SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 13E-4
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
XANTHUS FUND, L.L.C.
(Name of Issuer)
XANTHUS FUND, L.L.C.
(Name of Person(s) Filing Statement)
LIMITED LIABILITY COMPANY INTERESTS
(Title of Class of Securities)
Paul Belica
Xanthus Fund, L.L.C.
One World Financial Center, 31st Floor
200 Liberty Street
New York, New York 10281
(212) 667-4225
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
With a copy to:
Kenneth S. Gerstein, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
(212) 756-2533
December 1, 1999
(Date Tender Offer First Published,
Sent or Given to Security Holders)
CALCULATION OF FILING FEE
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Transaction Valuation: $25,000,000 (a) Amount of Filing Fee: $5,000 (b)
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(a) Calculated as the aggregate maximum purchase price for limited liability
company interests.
(b) Calculated at 1/50th of 1% of the Transaction Valuation.
[_] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid:
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Form or Registration No.:
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Filing Party:
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Date of Filing:
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ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Xanthus Fund, L.L.C. (the "Fund"). The Fund
is registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as a closed-end, non-diversified, management investment company and is
organized as a Delaware limited liability company. The principal executive
office of the Fund is located at One World Financial Center, 31st Floor, 200
Liberty Street, New York, New York 10281.
(b) The title of the securities that are the subject of the offer to
purchase ("Offer to Purchase") is limited liability company interests or
portions thereof in the Fund. (As used herein, the term "Interest" or
"Interests," as the context requires, shall refer to the limited liability
company interests in the Fund and portions thereof that constitute the class of
security that is the subject of this tender offer or the limited liability
company interests in the Fund or portions thereof that are tendered by members
to the Fund pursuant to the Offer to Purchase.) As of the close of business on
October 31, 1999, there was approximately $108,608,293 outstanding in capital of
the Fund held in Interests. Subject to the conditions set forth in the Offer to
Purchase, the Fund will purchase up to $25,000,000 of Interests that are
tendered by and not withdrawn prior to 12:00 Midnight, New York time, on
December 31, 1999, subject to any extension of the Offer to Purchase.
The purchase price of Interests tendered to the Fund will be their net
asset value as of the close of business on December 31, 1999, if the Offer to
Purchase expires on the initial expiration date of December 31, 1999, and
otherwise, at their net asset value as of the close of business on such later
date as corresponds to any extension of the Offer to Purchase.
For members who tender their entire Interest, payment of the purchase price
will consist of: (1) cash and/or marketable securities (valued in accordance
with the Fund's Limited Liability Company Agreement dated as of February 10,
1999 (the "LLC Agreement")) in an aggregate amount equal to 95 percent of the
estimated unaudited net asset value of Interests tendered and accepted by the
Fund, determined as of the expiration date, which is expected to be 12:00
Midnight, New York time, December 31, 1999, payable within ten days after the
expiration date (the "95% Cash Payment"); and (2) a promissory note (the "Note")
entitling the holder thereof to a contingent payment equal to the excess, if
any, of (a) the net asset value of Interests tendered and accepted by the Fund
as of the expiration date, determined based on audited financial statements of
the Fund for 1999, over (b) the 95% Cash Payment. The Note will be delivered to
the tendering member in the manner set forth in the Letter of Transmittal,
attached hereto as Exhibit C, within ten days after expiration of the Offer to
Purchase and will not be transferable. The Note will be payable in cash within
ten days after completion of the audit of the financial statements of the Fund.
It is anticipated that the audit of the Fund's 1999 financial statements will be
completed by no later than 60 days after the end of the year. Any amounts
payable under the Note will include interest, if any, earned by the Fund on an
amount, deposited by the Fund in a segregated custodial account, equal to 5
percent of the estimated unaudited net asset value of Interests tendered and
accepted by the Fund.
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Members who tender a portion of their Interest (subject to maintenance of a
minimum capital account balance) will receive a cash payment of 100% of the
tendered Interest within ten days after the expiration of the Offer.
The Fund has been informed by its investment adviser, CIBC Oppenheimer
Advisers, L.L.C. (the "Adviser"), that its affiliate, Canadian Imperial
Holdings, Inc., intends to tender the portion of the Interest it holds as a
member that represents the gain on its investment.
Although the Fund has retained the option to pay all or a portion of the
purchase price by distributing marketable securities, the purchase price will be
paid entirely in cash except in the unlikely event that the Fund's Board of
Managers determines that the distribution of securities is necessary to avoid or
mitigate any adverse effect of the Offer to Purchase on the remaining members of
the Fund. A copy of: (i) the cover letter to the Offer to Purchase and Letter of
Transmittal; (ii) the Offer to Purchase; (iii) a form of Letter of Transmittal;
and (iv) a form of Notice of Withdrawal of Tender are attached hereto as
Exhibits A, B, C and D respectively.
(c) Interests are not traded in any market, and any transfer thereof is
strictly limited by the terms of the LLC Agreement.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The Fund expects that the purchase price for Interests acquired
pursuant to the Offer to Purchase, which will not exceed $25,000,000, will be
derived from: (1) cash on hand; (2) the proceeds of the sale of and/or delivery
of securities and portfolio assets held by the Fund; and/or (3) possibly
borrowings, as described in paragraph (b), below. The Fund will segregate with
its custodian cash or U.S. government securities or other liquid securities
equal to the value of the amount estimated to be paid under any Notes as
described above. The purchase price for Interests acquired pursuant to the Offer
to Purchase shall not be derived from any of the members of the Board of
Managers of the Fund, from the Adviser or from CIBC World Markets Corp., the
managing member of the Adviser.
(b) Neither the Fund nor the Adviser has determined at this time to borrow
funds to purchase Interests in connection with the Offer to Purchase. However,
depending on the dollar amount of Interests tendered and prevailing general
economic and market conditions, the Fund, in its sole discretion, may decide to
fund any portion of the purchase price, subject to compliance with applicable
law, from its existing margin facility established with the Fund's prime broker,
Morgan Stanley Dean Witter & Co. ("Morgan Stanley"). If the Fund funds any
portion of the purchase price in that manner, it will deposit assets in a
special custody account with its custodian, The Chase Manhattan Bank, N.A., to
serve as collateral for any amounts so borrowed, and if the Fund were to fail to
repay any such amounts, Morgan Stanley would be entitled to satisfy the Fund's
obligations from the collateral deposited in the special custody account. The
Fund expects that the repayment of any amounts borrowed from Morgan Stanley
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will be financed from additional funds contributed to the Fund by existing
and/or new members, or from the proceeds of the sale of securities and portfolio
assets held by the Fund.
ITEM 3. PURPOSE OF THIS TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The purpose of the Offer to Purchase is to provide liquidity to members who
hold Interests as contemplated by and in accordance with the procedures set
forth in the Fund's Confidential Memorandum dated March 1999, as supplemented
quarterly (the "Confidential Memorandum"), and the LLC Agreement. Interests that
are tendered to the Fund in connection with the Offer to Purchase will be
retired, although the Fund may issue Interests from time to time in transactions
not involving any public offering conducted pursuant to Rule 506 of Regulation D
under the Securities Act of 1933, as amended. The Fund currently expects that it
will accept subscriptions for Interests as of January 1, 2000 and on the first
day of each month thereafter, but is under no obligation to do so.
Neither the Fund nor the Adviser has any plans or proposals that relate to
or would result in: (a) the acquisition by any person of additional Interests in
the Fund (other than the Fund's intention to accept subscriptions for Interests
from time to time in the discretion of the Fund), or the disposition of
Interests in the Fund; (b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Fund; (c) a sale or
transfer of a material amount of assets of the Fund (other than as the Board of
Managers determines may be necessary or appropriate to fund any portion of the
purchase price for Interests acquired pursuant to the Offer to Purchase or in
connection with ordinary portfolio transactions of the Fund); (d) any change in
the identity of the investment adviser of the Fund, or in the management of the
Fund including, but not limited to, any plans or proposals to change the number
or the term of the members of the Board of Managers of the Fund, to fill any
existing vacancy on the Board of Managers or to change any material term of the
investment advisory agreement with the Adviser; (e) any material change in the
present distribution policy or indebtedness or capitalization of the Fund; (f)
any other material change in the Fund's structure or business, including any
plans or proposals to make any changes in its fundamental investment policies,
as amended, for which a vote would be required by Section 13 of the 1940 Act; or
(g) any changes in the LLC Agreement or other actions that might impede the
acquisition of control of the Fund by any person. Items (h) through (j) of this
Item 3 are not applicable to the Fund.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Other than the acceptance of subscriptions for Interests on October 1, 1999
and November 1, 1999, there have been no transactions involving the Interests
that were effected during the past 40 business days by the Fund, the Adviser,
any member of the Fund or any person controlling the Fund or the Adviser or
controlling any member of the Fund.
