EXHIBIT 3.3
UNITED STATES HEATING OIL FUND, LP
FORM OF AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP
This
Amended and Restated Agreement of Limited Partnership
(this
“Agreement” )
executed on
[_____________] ,
is entered into by and among Victoria Bay Asset Management, LLC, a
Delaware limited liability company, as General Partner, Wainwright
Holdings, Inc., a Delaware corporation, as the Organizational
Limited Partner, and
[
Initial Authorized Purchaser
,] as
a Limited Partner, together with any Persons who shall hereafter be
admitted as Partners in accordance with this
Agreement.
WHEREAS,
the General Partner and the Organizational Limited Partner are
parties to that certain limited partnership agreement entered
into on
[_________] ,
2007 (the
“LP Agreement” ),
regarding the operation of the Partnership and their rights and
obligations thereunder; and
WHEREAS,
the Organizational Limited Partner and the General Partner now
desire to amend and restate the LP Agreement regarding the
operation of the Partnership;
NOW
THEREFORE, in consideration of the mutual promises and
agreements herein made, the Partners, intending to be legally
bound, hereby agree to amend and restate the LP Agreement in
its entirety as follows:
ARTICLE
1
Definitions
As
used in this Agreement, the following terms shall have the
following meanings:
1.1
“Accounting Period” shall
mean the following periods: the initial accounting period which
shall commence upon the commencement of operations of the
Partnership. Each subsequent Accounting Period shall commence
immediately after the close of the preceding Accounting Period.
Each Accounting Period hereunder shall close on the earliest of (i)
the last Business Day of a month, (ii) the effective date of
dissolution of the Partnership, and (iii) such other day or days in
addition thereto or in substitution therefore as may from time to
time be determined by the General Partner in its discretion either
in any particular case or generally.
1.2
“Act” shall
mean the Revised Uniform Limited Partnership Act of the State of
Delaware, as amended from time to time.
1.3
“Additional Limited Partner” shall
mean a Person admitted to the Partnership as a Limited Partner
pursuant to this Agreement and who is shown as such on the books
and records of the Partnership.
1.4
“Affiliate” shall
mean, when used with reference to a specified Person, (i) any
Person who directly or indirectly through one or more
intermediaries controls or is controlled by or is under common
control with the specified Person or (ii) any Person that is an
officer of, partner in, or trustee of, or serves in a similar
capacity with respect to, the specified Person or of which the
specified Person is an officer, partner or trustee, or with respect
to which the specified Person serves in a similar
capacity.
1.5
“Assignee” shall
mean a Record Holder that has not been admitted to the Partnership
as a Substituted Limited Partner.
1.6
“Agreement” shall
mean this Amended and Restated Agreement of Limited Partnership as
may be amended, modified, supplemented or restated from time to
time.
1.7
“Authorized Purchaser Agreement”
shall
mean an agreement among the Partnership, the General Partner and a
Participant, as may be amended or supplemented from time to time in
accordance with its terms.
1.8
“Business Day” shall
mean any day other than a day on which the American Stock Exchange,
the New York Mercantile Exchange or the New York Stock Exchange is
closed for regular trading.
1.9
“Beneficial Owner” shall
mean the ultimate beneficial owner of Units held by a nominee which
has furnished the identity of the Beneficial Owner in accordance
with Section 6031(c) of the Code (or any other method acceptable to
the General Partner in its sole discretion) and with Section 9.2.2
of this Agreement.
1.10
“Capital Account” shall
have the meaning assigned to such term in Section 4.1.
1.11
“Capital Contribution” shall
mean the total amount of money or agreed-upon value of property
contributed to the Partnership by all the Partners or any class of
Partners or any one Partner, as the case may be (or the predecessor
holders of the interests of such Partner or Partners).
1.12
“Capital Transaction” shall
mean a sale of all or substantially all of the assets of the
Partnership not in the ordinary course of business.
1.13
“Certificate” shall
mean a certificate issued by the Partnership evidencing ownership
of one or more Units.
1.14
“Close of Business” shall
mean 5:00 PM New York time.
1.15
“Creation Basket” shall
mean 100,000 Units, or such other number of Units as may be
determined by the General Partner from time to time, purchased by a
Participant.
1.16
“Code” shall
mean the Internal Revenue Code of 1986, as amended.
1.17
“Departing Partner” shall
mean a former General Partner, from and after the effective date of
any withdrawal or removal of such former General
Partner.
1.18
“Depository” or
“DTC” shall
mean The Depository Trust Company, New York, New York, or such
other depository of Units as may be selected by the General Partner
as specified herein.
1.19
“Depository Agreement” shall
mean the Letter of Representations from the General Partner to the
Depository, dated as of
[_________________] ,
as may be amended or supplemented from time to time.
1.20
“Distributable Cash” shall
mean, with respect to any period, all cash revenues of the
Partnership (not including (i) Capital Contributions, (ii) funds
received by the Partnership in respect of indebtedness incurred by
the Partnership, (iii) interest or other income earned on temporary
investments of Partnership funds pending utilization, and (iv)
proceeds from any Capital Transaction), less the sum of the
following: (x) all amounts expended by the Partnership pursuant to
this Agreement in such period and (y) such working capital or
reserves or other amounts as the General Partner reasonably deems
to be necessary or appropriate for the proper operation of the
Partnership’s business or its winding up and liquidation. The
General Partner in its sole discretion may from time to time
declare other funds of the Partnership to be Distributable
Cash.
1.21
“DTC Participants” shall
have the meaning assigned to such term in Section
9.2.2.
1.22
“General Partner” shall
mean Victoria Bay Asset Management, LLC, a Delaware limited
liability company, or any Person who, at the time of reference
thereto, serves as a general partner of the
Partnership.
