SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE TO
(RULE 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 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)
N/A
(CUSIP Number of Class of Securities)
Howard M. Singer
Xanthus Fund, L.L.C.
One World Financial Center
200 Liberty Street
31st Floor
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
June 2, 2000
(Date Tender Offer First Published,
Sent or Given to Security Holders)
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CALCULATION OF FILING FEE
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Transaction Valuation: $50,000,000(a) Amount of Filing Fee: $10,000(b)
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(a) Calculated as the aggregate maximum purchase price for Interests.
(b) Calculated at 1/50th of 1% of the Transaction Valuation.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-1l(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: ________________________
Form or Registration No.: ________________________
Filing Party: __________________________________
Date Filed: ___________________________________
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[ ] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13d under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
ITEM 1. SUMMARY TERM SHEET.
As stated in the Fund's offering documents, the Fund is offering to buy
limited liability company interests in the Fund ("Interests") from members at
their estimated net asset value (that is, the estimated value of the Fund assets
minus its liabilities, multiplied by the proportionate interest in the Fund a
member desires to sell). The offer will remain open until 12:00 a.m., New York
time, on June 30, 2000. Estimated net asset value of the Interests will be
calculated for this purpose on June 30, 2000.
To make sure we have calculated net asset value correctly, we will check it
during the Fund's audit for calendar year 2000, which we expect will be
completed in February 2001. Members may tender their entire Interest, a portion
of their Interest defined as a specific dollar
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value or portion of their Interest above the required Capital account balance.
If a member tenders its entire interest in the Fund, we will pay the member in
cash and/or marketable securities (valued in accordance with the Fund's Limited
Liability Company Agreement dated February 10, 1999) by July 10, 2000, 95% of
our calculation of the estimated net asset value as of June 30, 2000, less any
incentive allocation payable to the investment adviser on June 30, 2000 or, if
the offer is extended, on the expiration date of the offer. The Fund will owe
the member the balance, for which it will give the member a promissory note that
will be held in the member's brokerage account with CIBC World Markets Corp.
("CIBC WM"). A member who tenders for repurchase only part of its Interest will
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. In the case of a
partial tender of an Interest, the Fund will pay the full estimated net asset
value of the portion of the Interest tendered in cash and/or marketable
securities by July 10th. The Fund reserves the right to purchase less than the
amount tendered if the amount tendered by the member would cause the member's
capital account in the Fund to have a value less than the required minimum
balance. The Fund will make payment for the Interests it purchases from one or
more of the following sources: cash on hand, the proceeds of the sale of and/or
delivery of portfolio securities held by the Fund or by borrowing, if the offer
is extended (which the Fund does not intend to do).
Following this summary is a formal notice of the Fund's offer to purchase
the Interests. The offer remains open to members until midnight 12:00 a.m. New
York time on June 30, 2000, the expected expiration date of the offer. Until
this time, members have the right to change their minds and withdraw any tenders
of their Interests. Members will also have the right to withdraw tenders of
their Interests at any time after July 28, 2000, if their Interests have not yet
been accepted for purchase by the Fund.
If a member would like the Fund to purchase its Interest or a portion of
its Interest, it should mail a Letter of Transmittal, attached to this document
as Exhibit C, to PFPC Inc. at P.O. Box 220, Claymont, Delaware 19703, attention
Karl Garrett, or fax it to PFPC Inc. at (302) 791-3225 or (302) 791-2387, so
that it is received before midnight, New York time, on June 30, 2000. If the
member chooses to fax the Letter of Transmittal, it should mail the original
Letter of Transmittal to PFPC Inc. promptly after it is faxed (although the
original does not have to be received before midnight, June 30, 2000). Of
course, the value of the Interests will change between May 31st (the last time
estimated net asset value was calculated) and June 30th, when the value of the
investment will be determined for purposes of calculating the purchase price for
Interests. Members desiring to obtain the estimated net asset value of their
Interests, which the Fund calculates weekly, until the expiration date of the
offer and daily for the last five business days of the offer, may contact PFPC
Inc., at (888) 697-9661 or at the address listed above, Monday through Friday,
except holidays, during normal business hours of 9:00 a.m. to 5:00 p.m. (Eastern
Time).
Please note that just as each member has the right to withdraw an Interest
it has tendered, the Fund has the right to cancel, amend or postpone this offer
at any time before midnight, New York time, on June 30, 2000.
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ITEM 2. ISSUER INFORMATION.
(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. It is
organized as a Delaware limited liability company. The principal executive
office of the Fund is located at One World Financial Center, 200 Liberty Street,
31st Floor, New York, New York 10281 and the telephone number is (212) 667-4225.
(b) The title of the securities that are the subject of the offer to
purchase (the "Offer") is limited liability company interests or portions
thereof in the Fund. (As used herein, the term "Interest" or "Interests," as the
context requires, refers 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.) As of the close of business on April 28, 2000, there was approximately
$358,757,206 outstanding in capital of the Fund, represented by Interests.
Subject to the conditions set forth in the Offer to Purchase, the Fund will
purchase up to $50,000,000 of Interests that are tendered by and not withdrawn
prior to 12:00 midnight, New York time, on June 30, 2000, subject to any
extension of the Offer.
(c) Interests are not traded in any market, and any transfer thereof is
strictly limited by the terms of the Fund's Limited Liability Company Agreement
dated as of February 10, 1999 (the "LLC Agreement").
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) The name of the filing person is Xanthus Fund, L.L.C. (the "Fund"). The
Fund's principal executive office is located at One World Financial Center, 200
Liberty Street, 31st Floor, New York, New York 10281 and the telephone number is
(212) 667-4225. The Investment Adviser to the Fund is CIBC Oppenheimer Advisers,
L.L.C. (the "Adviser"). The principal executive office of the Adviser is located
at One World Financial Center, 31st Floor, 200 Liberty Street, New York, New
York 10281 and the telephone number is (212) 667-7000. The Fund's Managers are
Jesse H. Ausubel, Charles F. Barber, Paul Belica, Thomas Brock and Howard M.
Singer. Their address is c/o CIBC Oppenheimer Advisers, L.L.C., One World
Financial Center, 31st Floor, 200 Liberty Street, New York, New York 10281.
ITEM 4. TERMS OF THIS TENDER OFFER.
(a) (1) (i) Subject to the conditions set forth in the Offer to Purchase,
the Fund will purchase up to $50,000,000 of Interests that are tendered by and
not withdrawn prior to 12:00 midnight, New York time, on June 30, 2000 (such
time and date, the "Initial Expiration Date"), subject 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 called the "Expiration Date."
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(ii) The purchase price of Interests tendered to the Fund for purchase will
be their estimated net asset value as of the close of business on the Expiration
Date.
For members who tender their entire Interest, payment of the purchase price
will consist of: (a) 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 June 30, 2000) payable within ten days after the
Expiration Date, (the "95% Payment"); and (b) 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 calendar year 2000, over (b) the 95% Payment. The
Note will be delivered to the tendering member in the manner set forth in the
Letter of Transmittal, attached as Exhibit C, within ten days after the
Expiration Date 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 for calendar year 2000. It is anticipated that the audit of the Fund's
financial statements for calendar year 2000 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% of the estimated unaudited net
asset value of Interests tendered and accepted for purchase 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 of
the Fund 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.
Members who tender only a portion of their Interests (subject to
maintenance of the required minimum capital account balance discussed in Item I
above) will receive cash and/or marketable securities in an aggregate amount
equal to 100% of the estimated unaudited net asset value of Interests tendered
and accepted for purchase by the Fund, determined as of the Expiration Date,
payable within ten days after the Expiration Date.
A copy of: (a) the Cover Letter to the Offer to Purchase and Letter of
Transmittal; (b) the Offer to Purchase; (c) a form of Letter of Transmittal; (d)
a form of Notice of Withdrawal of Tender; and (e) forms of Letters to Members
that will be sent in connection with the Fund's acceptances of tenders of
Interest, are attached hereto as Exhibits A, B, C, D and E, respectively.
(iii) The scheduled expiration date of the Offer is 12:00 midnight, New
York time, Friday, June 30, 2000.
(iv) Not applicable.