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ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The Confidential Memorandum and the LLC Agreement, which were provided to
each member in advance of subscribing for Interests, provide that the Board of
Managers have the discretion to determine whether the Fund will purchase
Interests from members from time to time pursuant to written tenders. The
Confidential Memorandum also states that the Adviser of the Fund expects that it
will recommend to the Board of Managers that the Fund purchase Interests from
members at the end of 1999 and twice in each year thereafter. This is the first
tender offer made by the Fund. The Fund is not aware of any contract,
arrangement, understanding or relationship relating, directly or indirectly, to
this tender offer (whether or not legally enforceable) between: (i) the Fund and
any member of the Fund or any person controlling the Fund or controlling any
member of the Fund; and (ii) any person, with respect to Interests.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
No persons have been employed, retained or are to be compensated by the
Fund to make solicitations or recommendations in connection with the Offer to
Purchase.
ITEM 7. FINANCIAL INFORMATION.
(a) Reference is hereby made to the financial statements attached as part
of Exhibit B hereto, which are incorporated herein by reference. Unaudited
financial statements of the Fund for the period from May 4, 1999 (commencement
of operations) through June 30, 1999, which the Fund has prepared and furnished
to members pursuant to Rule 30d-1 under the 1940 Act, and filed with the
Securities and Exchange Commission pursuant to Rule 30b2-1 under the 1940 Act,
are included. As the Fund commenced operations in 1999, no audited financial
statements exist for the Fund. The Fund is not required to and does not file
quarterly unaudited financial statements under the Securities Exchange Act of
1934, as amended. The Fund does not have shares, and consequently does not have
earnings or book value per share information.
(b) The Fund's assets will be reduced by the amount of the tendered
Interests. Thus, income relative to assets may be affected by the tender offer.
The Fund does not have shares and consequently does not have earnings or book
value per share information.
ITEM 8. ADDITIONAL INFORMATION.
(a) None
(b) None
(c) Not Applicable
(d) None
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(e) Reference is hereby made to the information contained in the Offer of
Purchase attached as Exhibit B, which is incorporated herein by
reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
A. Cover letter to Offer to Purchase and Letter of Transmittal.
B. Offer to Purchase (including Financial Statements).
C. Form of Letter of Transmittal.
D. Form of Notice of Withdrawal of Tender.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
XANTHUS FUND, L.L.C.
By: /s/ Paul Belica
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December 1, 1999 Name: Paul Belica
Title: Manager
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EXHIBIT INDEX
Exhibit
A Cover letter to Offer to Purchase and Letter of Transmittal
B Offer to Purchase (including Financial Statements)
C Form of Letter of Transmittal
D Form of Notice of Withdrawal of Tender
[Xanthus Fund, L.L.C. Letterhead]
December 1, 1999
Dear Member:
On December 31, 1999, Xanthus Fund, L.L.C. will provide its investors with the
opportunity to redeem all or a portion of their investment by means of a tender
offer. Enclosed please find all documentation necessary to participate in this
tender offer. Note that if you wish to maintain your investment and withdraw
nothing from your account, no action on your part is required.
We hope you have been pleased with your investment to date and elect to remain
invested in the Fund. If you have any questions or require further information,
please contact your Account Executive.
Sincerely,
The Board of Managers
By: Paul Belica
Manager
XANTHUS FUND, L.L.C.
One World Financial Center, 31st Floor
200 Liberty Street
New York, New York 10281
OFFER TO PURCHASE $25,000,000 OF OUTSTANDING
LIMITED LIABILITY COMPANY INTERESTS AT NET ASSET VALUE
DATED DECEMBER 1, 1999
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK TIME,
ON FRIDAY, DECEMBER 31, 1999, UNLESS THE OFFER IS EXTENDED
To the Members of
Xanthus Fund, L.L.C.
Xanthus Fund, L.L.C., a closed-end, non-diversified, management investment
company organized as a Delaware limited liability company (the "Fund"), is
offering to purchase for cash on the terms and conditions set forth in this
offer to purchase ("Offer to Purchase") and the related letter of transmittal
("Letter of Transmittal," which together with the Offer to Purchase constitutes
the "Offer") up to $25,000,000 of interests in the Fund or portions thereof
pursuant to tenders by members at a price equal to their net asset value as of
December 31, 1999, if the Offer expires on December 31, 1999, and otherwise,
their net asset value on such later date as corresponds to any extension of the
Offer. (As used in this Offer, the term "Interest" or "Interests," as the
context requires, shall refer to the interests in the Fund and portions thereof
representing beneficial interests in the Fund.) This Offer is being made to all
members of the Fund and is not conditioned on any minimum amount of Interests
being tendered, but is subject to certain conditions described below. Interests
are not traded on any established trading market and are subject to strict
restrictions on transferability pursuant to the Fund's Limited Liability Company
Agreement dated as of February 10, 1999 (the "LLC Agreement").
If you desire to tender all or any portion of your Interest in the Fund in
accordance with the terms of the Offer, you should complete and sign the
attached Letter of Transmittal and send or deliver it to the Fund in the manner
set forth below.
IMPORTANT
NONE OF THE FUND, ITS INVESTMENT ADVISER OR ITS BOARD OF MANAGERS MAKES ANY
RECOMMENDATION TO ANY MEMBER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
INTERESTS. MEMBERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER INTERESTS,
AND, IF SO, THE PORTION OF THEIR INTERESTS TO TENDER.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
FUND AS TO WHETHER MEMBERS
<PAGE>
SHOULD TENDER INTERESTS PURSUANT TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
OTHER THAN THOSE CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR
MADE, SUCH RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE
RELIED ON AS HAVING BEEN AUTHORIZED BY THE FUND.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED ON THE FAIRNESS OR MERITS OF SUCH TRANSACTION OR ON
THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Questions and requests for assistance and requests for additional copies of
the Offer may be directed to the Fund's service agent:
PFPC Inc.
P.O. Box 220
Claymont, Delaware 19703
Phone: (888) 697-9661
(888) 520-3280
Fax: (302) 791-3225
(302) 791-2387
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TABLE OF CONTENTS
Page
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1. Background and Purpose of the Offer.....................................4
2. Offer to Purchase and Price.............................................4
3. Amount of Tender........................................................5
4. Procedure for Tenders...................................................6
5. Withdrawal Rights.......................................................7
6. Purchases and Payment...................................................7
7. Certain Conditions of the Offer.........................................8
8. Certain Information About the Fund......................................9
9. Certain Federal Income Tax Consequences................................10
10. Miscellaneous..........................................................10
Annex A Financial Statements
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1. BACKGROUND AND PURPOSE OF THE OFFER. The purpose of the Offer is to
provide liquidity to members for Interests, as contemplated by and in accordance
with the procedures set forth in the Fund's Confidential Memorandum dated March
1999, as supplemented quarterly (the "Confidential Memorandum"), and the LLC
Agreement. The Confidential Memorandum and the LLC Agreement, which were
provided to each member in advance of subscribing for Interests, provide that
the Board of Managers of the Fund has the discretion to determine whether the
Fund will purchase Interests from time to time from members pursuant to written
tenders. The Confidential Memorandum also states that CIBC Oppenheimer Advisers,
L.L.C., the investment adviser of the Fund (the "Adviser"), expects that it will
recommend to the Board of Managers that the Fund purchase Interests from members
at the end of 1999, and twice in each year thereafter. This is the first tender
offer made by the Fund. In light of the fact that there is no secondary trading
market for Interests and transfers of Interests are prohibited without prior
approval of the Fund, the Board of Managers has determined, after consideration
of various matters, including but not limited to those set forth in the
Confidential Memorandum, that the Offer is in the best interests of members of
the Fund in order to provide liquidity for Interests as contemplated in the
Confidential Memorandum and the LLC Agreement. The Board of Managers intends to
consider the continued desirability of the Fund making an offer to purchase
Interests twice in each year, but the Fund is not required to make any such
offer.
The purchase of Interests pursuant to the Offer will have the effect of
increasing the proportionate interest in the Fund of members who do not tender
Interests. Members who retain their Interests may be subject to increased risks
that may possibly result from the reduction in the Fund's aggregate assets
resulting from payment for the Interests tendered. These risks include the
potential for greater volatility due to decreased diversification. However, the
Fund believes that this result is unlikely given the nature of the Fund's
investment program. A reduction in the aggregate assets of the Fund may result
in members who do not tender interests bearing higher costs to the extent that
certain expenses borne by the Fund are relatively fixed and may not decrease if
assets decline. These effects may be reduced or eliminated to the extent that
additional subscriptions for Interests are made by new and existing members on
January 1, 2000.
Interests that are tendered to the Fund in connection with this Offer will
be retired, although the Fund may issue new Interests from time to time in
transactions not involving any public offering conducted pursuant to Rule 506 of
Regulation D under the Securities Act of 1933, as amended. The Fund currently
expects that it will accept subscriptions for Interests as of January 1, 2000
and on the first day of each calendar quarter thereafter, but is under no
obligation to do so.
