Delaware
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0-54140
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27-2365025
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(State or other jurisdiction
of incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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o
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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o
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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o
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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(i)
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clarifying that the Registrant is an affiliate of Bank of America Corporation;
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(ii)
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providing for the issuance and redemption of fractional units of limited liability company interest in the Registrant (“Units”);
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(iii)
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clarifying certain terms applicable to Class M Units, as well as terms applicable to other Classes of Units;
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(iv)
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clarifying that an investor can transfer the economic benefit of ownership of its Units without the consent of the manager of the Registrant (the “Sponsor”);
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(v)
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clarifying certain terms relating to the withdrawal of seed capital by the Sponsor and/or its affiliates; and
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(vi)
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clarifying that matters subject to the consent or vote of investors will not take into account any Units held by Sponsor related parties.
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Exhibit No.
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Description
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3.02
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Amended and Restated Limited Liability Company Operating Agreement of Man AHL FuturesAccess LLC.
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MAN AHL FUTURESACCESS LLC
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By:
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Merrill Lynch Alternative Investments LLC,
its Manager
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By: | /s/ Barbra E. Kocsis | |||
Name: | Barbra E. Kocsis | |||
Position: | Chief Financial Officer and Vice President |
Exhibit 3.02
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Amended and Restated Limited Liability Company Operating Agreement of Man AHL FuturesAccess LLC.
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MAN AHL FUTURESACCESS LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT
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ARTICLE I ORGANIZATION
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SECTION 1.01. OBJECTIVES AND PURPOSES
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1
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SECTION 1.02. APPOINTMENT OF THE TRADING ADVISOR; INVESTMENT OF CASH RESERVES
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2
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SECTION 1.03. FISCAL YEAR; ACCOUNTING PERIODS
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3
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SECTION 1.04. REGISTERED AGENT AND OFFICE; PRINCIPAL OFFICE
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3
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SECTION 1.05. DURATION OF THIS FUTURESACCESS FUND
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3
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SECTION 1.06. NON-ASSIGNABILITY OF UNITS; SUBSTITUTED INVESTORS; LIMITED ASSIGNABILITY OF THE SPONSOR’S
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INTEREST | 3 |
SECTION 1.07. LIABILITY OF INVESTORS
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3
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ARTICLE II CAPITAL AND TAX ALLOCATIONS
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SECTION 2.01. CAPITAL CONTRIBUTIONS
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4
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SECTION 2.02. OPENING CAPITAL ACCOUNTS
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5
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SECTION 2.03. FINANCIAL ALLOCATIONS AMONG THE UNITS
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6
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SECTION 2.04. NET ASSET VALUE
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6
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SECTION 2.05. SPONSOR’S FEES; MANAGEMENT AND PERFORMANCE FEES; TRANSACTION COSTS; OPERATING EXPENSES
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7
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SECTION 2.06. ALLOCATION OF PROFITS AND LOSSES FOR FINANCIAL PURPOSES
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8
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SECTION 2.07. ALLOCATION OF PROFITS AND LOSSES FOR INCOME TAX PURPOSES
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8
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SECTION 2.08. CHARGEBACKS TO CURRENT OR FORMER INVESTORS
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10
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SECTION 2.09. PROCESSING OF SUBSCRIPTIONS
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11
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SECTION 2.10. VALUATION OF ASSETS
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11
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SECTION 2.11. USE OF ESTIMATES
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12
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SECTION 2.12. ACCOUNTING PRACTICES
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12
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ARTICLE III PARTICIPATION IN FUTURESACCESS FUND PROPERTY; REDEMPTIONS AND DISTRIBUTIONS
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SECTION 3.01. NO UNDIVIDED INTERESTS IN FUTURESACCESS FUND PROPERTY
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12
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SECTION 3.02. REDEMPTIONS OF UNITS; EXCHANGES
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12
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SECTION 3.03. WITHDRAWALS OF CAPITAL BY THE SPONSOR
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13
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SECTION 3.04. MANDATORY REDEMPTIONS
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13
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SECTION 3.05. MANDATORY REDEMPTIONS TO PAY TAXES
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14
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SECTION 3.06. DISTRIBUTIONS
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14
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SECTION 3.07. FORM OF DISTRIBUTION AND REDEMPTION PAYMENTS
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14
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SECTION 3.08. REMOVAL OF THE SPONSOR
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14
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ARTICLE IV WITHDRAWAL OF THE SPONSOR AND INVESTORS
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SECTION 4.01. WITHDRAWAL OF THE SPONSOR
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14
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SECTION 4.02. WITHDRAWAL OF AN INVESTOR
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15
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SECTION 4.03. STATUS AFTER WITHDRAWAL
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15
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ARTICLE V MANAGEMENT
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SECTION 5.01. AUTHORITY OF THE SPONSOR
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15
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SECTION 5.02. SERVICE PROVIDERS; INVESTMENTS; ACCOUNTS
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15
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SECTION 5.03. ACTIVITIES OF THE SPONSOR PARTIES
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16
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SECTION 5.04. SERVICES TO THIS FUTURESACCESS FUND
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16
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SECTION 5.05. INTERESTED PARTIES
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16
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SECTION 5.06. EXCULPATION
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16
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SECTION 5.07. INDEMNIFICATION
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17
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SECTION 5.08. INVESTORS’ TRANSACTIONS
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17
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SECTION 5.09. RELIANCE BY THIRD PARTIES
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17
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SECTION 5.10. REGISTRATION OF ASSETS
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17
