AMENDED AND RESTATED DECLARATION OF TRUST AND TRUST AGREEMENT
Exhibit
3.2
MLM
Index™ Fund
AMENDED
AND RESTATED
This
AMENDED AND RESTATED DECLARATION OF TRUST AND TRUST AGREEMENT (“Trust
Agreement”) is made and entered into as of the 31st day of August, 1998 by and
among MOUNT XXXXX INDEX MANAGEMENT CORPORATION, a Delaware corporation (the
“Manager”), WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee
(the “Trustee”), and the INTEREST HOLDERS from time to time
hereunder.
W
I T N E
S S E T H:
WHEREAS,
the parties hereto previously entered into that certain Declaration of Trust
and
Trust Agreement, dated as of December 11, 1997 (the “Original Trust Agreement”),
and pursuant thereto the Trustee filed a Certificate of Trust with the Delaware
Secretary of State on December 11, 1997, in order to form the Trust as a
Delaware business trust under the Delaware Business Trust Act, 12 Del.
C.§3801 et seq., as the same may be amended from time
to time (the “Act”);
WHEREAS,
the parties amended the Original Trust Agreement as set forth in Amendment
No. 1
to the Declaration of Trust and Trust Agreement, dated as of January 14,
1998
(“Amendment No. 1”), to provide for the administration and contemplated
operation of the Trust;
WHEREAS,
the parties amended, restated and replaced the Original Trust Agreement,
as
amended by Amendment No. 1, in its entirety as set forth in the Amended and
Restated Declaration of Trust and Trust Agreement, dated as of January 31,
1998
(the “Amended and Restated Trust Agreement”), to provide for the administration
and contemplated operation of the Trust;
WHEREAS,
the parties amended the Amended and Restated Trust Agreement as set
forth in Amendment No. 2 to the Declaration of Trust and Trust Agreement,
dated
as of June 17, 1998 (“Amendment No. 2”), to provide for the administration and
contemplated operation of the Trust;
WHEREAS,
the parties now desire to amend, restate and replace the Amended and Restated
Trust Agreement, as amended by Amendment No. 2, in its entirety as set forth
herein to provide for certain changes in the administration and contemplated
operation of the Trust;
NOW
THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereby amend, restate and replace in its entirety the Amended and
Restated Trust Agreement, as previously amended by Amendment No. 2, as follows
and the Manager and the Initial Interest Holder hereby direct the Trustee,
pursuant to the Amended and Restated Trust Agreement, to execute and deliver
this Trust Agreement:
1
DEFINITIONS;
THE TRUST
— Definitions. As
used in this Trust Agreement, the following terms shall have the following
meanings unless the context otherwise requires:
“Affiliate
of the Manager” means: (i) any officer, director, employee or shareholder of the
Manager, (ii) any corporation, partnership, trust or other entity controlling,
controlled by or under common control with the Manager or any person described
in (i) above, and (iii) any officer, director, trustee, general partner or
employee of any person who is a member, other than as limited partner, with
any
person described in (i) and (ii) above, in a relationship of joint venture,
general partnership or similar form of unincorporated business
association. For purposes of this definition the term “control” shall
also mean the control or ownership of ten percent (10%) or more of the
beneficial interest in the person referred to.
“Business
Day” means a day other than Saturday, Sunday or other day when banks and/or
commodities exchanges in the City of New York, the City of Chicago, or the
City
of Wilmington are authorized or obligated by law or executive order to
close.
“Business
Trust Statute” means Chapter 38 of Title 12 of the Delaware Code, 12
Del.C. § 3801 et seq., as the same may be amended
from time to time.
“Capital
Contribution” means the amount contributed and agreed to be contributed to a
Series by any Person in accordance with Article III hereof.
“CE
Act”
means the Commodity Exchange Act, as amended.
“Certificate
of Trust” means the Certificate of Trust of the Trust in the form attached
hereto as Exhibit A, filed with the Secretary of State of the State of
Delaware pursuant to Section 3810 of the Business Trust Statute.
“CFTC”
means the Commodity Futures Trading Commission.
“Classes”
means each designated class of a Series of beneficial interests in the profits,
losses, distributions, capital and assets of the Trust issued pursuant to
Section 3.1(e) of this Trust Agreement.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Continuous
Offering Period” means the period following the conclusion of the Initial
Offering Period.
“Corporate
Trust Office” means the principal office at which at any particular time the
corporate trust business of the Trustee is administered, which office at
the
date hereof is located at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration.
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“DOL”
means the United States Department of Labor.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
“Fiscal
Quarter” means each period ending on the last day of each March, June, September
and December of each Fiscal Year.
“Fiscal
Year” shall have the meaning set forth in Article X hereof.
“Futures”
means agreements to purchase or sell a commodity, currency or other item
for
delivery in the future on a recognized contract market in the United States
(i)
at a price that is determined at initiation of the contract; (ii) which
obligates each party to the contract to fulfill the contract at the specified
price; (iii) which is used to assume or shift price risk; and (iv)
which may be satisfied by delivery or offset.
“Initial
Interest Holder” means Xxxxxxx Xxxxxxx, whose Capital
Contribution has been paid to the Trust as of the date hereof.
“Initial
Offering Period” means the period commencing with the initial effective date of
the Offering Memorandum and terminating on October 31,
1998. Notwithstanding the previous sentence, the Manager may, at its
discretion, terminate the Initial Offering Period prior to October 30, 1998
if
at least four million dollars ($4,000,000) of Interests of the Unleveraged
Series or at least two million dollars ($2,000,000) of Interests of the
Leveraged Series (exclusive of the Interests of the Manager and the Initial
Interest Holder) have been sold, and the Manager may, in its discretion,
extend
the Initial Offering Period of a Series until December 31, 1998, subject
to
earlier termination if at least four million dollars ($4,000,000) of Interests
of the Unleveraged Series or at least two million dollars ($2,000,000) of
Interests of the Leveraged Series (exclusive of the Interests of the Manager
and
Initial Interest Holder) have been sold.
“Interest
Holders” means the Manager and all other record holders of Interests, where no
distinction is required by the context in which the term is used.
“Interests”
means the beneficial interests of a particular Series of the
Trust. Interests need not be represented by
certificates.
“Manager”
means Mount Xxxxx Index Management Corporation or any substitute therefor
as
provided herein.
“Net
Asset Value” means the total assets in the Trust Estate including, but not
limited to, all cash and cash equivalents (valued at cost plus accrued interest
and amortization of original issue discount) less total liabilities of the
Trust, each determined on a per Series basis in accordance with generally
accepted accounting principles in the United States, consistently applied
under
the accrual method of accounting (“GAAP”), including, but not limited to, the
extent specifically set forth below:
3
(a) Net
Asset Value shall include any unrealized profit or loss on open Futures
positions, and any other credit or debit accruing to the Trust but unpaid
or not
received by the Trust.
(b) All
open commodity futures contracts traded on a United States exchange are
calculated at their then current market value, which shall be based upon
the
settlement price for that particular commodity futures contract traded on
the
applicable United States exchange on the date with respect to which Net Asset
Value is being determined; provided, that if a commodity futures contract
traded
on a United States exchange could not be liquidated on such day, due to the
operation of daily limits or other rules of the exchange upon which that
position is traded or otherwise, the settlement price on the first subsequent
day on which the position could be liquidated shall be the basis for determining
the market value of such position for such day. The Manager may in
its discretion value any of the Trust Estate pursuant to such other principles
as it may deem fair and equitable so long as such principles are consistent
with
normal industry standards.
(c) Interest
earned on the Trust’s commodity brokerage account shall be accrued at least
monthly.
(d) The
amount of any distribution declared pursuant to Article VI hereof shall be
a
liability of the Trust from the day when the distribution is declared until
it
is paid.
“Net
Asset Value per Interest” means, for each Series, the Net Asset Value divided by
the number of Interests in such Series outstanding on the date of
calculation.
“NFA”
means the National Futures Association.
“Offering
Memorandum” means the Confidential Offering Memorandum of the
Trust, as filed with the CFTC, as amended or
supplemented.
“Organization
and Offering Expenses” shall have the meaning set forth in Section 4.7 of this
Trust Agreement.
“Person”
means any natural person, partnership, limited liability company, business
trust, corporation, association or other legal entity.
“Redemption
Date” means the date upon which Interests held by the Interest Holders may be
redeemed in accordance with the provisions of Article VII hereof.
“Series”
means each designated series of beneficial interests in the profits, losses,
distributions, capital and assets of the Trust issued pursuant to Section
3.1(e)
of this Trust Agreement.
“Subscription
Agreement” means the agreement included as an exhibit to the Offering Memorandum
pursuant to which subscribers may subscribe for the purchase of the
Interests.
4
“Trust”
means the trust formed pursuant to this Trust Agreement.
“Trust
Agreement” means this Amended and Restated Trust Agreement, dated as of August
31, 1998, as the same may at any time or from time to time be further
amended.
“Trustee”
means Wilmington Trust Company or any substitute therefor as provided herein,
acting not in its individual capacity but solely as trustee of the
Trust.
“Trust
Estate” means any cash, Futures and any other property held by the Trust, and
all proceeds therefrom, including any rights of the Trust pursuant to any
Subscription Agreement and any other agreements to which the Trust is a
party.
—
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Name
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The
name
of the Trust is “MLM Index™ Fund,” in which name the Trustee and the Manager may
engage in the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and xxx and be sued on behalf of the
Trust.
—
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Delaware
Trustee; Business Offices.
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— The
Trustee of the Trust in the State of Delaware shall be Wilmington Trust Company,
which is located at the Corporate Trust Office or at such other address in
the
State of Delaware as the Trustee may designate in writing to the Interest
Holders. The Trustee shall receive service of process on the Trust in
the State of Delaware at the foregoing address. In the event
Wilmington Trust Company resigns or is removed as the Trustee, the Trustee
of
the Trust in the State of Delaware shall be the successor Trustee.
— The
principal office of the Trust, and such additional offices as the Manager
may
establish, shall be located at such place or places inside or outside the
State
of Delaware as the Manager may designate from time to time in writing to
the
Trustee and the Interest Holders. Initially, the principal office of
the Trust shall be at 00 Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxxxx
00000.
— Declaration
of
Trust. The Trustee hereby acknowledges that the Trust has
received from the Manager as grantor of the Trust $1,000 per Series in a
bank
account in the Trust’s name controlled by the Manager and has received from the
Initial Interest Holder $100 per Series in such bank account, and hereby
declares that it shall hold such sums in trust, upon and subject to the
conditions set forth herein for the use and benefit of the Interest
Holders. It is the intention of the parties hereto that the Trust
shall be a business trust under the Business Trust Statute and that this
Trust
Agreement shall constitute the governing instrument of the Trust. It
is not the intention of the parties hereto to create a general partnership,
limited partnership, joint stock association, corporation, bailment or any
form
of legal relationship other than a Delaware business trust except to the
extent
such Trust is deemed to constitute a partnership under the Code and applicable
state and local tax laws. Notwithstanding the foregoing, it is the
intention of the parties thereto to create a partnership among the Interest
Holders solely for purposes of taxation under the Code and applicable state
and
local tax laws. Effective as of the date hereof, the Trustee shall
have all of the rights, powers and authority set forth herein and in the
Business Trust Statute with respect to accomplishing the purposes of the
Trust. The Trustee has filed the certificate of trust required by
Section 3810 of the Business Trust Statute in connection with the formation
of
the Trust under the Business Trust Statute.