(v) 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. If the Fund elects to extend the tender period, for the
purpose of determining the
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purchase price for tendered Interests, the estimated net asset value of such
Interests will be determined at the close of business on the day the tender
offer actually expires. 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 Section 7 of the Offer to Purchase and in the event
of such cancellation, not to purchase or pay for any Interests tendered pursuant
to the Offer; (b) amend the Offer; or (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.
(vi) Interests may be withdrawn at any time before 12:00 midnight, New York
time, Friday, June 30, 2000 and, if Interests have not then been accepted for
purchase by the Fund, at any time after July 28, 2000.
(vii) Members wishing to tender Interests pursuant to the Offer should send
or deliver a completed and executed Letter of Transmittal to PFPC Inc. ("PFPC"),
to the attention of Karl Garrett, at the address set forth on page 2 of the
Offer to Purchase, 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 of the Offer to Purchase. The completed and executed Letter of
Transmittal must be received by PFPC, either by mail or by fax, no later than
the Expiration Date. The Fund recommends that all documents be submitted to PFPC
by certified mail, return receipt requested, or by facsimile transmission. A
member choosing to fax a Letter of Transmittal to PFPC must also send or deliver
the original completed and executed Letter of Transmittal to PFPC promptly
thereafter.
Any member tendering an Interest pursuant to the Offer may withdraw its
tender at any time on or before on the Expiration Date and, if Interests have
not then been accepted for purchase by the Fund, at any time after July 28,
2000. To be effective, any notice of withdrawal must be timely received by PFPC
at the address or fax numbers set forth on page 2 of the Offer to Purchase. A
form to use to give notice of withdrawal is available by calling PFPC at the
phone number indicated on page 2 of the Offer to Purchase. 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 above.
(viii) 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.
(ix) If more than $50,000,000 of Interests are duly tendered to the Fund
prior to the expiration of the Offer and not withdrawn, the Fund will in its
sole discretion either: (a) accept the additional Interests permitted to be
accepted pursuant to Rule 13e-4(f)(3) 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
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tendered during the extended Offer; or (c) accept Interests tendered on or
before the Expiration Date for payment on a pro rata basis based on the
aggregate estimated net asset value of tendered Interests. The Offer may be
extended, amended or canceled in various other circumstances described in (v)
above.
(x) 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
July 1, 2000 and thereafter from time to time.
(xi) Not applicable.
(xii) 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 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 a 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.
(a) (2) Not applicable.
(b) Not applicable.
ITEM 5. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The Fund's Confidential Memorandum dated March 1999, as supplemented (the
"Confidential Memorandum"), and the LLC Agreement, which were provided to each
member in advance of subscribing for Interests, provide that the Fund's Board of
Managers has the
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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 expects that it will recommend to the Board of Managers
that the Fund purchase Interests from members twice each year, in June and
December. The Fund offered to purchase Interests pursuant to written tenders
effective as of December 31, 1999. That was 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 the Adviser or any Manager of
the Fund or any person controlling the Fund or controlling the Adviser; and (ii)
any person, with respect to Interests. However, the LLC Agreement provides that
the Fund shall be dissolved if the Interest of any member that has submitted a
written request, in accordance with the terms of the LLC Agreement, to tender
its entire Interest for repurchase by the Fund has not been repurchased within a
period of two years of the request.
ITEM 6. PURPOSES OF THIS TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a) The purpose of the Offer is to provide liquidity to members who hold
Interests as contemplated by and in accordance with the procedures set forth in
the Confidential Memorandum and the LLC Agreement.
(b) 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 July 1,
2000 and on the first day of each calendar quarter thereafter, but is under no
obligation to do so.
(c) Neither the Fund nor the Adviser nor the Board of Managers has any
plans or proposals that relate to or would result in: (1) the acquisition by any
person of additional Interests (other than the Fund's intention to accept
subscriptions for Interests on July 1, 2000 and from time to time in the
discretion of the Fund), or the disposition of Interests; (2) an extraordinary
transaction, such as a merger, reorganization or liquidation, involving the
Fund; (3) any material change in the present distribution policy or indebtedness
or capitalization of the Fund; (4) any change in the identity of the Adviser or
the members of the Board of Managers, or in the management of the Fund
including, but not limited to, any plans or proposals to change the number or
the term of 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
arrangements with the Adviser; (5) 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 all or a portion of the purchase price for
Interests acquired pursuant to the Offer or in connection with the ordinary
portfolio transactions of the Fund); (6) 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 (7) any changes in the LLC Agreement
or other actions that might impede the acquisition of control
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of the Fund by any person. Because Interests are not traded in any market, Items
(6), (7) and (8) of Item 1006(c) are not applicable to the Fund.
ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The Fund expects that the purchase price for Interests acquired
pursuant to the Offer, which will not exceed $50,000,000 (unless the Fund elects
to purchase a greater amount), will be derived from one or more of the following
sources: (i) cash on hand; (ii) the proceeds of the sale of and/or delivery of
securities and portfolio assets held by the Fund; and (iii) 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.
(b) Neither the Fund nor the Board of Managers nor the Adviser has
determined at this time to borrow funds to purchase Interests 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 seek to borrow money to fund all or a portion of the
purchase price for Interests, 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, 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 or new members, or from proceeds of the sale of
securities and portfolio assets held by the Fund.
ITEM 8. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Adviser is entitled under the terms of the LLC Agreement to
receive, subject to certain limitations, an incentive allocation, as specified
in the LLC Agreement and described in the Confidential Memorandum.
(b) Other than the acceptance of subscriptions for Interests as of April 1,
2000 and May 1, 2000, there have been no transactions involving Interests that
were effected during the past 60 business days by the Fund, the Adviser, any
Manager or any person controlling the Fund or the Adviser.
ITEM 9. PERSONS/ASSETS RETAINED, EMPLOYED, COMPENSATED OR USED.
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.
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ITEM 10. FINANCIAL STATEMENTS.
(a) (1) Reference is hereby made to the audited financial statements of the
Fund for the period May 4, 1999 (commencement of operations) through December
31, 1999, which are being furnished herewith and are incorporated herein by
reference, which the Fund has prepared and furnished to members pursuant to Rule
30d-l under the 1940 Act, and filed with the Securities and Exchange Commission
pursuant to Rule 30b2-1 under the 1940 Act.
(2) 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 per share
information.
(3) Not Applicable.
(4) The Fund does not have shares, and consequently does not have book
value per share information.
(b) The Fund's assets will be reduced by the amount of the tendered
Interests that are purchased by the Fund. 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 11. ADDITIONAL INFORMATION.
(a) (1) None.
(2) None.
(3) Not Applicable.
(4) None.
(5) None.
(b) None.
ITEM 12. EXHIBITS.
A. Cover Letter to Offer to Purchase and Letter of Transmittal.
B. Offer to Purchase (with financial statements enclosed).
C. Form of Letter of Transmittal.
D. Form of Notice of Withdrawal of Tender.
E. Forms of Letters to Members in connection with the
Fund's acceptance of tenders of Interests.
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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: Board of Managers
By:/S/ HOWARD M. SINGER
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Name: Howard M. Singer
Title: Manager
May 31, 2000
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EXHIBIT INDEX
EXHIBIT
A Cover Letter to Offer to Purchase and Letter of Transmittal.
B Offer to Purchase (with financial statements enclosed).
C Form of Letter of Transmittal.
D Form of Notice of Withdrawal of Tender.
E Forms of Letters to be dated July 10, 2000 from the Fund to Members in
connection with acceptance of offers of tender.
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EXHIBIT A
Cover Letter to Offer to Purchase and Letter of Transmittal
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[Xanthus Fund, L.L.C. Letterhead]
IF YOU DO NOT WANT TO SELL YOUR LIMITED LIABILITY COMPANY INTERESTS
AT THIS TIME, PLEASE DISREGARD THIS NOTICE.
THIS IS SIMPLY NOTIFICATION OF THE FUND'S TENDER OFFER.
June 2, 2000
Dear Xanthus Fund, L.L.C. Member:
We are writing to inform you of important dates relating to a tender offer
by Xanthus Fund, L.L.C. (the "Fund"). If you are not interested in selling your
limited liability company interests in the Fund ("Interests") at this time,
please disregard this notice and take no action.
