligations, including all contingent, conditional or unmatured
claims and obligations in an amount that the General Partner or liquidator
deems
appropriate in its sole discretion as applicable) will be distributed in the
following manner:
(1) the
debts
of the Partnership, other than debts, liabilities or obligations to Limited
Partners, and the expenses of liquidation (including legal and accounting fees
and expenses incurred in connection with the liquidation), up to and including
the date on which distribution of the Partnership’s assets to the Partners has
been completed, will first be paid on a proportionate basis;
(2) any
debts, liabilities or obligations owing to the Limited Partners will be paid
next in their order of seniority and on a proportionate basis; and
(3) the
Partners are paid next on a proportionate basis the positive balances of their
Capital Accounts after giving effect to all allocations to be made to the
Partners’ Capital Accounts for the Fiscal Period ending on the date of the
distributions under this Section 6.2(a)(3).
(b) Notwithstanding
the provisions of this Section 6.2, upon dissolution of the Partnership, subject
to the Delaware Act and the priorities set out in Section 6.2(a) of this
Agreement, the General Partner or liquidator may distribute ratably in kind
any
assets of the Partnership. If any in-kind distribution is to be made under
this
Section 6.2(b), (1) the assets distributed in kind will be valued in accordance
with Section 7.3 of this Agreement as of the actual date of their distribution
and charged as so valued and distributed against amounts to be paid under
Section 6.2(a) of this Agreement, and (2) any profit or loss attributable to
property distributed in kind will be included in the Net Profit or Net Loss
for
the Fiscal Period ending on the date of the distribution. Notwithstanding any
provision of this Agreement to the contrary, the General Partner may compel
a
Partner to accept a distribution of any asset in kind from the Partnership
even
if the percentage of the asset distributed to the Partner exceeds a percentage
of the asset that is equal to the percentage in which the Partner shares in
distributions from the Partnership.
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ARTICLE
VII
ACCOUNTING,
VALUATIONS AND BOOKS AND RECORDS
SECTION
7.1 Accounting
and Reports.
(22)
The
Partnership will adopt for tax accounting purposes any accounting method that
the General Partner decides in its sole discretion is in the best interests
of
the Partnership. The Partnership’s accounts will be maintained in U.S.
currency.
(b) As
soon
as practicable after the end of each taxable year of the Partnership, the
Partnership will furnish to Partners information regarding the operation of
the
Partnership and the Partners’ Units as is necessary for Partners to complete
U.S. Federal and state income tax or information returns and any other tax
information required by U.S. Federal or state law. To the extent such
information may be delayed due to delayed reporting by Advisors with whom the
Partnership invests (through the Master Partnership), the Partners may be
required to file extensions of the filing dates for their income tax returns
at
the Federal, state and local levels.
(c) Except
as
otherwise required by the 1940 Act, or as may otherwise be permissible under
other applicable law, the Partnership will furnish to each Limited Partner
a
semiannual report and an annual report containing the information required
by
the 1940 Act as soon as practicable. The Partnership will cause financial
statements contained in each annual report furnished under this Section 7.1
to
be accompanied by a certificate of independent public accountants based upon
an
audit performed in accordance with generally accepted accounting principles.
The
Partnership may furnish to each Partner any other periodic reports the General
Partner deems necessary or appropriate in its discretion.
(d) The
General Partner will notify the Directors of any change in the holders of
intersests of the General Partner within a reasonable time after the
change.
SECTION
7.2 Determinations
by General Partner.
(23)
All
matters concerning the determination and allocation among the Partners of the
amounts to be determined and allocated pursuant to Article V of this Agreement,
including any taxes on those amounts and accounting procedures applicable with
respect to those amounts, will be determined by the General Partner unless
specifically and expressly otherwise provided for by the provisions of this
Agreement or as required by law. Any such determinations and allocations will
be
final and binding on all of the Partners.
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(b) The
General Partner may make any adjustments to the computation of Net Profit and/or
Net Loss, or any components (withholding any items of income, gain, loss or
deduction) constituting Net Profit and/or Net Loss as the General Partner deems
appropriate to reflect fairly and accurately the financial results of the
Partnership and the intended allocation of Net Profit and/or Net Loss among
the
Partners.
SECTION
7.3 Valuation
of Assets.