1.23
“Global Certificates” shall
mean the global certificate or certificates issued to the
Depository as provided in the Depository Agreement, each of which
shall be in substantially the form attached hereto as Exhibit
B.
1.24
“Indirect Participants” shall
have the meaning assigned to such term in Section
9.2.2.
1.25
“Initial Limited Partner” shall
have the meaning assigned to such term in Section 3.3.
1.26
“Initial Offering Period” shall
mean the period commencing with the initial effective date of the
Prospectus and terminating no later than the ninetieth (90th) day
following such date unless extended for up to an additional 90 days
at the sole discretion of the General Partner.
1.27
“Limited Partner” shall
mean the Organizational Limited Partner prior to its withdrawal
from the Partnership and any other Person who is a limited partner
(whether the Initial Limited Partner, a Limited Partner admitted
pursuant to this Agreement or an assignee who is admitted as a
Limited Partner) at the time of reference thereto, in such
Person’s capacity as a limited partner of the
Partnership.
1.28
“Management Fee” shall
mean the management fee paid to the General Partner pursuant to
this Agreement.
1.29
“Net Asset Value” or
“NAV” shall
mean the current market value of the Partnership’s total
assets, less any liabilities, as reasonably determined by the
General Partner or its designee.
1.30
“Opinion of Counsel” shall
mean a written opinion of counsel (who may be regular counsel to
the Partnership or the General Partner) acceptable to the General
Partner.
1.31
“Organizational Limited Partner”
shall
mean Wainwright Holdings, Inc., a Delaware corporation, in its
capacity as the organizational limited partner of the Partnership
pursuant to this Agreement.
1.32
“Outstanding” shall
mean, with respect to the Units or other Partnership Securities, as
the case may be, all Units or other Partnership Securities that are
issued by the Partnership and reflected as outstanding on the
Partnership’s books and records as of the date of
determination.
1.33
“Participant” shall
mean a Person that is a DTC Participant and has entered into an
Authorized Purchaser Agreement which, at the relevant time, is in
full force and effect.
1.34
“Partner” shall
mean the General Partner or any Limited Partner.
“Partners” shall
mean the General Partner and all Limited Partners (unless otherwise
indicated).
1.35
“Partnership” shall
mean the limited partnership hereby formed, as such limited
partnership may from time to time be constituted.
1.36
“Partnership Securities” shall
mean any additional Units, options, rights, warrants or
appreciation rights relating thereto, or any other type of equity
security that the Partnership may lawfully issue, any unsecured or
secured debt obligations of the Partnership or debt obligations of
the Partnership convertible into any class or series of equity
securities of the Partnership.
1.37
“Person” shall
mean any natural person, partnership, limited partnership, limited
liability company, trust, estate, corporation, association,
custodian, nominee or any other individual or entity in its own or
any representative capacity.
1.38
“Profit or Loss” with
respect to any Accounting Period shall mean the excess (if any)
of:
(a)
the Net Asset Value as of the Valuation Time on the Valuation
Date, less
(b)
the Net Asset Value as of the Valuation Time on the Valuation
Date immediately preceding the commencement of such Accounting
Period,
adjusted
as deemed appropriate by the General Partner to reflect any
Capital Contributions, redemptions, withdrawals,
distributions, or other events occurring or accounted for
during such Accounting Period (including any allocation of
Profit or Loss to a redeeming partner pursuant to Article
4.3.2 with respect to such Accounting Period).
If
the amount determined pursuant to the preceding sentence is a
positive number, such amount shall be the
“Profit” for
the Accounting Period and if such amount is a negative number, such
amount shall be the
“Loss” for
the Accounting Period.
1.39
“Prospectus” shall
mean the United States Heating Oil Fund, LP prospectus,
dated
[__________________] ,
as the same may have been amended or supplemented, used in
connection with the offer and sale of Units in the
Partnership.
1.40
“Record Date” shall
mean the date established by the General Partner for determining
(a) the identity of Limited Partners (or Assignees if applicable)
entitled to notice of, or to vote at any meeting of Limited
Partners or entitled to vote by ballot or give approval of any
Partnership action in writing without a meeting or entitled to
exercise rights in respect of any action of Limited Partners or (b)
the identity of Record Holders entitled to receive any report or
distribution.
1.41
“Record Holder” shall
mean the Person in whose name such Unit is registered on the books
of the Transfer Agent as of the open of business on a particular
Business Day.
1.42
“Redeemable Units” shall
mean any Units for which a redemption notice has been
given.
1.43
“Redemption Basket” shall
mean 100,000 Units or such other number of Units as may be
determined by the General Partner from time to time, redeemed by a
Participant.
1.44
“Revolving Credit Facility” shall
mean a revolving credit facility that the Partnership may enter
into on behalf of the Partnership with one or more commercial banks
or other lenders for liquidity or other purposes for the benefit of
the Partnership.
1.45
“Substituted Limited Partner” shall
mean a Person who is admitted as a Limited Partner to the
Partnership pursuant to Article 11.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner
on the books and records of the Partnership.
1.46
“Tax Certificate” shall
mean an Internal Revenue Service Form W-9 (or the substantial
equivalent thereof) in the case of a Limited Partner that is a U.S.
person within the meaning of the Code, or an Internal Revenue
Service Form W-8BEN or other applicable form in the case of a
Limited Partner that is not a U.S. person.
1.47
“Transfer Agent” shall
mean Brown Brothers Harriman & Co. or such bank, trust company
or other Person (including, without limitation, the General Partner
or one of its Affiliates) as shall be appointed from time to time
by the Partnership to act as registrar and transfer agent for the
Units or any applicable Partnership Securities.