The tender offer period will begin on June 2, 2000 and end on June 30,
2000. The purpose of the tender offer is to provide liquidity to members who
hold Interests. Interests may be presented to the Fund for purchase only by
tendering them during one of the Fund's announced tender offers.
Should you wish to tender your Interest or a portion of your Interest for
purchase by the Fund during this tender offer period, please complete and return
the enclosed Letter of Transmittal in the enclosed postage-paid envelope no
later than June 30, 2000. If you do not wish to sell your Interests, simply
disregard this notice. NO ACTION IS REQUIRED IF YOU DO NOT WISH TO SELL ANY
PORTION OF YOUR INTEREST AT THIS TIME.
All tenders of Interests must be received by the Fund's Administrator, PFPC
Inc., either by mail or by fax (if by fax, please deliver an original, executed
copy promptly thereafter) in good order by June 30, 2000.
If you have any questions, please refer to the attached Offer to Purchase
document, which contains additional important information about the tender
offer, or call your Account Executive or Karl Garrett at our Administrator,
(888) 697-9661.
Sincerely,
Xanthus Fund, L.L.C.
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EXHIBIT B
Offer to Purchase (with financial statements enclosed)
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XANTHUS FUND, L.L.C.
One World Financial Center
200 Liberty Street, 31st Floor
New York, New York 10281
OFFER TO PURCHASE $50,000,000 OF OUTSTANDING
INTERESTS AT NET ASSET VALUE
DATED JUNE 2, 2000
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK TIME, ON FRIDAY, JUNE 30, 2000,
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
(which together with the Offer to Purchase constitutes the "Offer") up to
$50,000,000 of interests in the Fund or portions thereof pursuant to tenders by
members at a price equal to their estimated net asset value as of June 30, 2000,
if the Offer expires on June 30, 2000. If the Fund elects to extend the tender
period, for the purpose of determining the purchase price for tendered
Interests, the estimated net asset value of such Interests will be determined at
the close of business on the last business day of the month in which the tender
offer actually expires. (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").
Members should realize that the value of the Interests tendered in this
Offer likely will change between April 30th (the last time net asset value was
calculated) and May 31st (the next time net asset value will be calculated) and
June 30th, when the value of the Interests tendered to the Fund will be
determined for purposes of calculating the purchase price of such Interests.
Members should also note that they remain members in the Fund until the
expiration date of the offer when the net asset value of their Interests is
calculated. Any tendering members that wish to obtain the estimated net asset
value of their Interests should contact PFPC Inc., at the telephone number or
address set forth below, Monday through Friday, except holidays, during normal
business hours of 9:00 a.m. to 5:00 p.m. (Eastern Time).
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<PAGE>
Members desiring to tender all or any portion of their Interest in the Fund
in accordance with the terms of the Offer 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, NOR 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.
BECAUSE EACH MEMBER'S INVESTMENT DECISION IS A PERSONAL ONE, BASED ON ITS
FINANCIAL CIRCUMSTANCES, NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY
RECOMMENDATION ON BEHALF OF THE FUND AS TO WHETHER MEMBERS 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
Fax: (302) 791-3225
(302) 791-2387
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TABLE OF CONTENTS
-----------------
1. Background and Purpose of the Offer......................................20
2. Offer to Purchase and Price..............................................21
3. Amount of Tender.........................................................22
4. Procedure for Tenders....................................................23
5. Withdrawal Rights........................................................24
6. Purchases and Payment....................................................24
7. Certain Conditions of the Offer..........................................25
8. Certain Information About the Fund.......................................26
9. Certain Federal Income Tax Consequences..................................27
10. Miscellaneous............................................................27
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SUMMARY TERM SHEET
o As we said we would in the Fund's offering documents, we will buy your
limited liability company interests ("Interests") at their estimated net
asset value (that is, the estimated value of the Fund's assets minus its
liabilities, multiplied by the proportionate interest in the Fund you
desire to sell). This offer will remain open until midnight New York time,
on June 30, 2000. Estimated net asset value will be calculated for this
purpose on June 30, 2000.
o To make sure we have calculated net asset value correctly, we will check it
during the Fund's audit for calendar year 2000, which we expect will be
completed in February 2001. You may tender your entire Interest, a portion
of your Interest defined as a specific dollar value, or the portion of your
Interest above the required minimum capital account balance. If you tender
your entire interest in the Fund, we will pay you in cash and/or marketable
securities (valued in accordance with the Fund's Limited Liability Company
Agreement dated February 10, 1999) by July 10, 2000, 95% of our calculation
of the estimated net asset value as of June 30, 2000, less any incentive
allocation payable to the investment adviser on June 30, 2000 or if the
offer is extended, on the expiration date of the offer. We will owe you the
balance, for which we will give you a promissory note that will be held in
your brokerage account with CIBC World Markets Corp. ("CIBC WM"). If you
tender only part of your Interest you will 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 your
capital account 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. In the case of a partial tender of
an Interest, we will pay the full estimated net asset value of the portion
of the Interest tendered in cash and/or marketable securities by July 10th.
We reserve the right to purchase less than the amount you tender if the
amount you tender would cause your account in the Fund, to have a value
less than the required minimum balance. We will pay you your proceeds from:
cash on hand, the proceeds of the sale of and/or delivery of portfolio
securities held by the Fund and/or delivery through borrowing if the offer
is extended (which we do not intend to do).
o Following this summary is a formal notice of our offer to purchase your
Interests. Our offer remains open to you until midnight New York time, on
June 30, 2000, the expected expiration date of the offer. Until this time,
you have the right to change your mind and withdraw any tenders of your
Interests. You will also have the right to withdraw the tenders of your
Interests at any time after July 28, 2000, assuming your Interests have not
yet been accepted for purchase by the Fund.
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<PAGE>
o If you would like us to purchase your Interests or a portion of your
Interests, you should mail a Letter of Transmittal, enclosed with our
offer, to PFPC Inc. at P.O. Box 220, Claymont, Delaware 19703, attention
Karl Garrett or fax it to PFPC Inc. at (302) 791-3225 or (302) 791-2387, so
that it is received before midnight, New York time, on June 30, 2000. If
you choose to fax the Letter of Transmittal, you should mail the original
Letter of Transmittal to PFPC Inc. promptly after you fax it (although the
original does not have to be received before midnight, New York time, on
June 30, 2000). Of course, the value of your Interests will change between
May 31st (the last time estimated net asset value was calculated) and June
30th, when the value of your investment will be determined for purposes of
calculating the purchase price for Interests.
o If you would like to obtain the estimated net asset value of your
Interests, which we calculate weekly until the expiration date of the
offer and daily for the last five business days of the offer, you may
contact PFPC Inc., at (888) 697-9661 or at the address listed above, Monday
through Friday, except holidays, during normal business hours of 9:00 a.m.
to 5:00 p.m. (Eastern Time).
o Please note that just as you have the right to withdraw the Interests you
tender, we have the right to cancel, amend or postpone this offer at any
time before midnight, New York time, on June 30, 2000. Also realize that
you remain a member in the Fund until the expiration date of the offer,
when the estimated net asset value of your Interests is calculated.
1. BACKGROUND AND PURPOSE OF THE OFFER. The purpose of the Offer 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. 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
twice in each year, effective each June 30 and December 31. The Fund offered to
purchase Interests from members pursuant to written tenders effective as of
December 31, 1999. That was 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.
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<PAGE>
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
July 1, 2000 and thereafter from time to time.