5
— Purposes
and
Powers. The purposes of the Trust shall be (a) to trade, buy,
sell, spread or otherwise acquire, hold or dispose of Futures; (b) to enter
into
any lawful transaction and engage in any lawful activities in furtherance
of or
incidental to the foregoing purposes; and (c) as determined from time to
time by
the Manager, to engage in any other lawful business or activity for which
a
business trust may be organized under the Business Trust Statute.
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Tax
Treatment
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— Each
of the parties hereto, by entering into this Trust Agreement, (i) expresses
its
intention that the Interests in a Series will qualify under applicable tax
law
as interests in a separate partnership which holds the assets of such Series
for
the benefit of its respective Interest Holders, (ii) agrees that it will
file
its own federal, state and local income, franchise and other tax returns
in a
manner that is consistent with the treatment of the Series in which it is
an
Interest Holder as a partnership in which it is a partner and (iii) agrees
to
use reasonable efforts to notify the Manager promptly upon a receipt of any
notice from any taxing authority having jurisdiction over such holders of
interests with respect to the treatment of the Interests as anything other
than
interests in a partnership.
— The
Tax Matters Partner (as defined in Section 6231 of the Code and any
corresponding state and local tax law) in respect of each Series shall be
the
Manager. The Tax Matters Partner, at the expense of the relevant
Series, (i) shall prepare or cause to be prepared and filed the tax returns
of
each Series as a partnership for federal, state and local tax purposes and
(ii)
shall be authorized to perform all duties imposed by § 6221 et seq. of
the Code, including, without limitation, (A) the power to conduct all audits
and
other administrative proceedings with respect to the tax items of each Series;
(B) the power to extend the statute of limitations for all Interest Holders
with
respect to the tax items of each Series; (C) the power to file a petition
with
an appropriate federal court for review of a final administrative adjustment
of
each Series; and (D) the power to enter into a settlement with the IRS on
behalf
of, and binding upon, those Interest Holders having less than one percent
(1%)
interest in the particular Series, unless an Interest Holder shall have notified
the IRS and the Manager that the Manager shall not act on such Interest Holder’s
behalf. The designation made in this Section 1.6(b) is hereby
approved by each Interest Holder as an express condition to becoming an Interest
Holder. Each Interest Holder agrees to take any further action as may
be required by regulation or otherwise to effectuate such
designation. Subject to Section 4.6, each Series hereby indemnifies,
to the full extent permitted by law, the Manager from and against any damages
or
losses (including attorneys’ fees) arising out of or incurred in connection with
any action taken or omitted to be taken by it in carrying out its
responsibilities as Tax Matters Partner with respect to such Series, provided
such action taken or omitted to be taken does not constitute fraud, gross
negligence or willful misconduct.
6
— Each
Interest Holder shall furnish the Manager with information necessary to enable
the Manager to comply with United States federal income tax information
reporting requirements in respect of such Interest Holder’s
Interests.
—
Legal Title. Legal title to all the Trust Estate shall be
vested in the Trust as a separate legal entity, except that where applicable
law
in any jurisdiction requires any part of the Trust Estate to be vested
otherwise, the Manager may cause legal title to the Trust Estate to be held
by
or in the name of the Manager or any other Person as nominee.
—
THE
TRUSTEE
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Term;
Resignation.
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— The
parties confirm that Wilmington Trust Company has been appointed to serve
as the
Trustee of the Trust and has accepted such appointment. The Trust
shall have only one trustee unless otherwise determined by the
Manager. The Trustee shall serve until such time as the Manager
removes the Trustee or the Trustee resigns and a successor Trustee is appointed
in accordance with the terms of Sections 2.1(b) or 2.5 hereof.
— The
Trustee may resign at any time upon the giving of at least sixty (60) days
advance written notice to the Trust; provided, that such resignation shall
not
become effective unless and until a successor Trustee shall have been appointed
by the Manager in accordance with Section 2.5 hereof or by the Court of Chancery
of the State of Delaware in accordance with this Section 2.1(b). If
the Manager does not act within such sixty (60) day period, the Trustee may
apply to the Court of Chancery of the State of Delaware for the appointment
of a
successor Trustee.
—
Powers. Except to the extent otherwise expressly set forth
in Section 1.3 hereof and this Article II, all right, power, authority and
duty
to manage the business and affairs of the Trust and each Series is hereby
vested
in the Manager. The Trustee shall have only the rights, obligations
and liabilities specifically provided for herein and in the Business Trust
Statute, but the Trustee shall have no duty whatsoever to supervise or monitor
the Manager or the management of the Trust or any Series by the Manager and
shall have no implied rights, obligations and liabilities with respect to
the
business and affairs of the Trust or any Series. The Trustee shall
have the power and authority to execute, deliver, acknowledge and file all
necessary documents as required by the Business Trust Statute. The
Trustee shall provide prompt notice to the Manager of its performance of
any of
the foregoing. The Manager shall keep the Trustee reasonably informed
of any actions taken by the Manager with respect to the Trust or any Series
that
affect the rights, obligations or liabilities of the Trustee hereunder or
under
the Business Trust Statute.
7
—
Compensation and Expenses of the
Trustee. The Trustee shall be entitled to receive from the
Manager or an Affiliate of the Manager reasonable compensation for its services
hereunder as set forth in a separate fee agreement and shall be entitled
to be
reimbursed by the Manager or an Affiliate of the Manager for reasonable
out-of-pocket expenses incurred by it in the performance of its duties
hereunder, including, without limitation, the reasonable compensation,
out-of-pocket expenses and disbursements of counsel and such other agents
as the
Trustee may employ in connection with the exercise and performance of its
rights
and duties hereunder.
—
Indemnification. The Manager agrees,
whether or not any of the transactions contemplated hereby shall be
consummated, to assume liability for, and does hereby indemnify, protect,
save
and keep harmless each of the Trustee (including in its individual capacity)
and
its successors, assigns, legal representatives, officers, directors, agents
and
servants (each an “Indemnified Party”) from and against any and all liabilities,
obligations, losses, damages, penalties, taxes (excluding any taxes payable
by
the Trustee on or measured by any compensation received by the Trustee for
its
services hereunder or any indemnity payments received by the Trustee pursuant
to
this Section 2.4), claims, actions, suits, costs, expenses or disbursements
(including legal fees and expenses) of any kind and nature whatsoever
(collectively, “Expenses”), which may be imposed on, incurred by or asserted
against such Indemnified Party in any way relating to or arising out of the
formation, operation or termination of the Trust, the execution, delivery
and
performance of any other agreements to which the Trust is a party or the
action
or inaction of the Trustee hereunder or thereunder, except for Expenses
resulting from the gross negligence or willful misconduct of such Indemnified
Party. The indemnities contained in this Section 2.4 shall survive
the termination of this Trust Agreement and shall survive the removal or
resignation of the Trustee. In addition, the Indemnified Parties
shall be entitled to indemnification from the Trust Estate to the extent
set
forth above and to secure the same, the Trustee (including in its individual
capacity) shall have a lien against the Trust Estate which shall be prior
to the
rights of the Manager and the Interest Holders to receive distributions from
the
Trust Estate.
—
Successor Trustee. Upon the resignation or
removal of the Trustee, the Manager shall appoint a successor
Trustee. Any successor Trustee must satisfy the requirements of
Section 3807 of the Business Trust Statute. Any resignation or
removal of the Trustee and appointment of a successor Trustee shall not become
effective until a written acceptance of appointment is delivered by the
successor Trustee to the outgoing Trustee and the Manager and any fees and
expenses and other amounts hereunder due to the outgoing Trustee are
paid. Following compliance with the preceding sentence, the successor
Trustee shall become fully vested with all of the rights, powers, duties
and
obligations of the outgoing Trustee under this Trust Agreement, with like
effect
as if originally named as Trustee, and the outgoing Trustee shall be discharged
of its duties and obligations under this Trust Agreement.
—
Liability of Trustee. Except as otherwise
provided in this Article II, in accepting the trust created hereby, Wilmington
Trust Company acts solely as Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Trustee by reason
of the
transactions contemplated by this Trust Agreement and any other agreement
to
which the Trust is a party shall look only to the Trust Estate for payment
or
satisfaction thereof. The Trustee shall not be liable or accountable
hereunder or under any other agreement to which the Trust is a party, except
that the foregoing limitation shall not limit the liability, if any, that
the
Trustee may have to an Interest Holder as a result of the Trustee’s gross
negligence, or willful misconduct. In particular, but not by way of
limitation, to the full extent permitted by applicable law:
8
— The
Trustee shall have no liability or responsibility for the validity or
sufficiency of this Trust Agreement or for the form, character, genuineness,
sufficiency, value or validity of the Trust Estate;
— The
Trustee shall not be liable for any actions taken or omitted to be taken
by it
in accordance with the instructions of the Manager;
— The
Trustee shall not have any liability for the acts or omissions of the
Manager;
— The
Trustee shall have no duty or liability to supervise the performance of any
obligations of the Manager, any commodity broker, or selling agent;
— No
provision of this Trust Agreement shall require the Trustee to expend or
risk
funds or otherwise incur any financial liability in the performance of any
of
its rights or powers hereunder if the Trustee shall have reasonable grounds
for
believing that repayment of such funds or adequate indemnity against such
risk
or liability is not reasonably assured or provided to it;
— Under
no circumstances shall the Trustee be liable for indebtedness or other
obligations of the Trust or any Series arising under this Trust Agreement
or any
other agreements to which the Trust or a Series is a party;
— The
Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by this Trust Agreement, or to institute, conduct or defend
any
litigation under this Trust Agreement or any other agreements to which the
Trust
or a Series is a party at the request, order or direction of an Interest
Holder
unless such Interest Holder has offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Trustee (including, without limitation, the reasonable fees
and
expenses of its counsel) therein or thereby; and
— Notwithstanding
anything contained herein to the contrary, the Trustee shall not be required
to
take any action in any jurisdiction other than in the State of Delaware if
the
taking of such action will (i) require the consent or approval or authorization
or order of or the giving of notice to, or the registration with or taking
of
any action in respect of, any state or other governmental authority or agency
of
any jurisdiction other than the State of Delaware, (ii) result in any fee,
tax
or other governmental charge under the laws of any jurisdiction or any political
subdivision thereof in existence on the date hereof other than the State
of
Delaware becoming payable by the Trustee or (iii) subject the Trustee to
personal jurisdiction other than in the State of Delaware for causes of action
unrelated to the consummation of the transactions by the Trustee contemplated
hereby.
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Reliance;
Advice of
Counsel.
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— In
the absence of bad faith, the Trustee may conclusively rely upon certificates
or
opinions furnished to the Trustee and conforming to the requirements of this
Trust Agreement in determining the truth of the statements and the correctness
of the opinions contained therein, and shall incur no liability to anyone
in
acting upon any signature, instrument, notice, resolutions, request, consent,
order, certificate, report, opinion, bond or other document or paper believed
by
it to be genuine and believed by it to be signed by the proper party or parties
and need not investigate any fact or matter pertaining to or in any such
document; provided, however, that the Trustee shall examine each such
certificate or opinion so as to determine whether on its face it complies
with
the requirements of this Trust Agreement. The Trustee may accept a
certified copy of a resolution of the board of directors or other governing
body
of any corporate or other party as conclusive evidence that such resolution
has
been duly adopted by such body and that the same is in full force and
effect. As to any fact or matter the method of the determination of
which is not specifically prescribed herein, the Trustee may for all purposes
herein rely on a certificate, signed by the president or any vice president
or
by the treasurer or other authorized officers of the relevant party, as to
such
fact or matter and such certificate shall constitute full protection to the
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
— In
the exercise or administration of the trust hereunder and in the performance
of
its duties and obligations under this Trust Agreement, the Trustee, at the
expense of the Trust (i) may act directly or through its agents, attorneys,
custodians or nominees pursuant to agreements entered into with any of them,
and
the Trustee shall not be liable for the conduct or misconduct of such agents,
attorneys, custodians or nominees if such agents, attorneys, custodians or
nominees shall have been selected by the Trustee with reasonable care and
(ii)
may consult with counsel, accountants and other skilled professionals to
be
selected with reasonable care by it. The Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance
with
the opinion or advice of any such counsel, accountant or other such
persons.