(24)
Except
as may be required by the 1940 Act, the Directors will value or cause to have
valued any Securities or other assets and liabilities of the Partnership as
of
the close of business on the last day of each Fiscal Period and at such other
times as the Directors may determine, in their discretion, in accordance with
valuation procedures as established from time to time by the Directors. Assets
of the Partnership invested in an Advisor Fund or Advisor Account will be valued
in accordance with the terms and conditions of the agreement or other document
governing the operation of the Advisor Fund or Advisor Account. In determining
the value of the assets of the Partnership, no value will be placed on the
goodwill or name of the Partnership, or the office records, files, statistical
data or any similar intangible assets of the Partnership not normally reflected
in the Partnership’s accounting records. Any items of income earned but not
received, expenses incurred but not yet paid, liabilities fixed or contingent,
and any other prepaid expenses to the extent not otherwise reflected in the
books of account, and the value of options or commitments to purchase or sell
Securities or commodities pursuant to agreements entered into prior to the
valuation date will, however, be taken into account in determining the value
of
the Partnership’s assets.
(b) Subject
to the provisions of the 1940 Act, the value of Securities and other assets
of
the Partnership and the net asset value of the Partnership as a whole determined
pursuant to this Section 7.3 will be conclusive and binding on all of the
Partners and all Persons claiming through or under them.
ARTICLE
VIII
MISCELLANEOUS
PROVISIONS
SECTION
8.1 Amendment
of Partnership Agreement.
(a) Except
as
otherwise provided in this Section 8.1, this Agreement may be amended, in whole
or in part, with the approval of a majority of the Directors (including the
vote
of a majority of the Independent Directors, but only if such vote is required
by
the 1940 Act), except that any amendment also must be approved by a majority
(as
defined in the ▇▇▇▇ ▇▇▇) of the outstanding voting securities of the Partnership
if such vote is required by the ▇▇▇▇ ▇▇▇.
(b) Any
amendment that would:
(1) increase
the obligation of a Partner to make any Capital Contribution,
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(2) reduce
the Capital Account of a Partner other than in accordance with Article V of
this
Agreement, or
(3) modify
the events causing the dissolution of the Partnership, may be made only if
(A)
the written consent of each Partner adversely affected by the proposed action
is
obtained prior to the effectiveness of the action or (B) the amendment does
not
become effective until (i) each Limited Partner has received written notice
of
the amendment and (ii) any Limited Partner objecting to the amendment has been
afforded a reasonable opportunity (under procedures prescribed by the General
Partner in its sole discretion) to tender all of the Partner’s Units for
repurchase by the Partnership. Notwithstanding the preceding sentence or the
provisions of Subsection 8.1(c), any amendment that would alter the provisions
of Section 8.1 relating to the material amendment of this Agreement or the
provisions of Section 3.8 of this Agreement relating to indemnification may
be
made only with the unanimous consent of the Partners and, to the extent required
by the 1940 Act, approval of a majority of the Directors (and, if so required,
a
majority of the Independent Directors).
(c) Notwithstanding
the provisions of Sections 8.1(a) and 8.1(b) of this Agreement, the General
Partner, at any time without the consent of any other Partner, may:
(1) restate
this Agreement, together with any amendments to this Agreement that have been
duly adopted in accordance with the provisions of this Agreement to incorporate
the amendments in a single, integrated document;
(2) amend
this Agreement (other than with respect to the matters described in Section
8.1(b) of this Agreement) to change the name of the Partnership in accordance
with Section 2.2 hereof or to effect compliance with any applicable law or
regulation, including, but not limited to, to satisfy the requirements of
applicable U.S. banking law or regulation, or to cure any ambiguity or to
correct or supplement any provision of this Agreement, so long as the action
does not adversely affect the rights of any Partner in any material respect;
and
(3) amend
this Agreement to make any changes necessary or desirable, based on advice
of
legal counsel to the Partnership, to assure the Partnership’s continuing
eligibility to be classified for U.S. federal income tax purposes as a
Partnership that is not treated as a corporation for tax purposes under the
Code; subject, however, to the limitation that any material amendment to this
Agreement under Section 8.1(c)(2) or (3) of this Agreement will be valid only
if
approved by a majority of the Directors (including the vote of a majority of
the
Independent Directors, if required by the 1940 Act).