1.48
“Transfer Application” shall
mean an application and agreement for transfer of Units, which
shall be substantially in the form attached hereto as Exhibit
D.
1.49
“Unit” shall
mean an interest of a Limited Partner or an assignee of the
Partnership representing such fractional part of the interests of
all Limited Partners and assignees as shall be determined by the
General Partner pursuant to this Agreement.
1.50
“Unit Register” shall
have the meaning assigned to such term in Article
9.2.1.
1.51
“Unitholders” shall
mean the General Partner and all holders of Units, where no
distinction is required by the context in which the term is
used.
1.52
“Valuation Date” shall
mean the last Business Day of any Accounting Period.
1.53
“Valuation Time” shall
mean (i) Close of Business on a Valuation Date or (ii) such other
time or day as the General Partner in its discretion may determine
from time to time either in any particular case or
generally.
ARTICLE
2
General
Provisions
2.1
This Agreement shall become effective on the date set forth in
the preamble of this Agreement. The rights and liabilities of
the Partners shall be as set forth in the Act, except as
herein otherwise expressly provided. The Partnership shall
continue without interruption as a limited partnership
pursuant to the provisions of the Act.
2.2
The name of the Partnership shall be United States Heating Oil
Fund, LP; however, the business of the Partnership may be
conducted, upon compliance with all applicable laws, under any
other name designated in writing by the General Partner to the
Limited Partners.
2.3
The Partnership’s principal place of business shall be
located at 1320 Harbor Bay Parkway, Suite 145, Alameda,
California 94502 or such other place as the General Partner
may designate from time to time. The registered agent for the
Partnership is Corporation Service Company and the registered
office is located at 2711 Centerville Road, Suite 400,
Wilmington, Delaware 19808, County of New Castle. The
Partnership may maintain such other offices at such other
places as the General Partner deems advisable.
2.4
The investment objective of the Partnership is for changes in
percentage terms of the Units’ NAV to reflect the
changes in percentage terms of the price of heating oil (also
known as No. 2 heating oil for delivery to New York harbor),
as measured by the “Benchmark Futures Contract, less the
Partnership’s expenses. It is not the intent of the
Partnership to be operated in such a fashion such that its NAV
will equal, in dollar terms, the dollar price of spot heating
oil or any particular futures contract based on heating oil.
The Partnership will invest in futures contracts for heating
oil, crude oil, natural gas, gasoline, and other petroleum
based fuels that are traded on the New York Mercantile
Exchange, ICE Futures or other U.S. and foreign exchanges
(collectively,
“
Heating Oil Futures Contracts
” )
and other heating oil related investments such as cash-settled
options on Heating Oil Futures Contracts, forward contracts for
heating oil, and over-the-counter transactions that are based on
the price of heating oil, oil and other petroleum-based fuels,
Heating Oil Futures Contracts and indices based on the
foregoing.
2.5
The term of the Partnership shall be from the date of its
formation in perpetuity, unless earlier terminated in
accordance with the terms of this Agreement.
2.6
The General Partner shall execute, file and publish all such
certificates, notices, statements or other instruments
required by law for the formation or operation of a limited
partnership in all jurisdictions where the Partnership may
elect to do business. The General Partner shall not be
required to deliver or mail to the Limited Partners a copy of
the certificate of limited partnership of the Partnership or
any certificate of amendment thereto.
2.7
The Partnership shall be empowered to do any and all acts and
things necessary, appropriate, proper, advisable, incidental
to or convenient for the furtherance and accomplishment of the
purposes, business, protection and benefit of the
Partnership.
2.8
The business and affairs of the Partnership shall be managed
by the General Partner in accordance with Article 7 hereof.
The General Partner has seven directors, a majority of whom
may also be executive officers of the General Partner. The
General Partner shall establish and maintain an audit
committee of its board of directors for the Partnership
(the
“Audit Committee” )
in compliance with, and granted the requisite authority and funding
pursuant to, any applicable (1) federal securities laws and
regulations, including the Sarbanes-Oxley Act of 2002, and (2)
rules, policies and procedures of any national securities exchange
on which the securities issued by the Partnership are listed and
traded.
ARTICLE
3
Partners
and Capital Contributions
3.1
General Partner.
3.1.1
The name of the General Partner is Victoria Bay Asset
Management, LLC, which maintains its principal business office
at 1320 Harbor Bay Parkway, Suite 145, Alameda, California
94502.
3.1.2
In consideration of management and administrative services
rendered by the General Partner, the Partnership shall pay the
Management Fee to the General Partner (or such other person or
entity designated by the General Partner) including the
payment of expenses in the ordinary course of business.
Expenses
in the “ordinary course of business” shall not
include the payment of (i) brokerage fees, (ii) licensing fees
for the use of intellectual property used by the Partnership,
or (iii) registration or other fees paid to the Securities and
Exchange Commission
(“SEC”) ,
the NASD, or any other regulatory agency in connection with the
offer and sale of the Units and all legal, accounting,
printing and other expenses associated therewith; provided,
however, that the fees and expenses incurred under (iii) in
connection with the initial public offering of the Units shall be
paid by the General Partner. The Partnership also pays the fees and
expenses, including directors and officers’ liability
insurance, of the independent directors. The Management Fee shall
be payable monthly. The initial Management Fee shall be set forth
on Exhibit A attached hereto, as may be amended from time to time.
The General Partner may, in its sole discretion, waive all or part
of the Management Fee. The Partnership shall be responsible for all
extraordinary expenses (i.e., expenses not in the ordinary course
of business, including, without limitation, the items listed above
in this Section 3.1.2, the indemnification of any Person against
liabilities and obligations to the extent permitted by law and
required under this Agreement and the bringing and defending of
actions at law or in equity and otherwise engaging in the conduct
of litigation and the incurring of legal expense and the settlement
of claims and litigation).