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Not Part of Trust Estate. Amounts
paid to the Trustee or any other Indemnified Party from the Trust Estate,
if
any, pursuant to this Article II shall be deemed not to be part of the Trust
Estate immediately after such payment.
10
—
INTERESTS;
CAPITAL CONTRIBUTIONS
—
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General.
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— The
beneficial interests in the Trust shall consist of a limited number of Interests
as set forth in this Article III.
— The
initial Capital Contribution by the Manager to each Class and Series was
$1,000
and has been paid, and the Manager is hereby issued its Interests corresponding
to such contributions. The Capital Contribution of the Initial
Interest Holder was $100 to each Class and Series and has been paid, and
the
Initial Interest Holder is hereby issued its Interests corresponding to such
contributions. The Interest of the Initial Interest Holder in a Class
and Series shall terminate upon the admission of any other person as an Interest
Holder in such Class and Series and his Capital Contribution in such Class
and
Series shall be returned at that time.
— Certificates
or other evidence of ownership of the Interests will be issued only upon
the
written request of an Interest Holder.
— Every
Interest Holder, by virtue of having purchased or otherwise acquired an
Interest, shall be deemed to have expressly consented and agreed to be bound
by
the terms of this Trust Agreement.
— The
Trust may issue multiple Series of Interests, and shall issue Interests only
in
designated Series. Such Series may consist of separate
Classes. Initially, the Trust shall issue Interests in the Class A-1
Unleveraged Series, the Class B-1 Unleveraged Series, the Class A-1 Leveraged
Series and in the Class B-1 Leveraged Series. The Unleveraged Series
will attempt to replicate the MLM Index™ at a leverage ratio of 1 to 1, and the
Leveraged Series shall trade the MLM Index™ at a leverage ratio of 3 to
1. The Trust will maintain separate and distinct records for each
such Series and the assets associated with each such Series shall be held
and
accounted for separately from the other assets of the Trust and of any other
Series thereof. The debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
Series shall be enforceable against the assets of such Series only and not
against the assets of the Trust generally or the assets of any other
Series.
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Interests.
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— Offer
of Interests. During the Initial Offering Period, each Series of
the Trust shall offer at a price of $100 per Interest, a maximum of 1,000,000
Interests ($100,000,000), including the Interests of the Manager. No
fractional Interests shall be issued during the Initial Offering
Period. Each Interest Holder whose subscription for Interests in a
Series has been accepted by the Manager on behalf of such Series shall make
a
Capital Contribution to the Trust of at least $25,000 per Series in increments
of $1000 unless the Manager in its discretion permits an Interest Holder
to make
a smaller Capital Contribution. The offering shall be made pursuant
to and on the terms and conditions set forth in the Offering
Memorandum. The Manager shall make such arrangements for the sale of
the Interests as it deems appropriate.
11
— Effect
of the Sale of at least 40,000 Interests of the Unleveraged Series or 20,000
Interests of the Leveraged Series. In the event that at least
40,000 Interests of the Unleveraged Series or 20,000 Interests of the Leveraged
Series, excluding the Interests of the Manager and the Initial Interest Holder,
offered pursuant to the Offering Memorandum are sold during the Initial Offering
Period, the Manager will admit all accepted subscribers in such Series as
Interest Holders by executing on behalf of such Interest Holders this Trust
Agreement, pursuant to the Power of Attorney set forth in the Subscription
Agreement, and by making an entry on the books and records of the Trust
reflecting that such subscribers have been admitted as Interest Holders,
as soon
as practicable after the termination of the Initial Offering
Period. Accepted subscribers will be deemed Interest Holders at such
time as such admission is reflected on the books and records of the
Trust.
— Effect
of the Sale of Less than 40,000 Interests of the Unleveraged Series or 20,000
Interests of the Leveraged Series. In the event that at
least 40,000 Interests of the Unleveraged Series or 20,000 Interests of the
Leveraged Series, excluding the Interests of the Manager and the Initial
Interest Holder, offered pursuant to the Offering Memorandum are not sold
during
the Initial Offering Period, subscriptions in such Series will be canceled
and
the related subscription payments, together with interest earned thereon,
if
any, if the interest on a subscription payment equals $10 or more, will be
returned to each subscriber in such Series no later than ten (10) Business
Days
after the conclusion of the Initial Offering Period (or as soon thereafter
as
practicable if payment cannot be made in such time period), and such Series
shall be terminated. If such interest is less than $10, it will be
paid to the Trust. If all Series of the Trust are so terminated the
Trust shall be terminated and the Manager shall cause the certificate of
cancellation required by Section 3810 of the Business Trust Statute to be
filed.
— Offer
of Interests After Initial Offering. In the event that 40,000 or
more Interests of the Unleveraged Series or 20,000 or more Interests of the
Leveraged Series offered pursuant to the Offering Memorandum, excluding the
Interests of the Manager and the Initial Interest Holder in such Series,
are
sold during the Initial Offering Period, such Series may continue to offer
and
accept subscriptions for Interests and admit additional Interest Holders
pursuant to the Offering Memorandum following the Initial Offering Period
from
time to time (the “Continuous Offering Period”) in an aggregate amount not to
exceed $100,000,000 for a Series or such higher amount as the Manager
shall determine with notice thereof to the Interest Holders.
12
Each
such
additional Interest Holder shall make an initial Capital Contribution to
the
Trust on the first day of any calendar month at Interest Net Asset Value
as of
the close of business on the last day of the preceding calendar month and
in an
amount of at least $25,000. Existing Interest Holders will be
permitted to make additional Capital Contributions to a Series of the Trust
as
of the close of business on the last day of any calendar month and in the
amount
of at least $1000 or even multiples thereof. The Manager may, in its
discretion, permit Interest Holders to make smaller Capital
Contributions.
A
subscriber whose subscription is received and accepted by the Manager on
behalf
of a Series of the Trust after the termination of the Initial Offering Period
shall be admitted to the Trust and deemed an Interest Holder of such Series
on
the first day of the month next succeeding the month during which such
subscriber’s subscription was accepted. Existing Interest Holders in
a Series who contribute additional sums are considered to have made the
contribution and received the related Interests as of the first day of the
next
succeeding month.
— Subscription
Agreement. Each Interest Holder other than the Manager shall contribute to
the capital of a Class and Series of the Trust such amount as he shall state
in
the Subscription Agreement which he shall execute (as required therein),
acknowledge and, together with the Power of Attorney set forth therein, deliver
to the Manager as a counterpart of this Trust Agreement. All
subscription amounts shall be in such form as may be acceptable to the Manager
at the time of the execution and delivery of such Subscription
Agreement. To the extent that the Manager determines to accept a
subscription check, it shall be subject to prompt collection. All
subscriptions are subject to acceptance by the Manager.
— Escrow
Agreement. All proceeds from the sale of a Series
of Interests offered pursuant to the Offering Memorandum shall be
deposited in a separate interest bearing escrow account at PNC Bank, Princeton,
New Jersey, or such other bank as the Manager shall determine until the
conclusion of the Initial Offering Period. In the event subscriptions
for at least 40,000 Interests of the Unleveraged Series or 20,000 Interests
of
the Leveraged Series offered pursuant to the Offering Memorandum (excluding
the
Interests of the Manager and the Initial Interest Holder) are received and
accepted during the Initial Offering Period, each subscriber in such Series
whose subscription has been accepted will be paid the amount of any interest
earned on such subscriber’s subscription payment before trading commences, if
such interest equals $10 or more. If such interest equals less than
$10, it will be paid to the relevant Series.
—
THE
MANAGER
—
Management of the Trust. Pursuant to Section 3806 of
the Business Trust Statute, the Trust and each Series shall be managed by
the
Manager and the conduct of the Trust’s and each Series’ business shall be
controlled and conducted solely by the Manager in accordance with this Trust
Agreement.
13
—
Authority of the
Manager. In addition to and not in limitation of any rights and
powers conferred by law or other provisions of this Trust Agreement, and
except
as limited, restricted or prohibited by the express provisions of this Trust
Agreement, the Manager shall have and may exercise on behalf of the Trust
and
each Series, all powers and rights necessary, proper, convenient or advisable
to
effectuate and carry out the purposes, business and objectives of the Trust
and
each Series and shall, except as provided in this Trust Agreement or the
Business Trust Statute, have powers which shall include, without limitation,
the
following:
— To
enter into, execute, deliver and maintain contracts, agreements and any or
all
other documents and instruments, and to do and perform all such things, as
may
be in furtherance of Trust or Series purposes or necessary or
appropriate for the offer and sale of the Interests and the conduct of Trust
or
Series activities, including, but not limited to, contracts with third parties
for commodity brokerage and selling agent services, as well as administrative
services necessary to the prudent operation of the Trust or Series, and such
services may be performed by an Affiliate or Affiliates of the
Manager.
— To
establish, maintain, deposit into, sign checks and/or otherwise draw upon
accounts on behalf of the Trust or Series with appropriate banking and brokerage
institutions, and execute and/or accept any instrument or agreement incidental
to the Trust’s or Series’ business and in furtherance of its purposes, and any
such instrument or agreement so executed or accepted by the Manager in the
Manager’s name shall be deemed executed and accepted on behalf of the Trust and
Series by the Manager;
— To
deposit, withdraw, pay, retain and distribute the Trust Estate in any manner
consistent with the provisions of this Trust Agreement;
— To
supervise the preparation and filing of the Offering Memorandum;
— To
pay or authorize the payment of distributions to the Interest Holders and
expenses of the Trust or relevant Series, and to establish reserves for
contingent liabilities of the Trust or relevant Series;
— To
invest or direct the investment of funds of the Trust or relevant Series
and
prohibit any transactions contemplated hereunder which may constitute prohibited
transactions under ERISA and the Code;
— To
make any elections on behalf of the Trust or relevant Series under the Code,
or
any other applicable federal or state tax law, as the Manager shall determine
to
be in the best interests of the Trust or relevant Series;
14
— To
redeem any Interests of a Series upon at least ten (10) Business Days’ prior
written notice to the affected Interest Holder(s) if (i) there is an
unauthorized assignment pursuant to the provisions of Article V hereof, (ii)
in
the event that any transaction would or might violate any law or constitute
a
prohibited transaction under ERISA or the Code and a statutory, class or
individual exemption from the prohibited transaction provisions of ERISA
for
such transaction or transactions does not apply or cannot be obtained from
the
DOL (or the Manager determines not to seek such an exemption), or (iii) for
any
other reason the Manager, in its sole discretion, elects to cause the Trust
to
effect any redemption of such Interests. In the case of such
redemptions, the Redemption Date shall be the close of business on the date
written notice of intent to redeem is sent by the Manager to an Interest
Holder. A notice may be revoked prior to the payment date by written
notice from the Manager to an Interest Holder;
— In
the sole discretion of the Manager, to appoint an Affiliate or Affiliates
of the
Manager as additional Managers; and
— To
establish the Trust’s and Series’ trading policies and impose limitations on the
trading activities of the Trust and each Series beyond those enumerated in
the
Trust’s and Series’ trading policies if the Manager determines that such
limitations are necessary or in the best interests of the Trust or Series;
and
to be responsible for the management of the Trust’s and Series’
assets.