(d) The
General Partner will give prior written notice of any proposed amendment to
this
Agreement (other than any amendment of the type contemplated by Section 8.1(c)
of this Agreement) to each Partner, which notice sets out (1) the text of the
proposed amendment or (2) a summary of the amendment and a statement that the
text of the amendment will be furnished to any Partner upon
request.
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SECTION
8.2 Special
Power of Attorney.
(a) Each
Partner irrevocably makes, constitutes and appoints the General Partner and
each
of the Directors, acting severally, and any liquidator of the Partnership’s
assets appointed pursuant to Section 6.2 of this Agreement with full power
of
substitution, the true and lawful representatives and attorneys-in-fact of,
and
in the name, place and stead of, the Partner, with the power from time to time
to make, execute, sign, acknowledge, swear to, verify, deliver, record, file
and/or publish:
(1) any
amendment to this Agreement;
(2) any
amendment to the Certificate, including, without limitation, any such amendment
required to reflect any amendments to this Agreement, and including, without
limitation, an amendment to effectuate any change in the membership of the
Partnership; and
(3) all
other
such instruments, documents and certificates that, in the view of legal counsel
to the Partnership, from time to time may be required by the laws of the United
States of America, the State of Delaware or any other jurisdiction in which
the
General Partner determines that the Partnership should do business, or any
political subdivision or agency of any such jurisdiction, or that legal counsel
may deem necessary or appropriate to effectuate, implement and continue the
valid existence and business of the Partnership as a limited partnership under
the Delaware Act.
(b) Each
Partner is aware that the terms of this Agreement permit certain amendments
to
this Agreement to be effected and certain other actions to be taken or omitted
by or with respect to the Partnership without the Partner’s consent. Each
Partner agrees that if an amendment to the Certificate or this Agreement or
any
action by or with respect to the Partnership is taken in the manner contemplated
by this Agreement, notwithstanding any objection that the Partner may assert
with respect to the action, the attorneys-in-fact appointed under this Agreement
are authorized and empowered, with full power of substitution, to exercise
the
authority granted in this Section 8.2 in any manner that may be necessary or
appropriate to permit the amendment to be made or action lawfully taken or
omitted. Each Partner is fully aware that each Partner will rely on the
effectiveness of this special power of attorney with a view to the orderly
administration of the affairs of the Partnership.
(c) The
power
of attorney contemplated by this Section 8.2 is a special power of attorney
and
is coupled with an interest in favor of the General Partner and each of the
Directors, acting severally, and any liquidator of the Partnership’s assets
appointed under Section 6.2 of this Agreement, and as such the power of
attorney:
(1) will
be
irrevocable and continue in full force and effect notwithstanding the subsequent
death or incapacity of any Person granting the power of attorney, regardless
of
whether the Partnership, the General Partner, the Directors or any liquidator
has had notice of the death or incapacity; and
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(2) will
survive the delivery of a Transfer by a Partner of the Partner’s Units, except
that, when the transferee of Units has been approved by the General Partner
for
admission to the Partnership as a substituted Partner, the power of attorney
given by the transferor will survive the delivery of the assignment for the
sole
purpose of enabling the General Partner, the Directors or any liquidator to
execute, acknowledge and file any instrument necessary to effect the
substitution.
SECTION
8.3 Notices.
Notices
that may or are required to be provided under this Agreement will be made to
a
Partner by hand delivery, regular mail (registered or certified mail return
receipt requested in the case of notice to the General Partner), commercial
courier service, telecopier, or electronic mail (with a confirmation copy by
registered or certified mail in the case of notices to the General Partner
by
telecopier or electronic mail), and will be addressed to the Partner at his,
her
or its address as set out in the books and records of the Partnership (or to
any
other address as may be designated by any Partner by notice addressed to the
General Partner in the case of notice given to any Partner, and to each of
the
Partners in the case of notice given to the General Partner). Notices will
be
deemed to have been provided when delivered by hand, on the date indicated
as
the date of receipt on a return receipt or when received if sent by regular
mail, commercial courier service, telecopier or by electronic mail. A document
that is not a notice and that is required to be provided under this Agreement
by
any party to another party may be delivered by any reasonable
means.
SECTION
8.4 Agreement
Binding Upon Successors and Assigns.