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SECTION 5.11. LIMITATION ON AUTHORITY OF THE SPONSOR
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17
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ARTICLE VI ADMISSION OF INVESTORS
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SECTION 6.01. PROCEDURE AS TO NEW INVESTORS
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18
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SECTION 6.02. PROCEDURE AS TO NEW MANAGERS
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18
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ARTICLE VII BOOKS OF ACCOUNT; AUDITS; REPORTS TO INVESTORS
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SECTION 7.01. BOOKS OF ACCOUNT
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18
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SECTION 7.02. ANNUAL AUDIT
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18
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SECTION 7.03. INTERIM REPORTS
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19
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ARTICLE VIII CONFLICTS OF INTEREST
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SECTION 8.01. INVESTORS’ CONSENT
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19
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SECTION 8.02. INVESTORS’ REPRESENTATIVE
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19
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ARTICLE IX DISSOLUTION AND WINDING UP OF THIS FUTURESACCESS FUND
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SECTION 9.01. EVENTS OF DISSOLUTION
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20
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SECTION 9.02. DISSOLUTION
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20
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ARTICLE X BENEFIT PLAN INVESTORS
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SECTION 10.01. INVESTMENT IN ACCORDANCE WITH LAW
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21
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SECTION 10.02. DISCLOSURES AND RESTRICTIONS REGARDING BENEFIT PLAN INVESTORS
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21
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ARTICLE XI MISCELLANEOUS PROVISIONS
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SECTION 11.01. INVESTORS NOT TO CONTROL
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22
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SECTION 11.02. POWER OF ATTORNEY
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22
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SECTION 11.03. AMENDMENTS; CONSENTS
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22
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SECTION 11.04. NOTICES
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23
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SECTION 11.05. LEGAL EFFECT; MANNER OF EXECUTION
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23
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SECTION 11.06. GOVERNING LAW
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23
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SECTION 11.07. CONSENT TO JURISDICTION
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23
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SECTION 11.08. “TAX MATTERS PARTNER”; TAX ELECTIONS
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23
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SECTION 11.09. DETERMINATION OF MATTERS NOT PROVIDED FOR IN THIS AGREEMENT
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23
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SECTION 11.10. NO PUBLICITY
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23
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SECTION 11.11. SURVIVAL
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24
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SECTION 11.12. WAIVERS
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24
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SECTION 11.13. VOTING RIGHTS
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24
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SECTION 11.14. ISSUANCE OF DIFFERENT CLASSES
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24
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SECTION 11.15. COMPLIANCE WITH THE ADVISERS ACT; SECURITIES LAWS
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24
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SECTION 11.16. AMENDMENT AND RESTATEMENT
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24
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(a)
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This FuturesAccess Fund shall have the following objectives and purposes:
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(i)
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to retain a professional trading advisor (the “Trading Advisor”) to manage this FuturesAccess Fund’s speculative trading in the futures, forward, options and other markets as described in the disclosure document for this FuturesAccess Fund, including any and all parts or sections thereof and exhibits or supplements thereto (the “Disclosure Document”);
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(ii)
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to maintain such futures brokerage, forward dealing and other counterparty accounts, as well as such cash reserves as the Sponsor may from time to time deem to be appropriate and to invest and manage all such cash reserves; and
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(iii)
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to engage in any other lawful act or activity within and without the United States for which limited liability companies may be organized under the laws of the State of Delaware.
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(b)
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This FuturesAccess Fund, and the Sponsor on behalf of this FuturesAccess Fund, shall have the power to enter into, make and perform all contracts and other undertakings, and engage in all activities and transactions as may be necessary or advisable to the carrying out of the foregoing purposes, including, without limitation, the power:
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(i)
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to trade futures, forwards, options and other instruments on margin and otherwise;
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(ii)
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to borrow money from banks or brokers, and to secure the payment of any obligations of this FuturesAccess Fund by hypothecation or pledge of all or part of the assets of this FuturesAccess Fund;
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(iii)
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to exercise, as applicable, all rights, powers, privileges and other incidents of ownership or possession with respect to the assets of this FuturesAccess Fund;
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(iv)
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to open, maintain and close bank, brokerage and other accounts;
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(v)
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to prepare and file all tax returns required of this FuturesAccess Fund and make any election or determination on behalf of this FuturesAccess Fund in connection therewith or as otherwise required or permitted by applicable tax laws;
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(vi)
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to bring, defend, compromise and settle legal actions or other claims on behalf of this FuturesAccess Fund;
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(vii)
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to maintain insurance on behalf of this FuturesAccess Fund, including indemnification insurance; and
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(viii)
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to take any and all such actions as the Sponsor may deem to be necessary or advisable in connection with the foregoing.
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(a)
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No Investor shall assign, encumber, pledge, hypothecate or otherwise transfer any of such Investor’s Units without the consent of the Sponsor; provided, however, that an Investor may transfer the economic benefit of ownership of such Investor’s Units without the prior written consent of the Sponsor. Any assignment, encumbrance, pledge, hypothecation or transfer of Units, whether voluntary, involuntary or by operation of law, to which the Sponsor does not consent, and for which the Sponsor’s consent was required pursuant to the previous sentence, shall result in the Units so assigned, encumbered, pledged, hypothecated or otherwise transferred being mandatorily redeemed as of the end of the month during which such purported assignment, encumbrance, pledge, hypothecation or transfer occurred. Any assignment, encumbrance, pledge, hypothecation or transfer which shall result in the termination of this FuturesAccess Fund for federal income tax purposes shall be null and void ab initio and of no legal force or effect whatsoever. An assigning Investor shall remain liable to this FuturesAccess Fund as provided in the Act, regardless of whether his or her assignee becomes a substituted Investor.