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 July 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, on the terms and subject to
the conditions of the Offer, purchase up to $50,000,000 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, June 30,
2000 (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, amend or cancel the Offer as described in Sections 3 and 7
below. The purchase price of an Interest tendered will be its estimated 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 April 28, 2000, 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 APRIL 28, 2000
------------ --------------------
May 4, 1999 $269,922.77
June 1, 1999 $346,369.49
July 1, 1999 $339,711.60
August 1, 1999 $337,192.92
September 1, 1999 $249,581.21
October 1, 1999 $245,469.81
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<PAGE>
November 1, 1999 $229,251.73
December 1, 1999 $195,702.72
January 1, 2000 $165,338.67
February 1, 2000 $167,215.99
March 1, 2000 $129,765.98
April 1, 2000 $139,980.10
As of the close of business on April 28, 2000, there was approximately
$358,757,206 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, a portion of their Interest defined as a
specific dollar value or the portion of their Interest above the required
minimum capital account balance, as described below. 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
$50,000,000 (or such greater amount as the Fund may elect to purchase pursuant
to the Offer), the Fund will, on the terms and 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 $50,000,000 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)(3) 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
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<PAGE>
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 aggregate estimated net asset value of tendered Interests.
The Offer may be extended, amended or canceled in various other circumstances
described in Section 7 below.
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, either by mail or
by fax, 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 must 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 the Board of Managers 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.
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 such member's Interests are not accepted by the Fund, at any time after
40 business days from 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 number 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.
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<PAGE>
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 June 30, 2000, 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, June 30, 2000, 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 2000, 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 calendar year 2000. It is anticipated that the audit of the Fund's
calendar year 2000 financial statements will be completed no later than 60 days
after December 31, 2000. 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.
Members who tender a portion of their Interest (subject to maintenance of
the minimum capital account balance described in Item 3, above) will receive
cash and/or marketable securities in an aggregate amount equal to 100% of the
estimated unaudited net asset value of Interests tendered and accepted by the
Fund, determined as of the Expiration Date (the "100% Cash Payment") payable
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.
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<PAGE>
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 at 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 to Purchase which will not exceed $50,000,000, (unless the Fund elects to
purchase a greater amount) 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. Neither the Fund, nor the Board of Managers, nor the Adviser have
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 estimated net asset value of such Interests
will be determined as of a date after June 30, 2000, 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
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
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<PAGE>
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 on July 1, 2000 and
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) any material change in
the present distribution policy or indebtedness or capitalization 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 arrangement with the Adviser; (e) 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); (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.
Other than the acceptance of subscriptions for Interests on April 1, 2000
and May 1, 2000, there have been no transactions involving the Interests that
were effected during the past 60 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. The Adviser of the Fund is entitled
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<PAGE>
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 TO 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,
http://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.
-26-
<PAGE>
ANNEX A
Financial Statements
<PAGE>
XANTHUS FUND, L.L.C.
FINANCIAL STATEMENTS
PERIOD FROM MAY 4, 1999
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1999
ERNST & YOUNG LLP
<PAGE>
XANTHUS FUND, L.L.C.
FINANCIAL STATEMENTS
PERIOD FROM MAY 4, 1999
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1999
CONTENTS
Report of Independent Auditors.............................................. 1
Statement of Assets, Liabilities and Member's Capital....................... 2
Statement of Operations..................................................... 3
Statement of Changes in Members' Capital - Net Assets....................... 4
Statement of Cash Flows..................................................... 5
Notes to Financial Statements............................................... 6
Schedule of Portfolio Investments........................................... 13
Schedule of Securities Sold, Not Yet Purchased.............................. 19
<PAGE>
*ERNST & YOUNG LLP *Phone (212) 773-3000
787 Seventh Avenue www.ey.com
New York, New York 10019
Report of Independent Auditors
To the Members of
Xanthus Fund, L.L.C.
We have audited the accompanying statement of assets, liabilities and members'
capital of Xanthus Fund, L.L.C. (the "Company"), including the schedules of
portfolio investments and securities sold, not yet purchased as of December 31,
1999, and the related statements of operations and changes in members'
capital--net assets for the period from May 4, 1999 (commencement of operations)
to December 31, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1999, by
correspondence with the custodian and broker. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Xanthus Fund, L.L.C. at
December 31, 1999, and the results of its operations, and changes in its
members' capital--net assets for the period from May 4, 1999 to December 31,
1999, in conformity with accounting principles generally accepted in the United
States.
February 11, 2000 /s/: Ernest & Young LLP
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
STATEMENT OF ASSETS, LIABILITIES AND MEMBERS' CAPITAL (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------------
<S> <C>
DECEMBER 31, 1999
ASSETS
Cash $ 6,415
Investments in securities, at market (cost - $155,402) 231,545
Due from broker 37,257
Interest receivable 153
Dividends receivable 8
Other assets 95
----------
TOTAL ASSETS 275,473
----------
LIABILITIES
Securities sold, not yet purchased, at market (proceeds - $27,321) 28,432
Withdrawals payable 3,179
Dividends payable on securities sold, not yet purchased 9
Syndication fees payable 17
Loan payable 55,479
Loan interest payable 270
Payable to affiliate 170
Management fee payable 127
Accrued expenses 115
----------
TOTAL LIABILITIES 87,798
----------
NET ASSETS $ 187,675
==========
MEMBERS' CAPITAL
Represented by:
Capital contributions - (net of syndication costs of $50) $ 114,973
Capital withdrawals (3,179)
Accumulated net investment loss (1,686)
Accumulated net realized gain on investments 2,535
Accumulated net unrealized appreciation on investments 75,032
----------
MEMBERS' CAPITAL - NET ASSETS $ 187,675
==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
STATEMENT OF OPERATIONS (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------------
<S> <C>
PERIOD FROM MAY 4, 1999
COMMENCEMENT OF OPERATIONS
TO DECEMBER 31, 1999
INVESTMENT INCOME
Interest $ 454
Dividends 76
----------
530
----------
EXPENSES
OPERATING EXPENSES:
Administration fee 605
Organizational expenses 177
Professional fees 147
Accounting and investor services fee 132
Insurance expense 75
Custodian fees 36
Board of Managers' fees and expenses 27
Miscellaneous 18
----------
TOTAL OPERATING EXPENSES 1,217
Interest expense 964
Dividends on securities sold, not yet purchased 35
----------
TOTAL EXPENSES 2,216
----------
NET INVESTMENT LOSS (1,686)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN (LOSS) ON INVESTMENTS:
Investment Securities 33,074
Purchased options (21,195)
Securities sold, not yet purchased (9,344)
----------
NET REALIZED GAIN ON INVESTMENTS 2,535
NET CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS 75,032
----------
NET REALIZED AND UNREALIZED GAIN 77,567
----------
INCREASE IN MEMBERS' CAPITAL DERIVED FROM INVESTMENT ACTIVITIES
$ 75,881
==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' CAPITAL - NET ASSETS (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------------
<S> <C>
PERIOD FROM MAY 4, 1999
COMMENCEMENT OF OPERATIONS
TO DECEMBER 31, 1999
FROM INVESTMENT ACTIVITIES
Net investment loss $ (1,686)
Net realized gain on investments 2,535
Net change in unrealized appreciation on investments 75,032
INCREASE IN MEMBERS' CAPITAL DERIVED
FROM INVESTMENT ACTIVITIES 75,881
----------
MEMBERS' CAPITAL TRANSACTIONS
Capital contributions 115,023
Capital withdrawals (3,179)
Syndication costs (50)
INCREASE IN MEMBERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS 111,794
MEMBERS' CAPITAL AT BEGINNING OF PERIOD -
---------
MEMBERS' CAPITAL AT END OF PERIOD $ 187,675
==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS (IN THOUSANDS)
-----------------------------------------------------------------------------------------------------------
<S> <C>
PERIOD FROM MAY 4, 1999
COMMENCEMENT OF OPERATIONS
TO DECEMBER 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Increase in Members' capital derived from investment activities $ 75,881
Adjustments to reconcile net increase in Members' capital derived
from investment activities to net cash used in operating activities:
Increase in due from broker (37,257)
Increase in investments in securities (155,402)
Increase in dividends receivable (8)
Increase in interest receivable (153)
Increase in other assets (95)
Increase in securities sold, not yet purchased 27,321
Increase in withdrawals payable 3,179
Increase in dividends payable on securities sold,
not yet purchased 9
Increase in syndication fees payable 17
Increase in payable to affiliate 170
Increase in management fee payable 127
Increase in accrued expenses 115
Net increase in unrealized gains (75,032)
----------
NET CASH USED IN OPERATING ACTIVITIES (161,128)
CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions - (net of syndication costs of $50) 114,973
Capital withdrawals (3,179)
----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 111,794
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in loan payable 55,479
Increase in loan interest payable 270
----------
NET CASH PROVIDED BY INVESTING ACTIVITIES 55,749
NET CHANGE IN CASH 6,415
Cash at beginning of period -
----------
Cash at end of period $ 6,415
==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE PERIOD FOR INTEREST $ 694
==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-5-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999
--------------------------------------------------------------------------------
1. ORGANIZATION
Xanthus Fund, L.L.C. (the "Company") was organized as a limited liability
company under the laws of Delaware in January 1999. The Company is
registered under the Investment Company Act of 1940 (the "Act") as a
closed-end, non-diversified management investment company. The Company's
term is perpetual unless the Company is otherwise terminated under the
terms of the Limited Liability Company Agreement dated as of February 10,
1999. The Company'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 Company'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.
