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Exhibit 3.1
UNITED STATES OIL FUND, LP
FIRST AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
This First
Amended and Restated Agreement of Limited Partnership (this
"Agreement"), executed on _____________, 2006, 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 [NAME OF INITIAL LIMITED
PARTNER TO BE
INSERTED PRIOR TO EFFECTIVENESS], as a Limited Partner, together
with any
Persons who shall hereafter be admitted as Partners in accordance
with this
Agreement.
NOW
THEREFORE, in consideration of the mutual promises and
agreements
herein made and intending to be legally bound, the Partners hereby
agree 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 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 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 Agreement of Limited Partnership,
as
originally executed and as amended, modified, supplemented or
restated from time
to time, as the context requires.
1.7
"Authorized Purchaser Agreement" means an agreement among the
Partnership, the General Partner and a Participant, substantially
in the form of
Exhibit __ hereto, as it may be amended or supplemented from time
to time in
accordance with its terms.
1.8
"Business Day" shall mean Monday through Friday of each week,
except
that a legal holiday recognized as such by the government of the
United States
shall not be regarded as a Business Day.
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 mean an account established on the books
and
records of the Partnership for each Partner as set forth in this
Agreement.
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).
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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, substantially in the form
of
Exhibit B to this Agreement or in such other forms as may be
adopted by the
General Partner in its sole discretion, issued by the Partnership
evidencing
ownership of one or more Units.
1.14
"Close of Business" shall mean 5:00 PM (New York City 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.
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" means 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" means the Letter of Representations from
the
General Partner to the Depository, dated as of __________, 2006, as
the same 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" means 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
__.
1.24
"Indirect Participants" shall have the meaning assigned to such
term
in Section 9.2.2.
1.25
"Initial Offering Period" means 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 ninety
(90) days at the sole discretion of the General Partner.
1.26
"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.
1.27
"Management Fee" shall mean the management fee paid to the
General
Partner pursuant to this Agreement.
1.28 "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.
1.29
"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.
1.30
"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.
1.31
"Outstanding" shall mean, with respect to the Units or other
Partnership Securities, as the case may be, all Units or other
Partnership
Securities of that are issued by the Partnership and reflected as
outstanding on
the Partnership's books and records as of the date of
determination.
1.32
"Participant" means 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.
1.33
"Partner" shall mean the General Partner or any Limited
Partner.
"Partners" shall mean the General Partner and all Limited Partners
(unless
otherwise indicated).
1.34
"Partnership" shall mean the limited partnership hereby formed,
as
such limited partnership may from time to time be constituted.
1.35
"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
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or debt obligations of the Partnership convertible into any class
or series of
equity securities of the Partnership.
1.36
"Person" shall mean any natural person, partnership, limited
partnership, trust, estate, corporation, association, custodian,
nominee or any
other individual or entity in their own or any representative
capacity.
1.37
"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,
over
(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.
1.38
"Prospectus" shall mean the United States Oil Fund, LP
Prospectus,
dated _______, 2006, as the same may have been amended or
supplemented, used in
connection with the offer and sale of interests.
1.39
"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 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.
1.40
"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.
1.41
"Redeemable Units" shall mean any Units for which a redemption
notice
has been given, and has not been withdrawn.
1.42
"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
1.43
"Revolving Credit Facility" shall mean a revolving credit
facility
which 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.
1.44
"Subscribing Participant" means a Participant who has submitted
a
request to purchase one or more Creation Baskets that has not yet
been accepted
by 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 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 in the form attached to this Agreement.
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
"Unitholders" means the General Partner and all holders of
Units,
where no distinction is required by the context in which the term
is used.
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1.51
"Valuation Date" shall mean the last Business Day of any
Accounting
Period.
1.52
"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 The
General Partner and the Organizational Limited Partner have
previously formed the Partnership as a limited partnership pursuant
to the Act
and hereby amend and restate the original Agreement of Limited
Partnership of
the Partnership in its entirety. This amendment and restatement
shall become
effective on the date of this Agreement. The rights and liabilities
of the
Partners shall be as provided 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 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
P.O. Box 6919, Moraga, CA 94570 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 deem advisable.