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(b)
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The Sponsor may not assign, encumber, pledge, hypothecate or otherwise transfer all or any portion of its manager’s interest in this FuturesAccess Fund; provided, that the Sponsor may assign such interest to an affiliate of the Sponsor upon notice (which need not be prior notice) to the Investors or in connection with the sale or transfer of all or a material portion of the Sponsor’s equity or assets. See Sections 4.01 and 6.02.
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(a)
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Nothing herein shall require the Sponsor to maintain any minimum net worth or shall make any person associated with the Sponsor individually liable for any debt, liability or obligation of this FuturesAccess Fund or of the Sponsor.
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(b)
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No Investor shall have any obligation to restore any negative balance in the capital account established for each Unit pursuant to Section 2.02 (“Capital Account”) of such Investor.
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(c)
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The Sponsor shall have no obligation to restore any negative balance in any Investor’s or in the Sponsor’s Capital Account.
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(d)
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Except as provided in Section 2.08 (providing for chargebacks to current or former Investors), the Sponsor and the Investors shall be liable for the repayment, satisfaction and discharge of debts, liabilities and obligations of this FuturesAccess Fund only to the extent of the Sponsor’s or such Investor’s investment in this FuturesAccess Fund and not in excess thereof.
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(a)
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There shall be established for each Unit of each Class on the books of this FuturesAccess Fund, as of the first day of each Accounting Period, an opening capital account (“Opening Capital Account”) which, for the Accounting Period as of the beginning of which such Unit is issued, shall be the Capital Contribution made in respect of such Unit and which, for each Accounting Period thereafter, shall be an amount equal to the closing capital account (“Closing Capital Account”) (determined as set forth in Section 2.06) attributable to such Unit for the immediately preceding Accounting Period.
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(b)
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The Sponsor may, but shall not be required to, make Capital Contributions to this FuturesAccess Fund from time to time as new Units are issued, which shall be accounted for on a Unit-equivalent basis and
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shall participate in the profits and losses of the Units on the same basis as the Capital Accounts of the Class D Units.
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(c)
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For all purposes of this Agreement, references to Units shall be deemed to include the Sponsor’s Capital Account on a Unit-equivalent basis (unless the context otherwise requires or the reference is made explicit for greater certainty).
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(a)
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The assets of this FuturesAccess Fund shall include:
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(i)
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all cash on hand or on deposit in bank or other interest-bearing accounts, including any interest accrued thereon;
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(ii)
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any accrued gains on open positions which have not been settled by crediting this FuturesAccess Fund’s account, as valued pursuant to Section 2.10;
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(iii)
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all bills, demand notes and accounts receivable;
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(iv)
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all securities (including, without limitation, money-market funds, Treasury bills and other short-term, interest-bearing instruments), commodity interests, currency interests, swap agreements and all other instruments owned or contracted for by this FuturesAccess Fund;
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(v)
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all interest accrued on any interest-bearing securities owned by this FuturesAccess Fund except to the extent that the same is included or reflected in the valuation of such securities; and
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(vi)
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all other assets of every kind and nature, including prepaid expenses.
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(b)
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The liabilities of this FuturesAccess Fund shall be deemed to include the following (provided, however, that in determining the amount of such liabilities, this FuturesAccess Fund may calculate expenses of a regular or recurring nature for any given period on an estimated basis in advance, and may accrue the same in such manner as the Sponsor may deem appropriate over such period):
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(i)
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any accrued losses on open positions which have not been settled by debiting this FuturesAccess Fund’s account, as valued pursuant to Section 2.10;
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(ii)
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all bills and accounts payable;
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(iii)
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all expenses accrued, reimbursable or payable; and
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(iv)
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all other liabilities, present or future, including such reserves as the Sponsor may (as contemplated by Section 2.04(g)) deem advisable.
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(c)
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The management fees payable to the Trading Advisor (“Management Fees”), the performance fees payable to the Trading Advisor (“Performance Fees”) and the “Sponsor’s Fees” (as defined in Section 2.05(a)) shall be determined, and Units’ Capital Accounts correspondingly reduced, after the allocation of the other components of Net Asset Value, as described above; provided that interest income may or may
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not be included in Net Asset Value for purposes of calculating the Performance Fees as agreed upon between the Sponsor and the Trading Advisor.
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(d)
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Operating expenses shall be allocated among the Units pro rata based on their respective Net Asset Values as of the beginning of the month.
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(e)
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Extraordinary costs, if any, shall be allocated as incurred in such manner as the Sponsor may deem to be fair and equitable.
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(f)
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Organizational and initial offering costs shall be deducted from Net Asset Value in installments as of the end of each of the first 60 calendar months after the initial issuance of the Units. However, for financial reporting purposes, organizational costs, to the extent material, will be deducted from net asset value as of the date of such initial issuance and initial offering costs will be amortized over a 12-month period to the extent material.
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(g)
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All Investors, by becoming party to this Agreement, hereby agree and consent to the Sponsor’s authority to establish whatever reserves the Sponsor may determine to be appropriate in order to cover losses, contingencies, liabilities, uncertain valuations and other factors. Any such reserves shall, unless the Sponsor determines that such reserves are properly attributable to certain but less than all outstanding Units, reduce the Net Asset Value of the Units of each Class pro rata based on their respective Net Asset Values, after reduction for accrued Sponsor’s Fees, operating expenses and extraordinary expenses until such time, if any, as such reserves are reversed. Reserves, when reversed, shall be similarly allocated among the Units then outstanding pro rata based on their respective Net Asset Value (irrespective of whether such Units were outstanding when the reserves were established).