Responsibility for the overall management and supervision of the operations
of the Company is vested in the individuals who serve as the Board of
Managers of the Company ("Board of Managers"). There are four members of
the "Board of Managers" and an "Adviser." CIBC Oppenheimer Advisors, L.L.C.
(the "Adviser"), a Delaware limited liability company, serves as the
investment adviser to the Company and is responsible for managing the
Company's investment activities pursuant to an investment advisory
agreement. CIBC World Markets Corp. ("CIBC WM") (formerly CIBC Oppenheimer
Corp.) is the managing member and controlling person of the Adviser.
The acceptance of initial and additional capital contributions from Members
is subject to approval by the Board of Managers. The Company 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 generally it will recommend to the
Board of Managers that the Company 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 Company's financial statements are reasonable and prudent;
however, actual results could differ from these estimates.
-6-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION
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 sold 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 sold
short) as reported by such exchange. Listed options will be valued at their
bid prices (or asked prices in the case of listed options sold 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 sold 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 Company is determined. When such
events materially affect the values of
-7-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999
--------------------------------------------------------------------------------
securities held by the Company 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.
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 Company have been made. The Members are individually liable
for their share of the Company's income.
3. ADMINISTRATION FEE, RELATED PARTY TRANSACTIONS AND OTHER
CIBC WM provides certain administrative services to the Company including,
among other things, providing office space and other support services. In
exchange for such services, the Company pays CIBC WM a monthly
administration fee of .08333% (1% on an annualized basis) of the Company's
net assets determined as of the beginning of the month.
Payable to affiliate represents insurance premiums paid in the amount of
$170,060 paid on behalf of the Company by CIBC WM.
During the period ended December 31, 1999, CIBC WM earned $2,173 in
brokerage commissions from portfolio transactions executed on behalf of the
Company.
The Adviser will serve as the Special Advisory Member of the Company. 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. During the period ended
December 31, 1999, the Incentive Allocation to the Adviser was $15,166,237.
Each member of the Board of Managers ("Manager") who is not an "interested
person" of the Company, as defined by the Act, receives an annual retainer
of $5,000 plus a fee for each meeting attended. Currently, no Manager is an
"interested person" of the Company. All Managers are reimbursed by the
Company for all reasonable out-of-pocket expenses incurred by them in
performing their duties. For the period ended December 31, 1999, fees
(including meeting fees and a pro-rata annual retainer) and expense paid to
the Managers totaled $26,538.
The Chase Manhattan Bank Serves as custodian of the Company's assets.
-8-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999
--------------------------------------------------------------------------------
PFPC Inc. serves as Investor Services and Accounting Agent to the Company,
and, in that capacity, provides certain accounting, recordkeeping, tax and
investor related services.
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 December 31, 1999, amounted to $279,496,788 and
$166,931,380, respectively.
At December 31, 1999, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes. At December 31, 1999, accumulated net unrealized appreciation on
investments was $75,031,693, consisting of $77,773,105 gross unrealized
appreciation and $2,741,412 gross unrealized depreciation.
Due from broker represents receivables and payables from unsettled security
trades and proceeds from securities sold, not yet purchased.
5. SHORT-TERM BORROWINGS
The Company 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 Company to satisfy an
asset coverage requirement of 300% of its indebtedness, including amounts
borrowed, measured at the time the Company incurs the indebtedness. The
Company pays interest on outstanding margin borrowings at an annualized
rate of LIBOR plus 0.875%. The Company pledges securities as collateral for
the margin borrowings, which are maintained in a segregated account held by
the Custodian. As of December 31, 1999, the Company had outstanding margin
borrowings of $55,479,476. For the period ended December 31, 1999, the
average daily amount of such borrowings was $21,427,015.
-9-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999
--------------------------------------------------------------------------------
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR CONCENTRATIONS OF
CREDIT RISK
In the normal course of business, the Company 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 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.
The Company maintains cash in bank deposit accounts, which at times may
exceed federally insured limits. The Company 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 Company 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 Company'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 Company pays a
premium whether or not the option is exercised. Additionally, the Company
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:
PUT OPTIONS
-----------
NUMBER
OF CONTRACTS COST
------------ ------------
Beginning balance - $ -
Options purchased 4,635 38,442,578
Options closed (2,553) (25,454,619)
Options split 86 -
Options expired (1,738) (3,225,669)
------ ------------
Options outstanding at
December 31, 1999 430 $ 9,762,290
====== ============
There were no transactions in written options during the period ended
December 31, 1999.
-10-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999
--------------------------------------------------------------------------------
7. FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
The Company 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/(LOSSES)
FOR THE PERIOD ENDED
DECEMBER 31, 1999
--------------------
Equity securities $ 98,691,002
Equity options (1,388,402)
Equity index options (19,735,205)
------------
$ 77,567,395
============
The following table presents the market values of derivative financial
instruments and the average market values of those instruments:
AVERAGE MARKET VALUE
MARKET VALUE AT FOR THE PERIOD ENDED
DECEMBER 31, 1999 DECEMBER 31, 1999
----------------- -----------------
ASSETS:
Equity options $ - $ 192,811
Equity Index options 9,833,025 4,641,871
Average market values presented above are based upon month-end market
values during the period ended December 31, 1999.
-11-
<PAGE>
XANTHUS FUND, L.L.C.
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 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
DECEMBER 31, 1999
-----------------
Ratio of net investment loss to average net assets (2.67%)*
Ratio of operating expenses to average net assets 1.92%*
Ratio of interest expenses to average net assets 1.52%
Ratio of dividends on securities sold, not yet
purchased to average net assets 0.06%*
Portfolio turnover 143.30%
Total return** 79.07%
Average debt ratio 22.46%
* Annualized.
** Total return assumes a purchase of an interest in the Company 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. SUBSEQUENT EVENT
On January 1, 2000 the Company received initial and additional capital
contributions from Members of approximately $56,010,000.