3.1.3
In connection with the formation of the Partnership under the
Act, the General Partner acquired a 2% interest in the profits
and losses of the Partnership and made an initial capital
contribution to the Partnership in the amount of $20.00, and
the Organizational Limited Partner acquired a 98% interest in
the profits and losses of the Partnership and made an initial
capital contribution to the Partnership in the amount of
$980.00. As of the date hereof, the interest of the
Organizational Limited Partner shall be redeemed, the initial
capital contribution of the Organizational Limited Partner
shall be refunded, and the Organizational Limited Partner
shall thereupon withdraw and cease to be a Limited Partner.
98% of any interest or other profit that may have resulted
from the investment or other use of such initial capital
contribution was allocated and distributed to the
Organizational Limited Partner, and the balance thereof was
allocated and distributed to the General Partner. As of the
first date of the offering, the General Partner shall be
issued an appropriate number of Units based on its initial
capital contribution. The General Partner may but shall not be
required to make Capital Contributions to the Partnership on
or after the date hereof. If the General Partner does make a
Capital Contribution to the Partnership on or after the date
hereof, it shall be issued Units based on the same terms and
conditions applicable to the purchase of a Creation Basket
under Article 16 hereof.
3.1.4
The General Partner may not, without written approval by all
of the Limited Partners or by other written instrument
executed and delivered by all of the Limited Partners
subsequent to the date of this Agreement, take any action in
contravention of this Agreement, including, without
limitation, (i) any act that would make it impossible to carry
on the ordinary business of the Partnership, except as
otherwise provided in this Agreement; (ii) possess Partnership
property, or assign any rights in specific Partnership
property, for other than a Partnership purpose; (iii) admit a
Person as a Partner, except as otherwise provided in this
Agreement; (iv) amend this Agreement in any manner, except as
otherwise provided in this Agreement or under applicable law;
or (v) transfer its interest as general partner of the
Partnership, except as otherwise provided in this
Agreement.
3.1.5
Except as otherwise provided herein, the General Partner may
not sell, exchange or otherwise dispose of all or
substantially all of the Partnership’s assets in a
single transaction or a series of related transactions
(including by way of merger, consolidation or other
combination with any other Person) or approve on behalf of the
Partnership the sale, exchange or other disposition of all or
substantially all of the assets of the Partnership, taken as a
whole, without the approval of at least a majority of the
Limited Partners; provided, however, that this provision shall
not preclude or limit the General Partner’s ability to
mortgage, pledge, hypothecate or grant a security interest in
all or substantially all of the Partnership’s assets and
shall not apply to any forced sale of any or all of the
Partnership’s assets pursuant to the foreclosure of, or
other realization upon, any such encumbrance.
3.1.6
Unless approved by a majority of the Limited Partners, the
General Partner shall not take any action or refuse to take
any reasonable action the effect of which, if taken or not
taken, as the case may be, would be to cause the Partnership,
to the extent it would materially and adversely affect the
Limited Partners, to be taxable as a corporation for federal
income tax purposes.
3.1.7
Notwithstanding any other provision of this Agreement, the
General Partner is not authorized to institute or initiate on
behalf of, or otherwise cause the Partnership to:
(a)
make
a general assignment for the benefit of
creditors;
(b)
file
a voluntary bankruptcy petition; or
(c)
file
a petition seeking for the Partnership a reorganization,
arrangement, composition, readjustment liquidation,
dissolution or similar relief under any law.
3.2
Issuance of Units. Units
in the Partnership will only be issued in a Creation Basket or
whole number multiples thereof.
3.3
Initial Limited Partner. The
name of the initial Limited Partner is
[
insert name
] (the
“Initial Limited Partner” ).
The business address and Capital Contribution of the Initial
Limited Partner are
[INSERT INFORMATION PRIOR TO EFFECTIVENESS
].
The Initial Limited Partner shall purchase the initial Creation
Basket at an initial offering price per Unit equal to the closing
price of near-month Heating Oil
Futures
Contracts as listed on the New York Mercantile Exchange on the last
Business Day prior to the effective date of the registration
statement relating to the Prospectus.
3.4
Capital Contribution. Except
as otherwise provided in this Agreement, no Partner shall have any
right to demand or receive the return of its Capital Contribution
to the Partnership. No Partner shall be entitled to interest on any
Capital Contribution to the Partnership or on such Partner’s
capital account.
ARTICLE
4
Capital
Accounts of Partners and Operation Thereof
4.1
Capital Accounts. There
shall be established on the books and records of the Partnership
for each Partner (or Beneficial Owner in the case of Units held by
a nominee) a capital account (a
“Capital Account” ).
It is intended that each Partner’s Capital Account shall be
maintained at all times in a manner consistent with Section 704 of
the Code and applicable Treasury regulations thereunder, and that
the provisions hereof relating to the Capital Accounts shall be
interpreted in a manner consistent therewith. For each Accounting
Period, the Capital Account of each Partner shall be:
(i)
credited with the amount of any Capital Contributions made by
such Partner during such Accounting Period;
(ii)
credited with any allocation of Profit made to such Partner
for such Accounting Period;
(iii)
debited with any allocation of Loss made to such Partners for
such Accounting Period; and
(iv)
debited with the amount of cash paid to such Partner as an
amount withdrawn or distributed to such Partner during such
Accounting Period, or, in the case of any payment of a
withdrawal or distribution in kind, the fair value of the
property paid or distributed during such Accounting
Period.