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(h)
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The Sponsor may suspend the calculation of Net Asset Value during any period for which the Sponsor is unable to value a material portion of this FuturesAccess Fund’s positions. The Sponsor will give notice of any such suspension to all Investors.
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(a)
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The Sponsor shall receive monthly sponsor’s fees (“Sponsor’s Fees”), payable in arrears of 1/12 of 1.50%, 2.50%, 0% and 1.10%, respectively, of the aggregate Net Asset Value of the Class A, Class C, Class D and Class I Units, in each case as of the close of business (as determined by the Sponsor) on the last business day of each calendar month (Net Asset Value for purposes of calculating the Sponsor’s Fees shall not be reduced by the accrued Sponsor’s Fees being calculated). The Sponsor’s Fees shall be accrued monthly. The Sponsor may waive or reduce Sponsor’s Fees for certain Investors without entitling any other Investor to any such waiver or reduction. No Sponsor’s Fees shall be charged to Class DS, Class DT or Class M Units, unless otherwise determined by the Sponsor.
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(b)
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This FuturesAccess Fund shall reimburse the Sponsor for the organizational and initial offering costs incurred by this FuturesAccess Fund in respect of the initial offering of the Units (of all Classes combined) as determined by the Sponsor in its sole discretion. If this FuturesAccess Fund dissolves prior to the end of the 60-month period described in Section 2.04(f), the Sponsor shall reimburse this FuturesAccess Fund for any such costs that have not yet been amortized.
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(c)
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The Sponsor’s Fees, as well as operating expenses due to the Sponsor (including: organizational and initial offering costs; ongoing offering costs; administrative, custody, transfer, subscription and redemption processing, legal, regulatory, filing, tax, audit, escrow, accounting and printing costs; and extraordinary expenses), shall be debited by the Sponsor directly from this FuturesAccess Fund’s account and paid to the Sponsor, where appropriate, as if to a third party, not credited to the Sponsor’s Capital Account.
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(d)
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This FuturesAccess Fund shall pay all transaction costs (including futures brokerage commissions and bid-ask spreads as well as interest on foreign currency borrowings), as well as all Management and Performance Fees, as incurred.
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(e)
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The Sponsor’s Fees, but not reimbursement payments for organizational and initial offering costs, shall be appropriately pro rated in the case of partial calendar months.
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(f)
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This FuturesAccess Fund shall pay all expenses, including administrative and ongoing offering costs, as well as any extraordinary expenses, incurred in its operations (including the expenses of any services provided by the Sponsor, other than in its capacity as Sponsor, or its affiliates); provided, that this FuturesAccess Fund shall not pay any allocable Sponsor overhead.
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(g)
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The Sponsor retains outside service providers to supply tax reporting, custody and accounting services to FuturesAccess. This FuturesAccess Fund’s operating costs will include its allocable share of the fees and expenses of such service providers, as well as the fees and expenses of any BAC entity which may provide such (or other) services in the future.
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(h)
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The Capital Account of the Sponsor (if any) shall not be subject to Sponsor’s Fees.
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(a)
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Any increase or decrease in the Net Asset Value of this FuturesAccess Fund, after the deduction of all transaction costs and operating expenses, but prior to accrual of the Management, Performance and Sponsor’s Fees, during such Accounting Period shall be credited pro rata, without any order or priority, among: (i) each Class of Units; and (ii) the Sponsor’s Capital Account, if any, based in each case on the aggregate Opening Capital Accounts attributable to each such Class of Units and the Sponsor’s Capital Account; provided that any amounts received by this FuturesAccess Fund from the Trading Advisor for payment to the Sponsor shall be allocated to the Capital Account of the Sponsor. Extraordinary expenses shall be allocated as the Sponsor may determine.
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(b)
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If the Closing Capital Account per Unit of any Class is reduced to zero, any further decrease in the Net Asset Value per Unit shall be allocated to the Sponsor’s Capital Account, if any.
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(c)
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The Management Fee, Performance Fee and Sponsor’s Fee shall be debited from each Class, in each case after the Section 2.06(a) and (b) allocations are made.
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(d)
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The Net Assets of each Class shall be divided equally among all Units of such Class.
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(a)
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A Tax Account shall be established for each Unit of each Class. The Tax Accounts of all outstanding Units shall initially be equal to each Unit’s net purchase price (i.e., the subscription price for such Unit reduced by any sales commissions) and shall subsequently be increased by such Unit’s share of the taxable and tax-exempt income and gain of this FuturesAccess Fund and decreased by such Unit’s share of the items of loss or expense and nondeductible items of loss or expense of this FuturesAccess Fund, as well as by any distributions.
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(b)
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For federal income tax purposes, items of ordinary income and loss, capital gain and capital loss shall, unless the Sponsor believes that doing so would not equitably reflect the economic experience of the Units, be allocated as of December 31 of each year among the Units, in the following order and priority:
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(i)
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Items of ordinary income and deduction generated by this FuturesAccess Fund shall be allocated pro rata among the Units which were outstanding during the months in such year when such items of ordinary income and deduction accrued.
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(ii)
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Gains will be allocated FIRST, to Investors who have redeemed Units during such year (including as of December 31), to the extent of the positive difference (if any) between the amounts received or receivable upon redemption and the respective Tax Account balances of the redeemed Units. SECOND, gains will be allocated to Investors to the extent of the positive difference (if any) between the Capital Account balance and the Tax Account balance attributable to their remaining Units. THIRD, gains will be allocated among all Investors based on the respective Net Asset Values of their outstanding Units.