—
Obligations of the
Manager. In addition to the obligations expressly provided by
the Business Trust Statute or this Trust Agreement, the Manager
shall:
— Devote
such of its time to the business and affairs of the Trust and each Series
as it
shall, in its discretion exercised in good faith, determine to be necessary
to
conduct the business and affairs of the Trust and each Series for the benefit
of
the Trust and each Series and the Interest Holders;
— Execute,
file, record and/or publish all certificates, statements and other documents
and
do any and all other things as may be appropriate for the formation,
qualification and operation of the Trust and each Series and for the conduct
of
its business in all appropriate jurisdictions;
— Retain
independent public accountants to audit the accounts of the Trust and each
Series;
— Employ
attorneys to represent the Trust and each Series;
— Use
its best efforts to maintain the status of (1) the Trust as a “business trust”
for state law purposes, and (2) each Series as a “partnership” for federal
income tax purposes;
— Have
fiduciary responsibility for the safekeeping and use of the Trust Estate,
whether or not in the Manager’s immediate possession or
control;
15
— Acknowledge
and accept appointment as an investment manager and fiduciary under ERISA,
with
respect to the assets of each Interest Holder subject to ERISA invested in
the
Trust.
— Admit
substitute Interest Holders and additional Interest Holders in accordance
with
this Trust Agreement;
— Refuse
to recognize any attempted transfer or assignment of an Interest that is
not
made in accordance with the provisions of Article V hereof; and
— Maintain
a current list of the names and last known addresses and number of Interests
owned by each Interest Holder and the other Trust documents described in
Section
9.6 hereof at the Trust’s principal place of business.
—
|
General
Prohibitions. The Trust and each Series shall
not:
|
— Borrow
money from or loan money to any Interest Holder or other person, except that
the
foregoing is not intended to prohibit (i) the deposit of margin with respect
to
the initiation and maintenance of the Trust’s and Series’ Futures positions or
(ii) a loan as described in Section 6.7 hereof; and
— Create,
incur, assume or suffer to exist any lien, mortgage, pledge, conditional
sales
or other title retention agreement, charge, security interest or encumbrance
on
the Trust Estate, except (i) the right and/or obligation of a Futures broker
incurred in the ordinary course of business, (ii) liens for taxes not delinquent
or being contested in good faith and by appropriate proceedings and for which
appropriate reserves have been established, (iii) deposits or pledges to
secure
obligations under workmen’s compensation, social security or similar laws or
under unemployment insurance, (iv) deposits or pledges to secure contracts
(other than contracts for the payment of money), leases, statutory obligations,
surety and appeal bonds and other obligations of like nature arising in the
ordinary course of business, (v) mechanics’, warehousemen’s, carriers’,
workmen’s, materialmen’s or other like liens arising in the ordinary course of
business with respect to obligations which are not due or which are being
contested in good faith, and for which appropriate reserves have been
established if required by generally accepted accounting principles, and
liens
arising under ERISA and (vi) as permitted in Section 2.4 hereof.
—
Liability of the Manager. The
Manager shall have no liability to the Trust or a Series or to any
Interest Holder for any loss suffered by the Trust or Series which arises
out of
any action or inaction of the Manager if the Manager, in good faith, determined
that such course of conduct was in the best interest of the Trust or Series
and
such course of conduct did not constitute gross negligence, willful misconduct
or a breach of ERISA by the Manager. Subject to the foregoing, the
Manager shall not be personally liable for the return or repayment of all
or any
portion of the capital or profits of any Interest Holder or assignee thereof,
it
being expressly agreed that any such return of capital or profits made pursuant
to this Trust Agreement shall be made solely from the assets of the relevant
Series without any rights of contribution from the Manager.
16
—
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Indemnification
of the Manager and the Trust.
|
— The
Manager shall be indemnified by the relevant Series against any
losses, judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained by it in connection with such Series,
provided that (i) the Manager was acting on behalf of or performing services
for
such Series and determined, in good faith, that such course of conduct was
in
the best interests of such Series and such liability or loss was not the
result
of gross negligence, willful misconduct or a breach of this Trust Agreement
or
ERISA on the part of the Manager, and (ii) any such indemnification will
be
recoverable only from the assets of such Series. All rights to
indemnification permitted herein and payment of associated expenses shall
not be
affected by the dissolution or other cessation to exist of the Manager, or
the
withdrawal, adjudication of bankruptcy or insolvency of the
Manager.
— In
the event the Trust or a Series is made a party to any claim, dispute, demand
or
litigation or otherwise incurs any loss, liability, damage, cost or expense
as a
result of or in connection with any Interest Holder’s (or assignee’s)
obligations or liabilities unrelated to the Trust’s and Series’ business, such
Interest Holder (or assignees cumulatively) shall indemnify, defend, hold
harmless, and reimburse the Trust or Series for all such loss, liability,
damage, cost and expense incurred, including attorneys’ and accountants’
fees.
—
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Expenses.
|
— The
Manager or an Affiliate of the Manager shall be responsible for the payment
of
all Organization and Offering Expenses incurred in the creation of the Trust,
each Series and sale of Interests. “Organization and Offering
Expenses” shall mean those expenses incurred in connection with the formation,
qualification and registration of the Trust, each Series and the Interests
and
in offering, distributing and processing the Interests under applicable federal
and state law, and any other expenses actually incurred and, directly or
indirectly, related to the organization of the Trust and each Series or the
initial and continuous offering of the Interests, including, but not limited
to,
expenses such as: (i) initial and ongoing filing fees, escrow fees and taxes,
(ii) costs of preparing, printing (including typesetting), amending,
supplementing, mailing and distributing the Offering Memorandum and related
sales materials during the Initial and Continuous Offering Periods, (iii)
travel, telegraph, telephone and other expenses in connection with the offering
and issuance of the Interests during the Initial and Continuous Offering
Periods
and (iv) accounting, auditing and legal fees (including disbursements related
thereto) incurred in connection therewith. The Manager shall charge
an organizational fee in the amount of one-half of one percent (0.5%) of
a
subscriber’s initial investment and any subsequent investment (excluding
Exchanges) in a Series of the Trust.
— All
ongoing charges, costs and expenses of each Series’ operation, including, but
not limited to, the expenses associated with (i) preparation of monthly,
annual
and other reports required by applicable federal and state regulatory
authorities, (ii) printing and mailing of reports to Interest Holders, (iii)
services of legal counsel and independent auditors and accountants, (iv)
postage
and insurance, (v) client relations and services, (vi) computer equipment
and
system development and (vii) trustee fees shall be paid by the relevant Series;
provided, however, that these expenses will be reimbursed to a Series of
the
Trust by the Manager to the extent that the aggregate amount per series exceeds
one-half of one percent (0.5%) of the average of the Net Asset Value of the
Trust allocated to that Series in any Fiscal Year. All ongoing
expenses associated with (i) management fee payments to the Manager and (ii)
brokerage fees and (iii) extraordinary expenses (including, but not limited
to,
legal claims and liabilities and litigation costs and any indemnification
related thereto) shall be paid by the relevant Series.
17
—
Compensation to the
Manager. The Manager shall receive from the relevant Series a
management fee at an annual rate of one percent (1%) for the Unleveraged
Series
and two percent (2.0%) for the Leveraged Series based upon the Net Asset
Value of the relevant Series, determined and paid as of the last day of each
calendar month. The Manager shall, in its capacity as an Interest
Holder, be entitled to receive allocations and distributions pursuant to
the
provisions of this Trust Agreement.
—
Other Business of Interest
Holders. Except as otherwise specifically provided herein, any
of the Interest Holders and any shareholder, officer, director, employee
or
other person holding a legal or beneficial interest in an entity which is
an
Interest Holder, may engage in or possess an interest in other business ventures
of every nature and description, independently or with others, and the pursuit
of such ventures, even if competitive with the business of the Trust and
a
Series, shall not be deemed wrongful or improper.
—
Voluntary Withdrawal of the
Manager. The Manager may withdraw voluntarily as the Manager of
the Trust upon sixty (60) days’ prior written notice to all Interest Holders and
the Trustee. The term of the Trust shall end upon the withdrawal of
the Manager.
—
Litigation. The Manager is hereby
authorized to prosecute, defend, settle or compromise actions or claims at
law
or in equity at the relevant Series’ expense as may be necessary or proper to
enforce or protect the relevant Series’ interests. The Manager shall
satisfy any judgment, decree or decision of any court, board or authority
having
jurisdiction or any settlement of any suit or claim prior to judgment or
final
decision thereon, first, out of any insurance proceeds available therefor,
and
next, out of the relevant Series’ assets.
—
TRANSFERS
OF INTERESTS
—
General Prohibition. An
Interest Holder may not sell, assign, transfer or otherwise dispose of, or
pledge, hypothecate or in any manner encumber any or all of his Interests
or any
part of his right, title and interest in the capital or profits of any Series
except as permitted in this Article V and any act in violation of this Article
V
shall not be binding upon or recognized by the Trust (regardless of whether
the
Manager shall have knowledge thereof), unless approved in writing by the
Manager.
18
—
Transfer of the Manager’s
Interests.
— The
Manager will not cease to be the Manager of the Trust merely upon the occurrence
of its making an assignment for the benefit of creditors, filing a voluntary
petition in bankruptcy, filing a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation, filing an answer
or
other pleading admitting or failing to contest material allegations of a
petition filed against it in any proceeding of this nature or seeking,
consenting to or acquiescing in the appointment of a trustee, receiver of
liquidator for itself or of all or any substantial part of its
properties.
— To
the full extent permitted by law, nothing in this Trust Agreement shall be
deemed to prevent the merger of the Manager with another entity, the
reorganization of the Manager into or with any other entity, the transfer
of all
the capital stock of the Manager or the assumption of the rights, duties
and
liabilities of the Manager by, in the case of a merger, reorganization or
consolidation, the surviving entity by operation of law.
— Upon
assignment of all of its Interests, the Manager shall not cease to be the
Manager of the Trust, or to have the power to exercise any rights or powers
as
the Manager, until an additional Manager, who shall carry on the business
of the
Trust, has been admitted to the Trust.
—
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Transfer
of Interests.
|
— An
Interest Holder other than the Manager may transfer, assign, pledge or encumber
his Interest in a Series as provided herein only after written notice to
and
written approval by the Manager, the granting or denying of which shall be
in
the Manager’s sole and absolute discretion and subject to whatever conditions,
if any, the Manager may require. No such transferee, assignee,
pledgee, or secured creditor (each, an “Assignee”) shall become a substituted
Interest Holder unless the Manager first consents to such substitution in
writing, which consent shall be granted or denied in the sole discretion
of the
Manager and subject to whatever conditions, if any, the Manager shall
require. Any Assignee of an Interest Holder who has not been admitted
with respect to a Series as a substituted Interest Holder shall not have
any of
the rights of an Interest Holder, except that such person shall receive that
share of capital and profits and shall have that right to request redemption
to
which his transferor, assignor, pledgor, or debtor would otherwise have been
entitled and shall remain subject to the other terms of this Trust Agreement
binding upon Interest Holders. The transferring Interest Holder shall
bear all costs (including any attorneys’ fees) related to such transfer,
assignment, pledge, or encumbrance of his Interest.