4.1.1
For any Accounting Period in which Units are issued or
redeemed for cash or other property, the General Partner
shall, in accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), adjust the Capital Accounts of all
Partners and the carrying value of each Partnership asset
upward or downward to reflect any unrealized gain or
unrealized loss attributable to each such Partnership asset,
as if such unrealized gain or unrealized loss had been
recognized on an actual sale of the asset and had been
allocated to the Partners at such time pursuant to Article 4.2
of this Agreement in the same manner as any item of gain or
loss actually recognized during such period would have been
allocated.
4.1.2
To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 734(b) or 743(b) of the
Code is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such item of gain or
loss shall be specially allocated to the Partners in a manner
consistent with the manner in which their Capital Accounts are
required to be adjusted pursuant to such Section of the
Treasury Regulations.
4.2
Allocation of Profit or Loss. Profit
or Loss for an Accounting Period shall be allocated among the
Partners in proportion to the number of Units each Partner holds as
of the close of business on the last Business Day of such
Accounting Period. The General Partner may revise, alter or
otherwise modify this method of allocation to the extent it deems
necessary to comply with the requirements of Section 704 or Section
706 of the Code and Treasury Regulations or administrative rulings
thereunder.
4.3
Allocations for Tax Purposes
4.3.1
Except as otherwise provided in this Agreement, for each
fiscal year of the Partnership, items of income, deduction,
gain, loss, and credit recognized by the Partnership for
federal income tax purposes shall be allocated among the
Partners in a manner that equitably reflects the amounts
credited or debited to each Partner’s Capital Account
for each Accounting Period during such fiscal year.
Allocations under this Article 4.3 shall be made by the
General Partner in accordance with the principles of Sections
704(b) and 704(c) of the Code and in conformity with
applicable Treasury Regulations promulgated thereunder
(including, without limitation, Treasury Regulations Sections
1.704-1(b)(2)(iv)(f), 1.704-1(b)(4)(i), and
1.704-3(e)).
4.3.2
Notwithstanding anything else contained in this Article 4, if
any Partner has a deficit Capital Account for any Accounting
Period as a result of any adjustment of the type described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d) (6), then the Partnership’s income
and gain shall be specially allocated to such Partner in an
amount and manner sufficient to eliminate such deficit as
quickly as possible. Any special allocation of items of income
or gain pursuant to this Article 4.3.2 shall be taken into
account in computing subsequent allocations pursuant to this
Article 4 so that the cumulative net amount of all items
allocated to each Partner shall, to the extent possible, be
equal to the amount that would have been allocated to such
Partner if there had never been any allocation pursuant to the
first sentence of this Article 4.3.2.
4.3.3
Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article 4 shall instead be made
to the Beneficial Owner of Units held by a
nominee.
4.4
Compliance. In
applying the provisions of this Article 4, the General Partner is
authorized to utilize such reasonable accounting conventions,
valuation methods and assumptions as the General Partner shall
determine to be appropriate and in compliance with the Code and
applicable Treasury Regulations. The General Partner may amend the
provisions of this Agreement to the extent it determines to be
necessary to comply with the Code and Treasury
Regulations.
ARTICLE
5
Records
and Accounting; Reports
5.1
Records and Accounting. The
Partnership will keep proper books of record and account of the
Partnership at its office located in 1320 Harbor Bay Parkway, Suite
145, Alameda, California 94502 or such office, including that of an
administrative agent, as it may subsequently designate upon notice
to the Limited Partners. These books and records are open to
inspection by any person who establishes to the Partnership’s
satisfaction that such person is a Limited Partner upon reasonable
advance notice at all reasonable times during the usual business
hours of the Partnership.
5.2
Annual Reports. Within
90 days after the end of each fiscal year, the General Partner
shall cause to be delivered to each Person who was a Partner at any
time during the fiscal year, an annual report containing the
following:
(i)
financial statements of the Partnership, including, without
limitation, a balance sheet as of the end of the
Partnership’s fiscal year and statements of income,
Partners’ equity and changes in financial position, for
such fiscal year, which shall be prepared in accordance with
generally accepted accounting principles consistently applied
and shall be audited by a firm of independent certified public
accountants registered with the Public Company Accounting
Oversight Board,
(ii)
a general description of the activities of the Partnership
during the period covered by the report, and
(iii)
a report of any material transactions between the Partnership
and the General Partner or any of its Affiliates, including
fees or compensation paid by the Partnership and the services
performed by the General Partner or any such Affiliate or such
fees or compensation.
5.3
Quarterly Reports. Within
45 days after the end of each quarter of each fiscal year, the
General Partner shall cause to be delivered to each Person who was
a Partner at any time during the quarter then ended, a quarterly
report containing a balance sheet and statement of income for the
period covered by the report, each of which may be unaudited but
shall be certified by the General Partner as fairly presenting the
financial position and results of operations of the Partnership
during the period covered by the report. The report shall also
contain a description of any material event regarding the business
of the Partnership during the period covered by the
report.
5.4
Monthly Reports. Within
30 days after the after the end of each month, the General Partner
shall cause to be delivered to each Person who was a Partner at any
time during the month then ended, a monthly report containing an
account statement, which will include a statement of income (loss)
and a statement of changes in NAV, for the prescribed period. In
addition, the account statement will disclose any material business
dealings between the Partnership, General Partner, commodity
trading advisor (if any), futures commission merchant, or the
principals thereof that previously have not been disclosed in the
Partnership’s Prospectus or any amendment thereto, other
account statements or annual reports.
5.5
Tax Information. The
General Partner shall use its best efforts to prepare and to
transmit a U.S. federal income tax form K-1 for each Partner,
Assignee, or Beneficial Owner or a report setting forth in
sufficient detail such transactions effected by the Partnership
during each fiscal year as shall enable each Partner, Assignee, or
Beneficial Owner to prepare its U.S. federal income tax return, if
any, within a reasonable period after the end of such fiscal
year.