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(iii)
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Losses shall be allocated FIRST, to Investors who have redeemed Units during such year (including as of December 31), to the extent of the negative difference (if any) between the amounts received or receivable upon redemption and the respective Tax Account balances of the redeemed Units. SECOND, losses shall be allocated to Investors to the extent of the negative difference (if any) between the Capital Account balance and Tax Account balance attributable to their remaining Units. THIRD, losses shall be allocated among all Investors based on the respective Net Asset Values of their outstanding Units.
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(iv)
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In the case of each of the FIRST and SECOND allocation levels set forth in Sections 2.07(b)(ii) and (iii), if there is insufficient gain or loss to make the complete allocation required at such level, such allocation will be made pro rata among all Investors who are subject to an allocation at such level in accordance with the respective amounts which would have been allocated had a complete allocation been possible.
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(v)
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Management Fees, Performance Fees and Sponsor’s Fees, as well as the operating expenses (in each case as adjusted to reflect the non-deductibility of all or a portion of such Sponsor’s Fees and operating expenses) and extraordinary expenses, shall be allocated, for tax purposes, to the Investors based on the amount of the foregoing actually debited from the Units’ respective Capital Accounts of the Investors’ respective Units.
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(vi)
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Items of ordinary income and/or gain attributable to amounts received by this FuturesAccess Fund from the Trading Advisor for payment to the Sponsor shall be specially allocated to the Sponsor.
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(c)
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The character of items of income, gain, loss or deduction (ordinary, short-term and long-term) and of the items required to be separately stated by Section 702(a) of the Internal Revenue Code of 1986, as amended (the “Code”), shall be allocated to the Investors pursuant to this Section 2.07 so as equitably to reflect, without discrimination or preference among Investors, the amounts credited or debited to the Units’ respective Capital Accounts pursuant to Section 2.06. Furthermore, to the extent that this FuturesAccess Fund has a net long-term capital gain or loss that may be subject to more than one maximum federal income tax rate, allocations of such gain or loss shall be made pro rata from among the amounts subject to each maximum tax rate.
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(d)
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In the case of Units which are transferred during a fiscal year, the tax allocations shall be made to such Units as provided above. The tax items so allocated will then be divided among the transferor(s) and the transferee(s) based on the number of months during such year that each held such Units, or in such other manner as the Sponsor may deem equitable.
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(e)
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Having in mind the principles of the allocations set forth above in this Section 2.07 (to which all Investors consent by becoming Investors), the Sponsor may nevertheless make such allocations of items of ordinary income and gain, ordinary deduction and loss and any items required to be separately stated by Section 702(a) of the Code as the Sponsor may deem fair and equitable — even if not consistent with the foregoing allocations — in order to cause the tax items allocated to the Investors, respectively, better to
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take into account (as determined by the Sponsor) the Units’ respective Opening Capital Accounts and distributive shares of net profit and net loss, any entry of new Investors, any redemptions, any differences between income for tax purposes and for Net Asset Value purposes, the differences between the Classes of Units and any other special circumstances which may arise; provided, however, that no such allocation by the Sponsor shall discriminate unfairly against any Investor; and provided further, that the Sponsor shall be under no obligation whatsoever to deviate from the allocations set forth above.
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(f)
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This FuturesAccess Fund may, to the extent practicable, allocate tax items on a gross rather than a net basis.
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(g)
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Allocations pursuant to this Section 2.07 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Unit’s Capital Account or share of net profits, net losses or distributions.
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(h)
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The tax allocations set forth in this Section 2.07 are intended to allocate items of this FuturesAccess Fund’s income, gains, losses and deductions (ordinary, short-term and long-term) in accordance with Sections 704(b) and 704(c) of the Code, and the regulations thereunder, including, without limitation, the requirements set forth therein regarding a “qualified income offset.”
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(i)
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The Sponsor may make such modifications to this Agreement as the Sponsor believes may be required to comply with Section 704 of the Code and the regulations thereunder.
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(j)
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In the event that the Sponsor determines to issue a new Class of Units, the foregoing tax allocations shall be adjusted so as equitably to allocate tax items between or among the different Classes.
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(a)
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The Sponsor may admit new Investors to this FuturesAccess Fund at such times and upon such notice (if any) as the Sponsor may determine. Investors’ Securities Accounts will be debited on or about the issuance date of such Units, and the amount so debited, less any applicable sales commission, will be invested directly in this FuturesAccess Fund. No interest will be payable in respect of any such subscriptions.
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(b)
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To the extent required by Rule 15c2-4 of the Securities Exchange Act of 1934, as amended, all subscriptions while held in escrow during the initial offering period pending release to this FuturesAccess Fund shall be held by a bank independent of the Sponsor, its affiliates, and their respective officers, employees, representatives and agents (each, a “Sponsor Party” and, collectively, the “Sponsor Parties”).
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(a)
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The Net Assets of this FuturesAccess Fund are its assets less its liabilities determined in accordance with generally accepted accounting principles and as described below. Accrued Performance Fees (as described in the Disclosure Document) shall reduce Net Asset Value, even though such Performance Fees may never, in fact, be paid.