2. OFFER TO PURCHASE AND PRICE. The Fund will, upon the terms and subject
to the conditions of the Offer, purchase up to $25,000,000 of those outstanding
Interests that are properly tendered by and not withdrawn (in accordance with
Section 5 below) prior to 12:00 Midnight, New York time, on Friday, December 31,
1999 (such time and date being hereinafter called the "Initial Expiration
Date"), or such later date as corresponds to any extension of the Offer. The
later of the Initial Expiration Date or the latest time and date to which the
Offer is extended is hereinafter called the "Expiration Date." The Fund reserves
the right to extend,
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amend or cancel the Offer as described in Sections 3 and 7 below. The purchase
price of an Interest tendered will be its net asset value as of the close of
business on the Expiration Date, payable as set forth in Section 6. As of the
close of business on October 31, 1999, the estimated unaudited net asset value
of an Interest corresponding to an initial capital contribution of $150,000 on
the following closing dates of the Fund was:
Unaudited Net Asset Value
Closing Date as of October 31, 1999
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May 4, 1999 $174,606.66
June 1, 1999 $175,560.31
July 1, 1999 $163,891.47
August 1, 1999 $166,817.18
September 1, 1999 $162,183.40
October 1, 1999 $159,673.20
As of the close of business on October 31, 1999, there was approximately
$108,608,293 outstanding in capital of the Fund held in Interests (based on the
unaudited net asset value of such Interests). Members may obtain weekly current
net asset value information until the expiration of the Offer, and daily net
asset value information during the last five business days of the Offer, by
contacting PFPC Inc. ("PFPC"), at the telephone numbers or address set forth on
page 2, Monday through Friday, except holidays, during normal business hours of
9:00 a.m. to 5:00 p.m. (Eastern Time).
3. AMOUNT OF TENDER. Subject to the limitations set forth below, members
may tender their entire Interest or a portion of their Interest defined as a
specific dollar value. However, a member who tenders for repurchase only a
portion of such member's Interest shall be required to maintain a capital
account balance equal to the greater of: (i) $150,000, net of the amount of the
incentive allocation, if any, that is to be debited from the capital account of
the member and credited to the Special Advisory Member Account of the Adviser on
the Expiration Date (the "Incentive Allocation") or would be so debited if the
Expiration Date were a day on which an incentive allocation was made (the
"Tentative Incentive Allocation"); or (ii) the amount of the Tentative Incentive
Allocation, if any. If a member tenders an amount that would cause the member's
capital account balance to fall below the required minimum, the Fund reserves
the right to reduce the amount to be purchased from such member so that the
required minimum balance is maintained. The Offer is being made to all members
of the Fund and is not conditioned on any minimum amount of Interests being
tendered.
If the amount of the Interests that are properly tendered pursuant to the
Offer and not withdrawn pursuant to Section 5 below is less than or equal to
$25,000,000 (or such greater amount as the Fund may elect to purchase pursuant
to the Offer), the Fund will, on the terms and
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subject to the conditions of the Offer, purchase all of the Interests so
tendered unless the Fund elects to cancel or amend the Offer, or postpone
acceptance of tenders made pursuant to the Offer, as provided in Section 7
below. If more than $25,000,000 of Interests are duly tendered to the Fund prior
to the expiration of the Offer and not withdrawn pursuant to Section 5 below,
the Fund will in its sole discretion either (a) accept the additional Interests
permitted to be accepted pursuant to Rule 13e-4(f)(1) under the Securities
Exchange Act of 1934, as amended; (b) extend the Offer, if necessary, and
increase the amount of Interests that the Fund is offering to purchase to an
amount it believes sufficient to accommodate the excess Interests tendered as
well as any Interests tendered during the extended Offer; or (c) accept
Interests tendered prior to or on the Expiration Date for payment on a pro rata
basis based on the net asset value of tendered Interests. The Offer may be
extended, amended or canceled in various other circumstances described in
Section 7 below.
The Fund has been informed by the Adviser that its affiliate, Canadian
Imperial Holdings, Inc., intends to tender the portion of the Interest it holds
as a member that represents the gain on its investment.
4. PROCEDURE FOR TENDERS. Members wishing to tender Interests pursuant to
the Offer should send or deliver a completed and executed Letter of Transmittal
to PFPC, to the attention of Karl Garrett, at the address set forth on page 2,
or fax a completed and executed Letter of Transmittal to PFPC, also to the
attention of Karl Garrett, at the fax numbers set forth on page 2. The completed
and executed Letter of Transmittal must be received by PFPC no later than the
Expiration Date.
The Fund recommends that all documents be submitted to PFPC via certified
mail, return receipt requested, or by facsimile transmission. A member choosing
to fax a Letter of Transmittal to PFPC should also send or deliver the original
completed and executed Letter of Transmittal to PFPC. Members wishing to confirm
receipt of a Letter of Transmittal may contact PFPC at the address and phone
numbers set forth on page 2. The method of delivery of any documents is at the
election and complete risk of the member tendering an Interest including, but
not limited to, the failure of PFPC to receive any Letter of Transmittal or
other document submitted by facsimile transmission. All questions as to the
validity, form, eligibility (including time of receipt) and acceptance of
tenders will be determined by the Fund, in its sole discretion, and such
determination shall be final and binding. The Fund reserves the absolute right
to reject any or all tenders determined by it not to be in appropriate form or
the acceptance of or payment for which would, in the opinion of counsel for the
Fund, be unlawful. The Fund also reserves the absolute right to waive any of the
conditions of the Offer or any defect in any tender with respect to any
particular Interest or any particular member, and the Fund's interpretation of
the terms and conditions of the Offer will be final and binding. Unless waived,
any defects or irregularities in connection with tenders must be cured within
such time as the Fund shall determine. Tenders will not be deemed to have been
made until the defects or irregularities have been cured or waived. None of the
Fund, the Adviser or any member of the Board of Managers of the Fund shall be
obligated to give notice of any defects or irregularities in tenders, nor shall
any of them incur any liability for failure to give such notice.
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5. WITHDRAWAL RIGHTS. Any member tendering an Interest pursuant to this
Offer may withdraw such tender at any time prior to or on the Expiration Date
and, if Interests are not accepted by the Fund at the close of the Expiration
Date, at any time after 40 business days after the commencement of the Offer. To
be effective, any notice of withdrawal must be timely received by PFPC at the
address or fax numbers set forth on page 2. A form to give notice of withdrawal
is available by calling PFPC at the phone numbers indicated on page 2. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Fund, in its sole discretion, and such
determination shall be final and binding. Interests properly withdrawn shall not
thereafter be deemed to be tendered for purposes of the Offer. However,
withdrawn Interests may be tendered prior to the Expiration Date by following
the procedures described in Section 4.
6. PURCHASES AND PAYMENT. For purposes of the Offer, the Fund will be
deemed to have accepted (and thereby purchased) Interests that are tendered as,
if and when it gives oral or written notice to the tendering member of its
election to purchase such Interest. As stated in Section 2 above, the purchase
price of an Interest tendered by any member will be the net asset value thereof
as of the close of business on December 31, 1999, if the Offer expires on the
Initial Expiration Date, and otherwise the net asset value thereof as of the
close of business on such later date as corresponds to any extension of the
Offer. The net asset value will be determined after all allocations to capital
accounts of the member required to be made by the LLC Agreement have been made.
For members who tender their entire Interest, payment of the purchase price
will consist of: (1) cash and/or marketable securities (valued in accordance
with the LLC Agreement) in an aggregate amount equal to 95% of the estimated
unaudited net asset value of Interests tendered and accepted by the Fund,
determined as of the Expiration Date, which is expected to be 12:00 Midnight,
New York time, on Friday, December 31, 1999, payable within ten days after the
Expiration Date (the "95% Cash Payment") in the manner set forth below; and (2)
a promissory note (the "Note") entitling the holder thereof to a contingent
payment equal to the excess, if any, of (a) the net asset value of the Interests
tendered and accepted by the Fund as of the Expiration Date, determined based on
the audited financial statements of the Fund for 1999, over (b) the 95% Cash
Payment. The Note will be delivered to the tendering member in the manner set
forth below within ten days after the Expiration Date and will not be
transferable. The Note will be payable in cash (in the manner set forth below)
within ten days after completion of the audit of the financial statements of the
Fund for 1999. It is anticipated that the audit of the Fund's 1999 financial
statements will be completed no later than 60 days after the end of the year.
Any amounts payable under the Note will include interest, if any, earned by the
Fund on an amount, deposited by the Fund in a segregated custodial account,
equal to 5 percent of the estimated unaudited net asset value of Interests
tendered and accepted by the Fund. Although the Fund has retained the option to
pay all or a portion of the purchase price by distributing marketable
securities, the purchase price will be paid entirely in cash except in the
unlikely event that the Board of Managers determines that the distribution of
securities is necessary to avoid or mitigate any adverse effect of the Offer on
the remaining members of the Fund.
