As filed with the Securities and Exchange Commission on May 9, 2000
Investment Company Act File No. 811-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-2
/X/ Registration Statement under the Investment Company Act of 1940
/ / Amendment No.
(Check Appropriate Box or Boxes)
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BMO PARTNERS FUND, L.P.
(Exact Name of Registrant as Specified in Charter)
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330 Madison Avenue, 31st Floor
New York, New York 10017
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code:
(212) 661-2640
Dan I. Abrams
Beck, Mack & Oliver LLC
330 Madison Avenue, 31st Floor
New York, New York 10017
(212) 661-2640
(Name and Address of Agent for Service)
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Copies to:
Cynthia G. Cobden
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
(212) 455-2000
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<PAGE>
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
N-2 Item Number Location in Private Placement Memorandum
(Caption)
PART A
1. Outside Front Cover . . . . . . . Not Applicable
2. Cover Pages; Other Offering
Information . . . . . . . . . . . Not Applicable
3. Fee Table and Synopsis
Fee Table . . . . . . FEES AND EXPENSES
Synopsis . . . . . . . Not Applicable
4. Financial Highlights . . . Not Applicable
5. Plan of Distribution . . . Not Applicable
6. Selling Shareholders . . . Not Applicable
7. Use of Proceeds . . . . . . Not Applicable
8. General Description THE FUND; INVESTMENT POLICIES
of the Registrant. . . . . AND OBJECTIVES; PRINCIPAL RISKS OF
INVESTING IN THE FUND; DESCRIPTION
OF UNITS
9. Management . . . . . . . . THE FUND; MANAGEMENT OF THE
PARTNERSHIP AND THE FUND
10. Capital Stock, Long-
Term Debt, and Other
Securities . . . . . . . . INVESTMENT POLICIES AND OBJECTIVES;
DESCRIPTION OF UNITS; TAXES
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11. Defaults and Arrears on Senior
Securities . . . . . . . . . . . Not Applicable
12. Legal Proceedings . . . . . . . . Not Applicable
13. Table of Contents of the
Statement of Additional
Information . . . . . . . . . . Not Applicable
PART B*
14. Cover Page. . . . . . . . . . . . Cover Page
15. Table of Contents . . . . . . . . Cover Page
16. General Information and THE FUND; MANAGEMENT OF THE
History . . . . . . . . . . . . PARTNERSHIP AND THE FUND
17. Investment Objectives
and Policies . . . . . . . . . . INVESTMENT POLICIES AND OBJECTIVES;
INVESTMENT POLICIES AND OBJECTIVES:
Use of Options; Investment
Restrictions
18. Management . . . . . . . . . . . MANAGEMENT OF THE PARTNERSHIP AND THE
FUND; MANAGEMENT OF THE PARTNERSHIP
AND THE FUND: The Fund's Investment
Adviser; Portfolio Manager;
Directors and Officers
19. Control Persons and Principal
Holders of Securities. . . . . . CONTROL PERSONS AND PRINCIPAL HOLDERS
OF UNITS
____________________
*Information required in Part B is included in the Private Placement Memorandum.
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20. Investment Advisory MANAGEMENT OF THE PARTNERSHIP AND
and Other Services. . . . . . . . THE FUND: The Fund's Investment
Adviser; Custodian
21. Brokerage Allocation and Other INVESTMENT POLICIES AND OBJECTIVES:
Practices . . . . . . . . . . . Portfolio Transactions and
Brokerage Allocation
22. Tax Status . . . . . . . . . . . TAXES
23. Financial Statements. . . . . . . Not Applicable
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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BMO Partners Fund, L.P.
Private Placement Memorandum
May 9, 2000
Neither the Securities and Exchange Commission nor any state securities
commission has approved of these securities or determined if this private
placement memorandum is accurate or complete. It is a crime to state
otherwise. In making an investment decision investors must rely on their own
examination of the BMO Partners Fund, L.P. and the terms of the offering.
<PAGE>
PRIVATE PLACEMENT MEMORANDUM
BMO Partners Fund, L.P.
Units of Limited Partnership Interest
THIS PRIVATE PLACEMENT MEMORANDUM HAS BEEN FURNISHED ON A
CONFIDENTIAL BASIS SOLELY FOR THE INFORMATION OF THE PERSONS TO WHOM IT HAS
BEEN DELIVERED AND MAY NOT BE REPRODUCED OR USED FOR ANY OTHER PURPOSE.
PROSPECTIVE INVESTORS SHOULD CAREFULLY READ AND RETAIN THIS CONFIDENTIAL
PRIVATE PLACEMENT MEMORANDUM. HOWEVER, THE CONTENTS OF THIS MEMORANDUM
SHOULD NOT BE CONSIDERED TO BE LEGAL, TAX, INVESTMENT OR OTHER ADVICE, AND
EACH PROSPECTIVE INVESTOR SHOULD CONSULT WITH ITS OWN COUNSEL AND ADVISERS AS
TO ALL LEGAL, TAX, REGULATORY, FINANCIAL AND RELATED MATTERS CONCERNING AN
INVESTMENT IN UNITS. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY
ON THEIR OWN EXAMINATION OF THE FUND AND THE TERMS OF THE OFFERING, INCLUDING
THE MERITS AND RISKS INVOLVED.
_________________________
THE LIMITED PARTNERSHIP UNITS HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), THE SECURITIES LAWS OF
ANY STATE OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION, NOR IS SUCH
REGISTRATION CONTEMPLATED. THE UNITS WILL BE OFFERED AND SOLD UNDER THE
EXEMPTION PROVIDED BY SECTION 4(2) OF THE 1933 ACT AND RULE 506 OF REGULATION
D PROMULGATED THEREUNDER AND OTHER EXEMPTIONS. NO OFFER TO SELL (OR
SOLICITATION OF AN OFFER TO BUY) IS BEING MADE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. THERE IS NO PUBLIC MARKET FOR
THE UNITS AND NO SUCH MARKET IS EXPECTED TO DEVELOP IN THE FUTURE. THESE
UNITS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECOND AMENDED AND
RESTATED LIMITED PARTNERSHIP AGREEMENT OF THE FUND (THE "PARTNERSHIP
AGREEMENT"), THE 1933 ACT AND OTHER APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION THEREUNDER OR EXEMPTION THEREFROM. INVESTORS SHOULD
BE AWARE OF THEIR LIMITED RIGHTS TO REDEEM UNITS AND OF THE LIMITED LIQUIDITY
OF AN INVESTMENT IN UNITS.
_________________________
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO
GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN
THIS MEMORANDUM AND THE ACCOMPANYING EXHIBITS AND ANY REPRESENTATION OR
INFORMATION NOT CONTAINED HEREIN OR IN THE ACCOMPANYING EXHIBITS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR ANY OF ITS PARTNERS OR
AFFILIATES. THE DELIVERY OF THIS MEMORANDUM AND THE ACCOMPANYING EXHIBITS
DOES NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE ON THE COVER HEREOF.
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_________________________
EACH PROSPECTIVE INVESTOR IS INVITED TO MEET WITH THE MANAGER AND TO
DISCUSS WITH, ASK QUESTIONS OF AND RECEIVE ANSWERS FROM IT CONCERNING THE
TERMS AND CONDITIONS OF THIS OFFERING OF THE UNITS, AND TO OBTAIN ANY
ADDITIONAL INFORMATION, TO THE EXTENT THE MANAGER POSSESSES SUCH INFORMATION
OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE, NECESSARY TO VERIFY
THE INFORMATION CONTAINED HEREIN. INQUIRIES SHOULD BE DIRECTED TO: D.I.
ABRAMS, BECK, MACK & OLIVER LLC, 330 MADISON AVENUE, 31ST FLOOR, NEW YORK, NY
10017, (212) 661-2640.
_________________________
THIS MEMORANDUM CONTAINS A SUMMARY OF THE PARTNERSHIP AGREEMENT OF
THE FUND AND OF OTHER DOCUMENTS REFERRED TO HEREIN. HOWEVER, THE DISCUSSIONS
SET FORTH IN THIS MEMORANDUM DO NOT PURPORT TO BE COMPLETE. THEY ARE SUBJECT
TO AND QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PARTNERSHIP AGREEMENT,
A COPY OF WHICH IS ATTACHED AS EXHIBIT A, AS WELL AS THE SUBSCRIPTION
AGREEMENT, A FORM OF WHICH IS ATTACHED AS EXHIBIT B, AND THE FUND'S MOST
RECENT FINANCIAL STATEMENTS, COPIES OF WHICH ARE ATTACHED AS EXHIBIT C, EACH
OF WHICH SHOULD BE REVIEWED FOR COMPLETE INFORMATION CONCERNING THE RIGHTS,
PRIVILEGES AND OBLIGATIONS OF THE PARTNERS.
_________________________
FOR PENNSYLVANIA INVESTORS: EACH PERSON WHO ACCEPTS AN OFFER TO
PURCHASE UNITS DIRECTLY FROM THE FUND OR AN AFFILIATE OF THE FUND SHALL HAVE
THE RIGHT TO WITHDRAW ITS ACCEPTANCE WITHOUT INCURRING ANY LIABILITY TO THE
FUND OR ANY OTHER PERSON, WITHIN TWO BUSINESS DAYS FROM THE DATE THE FUND
RECEIVES ITS WRITTEN, BINDING SUBSCRIPTION AGREEMENT.
_________________________
FOR FLORIDA INVESTORS: THE LIMITED PARTNERSHIP UNITS HAVE NOT BEEN
REGISTERED UNDER THE FLORIDA SECURITIES ACT.
IF SALES ARE MADE TO FIVE (5) OR MORE INVESTORS IN FLORIDA, ANY
FLORIDA INVESTOR MAY, AT HIS OPTION, VOID ANY PURCHASE HEREUNDER WITHIN A
PERIOD OF THREE (3) DAYS AFTER HE (A) FIRST TENDERS OR PAYS TO THE
PARTNERSHIP, AN AGENT OF THE PARTNERSHIP OR AN ESCROW AGENT THE CONSIDERATION
REQUIRED HEREUNDER OR (B) DELIVERS HIS EXECUTED SUBSCRIPTION AGREEMENT,
WHICHEVER OCCURS LATER. TO ACCOMPLISH THIS, IT IS SUFFICIENT FOR A FLORIDA
INVESTOR TO SEND A LETTER OR TELEGRAM TO THE PARTNERSHIP WITHIN SUCH THREE
(3) DAY PERIOD, STATING THAT HE IS VOIDING AND RESCINDING THE PURCHASE. IF
AN INVESTOR SENDS A LETTER, IT IS PRUDENT TO DO SO BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO INSURE THAT THE LETTER IS RECEIVED AND TO EVIDENCE THE
TIME OF MAILING.
_________________________
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FOR GEORGIA INVESTORS: THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN
RELIANCE ON PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE "GEORGIA SECURITIES
ACT OF 1973," AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION
WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER
SUCH ACT.
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SUMMARY OF TERMS
This Summary of Terms is intended only for general reference. Not
all of the material facts relating to an investment in units appear in this
Summary. This memorandum and the attached exhibits describe numerous aspects
of an investment in units of limited partnership interest which are material
to prospective investors. This memorandum, the Second Amended and Restated
Agreement of Limited Partnership (the "Partnership Agreement") and the other
exhibit documents should be read and understood in their entirety by all
prospective investors prior to making an investment in the Fund.
The Fund: BMO Partners Fund, L.P. (the "Fund" or the
"partnership") is a Delaware limited partnership,
registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as a closed-end,
non-diversified, management investment company.
Prior to May 9, 2000, the Fund was not registered
under the 1940 Act.
Investment Program: The Fund's investment objective is to achieve
long-term capital appreciation consistent with
preservation of capital. The Fund seeks to achieve
its objective by investing primarily in a portfolio
of common stocks and securities convertible into or
exercisable for common stocks, but it may also invest
in preferred stock and fixed income securities such
as notes, bonds and debentures. The Fund may also
invest in options on stock indices for bona fide
hedging purposes only.
Management: The Fund is managed under the supervision of the
Fund's board of directors (the "Board") which consists
of three individual general partners of the Fund
(the "Directors"). The fourth general partner, Beck,
Mack & Oliver LLC (the "Manager"), manages the Fund's
investment portfolio under an investment advisory
agreement(the "Investment Advisory Agreement"). See
"THE FUND" and "MANAGEMENT OF THE PARTNERSHIP AND
THE FUND."
Management Fee: The Fund pays the Manager a fee (the "Management Fee"),
quarterly in advance, based on the net assets of the
Fund at the beginning of each quarter of the Fund's
fiscal year, equal to 1% per annum of the first $5
million of the Fund's net assets, 3/4 of 1% per annum
of the next $5 million of the Fund's net assets and
1/2 of 1% per annum of the Fund's net assets in excess
of $10 million. See "FEES AND EXPENSES."
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Custodian: The Chase Manhattan Bank serves as custodian of the
Fund's assets. See "MANAGEMENT OF THE PARTNERSHIP
AND THE FUND -- Custodian."
Expenses: The Manager will provide the partnership, at its own
expense, with office space, facilities, equipment
and personnel. The Manager will bear the
administrative and service expenses associated with
managing the partnership's assets, including the
expenses incurred in the finding and management of the
investments of the partnership. All other operating
expenses of the Fund will be borne by the Fund. See
"MANAGEMENT OF THE PARTNERSHIP AND THE FUND -- The
Fund's Investment Adviser."
Risk Factors: The Fund is subject to market risks that affect the
value of its portfolio securities. The Fund has
significant equity exposure which subjects it to
changing conditions in the stock markets as well as
the performance of the companies or industries
selected for the Fund's portfolio. To the extent
the Fund invests in debt securities it is subject to
credit risk and interest rate risk.
You will not be able to transfer your units except by
operation of law or with the consent of the Manager
in its sole discretion. Your ability to redeem your
units will be limited to the Fund's quarterly offers
to repurchase units, which will be between 5% and 25%
of the total units outstanding. If a repurchase
offer is oversubscribed, the number of units to be
repurchased from each investor may be reduced pro rata.
The Fund's need to fund these repurchases may affect
the Fund's ability to be fully invested, may result in
a higher expense ratio, higher turnover and less
than optimal timing of sales of portfolio securities,
each of which may adversely affect the Fund's net
asset value.
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As a non-diversified investment company the Fund may
be more susceptible to any single economic, political
or regulatory occurrence than more widely diversified
funds.
The Fund may invest in foreign securities which carry
certain risks not typically associated with securities
of U.S. issuers, including withholding taxes, exchange
rate risks, less liquidity, higher costs, transfer
taxes, transaction charges, less public information,
differing accounting standards, risk of seizure and
difficulties in enforcing judgments.
The Fund may invest in debt securities rated below
investment-grade that carry a greater risk of default
than higher-rated debt securities, are subject to
greater fluctuations in market value and, in some
cases, lack an established retail secondary market.
There are additional risks associated with certain
of the Fund's investments and investment strategies.
See "PRINCIPAL RISKS OF INVESTING IN THE FUND."
Minimum Investment: Each limited partner must make an initial investment
of at least $100,000 unless the Manager exercises its
discretion to waive this minimum. Investments must
be made in cash. See "DESCRIPTION OF UNITS."