19
— Except
as specifically provided in this Trust Agreement, a permitted Assignee of
an
Interest shall be entitled to receive distributions from the relevant Series
attributable to the Interest acquired by reason of such assignment from and
after the effective date of the assignment of such Interest to
him. The “effective date” of an assignment of an Interest as used in
this clause shall be the first day of the next succeeding calendar month,
provided the Manager shall have been in receipt of the written instrument
of
assignment for at least two (2) Business Days prior thereto. If the
assignee is (A) an ancestor or descendant of the Interest Holder, (B) the
personal representative or heir of a deceased Interest Holder, (C) the trustee
of a trust whose beneficiary is the Interest Holder or another person to
whom a
transfer could otherwise be made or (D) a shareholder, partner, or beneficiary
of a corporation, partnership or trust upon its termination or liquidation,
then
the “effective date” of an assignment of an Interest shall be the first day of
the calendar month immediately following the month in which the written
instrument of assignment is received by the Manager.
— Anything
herein to the contrary notwithstanding, the Trust and the Manager shall be
entitled to treat the assignor of an Interest as the absolute owner thereof
in
all respects, and shall incur no liability for distributions made in good
faith
to him, until such time as the written assignment has been received by, and
recorded on the books of, the Trust and the Manager has approved the assignment
in writing.
— If
the Manager, its stockholders and any person related to the Manager or its
stockholders within the meaning of Sections 267(b) or 707(b)(1) of the Code
own
in the aggregate 80% or more of the aggregate Interests of a Series, an Assignee
of any such Interest may not become a substitute Interest Holder with respect
thereto except, if there are Interest Holders other than such persons which
in
the aggregate own at least a 1% interest in the Series’ income, gain, loss,
deduction, credit and capital, but this restriction will not apply if all
such
Interest Holders, at their sole discretion, consent in writing to such
substitution.
— Anything
else to the contrary contained herein notwithstanding: (A) In any particular
twelve (12) consecutive month period no assignment or transfer of an Interest
in
a Series may be made which would result in increasing the aggregate total
of
Interests in such Series previously assigned and/or transferred in said period
to forty-nine percent (49%) or more of the outstanding Interests in such
Series. This limitation is hereinafter referred to as the “forty-nine
percent (49%) limitation”; (B) Clause (ii)(A) hereof shall not apply to a
transfer by gift, bequest or inheritance, or a transfer to (e.g., a redemption
by) the Series, and, for purposes of the forty-nine percent (49%) limitation,
any such transfer shall not be treated as such; (C) If, after the forty-nine
percent (49%) limitation is reached in any consecutive twelve (12) month
period
with respect to a Series, a transfer of an Interest in such Series would
otherwise take place by operation of law (but not including any transfer
referred to in clause (ii)(B) hereof) and would cause a violation of the
forty-nine percent (49%) limitation, then said Interest(s) shall be deemed
to
have been sold by the transferor to the Series in liquidation of said
Interest(s) immediately prior to such transfer for a liquidation price equal
to
the Net Asset Value of said Interest(s) on such date of transfer. The
liquidation price shall be paid within ninety (90) days after the date of
the
transfer.
20
— The
Manager, in its sole discretion, may cause a Series to make, refrain from
making, or, once having made, to revoke, the election referred to in Section
754
of the Code, and any similar election provided by state or local law, or
any
similar provision enacted in lieu thereof.
— The
Manager, in its sole discretion, may cause a Series to make, refrain from
making, or, once having made, to revoke the election in Section 988(a)(1)(B)
of
the Code or by a qualified fund under Section 988(c)(1)(E)(V) of the Code,
and
any similar election provided by state or local law, or any similar provision
enacted in lieu thereof.
— No
election to treat a Series other than as a partnership for federal income
tax
purposes shall be made without the consent of all Interest Holders of such
Series.
— Each
Interest Holder of a Series hereby agrees to indemnify and hold harmless
such
Series and each Interest Holder of such Series against any and all losses,
damages, liabilities or expense (including, without limitation, tax liabilities
or loss of tax benefits) arising, directly or indirectly, as a result of
any
transfer or purported transfer by such Interest Holder in violation of any
provision contained in this Section 5.3.
— The
requirements of Sections 5.3(a), 5.3(b) and 5.3(d)(i) hereof may be modified
in
the discretion of the Manager if the Manager is advised by tax counsel to
the
Trust that a proposed modification will not adversely affect the classification
of a Series as a partnership for federal income tax purposes or otherwise
adversely affect the Interest Holders.
—
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Not
to be Subject to Corporate Tax as a Publicly Traded
Partnership.
|
— All
Interests in the Trust have been or will be issued in a transaction or
transactions that were not required to be registered under the Securities
Act of
1933 (the “1933 Act”), and to the extent such offerings or sales were not
required to be registered under the 1933 Act by reason of Regulation S (17
CFR
230.901 through 230.904) or any successor thereto, such offerings or sales
would
not have been required to be registered under the 1933 Act if the Interests
so
offered or sold had been offered and sold within the United States.
— Neither
the Manager nor the Trust or any Series will participate in the Interests
in the
Trust being traded on an established securities market. For purposes
of the preceding sentence, an established securities market is a national
securities exchange that is either registered under Section 6 of the Securities
Exchange Act of 1934 (the “1934 Act”) or exempt from registration because of the
limited volume of transactions, a foreign securities exchange that, under
the
law of the jurisdiction where it is organized, satisfies regulatory requirements
that are analogous to the regulatory requirements of the 1934 Act, a regional
or
local exchange, or an interdealer quotation system that regularly disseminates
firm buy or sell quotations by identified brokers or dealers by electronic
means
or otherwise.
21
— Notwithstanding
anything to the contrary in this Trust Agreement, for each taxable year of
a
Series, pursuant to Sections 7704(c) and 7704(d) of the Code, the principal
activity of the Series will consist of entering into and buying for investment
purposes futures contracts on foreign currencies and commodities (which are
capital assets to the Series) and at least 90% of the Series’ gross income for
each taxable year of such Series will constitute “qualifying income” under such
provisions in the form of gains from such trading and other qualifying income,
including interest income.
—
DISTRIBUTION
AND ALLOCATIONS
—
Capital Accounts. Each
Series shall be accounted for separately, as if it were a separate
partnership. A capital account shall be established for each Interest
Holder of each Series on the books of the Trust (such account sometimes
hereinafter referred to as a “book capital account”). The initial
balance of each Interest Holder’s book capital account for a Series shall be the
amount of his initial Capital Contribution to such Series. Each
Interest Holder’s capital account shall be maintained in accordance with the
Treasury Regulations promulgated under Section 704(b) of the Code.
—
Monthly Allocations. As of the close
of business (as determined by the Manager) on the last day of each calendar
month during each Fiscal Year of the Trust, the following determinations
and
allocations shall be made:
— First,
any increase or decrease in the Net Asset Value of a Series as of such date
as
compared to the next previous determination of Net Asset Value shall be credited
or charged to the book capital accounts of the Interest Holders of such Series
in the ratio that the balance of each Interest Holder’s book capital account in
such Series bears to the balance of all Interest Holders’ book capital accounts
in such Series; and
— Next,
the amount of any distribution from a Series to be made to an Interest Holder
and any amount to be paid to an Interest Holder upon redemption of his Interests
in a Series shall be charged to that Interest Holder’s book capital account for
such Series as of the applicable record date and Redemption Date,
respectively.
22
— Notwithstanding
this Section 6.2, if after taking into account any distributions to be made
with
respect to an Interest Holder for the relevant period pursuant to Section
6.5
hereof, any allocation would produce a deficit in the book capital account
for a
Series of an Interest Holder, the portion of such allocation that would create
such a deficit shall instead be allocated pro rata to the book capital
accounts of all the remaining Interest Holders of such Series (subject to
the
same limitation).
— Notwithstanding
anything to the contrary in this Trust Agreement, the interest of the Manager
in
each material item of income, gain, loss and deduction of each Series shall
be
equal, in the aggregate, to at least one percent (1%) of each such item at
all
times during the term of this Trust Agreement. This requirement may
be modified in the discretion of the Manager if the Manager is advised by
tax
counsel to the Trust that a proposed modification will not adversely effect
the
classification of a Series as a partnership for federal income tax purposes
or
otherwise adversely affect the income tax consequences to the Interest
Holders.
—
Allocation of Profit and Loss for United
States Federal Income Tax Purposes. As of the end of each Fiscal
Year of a Series, the recognized profit or loss of such Series shall be
allocated among the Interest Holders of such Series pursuant to the following
subparagraphs for federal income tax purposes.
— For
federal income tax purposes, items of income, gain, loss, deduction or credit
of
a Series for each Fiscal Year shall be allocated among the Interest Holders
of
such Series in such manner as to reflect as nearly as possible the amounts
credited or charged to each Interest Holder’s book capital account in such
Series.
— Unrealized
gains or losses of a Series from prior periods which have been credited or
charged to an Interest Holder’s book capital account shall, when realized, be
allocated as nearly as possible for federal income tax purposes to reflect
such
prior allocation to an Interest Holder’s book capital account.
— Allocations
hereunder shall be made in accordance with the Treasury Regulations promulgated
by the Department of the Treasury under Section 704(b) and Section 704(c)
of the
Code, and in the case of allocations made in accordance with subparagraphs
(a)
and (b) above, may be made in accordance with the provisions in Treasury
Regulation Section 1.704-3(e)(3) (or successor regulations) for “securities
partnerships” to the extent a Series constitutes a “securities partnership”
within the meaning of such provisions.
23
— Notwithstanding
subparagraph (b) above, to the extent permitted by the Treasury Regulations
(or
successor regulations) referred to in subparagraph (c), allocations of gains
of
a Series that have been realized up to the time an Interest Holder has redeemed
all or any portion of his Interests in such Series may be allocated first
to
each Interest Holder of such Series who has redeemed any such Interests during
the year to the extent that the amount the Interest Holder received on
redemption exceeds the amount of the Interest Holder’s tax basis attributable to
the Interests redeemed, and allocations of losses of a Series that have been
realized up to the time an Interest Holder has redeemed all or any portion
of
his Interests in such Series may be allocated first to each Interest Holder
of
such Series who has redeemed any such Interests during the year to the extent
that the amount of the Interest Holder’s tax basis attributable to the Interests
redeemed exceeds the amount the Interest Holder received on
redemption. If more than one Interest Holder receives a special
allocation described above, the allocation to each Interest Holder may be
made
in proportion to the ratio that such Interest Holder’s tax basis bears to the
total tax basis for all Interests of the relevant Series redeemed at that
time.
— Notwithstanding
anything contained in this Trust Agreement to the contrary, the Manager shall
be
given the absolute discretion to make such adjustments to the allocation
of
gain, deduction, income, loss or distributions of a Series so that the
allocations are consistent with those permitted under Subchapter K of the
Code.
— The
tax allocations prescribed by this Section 6.3 shall be made to each holder
of
an Interest whether or not the holder is a substituted Interest
Holder.