-7-
<PAGE>
Members who tender a portion of their Interest (subject to maintenance of
the minimum capital account balance described in Item 3, above) will receive a
cash payment of 100% of the tendered Interest (the "100% Cash Payment") within
ten days after the Expiration Date.
Both the 95% Cash Payment and the 100% Cash Payment (together, the "Cash
Payment") will be made by wire transfer directly to the tendering member's
brokerage account with CIBC World Markets Corp. ("CIBC WM"). Cash Payments wired
directly to brokerage accounts will be subject upon withdrawal from such
accounts to any fees that CIBC WM would customarily assess upon the withdrawal
of cash from such brokerage account.
The Note will be deposited directly to the tendering member's brokerage
account with CIBC WM. Any contingent payment due pursuant to the Note will also
be deposited directly to the tendering member's brokerage account with CIBC WM
and will be subject upon withdrawal from such accounts to any fees that CIBC WM
would customarily assess upon the withdrawal of cash from such brokerage
account.
It is expected that cash payments for Interests acquired pursuant to the
Offer will be derived from: (a) cash on hand; (b) the proceeds of the sale of
securities and portfolio assets held by the Fund; and/or (c) possibly
borrowings, as described below. The Fund will segregate with its custodian cash
or U.S. government securities or other liquid securities equal to the value of
the amount estimated to be paid under the Notes, as described above. The Fund
has not determined at this time to borrow funds to purchase Interests tendered
in connection with the Offer. However, depending on the dollar amount of
Interests tendered and prevailing general economic and market conditions, the
Fund, in its sole discretion, may decide to fund any portion of the purchase
price, subject to compliance with applicable law, from its existing margin
facility established with the Fund's prime broker, Morgan Stanley Dean Witter &
Co. ("Morgan Stanley"). If the Fund funds any portion of the purchase price in
that manner, it will deposit assets in a special custody account with its
custodian, The Chase Manhattan Bank, N.A., to serve as collateral for any
amounts so borrowed, and if the Fund were to fail to repay any such amounts,
Morgan Stanley would be entitled to satisfy the Fund's obligations from the
collateral deposited in the special custody account. The Fund expects that the
repayment of any amounts borrowed from Morgan Stanley will be financed from
additional funds contributed to the Fund by existing and/or new members, or from
the proceeds of the sale of securities and portfolio assets held by the Fund.
7. CERTAIN CONDITIONS OF THE OFFER. The Fund reserves the right, at any
time and from time to time, to extend the period of time during which the Offer
is pending by notifying members of such extension. In the event that the Fund so
elects to extend the tender period, for the purpose of determining the purchase
price for tendered Interests, the net asset value of such Interests will be
determined as of a date after December 31, 1999, corresponding to any extension
of the Offer. During any such extension, all Interests previously tendered and
not withdrawn will remain subject to the Offer. The Fund also reserves the
right, at any time and from time to time, up to and including acceptance of
tenders pursuant to the Offer, to: (a) cancel the Offer in the circumstances set
forth in the following paragraph and in the event of such
-8-
<PAGE>
cancellation not to purchase or pay for any Interests tendered pursuant to the
Offer; (b) amend the Offer; and (c) postpone the acceptance of Interests. If the
Fund determines to amend the Offer or to postpone the acceptance of Interests
tendered, it will, to the extent necessary, extend the period of time during
which the Offer is open as provided above and will promptly notify members.
The Fund may cancel the Offer, amend the Offer or postpone the acceptance
of tenders made pursuant to the Offer if: (a) the Fund would not be able to
liquidate portfolio securities in a manner that is orderly and consistent with
the Fund's investment objectives and policies in order to purchase Interests
tendered pursuant to the Offer; (b) there is, in the judgment of the Board of
Managers, any (i) legal action or proceeding instituted or threatened
challenging the Offer or otherwise materially adversely affecting the Fund, (ii)
declaration of a banking moratorium by Federal or state authorities or any
suspension of payment by banks in the United States or New York State that is
material to the Fund, (iii) limitation imposed by Federal or state authorities
on the extension of credit by lending institutions, (iv) suspension of trading
on any organized exchange or over-the-counter market where the Fund has a
material investment, (v) commencement of war, armed hostilities or other
international or national calamity directly or indirectly involving the United
States that is material to the Fund, (vi) material decrease in the net asset
value of the Fund from the net asset value of the Fund as of commencement of the
Offer, or (vii) other event or condition that would have a material adverse
effect on the Fund or its members if Interests tendered pursuant to the Offer
were purchased; or (c) the Board of Managers determines that it is not in the
best interest of the Fund to purchase Interests pursuant to the Offer. However,
there can be no assurance that the Fund will exercise its right to extend, amend
or cancel the Offer or to postpone acceptance of tenders pursuant to the Offer.
8. CERTAIN INFORMATION ABOUT THE FUND. The Fund is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end,
non-diversified, management investment company. It is organized as a Delaware
limited liability company. The principal office of the Fund is located at One
World Financial Center, 31st Floor, 200 Liberty Street, New York, New York
10281. Interests are not traded on any established trading market and are
subject to strict restrictions on transferability pursuant to the LLC Agreement.
The Fund does not have any plans or proposals that relate to or would
result in: (a) the acquisition by any person of additional Interests (other than
the Fund's intention to accept subscriptions for Interests from time to time in
the discretion of the Fund) or the disposition of Interests; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Fund; (c) a sale or transfer of a material amount of
assets of the Fund (other than as the Board of Managers determines may be
necessary or appropriate to fund any portion of the purchase price for Interests
acquired pursuant to this Offer to Purchase or in connection with ordinary
portfolio transactions of the Fund); (d) any change in the identity of the
investment adviser of the Fund, or in the management of the Fund including, but
not limited to, any plans or proposals to change the number or the term of the
members of the Board of Managers, to fill any existing vacancy on the Board of
Managers or to change any material term of the investment advisory agreement
with the Adviser; (e) any material change in the present
-9-
<PAGE>
distribution policy or indebtedness or capitalization of the Fund; (f) any other
material change in the Fund's structure or business, including any plans or
proposals to make any changes in its fundamental investment policy for which a
vote would be required by Section 13 of the 1940 Act; or (g) any changes in the
LLC Agreement or other actions that may impede the acquisition of control of the
Fund by any person.
The Adviser of the Fund is entitled under the terms of the LLC Agreement to
receive, subject to certain limitations, the Incentive Allocation, as specified
in the LLC Agreement and described in the Confidential Memorandum.
9. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion is a
general summary of the federal income tax consequences of the purchase of
Interests by the Fund from members pursuant to the Offer. Members should consult
their own tax advisers for a complete description of the tax consequences to
them of a purchase of their Interests by the Fund pursuant to the Offer.
In general, a member from whom an Interest is purchased by the Fund will be
treated as receiving a distribution from the Fund. Such member generally will
not recognize income or gain as a result of the purchase, except to the extent
(if any) that the amount of consideration received by the member exceeds such
member's then adjusted tax basis in such member's Interest. A member's basis in
such member's Interest will be reduced (but not below zero) by the amount of
consideration received by the member from the Fund in connection with the
purchase of such Interest. A member's basis in such member's Interest will be
adjusted for income, gain or loss allocated (for tax purposes) to such member
for periods prior to the purchase of such Interest. Cash distributed to a member
in excess of the adjusted tax basis of such member's Interest is taxable as
capital gain or ordinary income, depending on the circumstances. A member whose
entire Interest is purchased by the Fund may recognize a loss, but only to the
extent that the amount of consideration received from the Fund is less than the
member's then adjusted tax basis in such member's Interest.
10. MISCELLANEOUS. The Offer is not being made to, nor will tenders be
accepted from, members in any jurisdiction in which the Offer or its acceptance
would not comply with the securities or Blue Sky laws of such jurisdiction. The
Fund is not aware of any jurisdiction in which the Offer or tenders pursuant
thereto would not be in compliance with the laws of such jurisdiction. However,
the Fund reserves the right to exclude members from the Offer in any
jurisdiction in which it is asserted that the Offer cannot lawfully be made. The
Fund believes such exclusion is permissible under applicable laws and
regulations, provided the Fund makes a good faith effort to comply with any
state law deemed applicable to the Offer.
The Fund has filed an Issuer Tender Offer Statement on Schedule 13E-4 with
the Securities and Exchange Commission, which includes certain information
relating to the Offer summarized herein. A free copy of such statement may be
obtained from the Fund by contacting PFPC at the address and phone numbers set
forth on page 2 or from the Securities and Exchange Commission's internet web
site, www.sec.gov. For a fee, a copy may be obtained from the public reference
office of the Securities and Exchange Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, DC 20549.
-10-
<PAGE>
ANNEX A
Financial Statements
<PAGE>
XANTHUS FUND, L.L.C.
FINANCIAL STATEMENTS
FOR THE PERIOD FROM MAY 4, 1999
(COMMENCEMENT OF OPERATIONS)
THROUGH JUNE 30, 1999
(UNAUDITED)
<PAGE>
XANTHUS FUND, L.L.C.