Additional Investments Additional investments by existing limited partners
and New Limited may be accepted and new limited partners may make
Partners: initial investments in the Fund only on the first
business day of each calendar quarter, unless the
Manager exercises its discretion to accept additional
investments by existing limited partners or admit new
limited partners at any time other than the first day
of a calendar quarter. See "DESCRIPTION OF UNITS."
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Tax Allocations: A capital account for Fund accounting purposes
("Capital Account") and a capital account for income
tax accounting purposes ("Tax Account") will be
established for each new partner. The initial balance
of each account will equal the partner's original
cash contribution, and it will be adjusted from time
to time to reflect additional contributions and
distributions. In addition, at the end of each
accounting period, the Capital Accounts of all
partners will be adjusted to reflect an allocation of
net capital appreciation or depreciation of the Fund
during that accounting period in proportion to the
partners' respective Capital Account balances.
Each partner's Tax Account will be increased by
the partner's share of income and taxable gain will
be reduced by the partner's share of taxable loss and
deductions and certain nondeductible expenses.
Allocations for income tax purposes generally will
be made among partners so as to reflect equitably
amounts credited or debited to each partner's Capital
Account for the current and prior years. However, for
any fiscal year capital gains and losses of the Fund
will first be allocated to withdrawing partners so as
to eliminate insofar as possible any difference
between the balance in withdrawing partners'
Capital Accounts and Tax Accounts and, to the extent
these allocations are insufficient to eliminate
completely this difference, items of ordinary income,
loss or deduction may be allocated to the withdrawing
partners. See "SUMMARY OF PARTNERSHIP AGREEMENT --
Capital Accounts and Tax Accounts."
Taxes: The Manager believes that the Fund will be treated as a
partnership and not as an association taxable as a
corporation for federal income tax purposes. In this
regard, the Manager is relying on a specified safe
harbor to preclude the Fund from being treated
currently as a "publicly traded partnership" taxable
as a corporation. This safe harbor will expire on
December 31, 2005. The Fund intends to take such
actions as are necessary and advisable to continue
to be taxed as a partnership after December 31, 2005.
Such actions could include limiting redemption rights.
Alternatively, the Fund may decide to liquidate at
such time. The Fund has determined that it is not
practicable to seek a ruling from the Internal Revenue
Service ("IRS") that it will not be treated as a
"publicly traded partnership," and therefore it is
not certain that the Fund will not be so treated. If
it is determined that, contrary to the Manager's
belief, the Fund should be taxed as a corporation, the
taxable income of the Fund would be subject to
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corporate income tax and any distributions of profits
from the Fund would be treated as dividends.
Each limited partner must report and will be taxed
based upon his or her distributive share of the
Fund's income, gain, loss, deduction and credit each
taxable year whether or not he or she has
received any cash distributions. See "TAXES --
Taxation of Limited Partners."
Prospective investors should consult their tax
advisers with respect to the tax consequences of
their investment in the Fund. See "TAXES".
Distributions: Each partner may elect to receive distributions of
investment income and realized net capital gains in
cash. Any limited partner that does not so elect
will have distributions automatically reinvested in
the Fund. The Fund anticipates that such
distributions will be made annually.
Repurchases: The Fund is required each quarter to offer to
repurchase at least 5% and up to 25% of its units.
Under normal market conditions, the Board expects
to authorize a 25% offer. The deadline for responding
to the Fund's repurchase offers (the "repurchase
request deadline") shall be fourteen days prior to
the last business day of each calendar quarter (or if
not a business day, the previous business day). The
repurchase price will be the per unit net asset value
on the last business day of a calendar quarter (the
"repurchase pricing date") and payment for all units
repurchased pursuant to these offers will be made
not later than 7 days after the repurchase pricing
date. The Fund will mail written notice to you
setting forth the number of units the Fund will
repurchase, the repurchase request deadline and
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other terms of the offer to repurchase, and the
procedures for you to follow to request a repurchase.
If the limited partners want to sell more units than
the Fund has offered to repurchase, the Board may,
but is not obligated to, increase the number of units
to be repurchased by 2% of the Fund units outstanding.
If there are still more units tendered than are
offered for repurchase, units will be repurchased on
a pro rata basis. You may withdraw units tendered
for repurchase at any time prior to the repurchase
request deadline.
The Board may suspend or postpone a repurchase offer
in certain limited circumstances.
Transferability of A limited partner may not assign its units (except by
Units: operation of law) or substitute an assignee as a
limited partner without the prior written consent of
the Manager, which may be given or withheld in the
Manager's sole discretion. See "THE FUND."
Term: The Fund will dissolve on the first to occur of (a)
December 31, 2025, (b) the Board's determination at
any time and for any reason to liquidate and dissolve
the Fund, (c) the bankruptcy or insolvency of the
Manager, (d) the election to dissolve the partnership
by the holders of a "majority of outstanding units"
of the limited partnership, or (e) termination,
dissolution (other than by reason of a change in the
partners of the Manager) or withdrawal of the Manager
as general partner of the Fund without the Board
designating another investment adviser to be
substituted as the Manager. See "SUMMARY OF
PARTNERSHIP AGREEMENT -- Term of the Fund."
Limited Partner Limited partners will receive audited financial
Reports: reports of the Fund annually, reported on by the
Fund's accountants, and unaudited interim reports
at least semi-annually. See "DESCRIPTION OF UNITS
-- Reports."
Subscription Matters: Investors in the Fund become parties to the Partnership
Agreement. Persons interested in investing in the Fund
are required to complete and return to the Manager
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the subscription document attached as Exhibit B. The
Manager, in its sole discretion, may decline to
accept any proposed investor as a limited partner.
See "DESCRIPTION OF UNITS -- Subscription for Units."
THE FUND
The Fund is a closed-end, non-diversified management investment
company formed on March 8, 1991 as a Delaware limited partnership whose
interests, called "units", are privately offered. Prior to May 9, 2000,
the Fund was not registered under the 1940 Act. On May 9, 2000, the
Fund adopted its current unit structure and existing limited partners were
issued the number of units corresponding to the value of their investments.
The Fund shall continue in business through the close of business on December
31, 2025 unless terminated earlier under the terms of the Partnership
Agreement. Up to five hundred persons may own partnership interests. If a
limited partnership interest is owned by a partnership, an "S" corporation, a
limited liability company or a trust, each partner, "S" corporation
shareholder, limited liability company member or trust beneficiary will be
counted toward the five hundred person limit.
FEES AND EXPENSES
The Fund does not charge a sales load on the units.
The following table is to help you understand the expected annual
operating expenses of the Fund, which are deducted from Fund assets. Each is
stated as a percentage of net asset value.
Expenses of the Fund
Management Fees .62%
Other Expenses .31%
Total Annual Operating Expenses Before Waiver .93%
Fee Waiver .10%
Total Annual Operating Expenses After Waiver .83%
The Manager has agreed to cap total operating expenses for the Fund
during the first year following registration of the Fund under the 1940 Act
at .83% of net assets and, accordingly, will waive a portion of its
management fee. The amount set forth for "Other Expenses" is based on
estimates for the current fiscal year and will include fees for limited
partner services, administrative fees, custodial fees, professional fees and
registration fees.
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EXAMPLE: This example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other investment companies. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your units at the end of those periods. The
example also assumes that your investment has a 5% return each year (although
the actual return may be higher or lower) and that the operating expenses
remain the same (although your actual costs may be higher or lower):
Estimated cost of investing in the Fund
1 Year 3 Years 5 Years 10 Years
$84.57 $287.38 $507.49 $1,143.47
This example is for comparison only. Your actual costs may be higher
or lower, depending on the amount you invest and the Fund's actual rate of
return.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term capital appreciation
consistent with the preservation of capital. The Fund is designed to provide
an equity oriented professionally managed investment program. The Fund is
not a complete financial program.
The Fund will seek to achieve its objective by investing primarily in
a portfolio of common stocks and securities convertible into or exercisable
for common stocks, but it may also invest in preferred stocks and fixed,
variable and floating rate fixed income securities such as investment grade
notes, bonds and debentures. The Manager will generally seek to invest in
equity securities of companies which it believes have sound, long-term
fundamentals. Equity investments will be made typically in companies which
the Manager believes are financially strong and which appear to have
attractive prospects for growth. The Fund may invest up to 10% of its net
assets in fixed income securities rated below investment grade. Investment
grade debt securities are debt securities rated in the category BBB- or
higher by Standard & Poor's Corporation or Baa3 or higher by Moody's
Investors Services, Inc. or the equivalent by another national rating
organization or, if unrated, determined by the Manager to be of comparable
quality. The Manager will have discretion to select the range of maturities
of the various fixed income securities in which the Fund may invest and the
weighted average life of the Fund's fixed income securities may vary
substantially from time to time depending on economic and market conditions.
Although it is anticipated that the Fund's portfolio will primarily
consist of marketable equity securities of U.S. issuers, the Fund will have
flexibility in the management of its portfolio. The Fund's portfolio
investments may include securities of foreign issuers, preferred stocks,
corporate notes, bonds and debentures and securities issued and guaranteed as
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to principal and interest by the United States Government or its agencies or
instrumentalities. For temporary or defensive purposes, the Fund may invest
in high grade commercial paper, repurchase agreements, bankers' acceptances,
bank certificates of deposit, time deposits and master notes without
limitation. When such a defensive strategy is in effect the Fund may not
achieve its investment objective. The Fund may enter into repurchase
agreements with member banks of the Federal Reserve System or primary dealers
in U.S. Government securities. Under a repurchase agreement, the Fund buys
securities at one price and simultaneously promises to sell back those
securities at a higher price.
The Fund may purchase securities on a "when-issued" basis and may
purchase or sell securities on a "forward commitment" basis. These
transactions involve a commitment by the Fund to purchase or sell particular
securities with payment and delivery taking place at a future date (perhaps
one or two months later), and permit the Fund to lock in a price or yield on
a security that it owns or intends to purchase, regardless of future changes
in interest rates or market action.
The Fund may invest up to 10% of its total assets in the securities
of other unaffiliated investment companies which invest principally in
securities in which the Fund is authorized to invest in compliance with the
provisions of the 1940 Act. To the extent that the Fund invests in other
investment companies, the limited partners will incur certain duplicative
fees and expenses, including investment advisory fees.
While the Fund is generally not limited in its ability to purchase
illiquid securities, during the period each quarter from the Fund's
notification to limited partners of an upcoming repurchase of units until the
repurchase pricing date, the Fund will keep enough of its assets in liquid
securities to fully fund the repurchase.
Use of Options
The Fund may purchase and sell put and call options on stock indices.
The Fund may enter into these transactions as a hedge against declines in the
value of the portfolio resulting from market conditions or as a hedge against
securities it anticipates purchasing at a later date. The Fund will not use
stock index options for speculative purposes.
An option on a stock index gives the holder the right to receive,
upon exercise of the option, an amount of cash equal to the difference
between the strike price and the closing price of the stock index upon which
the option is based if the closing level of the stock index is greater than,
in the case of a call, or less than, in the case of a put, the exercise price
of the option. The writer of the option is obligated, in return for the
premium received, to make delivery of the cash settlement. The Fund will
only purchase options traded on a national securities exchange or board of
trade.
Investment Restrictions
The Fund will operate under the following investment restrictions
that, along with the Fund's investment objectives, cannot be changed without
the affirmative vote of a "majority of the outstanding units" of the Fund
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which, as used in this private placement memorandum, means the vote of the
lesser of (i) 67% or more of the units of the Fund present or represented by
proxy at a meeting, if the holders of more than 50% of the outstanding units
of the Fund are present or represented by proxy, or (ii) more than 50% of the
outstanding units of the Fund. The Fund may not:
1. Borrow money, except as a temporary measure for
extraordinary or emergency purposes and then only from banks and only
in an amount not to exceed 10% of its total assets, or mortgage or
pledge its assets;
2. Invest 10% or more of its total assets in the
securities of any one issuer or 25% or more of its total assets in
the securities of issuers in any single industry, provided that this
restriction does not apply to investments in United States Government
securities;
3. Acquire 10% or more of the voting power or value of
the stock of a foreign corporation;
4. Purchase any securities on margin (except that the
Fund may make deposits in connection with transactions in options) or
make short sales of securities;
5. Make loans (other than through the purchase of
marketable debt securities) or lend portfolio securities;
6. Underwrite securities; or
7. Purchase or sell commodities, commodity contracts,
futures contracts or options thereon or purchase or sell put or call
options on securities, provided, that for bona fide hedging purposes
the Fund may purchase or sell options on stock indices.
If a percentage restriction set forth above is adhered to at the time
the transaction is effected, later changes in percentages resulting from
changing values will not be considered a violation.
The Fund's investment objective and investment restrictions are
fundamental policies and cannot be changed without the approval of the
holders of a "majority of the outstanding units."
Portfolio Transactions and Brokerage Allocation
Purchases and sales will be made when considered advisable by the
Manager, but generally not for trading purposes. The Fund intends to limit
portfolio trading to the extent practicable and consistent with its
investment objectives. It is expected that the Fund's annual portfolio
turnover rate will not exceed 30%, but this rate may be exceeded if, in the
Manager's opinion, conditions warrant. To the extent that there is active
trading, the Fund will incur higher transaction costs. The Manager will
weigh the added costs of short-term investment against anticipated gains, and
the Fund will engage in portfolio trading if the Manager believes a
transaction, net of costs (including custodian charges), will help it achieve
its investment objective.
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Under the Investment Advisory Agreement, the Manager shall use its
best efforts to seek to execute portfolio transactions at prices which, under
the circumstances, result in total costs or proceeds being the most favorable
to the Fund. In assessing the best overall terms available for any
transaction, the Manager considers all factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer,
research services provided to the Manager, and the reasonableness of the
commissions, if any, both for the specific transaction and on a continuing
basis. The Manager is not required to obtain the lowest commission or the
best net price for the Fund on any particular transaction, and is not
required to execute any order in a fashion either preferential to the Fund
relative to other accounts they manage or otherwise materially adverse to
such other accounts.
Debt securities are traded principally in the over-the-counter market
through dealers acting on their own account and not as brokers. In the case
of securities traded in the over-the-counter market (where no stated
commissions are paid but the prices include a dealer's markup or markdown),
the Manager normally seeks to deal directly with the primary market makers
unless, in its opinion, best execution is available elsewhere. In the case of
securities purchased from underwriters, the cost of such securities generally
includes a fixed underwriting commission or concession.
Under the Investment Advisory Agreement and as permitted by Section
28(e) of the Securities Exchange Act of 1934, the Manager may cause the Fund
to pay a broker-dealer which provides brokerage and research services to the
Manager, the Fund and/or other accounts for which the Manager exercises
investment discretion, an amount of commission for effecting a securities
transaction for the Fund in excess of the amount other broker-dealers would
have charged for the transaction if they determine in good faith that the
greater commission is reasonable in relation to the value of the brokerage
and research services provided by the executing broker-dealer viewed in terms
of either a particular transaction or their overall responsibilities to
accounts over which they exercise investment discretion. Not all of such
services may be of value in advising the Fund. The term "brokerage and
research services" includes advice as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or of purchasers or sellers of securities,
furnishing analyses and reports concerning issues, industries, securities,
economic factors and trends, portfolio strategy and the performance of
accounts, and effecting securities transactions and performing functions
incidental thereto such as clearance and settlement.