This
Agreement will be binding upon and inure to the benefit of the Partners and
their respective heirs, successors, assigns, executors, trustees or other legal
representatives, but the rights and obligations of the Partners may not be
Transferred or delegated except as provided in this Agreement, and any attempted
Transfer or delegation of those rights and obligations that is not made in
accordance with the terms of this Agreement will be void.
SECTION
8.5 Choice
of Law; Arbitration.
(a) Notwithstanding
the location at which this Agreement is executed by any of the Partners, the
Partners expressly agree that all the terms and provisions of this Agreement
are
governed by and will be construed under the laws of the State of Delaware,
including the Delaware Act, without regard to the conflict of law principles
of
the State of Delaware.
(b) To
the
extent such action is consistent with the provisions of the 1940 Act and any
other applicable law, except as provided in Section 8.10(b) of this Agreement,
each Partner agrees to submit all controversies arising between or among
Partners or one or more Partners and the Partnership in connection with the
Partnership or its businesses or concerning any transaction, dispute or the
construction, performance or breach of this Agreement or any other agreement
relating to the Partnership, whether entered into prior to, on or subsequent
to
the date of this Agreement, to arbitration in accordance with the provisions
set
out in this Section 8.5. EACH PARTNER UNDERSTANDS THAT ARBITRATION IS FINAL
AND
BINDING ON THE PARTNERS AND THAT THE PARTNERS IN EXECUTING THIS AGREEMENT ARE
WAIVING THEIR RIGHTS TO SEEK REMEDIES IN COURT, INCLUDING THE RIGHT TO JURY
TRIAL.
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(c) Controversies
will be finally settled by, and only by, arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association (the “AAA”)
to the fullest extent permitted by law. The place of arbitration will be
Raleigh, North Carolina. Any arbitration under this Section 8.5 will be
conducted before a panel of three arbitrators. The Partner or Partners
initiating arbitration under this Section 8.5 will appoint one arbitrator in
the
demand for arbitration. The Partner or Partners against whom or which
arbitration is sought will jointly appoint one arbitrator within 30 Business
Days after notice from the AAA of the filing of the demand for arbitration.
The
two arbitrators nominated by the Partners will attempt to agree on a third
arbitrator within 30 Business Days of the appointment of the second arbitrator.
If the two arbitrators fail to agree on the third arbitrator within the 30-day
period, then the AAA will appoint the third arbitrator within 30 Business Days
following the expiration of the 30-day period. Any award rendered by the
arbitrators will be final and binding on the Partners, and judgment upon the
award may be entered in the supreme court of the state of New York and/or the
U.S. District Court for the Southern District of New York, or any other court
having jurisdiction over the award or having jurisdiction over the Partners
or
their assets. The arbitration agreement contained in this Section 8.5 will
not
be construed to deprive any court of its jurisdiction to grant provisional
relief (including by injunction or order of attachment) in aid of arbitration
proceedings or enforcement of an award. In the event of arbitration as provided
in this Section 8.5, the arbitrators will be governed by and will apply the
substantive (but not procedural) law of Delaware, to the exclusion of the
principles of the conflicts of law of Delaware. The arbitration will be
conducted in accordance with the procedures set out in the commercial
arbitration rules of the AAA. If those rules are silent with respect to a
particular matter, the procedure will be as agreed by the Partners, or in the
absence of agreement among or between the Partners, as established by the
arbitrators. Notwithstanding any other provision of this Agreement, this Section
8.5(c) will be construed to the maximum extent possible to comply with the
laws
of the State of Delaware, including the Uniform Arbitration Act (10 Del. C
Section 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it is
determined by a court of competent jurisdiction that any provision or wording
of
this Section 8.5(c), including any rules of the AAA, are invalid or
unenforceable under the Delaware Arbitration Act or other applicable law, such
invalidity will not invalidate all of this Section 8.5(c). In that case, this
Section 8.5(c) will be construed so as to limit any term or provision so as
to
make it valid or enforceable within the requirements of the Delaware Arbitration
Act or other applicable law, and, in the event such term or provision cannot
be
so limited, this Section 8.5(c) will be construed to omit such invalid or
unenforceable provision.
SECTION
8.6 Not
for Benefit of Creditors.
The
provisions of this Agreement are intended only for the regulation of relations
among past, existing and future Partners, their assignees and the Partnership.
This Agreement is not intended for the benefit of non-Partner creditors and,
except to the extent provided in Section 3.8 of this Agreement, no rights are
granted to non-Partner creditors under this Agreement.