-12-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
SHARES MARKET VALUE
COMMON STOCK - 118.14%
APPLICATIONS SOFTWARE - 1.94%
1,000 Intertrust Technologies Corp.* $ 117,625
58,656 Intuit, Inc.* 3,515,723
-----------
3,633,348
-----------
BROADCASTING SERVICES/PROGRAMMING - 2.85%
94,000 AT&T Corp. - Liberty Media Group, Class A* 5,340,422
-----------
CABLE TV - 0.63%
23,500 Comcast Corp., Special Class A* 1,188,230
-----------
CELLULAR TELECOMMUNICATIONS - 2.76%
30,796 Nextel Communications, Inc., Class A* (a) 3,175,838
14,100 VoiceStream Wireless Corp.* 2,006,606
-----------
5,182,444
-----------
CIRCUITS - 3.61%
72,800 Analog Devices, Inc.* (a) 6,770,400
-----------
COMMERCIAL SERVICES - 0.02%
1,000 Wireless Facilities, Inc.* 43,625
-----------
COMPUTER SERVICES - 1.09%
30,684 Electronic Data Systems Corp. (a) 2,053,926
-----------
COMPUTER SOFTWARE - 8.37%
14,100 Business Objects SA, Sponsored ADR* 1,884,112
39,300 Computer Associates International, Inc. (a) 2,748,563
645 Micromuse, Inc.* 109,650
64,852 Microsoft Corp.* (a) 7,571,471
5,000 Mission Critical Software, Inc.* 350,000
1,000 NetIQ Corp.* 52,063
66,500 Parametric Technology Corp.* (a) 1,799,690
1,000 VA Linux Systems, Inc.* 206,625
27,000 Wind River Systems, Inc.* 988,875
-----------
5,711,049
-----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
SHARES MARKET VALUE
COMMON STOCK - (CONTINUED)
COMPUTERS - INTEGRATED SYSTEMS - 1.11%
11,700 Redback Networks, Inc.* $ 2,076,750
-----------
COMPUTERS - MEMORY DEVICES - 5.75%
36,372 EMC Corp.* 3,973,641
1,290 SanDisk Corp.* 124,162
58,176 Seagate Technology, Inc.* (a) 2,708,849
27,860 VERITAS Software Corp.* (a) 3,987,463
-----------
10,794,115
-----------
COMPUTERS - MICRO - 5.08%
59,702 Dell Computer Corp.* (a) 3,044,802
1 Hewlett-Packard Co. 114
83,784 Sun Microsystems, Inc.* (a) 6,488,065
-----------
9,532,981
-----------
CONSULTING SERVICES - 0.93%
47,000 Comdisco, Inc. 1,750,750
-----------
DISTRIBUTION - WHOLESALE - 0.06%
4,316 Tech Data Corp.* 117,071
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - 3.23%
47,000 Corning, Inc. (a) 6,060,086
-----------
ELECTRONIC COMPONENTS - MISCELLANEOUS - 1.27%
24,966 Solectron Corp.* (a) 2,374,891
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - 22.68%
25,494 Applied Materials, Inc.* 3,229,784
8,600 ASM International, N.V.* 197,800
56,400 Atmel Corp.* (a) 1,667,353
17,150 Broadcom Corp., Class A* (a) 4,671,231
56,852 Conexant Systems, Inc.* (a) 3,773,552
The accompanying notes are an integral part of these financial statements.
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
SHARES MARKET VALUE
COMMON STOCK - (CONTINUED)
ELECTRONIC COMPONENTS
-SEMICONDUCTORS (CONTINUED)
13,700 Cree Research, Inc.* $ 1,169,637
14,100 EMCORE Corp.* 479,400
61,630 Intel Corp. (a) 5,072,950
38,052 Micron Technology, Inc. 2,958,543
14,100 Novellus Systems, Inc. 1,727,687
17,200 SDL, Inc.* (a) 3,749,600
8,600 Silicon Valley Group, Inc.* 152,650
24,712 STMicroelectronics, N.V. (a) 3,742,336
37,750 Texas Instruments, Inc. (a) 3,647,594
25,420 TriQuint Semiconductor, Inc.* 2,827,975
77,168 Xilinx, Inc.* (a) 3,508,752
-----------
42,576,844
-----------
ENTERPRISE SOFTWARE/SERVICES - 8.20%
39,000 BEA Systems, Inc.* 2,727,582
22,700 Compuware Corp.* 845,575
16,500 i2 Technologies, Inc.* (a) 3,217,500
65,408 Oracle Corp.* (a) 7,329,817
59,500 PeopleSoft, Inc.* 1,268,123
-----------
15,388,597
-----------
ENTERTAINMENT SOFTWARE - 1.59%
35,568 Electronic Arts, Inc.* (a) 2,987,712
-----------
FIBER OPTICS - 4.90%
32,900 Harmonic, Inc.* (a) 3,123,460
24,520 JDS Uniphase Corp.* (a) 3,955,395
17,600 Ortel Corp.* (a) 2,112,000
-----------
9,190,855
-----------
INSURANCE BROKERS - 0.03%
2,500 InsWeb Corp.* 63,908
-----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
SHARES MARKET VALUE
COMMON STOCK - (CONTINUED)
INTERNET CONTENT - 7.22%
11,000 CMGI, Inc.* (a) $ 3,045,625
23,500 Critical Path, Inc.* 2,217,813
2,000 Digital Insight Corp.* 72,750
9,400 DoubleClick, Inc.* 2,378,787
860 S1 Corp.* 67,188
13,326 Yahoo!, Inc.* (a) 5,766,000
-----------
13,548,163
-----------
INTERNET SOFTWARE - 10.75%
1,000 AGENCY.COM, Inc., Ltd.* 51,000
22,300 Allaire Corp.* (a) 3,262,780
1,000 Alteon Websystems, Inc.* 87,750
64,992 America Online, Inc.* (a) 4,931,268
14,060 ARt Technology Group, Inc.* 1,801,438
18,992 At Home Corp., Series A* (a) 814,282
15,200 BroadVision, Inc.* (a) 2,584,958
860 Commtouch Software, Ltd.* 41,764
7,099 Digital Island, Inc.* 675,292
1,000 Engage Technologies, Inc.* 60,000
15,600 Inktomi Corp.* (a) 1,384,500
7,000 Liberate Technologies, Inc.* 1,799,000
1,500 Retek, Inc.* 112,875
535 U.S. Interactive, Inc.* 23,005
15,600 Vignette Corp.* (a) 2,542,800
-----------
20,172,712
-----------
NETWORKING PRODUCTS - 5.25%
17,846 3Com Corp.* 838,762
63,530 Cisco Systems, Inc.* (a) 6,805,651
26,500 Network Appliance, Inc.* (a) 2,201,170
-----------
9,845,583
-----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
SHARES MARKET VALUE
COMMON STOCK - (CONTINUED)
RETAIL - INTERNET - 0.70%
16,652 Amazon.com, Inc.* $ 1,267,633
2,500 Webvan Group, Inc.* 41,250
-----------
1,308,883
-----------
SATELLITE TELECOMMUNICATIONS - 2.16%
24,454 Gilat Satellite Networks, Ltd.* 2,903,913
47,000 Loral Space & Communications, Ltd.* 1,142,711
-----------
4,046,624
-----------
TELECOMMUNICATIONS EQUIPMENT - 11.39%
31,650 ADC Telecommunications, Inc.* 2,296,619
27,945 Lucent Technologies, Inc. 2,095,875
28,200 Nokia Oyj, Sponsored ADR (a) 5,387,976
50,684 Nortel Networks Corp. (a) 5,119,084
16,400 QUALCOMM, Inc.* 2,888,450
56,016 Tellabs, Inc.* (a) 3,595,555
-----------
21,383,559
-----------
TELECOMMUNICATIONS SERVICES - 1.29%
12,390 Illuminet Holdings, Inc.* 681,450
24,400 Inet Technologies, Inc.* (a) 1,704,950
1,208 Pac-West Telecomm, Inc.* 32,012
-----------
2,418,412
-----------
WIRELESS EQUIPMENT - 3.28%
41,766 Motorola, Inc. (a) 6,150,044
-----------
TOTAL COMMON STOCK (COST $145,639,564) 221,711,984
===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
NUMBER OF DECEMBER 31, 1999
CONTRACTS MARKET VALUE
PUT OPTIONS - 5.24%
INDEX - 5.24%
172 Nasdaq-100 Index, 3/18/00, $3,580.00 $ 3,682,950
258 Nasdaq-100 Index, 3/18/00, $3,640.00 6,150,075
--------------
9,833,025
--------------
TOTAL PUT OPTIONS (COST $9,762,290) 9,833,025
==============
TOTAL INVESTMENTS (COST $155,401,854) - 123.38% 231,545,009
OTHER ASSETS, LESS LIABILITIES - (23.38%) (43,870,186)
--------------
NET ASSETS - 100.00% $ 187,674,823
--------------
(a) Partially or wholly-held in a pledged account by the Custodian as
collateral for securities sold, not yet purchased and loan payable.