2.4 The
Partnership is organized within the goal of having acquire its
own
and dispose of. To achieve this goal futures contracts for crude
oil and/or
other petroleum based fuels on other U.S. and foreign exchanges
(collectively,
"Oil Futures Contracts") and other oil interests such as cash
settled options on
Oil Futures Contracts, forward contracts for oil, and
over-the-counter
transactions that are based on the price of oil, other petroleum
based fuels,
Oil Futures Contracts and indices based on the foregoing and
short-term United
States government securities, cash-equivalents, or other short-term
debt
instruments deemed appropriate by the General Partner, and
conducting any other
business or duties authorized by this Agreement, as well as any
activities
incidental or necessary to carry out the business and duties set
forth in this
Agreement. Net Asset Value of each of its Units correlate to the
spot price of
West Texas Intermediate crude oil at Cushing, Oklahoma.
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. A copy of this Agreement may
be filed as
the Certificate of Limited Partnership of the Partnership. The
General Partner
shall not be required to deliver or mail to 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 and by seven
directors, four
of whom may also be executive officers of the General Partner. The
General
Partner shall establish and maintain an 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.
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3.1.1 The name of the General Partner is Victoria Bay Asset
Management,
LLC, which maintains its principal business office at P.O. Box
6919, Moraga, CA
94570.
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.
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 extraordinary
expenses (i.e.,
expenses not in the ordinary course of business, including 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, was admitted as the General Partner of the Partnership
and later
made an initial capital contribution to the Partnership in the
amount of $20.00,
and the Organizational Limited Partner acquired a ninety-eight
percent (98%)
interest in the profits and losses of the Partnership, was admitted
as a Limited
Partner of the Partnership and later 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. Ninety-eight percent (98%) of any interest or
other profit that
may have resulted from the investment or other use of such initial
capital
contributions shall be allocated and distributed to the
Organizational Limited
Partner, and the balance thereof shall be 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 of the
specific act 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
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 provided in certain articles, 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 all of
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
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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, 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 oil futures contracts for light, sweet crude oil as
listed on the New
York Mercantile Exchange on the last business date prior to the
effective date.
3.4 Except as
otherwise provided in this Agreement, no Partner shall have
any right to demand or receive the return of his 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 Member 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 additional 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
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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 In
accordance with Section 704(c) of the Code (and the principles
thereof) and the Treasury Regulations issued with respect thereto,
income, gain,
loss and deduction with respect to any property contributed to the
capital of
the Company and with respect to assets of the Company that have
been revalued
under Treasury Regulations Sections 1.704-1(b)(2)(iv)(f), solely
for tax
purposes, shall be allocated among the Partners so as to take into
account any
variation between the adjusted basis of such property to the
Partnership for
federal income tax purposes and its value as of the time of the
contribution or
revaluation of Partnership assets, including, but not limited to,
special
allocations to a contributing Partner that are required under Code
Section
704(c) (and the principles thereof) to be made upon distributions
of such
property to any non-contributing Partner.
4.3.4
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 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 P.O.
Box 6919,
Moraga, CA 94570 or such office, including of an administrative
agent, as it may
subsequently designate upon notice. 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 of 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
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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 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.
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 there from 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 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
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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 of the limited partners);
(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;
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(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 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 information, 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
Partnership purposes so much of its time and attention as is
necessary or
advisable to manage properly the affairs of the Partnership;
(b)
maintain a Partnership 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 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 Securities and
Exchange
Commission ("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, employee, broker or other
agent of the
Partnership or any officer, director, stockholder, partner,
employee or agent of
such General Partner, provided that such officer, director,
stockholder,
employee, broker or agent of the Partner or officer, employee,
partner 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 actions 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
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<PAGE>
construed so as to relieve (or attempt to relieve) a General
Partner (or any
employee or other agent thereof or any 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, employee and 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 Unit
holder, 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 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 officer thereof or
by reason of
its being or having been such a General Partner 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 as 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 none of
such 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 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 stockholder, director, officer, employee or agent of any
Affiliate of the
General Partner to any liability 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
11
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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 or by a court of competent
jurisdiction.
Any resolution is deemed to be fair and reasonable to the
Partnership if the
resolution is:
-
approved by the audit committee of the Partnership (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 to