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SECTION
8.7 Consents.
Any and
all consents, agreements or approvals provided for or permitted by this
Agreement (including minutes of any meeting) must be in writing and a signed
copy of any such consent, agreement or approval will be filed and kept with
the
books of the Partnership.
SECTION
8.8 Merger
and Consolidation.
(a) The
Partnership may merge or consolidate with or into one or more limited
partnerships formed under the Delaware Act or other business entities under
an
agreement of merger or consolidation that has been approved in the manner
contemplated by the Delaware Act.
(b) Notwithstanding
anything to the contrary in this Agreement, an agreement of merger or
consolidation approved in accordance with the Delaware Act may, to the extent
permitted by the Delaware Act, (1) effect any amendment to this Agreement,
(2)
effect the adoption of a new Partnership agreement for the Partnership if it
is
the surviving or resulting limited partnership in the merger or consolidation,
or (3) provide that the Partnership agreement of any other constituent
Partnership to the merger or consolidation (including a limited partnership
formed for the purpose of consummating the merger or consolidation) will be
the
Partnership agreement of the surviving or resulting limited
partnership.
(c) The
Partnership may convert to another Delaware business entity in accordance with
the Delaware Act upon the approval of the Partners representing a majority
(as
defined in the ▇▇▇▇ ▇▇▇) of the outstanding voting securities of the
Partnership.
SECTION
8.9 Pronouns.
All
pronouns used in this Agreement will be deemed to refer to the masculine,
feminine, neuter, singular or plural, as the identity of the Person or Persons,
firm or entity may require in the context in which they are used.
SECTION
8.10 Confidentiality.
(a) A
Limited
Partner may obtain from the General Partner, upon reasonable demand for any
purpose reasonably related to the Limited Partner’s interest in the Partnership,
information regarding the affairs of the Partnership as is just and reasonable
under the Delaware Act, subject to reasonable standards (including standards
governing the information and documents to be furnished, at what time and
location and at whose expense) established by the General Partner in its sole
discretion.
(b) Each
Limited Partner agrees in executing this Agreement that, except as required
by
applicable law or any regulatory body, the Limited Partner will not divulge,
furnish or make accessible to any other Person the name or address (whether
business, residence or mailing) of any Limited Partner (collectively,
“Confidential Information”) without the prior written consent of the General
Partner, which consent may be withheld in its sole discretion.
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(c) Each
Partner recognizes that in the event that this Section 8.10 is breached by
any
Partner or any of its principals, Partners, members, directors, officers,
employees or agents or any of the Partner’s Affiliates, including any of the
Affiliate’s principals, Partners, members, directors, officers, employees or
agents, irreparable injury may result to the non-breaching Partners and the
Partnership. In recognition of that irreparable injury, any non-breaching
Partner may have, in addition to any and all other remedies at law or in equity
to which the non-breaching Partner and the Partnership may be entitled, the
right to obtain equitable relief, including, without limitation, injunctive
relief, to prevent any disclosure of Confidential Information, plus reasonable
attorneys’ fees and other litigation expenses incurred in connection with
obtaining the equitable relief. If any non-breaching Partner or the Partnership
(“Initiating Non-Breaching Party”) determines that any other Partner or any of
that Partner’s principals, Partners, members, directors, officers, employees or
agents or any of the Partner’s Affiliates, including any of the Affiliates’
principals, Partners, members, directors, officers, employees or agents, should
be enjoined from or required to take any action to prevent the disclosure of
Confidential Information, each of the other non-breaching Partners agrees to
join the non-breaching Initiating Non-Breaching Party in pursuing injunctive
relief in a court of appropriate jurisdiction.
(d) The
General Partner will have the right to keep confidential from the Limited
Partners, for any period of time as the General Partner deems reasonable in
its
sole discretion, any information that the General Partner reasonably believes
to
be in the nature of trade secrets or other information the disclosure of which
the General Partner in good faith believes is not in the best interest of the
Partnership or could damage the Partnership or its business or that the
Partnership is required by law or by agreement with a third party to keep
confidential.
SECTION
8.11 Certification
of Non-Foreign Status.