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
MARKET VALUE
SHARES
SECURITIES SOLD, NOT YET PURCHASED - (15.15%)
AEROSPACE/DEFENSE - (0.70%)
13,050 Boeing Co. $ (540,766)
13,300 Honeywell International, Inc. (767,250)
-------------
(1,308,016)
-------------
AEROSPACE/DEFENSE-EQUIPMENT - (0.77%)
13,300 General Dynamics Corp. (701,575)
11,300 United Technologies Corp. (734,500)
-------------
(1,436,075)
-------------
APPLICATIONS SOFTWARE - (0.24%)
8,600 Keane, Inc. (276,275)
7,095 Policy Management Systems Corp. (181,369)
2 Siebel Systems, Inc. (168)
-------------
(457,812)
-------------
COMMERCIAL SERVICES - FINANCES - (0.52%)
15,552 Equifax, Inc. (366,452)
15,252 Paychex, Inc. (610,080)
-------------
(976,532)
-------------
COMPUTER GRAPHICS - (0.04%)
7,899 3Dfx Interactive, Inc. (77,513)
1 Visio Corp. (47)
-------------
(77,560)
-------------
COMPUTER SERVICES - (0.49%)
16,788 Ceridian Corp. (361,999)
2 Sapient Corp. (282)
17,600 Unisys Corp. (562,109)
-------------
(924,390)
-------------
COMPUTER SOFTWARE - (0.22%)
14,461 Transaction Systems Architects, Inc., Class A (404,908)
-------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
MARKET VALUE
SHARES
SECURITIES SOLD, NOT YET PURCHASED - (CONTINUED)
COMPUTERS - MICRO - (0.76%)
13,300 International Business Machines Corp. $(1,434,737)
-----------
CONSULTING SERVICES - (0.28%)
11,700 USWeb Corp. (519,925)
-----------
DATA PROCESSING/MANAGEMENT - (0.57%)
10,716 Fiserv, Inc. (410,562)
13,300 LHS Group, Inc. (326,688)
10,016 Sterling Commerce, Inc. (340,544)
-----------
(1,077,794)
-----------
DISTRIBUTION - WHOLESALE - (0.10%)
6,102 Ingram Micro, Inc., Class A (80,089)
4,316 Tech Data Corp. (117,071)
-----------
(197,160)
-----------
DIVERSIFIED MANUFACTURING OPERATIONS - (0.14%)
8,600 Teleflex, Inc. (269,292)
ELECTRIC PRODUCTS - MISCELLANEOUS - (0.41%)
13,300 Emerson Electric Co. (763,087)
-----------
ELECTRONIC COMPONENTS - MISCELLANEOUS - (0.62%)
13,145 Kent Electronics, Inc. (299,049)
6,450 Koninklijke (Royal) Philips Electronics, N.V. (870,750)
-----------
(1,169,799)
-----------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - (0.42%)
5,430 Dallas Semiconductor Corp. (349,898)
9,400 Lattice Semiconductor Corp. (442,975)
-----------
(792,873)
-----------
ELECTRONICS PARTS DISTRIBUTION - (0.45%)
13,932 Avnet, Inc. (842,886)
-----------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
MARKET VALUE
SHARES
SECURITIES SOLD NOT, YET PURCHASED - (CONTINUED)
HEALTHCARE COST CONTAINMENT - (0.38%)
8,530 Medical Manager Corp. $ (718,653)
------------
INTERNET CONTENT - (0.02%)
903 MarketWatch.com, Inc. (32,960)
430 Women.com Networks, Inc. (6,128)
------------
(39,088)
------------
INTERNET SOFTWARE - (0.34%)
11,700 NorthPoint Communications Group, Inc. (280,800)
11,300 Rhythms NetConnections, Inc. (350,300)
------------
(631,100)
------------
MEDICAL - DRUGS - (0.25%)
11,150 Schering-Plough Corp. (472,481)
------------
MEDICAL - GENERIC DRUGS - (0.22%)
11,300 Watson Pharmaceuticals, Inc. (404,687)
------------
MEDICAL - WHOLESALE DRUG DISTRIBUTION - (0.36%)
14,216 Cardinal Health, Inc. (680,591)
------------
MEDICAL INFORMATION SYSTEMS - (0.42%)
15,623 Shared Medical Systems Corp. (795,804)
------------
MEDICAL INSTRUMENTS - (0.56%)
10,900 Guidant Corp. (512,300)
17,400 St. Jude Medical, Inc. (533,971)
------------
(1,046,271)
------------
MEDICAL LASER SYSTEMS - (0.09%)
3,280 VISX, Inc. (169,740)
------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-21-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
MARKET VALUE
SHARES
SECURITIES SOLD, NOT YET PURCHASED - (CONTINUED)
MEDICAL PRODUCTS - (1.37%)
13,050 Baxter International, Inc. $ (819,710)
18,800 Johnson & Johnson (1,753,100)
-------------
(2,572,810)
-------------
MULTIMEDIA - (0.45%)
13,100 CBS Corp. (837,588)
-------------
OFFICE AUTOMATION & EQUIPMENT - (0.41%)
13,330 Pitney Bowes, Inc. (644,012)
5,388 Xerox Corp. (122,243)
-------------
(766,255)
-------------
PHOTO EQUIPMENT & SUPPLIES - (0.33%)
9,400 Eastman Kodak Co. (622,750)
-------------
PRINTERS & RELATED PRODUCTS - (0.41%)
8,400 Lexmark International Group, Inc., Class A (760,200)
PRINTING - COMMERCIAL - (0.27%)
20,400 R.R. Donnelley & Sons Co. (506,185)
-------------
RETAIL - CONSUMER ELECTRONICS - (0.91%)
13,250 Best Buy Co., Inc. (665,813)
13,450 Circuit City Stores - Circuit city Group (606,097)
8,750 Tandy Corp. (430,395)
-------------
(1,702,305)
-------------
RETAIL OFFICE SUPPLIES - (0.14%)
13,000 Staples, Inc. (269,750)
------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
-22-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (CONTINUED)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DECEMBER 31, 1999
MARKET VALUE
SHARES
SECURITIES SOLD, NOT YET PURCHASED - (CONTINUED)
TELECOMMUNICATIONS EQUIPMENT - (0.82%)
3,559 Lucent Technologies, Inc. $ (819,710)
13,766 Plantronics, Inc. (985,136)
4,302 Telefonaktiebolaget LM Ericsson, Sponsored ADR (282,590)
-------------
(1,534,626)
-------------
TELEPHONE - INTEGRATED - (0.49%)
13,150 CenturyTel, Inc. (622,981)
4,100 Deutsche Telekom AG, Sponsored ADR (291,100)
-------------
(914,081)
-------------
TRAVEL SERVICES - (0.18%)
11,100 Galileo International, Inc. (334,388)
-------------
SECURITIES SOLD, NOT YET PURCHASED (PROCEEDS
$27,320,737) $ (28,432,199)
=============
The accompanying notes are an integral part of these financial statements.
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
XANTHUS FUND, L.L.C.
CLOSING NET OF CONTRIBUTION
ENTITY DATE 4/30/00 VALUE INCENTIVE PARTNER ID AMOUNT
--------------- -------------- ------------------ ---------------- --------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Wynstone 11/01/1998 138,239.91 138,239.91 W00416 150,000.00
12/01/1998 141,821.97 141,821.97 W00957 1,000,000.00
01/01/1999 140,205.63 140,205.63 W00505 150,000.00
02/01/1999 143,642.13 143,642.13 W00491 150,000.00
03/01/1999 144,069.79 144,069.79 W01153 150,000.00
05/01/1999 133,954.15 133,954.15 W01509 150,000.00
07/01/1999 132,019.95 132,019.95 W01189 200,000.00
08/01/1999 136,383.23 136,383.23 use W01509 subtract
out 6/99 and 7/99 earnings
09/01/1999 144,881.57 144,881.57 use W01509 subtract out
6/99, 7/99 and 8/99 earnings
10/01/1999 147,056.26 147,056.26 use W01509 subtract out
6/99, 7/99, 8/99 and 9/99
earnings
11/01/1999 137,859.37 137,859.37 use W001509 subtract out
6/99, 7/99, 8,99, 9/99 and
10/99 earnings
12/01/1999 142,486.63 142,486.63 use W001509 subtract out
6/99, 7/99,8,99 9/99, 10/99
and 11/99 earnings
01/01/2000 148,498.61 148,498.61 W00587 150,000.00
02/01/2000 149,150.77 149,150.77 use W00587 subtract out 1/00
earnings
03/01/2000 162,387.45 159,909.96 use W00587 subtract out 1/00
and 2/00 earnings
04/01/2000 148,725.02 148,725.02 W01603 200,000.00
Xanthus 05/04/1999 276,183.09 269,922.77 XA0081 150,000.00
06/01/1999 352,637.28 346,369.49 XA0441 150,000.00
07/01/1999 339,979.39 333,711.60 use XA0441 subtract out June
99 earnings
08/01/1999 343,460.71 337,192.92 use XA0441 subtract out 6/99
and 7/99 earnings
09/01/1999 255,369.82 249,581.21 XA2703 150,000.00
10/01/1999 251,163.04 245,469.81 XA2685 150,000.00
11/01/1999 234,568.63 229,251.73 XA2977 150,000.00
12/01/1999 200,241.65 195,702.72 XA3211 150,000.00
01/01/2000 169,173.34 165,338.67 XA5105 150,000.00
02/01/2000 171,519.99 167,215.99 XA4958 150,000.00
03/01/2000 129,765.98 129,765.98 XA6046 150,000.00
04/01/2000 139,980.10 139,980.10 XA6639 150,000.00
</TABLE>
-24-
<PAGE>
EXHIBIT C
LETTER OF TRANSMITTAL
Regarding
Interests
in
XANTHUS FUND, L.L.C.