5.6
Tax Returns. The
General Partner shall cause income tax returns of the Partnership
to be prepared and timely filed with the appropriate
authorities.
5.7
Tax Matters Partner. The
General Partner is hereby designated as the
Partnership’s
“Tax Matters Partner,” as
defined under Section 6231(a)(7) of the Code. The General Partner
is specifically directed and authorized to take whatever steps the
General Partner, in its discretion, deems necessary or desirable to
perfect such designation, including filing any forms or documents
with the U.S. Internal Revenue Service and taking such other action
as may from time to time be required under U.S. Treasury
regulations. Any Partner shall have the right to participate in any
administrative proceedings relating to the determination of
Partnership items at the Partnership level. Expenses of such
administrative proceedings undertaken by the Tax Matters Partner
shall be expenses of the Partnership. Each Partner who elects to
participate in such proceedings shall be responsible for any
expenses incurred by such Partner in connection with such
participation. The cost of any resulting audits or adjustments of a
Partner’s tax return shall be borne solely by the affected
Partner. In the event of any audit, investigation, settlement or
review, for which the General Partner is carrying out the
responsibilities of Tax Matters Partner, the General Partner shall
keep the Partners reasonably apprised of the status and course of
such audit, investigation, settlement or review and shall forward
copies of all written communications from or to any regulatory,
investigative or judicial authority with regard
thereto.
ARTICLE
6
Fiscal
Affairs
6.1
Fiscal Year. The
fiscal year of the Partnership shall be the calendar year. The
General Partner may select an alternate fiscal year.
6.2
Partnership Funds. Pending
application or distribution, the funds of the Partnership shall be
deposited in such bank account or accounts, or invested in such
interest-bearing or non-interest bearing investment, including,
without limitation, checking and savings accounts, certificates of
deposit and time or demand deposits in commercial banks, U.S.
government securities and securities guaranteed by U.S. government
agencies as shall be designed by the General Partner. Such funds
shall not be commingled with funds of any other Person. Withdrawals
therefrom shall be made upon such signatures as the General Partner
may designate.
6.3
Accounting Decisions. All
decisions as to accounting principles, except as specifically
provided to the contrary herein, shall be made by the General
Partner.
6.4
Tax Elections. The
General Partner shall, from time to time, make such tax elections
as it deems necessary or desirable in its sole discretion to carry
out the business of the Partnership or the purposes of this
Agreement. Notwithstanding the foregoing, the General Partner shall
make a timely election under Section 754 of the Code.
6.5
Partnership Interests. Title
to the Partnership assets shall be deemed to be owned by the
Partnership as an entity, and no Partner or Assignee, individually
or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of
the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner
may determine. The General Partner hereby declares and warrants
that any Partnership assets for which record title is held in the
name of the General Partner shall be held by the General Partner
for the exclusive use and benefit of the Partnership in accordance
with the provisions of this Agreement; provided, however, that the
General Partner shall use its reasonable efforts to cause record
title to such assets (other than those assets in respect of which
the General Partner determines that the expense and difficulty of
conveyancing makes transfer of record title to the Partnership
impracticable) to be vested in the Partnership as soon as
reasonably practicable; provided, that prior to the withdrawal or
removal of the General Partner or as soon thereafter as
practicable, the General Partner will use reasonable efforts to
effect the transfer of record title to the Partnership and, prior
to any such transfer, will provide for the use of such assets in a
manner satisfactory to the Partnership. All Partnership Assets
shall be recorded as the property of the Partnership in its books
and records, irrespective of the name in which record title to such
Partnership assets are held.
ARTICLE
7
Rights
and Duties of the General Partner
7.1
Management Power. The
General Partner shall have exclusive management and control of the
business and affairs of the Partnership, and all decisions
regarding the management and affairs of the Partnership shall be
made by the General Partner. The General Partner shall have all the
rights and powers of general partner as provided in the Act and as
otherwise provided by law. Except as otherwise expressly provided
in this Agreement, the General Partner is hereby granted the right,
power and authority to do on behalf of the Partnership all things
which, in its sole judgment, are necessary, proper or desirable to
carry out the aforementioned duties and responsibilities, including
but not limited to, the right, power and authority from time to
time to do the following:
(a)
the making of any expenditures, the lending or borrowing of
money, the assumption or guarantee of, or other contracting
for, indebtedness and other liabilities, the issuance of
evidences of indebtedness and the incurring of any other
obligations and the securing of same by mortgage, deed of
trust or other lien or encumbrance;
(b)
the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(c)
the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the
Partnership, or the merger or other combination of the
Partnership with or into another Person (the matters described
in this clause (c) being subject, however, to any prior
approval that may be required in accordance with this
Agreement);
(d)
the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement including, without limitation, the
financing of the conduct of the operations of the Partnership,
the lending of funds to other Persons, and the repayment of
obligations of the Partnership;
(e)
the negotiation, execution and performance of any contracts,
conveyances or other instruments (including, without
limitation, instruments that limit the liability of the
Partnership under contractual arrangements to all or
particular assets of the Partnership with the other party to
the contract to have no recourse against the General Partner
or its assets other than its interest in the Partnership, even
if same results in the terms of the transaction being less
favorable to the Partnership than would otherwise be the
case);
(f)
the distribution of Distributable Cash;
(g)
the selection and dismissal of employees (including, without
limitation, employees having titles such as
“president,” “vice president,”
“secretary” and
“treasurer” ),
agents, outside attorneys, accountants, consultants and contractors
and the determination of their compensation and other terms of
employment or hiring;
(h)
the maintenance of insurance for the benefit of the Partners
and the Partnership (including, without limitation, the assets
and operations of the Partnership);
(i)
the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other
relationships;
(j)
the control of any matters affecting the rights and
obligations of the Partnership, including, without limitation,
the bringing and defending of actions at law or in equity and
otherwise engaging in the conduct of litigation and the
incurring of legal expense and the settlement of claims and
litigation;
(k)
the indemnification of any Person against liabilities and
contingencies to the extent permitted by law;
(l)
the entering into of listing agreements with the American
Stock Exchange and any other securities exchange and the
delisting of some or all of the Units from, or requesting that
trading be suspended on, any such exchange; and
(m)
the purchase, sale or other acquisition or disposition of
Units.