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(b)
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For the avoidance of doubt, the Sponsor shall, in general, apply the following principles in valuing this FuturesAccess Fund’s assets:
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(i)
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commodity interests and currency interests which are traded on a United States exchange shall be valued at their settlement on the date as of which the values are being determined;
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(ii)
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commodity interests and currency interests not traded on a United States exchange shall be valued based upon policies established by the Sponsor, generally based on prices as reported by any reliable source selected by the Sponsor, consistently applied for each variety of interest;
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(iii)
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swap agreements shall be valued in the good faith discretion of the Sponsor based on quotations received from dealers deemed appropriate by the Sponsor;
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(iv)
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bank and other interest-bearing accounts, Treasury bills and other short-term, interest-bearing instruments shall be valued at cost plus accrued interest;
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(v)
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securities which are traded on a national securities exchange shall be valued at their closing price on the date as of which their value is being determined on the national securities exchange on which such securities are principally traded or on a consolidated tape which includes such exchange, whichever shall be selected by the Sponsor, or, if there is no closing price on such date on such exchange or consolidated tape, at the prior day’s closing price;
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(vi)
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securities not traded on a national securities exchange but traded over-the-counter shall be valued based on prices as reported by any reliable source selected by the Sponsor;
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(vii)
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money-market funds shall be valued at their net asset value on the date as of which their value is being determined;
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(viii)
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if on the date as of which any valuation is being made, the exchange or market herein designated for the valuation of any given assets is not open for business, the basis for valuing such assets shall be such value as the Sponsor may deem fair and reasonable;
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(ix)
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all other assets, including securities traded on foreign exchanges, and liabilities shall be valued in good faith by the Sponsor, including assets and liabilities for which there is no readily identifiable market value;
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(x)
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the foregoing valuations may be modified by the Sponsor if and to the extent that it shall determine that modifications are advisable in order better to reflect the true value of any asset; and
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(xi)
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the Sponsor may reduce the valuation of any asset (or of this FuturesAccess Fund) by reserves established, as contemplated by Section 2.04(g), to reflect losses, contingencies, liabilities, uncertain valuations or other factors, which the Sponsor determines reduce, or might reduce, the value of such asset (or of this FuturesAccess Fund as a whole in the case of reserves not specifically attributable to any particular asset).
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(a)
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Timing and Amount of Redemptions. Subject to this Section 3.02, an Investor shall be entitled to redeem as of the end of any calendar month all or part of such Investor’s Units, upon giving at least 10 days’
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written or oral notice. Investors who have Securities Accounts may give such notice by contacting their BAC financial advisor or portfolio manager or other BAC investment professional (“Investment Professional”), orally or in writing; Investors who no longer have a Securities Account must submit written notice of redemption, with the signature guaranteed by a United States bank or broker-dealer, to the Sponsor.
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(b)
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No Redemption Fees. This FuturesAccess Fund shall not charge a redemption fee.
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(c)
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Payment of Redemptions. The Sponsor shall cause this FuturesAccess Fund to distribute to redeeming Investors the estimated Net Asset Value of the Units redeemed by them, generally approximately 10 business days after the effective date of redemption, although there can be no assurance of the timing of such payment.
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(d)
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Suspension of Redemptions. In the event that this FuturesAccess Fund suspends the calculation of Net Asset Value, the Sponsor shall, upon written notice to all affected Investors, suspend any or all redemption requests (as well as any request to exchange Units for units of other FuturesAccess Funds). Any unsatisfied redemption requests shall be suspended until such time as this FuturesAccess Fund is able to determine Net Asset Value. All Units subject to suspended redemption requests shall continue to be treated as outstanding for all purposes hereunder, as if no redemption requests relating thereto had been submitted, until the effective date of their suspended redemption. During any period in which this FuturesAccess Fund is suspending redemptions, Investors will not be able to exchange Units for units of other FuturesAccess Funds. The Sponsor shall suspend redemptions during any period in which the calculation of Net Asset Value has been suspended.
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(e)
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Exchanges. Investors may generally exchange Units for units in other FuturesAccess Funds as described in the Disclosure Document. Any circumstance leading to a delay or suspension of either redemption dates or the receipt of the proceeds of redemptions from this FuturesAccess Fund shall have a corresponding effect on Investors’ exercise of their exchange privileges relating to this FuturesAccess Fund.
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(a)
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The Sponsor may withdraw capital from its Capital Account(s), if any, without notice to the Investors.
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(b)
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To the extent BAC has provided any “seed” capital to this FuturesAccess Fund, BAC may redeem such seed capital pursuant to the terms set forth in the Disclosure Document. For the avoidance of doubt, BAC may withdraw seed capital at different times and on different terms than are available to Investors.
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(a)
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The Sponsor may mandatorily redeem part or all of the Units held by a particular Investor if the Sponsor
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determines that: (i) such Investor’s continued holding of Units could result in adverse consequences to this FuturesAccess Fund; (ii) such Investor has a history of excessive exchanges between different FuturesAccess Funds and/or HedgeAccess Funds that is contrary to the purpose and/or efficient management of FuturesAccess and/or HedgeAccess; (iii) such Investor’s investment in the Units, or aggregate investment in FuturesAccess, is below the minimum level established by the Sponsor (including any increase in such minimum level that the Sponsor may implement in the future); (iv) such Investor holds Class M Units and is no longer eligible to hold such Units; or (v) for any other reason.
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(b)
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The Sponsor will mandatorily redeem all of this FuturesAccess Fund’s outstanding Units in the event that the Sponsor concludes that it is no longer advisable to place client capital with the Trading Advisor or if the amount of assets invested in this FuturesAccess Fund declines to a level that the Sponsor believes makes the continued operation of this FuturesAccess Fund impracticable or uneconomical.
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(c)
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Units mandatorily redeemed shall be redeemed as of the specified month-end without any further action on the part of the affected Investor, and the provisions of Sections 3.02 and 3.07 shall apply. In the event that the Sponsor mandatorily redeems any of an Investor’s Units, such Investor shall have the option to redeem all of such Investor’s Units as of the date fixed for redemption.