Each
Limited Partner or transferee of an Interest or a portion of an Interest from
a
Limited Partner who or that is admitted to the Partnership in accordance with
this Agreement will certify, upon admission to the Partnership and at any other
time as the General Partner may request, whether the Limited Partner or
transferee is a “United States Person” within the meaning of the Code on forms
to be provided by the Partnership, and will notify the Partnership within 30
days of any change in the status of the Limited Partner or transferee. Any
Limited Partner or transferee who or that fails to provide certification when
requested to do so by the General Partner may be treated as a non-United States
Person for purposes of U.S. Federal tax withholding.
SECTION
8.12 Severability.
Each
Partner agrees that the Partner intends that, if any provision of this Agreement
is determined by a court of competent jurisdiction or regulatory authority
with
jurisdiction over the Partnership or the General Partner not to be enforceable
in the manner set out in this Agreement, then the provision should be
enforceable to the maximum extent possible under applicable law. If any
provision of this Agreement is held to be invalid or unenforceable, the
invalidation or unenforceability will not affect the validity or enforceability
of any other provision of this Agreement (or portion of the
provision).
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SECTION
8.13 Entire
Agreement.
This
Agreement constitutes the entire agreement among the Partners pertaining to
the
subject matter of this Agreement and supersedes all prior agreements and
understandings pertaining to that subject matter.
Notwithstanding
any other provision of this Agreement, including Section 8.1, each Partner,
in
executing this Agreement, acknowledges and agrees that the General Partner,
on
its own behalf or on behalf of the Partnership, without the approval of the
Limited Partners or any other Person, may enter into a written agreement or
agreements with any other Partner, executed contemporaneously with the admission
of the other Partner to the Partnership, affecting or modifying the terms of,
or
establishing rights under, this Agreement or any subscription agreement. Each
Partner agrees that any terms contained in any such other agreement with another
Partner will govern with respect to the other Partner notwithstanding the
provisions of this Agreement or any subscription agreement, and that the Partner
will have no rights in respect of those granted in favor of such other
Partner.
SECTION
8.14 Discretion.
To the
fullest extent permitted by law, whenever in this Agreement a Person is
permitted or required to make a decision (a) in its “sole discretion” or
“discretion” or under a grant of similar authority or latitude, the Person will
be entitled to consider only those interests and factors as he, she or it
desires, including his, her or its own interests, and, to the fullest extent
permitted by law, will have no duty or obligation to give any consideration
to
any interest of or factors affecting the Partnership or the Limited Partners,
or
(b) in its “good faith” or under another express standard, then the Person will
act under the express standard and will not be subject to any other or different
standards imposed by this Agreement or any other agreement contemplated by
this
Agreement or by relevant provisions of law or in equity or
otherwise.
SECTION
8.15 Conflicts.
The
Partners acknowledge and agree that the General Partner and its Affiliates
may
engage in activities in which their respective interests or the interests of
their clients may conflict with the interests of the Partnership or the Limited
Partners, and that the resolution of such conflicts may not always be resolved
by the General Partner or its Affiliates in favor of the Partnership or the
Limited Partners.
SECTION
8.16 Counterparts.
This
Agreement may be executed in several counterparts, all of which together will
constitute one agreement binding on all Partners, notwithstanding that all
the
Partners have not signed the same counterpart.
SECTION
8.17 Headings.
The
headings in this Agreement are included for convenience of reference only and
in
no way define or delimit any of the provisions of this Agreement or otherwise
affect their construction or effect.
[Remainder
of Page Intentionally Left Blank]
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IN
EXECUTING THIS AGREEMENT, EACH PARTNER ACKNOWLEDGES HAVING READ THIS AGREEMENT
IN ITS ENTIRETY BEFORE SIGNING, INCLUDING THE PRE-DISPUTE ARBITRATION CLAUSES
SET OUT IN SECTION 8.5 AND THE CONFIDENTIALITY CLAUSES SET OUT IN SECTION
8.10.
The
Partners have executed this Agreement as of the day and year first above
written.
|
GENERAL
PARTNER:
HATTERAS
INVESTMENT MANAGEMENT LLC
|
|
| By: ______________________________________ | |
|
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Managing Member
|
|
| ORGANIZATIONAL LIMITED PARTNER: | |
| By: ______________________________________ | |
| Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |
| LIMITED PARTNERS: | |
|
Each
Person who or that has signed, or has had signed on the Person’s behalf, a
Limited Partner Signature Page, which will constitute a counterpart
of
this Agreement.
|
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