7.2
Best Efforts. The
General Partner will use its best efforts to cause the Partnership
to be formed, reformed, qualified or registered under assumed or
fictitious name statutes or similar laws in any state in which the
Partnership owns property or transacts business if such formation,
reformation, qualification or registration is necessary in order to
protect the limited liability of the Limited Partners or to permit
the Partnership lawfully to own property or transact
business.
7.3
Right of Public to Rely on Authority of a General
Partner. No
person shall be required to determine the General Partner’s
authority to make any undertaking on behalf of the
Partnership.
7.4
Obligation of the General Partner. The
General Partner shall:
(a)
devote
to the Partnership and apply to the accomplishment of the
Partnership purposes so much of its time and attention as is
necessary or advisable to manage properly the affairs of the
Partnership;
(b)
maintain
the Capital Account for each Partner; and
(c)
cause
the Partnership to enter into and carry out the obligations of
the Partnership contained in the agreements with Affiliates of
the General Partner as described in the Prospectus and cause
the Partnership not to take any action in violation of such
agreements.
7.5
Good Faith. The
General Partner has a responsibility to the Limited Partners to
exercise good faith and fairness in all dealings. In the event that
a Limited Partner believes that the General Partner has violated
its fiduciary duty to the Limited Partners, he may seek legal
relief individually or on behalf of the Partnership under
applicable laws, including under the Act and under securities and
commodities laws, to recover damages from or require an accounting
by the General Partner. Limited Partners should be aware that
performance by the General Partner of its fiduciary duty is
measured by the terms of this Agreement as well as applicable law.
Limited Partners may also have the right, subject to applicable
procedural and jurisdictional requirements, to bring class actions
in federal court to enforce their rights under the federal
securities laws and the rules and regulations promulgated
thereunder by the SEC. Limited Partners who have suffered losses in
connection with the purchase or sale of the Units may be able to
recover such losses from the General Partner where the losses
result from a violation by the General Partner of the federal
securities laws. State securities laws may also provide certain
remedies to limited partners. Limited Partners are afforded certain
rights to institute reparations proceedings under the Commodity
Exchange Act for violations of the Commodity Exchange Act or of any
rule, regulation or order of the Commodities Futures Trading
Commission
(“CFTC”) by
the General Partner.
7.6
Indemnification
7.6.1
Notwithstanding any other provision of this Agreement, neither
a General Partner nor any employee or other agent of the
Partnership nor any officer, director, stockholder, partner,
employee or agent of a General Partner (a
“Protected Person” )
shall be liable to any Partner or the Partnership for any mistake
of judgment or for any action or inaction taken, nor for any losses
due to any mistake of judgment or to any action or inaction or to
the negligence, dishonesty or bad faith of any officer, director,
stockholder, partner, employee or agent of the Partnership or any
officer, director, stockholder, partner, employee or agent of such
General Partner, provided that such officer, director, stockholder,
partner, employee or agent of the Partner or officer, director,
stockholder, partner, employee or agent of such General Partner was
selected, engaged or retained by such General Partner with
reasonable care, except with respect to any matter as to which such
General Partner shall have been finally adjudicated in any action,
suit or other proceeding not to have acted in good faith in the
reasonable belief that such Protected Person’s action was in
the best interests of the Partnership and except that no Protected
Person shall be relieved of any liability to which such Protected
Person would otherwise be subject by reason of willful misfeasance,
gross negligence or reckless disregard of the duties involved in
the conduct of the Protected Person’s office. A General
Partner and its officers, directors, employees or partners may
consult with counsel and accountants (except for the
Partnership’s independent auditors) in respect of Partnership
affairs and be fully protected and justified in any action or
inaction which is taken in accordance with the advice or opinion of
such counsel or accountants (except for the Partnership’s
independent auditors), provided that they shall have been selected
with reasonable care.
Notwithstanding
any of the foregoing to the contrary, the provisions of this
Article 7.6.1 and of Article 7.6.2 hereof shall not be
construed so as to relieve (or attempt to relieve) a General
Partner (or any officer, director, stockholder, partner,
employee or agent of such General Partner) of any liability to
the extent (but only to the extent) that such liability may
not be waived, modified or limited under applicable law, but
shall be construed so as to effectuate the provisions of this
Article 7.6.1 and of Article 7.6.2 hereof to the fullest
extent permitted by law.