—
Qualified Income
Offset. In the event any Interest Holder of a Series
unexpectedly receives any adjustments, allocations, or distributions described
in Treasury Regulations Section 1.704-1(b) (2) (ii) (d) (4), Treasury
Regulations Section 1.704-1(b) (2) (ii) (d) (5), or Treasury Regulations
Section
1.704-1 (b) (2) (ii) (d) (6), items of income and gain of such Series shall
be
specially allocated to each such Interest Holder in an amount and manner
sufficient to eliminate, to the extent required by the Treasury Regulations,
the
book capital account deficit in such Series of such Interest Holder as quickly
as possible, provided that an allocation pursuant to this Section 6.4 shall
be
made if and only to the extent that such Interest Holder would have a book
capital account deficit after all other allocations provided for in Section
6.2
of this Trust Agreement have been tentatively made as if this Section were
not
in this Trust Agreement.
—
Allocation of Distributions. Distributions shall
be made by the Manager, and the Manager shall have sole discretion in
determining the amount and frequency of distributions, other than redemptions,
which the Trust shall make with respect to the Interests; provided, however,
that the Trust shall not make any distribution that violates the Business
Trust
Statute. The aggregate distributions made in a Fiscal Year with
respect to a Series (other than distributions on termination, which shall
be
allocated in the manner described in Article VIII hereof) shall be allocated
among the Interest Holders in such Series in the ratio in which the number
of
Interests held by each of them bears to the number of Interests held by all
of
the Interest Holders of such Series as of the record date of such distribution;
provided, further, however, that any distribution with respect to a Series
made
in respect of an Interest shall not exceed the book capital account for such
Interest.
—
Admissions of Interest Holders;
Transfers. For purposes of this Article VI, Interest Holders
shall be deemed admitted, and a book capital account shall be established
in
respect of the Interests acquired by such Interest Holder, as of the first
day
of the calendar month following the calendar month in which such Interest
Holder’s subscription or additional Capital Contribution, as the case may be, is
accepted, or the transfer of Interests to such Interest Holder is recognized,
determined in accordance with Section 3.2(e) hereof except that persons accepted
as subscribers to the Trust pursuant to Section 3.2(b) hereof shall be deemed
admitted on the date determined pursuant to such Section. Any
Interest Holder to whom an Interest has been transferred shall succeed to
the
book capital account attributable to the Interest transferred.
24
—
Liability for State and Local and Other
Taxes. In the event that the Trust or a Series shall be
separately subject to taxation by any state or local taxing authority or
by any
foreign taxing authority, the Trust or a Series shall be obligated to pay
such
taxes to such jurisdiction. In the event that the Trust or a Series
shall be required to make payments to any taxing authority in respect of
any
Interest Holder’s allocable share of income of a Series, the amount of such
taxes shall be considered a loan by the Series to such Interest Holder, and
such
Interest Holder shall be liable for and shall pay to the Series (and the
Manager
shall be entitled to redeem Interests of the Interest Holder as necessary
to
satisfy), any taxes so required to be withheld and paid by the Trust or Series
within ten (10) days after the Manager’s request therefor. Such
Interest Holder shall also be liable for (and the Manager shall be entitled
to
redeem additional Interests of the Interest Holder as necessary to satisfy)
interest on the amount of taxes paid by the Trust or Series to the taxing
authority, from the date of the Manager’s request for payment to the date of
payment or the redemption, as the case may be, at the rate of two percent
(2%)
over the prime rate charged from time to time by Citibank, N.A. The
amount, if any, payable by the Series to the Interest Holder in respect of
his
Interests so redeemed, or in respect of any other actual distribution by
the
Series to such Interest Holder, shall be reduced by any obligations owed
to the
Series by the Interest Holder, including, without limitation, the amount
of any
taxes required to be paid by the Series to the taxing authority and interest
thereon as aforesaid. Amounts, if any, deducted by the Series from
any actual distribution or redemption payment to such Interest Holder shall
be
treated as an actual distribution to such Interest Holder for all purposes
of
this Trust Agreement.
—
REDEMPTIONS
AND EXCHANGES
—
Redemption of Interests. The
Interest Holders recognize that the profitability of a Series depends upon
long-term and uninterrupted investment of capital. It is agreed,
therefore, that profits and gains of a Series may be automatically reinvested,
and that the Manager does not intend to make any
distributions. Nevertheless, the Interest Holders contemplate the
possibility that one or more of the Interest Holders may elect to realize
and
withdraw profits, or withdraw capital, through the redemption of Interests
prior
to the dissolution of the Trust and each Series. In that regard and
subject to the provisions of Section 4.2(h) hereof:
— Subject
to the conditions set forth in this Article VII, each Interest Holder (or
any
permitted assignee thereof) shall have the right to request such Series to
redeem any Interest in such Series in its entirety, or a portion thereof
in even
multiples of $1000, that he owns immediately after the close of business
on the
last day of a calendar month following the date the Manager is in receipt
of
written notice of redemption for ten (10) Business Days (a “Redemption Date”),
commencing with the end of the first full calendar month of trading
activity of such Series. Interests will be redeemed on a “first in,
first out” basis based on the time of receipt of redemption requests. Interests
which are redeemed will be deemed canceled, but such cancellation shall not
reduce the maximum number of Interests that a Series may offer under Section
3.2
of this Trust Agreement. If an Interest Holder (or permitted assignee
thereof) is permitted to request that the Series redeem any or all of his
Interests in such Series as of a date other than a Redemption Date, such
adjustments in the determination and allocation among the Interest Holders
of
such Series of profits, losses and items of income, gain, deduction, loss
or
credit for tax accounting purposes shall be made as are necessary or appropriate
to reflect and give effect to the redemption.
25
— The
value of an Interest for purposes of redemption shall be the book capital
account balance of such Interest at the close of business on the Redemption
Date, less any amount owing by such Interest Holder (and his permitted assignee,
if any) to the Series pursuant to Sections 4.6(b), 5.3(h), 6.7 or 7.1(c)
of this
Trust Agreement. If redemption of an Interest shall be requested by a
permitted assignee, all amounts which shall be owed to the relevant Series
under
Sections 4.6(b), 5.3(h), 6.7 or 7.1(c) hereof by the Interest Holder,
as well as all amounts which shall be owed by all permitted assignees of such
Interest, shall be deducted from the Net Asset Value of such Interest upon
redemption.
— With
respect to all redemptions, payment ordinarily will be made within ten (10)
Business Days of the Redemption Date, except that under special circumstances,
including, but not limited to, the inability on the part of a Series to
liquidate positions as of the Redemption Date or default or delay in payments
due the relevant Series from brokers, banks and other Persons, the Series
may
delay payment to Interest Holders whose Interests are being
redeemed. Further, the right to obtain redemption is contingent upon
the relevant Series having property sufficient to discharge its liabilities
on
the date of redemption. The Manager is hereby authorized to charge an
Interest Holder whose Interests are being redeemed such reasonable expenses
and
costs as may be occasioned by any such redemption. Under certain
circumstances, the Manager may find it advisable to establish a reserve for
contingent liabilities. In such event, the amount receivable by an
Interest Holder on redemption of his Interest will be reduced by his
proportionate share of the reserve.
— An
Interest Holder wishing to request redemption of his Interests must provide
the
Manager with written notice of his request for redemption, which notice shall
specify the name and address of the Interest Holder requesting redemption
and
the amount and Series of Interests he seeks to have redeemed. The
notice of redemption shall be in the form annexed to the Offering Memorandum
or
in any other form acceptable to the Manager and shall be mailed or delivered
to
the principal place of business of the Manager. Such notice must
include representations and warranties that the Interest Holder requesting
redemption is the lawful and beneficial owner of the Interests to be redeemed
and that such Interests are not subject to any pledge or otherwise encumbered
in
any fashion. In certain circumstances, the relevant Series may
require additional documents, such as, but not limited to, trust instruments,
death certificates, appointments as executor or administrator or certificates
of
corporate authority. Interest Holders requesting redemption shall be
notified in writing within ten (10) Business Days following the Redemption
Date
whether or not their Interests will be redeemed, unless payment for the redeemed
Interests is made within that ten (10) Business Day period, in which case
the
notice of acceptance of the redemption shall not be required.
26
— The
Manager may suspend temporarily any redemption if the effect of such redemption,
either alone or in conjunction with other redemptions, would be to impair
the
relevant Series’ ability to operate in pursuit of its objectives. In
addition, the Manager may cause one or more Series to redeem Interests pursuant
to Section 4.2(h) hereof.
— Subject
to Sections 7.1(c) and 7.1(e) hereof, all requests for redemption in proper
form
will be honored, and the relevant Series’ positions will be liquidated to the
extent necessary to discharge its liabilities on the Redemption
Date.
—
Redemption By the
Manager. Notwithstanding any provision in this Trust Agreement
to the contrary, for so long as it shall act as the Trust’s Manager, the Manager
shall not transfer or permit a Series to redeem any of the Manager’s Interests
in such Series to the extent that any such transfer or redemption would result
in its having a capital account balance for such Series of less than
$1,000.
—
Exchanges. Interests of one
Series may be exchanged, without any charge, for Interests of the other Series
(an “Exchange”) on the last day of each month, subject to the conditions set
forth below. An Exchange will be treated as a redemption of Interests
of one Series and a simultaneous purchase of Interests of the other
Series. No organizational fee will be charged in connection with
Interests acquired in an Exchange. Interests purchased in an Exchange
will be issued and sold at a price equal to one hundred percent (100%) of
the
Net Asset Value of the Interests in such new Series as of the date of the
Exchange. Each Exchange is subject to satisfaction of the conditions
governing redemptions set forth in Section 7.1 hereof. In order to
effect an Exchange, a request for exchange must be received by the Manager
not
less than ten (10) Business Days prior to the proposed date of the
Exchange. An Interest Holder must request an Exchange on the form
attached to the Offering Memorandum.
—
THE
INTEREST HOLDERS
—
No Management or Control; Limited
Liability. The Interest Holders, except for the Manager, shall
not participate in the management or control of the Trust’s and
Series’ business nor shall they transact any business for the Trust or any
Series or have the power to sign for or bind the Trust or any Series, said
power
being vested solely and exclusively in the Manager. Except as
provided in Section 8.3 hereof, no Interest Holder shall be bound by, or
be
personally liable for, the expenses, liabilities or obligations of a Series
in
excess of his Capital Contribution to such Series plus his share of the Trust
Estate belonging to such Series and profits of such Series remaining in such
Series, if any. Each Interest, when purchased in accordance with this Trust
Agreement, shall, except as otherwise provided by law, be fully paid and
non
assessable. No salary shall be paid to any Interest Holder in his
capacity as an Interest Holder, nor shall any Interest Holder have a drawing
account or earn interest on the contribution to his capital
account(s).
27
—
Rights and
Duties. The Interest Holders shall have the following rights,
powers, privileges, duties and liabilities:
— The
Interest Holders of a Series shall receive from the Series distributions
if,
when and as declared by the Manager.
— Except
for the Interest Holders’ rights to request redemption set forth in Article VII
hereof or upon a redemption effected by the Manager pursuant to Section 4.2(h)
hereof, Interest Holders shall have the right to demand the return of their
capital account in a Series only upon the dissolution and winding up of the
Series. In no event shall an Interest Holder be entitled to demand or
receive property other than cash. Except upon a redemption effected
by the Manager pursuant to Section 4.2(h) hereof, no Interest Holder of a
Series
shall have priority over any other Interest Holder of such Series either
as to
the return of capital or as to profits, losses or distributions. No
Interest Holder shall have the right to bring an action for partition against
the Trust or any Series.