The management fees that the Fund pays to the Manager will not be
reduced as a consequence of the Manager's receipt of brokerage and research
services. To the extent the Fund's portfolio transactions are used to obtain
such services, the brokerage commissions paid by the Fund will exceed those
that might otherwise be paid by an amount which cannot be presently
determined. Such services generally would be useful and of value to the
Manager in serving one or more of their other clients and, conversely, such
services obtained by the placement of brokerage business of other clients
generally would be useful to the Manager in carrying out its obligations to
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the Fund. While such services are not expected to reduce the expenses of the
Manager, the Manager would, through use of the services, avoid the additional
expenses which would be incurred if it should attempt to develop comparable
information through its own staff.
In certain instances, there may be securities that are suitable for
one or more of the accounts advised by the Manager. Investment decisions for
the Fund and for other clients are made with a view to achieving their
respective investment objectives. It may develop that the same investment
decision is made for more than one client or that a particular security is
bought or sold for only one client even though it might be held by, or bought
or sold for, other clients. Likewise, a particular security may be bought for
one or more clients when one or more clients are selling that same security.
Some simultaneous transactions are inevitable when several clients receive
investment advice from the same investment adviser, particularly when the
same security is suitable for the investment objectives of more than one
client. When two or more clients are simultaneously engaged in the purchase
or sale of the same security, the securities are allocated among clients in a
manner believed to be equitable to each. It is recognized that in some cases
this system could have a detrimental effect on the price or volume of the
security as far as the Fund is concerned. However, it is believed that the
ability of the Fund to participate in volume transactions will generally
produce better executions for the Fund.
No portfolio transactions are executed with any affiliate of Beck,
Mack & Oliver LLC acting either as principal or as broker.
PRINCIPAL RISKS OF INVESTING IN THE FUND
While the Fund seeks long-term capital appreciation, there is no
guarantee that units of the Fund will not lose value. This means that you can
lose money on your investment in the Fund. The Fund may not be able to
achieve its investment objective if the Manager's expectations regarding
particular securities or markets are not met.
General Market Risks. The Fund is subject to market risks that affect
the value of its portfolio securities, including general economic and market
conditions. To the extent the Fund has significant equity exposure, the value
of the Fund's units will be influenced by conditions in the stock markets, as
well as the performance of the companies or industries selected for the
Fund's portfolio.
To the extent the Fund's assets are invested in debt securities, the
Fund is subject to credit risk and interest rate risk. Typically, when
interest rates rise, the market value of debt securities, such as those held
by the Fund, will decline. Debt securities with longer maturities are more
sensitive to interest rate risk than shorter term debt securities. When
interest rates fall, the market value of the Fund's debt securities will tend
to rise. However, during periods of falling interest rates, the Fund's total
return may be subject to reinvestment rate risk. The Fund's total return may
suffer as a result of reinvestment rate risk if the market value gains caused
by falling interest rates are not enough to offset the lower rates of
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interest available for the continuing investment of the Fund's assets.
Credit risk is the risk that the issuer of a debt security may not be able to
pay principal and interest payments on time. The market's perception that an
issuer might not be able to make such timely payments may negatively affect
the market value of that issuer's debt securities.
Transferability. Your units cannot be transferred (except through
inheritance or other operation of law), assigned, or sold, except to the Fund
during periodic tender offers, without the consent of the Manager which can
be withheld for any reason.
Limited Liquidity. As the Fund is a "closed-end" investment company,
you will not be able to redeem your units on a daily basis. Although the
Fund will make quarterly offers to repurchase units, such repurchases are
limited to 5% to 25% of the total units outstanding (at the discretion of the
Board) and they may be oversubscribed with the result that you may not be
able to sell as many units as you wish to sell. The right of a limited
partner who withdraws from the Fund to receive the net asset value of his or
her units may be limited by the general partners' obligation under applicable
law to hold reserves for certain liabilities of the Fund.
Effect of Repurchase Obligations. Repurchase offers and the need to
fund repurchase obligations may affect the ability of the Fund to be fully
invested, which may reduce returns. Moreover, diminution in the size of the
Fund through repurchases without offsetting new sales may result in untimely
sales of portfolio securities and a higher expense ratio, and may limit the
ability of the Fund to participate in new investment opportunities.
Repurchases resulting in portfolio turnover will result in additional
expenses being borne by the Fund. The Fund may also sell portfolio
securities to meet repurchase obligations which, in certain circumstances,
may adversely affect the Fund's net asset value.
Concentration. The Fund is classified as a "non-diversified"
investment company under the 1940 Act. The Fund may invest up to 10% of its
total assets in the securities of a single issuer. In addition, the Fund may
invest up to 25% of its total assets in a single industry. Since a relatively
high percentage of the Fund's assets may be invested in the obligations of a
limited number of issuers and the Fund may invest a significant amount of its
assets in one or more industries, the Fund may be more susceptible to any
single economic, political or regulatory occurrence than more widely
diversified funds.
Non-U.S. Securities. The Fund's investments in foreign securities
involve certain risks not typically associated with investments in the
securities of U.S. issuers, including risk relating to future political and
economic developments and the possible imposition of foreign withholding
taxes on dividend or interest income payable on such securities. Changes in
the exchange rates of foreign currencies in which the Fund's investments may
be denominated will affect the U.S. dollar value of the Fund's assets and the
Fund's return. Foreign securities markets may have substantially less volume
and may be smaller, less liquid and subject to greater price volatility than
U.S. markets. Delays or problems with settlement in foreign markets could
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affect the liquidity of the Fund's foreign investments and adversely affect
performance. Investment in foreign securities also may result in higher
brokerage and other costs and the imposition of transfer taxes or transaction
charges. In addition, there may be less publicly available information about
a foreign issuer than about a U.S. issuer, and foreign issuers may not be
subject to the same accounting, auditing and financial recordkeeping
standards and requirements as U.S. issuers. Investments in foreign securities
also involve risks of the possible seizure or nationalization of foreign
assets and the possible establishment of exchange controls or other foreign
governmental laws or restrictions that might adversely affect the payment of
dividends on equity securities and principal of and interest on debt
securities. In the event of a default on a foreign obligation, it may be
difficult for the Fund to obtain or enforce a judgment against the issuer.
Investments in depositary receipts are subject to some, but not all, of the
foregoing risks.
Index Options. Whether the Fund will realize a gain or loss on the
purchase or sale of an option on an index depends upon movements in the
prices of the stocks constituting the related index and the changes in the
premium or discount for the option rather than movements in the price of a
particular stock. Accordingly, successful use by the Fund of options on
indices would be subject to the Manager's ability to predict correctly
movements in the direction of the stock market generally. This requires
different skills and techniques than predicting changes in the price of
individual stocks.
The Fund's use of options on stock indices is also subject to various
additional risks. The correlation between movements in the price of the
stock index and the price of the securities being hedged is imperfect and the
risk from imperfect correlation increases as the composition of the Fund's
portfolio diverges from the composition of the relevant index. In addition,
the ability of the Fund to close out an option depends on an exchange or
board of trade providing a market for options on the same index and in the
same series. Although the Fund intends to purchase and sell options on an
exchange or board of trade with an active trading market, there is no
assurance that an active market will exist for any particular option at any
particular time.
Convertible Securities. Convertible securities have general
characteristics similar to both fixed-income and equity securities. Although
to a lesser extent than with fixed-income securities generally, the market
value of convertible securities tends to decline as interest rates increase
and, conversely, tends to increase as interest rates decline. In addition,
because of the conversion feature, the market value of convertible securities
tends to vary with fluctuations in the market value of the underlying common
stock, and therefore, also will react to variations in the general market for
equity securities. A unique feature of convertible securities is that as the
market price of the underlying common stock declines, convertible securities
tend to trade increasingly on a yield basis, and so may not experience market
value declines to the same extent as the underlying common stock. When the
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market price of the underlying common stock increases, the prices of the
convertible securities tend to rise as a reflection of the value of the
underlying common stock.
Below Investment-Grade Securities. The market values of many high
yield securities, which are rated Ba or lower by Moody's or BB or lower by
S&P and are sometimes referred to as "junk bonds," tend to be more sensitive
to economic conditions than are higher rated securities and will fluctuate
more over time. These securities are considered by S&P and Moody's, on
balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation
and generally will involve more credit risk than securities in the higher
rating categories. The Fund limits such investments to a maximum of 10% of
its portfolio.
Issuers of high yield securities often are highly leveraged and may
not have available to them more traditional methods of financing. The
issuer's ability to service its debt obligations may be affected adversely by
specific corporate developments or the issuer's inability to meet specific
projected business forecasts, or the unavailability of additional financing.
The risk of loss because of default by the issuer is significantly greater
for the holders of these securities because such securities generally are
unsecured and often are subordinated to other creditors of the issuer.
There is no established retail secondary market for many of these
securities, and to the extent a secondary trading market for these securities
does exist, it generally is not as liquid as the secondary market for higher
rated securities. The lack of a liquid secondary market may have an adverse
impact on market price and yield and the Fund's ability to dispose of
particular issues when necessary to meet that Fund's liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. It may make it more difficult for the Fund to
obtain accurate market quotations for purposes of valuing that Fund's
portfolio and calculating its net asset value.
The market values of certain lower rated debt securities tend to
reflect investor perceptions and individual corporate developments to a
greater extent than do higher rated securities, which react primarily to
fluctuations in the general level of interest rates, and tend to be more
sensitive to economic conditions than are higher rated securities.
Repurchase Agreements. The Fund will enter into repurchase
agreements only with member banks of the Federal Reserve System and
securities dealers believed creditworthy, and only if fully collateralized by
securities in which the Fund is permitted to invest. A repurchase agreement
is subject to the risk that the seller may fail to repurchase the security.
Repurchase agreements are considered under the 1940 Act to be loans
collateralized by the underlying securities. All repurchase agreements
entered into by the Fund will be fully collateralized at all times during the
period of the agreement in that the value of the underlying security will be
at least equal to 100% of the amount of the loan, including the accrued
interest thereon, and the Fund or its custodian will have possession of the
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collateral. Whether a repurchase agreement is the purchase and sale of a
security or a collateralized loan has not been conclusively established. This
might become an issue in the event of the bankruptcy of the other party to
the transaction. In the event of default by the seller under a repurchase
agreement construed to be a collateralized loan, the underlying securities
would not be owned by the Fund, but would only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, the Fund may
suffer time delays and incur costs in connection with the disposition of the
collateral. The collateral underlying repurchase agreements may be more
susceptible to claims of the seller's creditors than would be the case with
securities owned by the Fund. Repurchase agreements maturing in more than
seven days are treated as illiquid.
When-Issued Purchases and Forward Commitments. When-issued and
forward commitment transactions involve the risk that the price or yield
obtained in a transaction may be less favorable than the price or yield
available in the market when the securities delivery takes place.
FINANCIAL INFORMATION
Exhibit C contains audited annual financial statements of the Fund
for 1997 and 1998 and unaudited interim statements. However, keep in mind
that the Fund's costs are likely to be higher in the near term future due to
certain requirements imposed on registered funds by the Securities and
Exchange Commission.
DESCRIPTION OF UNITS
This section will help you become familiar with the limited
partnership units and the policies that may apply to your account. The
complete terms of the units are found in the Partnership Agreement attached
as Exhibit A to this private placement memorandum.
Issuance of Units to New Limited Partners
On the first day of each calendar quarter, the Manager (subject to
any policies established by the Board) may at any time and without advance
notice to or consent from any other partner admit any person who shall agree
to be bound by all of the terms of the Partnership Agreement as a limited
partner. The minimum initial investment is $100,000 and subsequent
investments (other than reinvested dividends) must be in a minimum amount of
$10,000 unless the Manager decides, in its sole discretion (subject to any
policies established by the Board), to waive these minimums. The Manager may
also allow a new limited partner to be admitted other than on the first day
of a calendar quarter. The number of units issued in exchange for each
initial purchase shall be based on the net asset value per unit as of the
next date on which net asset value is determined following receipt of the
investor's completed, binding subscription agreement in the form attached as
Exhibit B. Each new limited partner shall be required to execute an
agreement binding him or her to the terms of the Partnership Agreement. See
"SUMMARY OF PARTNERSHIP AGREEMENT."
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Pricing of Partnership Units
All purchases and redemptions of units will be priced at the per unit
net asset value or NAV calculated as of the next date on which net asset
value is determined following receipt of completed, binding subscription or
redemption documents from the investor. The current net asset value of the
Fund's units shall be computed at least weekly as of the close of business on
the last business day of each calendar week, and daily during the five days
preceding a repurchase request deadline. See "DESCRIPTION OF UNITS--
Repurchase Offers."
Securities which are listed on a national securities exchange shall
be valued by the Manager at their last sales prices on the date of
determination on the principal securities exchange on which the securities
shall have traded on that date, or if trading in the securities on the
principal securities exchange on which the securities shall have traded on
that date was reported on the consolidated tape, their last sales prices on
the consolidated tape (or, if the date of determination is not a date upon
which that principal securities exchange was open for trading, on the last
prior date on which that securities exchange was open not more than 10 days
prior to the date of determination). If no sales of the securities occurred
on either of the foregoing dates, the securities shall be valued at the mean
of the "bid" and "asked" prices for the securities on the principal
securities exchange on which the securities are traded, on the date of
determination, or, if "bid" and "asked" prices for the securities on the
principal securities exchange on which the securities shall have traded on
that date was reported on the consolidated tape, the mean of "bid" and
"asked" prices for the securities on the consolidated tape (or, if the date
of determination is not a date upon which that securities exchange was open
for trading, on the last prior date on which it was open not more than 10
days prior to the date of determination). Securities which are not listed
shall be valued at their representative "bid" quotations, unless the
securities are included in the NASDAQ National Market System, in which case
they shall be valued based upon their closing "bid" prices as reported on the
NASDAQ National Market System reporting system (if these prices are
available). Securities and other assets of the Fund (except goodwill, which
shall not be taken into account) for which no such market prices are
available, or for which valuation determined pursuant to this paragraph does
not in the opinion of the Manager fairly reflect market value, shall be
valued by or under the direction of the Board.
Subscription for Units
Persons interested in investing in the Fund are required to complete
and return to the Manager the subscription document available from the
Manager. The Manager, in its sole discretion, may decline to accept any
proposed investor as a limited partner.
The units have not been registered under the 1933 Act and therefore
cannot be sold unless they are subsequently registered under the 1933 Act or
an exemption from registration is available. It is not contemplated that the
units will ever be registered under the 1933 Act or that certain exemptions
provided by rules promulgated under the 1933 Act (such as Rule 144) will ever
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be available. The Partnership Agreement provides that a limited partner may
not assign any of its units or the interests they represent, except by
operation of law, or substitute another person as a limited partner without
the prior written consent of the Manager, which consent may be withheld for
any reason. For a description of the limited rights of limited partners to
redeem units, see "-- Repurchase Offers." The foregoing limitations on
transferability and liquidity must be regarded as substantial.
Each investor will be required to represent in the subscription
agreement, a form of which is attached as Exhibit B, that the units to be
acquired by it are being acquired for the investor's own account, for the
account of one or more separate accounts maintained by it or for the account
of one or more pension or trust funds of which the investor is a trustee, in
each case for investment purposes only and not with a view to resale or
distribution.
All subscriptions for units must be made in the form of the
subscription agreement attached as Exhibit B and forwarded along with the
other subscription documents to the Fund, c/o Beck, Mack & Oliver LLC, 330
Madison Avenue, 31st Floor, New York, New York 10017, Attention: Dan I.