Tendered Pursuant to the Offer to Purchase
Dated June 2, 2000
--------------------------------------------------------------
| 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, JUNE 30, 2000, 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
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
(hereinafter the "Interest" or "Interests" as the context requires) 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 June 2, 2000
("Offer
C-1
<PAGE>
to Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"). THE TENDER AND THIS LETTER
OF TRANSMITTAL ARE SUBJECT TO ALL THE TERMS AND CONDITIONS SET FORTH IN 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 Interest or portion thereof
tendered hereby pursuant to the Offer. The undersigned hereby warrants that the
undersigned has full authority to sell the Interest 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 Interests in the
Fund or portions thereof tendered hereby.
Payment of the purchase price for the Interest or portion thereof tendered
by the undersigned will be made by wire transfer of the funds to the
undersigned's brokerage account at CIBC World Markets Corp. ("CIBC WM"), as
described in Section 6 of the Offer. The undersigned hereby represents and
warrants that the undersigned understands that upon a withdrawal of such cash
payment from such account, CIBC WM may 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, if the
undersigned has a CIBC WM account. (Any contingent payment of cash 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 cash from such account, CIBC
WM may 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 purchase price for Interests will be based on the unaudited estimated net
asset value of the Fund as of June 30, 2000, 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 calendar year 2000, which is
anticipated to be completed not later than 60 days after December 31, 2000, the
Fund's fiscal year end, and will be paid 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
C-2
<PAGE>
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.
PLEASE FAX OR MAIL IN THE ENCLOSED POSTAGE PAID ENVELOPE TO:
PFPC INC., P.O. BOX 220, CLAYMONT, DE 19703, ATTN: KARL GARRETT
FOR ADDITIONAL INFORMATION: PHONE: (888) 697-9661 FAX: (302) 791-3225 OR
(302) 791-2387
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 BEING TENDERED:
[ ] Entire limited liability company interest.
[ ] Portion of limited liability company interest expressed as a specific
dollar value. (A minimum interest with a value greater than: (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 and agrees 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 may
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 the undersigned's brokerage account, upon a
withdrawal of such cash payment from such account, CIBC WM may impose
such fees as it would customarily assess upon the withdrawal of cash
from such
C-3
<PAGE>
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, if the undersigned has a
CIBC WM account. The undersigned hereby represents and warrants that
the undersigned understands that any contingent payment of cash due
pursuant to the Note will also be deposited directly to the
undersigned's brokerage account at CIBC WM, and, upon a withdrawal of
such cash from such account, CIBC WM may impose such fees as it would
customarily assess upon the withdrawal of cash from such brokerage
account.
C-4
<PAGE>
<TABLE>
<CAPTION>
PART 4. SIGNATURE(S).
--------------------------------------------- --------------------------------------------
<S> <C>
FOR INDIVIDUAL INVESTORS FOR OTHER INVESTORS:
AND JOINT TENANTS:
------------------------------------ ------------------------------------
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
--------------------------------------------- --------------------------------------------
Date:_______________________________
</TABLE>
C-5
<PAGE>
EXHIBIT D
Form of Notice of Withdrawal of Tender
(To be provided only to members who call and request the form.)
<PAGE>
EXHIBIT D
NOTICE OF WITHDRAWAL OF TENDER
Regarding Interests in
XANTHUS FUND, L.L.C.
Tendered Pursuant to the Offer to Purchase
Dated June 2, 2000
--------------------------------------------------------------
| 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, JUNE 30, 2000, 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
Fax: (302) 791-3225
(302) 791-2387
Ladies and Gentlemen:
The undersigned wishes to withdraw the tender of its limited liability
company interest in Xanthus Fund, L.L.C. (the "Fund"), or the tender of a
portion of such interests, for purchase by the Fund that previously was
submitted by the undersigned in a Letter of Transmittal dated
_____________________.
D-1
<PAGE>
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.
The undersigned recognizes that upon the submission on a timely basis of
this Notice of Withdrawal of Tender, properly executed, the interest in the Fund
(or portion of such interest) previously tendered will not be purchased by the
Fund upon expiration of the tender offer described above.
<TABLE>
<CAPTION>
SIGNATURE(S).
----------------------------------------------- ---------------------------------------------
<S> <C>
FOR INDIVIDUAL INVESTORS FOR OTHER INVESTORS:
AND JOINT TENANTS:
------------------------------------ ------------------------------------
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
----------------------------------------------- ---------------------------------------------
Date:_______________________________
</TABLE>
D-2
<PAGE>
EXHIBIT E
Forms of Letters from the Fund
to members in connection with acceptance of offers of tender
THIS LETTER IS BEING SENT TO YOU IF YOU TENDERED YOUR ENTIRE INTEREST IN THE
FUND.
July 10, 2000
Dear Member:
Xanthus Fund, L.L.C. (the "Fund") has received and accepted for purchase
your tender of a limited liability company interest in the Fund. Enclosed is a
statement showing the breakdown of your capital withdrawal resulting from the
purchase of your interest in the Fund and the manner in which payment of the
purchase price is being distributed, in accordance with the term of the tender
offer.
Because you have tendered and the Fund has purchased your entire
investment, you have been paid 95% of the estimated purchase price based on the
unaudited net asset value of the Fund as of June 30, 2000, in accordance with
the terms of the tender offer. A cash payment in this amount has been wired
directly into your CIBC WM brokerage account.
The balance of the purchase price will be paid to you after the completion
of the Fund's 2000 year-end audit and is subject to year-end audit adjustment.
This amount, together with interest, will be paid within ten days after the
conclusion of the year-end audit, or on such earlier date as the Fund's Board of
Managers may determine, according to the terms of the tender offer. We expect
the audit to be completed by the end of February 2001.
Should you have any questions, please feel free to contact the Fund's
Administrator, PFPC Inc., at (888) 697-9661.
Sincerely,
Xanthus Fund, L.L.C.
Enclosure
E-1
<PAGE>
THIS LETTER IS BEING SENT TO YOU IF YOU TENDERED A PORTION OF YOUR INTEREST IN
THE FUND.
July 10, 2000
Dear Member:
Xanthus Fund, L.L.C. (the "Fund") has received and accepted for purchase
your tender of a portion of your limited liability company interest in the Fund.
Enclosed is a statement showing the breakdown of your capital withdrawal
resulting from the purchase of a portion of your interest.
Since you have tendered only a portion of your investment, you have been
paid 100% of the amount requested in cash, provided that your account retains
the required minimum balance, in accordance with the terms of the tender offer.
The funds were wired directly into your CIBC WM brokerage account. You remain a
member of the Fund with respect to the portion of your interest in the Fund that
you did not tender.
Should you have any questions, please feel free to contact the Fund's
Administrator, PFPC Inc., at (888) 697-9661.
Sincerely,
Xanthus Fund, L.L.C.
Enclosure
E-2