— Except
as set forth above and in Article XI hereof, to the fullest extent permitted
by
law, the Interest Holders shall have no voting or other rights with respect
to
the Trust or any Series, including, without limitation, any right to vote
on or
approve any merger or consolidation of the Trust or any Series with any other
Person or any conversion of the Trust or any Series.
—
Limitation on
Liability.
— Except
as provided in Sections 2.6(g) (if applicable), 4.6(b), 5.3(h) and 6.7 hereof,
and as otherwise provided under Delaware law, the Interest Holders shall
be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the general corporation
law
of Delaware and no Interest Holder shall be liable for claims against, or
debts
of the Trust and a Series in excess of his Capital Contribution to such Series
and his share of the Trust Estate belonging to such Series and undistributed
profits of such Series, except in the event that the liability is founded
upon
misstatements or omissions contained in such Interest Holder’s Subscription
Agreement delivered in connection with his purchase of Interests. In
addition, and subject to the exceptions set forth in the immediately preceding
sentence, the Trust and a Series shall not make a claim against an Interest
Holder with respect to amounts distributed to such Interest Holder or amounts
received by such Interest Holder upon redemption unless, under Delaware law,
such Interest Holder is liable to repay such amount.
28
— The
relevant Series shall indemnify, to the full extent permitted by law, to
the
extent of the Trust Estate belonging to such Series, each Interest Holder
(excluding the Manager) of such Series against any claims of liability asserted
against such Interest Holder solely because he is a beneficial owner of the
Trust and such Series (other than for taxes for which such Interest Holder
is
liable under Section 6.7 hereof).
— Every
written note, bond, contract, instrument, certificate or undertaking made
or
issued by the Manager shall give notice to the effect that the same was executed
or made by or on behalf of the Trust and the relevant Series and that the
obligations of such instrument are not binding upon the Interest Holders
individually but are binding only upon the assets and property of the relevant
Series, and no resort shall be had to the Interest Holders’ personal property
for satisfaction of any obligation or claim thereunder, and appropriate
references may be made to this Trust Agreement and may contain any further
recital which the Manager deems appropriate, but the omission thereof shall
not
operate to bind the Interest Holders individually or otherwise invalidate
any
such note, bond, contract, instrument, certificate or undertaking.
—
BOOKS
OF ACCOUNT AND REPORTS
—
Books of
Account. Proper books of account shall be kept for each Series
and shall be audited annually by an independent certified public accounting
firm
selected by the Manager in its sole discretion, and there shall be entered
therein all transactions, matters and things relating to the business of
each
Series as are required by the CE Act and regulations promulgated thereunder,
and
all other applicable rules and regulations, and as are usually entered into
books of account kept by persons engaged in a business of like
character. The books of account shall be kept at the principal office
of the Trust. Information regarding positions held by a Series, to
the extent deemed proprietary or confidential by the Manager, will not be
made
available to the Interest Holders except as required by law. Such
books of account shall be kept, and the relevant Series shall report, on
the
accrual method of accounting for financial accounting purposes on a Fiscal
Year
basis as described in Article X hereof.
—
Annual Reports and Monthly
Statements. Each Interest Holder shall be furnished as of the
last Business Day of each month and as of the end of each Fiscal Year with
(a)
such reports (in such detail) as are required to be given to Interest Holders
by
the CFTC and the NFA, (b) any other reports (in such detail) required by
any
other governmental authority which has jurisdiction over the activities of
the
Trust and a Series and (c) any other reports or information which the Manager,
in its discretion, determines to be necessary or appropriate.
29
—
Tax
Information. Appropriate tax information (adequate to enable
each Interest Holder to complete and file his federal tax return) shall be
delivered to each Interest Holder as soon as practicable following the end
of
each Fiscal Year but generally no later than March 15.
—
Calculation of Net Asset Value. Net
Asset Value of each Series will be calculated as of the last day of each
calendar month and as of such other days as the Manager shall determine in
its
sole discretion.
—
Other Reports. The Manager
shall send such other reports and information, if any, to the Interest Holders
as it may deem necessary or appropriate.
—
Maintenance of
Records. The Manager shall maintain (a) for a period of at least
eight (8) Fiscal Years all books of account required by Section 9.1 hereof,
a
list of the names and last known address of, and Series and number of Interests
owned by, all Interest Holders, a copy of the Certificate of Trust and all
certificates of amendment thereto, together with executed copies of any powers
of attorney pursuant to which any certificate has been executed; copies of
each
Series’ federal, state and local income tax returns and reports, if
any; a record of the information obtained to indicate that an
Interest Holder meets the investor suitability standards set forth in the
Offering Memorandum, and (b) for a period of at least six (6) Fiscal Years
copies of any effective written trust agreements, subscription agreements
and
any financial statements of the Trust and each Series.
—
Certificate of
Trust. Except as otherwise provided in the Business Trust
Statute or this Trust Agreement, the Manager shall not be required to mail
a
copy of any Certificate of Trust filed with the Secretary of State of the
State
of Delaware to each Interest Holder; however, such certificates shall be
maintained at the principal office of the Trust and shall be available for
inspection and copying by the Interest Holders in accordance with this Trust
Agreement.
—
Registration of Interests. The
Manager shall keep, at the Trust’s principal place of business, an Interest
Register for each Series in which, subject to such requirements as it may
provide, it shall provide for the registration of Interests and of transfers of
Interests of such Series. Prior to receipt of any notice to the
contrary, the Manager may treat the Person in whose name any Interest shall
be
registered in the Interest Register as the Interest Holder of such Interest
for
the purpose of receiving distributions pursuant to Article VI hereof and
for all
other purposes whatsoever.
—
FISCAL
YEAR
—
Fiscal Year. The Fiscal Year for the
Trust and each Series shall begin on the 1st day of January and end on the
31st
day of December of each year. The first Fiscal Year of the Trust, the
Unleveraged Series and the Leveraged Series shall commence on the date of
filing
of the Certificate of Trust and end on the 31st day of December,
1997. The Fiscal Year in which the Trust shall terminate shall end on
the date of termination of the Trust.
30
—
AMENDMENT
OF TRUST AGREEMENT
—
|
Amendments
to this Trust Agreement
|
— This
Trust Agreement may not be amended without the consent of the
Manager. If at any time during the term of the Trust the Manager
shall deem it necessary or desirable to amend this Trust Agreement, such
amendment shall be effective only if embodied in an instrument signed by
the
Manager and by the other Interest Holders of each relevant Series owning
more
than 10% of the then outstanding Interests (exclusive of the Interests of
the
Manager) of each relevant Series and if made in accordance with and to the
extent permissible under the Business Trust Statute.
— Notwithstanding
any provision to the contrary contained in Sections 11.1(a) or 11.1(d) hereof,
the Manager may, without the approval of the other Interest Holders, make
such
amendments to this Trust Agreement which (i) change the name of the Trust,
(ii)
are necessary to add to the representations, duties or obligations of the
Manager or surrender any right or power granted to the Manager herein, for
the
benefit of the other Interest Holders, (iii) are necessary to cure any
ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under this Trust Agreement which
will not be inconsistent with the provisions of this Trust Agreement or (iv)
the
Manager deems advisable or considers necessary to comply with any applicable
law, provided, however, that no amendment shall be adopted pursuant to this
clause (iv) unless the adoption thereof (A) is for the benefit of, or not
adverse to, the interests of the other Interest Holders; (B) is consistent
with
Section 4.1 hereof; and (C) except as otherwise provided in Section 11.1(c)
hereof, does not affect the allocation of profits and losses among the Interest
Holders or between the other Interest Holders and the Manager.
— No
amendment shall adversely affect the limitations on liability of the Interest
Holders as described in Section 8.3 of this Trust Agreement or the status
of
each Series as a partnership for federal income tax purposes, change any
Interest Holder’s share of the profits or losses of a Series without the consent
of such Interest Holder, extend the duration of the Trust and each Series
or
change the provisions of this Section 11.1.
— Upon
amendment of this Trust Agreement, the Certificate of Trust shall also be
amended, if required by the Business Trust Statute, to reflect such
change.
— No
amendment shall be made to this Trust Agreement without the express written
consent of the Trustee if such amendment adversely affects any of the rights,
duties or liabilities of the Trustee. The Trustee shall execute and
file any amendment to the Certificate of Trust if so directed by the Manager
or
if such amendment is required in the opinion of the Trustee.
31
—
TERM
—
Term. The term for which the
Trust is to exist shall commence on the date of the filing of the Certificate
of
Trust, and shall expire on December 31, 2017, unless sooner terminated pursuant
to the provisions of Article XIII hereof or as otherwise provided by
law.
—
TERMINATION
—
Events Requiring
Dissolution. A Series of the Trust shall dissolve in the
event that subscriptions for at least 40,000 Interests of the Unleveraged
Series
or 20,000 Interests of the Leveraged Series offered pursuant to the Offering
Memorandum (excluding the Interests of the Manager and the Initial Interest
Holder) are not sold during the Initial Offering Period. The Trust shall
dissolve at any time upon the happening of any of the following
events:
— The
expiration of its term as provided in Article XII hereof.
— The
filing of a certificate of dissolution or revocation of the charter (and
the
expiration of ninety (90) days after the date of notice to the Manager of
revocation without a reinstatement of its charter) of the Manager, or upon
the
resignation or other withdrawal, adjudication of bankruptcy or insolvency
of the
Manager (each of the foregoing events an “Event of Withdrawal”), except that, in
the discretion of the Manager, the Trust and each Series thereof shall not
be
dissolved upon an Event of Withdrawal of the Manager if the Manager is advised
by tax counsel to the Trust that a proposed modification of this requirement
will not adversely affect the classification of a Series of the Trust as
a
partnership for federal income tax purposes or otherwise adversely affect
the
Interest Holders.
— The
occurrence of any event which would make unlawful the continued existence
of the
Trust.
— The
suspension, revocation or termination of the Manager’s registration as a
commodity pool operator under the CE Act, or membership as a commodity pool
operator with the NFA.
— The
Trust files a voluntary petition for bankruptcy; is adjudged bankrupt or
insolvent, or has entered against it an order for relief in any bankruptcy
or
insolvency proceeding.
32
— The
determination by the Manager that it is in the best interests of the other
Interest Holders to terminate the Trust.
The
death, legal disability, bankruptcy, insolvency, dissolution, or withdrawal
of
any Interest Holder other than the Manager (as long as such Interest Holder
is
not the sole Interest Holder of the Trust) shall not result in the termination
of the Trust or any Series thereof, and such Interest Holder, his estate,
custodian or personal representative shall have no right to withdraw or value
such Interest Holder’s Interests except as provided in Section 7.1
hereof. Each Interest Holder (and any assignee thereof) expressly
agrees that in the event of his death, he waives on behalf of himself and
his
estate, and he directs the legal representative of his estate and any person
interested therein to waive the furnishing of any inventory, accounting or
appraisal of the assets of the Trust or any Series thereof and any right
to an
audit or examination of the books of the Trust or any Series thereof, except
for
such rights as are set forth in Article IX hereof relating to the books of
account and reports of the Trust.
—
Stop Loss Provision. A Series
of the Trust will cease trading and liquidate all positions if the Net Asset
Value of such Series of the Trust declines by more than fifty percent (50%)
from
either such Series’ initial Net Asset Value or the Series’ Net Asset Value on
the first day of the then-current calendar year, after adjusting in each
case
for distributions, redemptions and additional contributions to
capital.