Abrams. All investments in the Fund must be made in United States dollars by
check or wire transfer to a bank account designated by the Manager.
Subscriptions will be accepted in whole or in part at the discretion
of the Manager. Subscriptions will in any event only be accepted from those
persons to whom the Manager provides this private placement memorandum.
Distributions
The Fund anticipates that it will make distributions of net
investment income and realized net capital gains annually. In your
subscription agreement, you must specify how you want to receive your annual
distribution. You may change your distribution option at any time by writing
the Fund at the address on page 33. A change in distribution option will be
effective if received at least 30 days before the end of the fiscal year.
The Fund offers the following options:
1. Reinvestment Option. You may reinvest your distribution from income
and gains in additional units. This option is assigned automatically
if no other choice is made.
2. Cash Option. You may receive your income dividends and capital gain
dividends in cash.
All amounts that are not so distributed will automatically be credited as
additional units to your account at the net asset value per unit as of the
date of the distribution. Payment of any such dividends shall be sent to you
within 30 days after the end of that fiscal year. The Fund reserves the
right to pay distributions in kind in the form of readily marketable
portfolio securities rather than in cash.
If we are unable to deliver to you any dividend or distribution check
and it remains outstanding for six months, we reserve the right to cancel the
check and reinvest the dividend or distribution in units of the Fund for your
account. If a check representing the Fund distribution is not cashed within
a specified period, the Fund will notify the investor that he or she has the
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option of requesting another check or reinvesting the distribution in the
Fund. If the Fund does not receive the investor's election, the distribution
will be reinvested in the Fund. Similarly, if the Fund sends the investor
correspondence returned as "undeliverable," distributions will automatically
be reinvested in the Fund. We will use the net asset value next computed
after the check is canceled. Subsequent distributions may also be
reinvested.
Repurchase Offers
As a matter of fundamental policy which cannot be changed without a
vote of a majority of the outstanding units of the Fund as defined in the
1940 Act, each quarter the Fund shall make an offer to repurchase its units.
Quarterly the Board will set the size of the offer which will be at least 5%
to up to 25% of the outstanding units. The deadline for responding to the
Fund's repurchase offers (that is, the repurchase request deadline) shall be
fourteen days prior to the last business day of each calendar quarter (or if
not a business day, the previous business day). Under normal market
conditions, the Board expects to authorize a 25% offer. The Fund may also
make a discretionary repurchase offer once every two years, but it has no
current intention to do so. The repurchase price will be the per unit net
asset value on the repurchase pricing date, which shall be the last business
day of the calendar quarter, and payment for all units repurchased pursuant
to these offers will be made not later than 7 days after the repurchase
pricing date. During the five business days prior to the repurchase request
deadline you may obtain the current net asset value by calling 212-661-2640.
At least 21 days prior to the repurchase request deadline the Fund
will mail written notice to you setting forth the number of units the Fund
will repurchase, the repurchase request deadline and other terms of the offer
to repurchase, and the procedures for you to follow to request a repurchase.
THE REPURCHASE REQUEST DEADLINE WILL BE STRICTLY OBSERVED. Limited partners
failing to submit repurchase requests in good order by such deadline will be
unable to liquidate units until a subsequent repurchase offer. The Fund
reserves the absolute right to reject any or all tenders of units determined
by the Manager not to be in proper form or to refuse to accept for payment,
purchase or pay for any units if, in the opinion of the Fund's counsel,
accepting, purchasing or paying for such units would be unlawful. The Fund
also reserves the absolute right to waive any of the conditions of the Offer
or any defect in any tender of units whether generally or with respect to any
particular units or limited partners.
If limited partners want to sell more units than the Fund has offered
to repurchase, the Board may, but is not obligated to, increase its offer for
units by 2% of the Fund units outstanding. If there are still more units
tendered than are offered for repurchase, units will be repurchased on a pro
rata basis. Thus, you may be unable to liquidate all or a given percentage
of your units and some limited partners may tender more units than they wish
to have repurchased in order to ensure repurchase of at least a specific
number of units. You may withdraw units tendered at any time prior to the
repurchase request deadline.
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The Fund may suspend or postpone a repurchase offer only pursuant to
a vote of a majority of Directors, including a majority of the Directors that
are not affiliated with the Fund (the "Independent Directors"): (A) for any
period during which any market in which the securities owned by the Fund are
principally traded is closed, other than customary weekend and holiday
closings, or during which trading in such market is restricted; (B) for any
period during which an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable, or during which
it is not reasonably practicable for the Fund fairly to determine the value
of its net assets; or (C) for such other periods as the SEC may by order
permit for the protection of limited partners of the Fund.
Reports
You will receive audited financial reports of the Fund annually,
reported on by the Fund's independent accountants, and unaudited interim
reports at least semi-annually. Reminick Aarons & Co. have been retained to
serve as independent accountants to the Fund.
MANAGEMENT OF THE PARTNERSHIP AND THE FUND
The Fund's Investment Adviser
The Fund's investment adviser is Beck, Mack & Oliver LLC, a New York
limited liability company. As Manager, Beck, Mack & Oliver LLC is
responsible for the day-to-day management of the investment portfolio and
other business affairs of the Fund. Beck, Mack & Oliver LLC is located at 330
Madison Avenue, 31st Floor, New York, New York 10017. Beck, Mack & Oliver
LLC is a member of the Investment Counsel Association of America.
Founded as a partnership in 1931 by T. Edmund Beck and Lewis Mack and
converted to a limited liability company in 1996, Beck, Mack & Oliver LLC is
an independent investment counselor which is registered under the Investment
Advisers Act of 1940 and as of December 31, 1999 managed approximately $2.8
billion dollars in assets on behalf of individuals, trusts, tax-exempt
institutions and corporations.
Beck, Mack & Oliver LLC is responsible for the management of the
Fund's investment portfolio pursuant to a Investment Advisory Agreement. It
also oversees certain administrative, compliance and accounting services for
the Fund. In addition, members of Beck, Mack & Oliver LLC serve as officers
of the Fund and Beck, Mack & Oliver LLC provides office space for the Fund
and pays the salaries, fees and expenses of Fund officers.
Code of Ethics
Rule 17j-1 under the 1940 Act requires all registered investment
companies and their investment advisers adopt written codes of ethics and
institute procedures designed to prevent "access persons" (as defined in Rule
17j-1) from engaging in any fraudulent, deceptive or manipulative trading
practices. The Fund's Board of Directors has adopted a code of ethics (the
"Fund Code") that incorporates personal trading policies and procedures
applicable to access persons of the Fund, which includes officers, directors
and other specified persons who may make, participate in or otherwise obtain
information concerning the purchase or sale of securities by the Fund. In
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addition, the Manager has adopted a code of ethics (the "Manager Code"). The
Fund and Manager Codes have been designed to address potential conflict of
interests that can arise in connection with the personal trading activities
of investment company and investment advisory personnel.
Pursuant to the Fund and Manager Codes, access persons are generally
permitted to engage in personal securities transactions, provided that a
transaction does not involve securities that are being purchased or sold, are
being considered for purchase or sale, or are being recommended for purchase
or sale by or for the Company. In addition, the Adviser Code contains
specified prohibitions and blackout periods for certain categories of
securities and transactions, and requires that access persons obtain
preclearance to engage in personal securities transactions. Finally, the
Fund and Adviser Codes require access persons to report all personal
securities transactions periodically.
You can write the SEC's Public Reference Room and ask them to mail
you copies of the Fund Code and the Manager Code. You can also request copies
electronically at [email protected]. They will charge you a copying fee for
this service. You can also visit the Public Reference Section and copy the
documents while you are there. The address is listed below under "Securities
and Exchange Commission (SEC)."
Portfolio Manager
Dan I. Abrams is the portfolio manager of the Fund and is responsible
for making investment decisions and for the day-to-day management of the
Fund's portfolio.
Mr. Abrams, a member since 1975 of the National Association of
Securities Dealers, has served as an investment counselor at Beck, Mack &
Oliver LLC since 1987 and is a member of the company. His responsibilities
with Beck Mack & Oliver LLC include counseling, developing investment
strategies and managing portfolios for individuals, trusts and institutional
clients. Mr. Abrams has had primary responsibility for managing the Fund
since its inception in 1991.
Management Fee
The Fund pays the Manager a management fee, quarterly in advance,
based on the net assets of the Fund at the beginning of each quarter of the
Fund.
The following schedule sets forth the management fee (expressed as an
annual rate):
Average Daily Net Annual Rate
Assets of Fund Percentage (%)
Less than $5 Million 1.00
$5 Million but less than $10 Million 0.75
$10 Million and over 0.50
Directors and Officers
The business and affairs of the partnership are managed under the
direction of the Board. The Fund has a nominating committee and an audit
committee which are each comprised of the Independent Directors.
Each Independent Director receives a fee which consists of an annual
retainer of $3,000 and a meeting fee of $500 for each meeting attended. Each
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Director is also reimbursed for expenses incurred in attending each meeting
of the Board.
The Partnership Agreement provides that the general partners
(including the Directors) will not be liable to the partnership or the
limited partners for any act or omission performed or omitted by them in
good faith in connection with the conduct of the business of the Fund, but
shall only be liable for actions or omissions constituting willful
misconduct, gross negligence, a violation of federal or state securities laws
or criminal wrongdoing. Thus, the ultimate liability of any general partner
to the limited partners is more limited than would be the case without such a
provision. The general partners will be indemnified by the partnership for
any liability incurred by them arising out of their activities as general
partners except for negligence, misconduct or other breach of fiduciary duty.
The Directors and officers of the Fund and their principal
occupations for at least the past five years are set forth below.
Principal
Name, Age, Address Position Held with Fund Occupation(s)
Past 5 Years
John C. Beck*, 67 Director, general partner Investment Counsel and
330 Madison Avenue, President and Chief Member, Beck, Mack &
31st Floor Executive Officer Oliver LLC
New York, NY 10017
Margaret Ann Johnson, 53 Director and general Member, Ann Johnson
149 East 73rd Street partner Interiors LLC
New York, NY 10021
John D. Twiname, 67 Director and general Minister, founder of
307 East 60th Street partner The HealthCare
New York, NY 10022-1505 Chaplaincy, Inc.
Dan I. Abrams, 59 Treasurer and Secretary Investment Counsel and
330 Madison Avenue, Member, Beck, Mack &
31st Floor Oliver LLC
New York, NY 10017
* Asterisks indicate those Directors that are "interested persons" (as defined
in the 1940 Act).
Custodian
Pursuant to a custodian agreement, The Chase Manhattan Bank serves as
the custodian of the assets of the Fund and receives such compensation as is
agreed upon from time to time. As custodian The Chase Manhattan Bank
provides oversight and record keeping for the assets held in the Fund. The
custodian is located at 3 Metrotech Center, Brooklyn, New York 11245.
Other Fees and Expenses
The Manager provides the partnership, at its own expense, with office
space, facilities, equipment and personnel. The Manager bears the
administrative and service expenses associated with managing the Fund's
assets, including the expenses incurred in the finding and management of the
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investments of the partnership. All other operating expenses of the Fund,
including the Fund's custody expenses, the Fund's investment expenses,
including brokerage costs and interest charges with respect to transactions
in securities, 1940 Act registration fees and expenses, fees and expenses of
the Board, legal and accounting expenses and limited partner administrative
expenses will be borne by the Fund, thereby reducing the total net asset
value of the Fund, except that the Manager will bear its expenses incurred in
reporting to the partners.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
No person owns of record or beneficially five percent or more of the
units of the Fund.
SUMMARY OF PARTNERSHIP AGREEMENT
As an investor in the Fund, you will be a party to the Partnership
Agreement. A summary of certain provisions of the Partnership Agreement
follows. This summary is not definitive and is qualified in its entirety by
reference to the Partnership Agreement itself, which is attached as Exhibit
A. Each prospective investor should carefully read the Partnership Agreement
in its entirety.
Capital Accounts and Tax Accounts
A Capital Account and a Tax Account will be established for each new
partner. The initial balance of each account will equal the partner's
original cash contribution, and it will be adjusted to reflect additional
contributions and distributions. At the end of each Fiscal Period (as
defined below), the Capital Account of each partner will be (i) decreased by
the amount of any redemptions made by the partner, (ii) increased by the
amount of the partner's allocation of Net Capital Appreciation (as defined
below) and (iii) decreased by the amount of the partner's allocation of Net
Capital Depreciation (as defined below).
Each partner's Tax Account will be increased by the partner's share
of taxable gain and income and tax-exempt income and will be reduced by the
partner's share of taxable loss and certain nondeductible expenses.
Allocations for income tax purposes generally will be made among
partners so as to reflect equitably amounts credited or debited to each
partner's Capital Account for the current and prior years. However, for any
fiscal year capital gains and losses of the Fund will first be allocated to
withdrawing partners so as to eliminate insofar as possible any difference
between the balance in withdrawing partners' Capital Accounts and Tax
Accounts and, to the extent these allocations are insufficient to eliminate
completely this difference, items of ordinary income, loss or deduction may
be allocated to the withdrawing partners.
"Fiscal Period" means the period beginning on the first day following
the last day of the immediately preceding Fiscal Period and ending on the
earliest of (i) the date immediately preceding the date on which additional
capital contributions are made to the Fund, (ii) the date on which there are
withdrawals from the Fund, (iii) the December 31st of the calendar year
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within which the current Fiscal Period began and (iv) the date on which the
Fund liquidates.
"Net Capital Appreciation" for any Fiscal Period means the excess of
the Fund's net asset value at the end of that Fiscal Period over the Fund's
net asset value at the beginning of that Fiscal Period (plus the amount of
any distributions and minus the amount of capital contributions to the Fund
made during that Fiscal Period).
"Net Capital Depreciation" for any Fiscal Period means the excess of
the Fund's net asset value at the beginning of that Fiscal Period over the
Fund's net asset value at the end of that Fiscal Period (minus the amount of
distributions and plus the amount of any capital contributions to the Fund
during that Fiscal Period).
Allocation of Net Capital Appreciation
and Net Capital Depreciation
At the end of each Fiscal Period, the Capital Account of all partners
during that Fiscal Period will be adjusted by crediting (in the case of Net
Capital Appreciation) or debiting (in the case of Net Capital Depreciation)
the Net Capital Appreciation or the Net Capital Depreciation, as the case may
be, of the Fund for that Fiscal Period to the Capital Accounts of those
partners in proportion to their respective Capital Account balances at the
beginning of that Fiscal Period.
Term of the Fund
The Fund will dissolve on the first to occur of (i) December 31,
2025, (ii) the Board's determination at any time and for any reason to
liquidate and dissolve the Fund, (iii) the bankruptcy or insolvency of the
Manager, (iv) the election to dissolve the partnership by the holders of a
"majority of outstanding units" of the limited partnership, or (v)
termination, dissolution (other than by reason of a change in the partners of
the Manager) or withdrawal of the Manager as manager of the Fund without the
Board designating another investment adviser to be substituted as the
Manager.
The withdrawal, death, disability, incapacity, incompetency,
termination, bankruptcy, insolvency or dissolution of a general or limited
partner will not dissolve the Fund. The legal representatives of a limited
partner will succeed as assignee to a limited partner's units and the
interest in the Fund they represent upon the death, disability, incapacity,
incompetency, termination, bankruptcy, insolvency or dissolution of the
limited partner but shall not be admitted as a substituted limited partner
without the consent of the Manager. In the event of the death, disability,
incapacity, incompetency, termination, bankruptcy, insolvency or dissolution
of a limited partner, the limited partnership interest of the limited partner
will continue at the risk of the Fund business until the date on which the
limited partner's units are repurchased by the Fund or the earlier
termination of the Fund.