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(a)
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The Sponsor may withdraw from this FuturesAccess Fund at any time, without any breach of this Agreement, upon 90 calendar days’ written notice to the Investors. Withdrawal of the Sponsor shall not dissolve this FuturesAccess Fund if at the time there is at least one other manager remaining; however, all Investors shall be entitled to redeem their Units, in total and not in part, as of the effective date of any such withdrawal by the Sponsor, unless an entity affiliated with the Sponsor remains as a manager of this FuturesAccess Fund. Nothing in this Section 4.01(a) shall, however, restrict the Sponsor from assigning and delegating its rights and obligations under this Agreement to an affiliate of the Sponsor upon notice (which need not be prior notice) to the Investors or in connection with the sale of all or a material portion of the Sponsor’s equity or assets.
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(b)
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Withdrawal of the last remaining manager shall dissolve this FuturesAccess Fund.
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(a)
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The management and operation of this FuturesAccess Fund and the determination of its policies shall be vested exclusively in the Sponsor. The Sponsor shall have the authority and power on behalf and in the name of this FuturesAccess Fund to: carry out any and all of the objectives and purposes of this FuturesAccess Fund set forth in Section 1.01; make, execute, sign and file a Certificate of Formation of this FuturesAccess Fund, any amendments thereto authorized herein, any amendments to this Agreement authorized herein, and all such other instruments, documents and certificates, which may, from time to time, be required by, or deemed advisable by the Sponsor under, the laws of the United States of America, the State of Delaware, the State of New Jersey, the State of New York or any other state or political subdivision in which the Sponsor shall determine that this FuturesAccess Fund shall do business, to effectuate, implement and continue the valid existence of this FuturesAccess Fund; and perform all acts and enter into, execute and perform all contracts and other undertakings which the Sponsor may deem necessary or advisable in connection with such objectives and purposes or incidental thereto; provided, that the Trading Advisor shall at all times have discretionary authority over the trading and investing of this FuturesAccess Fund. All actions and determinations to be made by the Sponsor hereunder shall, unless otherwise expressly provided, be made in the Sponsor’s sole and absolute discretion.
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(b)
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The Sponsor is specifically authorized to manage this FuturesAccess Fund’s cash flow and pay costs by bank or other borrowings.
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(a)
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to place capital under the management of, and withdraw capital from, the discretionary control of the Trading Advisor; provided, that this FuturesAccess Fund shall not retain any other Trading Advisor (although the Sponsor may dissolve this FuturesAccess Fund at any time).
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(b)
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to engage attorneys, accountants, agents and other persons as the Sponsor may deem necessary or advisable;
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(c)
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to open, maintain and close accounts, including margin, discretionary and cash management accounts, with brokers, dealers, counterparties or other persons (in each case, including affiliates of the Sponsor) and to pay the customary fees and charges applicable to transactions in, or the maintenance of, all such accounts;
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(d)
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to invest in money-market funds (including funds sponsored by affiliates of the Sponsor), Treasury bills or other short-term, interest-bearing instruments;
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(e)
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to open, maintain and close bank and other interest-bearing and non-interest-bearing accounts; and
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(f)
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to enter into, make, execute and perform such contracts, agreements and other undertakings as the Sponsor may deem necessary, advisable or incidental to the conduct of the business of this FuturesAccess Fund.
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(a)
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The respective Sponsor Parties will not devote their full business time, or any material portion of their business time, to this FuturesAccess Fund, as each is involved in the management of numerous other client and proprietary accounts. However, the Sponsor hereby agrees to devote to the objectives and purposes of this FuturesAccess Fund such amount of the business time of its officers and employees as the Sponsor shall deem necessary for the management of the affairs of this FuturesAccess Fund; provided, however, that nothing contained in this Section 5.03(a) shall preclude any Sponsor Party from acting as a director, stockholder, officer or employee of any corporation, a trustee of any trust, a partner of any partnership, a manager or member of any other limited liability company or an administrative official of any other business or governmental entity, or from receiving compensation for services rendered thereto, from participating in profits derived from investments in any such entity or from investing in any securities or other property for such person’s own account.
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(b)
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As contemplated by Section 2.05(g), the Sponsor retains outside service providers to supply certain services to FuturesAccess, including, but not limited to: tax reporting; custody; accounting; and escrow services to FuturesAccess. Operating costs include this FuturesAccess Fund’s allocable share of the fees and expenses of such (or other) service providers, as well as the fees and expenses of any Sponsor Party which may provide such (or other) services in the future.
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(a)
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do any act in contravention of this Agreement (other than pursuant to the Sponsor’s authority to unilaterally amend this Agreement, as provided in Section 11.03);
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(b)
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confess a judgment against this FuturesAccess Fund; or
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(c)
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possess this FuturesAccess Fund’s property or assign rights to this FuturesAccess Fund’s property for other than a purpose of this FuturesAccess Fund .
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(a)
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the assets and liabilities of this FuturesAccess Fund;
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(b)
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the net capital appreciation or depreciation of this FuturesAccess Fund for such fiscal year;
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(c)
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the Net Asset Value of this FuturesAccess Fund as of the end of such fiscal year; and
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(d)
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the Net Asset Value per Unit of each Class as of the end of such fiscal year.
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(a)
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An Investors’ Representative — a professional services firm that is independent of the Sponsor and its affiliates and that does not otherwise perform material services for the Sponsor, this FuturesAccess Fund or any affiliated entity (other than as an investors’ representative for other funds) — may be appointed by the Sponsor from time to time as a means of providing (or withholding) the informed consent of Investors required for this FuturesAccess Fund to enter into certain transactions which otherwise may be inappropriate or impermissible due to the conflicts of interest involved. The transactions submitted to the Investors’ Representative for consent will typically be transactions which the Sponsor believes to be in the best interests of this FuturesAccess Fund but which, nevertheless, may require Investor consent under Section 206(3) or other applicable provisions of the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The role of the Investors’ Representative will not be to make investment recommendations or pricing determinations nor to review the merits of any transaction presented to it, but only to confirm that the conflicts of interest involved have been resolved and that this FuturesAccess Fund enters into such transactions on an arm’s-length basis. The Investors’ Representative will be exculpated and indemnified by this FuturesAccess Fund to the extent that its actions are not determined to constitute fraud, bad faith, negligence, gross negligence or reckless or intentional misconduct.