FINANCIAL STATEMENTS
PERIOD FROM MAY 4, 1999
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
(UNAUDITED)
CONTENTS
Statement of Assets, Liabilities and Members' Capital..................... 1
Statement of Operations................................................... 2
Statement of Changes in Members' Capital - Net Assets..................... 3
Notes to Financial Statements............................................. 4
Schedule of Portfolio Investments......................................... 11
Schedule of Securities Sold, Not Yet Purchased............................ 15
<PAGE>
XANTHUS FUND, L.L.C.
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
ASSETS (UNAUDITED)
<S> <C>
Investments in securities, at market (identified cost - $78,271) $ 85,389
Due from broker 8,366
Dividends receivable 18
Interest receivable 23
Other assets 14
--------
TOTAL ASSETS 93,810
--------
LIABILITIES
Securities sold, not yet purchased, at market (proceeds of sales - $6,285) 6,957
Dividends payable on securities sold, not yet purchased 2
Syndication fees payable 50
Loan payable 13,135
Loan interest payable 56
Payable to affiliate 183
Management fee payable 56
Accrued expenses 73
--------
TOTAL LIABILITIES 20,512
--------
NET ASSETS $ 73,298
========
MEMBERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions (net of syndication costs of $50) $ 67,910
Accumulated net investment loss (382)
Accumulated net realized loss on investments (676)
Accumulated net unrealized appreciation on investments 6,446
--------
MEMBERS' CAPITAL - NET ASSETS $ 73,298
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-1-
<PAGE>
XANTHUS FUND, L.L.C.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM MAY 4, 1999
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
(UNAUDITED)
<S> <C>
INVESTMENT INCOME
Interest $ 55
Dividends 30
-------
85
-------
EXPENSES
OPERATING EXPENSES:
Organizational expense 177
Administration fee 98
Professional fees 38
Investor servicing and accounting fees 27
Insurance expense 14
Custodian fees 6
Board of Managers' fees 6
Miscellaneous 4
-------
TOTAL OPERATING EXPENSES 370
Interest expense 94
Dividends on securities sold, not yet purchased 3
-------
TOTAL EXPENSES 467
-------
NET INVESTMENT LOSS (382)
-------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
REALIZED GAIN (LOSS) ON INVESTMENTS:
Investment securities 528
Purchased options (948)
Securities sold, not yet purchased (256)
-------
NET REALIZED LOSS ON INVESTMENTS (676)
-------
NET CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS 6,446
-------
NET REALIZED AND UNREALIZED GAIN 5,770
-------
INCREASE IN MEMBERS' CAPITAL DERIVED FROM INVESTMENT ACTIVITIES $ 5,388
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
XANTHUS FUND, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM MAY 4, 1999
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
(UNAUDITED)
<S> <C>
FROM INVESTMENT ACTIVITIES
Net investment loss $ (382)
Net realized loss on investments (676)
Net change in unrealized appreciation on investments 6,446
--------
INCREASE IN MEMBERS' CAPITAL
DERIVED FROM INVESTMENT ACTIVITIES 5,388
MEMBERS' CAPITAL TRANSACTIONS
Capital contributions 67,960
Syndication costs (50)
--------
INCREASE IN MEMBERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS 67,910
MEMBERS' CAPITAL AT BEGINNING OF PERIOD 0
--------
MEMBERS' CAPITAL AT END OF PERIOD $ 73,298
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Xanthus Fund, L.L.C. (the "Fund") was organized as a limited liability
company under the laws of Delaware in January 1999. The Fund is registered
under the Investment Company act of 1940 (the "Act") as a closed-end,
non-diversified management investment company. CIBC Oppenheimer Advisors,
L.L.C. (the "Adviser"), a Delaware limited liability company, serves as the
investment adviser to the Fund and is responsible for the Fund's investment
activities pursuant to an investment advisory agreement. Responsibility for
the overall management and supervision of the operations of the Fund is
vested in the individuals who serve as the Board of Managers of the Fund
(the "Board of Managers").
The Fund's investment objective is to achieve maximum capital appreciation.
It pursues this objective by actively investing in a portfolio consisting
primarily of equity securities of technology companies and of companies
which derive a major portion of their revenue directly or indirectly from
technological events and advances. The Fund's portfolio of securities in
the technology area is expected to include long and short positions
primarily in equity securities of U.S. and non-U.S. companies. Equity
securities include common and preferred stock and other securities having
equity characteristics, including convertible debt securities, stock
options, warrants and rights.
There are four members of the "Board of Managers" and an "Adviser." CIBC
Oppenheimer Advisers, L.L.C. serves as the investment adviser of the Fund
and is responsible for managing the Fund's investment portfolio. CIBC World
Markets Corp. (formerly CIBC Oppenheimer Corp.) is the managing member and
controlling person of the adviser.
The acceptance of initial and additional contributions is subject to
approval by the Board of Managers. The Fund may from time to time offer to
repurchase interests pursuant to written tenders by Members. Such
repurchases will be made at such times and on such terms as may be
determined by the Board of Managers, in their complete and exclusive
discretion. The Adviser expects that it will recommend to the Board of
Managers that the Fund offer to repurchase interests from Members at the
end of 1999. Thereafter, the Adviser expects that generally it will
recommend to the Board of Managers that the Fund offer to repurchase
interests from Members twice each year, effective at the end of the second
fiscal quarter and again at the end of the year.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Adviser to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. The Adviser believes that the estimates utilized in
preparing the Fund's financial statements are reasonable and prudent;
however, actual results could differ from these estimates.
-4-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
Securities transactions, including related revenue and expenses, are
recorded on a trade-date basis and dividends are recorded on an ex-dividend
date basis. Interest income is recorded on the accrual basis.
Domestic exchange traded or NASDAQ listed equity securities will be valued
at their last composite sale prices as reported on the exchanges where such
securities are traded. If no sales of such securities are reported on a
particular day, the securities will be valued based upon their composite
bid prices for securities held long, or their composite asked prices for
securities held short, as reported by such exchanges. Securities traded on
a foreign securities exchange will be valued at their last sale prices on
the exchange where such securities are primarily traded, or in the absence
of a reported sale on a particular day, at their bid prices (in the case of
securities held long) or asked prices (in the case of securities held
short) as reported by such exchange. Listed options will be valued at their
bid prices (or asked prices in the case of listed options held short) as
reported by the exchange with the highest volume on the last day a trade
was reported. Other securities for which market quotations are readily
available will be valued at their bid prices (or asked prices in the case
of securities held short) as obtained from one or more dealers making
markets for those securities. If market quotations are not readily
available, securities and other assets will be valued at fair value as
determined in good faith by, or under the supervision of, the Board of
Managers.
Debt securities (other than convertible debt securities) will be valued in
accordance with the procedures described above, which with respect to such
securities may include the use of valuations furnished by a pricing service
which employs a matrix to determine valuation for normal institutional size
trading units. The Board of Managers will periodically monitor the
reasonableness of valuations provided by any such pricing service. Debt
securities with remaining maturities of 60 days or less will, absent
unusual circumstances, be valued at amortized cost, so long as such
valuation is determined by the Board of Managers to represent fair value.
All assets and liabilities initially expressed in foreign currencies will
be converted into U.S. dollars using foreign exchange rates provided by a
pricing service compiled as of 4:00 p.m. London time. Trading in foreign
securities generally is completed, and the values of such securities are
determined, prior to the close of securities markets in the U.S. Foreign
exchange rates are also determined prior to such close. On occasion, the
values of such securities and exchange rates may be affected by events
occurring between the time such values or exchange rates are determined and
the time that the net asset value of the Fund is determined. When such
events materially affect the values of securities held by the Fund or its
liabilities, such securities and liabilities will be valued at fair value
as determined in good faith by, or under the supervision of, the Board of
Managers.
-5-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. INCOME TAXES
No provision for the payment of Federal, state or local income taxes on the
profits of the Partnership will be made. The Members are individually
liable for the income taxes on their share of the Fund's income.
3. ADMINISTRATION FEE, RELATED PARTY TRANSACTIONS AND OTHER
CIBC World Markets Corp. ("CIBC WM") provides certain administrative
services to the Fund including, among other things, providing office space
and other support services to the Fund. In exchange for such services, the
Fund pays CIBC WM a monthly administration fee of .08333% (1% on an
annualized basis) of the Fund's net assets determined as of the beginning
of the month.
Payable to affiliate represents organizational expense and insurance
expense in the amounts of $168,104 and $14,476, respectively, paid on
behalf of the Fund by CIBC WM.
During the period ended June 30, 1999, CIBC WM earned $320 in brokerage
commissions from portfolio transactions executed on behalf of the Fund.
The Adviser of the Fund will serve as the Special Advisory Member of the
Fund. In such capacity, the Adviser will be entitled to receive an
incentive allocation (the "Incentive Allocation"), charged to the capital
account of each Member as of the last day of each allocation period, of 20%
of the amount by which net profits, if any, exceed the positive balance in
the Member's "loss recovery account." The Incentive Allocation will be
credited to the Special Advisory Account of the Adviser.