Liability of the General Partners and the Manager
The general partners have unlimited liability under the Delaware
Revised Uniform Limited Partnership Act (the "Partnership Act") for the
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repayment and discharge of all debts and obligations of the Fund but are
entitled to require the prior exhaustion of the Fund's assets.
No general partners will be liable to any other partner or the Fund
for any losses due to any act or omission of the general partners in
connection with the conduct of the business of the Fund that is determined in
good faith by the general partner to be in or not opposed to the best
interests of the Fund, unless the act or omission constitutes willful
misconduct, gross negligence, a violation of federal or state securities laws
or criminal wrongdoing by the general partner. In addition, no general
partner will be liable to any other partner or the Fund for any losses due to
any act or omission of any other partner or the mistakes, negligence,
misconduct or bad faith of any broker or other agent of the Fund selected by
the Directors or the Manager with reasonable care.
The Manager and the general partners may consult with legal counsel
or accountants selected by them. Any act or omission by it on behalf of the
Fund or in furtherance of the business of the Fund in good faith in reliance
on and in accordance with the advice of such counsel or accountants will be
full justification for the act or omission, and each general partner will be
fully protected in so acting or omitting to act if the counsel or accountants
were selected with reasonable care.
Indemnification
To the fullest extent permitted by law, each general partner, its
affiliates and their respective partners, officers, employees, directors and
shareholders (the "Indemnitees") will be indemnified by the Fund against any
losses and expenses that are incurred and arise out of or in the course of
the business of the Fund, provided that (i) the Indemnitee acted in good
faith in a manner reasonably believed to be in or not opposed to the best
interests of the Fund and (ii) the conduct did not constitute willful
misconduct, gross negligence, a violation of federal or state securities laws
or criminal wrongdoing. The satisfaction of any indemnification shall be
from and limited to Fund assets, and no partner shall have personal liability
on account thereof.
Limited Liability of Limited Partners
A limited partner or former limited partner will be liable for debts
and obligations of the Fund attributable to any fiscal year during which it
is or was a limited partner of the Fund only to the extent of its interest in
the Fund in the fiscal year (or portion thereof) to which the debts and
obligations are attributable. In order to meet a particular debt or
obligation, a limited partner or former limited partner may be required to
make additional contributions or payments up to, but in no event in excess
of, the aggregate amount of returns of capital and other amounts actually
received by him from the partnership during or after the fiscal year to which
such debt or obligation is attributable.
Additional Investments; Admission of New Limited Partners; Changes in the
General Partners
With the approval of the Manager and without the consent of any
limited partner, an existing limited partner may purchase additional units in
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the Fund and new limited partners may purchase units in the Fund on the first
business day of each calendar quarter, provided that each additional purchase
of units must be for at least $10,000 and the initial purchase of units of
each new limited partner must be for at least $100,000, unless the Manager
exercises its discretion to waive these minimum requirements or to accept
unit purchases by existing limited partners or admit new limited partners at
any time other than the first day of a calendar quarter.
Without the consent of the limited partners, the Manager may withdraw
as manager of the Fund and the Board, including a majority of the Independent
Directors, and, if required by the 1940 Act, the limited partners, will
select an investment adviser to be substituted as manager. Except as
required by applicable law, changes in the partners, directors, officers or
shareholders of a general partner will not require the consent of the limited
partners and will not dissolve the Fund.
Other Activities of the Manager and the Directors
The Manager will devote that amount of its time to the affairs of the
Fund which in its judgment the conduct of the Fund's business reasonably
requires. Neither the Manager nor any Director will be obligated to do or
perform any act or thing in connection with the business of the Fund not
expressly set forth in the Partnership Agreement or, in the case of the
Manager, in the Investment Advisory Agreement. The Manager, its partners,
officers and employees, the Directors and their affiliates will not be
precluded from engaging directly or indirectly in any other business or other
activity, including, but not limited to, exercising investment advisory and
management responsibility and buying, selling or otherwise dealing with
securities for their own accounts, for the accounts of family members and for
the accounts of individual and institutional clients, which activities may
compete with those of the Fund. The Manager will be permitted to perform,
among other things, investment advisory and management services for
individuals and entities other than the Fund and in that connection to give
advice and take action in the performance of its duties to those individuals
and entities which may differ from the timing and nature of action taken with
respect to the Fund. The Manager will not be obligated to purchase or sell
for the Fund any security or other investment which the Manager or its
affiliates may purchase or sell, or recommend for purchase or sale, for its
or their own accounts, or for the account of any client. Neither the Fund
nor the limited partners will have any rights of first refusal, coinvestment
or other rights in respect of the investments of other accounts or in any
fees, profits or other income earned or otherwise derived therefrom. No
limited partner will, by reason of being a limited partner in the Fund, have
any right to participate in any manner in any profits or income earned or
derived by or accruing to the general partners (including the Manager), any
of their affiliates or their respective partners, directors, officers,
employees or shareholders from the conduct of any business other than the
business of the Fund or from any transaction in securities effected by any
general partner (including the Manager), any of their affiliates or their
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respective partners, directors, officers, employees or shareholders for any
account other than that of the Fund.
Amendments to Partnership Agreement
The Partnership Agreement may be amended at any time with the written
consent of the Manager, of the Board and of limited partners holding more
than 50% of the outstanding units (unless approval is sought at a meeting of
limited partners, where it may be amended by the affirmative vote of a
majority of the outstanding units as defined in the 1940 Act); except that
the general partners may, without the consent of the limited partners, amend
the Partnership Agreement (i) to reflect changes validly made in the
membership of the Fund and the contributions and withdrawals by any partner,
(ii) to reflect a change in the name of the Fund, (iii) to reflect a change
in the manner in which Capital Accounts or any debits or credits thereto are
computed in accordance with the terms and conditions of the Partnership
Agreement, (iv) to effect compliance with any applicable law or regulation
and (v) to make a change that is necessary or desirable to correct any
ambiguity, to correct or supplement any provision in the Partnership
Agreement that would be inconsistent with any other provision in the
Partnership Agreement and to make any other provision with respect to matters
or questions arising under the Partnership Agreement that will not be
inconsistent with the provisions of the Partnership Agreement, in each case
if the change does not adversely affect the limited partners. The consent of
a partner must be obtained for any amendment which would reduce its Capital
Account, rights to allocations and distributions (other than by virtue of new
and additional contributions by other partners), rights of contribution or
withdrawal or which would modify the provisions of the amendment section of
the Partnership Agreement.
TAXES
The following summary discussion describes certain U.S. federal
income tax aspects of investing in the Fund. It is based on provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury
regulations ("Regulations") promulgated thereunder and published
administrative rulings and judicial decisions, all as of the date of this
private placement memorandum. No assurance can be given that future
legislation, administrative rulings or court decisions will not modify the
conclusions set forth in this discussion. This discussion is necessarily
general; the actual tax and financial consequences of the purchase of units
in the Fund will vary depending upon the investor's circumstances. This
discussion does not constitute tax advice and is not intended to substitute
for individual tax planning. Further, this discussion does not take into
account the particular circumstances of each prospective investor some of
whom, such as non-U.S. persons, tax exempt organizations, financial
institutions, dealers or traders in securities that adopt mark to market
accounting for tax purposes or other investors that do not hold their units
as capital assets may be subject to special rules. Each prospective investor
is urged to consult his own tax advisor with respect to the federal, state,
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local and foreign income tax consequences of the purchase, ownership or
disposition of units in the Fund.
Partnership Status
Under current U.S. Treasury regulations, a domestic entity that has
two or more members and that is not organized as a corporation under federal
or state law will generally be classified as a partnership for federal income
tax purposes unless it elects to be treated as a corporation. Thus, subject
to the discussion of "publicly traded partnership" set forth below, the Fund
will be treated as a partnership for U.S. federal income tax purposes. The
classification of an entity as a partnership for federal income tax purposes
may not be respected for state or local tax purposes. An organization that
is classified as a partnership for federal income tax purposes is not subject
to federal income tax itself, although it must file an annual information
return. Individual partners are required to report on their federal income
tax returns their distributive units of each item of the partnership's
income, gain, loss, deduction and credits for each taxable year of the
partnership ending with or within the partner's taxable year. See "Taxation
of Limited Partners" below.
An entity that would otherwise be classified as a partnership for
federal income tax purposes may nonetheless be taxable as a corporation if it
is a "publicly traded partnership". Pursuant to IRS Notice 88-75 a
partnership which meets certain safe harbor requirements is precluded from
being classified as a "publicly traded partnership" for all taxable years
beginning on or before December 31, 2005. The Manager believes that the Fund
currently meets and intends to operate the Fund so that it will continue to
meet the requirements for safe harbor treatment set out in Notice 88-75 so
that the Fund will not be classified as a "publicly traded partnership" prior
to December 31, 2005. In this regard, the Fund will rely on representations
and undertakings of limited partners. Moreover, the Directors intend to take
such actions as are reasonably necessary or advisable in the future to ensure
that the Fund will not be treated as a "publicly traded partnership" after
December 31, 2005. Such action could include, for example, limiting the
redemption rights of limited partners. Alternatively, the Fund may determine
to liquidate at such time.
In the absence of a ruling from the IRS (which the Fund has
determined it is not practicable to seek), there can be no assurance that the
IRS will not attempt to characterize the Fund as a "publicly traded
partnership" taxable as a corporation. If the Fund were determined to be a
corporation for tax purposes, the Fund would be taxed on its earnings at
corporate rates, and any distributions to the limited partners would be
treated as corporate distributions, which would be taxable as dividends to
the limited partners to the extent of the earnings and profits of the Fund.
Subject to applicable limitations in the Code, such dividends would generally
be eligible for a dividends received deduction in the case of a limited
partner that is a corporation.
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It is assumed in the following discussion of tax considerations that
the Fund will be classified as a partnership and will not be treated as
"publicly traded" for federal income tax purposes.
Taxation of Limited Partners
Provided that the Fund is classified as a partnership for federal
income tax purposes, each limited partner will be taxed upon his distributive
share of each item of the Fund's income, gain, loss, deduction and credit for
each taxable year of the Fund ending with or within the limited partners'
taxable year. See "Allocations of Income, Gain, Loss and Expense" below.
Each item will have the same character and source to a limited partner as
though the limited partner realized the item directly. Limited partners must
report these items regardless of the extent to which, or whether, they
receive cash distributions from the Fund for a taxable year, and thus may
incur income tax liabilities without receiving sufficient distributions from
the Fund to fund these liabilities. In addition, investments in certain
securities such as original issue discount obligations, preferred stock with
redemption premiums, stock of certain foreign corporations, "Section 1256
contracts" and in positions that constitute "straddles" as well as certain
methods of accounting adopted by the Fund, may result in the recognition of
substantial amounts of taxable income without receipt of cash, or substantial
amounts of taxable income when little economic income is realized.
Allocations of Income, Gain, Loss and Deduction
Section 704(b) of the Code provides that a partner's distributive
share of income, gain, loss, deduction or credit or any item thereof, will be
determined under the Partnership Agreement provided the allocations have
"substantial economic effect." In order for partnership allocations to have
substantial economic effect the Regulations under Section 704(b) of the Code,
among other things, prescribe complex requirements for the maintenance of
capital accounts. If an allocation lacks substantial economic effect the
item must be reallocated in accordance with the partner's "interest in the
partnership", which will be determined taking into account all of the facts
and circumstances.
Under the Partnership Agreement, the Fund's Net Capital Appreciation
or Net Capital Depreciation for each accounting period is allocated among the
partners without regard to the amount of income or loss actually realized by
the Fund for federal income tax purposes. For each fiscal year, under the
Partnership Agreement items of income, gain, loss, deduction or credit
realized for federal income tax purposes by the Fund are to be allocated for
income tax purposes in such a manner as to reflect equitably the amount so
allocated to each partner's Capital Account for the current and prior fiscal
years. In addition, in the case of a withdrawing partner whose tax basis
differs from his Capital Account balance the Manager may allocate
specifically to that Partner items of tax income or loss to eliminate the
difference. There can be no assurance that the IRS will accept such
allocations.
The allocations of income, gain, loss and deduction discussed above
are intended to comply generally with the requirements of Sections 704(b) and
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704(c) of the Code. However, the IRS may assert that the Fund does not
maintain capital accounts in accordance with Section 704(b) of the Code and
that its allocations therefore lack substantial economic effect. Similarly,
there can be no assurance that the IRS will not challenge the validity of the
Fund's method of complying with Section 704(c).
Any challenge by the IRS with respect to the allocations of tax items
provided in the Partnership Agreement, whether as described above or on some
other ground, would, if sustained, result in the reallocation of the items in
accordance with the partners' interests in the Fund. This reallocation could
affect adversely the tax and financial consequences of a purchase of units in
the Fund.
The Manager will have the authority, without the consent of the
limited partners, to amend the tax allocation provisions to the extent
necessary to comply with Regulations or other authority issued under Sections
704(b) of the Code.
Limited partners should note that it is possible that the allocations
of the Fund's taxable income and losses among the partners will not reflect
the allocations of Net Capital Appreciation and Net Capital Depreciation that
have been made to the partners' Capital Accounts so that a limited partner
may be allocated taxable income in excess of its economic gain. In such
cases, a limited partner may be prevented from realizing the tax benefit of
any excess of tax allocations over his Capital Account balance, if at all,
until his units have been disposed of or his interest terminated. Limited
partners should note that the Manager will attempt to allocate additional
items of tax income or loss, including ordinary income or loss, as the case
may be, to limited partners who withdraw from the Fund at a time when
allocations of the Fund's tax results to them do not reflect allocations of
Fund financial income.
Fund Distributions and Redemptions
A cash distribution from the Fund to a limited partner will reduce
the adjusted basis of the limited partner's interest and, to the extent it
exceeds the adjusted basis of the limited partner's interest, result in
treatment as gain from the sale or exchange of the interest, taxable in
accordance with the rules described under "Disposition of Units" below.
Disposition of Units
A limited partner will recognize gain or loss on the sale, exchange
or other disposition of units to the extent the amount realized therefor
differs from its tax basis in his units. Generally, this gain or loss will
be considered long-term capital gain or loss if the limited partner has held
its units for more than one year. Under Section 751 of the Code, however, on
a sale of units to a third party the limited partner will recognize ordinary
income to the extent the disposition proceeds are attributable to "unrealized
receivables" (including, for example, certain short-term obligations or
market discount bonds, the interest on which has not been included in the
Fund's taxable income) ("Section 751 property"). The limited partner may
recognize this ordinary income even if it would not otherwise recognize a
gain on the sale, exchange or other disposition. For tax purposes, the
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amount realized by a limited partner from the sale, exchange or other
disposition of units will include its share of the Fund's outstanding non-
recourse liabilities, if any.
On a redemption of units by the Fund, a limited partner will be
subject to Section 751(b) if he receives non-Section 751 property (such as
cash) for a portion of its interest in Section 751 property. Section 751(b)
provides that in this circumstance the limited partner will be treated as
receiving a deemed distribution of Section 751 property and then exchanging
the Section 751 property for the non-Section 751 property. Both the limited
partner and the Fund would recognize gain on a deemed exchange.