—
Distributions on
Dissolution. Upon the dissolution of the Trust or Series
thereof, the Manager (or in the event there is no Manager, such person as
the
majority in interest of the Interest Holders of each relevant Series may
propose
and approve with respect to each relevant Series) shall take full charge
of the
assets and liabilities of each relevant Series. Thereafter, the
business and affairs of each relevant Series shall be wound up and with respect
to each relevant Series all assets shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds therefrom
shall be applied and distributed in the following order of priority with
respect
to each such relevant Series respectively: (a) to the expenses of liquidation
and termination of such Series and to creditors, including Interest Holders
who
are creditors, to the extent otherwise permitted by law, in satisfaction
of
liabilities of such Series (whether by payment or the making of reasonable
provision for payment thereof) other than liabilities for distributions to
Interest Holders, and (b) to the Manager and each Interest Holder other than
the
Manager pro rata in accordance with his positive book capital account
balance in such Series, less any amount owing by such Interest Holder to
such
Series, after giving effect to all adjustments made pursuant to Article VI
hereof and all distributions theretofore made to the Interest Holders pursuant
to Article VI hereof.
After
the
distribution of all remaining assets of a Series, the Manager will contribute
to
such Series an amount equal to the lesser of (i) the deficit balance, if
any, in
its book capital account for such Series, and (ii) the excess of 1.01% of
the
total Capital Contributions of the Interest Holders (excluding the Manager)
of
such Series over the capital previously contributed to such Series by the
Manager. Any capital contributions made by the Manager pursuant to
this Section shall be applied first to satisfy any amounts then owed by the
relevant Series to its creditors, and the balance, if any, shall be distributed
to those Interest Holders in such Series whose book capital account balances
(immediately following the distribution of any liquidation proceeds) were
positive, in proportion to their respective positive book capital account
balances.
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—
Termination; Certificate of
Cancellation. Following the dissolution and upon the completion
of winding up of the Trust, the Manager shall execute and cause a certificate
of
cancellation to be filed in accordance with the Business Trust Statute, and
thereupon the Trust shall terminate.
—
POWER
OF ATTORNEY
—
Power of Attorney Executed
Concurrently. Concurrently with the written acceptance and
adoption of the provisions of this Trust Agreement, each Interest Holder
other
than the Manager shall execute and deliver to the Manager a Power of Attorney
as
part of the Subscription Agreement, or in such other form as may be prescribed
by the Manager. Each Interest Holder other than the Manager, by its
execution and delivery hereof, irrevocably constitutes and appoints the Manager
as the true and lawful attorney-in-fact and agent for such Interest Holder
with
full power and authority to act in his name and on his behalf in the execution,
acknowledgment, filing and publishing of Trust documents, including, but
not
limited to, the following:
— Any
certificates and other instruments, including but not limited to any
applications for authority to do business and amendments thereto, which the
Manager deems appropriate to qualify or continue the Trust as a business
trust
in the jurisdictions in which the Trust may conduct business, so long as
such
qualifications and continuations are in accordance with the terms of this
Trust
Agreement or any amendment hereto, or which may be required to be filed by
the
Trust or the Interest Holders under the laws of any jurisdiction;
— Any
instrument which may be required to be filed by the Trust under the laws
of any
state or by any governmental agency, or which the Manager deems advisable
to
file; and
— This
Trust Agreement and any documents which may be required to effect an amendment
to this Trust Agreement approved under the terms of this Trust Agreement,
the
admission of the signer of the Power of Attorney as an Interest Holder or
of
others as additional or substituted Interest Holders, or the termination of the
Trust, provided such admission or termination is in accordance with the terms
of
this Trust Agreement.
—
Effect of Power of
Attorney. The Power of Attorney concurrently granted by each
Interest Holder, other than the Manager, to the Manager:
34
— Is
a special, irrevocable Power of Attorney coupled with an interest, and shall
survive and not be affected by the subsequent death, disability, dissolution,
liquidation, termination or incapacity of the Interest Holder;
— May
be exercised by the Manager by a facsimile signature of one of its officers
or
by a single signature of one of its officers acting as attorney-in-fact for
such
Interest Holders or for an individual Interest Holder; and
— Shall
survive the delivery of an assignment by an Interest Holder of the whole
or any
portion of his Interests, except that where the assignee thereof has been
approved by the Manager for admission to a Series as a substituted Interest
Holder, the Power of Attorney of the assignor as it relates to such Series
shall
survive the delivery of such assignment for the sole purpose of enabling
the
Manager to execute, acknowledge and file any instrument necessary to effect
such
substitution.
Each
Interest Holder agrees to be bound by any representations made by the Manager
and by any successor thereto, determined to be acting in good faith pursuant
to
such Power of Attorney and not constituting gross negligence or willful
misconduct.
—
Limitation on Power of
Attorney. The Power of Attorney concurrently granted by each
Interest Holder, other than the Manager, to the Manager shall not authorize
the
Manager to act on behalf of Interest Holders in any situation in which this
Trust Agreement requires the approval of Interest Holders unless such approval
has been obtained as required by this Trust Agreement. In the event
of any conflict between this Trust Agreement and any instruments filed by
the
Manager pursuant to this Power of Attorney, this Trust Agreement shall
control.
—
MISCELLANEOUS
—
Governing
Law. This Trust Agreement and the rights of all parties hereto
and the effect of every provision hereof shall be governed by and construed
according to the laws of the State of Delaware without regard to the conflicts
of law provisions thereof; provided, however, that the parties hereto intend
that the provisions hereof shall control over any contrary or limiting statutory
or common law of the State of Delaware (other than the Business Trust Statute)
and that, to the maximum extent permitted by applicable law, there shall
not be
applicable to the Trust, the Trustee, the Manager, the Interest Holders or
this
Trust Agreement any provision of the laws (statutory or common) of the State
of
Delaware (other than the Business Trust Statute) pertaining to trusts which
relate to or regulate in a manner inconsistent with the terms hereof: (a)
the
filing with any court or governmental body or agency of trustee accounts
or
schedules of trustee fees and charges, (b) affirmative requirements to post
bonds for trustees, officers, agents, or employees of a trust, (c) the necessity
for obtaining court or other governmental approval concerning the acquisition,
holding or disposition of real or personal property, (d) fees or other sums
payable to trustees, officers, agents or employees of a trust, (e) the
allocation of receipts and expenditures to income or principal, (f) restrictions
or limitations on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other manner
of
holding of trust assets, or (g) the establishment of fiduciary or other
standards or responsibilities or limitations on the acts or powers of trustees
or the Managers that are inconsistent with the limitations on liability or
authorities and powers of the Trustee or the Manager set forth or referenced
in
this Trust Agreement. Section 3540 of Title 12 of the Delaware Code
shall not apply to the Trust. The Trust shall be of the type commonly
called a “business trust,” and without limiting the provisions hereof, the Trust
may exercise all powers that are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise
any of the powers or privileges afforded to business trusts and the absence
of a
specific reference herein to any such power, privilege or action shall not
imply
that the Trust may not exercise such power or privilege or take such
actions.
35
—
Provisions In Violation of Law
or Regulations.
— The
provisions of this Trust Agreement are severable, and if the Manager shall
determine, with the advice of counsel, that any one or more of such provisions
(the “Conflicting Provisions”) violate the Code, the Business Trust Statute or
other applicable laws, the Conflicting Provisions shall be deemed never to
have
constituted a part of this Trust Agreement, even without any amendment of
this
Trust Agreement pursuant to this Trust Agreement; provided, however, that
such
determination by the Manager shall not affect or impair any of the remaining
provisions of this Trust Agreement or render invalid or improper any action
taken or omitted prior to such determination; provided, further,
that this Section 15.2(a) shall not affect or impair any right, duty or
liability of the Trustee without the express written consent of the
Trustee. No Manager or Trustee shall be liable for making or failing
to make such a determination.
— If
any provision of this Trust Agreement shall be held invalid or unenforceable
in
any jurisdiction, such holding shall not in any manner affect or render invalid
or unenforceable such provision in any other jurisdiction or any other provision
of this Trust Agreement in any jurisdiction.
—
Construction. In this
Trust Agreement, unless the context otherwise requires, words used in the
singular or in the plural include both the plural and singular and words
denoting any gender include all genders. The title and headings of
different parts are inserted for convenience and shall not affect the meaning,
construction or effect of this Trust Agreement.
—
Notices. All notices or
communications under this Trust Agreement (other than reports and notices
by the
Manager to the Interest Holders) shall be in writing and shall be effective
upon
receipt, and shall be sent by mail, postage prepaid, telecopy or air courier;
and addressed, in each such case, to the address set forth in the books and
records of the Trust and Series or such other address, as may be specified
in
writing, of the party to whom such notice is to be
given.
—
Counterparts. This Trust Agreement
may be executed in several counterparts, and all so executed shall constitute
one agreement, binding on all of the parties hereto.
36
—
Binding Nature of Trust
Agreement. The terms and provisions of this Trust Agreement
shall be binding upon and inure to the benefit of the heirs, custodians,
executors, estates, administrators, personal representatives, successors
and
permitted assigns of the respective Interest Holders. For purposes of
determining the rights of any Interest Holder or assignee hereunder, the
Trust
and the Manager may rely upon the Trust and Series records as to who are
Interest Holders and permitted assignees, and all Interest Holders and assignees
agree that they shall be bound by such determination.
—
No Legal Title to Trust
Estate. The Interest Holders shall not have legal title to any
part of the Trust Estate.
—
Creditors. No creditors
of any Interest Holders shall have any right to obtain possession of, or
otherwise exercise legal or equitable remedies with respect to, the Trust
Estate.
37
IN
WITNESS WHEREOF, the undersigned have duly executed this Amended and Restated
Declaration of Trust and Trust Agreement as of the day and year first above
written.
MOUNT
XXXXX INDEX MANAGEMENT CORPORATION,
|
|
as
the Manager
|
|
By:
/s/ Xxxxxxx X. Xxxxxxxx
|
|
Name:
Xxxxxxx X. Xxxxxxxx
|
|
Title:
President
|
|
WILMINGTON
TRUST COMPANY, as Trustee
|
|
By: /s/
Wilmington Trust Company
|
|
Name:
Wilmington Trust Company
|
|
Title:
Trustee
|
|
/s/
Xxxxxxx Xxxxxxx
|
|
XXXXXXX
XXXXXXX, as the sole Interest
Holder
|
38
Amended
and Restated Declaration of Trust and Trust Agreement
CERTIFICATE
OF TRUST OF MLM Index™ Fund
THIS
Certificate of Trust of MLM Index™ Fund (the Trust) is being duly executed and
filed by Wilmington Trust Company, a Delaware banking corporation, as trustee,
to form a business trust under the Delaware Business Trust Act (12
Del.C. 3801 et seq.).
1. Name. The
name of the business trust formed hereby is MLM Index™ Fund.
2. Delaware
Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Xxxxxx Square
North,
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Corporate Trust Administration.
3. Multiple
Series. The Trust may issue multiple series of beneficial
interests. The Trust will maintain separate and distinct records for
each such series and the assets associated with each such series shall be
held
and accounted for separately from the other assets of the Trust and of any
other
series thereof. Notice is hereby given that the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular series are enforceable against the assets of such
series
only and not against the assets of the Trust generally or the assets of any
other series.
IN
WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust, has
executed this Certificate of Trust.
WILMINGTON
TRUST COMPANY, not in its individual capacity but solely as Trustee
By:
/s/
Wilmington Trust Company
Name:
Wilmington Trust Company
Title:
Trustee
39