Each Manager receives an annual retainer of $5,000 plus a fee for each
meeting attended. None of the Managers is or will be an "interested person"
of the Fund (as defined in the Act). All Managers are reimbursed by the
Fund for all reasonable out-of-pocket expenses incurred by them in
performing their duties. For the period ended June 30, 1999, fees
(including meeting fees and a pro-rata annual retainer) and expenses paid
to the Managers totaled $20,638.
Chase Manhattan Bank serves as Custodian of the Fund's assets.
PFPC Inc. serves as Investor Services and Accounting Agent to the Fund, and
in that capacity provides certain accounting, recordkeeping, tax and
investor related services.
-6-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
4. SECURITIES TRANSACTIONS
Aggregate purchases and sales of investment securities, excluding
short-term securities, for the period from May 4, 1999 (commencement of
operations) to June 30, 1999, amounted to $82,629,469 and $7,995,739,
respectively.
At June 30, 1999, the cost of investments for Federal income tax purposes
was substantially the same as the cost for financial reporting purposes. At
June 30, 1999, accumulated net unrealized appreciation on investments was
$6,446,271, consisting of $10,006,693 gross unrealized appreciation and
$3,560,422 gross unrealized depreciation.
Due from broker represents receivables and payables from unsettled security
trades and short sales.
5. SHORT-TERM BORROWINGS
The Fund has the ability to trade on margin and, in that connection, borrow
funds from brokers and banks for investment purposes. Trading in equity
securities on margin involves an initial cash requirement representing at
least 50% of the underlying security's value with respect to transactions
in U.S. markets and varying percentages with respect to transactions in
foreign markets. The Act requires the Fund to satisfy an asset coverage
requirement of 300% of its indebtedness, including amounts borrowed,
measured at the time the Fund incurs the indebtedness. The Fund pays
interest on outstanding margin borrowings at an annualized rate of LIBOR
plus .875%. The Fund pledges securities as collateral for the margin
borrowings, which are maintained in a segregated account held by the
Custodian. As of June 30, 1999, the Fund had outstanding margin borrowings
of $13,134,911. For the period ended June 30, 1999, the average daily
amount of such borrowings was $9,481,158.
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR CONCENTRATIONS OF
CREDIT RISK
In the normal course of business, the Fund may trade various financial
instruments and enter into various investment activities with off-balance
sheet risk. These financial instruments include forward contracts, options
and securities sold, not yet purchased. Generally, these financial
instruments represent future commitments to purchase or sell other
financial instruments at specific terms at specified future dates. Each of
these financial instruments contains varying degrees of off-balance sheet
risk whereby changes in the market value of the securities underlying the
financial instruments may be in excess of the amounts recognized in the
Statement of Assets, Liabilities and Members' capital.
-7-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR CONCENTRATIONS OF
CREDIT RISK (CONTINUED)
The Fund maintains cash in bank deposit accounts, which at times may exceed
federally insured limits. The Fund has not experienced any losses in such
accounts and does not believe it is exposed to any significant credit risk
on cash.
Securities sold, not yet purchased represent obligations of the Fund to
deliver specified securities and thereby creates a liability to purchase
such securities in the market at prevailing prices. Accordingly, these
transactions result in off-balance sheet risk as the Fund's ultimate
obligation to satisfy the sale of securities sold, not yet purchased may
exceed the amount indicated in the Statement of Assets, Liabilities and
Members' capital.
The risk associated with purchasing an option is that the Fund pays a
premium whether or not the option is exercised. Additionally, the Fund
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased
are accounted for in the same manner as investment securities.
Transactions in purchased options were as follows:
<TABLE>
<CAPTION>
PUT OPTIONS
----------------------------------
NUMBER
OF CONTRACTS COST
-------------- -----------
<S> <C> <C>
Beginning balance 0 $ 0
Options purchased 878 5,364,234
Options closed (295) (1,750,435)
Expired options (200) (504,350)
---- -----------
Options outstanding at June 30, 1999 383 $ 3,109,449
==== ===========
</TABLE>
7. FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
The Fund maintains positions in a variety of financial instruments. The
following table summarizes the components of net realized and unrealized
gains from investment transactions:
NET GAINS
FOR THE PERIOD ENDED
JUNE 30, 1999
---------------------
Equity securities $ 8,104,846
Equity options (14,811)
Index options (2,319,803)
-----------
Total $ 5,770,232
===========
-8-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
7. FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES (CONTINUED)
The following table presents the market values of derivative financial
instruments and the average market values of those instruments:
AVERAGE MARKET VALUE
FOR THE PERIOD ENDED
JUNE 30, 1999
--------------------
ASSETS:
Index options $1,511,300
Average market values presented above are based upon month-end market
values during the period ended June 30, 1999.
8. SELECTED FINANCIAL RATIOS AND OTHER SUPPLEMENTAL INFORMATION
The following represents the ratios to average net assets and other
supplemental information for the period indicated:
MAY 4, 1999
(COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 1999
-------------
Ratio of net investment loss to average net assets (3.94%)*
Ratio of operating expenses to average net assets 3.82%*
Ratio of interest expense to average net assets 0.97%*
Ratio of dividends on securities sold, not yet
purchased to average net assets 0.03%*
Portfolio turnover rate 11%
Average commission rate paid $ 0.0591**
Total return 7.73%***
* Annualized.
** Average commission rate paid on purchases and sales of investment
securities held long.
*** Total return assumes a purchase of an interest in the Fund on the
first day and a sale of the interest on the last day of the
period noted, before incentive allocation to the Special Advisory
Member, if any. Total returns for a period of less than a full
year are not annualized.
-9-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
9. YEAR 2000
Like other investment companies and financial and business organizations
around the world, the Fund could be adversely affected if the computer
systems it uses and those used by the Fund's brokers and other major
service providers do not properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000 Issue."
The Fund has assessed its computer systems and the systems compliance
issues of its brokers and other major service providers. The Fund has taken
steps that it believes are reasonably designed to address the Year 2000
Issue with respect to the computer systems it uses and has obtained
satisfactory assurances that comparable steps are being taken by its
brokers and other major service providers. At this time, however, there can
be no assurance that these steps will be sufficient to address all Year
2000 Issues.
The inability of the Fund or its third party providers to timely complete
all necessary procedures to address the Year 2000 Issue could have a
material adverse effect on the Fund's operations. Management will continue
to monitor the status of and its exposure to this issue. For the period
ended June 30, 1999, the Fund incurred no Year 2000 related expenses, and
it does not expect to incur significant Year 2000 expenses in the future.
The Fund intends to develop contingency plans designed to ensure that third
party non-compliance will not materially affect the Fund's operations.