Limitations on Deductibility of Fund Losses
Basis. To the extent losses are incurred by the Fund, a limited
partner's share of deductions for the losses will be limited to the tax basis
of the limited partner's interest. A limited partner's initial tax basis for
its interest will be the amount paid for the units. This initial basis will
be increased by the limited partner's share of Fund income and by any
increase in the limited partner's share of Fund non-recourse indebtedness, if
any. Basis for an interest will be decreased (but not below zero) by
distributions from the Fund, by any decrease in the limited partner's share
of Fund non-recourse indebtedness, by the limited partner's share of Fund
losses and by the limited partner's share of expenditures of the Fund that
are not deductible in computing his taxable income and are not required to be
capitalized.
Passive Losses. The Code restricts the deductibility of losses from
a "passive activity" (generally an activity in which the taxpayer does not
materially participate) against certain income which is not derived from a
passive activity. This restriction applies to individuals, personal service
corporations and closely held corporations. Pursuant to temporary
Regulations issued by the Treasury Department, income or loss from the Fund
generally will not constitute income or loss from a passive activity.
Therefore, passive losses from other sources generally could not be deducted
against a limited partner's share of income and gain, if any, from the Fund.
The Code imposes other limitations on the ability of individuals to
use losses and deductions arising from investment in entities such as the
Fund, including, limitations relating to deductions for "investment interest"
under Section 163 of the Code. Prospective investors should consult their
own tax advisors regarding the application of such rules to an investment in
the Fund.
Alternative Minimum Tax
Each limited partner will be required to take into account its
distributive share of any Fund income, gain or loss for purposes of the
alternative minimum tax. Since a limited partner's potential liability for
the alternative minimum tax will depend upon his overall tax situation,
prospective investors are urged to consult with their tax advisors concerning
the effect of an investment in the Fund on its potential liability for the
alternative minimum tax.
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Taxation of Fund Investments
The Fund may realize capital gains or losses from dispositions of its
investments. Interest, dividends and certain other income earned by the Fund
will generally be treated as ordinary income. Net capital gains of
individual limited partners are generally taxable at a maximum rate of 20%
whereas ordinary income is generally taxable at a 39.6% rate. Corporate
limited partners are generally taxed at the same 35% rate on both ordinary
income and capital gains. The excess of capital losses over capital gains
may be offset against the ordinary income of a non-corporate limited partner,
subject to an annual deduction limitation of $3,000. Unused capital losses
may generally be carried forward indefinitely subject to an annual reduction
based on the amount of capital losses allowed or allowable as a deduction in
the taxable year. For corporate limited partners, capital losses may be
offset only against capital gains, but unused capital losses may be carried
back three years (subject to certain limitations) and carried forward five
years.
Deductibility of Fund Investment Expenditures by Individual Partners
Under the Code miscellaneous itemized deductions of an individual,
including investment expenses (e.g., investment advisory fees), are
deductible subject to certain limitations only to the extent they exceed 2%
of the individual's adjusted gross income. This limitation on deductibility
may apply to an individual partner's share of the investment expenses of a
partnership. Whether the operating expenses of the Fund will be treated as
investment expenses subject to the foregoing rule will depend on whether the
Fund is treated as engaged in a trade or business for tax purposes. The
Manager will file the Fund's tax returns and the accompanying Schedule K-1 on
the basis that the expenses are subject to the 2% limitation. Thus, an
individual partner's share of certain of the Fund's expenses, including the
Management Fee, will be reported as subject to this rule. Moreover, the
otherwise allowable itemized deductions of individuals whose adjusted gross
income exceeds an applicable threshold amount are subject to reduction by an
amount equal to the lesser of (i) 3% of the excess of such individual's
adjusted gross income over the threshold amount or (ii) 80% of the amount of
the itemized deductions otherwise allowable. The consequences of this
limitation will vary depending upon the personal tax situation of each
taxpayer. Accordingly, individual limited partners should consult their tax
advisors with respect to the application of this limitation.
Tax Exempt Investors
Income recognized by a tax-exempt entity is exempt from federal
income tax except to the extent of the entity's "unrelated business taxable
income" ("UBTI"). With exceptions for certain types of entities, UBTI is
generally defined as income from a trade or business regularly carried on by
a tax-exempt entity that is unrelated to its exempt purpose (including an
unrelated trade or business regularly carried on by a partnership of which
the entity is a partner). UBTI generally does not include dividends,
interest and gains from the sale of property that is neither inventory nor
held for sale to customers in the ordinary course of business. A tax-exempt
entity deriving gross income characterized as UBTI that exceeds $1,000 in any
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taxable year is obligated to file a federal income tax return, even if it has
no liability for that year as a result of deductions against such gross
income, including an annual $1,000 statutory deduction.
Notwithstanding the foregoing, if a tax exempt entity's acquisition
of an interest in the Fund is debt-financed, or the Fund incurs debt (which
it is entitled to do under certain circumstances) for the acquisition of an
investment, all or a portion of the income or gain attributed to the "debt
financed property" would be included in UBTI regardless of whether such
income or gain would otherwise be excluded as dividends, interest or other
similar income. Prospective tax-exempt investors are urged to consult their
tax advisors with respect to the consequences of investing in the Fund.
Tax Elections; Returns; Tax Audits
The Code provides for optional adjustments to the basis of
partnership property upon distributions of partnership property to a partner
and transfers of partnership interests (including by reason of death)
provided that a partnership election has been made pursuant to Section 754.
Under the Partnership Agreement, the Manager, in its sole discretion, may,
but is not required to, cause the Fund to make this election. This election,
once made, cannot be revoked without the consent of the IRS.
The Fund will file a federal partnership information return for each
calendar year and will provide each limited partner with an annual statement
containing relevant income tax information, including each limited partner's
share of the Fund's taxable income or loss and capital gains or losses for
each calendar year. The Manager decides how to report the Fund items on the
Fund's tax returns, and all limited partners are required under the Code to
treat the items consistently on their own returns, unless they file a
statement with the IRS disclosing the inconsistency. If the income tax
returns of the Fund are audited by the IRS, the tax treatment of Fund income
and deductions generally will be determined at the Fund level in a single
proceeding rather than by individual audits of the partners. The costs
relating to such an audit will be borne by the partners or the Fund. The
Manager will be designated as the "Tax Matters Partner" and will have
considerable authority to make decisions affecting the tax treatment and
procedural rights of all partners. In addition, the Tax Matters Partner will
have the right on behalf of all partners to extend the statute of limitations
relating to the partners' tax liabilities with respect to Fund items.
Foreign Investors
The Federal income tax treatment applicable to a nonresident alien or
foreign entity investing in the Fund is complex and will vary depending upon
the particular circumstances of each such limited partner and whether the
Fund is treated as being engaged in a trade or business for United States
Federal income tax purposes. Foreign investors are urged to consult with
their tax advisors concerning the United States Federal, state, local and
foreign (including the foreign investor's country of residence) tax treatment
of an investment in the Fund.
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State and Local Taxation
In addition to the federal income tax consequences described above,
prospective investors should consider potential state and local tax
consequences of an investment in the Fund. State and local laws often differ
from federal income tax laws with respect to the treatment of specific items
of income, gain, loss, deduction and credit. A limited partner's
distributive share of the taxable income or loss of the Fund generally will
be required to be included in determining his reportable income for state and
local tax purposes in the jurisdiction in which he is a resident.
A state or other taxing authority in which the Fund may be deemed to
be doing business may impose a tax on that limited partner with respect his
share of Fund income. Moreover, the Fund may itself be subject to state and
local tax.
Prospective investors are urged to consult their tax advisors with
respect to the state and local tax consequences of investing in the Fund,
including the effect of applicable New York State and New York City tax laws.
Certain Proposed Federal Income Tax Legislation
A number of items of legislation have in the past been proposed that
could alter certain of the federal income tax consequences of an investment
in the Fund. It is uncertain whether any such proposed legislation (or
similar legislation) will be enacted. Prospective investors should consult
their own tax advisors regarding proposed legislation.
Early in each calendar year, the Fund will send you a notice showing
the amount of distributions you received in the preceding year and the tax
status of those distributions. The above is a general summary of tax
implications of investing in the Fund. Please consult your tax adviser to
see how investing in the Fund will affect your own tax situation.
CERTAIN ERISA CONSIDERATIONS
General Fiduciary Matters
In considering an investment in the Fund of a portion of the assets
of any employee benefit plan (including a "Keogh" plan), whether or not
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Code (a "Qualified Plan"), a fiduciary should determine, in
light of the substantial restrictions on transfers and withdrawals by limited
partners and the illiquidity of the units, whether the investment is in
accordance with the documents and instruments governing the Qualified Plan
and the applicable provisions of ERISA relating to a fiduciary's duties to
the Qualified Plan.
ERISA and the Code impose certain duties on persons who are
fiduciaries of plans and prohibit certain transactions involving the assets
of a plan and its fiduciaries or other interested parties. Under ERISA and
the Code, any person who exercises any authority or control over the
management or disposition of the assets of a plan is considered to be a
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fiduciary of the plan, subject to certain exceptions which are not relevant
to the Fund.
Plan Assets
If the assets of the Fund were to be deemed to be "plan assets" under
ERISA, (i) the prudence and other fiduciary responsibility standards of ERISA
applicable to investments made by certain Qualified Plans and their
fiduciaries would extend to investments made by the Fund, and (ii) certain
transactions in which the Fund might seek to engage could constitute
"prohibited transactions" under ERISA and the Code.
Under current law, an entity will be deemed to hold plan assets if
the total equity investment by benefit plan investors is 25 percent or more
of the entity's equity, excluding equity interests held by the person with
discretionary authority or control over the assets of the entity and the
affiliates of such person. For purposes of this 25 percent test, all
employee benefit plans, whether or not subject to ERISA or the Code, are
counted, including "Keogh" plans, Individual Retirement Accounts and pension
plans maintained by foreign corporations. If benefit plan investors
constitute 25 percent or more of the Fund's equity, the Fund will be deemed
to hold "plan assets," and the Manager and Directors will attempt to comply
with the provisions of ERISA and the Code applicable to a fiduciary of a
Qualified Plan under ERISA.
Plan Asset Consequences;
Prohibited Transaction Exemption
When the Fund holds "plan assets," additional issues arise under the
prohibited transaction provisions of ERISA and the Code by virtue of a
Director's or the Manager's interest in the Fund and the possible
relationship between a Director or the Manager and any Qualified Plan which
may purchase units. If a prohibited transaction occurs for which no
administrative exemption is available, the Director or Manager, and any other
party in interest which has engaged in any such prohibited transaction, would
be required (i) to restore to the Qualified Plan any profit realized on the
transaction and (ii) to reimburse the Qualified Plan for any losses suffered
by the Qualified Plan as a result of the investment. In addition, each party
in interest involved could be subject to an excise tax equal to 5 percent of
the amount involved in the prohibited transaction for each year the
transaction continues and, unless the transaction is corrected within
statutorily required periods, to an additional tax of 100 percent. Plan
fiduciaries who decide to invest in the Fund could, under certain
circumstances, be liable for prohibited transactions or other violations as a
result of their investment in the Fund or as co-fiduciaries for actions taken
by the Directors or the Manager.
Furthermore, unless appropriate administrative exemptions were
available or were obtained, the Fund could be restricted from acquiring an
otherwise desirable investment or from entering into an otherwise favorable
transaction if the acquisition or transaction would constitute a "prohibited
transaction." For example, the Fund could be prohibited from investing in a
corporation whose affiliates maintain a pension or profit-sharing plan
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participating in the Fund. However, because of the type of portfolio that
the Fund is expected to have, the Fund does not believe that the investment
restrictions imposed by the prohibited transaction provisions of ERISA and
the Code will materially limit the investment opportunities available to the
Fund.
ANY FIDUCIARY FOR A QUALIFIED PLAN SHOULD CONSULT ITS LEGAL ADVISOR
CONCERNING THE ERISA CONSIDERATIONS DISCUSSED ABOVE BEFORE MAKING AN
INVESTMENT IN THE FUND.
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Contacting the Fund
You can contact us by calling (212) 661-2640 or writing:
BMO Partners Fund, Inc.
330 Madison Avenue, 31st Floor
New York, New York 10017
Securities and Exchange Commission (SEC)
You can write the SEC's Public Reference Room and ask them to mail
you information about the Fund. They will charge you a copying fee for this
service. You can also visit the Public Reference Section and copy the
documents while you are there.
Public Reference Section of the SEC
Washington, D.C. 20549-6009
1-800-SEC-0330
Reports and a copy of other information about the Fund is also
available on the SEC's website at http://www.sec.gov.
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EXHIBIT A
----------------------------------------------
SECOND AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
BMO PARTNERS FUND, L.P.
Dated as of May 9, 2000
----------------------------------------------
============================================================
THE LIMITED PARTNERSHIP UNITS OF BMO PARTNERS FUND, L.P. HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), THE
SECURITIES LAWS OF ANY STATE OR ANY OTHER APPLICABLE SECURITIES LAWS IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND
THOSE LAWS. THE UNITS MUST BE ACQUIRED FOR INVESTMENT ONLY, AND THE UNITS
MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR
TRANSFERRED AT ANY TIME EXCEPT IN COMPLIANCE WITH (I) THE ACT, ANY APPLICABLE
STATE SECURITIES LAWS AND ANY OTHER APPLICABLE SECURITIES LAWS AND (II) THE
TERMS AND CONDITIONS OF THIS AGREEMENT. THE UNITS WILL NOT BE TRANSFERRED OF
RECORD EXCEPT IN COMPLIANCE WITH THOSE LAWS AND THIS AGREEMENT.