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(b)
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In the event an Investors’ Representative is appointed, the Sponsor will notify Investors of any change in the appointment of the Investors’ Representative and will report annually to Investors all transactions approved by the Investors’ Representative during the fiscal-year period then ended. The Sponsor may
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resolve conflict of interest situations itself without referring the matter to the Investors’ Representative, unless otherwise required by law.
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(c)
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By subscribing for Units in this FuturesAccess Fund, each Investor expressly authorizes the Sponsor to appoint an Investors’ Representative to act as its agent in consenting (or withholding consent) to transactions presented to it.
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(a)
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bankruptcy, dissolution, withdrawal or other termination of the last remaining manager of this FuturesAccess Fund;
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(b)
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any event which would make unlawful the continued existence of this FuturesAccess Fund;
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(c)
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withdrawal of the Sponsor unless at such time there is at least one remaining manager; or
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(d)
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the determination by the Sponsor to liquidate this FuturesAccess Fund and wind up its affairs.
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(a)
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FIRST, to the payment and discharge of all claims of creditors of this FuturesAccess Fund (including creditors who are Investors);
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(b)
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SECOND, to the establishment of such reserves as the Sponsor (or such other liquidator) may consider reasonably necessary or appropriate for any losses, contingencies, liabilities or other matters of or relating to this FuturesAccess Fund; provided, however, that if and when the Sponsor (or such other liquidator) determines that the causes for such reserves have ceased to exist, the monies, if any, then held in reserve shall be distributed in the manner hereinafter provided; and
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(c)
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THIRD, after making all final allocations contemplated by Article II (and for such purposes treating the date of dissolution as if it were a December 31), to the distribution in cash of the remaining assets of this FuturesAccess Fund among the Investors in accordance with the positive balance in each such Investor’s Closing Capital Account as of the last day of the Accounting Period in which this FuturesAccess Fund’s dissolution occurs. Any assets distributed in kind in the liquidation shall be valued, for purposes of such distribution, in accordance with Section 2.10 as of the date of distribution, and any difference between such value and the carrying value of such assets shall, to the extent not otherwise taken into account in determining Net Asset Value, be deemed to constitute income or loss to this FuturesAccess Fund.
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(a)
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to add to this Agreement any further covenants, restrictions, undertakings or other provisions for the protection or benefit of Investors;
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(b)
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to cure any ambiguity or to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions contained herein or in the Disclosure Document;
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(c)
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to cause the allocations contained in Article II to comply with Section 704 of the Code or any other statutory provisions or regulations relating to such allocations;
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(d)
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to provide for the issuance of new Classes of Units, or to amend the manner in which Units may be exchanged among funds in FuturesAccess or between different Classes of Units, provided that doing so is not adverse to outstanding Units (as contemplated by Section 11.14);
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(e)
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to take such actions as may be necessary or appropriate to avoid the assets of this FuturesAccess Fund being treated for any purpose of ERISA or Section 4975 of the Code as assets of any Plan or to avoid this FuturesAccess Fund’s engaging in a prohibited transaction as defined in Section 406 of ERISA or Section 4975(c) of the Code;
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(f)
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to allow for a performance allocation to be made to an entity or person designated by the Trading Advisor instead of paying a Performance Fee; or
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(g)
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to make any other change not materially adverse to the interests of the Investors.
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(a)
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The Sponsor may, at any time and from time to time, issue different Classes of Units, and may adjust the allocation, voting and other provisions of this Agreement so as equitably to reflect the issuance of such additional Classes. The terms applicable to any such Class of Units shall be as set forth in any amendment to this Agreement, the Disclosure Document or any supplement thereto, resolutions of this FuturesAccess Fund or such other form, as determined by the Sponsor.
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(b)
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The Sponsor may also alter the terms on which Units of any Class are sold, provided that doing so does not adversely affect existing Investors.
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(c)
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The fact that, for purposes of convenience, Units issued by this FuturesAccess Fund shall be designated as being Units of different “Classes” shall in no respect imply that these Units constitute different classes of equity interests as opposed to simply being subject to different fees.
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(a)
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This FuturesAccess Fund is not an “advisory client” of the Sponsor for purposes of the Advisers Act due to this FuturesAccess Fund’s trading futures, forward and options contracts other than securities. Nevertheless, to the extent that any provision hereof may be construed in a manner inconsistent with the Advisers Act, it is the express intent of the Sponsor and the Investors that such provision be interpreted and applied ab initio so as to comply with the Advisers Act in all respects (even if doing so effectively amends the terms of this Agreement).
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(b)
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Nothing in this Agreement shall be deemed to constitute a waiver by any Investor of such Investor’s rights under any federal or state securities laws.
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INVESTORS: | SPONSOR: | |||||||
By: | Merrill Lynch Alternative Investments LLC Attorney-in-Fact |
Merrill Lynch Alternative Investments LLC | ||||||
By: | /s/ Ninon Marapachi | By: | /s/ Ninon Marapachi | |||||
Name: | Ninon Marapachi | Name: | Ninon Marapachi | |||||
Title: | VP MLAI | Title: | VP MLAI |