-10-
<PAGE>
XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - 114.14%
APPLICATIONS SOFTWARE - 4.47%
23,200 Intuit, Inc.* $ 2,090,900
68,900 PeopleSoft, Inc.* 1,188,525
-----------
3,279,425
-----------
BROADCASTING SERVICES/PROGRAMMING - 3.76%
35,580 AT&T Corp. - Liberty Media Group, Class A* (a) 1,271,550
7,600 Fox Entertainment Group, Inc., Class A* 204,729
18,900 United International Holdings, Inc., Class A* 1,278,113
-----------
2,754,392
-----------
CABLE TV - 2.69%
40,400 Comcast Corp., Special Class A* (a) 1,552,895
8,500 Jones Intercable, Inc., Class A* 416,500
-----------
1,969,395
-----------
CATALOG AND MAIL ORDER HOUSES - 1.27%
23,200 USA Networks, Inc.* 930,900
-----------
CELLULAR TELECOMMUNICATIONS - 2.37%
23,600 Nextel Communications, Inc., Class A * 1,184,437
11,400 WinStar Communications, Inc.* 555,750
-----------
1,740,187
-----------
COMPUTER SERVICES - 5.18%
20,000 Computer Sciences Corp.* 1,383,760
30,700 Electronic Data Systems Corp. (a) 1,738,387
10,700 Safeguard Scientifics, Inc.* 674,100
-----------
3,796,247
-----------
COMPUTER SOFTWARE - 11.75%
27,288 Computer Associates International, Inc. (a) 1,494,018
11,400 Compuware Corp.* 362,663
37,300 Microsoft Corp.* (a) 3,364,012
62,800 Oracle Corp.* (a) 2,331,450
76,400 Parametric Technology Corp.* 1,060,050
-----------
8,612,193
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-11-
<PAGE>
XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
COMPUTERS - MEMORY DEVICES - 4.09%
33,600 EMC Corp.* (a) $ 1,848,000
44,900 Seagate Technology, Inc.* (a) 1,150,562
-----------
2,998,562
-----------
COMPUTERS - MICRO - 11.97%
35,600 Compaq Computers Corp. 843,293
29,600 Dell Computer Corp.* (a) 1,095,200
21,700 Hewlett-Packard Co. 2,180,850
17,400 International Business Machines Corp. 2,248,950
34,900 Sun Microsystems, Inc.* (a) 2,403,738
-----------
8,772,031
-----------
DATA PROCESSING/MANAGEMENT - 5.14%
37,000 Automatic Data Processing, Inc. 1,628,000
43,700 First Data Corp.* (a) 2,138,591
-----------
3,766,591
-----------
ELECTRONIC COMPONENTS - MISCELLANEOUS - 2.46%
27,000 Solectron Corp.* (a) 1,800,576
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 16.67%
31,100 Intel Corp. (a) 1,850,450
26,700 Micron Technology, Inc. 1,081,350
21,600 Motorola, Inc. 2,046,600
25,800 STMicroelectronics N.V. (a) 1,788,275
17,800 Texas Instruments, Inc. 2,563,200
7,600 TranSwitch Corp.* 360,050
44,200 Xilinx, Inc.* (a) 2,530,450
-----------
12,220,375
-----------
ENTERTAINMENT SOFTWARE - 2.39%
32,300 Electronic Arts, Inc.* (a) 1,752,275
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-12-
<PAGE>
XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
INTERNET CONTENT - 3.36%
3,800 At Home Corp., Series A* $ 204,964
13,100 Yahoo!, Inc.* 2,256,475
---------
2,461,439
---------
INTERNET SOFTWARE - 3.84%
25,600 America Online, Inc.* (a) 2,816,000
---------
MACHINERY - GENERAL INDUSTRIAL - 2.32%
23,000 Applied Materials, Inc.* (a) 1,699,125
---------
MULTIMEDIA - 1.59%
16,000 Time Warner, Inc. 1,162,000
---------
NETWORKING PRODUCTS - 5.39%
48,800 Cisco Systems, Inc.* (a) 3,144,574
30,200 3Com Corp.* 805,978
---------
3,950,552
---------
PIPELINES - 0.52%
9,000 Williams Companies, Inc. 383,067
---------
RETAIL - INTERNET - 2.39%
14,000 Amazon.com, Inc.* (a) 1,751,750
---------
SATELLITE TELECOMMUNICATIONS - 0.69%
9,000 General Motors Corp., Class H 506,817
---------
TELECOMMUNICATIONS EQUIPMENT - 13.15%
11,900 ADC Telecommunications, Inc.* 542,200
13,300 ANTEC Corp.* 426,438
5,700 General Instrument Corp.* 242,250
32,145 Lucent Technologies, Inc. (a) 2,167,794
8,900 Nokia Corp. - Sponsored ADR 814,911
30,700 Nortel Networks Corp. (a) 2,665,159
41,200 Tellabs, Inc.* (a) 2,783,596
---------
9,642,348
---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-13-
<PAGE>
XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
TELECOMMUNICATIONS SERVICES - 2.12%
5,500 Global TeleSystems Group, Inc.* $ 445,500
19,600 Inet Technologies, Inc.* 470,400
7,400 NTL, Inc.* 637,791
-----------
1,553,691
-----------
TELEPHONE - INTEGRATED - 2.02%
26,560 AT&T Corp. (a) 1,482,393
-----------
TELEPHONE - LONG DISTANCE - 2.54%
15,000 MCI WorldCom, Inc.* 1,290,945
10,200 Viatel, Inc.* 572,475
-----------
1,863,420
-----------
TOTAL COMMON STOCKS (COST $75,161,493) 83,665,751
===========
<CAPTION>
NUMBER OF
CONTRACTS
<S> <C> <C>
PUT OPTIONS - 2.35%
INDEX - 2.35%
250 Morgan Stanley High Tech Index, 07/17/99, $980.00 47,299
133 Nasdaq-100 Index, 09/18/99, $2,280.00 1,675,800
-----------
1,723,099
-----------
TOTAL PUT OPTIONS (COST $3,109,449) 1,723,099
===========
TOTAL INVESTMENTS (COST $78,270,942) - 116.49% 85,388,850
-----------
OTHER ASSETS, LESS LIABILITIES - (16.49%) (12,090,714)
-----------
NET ASSETS - 100.00% $73,298,136
===========
</TABLE>
* Non-income producing security.
(a) Partially or wholly held in a pledged account by the custodian for
securities sold, not yet purchased.
The accompanying notes are an integral part of these financial statements.
-14-
<PAGE>
XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<S> <C> <C>
SHORT COMMON STOCK - (9.49%)
APPLICATIONS SOFTWARE - (0.94%)
5,000 Great Plains Software, Inc. $ (235,940)
6,500 Peregrine Systems, Inc. (166,972)
4,300 Siebel Systems, Inc. (285,146)
-----------
(688,058)
-----------
CIRCUIT BOARDS - (0.47%)
4,500 Sanmina Corp. (341,437)
-----------
COMMERCIAL SERVICES - FINANCE - (0.33%)
7,650 Paychex, Inc. (243,844)
-----------
COMPUTER DATA SECURITY - (0.31%)
6,000 ISS Group, Inc. (226,500)
-----------
COMPUTER GRAPHICS - (0.39%)
5,000 Visio Corp. (190,315)
6,100 3Dfx Interactive, Inc. (95,313)
-----------
(285,628)
-----------
COMPUTER SERVICES - (0.50%)
5,000 Ceridian Corp. (163,440)
3,600 Sapient Corp. (203,850)
-----------
(367,290)
-----------
COMPUTER SOFTWARE - (0.43%)
2,500 SCM Microsystems, Inc. (115,937)
5,100 Transaction Systems Architects, Inc., Class A (198,900)
-----------
(314,837)
-----------
DATA PROCESSING/MANAGEMENT - (0.66%)
5,500 Acxiom Corp. (137,159)
5,500 Fiserv, Inc. (172,222)
4,800 Sterling Commerce, Inc. (176,400)
-----------
(485,781)
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-15-
<PAGE>
XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<S> <C> <C>
SHORT COMMON STOCK - (CONTINUED)
DISTRIBUTION - WHOLESALE - (0.39%)
5,500 Ingram Micro, Inc., Class A $ (141,625)
3,800 Tech Data Corp. (145,350)
----------
(286,975)
----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - (0 .79%)
5,000 Dallas Semiconductor Corp. (253,750)
5,200 Lattice Semiconductor Corp. (323,700)
----------
(577,450)
----------
ELECTRONIC PARTS DISTRIBUTION - (0.26%)
4,180 Avnet, Inc. (194,370)
----------
INSTRUMENTS - SCIENTIFIC - (0.38%)
2,400 PE Corp - PE Biosystems Group (275,400)
----------
INTERNET SOFTWARE - (0.13%)
3,800 Prodigy Communications Corp. (98,325)
----------
LINEN SUPPLY & RELATED ITEMS - (0.36%)
3,900 Cintas Corp. (262,033)
----------
MEDICAL INFORMATION SYSTEMS - (0.36%)
4,000 Shared Medical Systems Corp. (261,000)
----------
MEDICAL INSTRUMENTS - (0.24%)
4,000 Boston Scientific Corp. (175,752)
----------
MEDICAL - BIOMEDICAL/GENE - (0.03%)
1,200 Celera Genomics (19,426)
----------
MEDICAL - WHOLESALE DRUG DISTRIBUTION - (0.41%)
4,700 Cardinal Health, Inc. (301,387)
----------
NETWORKING PRODUCTS - (0.23%)
4,200 International Network Services (169,575)
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-16-
<PAGE>
XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<S> <C> <C>
SHORT COMMON STOCK - (CONTINUED)
OFFICE AUTOMATION & EQUIPMENT - (0.34%)
3,900 Pitney Bowes, Inc. $ (250,575)
-----------
RETAIL - BUILDING PRODUCTS - (0.23%)
3,200 Fastenal Co. (167,802)
-----------
RETAIL - CONSUMER ELECTRONICS - (0.95%)
5,600 Best Buy Co., Inc. (378,000)
3,420 Circuit City Stores-Circuit City Group (318,060)
-----------
(696,060)
-----------
TELECOMMUNICATIONS EQUIPMENT - (0.36%)
4,100 Plantronics, Inc. (267,012)
-----------
TOTAL SHORT COMMON STOCK (PROCEEDS $6,284,880) $(6,956,517)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-17-
LETTER OF TRANSMITTAL
Regarding
Interests
in
XANTHUS FUND, L.L.C.
Tendered Pursuant to the Offer to Purchase
Dated December 1, 1999
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT, AND THIS
LETTER OF TRANSMITTAL MUST BE RECEIVED BY THE FUND BY, 12:00
MIDNIGHT, NEW YORK TIME, ON FRIDAY, DECEMBER 31, 1999,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
Complete This Letter Of Transmittal And Return Or Deliver To:
PFPC Inc.