<PAGE>
TABLE OF CONTENTS
Page(s)
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.01 Formation . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.02 Name . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.03 Organizational Certificates and Other Filings . . 5
SECTION 2.04 Principal Place of Business . . . . . . . . . . . 5
SECTION 2.05 Registered Office and Registered Agent . . . . . . 6
SECTION 2.06 Term . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.07 Fiscal Year . . . . . . . . . . . . . . . . . . . 6
SECTION 2.08 Manager; Directors . . . . . . . . . . . . . . . . 6
SECTION 2.09 Limited Partners . . . . . . . . . . . . . . . . . 7
SECTION 2.10 Both General and Limited Partner . . . . . . . . . 7
SECTION 2.11 Liability of Partners . . . . . . . . . . . . . . 7
SECTION 2.12 Purposes . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.13 Investment Restrictions . . . . . . . . . . . . . 9
SECTION 2.14 Interests to be Denominated as Units . . . . . . . 9
ARTICLE III
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . 10
SECTION 3.01 Management and Control . . . . . . . . . . . . . . 10
SECTION 3.02 Actions by Directors . . . . . . . . . . . . . . . 10
SECTION 3.03 Meetings of Limited Partners . . . . . . . . . . . 11
SECTION 3.04 Management Services . . . . . . . . . . . . . . . 12
SECTION 3.05 Reliance by Third Parties . . . . . . . . . . . . 15
SECTION 3.06 Other Activities of the General Partners . . . . . 15
SECTION 3.07 Custody of Assets of the Fund . . . . . . . . . . 15
SECTION 3.08 Exculpation . . . . . . . . . . . . . . . . . . . 16
SECTION 3.09 Indemnification . . . . . . . . . . . . . . . . . 16
SECTION 3.10 Expenses . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV
TERMINATION OF STATUS AS GENERAL
PARTNER, TRANSFERS AND REPURCHASES . . . . . . . . . . . . . . . 18
SECTION 4.01 Termination of Status of the Manager . . . . . . . 18
SECTION 4.02 Termination of Status of a Director . . . . . . . 18
SECTION 4.03 Removal of Directors . . . . . . . . . . . . . . . 19
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SECTION 4.04 Changes in General Partners . . . . . . . . . . . 19
SECTION 4.05 Transfer of Units . . . . . . . . . . . . . . . . 19
SECTION 4.06 Repurchase of Units . . . . . . . . . . . . . . . 20
ARTICLE V
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS
AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.01 Capital Contributions . . . . . . . . . . . . . . 20
SECTION 5.02 Capital Accounts and Tax Accounts . . . . . . . . 21
SECTION 5.03 Capital Account Allocations . . . . . . . . . . . 22
SECTION 5.04 Closing of the Books . . . . . . . . . . . . . . . 23
SECTION 5.05 Valuation of Assets . . . . . . . . . . . . . . . 23
SECTION 5.06 Liabilities . . . . . . . . . . . . . . . . . . . 24
SECTION 5.07 Tax Account Allocations . . . . . . . . . . . . . 24
SECTION 5.08 Determination by the Manager of Certain
Matters . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI
WITHDRAWALS AND DISTRIBUTIONS OF CAPITAL . . . . . . . . . . . . 26
SECTION 6.01 Withdrawals and Distributions in General . . . . . 26
SECTION 6.02 Distributions of Net Investment Income and Net
Realized Capital Gains . . . . . . . . . . . . . 26
SECTION 6.03 Method of Distributions . . . . . . . . . . . . . . 26
ARTICLE VII
ADMISSION OF NEW PARTNERS . . . . . . . . . . . . . . . . . . . 27
ARTICLE VIII
WITHDRAWAL, DEATH OR INCOMPETENCY OF PARTNERS . . . . . . . . . 27
SECTION 8.01 Withdrawal, Death, Etc., of Partners . . . . . . . 27
SECTION 8.02 Required Withdrawals of Partners. . . . . . . . 28
SECTION 8.03 Effective Date of Withdrawal . . . . . . . . . . . 28
SECTION 8.04 Limitations on Withdrawal of Capital Account . . . 28
ARTICLE IX
DURATION AND TERMINATION OF THE FUND . . . . . . . . . . . . . . 28
SECTION 9.01 Duration . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9.02 Termination . . . . . . . . . . . . . . . . . . . 29
SECTION 9.03 Restoration Obligation . . . . . . . . . . . . . . 29
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ARTICLE X
TAX RETURNS; REPORTS TO PARTNERS. . . . . . . . . . . . . . . . 29
SECTION 10.01 Independent Auditors . . . . . . . . . . . . . . 29
SECTION 10.02 Filing of Tax Returns . . . . . . . . . . . . . . 30
SECTION 10.03 Tax Matters Partner . . . . . . . . . . . . . . . 30
SECTION 10.04 Consistent Reporting . . . . . . . . . . . . . . 30
SECTION 10.05 Reports to Current Partners . . . . . . . . . . . 30
SECTION 10.06 Reports to Partners and Former Partners . . . . . 31
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 11.01 Power of Attorney . . . . . . . . . . . . . . . . 31
SECTION 11.02 General . . . . . . . . . . . . . . . . . . . . . 31
SECTION 11.03 Waiver of Partition . . . . . . . . . . . . . . . 31
SECTION 11.04 Amendments to Partnership Agreement . . . . . . . 31
SECTION 11.05 Governing Law . . . . . . . . . . . . . . . . . . 32
SECTION 11.06 Adjustment of Basis of Fund Property . . . . . . 32
SECTION 11.07 Notices . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.08 Goodwill . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.09 Headings . . . . . . . . . . . . . . . . . . . . 32
SECTION 11.10 Pronouns . . . . . . . . . . . . . . . . . . . . 33
SCHEDULE I Limited Partners
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<PAGE>
SECOND AMENDED AND RESTATED
LIMITED PARTNERSHIP AGREEMENT
OF
BMO PARTNERS FUND, L.P.
This SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT of
BMO Partners Fund, L.P. , a Delaware limited partnership (the "Fund"), is
made as of May 9, 2000 by and among Beck, Mack & Oliver LLC, a New York
limited liability company and a general partner of the Fund, John C. Beck,
Margaret Ann Johnson and John D. Twiname as Directors and those persons
listed on Schedule I (as such Schedule I may be amended from time to time) as
Limited Partners.
The Fund was formed pursuant to a Limited Partnership Agreement,
dated as of March 8, 1991 and amended and restated as of April 19, 1991,
among the General Partner (as defined therein), the Initial Limited Partner
(as defined therein), and the persons designated as limited partners in the
records of the Fund, and a Certificate of Limited Partnership, dated as of
March 7, 1991, which was filed in the office of the Secretary of State of
Delaware on March 8, 1991. The parties wish to amend the Limited Partnership
Agreement to permit the registration of the Fund as a closed-end management
investment company pursuant to the Investment Company Act of 1940, as
amended, and to make certain other modifications. Accordingly, the parties
agree to amend and restate the Amended and Restated Limited Partnership
Agreement in its entirety to read as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, unless the context otherwise
requires:
(a) "Affiliate" means, with respect to a Person, any other Person
which either directly or indirectly controls, is controlled by or is under
common control with the first Person.
(b) "Agreement" means this Second Amended and Restated Limited
Partnership Agreement, as amended and restated from time to time.
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(c) "Beginning Value", with respect to any Fiscal Period, means the
value of the Fund's Net Assets at the beginning of that Fiscal Period.
(d) "Board" or "Board of Directors" means the board of directors of
the Fund consisting of all of the Directors.
(d) "Capital Account" has the meaning specified in Section 5.02(a).
(e) "Certificate" means the Certificate of Limited Partnership of
the Fund, dated as of March 7, 1991, filed in the office of the Secretary of
State of Delaware on March 8, 1991, as amended and restated from time to
time.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Directors" means those General Partners who are natural
persons serving as directors of the Fund listed from time to time on Schedule
I.
(h) "Ending Value", with respect to any Fiscal Period, means the
value of the Fund's Net Assets at the end of that Fiscal Period.
(i) "Fiscal Period" means the period beginning on the first day
following the last day of the immediately preceding Fiscal Period and ending
on the earliest of (i) the date immediately preceding the date on which
additional capital contributions are made to the Fund, (ii) the date on which
there are withdrawals from the Fund, (iii) the December 31st of the calendar
year within which the current Fiscal Period began and (iv) the date on which
the Fund liquidates.
(j) "Form N-2" means the Fund's Registration Statement on Form N-2
to be filed with the Securities and Exchange Commission on or after the date
hereof, as amended from time to time.
(k) "Fund" means BMO Partners Fund, L.P., a Delaware limited
partnership.
(l) "General Partner" means the Manager or any Director.
(m) "Indemnitees" has the meaning specified in Section 3.09(a).
(n) "Independent Directors" means those Directors who are not
"interested persons" (as defined in the 1940 Act) of the Fund and, when used
with respect to the approval of a particular agreement, who are not parties
to such agreement or "interested persons" (as defined in the 1940 Act) of any
such party.
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(o) "Initial Capital Contribution" has the meaning specified in
Section 5.01(a).
(p) "Interest" means the Capital Account that a Limited Partner or
former Limited Partner would have received, or in fact did receive, pursuant
to the terms and provisions of Articles VI or VIII upon withdrawal from the
Fund as of the end of that fiscal year, or relevant portion thereof.
(q) "Investment Advisory Agreement" has the meaning specified in
Section 3.04(a).
(r) "Limited Partner" means any Person who shall have been admitted
to the Fund as a limited partner (including any General Partner in such
person's capacity as a limited partner of the Fund but excluding any General
Partner in such person's capacity as a general partner of the Fund) until the
Fund repurchases all of such Person's Units pursuant to Section 4.06 hereof
or a substituted Limited Partner or Partners are admitted with respect to any
such Person's entire Interest pursuant to Section 4.05 hereof.
(s) "Management Fee" means the fee payable by the Fund to the
Manager for its advisory services pursuant to a written agreement described
in Section 3.04(a).
(t) "Management Services" has the meaning specified in Section
3.04.
(u) "Manager" means Beck, Mack & Oliver LLC or successor thereto as
investment manager of the Fund.
(v) "Manager Expenses" has the meaning specified in Section
3.10(a).
(w) "Negative Basis" has the meaning specified in Section 5.07(d).
(x) "Negative Basis Partner" has the meaning specified in Section
5.07(d).
(y) "Net Assets" means the excess of the Fund's assets over its
liabilities.
(z) "Net Capital Appreciation", with respect to any Fiscal Period,
means the excess of the Ending Value over the Beginning Value plus the amount
of any distributions during that Fiscal Period and minus the amount of any
capital contributions to the Fund during that Fiscal Period.
(aa) "Net Capital Depreciation", with respect to any Fiscal Period,
means the excess of the Beginning Value over the Ending Value minus the
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amount of any distributions during that Fiscal Period plus the amount of any
capital contributions to the Fund during that Fiscal Period.
(bb) "Net Investment Income," with respect to any Fiscal Period,
means the excess of the aggregate dividends, interest and other items of
income during that Fiscal Period earned by the Fund from all sources over the
expenses incurred or accrued during that Fiscal Period by the Fund.
(cc) "Net Realized Capital Gains", with respect to any calendar
year, means the excess of the aggregate capital gains over aggregate capital
losses realized during that fiscal year and reserves established during that
fiscal year by the Fund.
(dd) "1940 Act" means the Investment Company Act of 1940 and the
rules promulgated thereunder, as amended from time to time.
(ee) "1940 Act majority" means the vote at a meeting of the lesser
of (i) 67% or more of the Units present or represented by proxy, if the
holders of more than 50% of the outstanding Units are present or represented
by proxy, or (ii) more than 50% of the outstanding Units.
(ff) "Partners" means the General Partners and the Limited
Partners.
(gg) "Partnership Act" means the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time.
(hh) "Pass-Thru Partner" has the meaning specified in Section
10.03.
(ii) "Person" means any individual, partnership, corporation,
unincorporated organization or association, trust (including the trustees
thereof in their capacity as such) or other entity.
(jj) "Positive Basis" has the meaning specified in Section 5.07(d).
(kk) "Positive Basis Partner" has the meaning specified in Section
5.07(d).
(ll) "Securities" has the meaning specified in Section 2.12(a).
(mm) "Sharing Percentage" means the partnership percentage for each
Fiscal Period of a Partner set forth in the records of the Fund at the Fund's
principal place of business set forth in Section 2.04 and determined for that
Fiscal Period by dividing the balance of each Partner's Capital Account as of
the beginning of that Fiscal Period by the sum of the Capital Accounts of all
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Partners as of the beginning of that Fiscal Period. The sum of the Sharing
Percentages shall be 100 percent.
(nn) "Subscription Agreements" means the Subscription Agreements
between the Fund and the Limited Partners.
(oo) "Tax Account" has the meaning specified in Section 5.02.
(pp) "Tax Matters Partner" has the meaning specified in Section
10.03.
(qq) "Transfer" means the assignment, transfer, sale, encumbrance,
pledge or other disposition of any Units, including the right to receive any
allocations and distributions attributable to a Unit.
(rr) "Units" means units of limited partnership interest in the
Fund.
ARTICLE II
GENERAL PROVISIONS
SECTION 2.01 Formation. The parties continue a limited partnership
formed on March 8, 1991 pursuant to the Partnership Act.
SECTION 2.02 Name. The name of the Fund is "BMO Partners Fund,
L.P." The Board may make any variations in the Fund's name which the Board
deems necessary or advisable to comply with the laws of any jurisdiction in
which the Fund may conduct business provided that the name shall always
contain the words "Limited Partnership" or the letters "L.P."
SECTION 2.03 Organizational Certificates and Other Filings. If
requested by the Manager, the Limited Partners shall promptly execute all
certificates and other documents consistent with the terms of this Agreement
necessary for the Manager to accomplish all filing, recording, publishing and
other acts that may be appropriate to comply with all requirements for (a)
the formation and operation of a limited partnership under the laws of the
State of Delaware, (b) the registration of a closed-end management investment
company under the 1940 Act and (c) the operation of the Fund as a limited
partnership, or partnership in which the Limited Partners have limited
liability, in all jurisdictions where the Fund conducts or proposes to
conduct business.
SECTION 2.04 Principal Place of Business. The principal place of
business of the Fund shall be located at 330 Madison Avenue, 31st Floor, New
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York, NY 10017 or any other place that the Board of Directors may select,
provided that notice of that selection is given to the Limited Partners.
SECTION 2.05 Registered Office and Registered Agent. The address
of the Fund's registered office in the State of Delaware is The Prentice-Hall
Corporation System, Inc., 32 Loockerman Square, Suite L-100, Dover, Kent
County, Delaware 19901. The name and address of the Fund's registered agent
for service of process in the State of Delaware is The Prentice-Hall
Corporation System, Inc., 32 Loockerman Square, Suite L-100, Dover, Kent
County, Delaware 19901.
SECTION 2.06 Term. The Fund commenced upon the filing for record
of the Certificate in the office of the Secretary of State of Delaware and
shall continue in business through the first to occur of (a) the close of
business on December 31, 2025, (b) the Board's determination at any time and
for any reason to liquidate and dissolve the Fund, (c) the bankruptcy or
insolvency of the Manager, (d) the election to dissolve the partnership by
the holders of a 1940 Act majority, or (e) termination, dissolution or
withdrawal of Beck, Mack & Oliver LLC as Manager without the Board
designating and, if required by the 1940 Act, the Limited Partners approving
another investment adviser to be substituted as the Manager.
SECTION 2.07 Fiscal Year. The fiscal year of the Fund (the "fiscal
year") shall end on December 31 of each calendar year or any other date
deemed advisable by the Board and permitted under the Code. The Fund shall
have the same fiscal year for United States federal and state income tax
purposes and for financial and partnership accounting purposes.
SECTION 2.08 Manager; Directors. (a) The Directors may, subject to
the provisions of this Section 2.08 with respect to the number of and
vacancies in the position of Director, the provisions of Section 3.03 with
respect to the election of Directors by Limited Partners and the provisions
of the 1940 Act, admit any person who shall agree to be bound by all of the
terms of this Agreement as a Director. The Manager may admit to the Fund as
a new Manager any person it has designated pursuant to and in compliance with
Section 4.04 hereof and then withdraw as Manager. The Directors may admit to
the Fund any person as a new Manager if the status of the Manager is
terminated pursuant to Section 4.01 or is transferred in an "assignment" of
the Investment Advisory Agreement pursuant to Section 4.04 and both the
Directors (including a majority of the Independent Directors) and Limited
Partners holding not less than a 1940 Act majority approve a new Investment
Advisory Agreement with such new Manager. The names and mailing addresses of
the General Partners shall be set forth on Schedule I hereto. The General
Partners shall be listed separately as the "Directors" and the "Manager."
The number of Directors shall be fixed from time to time by the Directors.
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(b) Subject to compliance with the provisions of the 1940 Act, the
Manager's service to the Fund shall continue for the term of the Fund unless
its status as the Manager shall be sooner terminated pursuant to Section 4.01
or 4.04 hereof. In the event of any vacancy in the position of a Director,
the remaining Directors may appoint an individual to serve in such capacity,
subject to the requirements of the 1940 Act.