7.6.2
The Partnership shall, to the fullest extent permitted by law,
but only out of Partnership assets, indemnify and hold
harmless a General Partner and each officer, director,
stockholder, partner, employee or agent thereof (including
persons who serve at the Partnership’s request as
directors, officers or trustees of another organization in
which the Partnership has an interest as a Unitholder,
creditor or otherwise) and their respective legal
representatives and successors (hereinafter referred to as
a
“Covered Person” against
all liabilities and expenses, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred by any Covered
Person in connection with the defense or disposition of any action,
suit or other proceedings, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered
Person may be or may have been involved as a party or otherwise or
with which such Covered Person may be or may have been threatened,
while in office or thereafter, by reason of an alleged act or
omission as a General Partner or director or officer thereof, or by
reason of its being or having been such a General Partner, director
or officer, except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such
action, suit or other proceeding not to have acted in good faith in
the reasonable believe that such Covered Person’s action was
in the best interest of the Partnership, and except that no Covered
Person shall be indemnified against any liability to the
Partnership or Limited Partners to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in
the conduct of such Covered Person’s office. Expenses,
including counsel fees so incurred by any such Covered Person, may
be paid from time to time by the Partnership in advance of the
final disposition of any such action, suit or proceeding on the
condition that the amounts so paid shall be repaid to the
Partnership if it is ultimately determined that the indemnification
of such expenses is not authorized hereunder.
As
to any matter disposed of by a compromise payment by any such
Covered Person, pursuant to a consent decree or otherwise, no
such indemnification either for said payment or for any other
expenses shall be provided unless such compromise shall be
approved as in the best interests of the Partnership, after
notice that it involved such indemnification by any
disinterested person or persons to whom the questions may be
referred by the General Partner, provided that there has been
obtained an opinion in writing of independent legal counsel to
the effect that such Covered Person appears to have acted in
good faith in the reasonable belief that his or her action was
in the best interests of the Partnership and that such
indemnification would not protect such persons against any
liability to the Partnership or its Limited Partners to which
such person would otherwise by subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of office. Approval by
any disinterested person or persons shall not prevent the
recovery from persons of indemnification if such Covered
Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable
belief that such Covered Person’s action was in the best
interests of the Partnership or to have been liable to the
Partnership or its Limited Partners by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered
Person’s office.
The
right of indemnification hereby provided shall not be
exclusive of or affect any other rights to which any such
Covered Person may be entitled. As used in this Article 7.6.2,
an
“interested Covered Person” is
one against whom the action, suit or other proceeding on the same
or similar grounds is then or has been pending and a
“disinterested person” is
a person against whom no actions, suits or other proceedings or
another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this
Article 7.6.2 shall affect any rights to indemnification to which
personnel of a General Partner, other than directors and officers,
and other persons may be entitled by contract or otherwise under
law, nor the power of the Partnership to purchase and maintain
liability insurance on behalf of any such person.
Nothing
in this Article 7.6.2 shall be construed to subject any
Covered Person to any liability to which he or she is not
already liable under this Agreement or applicable
law.
7.6.3
Each Limited Partner agrees that it will not hold any
Affiliate or any officer, director, stockholder, partner,
employee or agent of any Affiliate of the General Partner
liable for any actions of such General Partner or any
obligations arising under or in connection with this Agreement
or the transactions contemplated hereby.
7.7
Resolutions of Conflicts of Interest; Standard of
Care.
7.7.1
Unless otherwise expressly provided in this Agreement or any
other agreement contemplated hereby, whenever a conflict of
interest exists or arises between the General Partner on the
one hand, and the Partnership or any Limited Partner, on the
other hand, any resolution or course of action by the General
Partner in respect of such conflict of interest shall be
permitted and deemed approved by all Partners and shall not
constitute a breach of this Agreement or of any agreement
contemplated hereby or of a duty stated or implied by law or
equity, if the resolution or course of action is, or by
operation of this Agreement is deemed to be, fair and
reasonable to the Partnership. If a dispute arises, it will be
resolved through negotiations with the General Partner or by a
court located in the State of Delaware. Any resolution of a
dispute is deemed to be fair and reasonable to the Partnership
if the resolution is:
| · |
approved
by the Audit Committee, although no party is obligated to seek such
approval and the General Partner may adopt a resolution or course
of action that has not received such approval;
|
| · |
on
terms no less favorable to the Limited Partners than those
generally being provided to or available from unrelated third
parties; or
|
| · |
fair
to the Limited Partners, taking into account the totality of the
relationships of the parties involved including other transactions
that may be particularly favorable or advantageous to the Limited
Partners.
|
7.7.2
Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner is permitted or
required to make a decision (i) in its discretion or under a
grant of similar authority or latitude, the General Partner
shall be entitled to the extent permitted by applicable law,
to consider only such interest and factors as it desires and
shall have no duty or obligation to give any consideration to
any interest of or factors affecting the partnership or the
Limited Partners, or (ii) in its good faith or under another
express standard, the General Partner shall act under such
express standard and except as required by applicable law,
shall not be subject to any other different standards imposed
by this Agreement, any other agreement contemplated hereby or
applicable law.
7.8
Other Matters Concerning the General Partner.
7.8.1
The General Partner (including the Audit Committee) may rely
on and shall be protected in acting or refraining from acting
upon any certificate, document or other instrument believed by
it to be genuine and to have been signed or presented by the
proper party or parties.
7.8.2
The General Partner (including the Audit Committee) may
consult with legal counsel, accountants, appraisers,
management consultants, investment bankers and other
consultants and advisors selected by it and any opinion or
advice of any such person as to matters which the General
Partner (including the Audit Committee) believes to be within
such person’s professional or expert competence shall be
the basis for full and complete authorization of
indemnification and provide legal protection with respect to
any action taken or suffered or omitted by the General Partner
(including the Audit Committee) hereunder in good faith and in
accordance with such opinion or advice.
7.8.3
The General Partner (including the Audit Committee) may
exercise any of the powers granted to it by this Agreement and
perform any of the duties imposed upon it hereunder either
directly or by or through its agents, and the General Partner
(including the Audit Committee) shall not be responsible for
any misconduct or negligence on the part of any such agent
appointed by the General Partner in good faith.
7.9
Other Business Ventures. Any
Partner, director, employee, Affiliate or other person holding a
legal or benefi
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