P.O. Box 220
Claymont, DE 19703
Attn: Karl Garrett
For additional information:
Phone: (888) 697-9661
(888) 520-3280
Fax: (302) 791-3225
(302) 791-2387
Ladies and Gentlemen:
The undersigned hereby tenders to Xanthus Fund, L.L.C., a closed-end,
non-diversified, management investment company organized under the laws of the
State of Delaware (the "Fund"), the limited liability company interest in the
Fund or portion thereof held by the undersigned, described and specified below,
on the terms and conditions set forth in the offer to purchase, dated December
1, 1999 ("Offer to Purchase"), receipt of which is hereby acknowledged, and in
this letter of transmittal (which together constituted the "Offer"). THE TENDER
AND THIS LETTER OF TRANSMITTAL ARE SUBJECT TO ALL THE TERMS AND CONDITIONS SET
FORTH IN
<PAGE>
THE OFFER TO PURCHASE, INCLUDING, BUT NOT LIMITED TO, THE ABSOLUTE RIGHT OF THE
FUND TO REJECT ANY AND ALL TENDERS DETERMINED BY IT, IN ITS SOLE DISCRETION, NOT
TO BE IN THE APPROPRIATE FORM.
The undersigned hereby sells to the Fund the limited liability company
interest in the Fund or portion thereof tendered hereby pursuant to the Offer.
The undersigned hereby warrants that the undersigned has full authority to sell
the limited liability company interest in the Fund or portion thereof tendered
hereby and that the Fund will acquire good title thereto, free and clear of all
liens, charges, encumbrances, conditional sales agreements or other obligations
relating to the sale thereof, and not subject to any adverse claim, when and to
the extent the same are purchased by it. Upon request, the undersigned will
execute and deliver any additional documents necessary to complete the sale in
accordance with the terms of the Offer.
The undersigned recognizes that under certain circumstances set forth in
the Offer, the Fund may not be required to purchase any of the limited liability
company interests in the Fund or portions thereof tendered hereby.
Payment of the cash portion of the purchase price for the limited liability
company interest in the Fund or portion thereof of the undersigned (the "Cash
Payment"), as described in Section 6 of the Offer to Purchase, shall be sent to
the undersigned by wire transfer to the undersigned's brokerage account at CIBC
World Markets Corp. ("CIBC WM"). The undersigned hereby represents and warrants
that the undersigned understands that, for cash payments wired directly to a
member's brokerage account, upon a withdrawal of such cash payment from such
account, CIBC WM will subject such withdrawal to any fees that CIBC WM would
customarily assess upon the withdrawal of cash from such brokerage account. (Any
payment in the form of marketable securities would be made by means of special
arrangement with the tendering member in the sole discretion of the Board of
Managers of the Fund.) A promissory note reflecting the contingent payment
portion of the purchase price, if any, as described in Section 6 of the Offer to
Purchase, will be deposited directly to the undersigned's brokerage account with
CIBC WM. (Any contingent payment due pursuant to the Note will also be deposited
directly to the tendering member's brokerage account with CIBC WM and, upon a
withdrawal of such contingent payment from such account, CIBC WM will impose
such fees as it would customarily assess upon the withdrawal of cash from such
brokerage account.) The undersigned recognizes that the amount of the Cash
Payment will be based on the unaudited net asset value as of December 31, 1999,
of the limited liability company interest of the Fund or portion thereof
tendered, and that the contingent payment portion of the purchase price, if any,
will be determined upon completion of the audit of the Fund's financial
statements for 1999, which is anticipated to be completed not later than 60 days
after the Fund's fiscal year end, and will be paid in cash within ten days
thereafter.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and the obligation of the undersigned
hereunder shall be binding on the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in Section 5 of the Offer to
Purchase, this tender is irrevocable.
-2-
<PAGE>
PART 1. NAME AND ADDRESS:
Name of member:
----------------------------------------------------------
Social Security No.
or Taxpayer
Identification No.:
---------------------------------
Telephone Number: ( )
--- -----------------------------
PART 2. AMOUNT OF LIMITED LIABILITY COMPANY INTEREST IN THE FUND TO BE TENDERED:
[_] Entire limited liability company interest.
[_] Portion of limited liability company interest expressed as a specific
dollar value. (A minimum interest of the greater of: (a) $150,000, net
of the incentive allocation or net of the tentative incentive
allocation; or (b) the tentative incentive allocation, must be
maintained (the "Required Minimum Balance").)*
$
-----------------
[_] Portion of limited liability company interest in excess of the
Required Minimum Balance.*
*The undersigned understands that if the undersigned tenders an amount
that would cause the undersigned's capital account balance to fall
below the Required Minimum Balance, the Fund reserves the right to
reduce the amount to be purchased from the undersigned so that the
Required Minimum Balance is maintained.
PART 3. PAYMENT.
Cash Payment
------------
Cash payments will be wire transferred directly to the undersigned's
brokerage account at CIBC WM. The undersigned hereby represents and
warrants that the undersigned understands that, for cash payments wired
directly to a member's brokerage account, upon a withdrawal of such cash
payment from such account, CIBC WM will impose such fees as it would
customarily assess upon the withdrawal of cash from such brokerage account.
(Any payment in the form of marketable securities would be made by means of
special arrangements with the tendering member.)
Promissory Note
---------------
The promissory note reflecting the contingent payment portion of the
purchase price, if applicable, will be deposited directly to the
undersigned's brokerage account at CIBC WM. The undersigned hereby
represents and warrants that the undersigned understands that any
contingent payment due pursuant to the Note will also be deposited directly
to
-3-
<PAGE>
the undersigned's brokerage account at CIBC WM, and, upon a withdrawal of
such contingent payment from such account, CIBC WM will impose such fees as
it would customarily assess upon the withdrawal of cash from such brokerage
account.
PART 4. SIGNATURE(S).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
FOR INDIVIDUAL INVESTORS FOR OTHER INVESTORS:
- ------------------------ --------------------
AND JOINT TENANTS:
- ------------------
<S> <C>
- ------------------------------------ ------------------------------------
Signature Print Name of Investor
(SIGNATURE OF OWNER(S) EXACTLY AS APPEARED
ON SUBSCRIPTION AGREEMENT)
- ------------------------------------ ------------------------------------
Print Name of Investor Signature
(SIGNATURE OF OWNER(S) EXACTLY AS APPEARED
ON SUBSCRIPTION AGREEMENT)
- ------------------------------------ ------------------------------------
Joint Tenant Signature if necessary Print Name of Signatory and Title
(SIGNATURE OF OWNER(S) EXACTLY AS APPEARED
ON SUBSCRIPTION AGREEMENT)
- ------------------------------------ ------------------------------------
Print Name of Joint Tenant Co-signatory if necessary
(SIGNATURE OF OWNER(S) EXACTLY AS APPEARED
ON SUBSCRIPTION AGREEMENT)
------------------------------------
Print Name and Title of Co-signatory
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
Date:
------------------------
-4-
[To be provided to members who call and request the form.]
NOTICE OF WITHDRAWAL OF TENDER
Regarding Interests in
XANTHUS FUND, L.L.C.
Tendered Pursuant to the Offer to Purchase
Dated December 1, 1999
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT, AND THIS
NOTICE OF WITHDRAWAL MUST BE RECEIVED BY THE FUND BY, 12:00
MIDNIGHT, NEW YORK TIME, ON FRIDAY, DECEMBER 31, 1999,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
Complete This Notice of Withdrawal And Return Or Deliver To:
PFPC Inc.
P.O. Box 220
Claymont, DE 19703
Attn: Karl Garrett
For additional information:
Phone: (888) 697-9661
(888) 520-3280
Fax: (302) 791-3225
(302) 791-2387
Ladies and Gentlemen:
Please withdraw the tender previously submitted by the undersigned in a
Letter of Transmittal dated .
--------------------------
Such tender was in the amount of:
[_] Entire limited liability company interest.
[_] Portion of limited liability company interest expressed as a specific
dollar value.
$ -
--------------
[_] Portion of limited liability company interest in excess of the
Required Minimum Balance.
<PAGE>
SIGNATURE(S).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
FOR INDIVIDUAL INVESTORS FOR OTHER INVESTORS:
- ------------------------ --------------------
AND JOINT TENANTS:
- ------------------
<S> <C>
- ------------------------------------ ------------------------------------
Signature Print Name of Investor
(SIGNATURE OF OWNER(S) EXACTLY AS APPEARED
ON SUBSCRIPTION AGREEMENT)
- ------------------------------------ ------------------------------------
Print Name of Investor Signature
(SIGNATURE OF OWNER(S) EXACTLY AS APPEARED
ON SUBSCRIPTION AGREEMENT)
- ------------------------------------ ------------------------------------
Joint Tenant Signature if necessary Print Name of Signatory and Title
(SIGNATURE OF OWNER(S) EXACTLY AS APPEARED
ON SUBSCRIPTION AGREEMENT)
- ------------------------------------ ------------------------------------
Print Name of Joint Tenant Co-signatory if necessary
(SIGNATURE OF OWNER(S) EXACTLY AS APPEARED
ON SUBSCRIPTION AGREEMENT)
------------------------------------
Print Name and Title of Co-signatory
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
Date:
----------------
-2-