(c) In the event that no Director remains to continue the business
of the Fund, the Manager shall promptly call a meeting of the Limited
Partners, to be held within the time period required by the 1940 Act, for the
purpose of determining whether to continue the business of the Fund and, if
the business shall be continued, of electing Directors. If the Limited
Partners shall determine at such meeting not to continue the business of the
Fund or if new Directors are not elected in compliance with the provisions of
the 1940 Act, then the Fund shall be dissolved pursuant to Section 9.01
hereof and the assets of the Fund shall be liquidated and distributed
pursuant to Section 9.02 hereof.
SECTION 2.09 Limited Partners. The Manager (subject to any
policies established by the Board) may at any time and without advance notice
to or consent from any other Partner, sell Units to and admit as a Limited
Partner any person who shall agree to be bound by all of the terms of this
Agreement as a Limited Partner. The Manager may in its absolute discretion
reject subscriptions for Units. The admission of any Person as a Limited
Partner shall be effective upon the revision of Schedule I to this Agreement
to reflect the name and the required purchase of Units by such additional
Limited Partner.
SECTION 2.10 Both General and Limited Partner. A Partner may at the
same time be a General Partner and a Limited Partner, in which event such
Partner's rights and obligations in each capacity shall be determined
separately in accordance with the terms and provisions hereof or as provided
in the Partnership Act.
SECTION 2.11 Liability of Partners. (a) The names of all of the
Partners and the number of Units held by all of the Limited Partners shall be
maintained in the records of the Fund.
(b) The General Partners and any former General Partners shall have
unlimited liability for the repayment and discharge of all debts and
obligations of the Fund attributable to any fiscal year or portion thereof
during which they are or were General Partners of the Fund but shall, as
among the Partners, be entitled to require the prior exhaustion of the Fund's
assets and shall be entitled to the benefit of the indemnities set forth in
Section 3.09.
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(c) Limited Partners and former Limited Partners shall be liable
for the repayment and discharge of all debts and obligations of the Fund
attributable to any fiscal year, or relevant portion thereof, during which
they are or were Limited Partners only to the extent of their respective
Interests in the Fund in the fiscal year, or relevant portion thereof, to
which any such debts and obligations are attributable, in proportion to their
Sharing Percentages for the relevant period or periods. The General Partners
shall bear all losses, liabilities or expenses incurred by virtue of the
operation of paragraph (b) of this Section 2.11 in excess of their Interests
in the fiscal year to which the relevant debts or obligations are
attributable.
(d) As used in this Agreement, the terms "former Partners," "former
Limited Partners" and "former General Partners" refer to the Persons or
entities which from time to time cease to be Limited Partners or General
Partners, as the case may be, under this Agreement.
SECTION 2.12 Purposes. The Fund is organized for the purpose of
achieving long-term capital appreciation consistent with preservation of
capital by investing in Securities (as defined below). The Fund shall have
the power to engage in all activities and transactions which the Manager
deems necessary or advisable, including, without limitation, but subject to
the investment restrictions set forth in Section 2.13 and consistent with
operating as a closed-end, non-diversified, management investment company in
accordance with the 1940 Act:
(a) To invest and trade in capital stock, shares of beneficial
interest, warrants, bonds, notes, debentures, whether subordinated,
convertible or otherwise, mutual funds, money market funds, commercial paper,
certificates of deposit, bank debt, trade claims, obligations of the United
States, any State thereof and instrumentalities of any of them, bankers'
acceptances, trust receipts, master notes and other obligations, and
instruments or evidences of indebtedness commonly referred to as securities
of whatever kind or nature of any person, corporation, government or entity
whatsoever, and in options on stock indices (collectively, "Securities");
(b) To engage in any other lawful transactions in Securities which
the Manager from time to time determines;
(c) To possess, transfer or otherwise deal in, and to exercise all
rights, powers, privileges and other incidents of ownership or possession
with respect to, Securities and other property and funds held or owned by the
Fund;
(d) To borrow or raise moneys and to issue, accept, endorse and
execute promissory notes, drafts, bills of exchange, warrants, bonds,
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debentures and other negotiable or non-negotiable instruments and evidences
of indebtedness;
(e) To maintain for the conduct of Fund affairs one or more offices
and in connection therewith rent or acquire office space, engage personnel,
whether part-time or full time, and do any other acts that the Manager deems
necessary or advisable in connection with the maintenance and administration
of such office or offices;
(f) To engage attorneys, independent accountants and any other
Persons that the Manager deems necessary or advisable;
(g) To do all acts on behalf of the Fund, and exercise all rights
of the Fund, with respect to its interest in any person, firm, corporation or
other entity, including without limitation participation in arrangements with
creditors, the institution and settlement or compromise of suits and
administrative proceedings and other similar matters; and
(h) To do any other act that the Manager deems necessary or
advisable in connection with the management and administration of the Fund as
an investment company.
SECTION 2.13 Investment Restrictions. The Fund shall not (a)
borrow money, except as a temporary measure for extraordinary or emergency
purposes and then only from banks and only in an amount not to exceed 10% of
its total assets, or mortgage or pledge its assets, (b) invest (i) 10% or
more of its total assets in the Securities of any one issuer or (ii) 25% or
more of its total assets in the Securities of issuers in any single industry
provided that this restriction (b) shall not apply to investments in United
States Government Securities, (c) acquire 10% or more of the voting power or
value of a foreign corporation, (d) purchase any Securities on margin (except
that the Fund may make deposits in connection with transactions in options)
or make short sales of Securities, (e) make loans (other than through the
purchase of debt Securities) or lend Securities, (f) underwrite Securities or
(g) purchase or sell commodities, commodity contracts, futures contracts or
options thereon or purchase, sell or write put or call options on Securities,
provided, that for bona fide hedging purposes the Fund may purchase or sell
options on stock indices. The foregoing percentages of the total assets of
the Fund shall be based on the market value of its assets at the time of each
investment.
SECTION 2.14 Interests to be Denominated as Units. Each Limited
Partner's Interest will be denominated in Units with an aggregate net asset
value equal to the value of such Limited Partner's Capital Account.
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ARTICLE III
MANAGEMENT OF THE FUND
SECTION 3.01 Management and Control. (a) The ultimate authority
over the management and control of the business of the Fund shall be vested
in the Directors, who shall have the right, power and authority, on behalf of
the Fund and in its name, to exercise all rights, powers and authority of
general partners under the Partnership Act and to do all things necessary and
proper to carry out the objective and business of the Fund and their duties
hereunder. The parties hereto intend that, except to the extent otherwise
expressly provided herein, (i) each Director shall be vested with the same
powers, authority and responsibilities on behalf of the Fund as are
customarily vested in each director of a Delaware corporation and (ii) each
Independent Director shall be vested with the same powers, authority and
responsibilities on behalf of the Fund as are customarily vested in each
director of a closed-end management investment company registered under the
1940 Act that is organized as a Delaware corporation and who is not an
"interested person" of such company as such term is defined in the 1940 Act.
During any period in which the Fund shall have no Directors, the Manager
shall continue the management and control of the Fund subject to Section
2.08(c).
(b) The Manager shall be the designated Tax Matters Partner for
purposes of Section 6231(a)(7) of the Code. Each Partner agrees not to
treat, on his personal return or in any claim for a refund, any item of
income, gain, loss, deduction or credit in a manner inconsistent with the
treatment of such item by the Fund. The Manager shall have the exclusive
authority and discretion to make any elections required or permitted to be
made by the Fund under any provisions of the Code or any other revenue laws.
(c) Limited Partners shall have no right to participate in and
shall take no part in the management or control of the Fund's business and
shall have no right, power or authority to act for or bind the Fund. Limited
Partners shall have the right to vote on any matters only as provided in this
Agreement or on any matters that require the approval of the holders of
voting securities under the 1940 Act or as otherwise required in the Delaware
Act. The exercise by any Limited Partner of any right conferred herein shall
not be construed to constitute participation by the Limited Partner in the
control of the business of the Fund so as to make the Limited Partner liable
as a general partner for the debts and obligations of the Fund for purposes
of the Partnership Act.
SECTION 3.02 Actions by Directors. (a) Unless provided otherwise
in this Agreement, the Directors shall act only: (i) by the affirmative vote
of a majority of the Directors (which majority shall include any requisite
number of Independent Directors required by the 1940 Act) present at a
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meeting duly called at which a quorum of the Directors shall be present (in
person or, if in person attendance is not required by the 1940 Act, by
telephone) or (ii) by unanimous written consent of all of the Directors
without a meeting, if permissible under the 1940 Act.
(b) The Directors may designate from time to time a Principal
Director, who shall preside at all meetings. Meetings of the Directors may
be called by the Principal Director or by any two Directors, and may be held
on such date and at such time and place as the Directors shall determine.
Each Director shall be entitled to receive written notice of the date, time
and place of such meeting within a reasonable time in advance of the meeting.
Notice need not be given to any Director who shall attend a meeting without
objecting to the lack of notice or who shall execute a written waiver of
notice with respect to the meeting. Directors may attend and participate in
any meeting by telephone except where in person attendance at a meeting is
required by the 1940 Act. A majority of the Directors shall constitute a
quorum at any meeting.
SECTION 3.03 Meetings of Limited Partners. (a) Actions requiring
the vote of the Limited Partners may be taken at any duly constituted meeting
of the Limited Partners at which a quorum is present or by written consent.
Meetings of the Limited Partners may be called by the Manager, by the
Directors or by Limited Partners holding 25% or more of the total number of
votes eligible to be cast by all Limited Partners, and may be held at such
time, date and place as the Manager shall determine. The Manager shall
arrange to provide written notice of the meeting, stating the date, time and
place of the meeting and the record date therefor, to each Limited Partner
entitled to vote at the meeting within a reasonable time prior thereto.
Failure to receive notice of a meeting on the part of any Limited Partner
shall not affect the validity of any act or proceeding of the meeting, so
long as a quorum shall be present at the meeting. Only matters set forth in
the notice of a meeting may be voted on by the Limited Partners at a meeting.
The presence in person or by proxy of Limited Partners holding a majority of
the total number of votes eligible to be cast by all Limited Partners as of
the record date shall constitute a quorum at any meeting. In the absence of
a quorum, the Manager may adjourn a meeting to the time or times as
determined by the Manager without additional notice to the Partners. Except
as otherwise required by any provision of this Agreement or by applicable
law, (i) those candidates receiving a plurality of the votes cast at any
meeting of Limited Partners shall be elected as Directors and (ii) all other
actions of the Limited Partners taken at a meeting shall require the
affirmative vote of Limited Partners holding a majority of the total number
of votes eligible to be cast by those Limited Partners who are present in
person or by proxy at such meeting.
(b) Each Limited Partner shall be entitled to cast at any meeting
of Limited Partners one vote for each Unit held as of the record date for
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such meeting. The Manager shall establish a record date not less than 10 nor
more than 60 days prior to the date of any meeting of Limited Partners to
determine eligibility to vote at such meeting and the number of votes which
each Partner will be entitled to cast thereat, and shall maintain for each
such record date a list setting forth the name of each Limited Partner and
the number of votes that each Limited Partner will be entitled to cast at the
meeting.
(c) A Limited Partner may vote at any meeting of Limited Partners
by a proxy properly executed in writing by the Limited Partner and filed with
the Fund before or at the time of the meeting. A proxy may be suspended or
revoked, as the case may be, by the Limited Partner executing the proxy by a
later writing delivered to the Fund at any time prior to exercise of the
proxy or if the Limited Partner executing the proxy shall be present at the
meeting and decide to vote in person. Subject to the requirements of the
1940 Act, any action of the Limited Partners that is permitted to be taken at
a meeting of the Limited Partners may be taken without a meeting if consents
in writing, setting forth the action taken, are signed by Partners holding a
majority of the total number of votes eligible to be cast or such greater
percentage as may be required in order to approve such action.
SECTION 3.04 Management Services. (a) The Manager shall provide
investment advice and management to the Fund, to the extent and in the manner
described in paragraph (b) of this Section 3.04 ("Management Services"),
under the general supervision of the Directors, pursuant to a written
agreement (an "Investment Advisory Agreement") between the Manager and the
Fund that is subject to initial approval by the Directors (including the vote
of a majority of the Independent Directors) at a meeting called for such
purpose and by the holders of a 1940 Act majority of the outstanding Units.
The authority of the Manager granted under this Section 3.04 shall terminate:
(i) if any period of 12 consecutive months following the first twelve
consecutive months of the effectiveness of such authority shall conclude
without the approval of the continuation of such authority by (A) the vote of
a 1940 Act majority of the outstanding Units or (B) the Directors, and in
either case, approval by a majority of the Independent Directors by vote cast
in person at a meeting called for such purpose; (ii) if revoked by the
Directors or by vote of a 1940 Act majority of the outstanding voting
securities of the Fund, in either case with 60 days' prior written notice to
the Manager; (iii) at the election of the Manager with 60 days' (or one
year's if such withdrawal is likely to cause the Fund to lose its partnership
tax classification) prior written notice to the Directors; or (iv) upon the
termination of the status of the Manager pursuant to Section 4.01(a) hereof
other than by reason of the withdrawal and designation by the Manager of a
Designee pursuant to Section 4.04 hereof that does not involve an
"assignment" within the meaning of the 1940 Act. The authority of the
Manager under this Section 3.04 shall be terminated in the event of the
withdrawal and designation by the Manager of a Designee as Manager pursuant
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to Section 4.04 that does not involve an "assignment" within the meaning of
the 1940 Act, and shall instead be vested in such Designee. The authority of
the Manager to provide Management Services pursuant to this Section 3.04
shall automatically terminate upon the occurrence of an "assignment" within
the meaning of the 1940 Act. If the authority of the Manager under this
Section 3.04 is terminated as provided herein, the Directors may appoint,
subject to the requirements of the 1940 Act, a person or persons to provide
Management Services to the Fund as set forth in paragraph (b) of this Section
3.04, and shall cause the terms and conditions of such appointment to be
stated in an agreement executed on behalf of the Fund and such person or
persons.
(b) So long as the Manager has been and continues to be authorized
to provide Management Services, it shall have, subject to any policies and
restrictions set forth in any current offering memorandum issued by the Fund,
this Agreement, the Form N-2 or the 1940 Act, or adopted from time to time by
the Directors and communicated in writing to the Manager, full discretion and
authority (i) to manage the assets and liabilities of the Fund and (ii) to
manage the day-to-day business and affairs of the Fund. In furtherance of
and subject to the foregoing, the Manager shall have full power and authority
on behalf of the Fund:
(1) to purchase, sell, exchange, trade and otherwise deal in and
with Securities and other property of the Fund;
(2) to open, maintain and close accounts with brokers and dealers,
to make all decisions relating to the manner, method and timing of
Securities and other investment transactions, to select and place orders
with brokers, dealers or other financial intermediaries for the
execution, clearance or settlement of any transactions on behalf of the
Fund and to pay, or authorize the payment and reimbursement of, brokerage
commissions, which may be in excess of the lowest rates available which
are paid to brokers who execute transactions for the account of the Fund
and who supply or pay the cost of research and brokerage services (which
services may be used by the Manager in servicing clients other than the
Fund, and not all of which services will necessarily benefit the Fund),
provided that the Fund in using these brokers obtains "best execution,"
taking into account the research and execution capabilities of the
brokers, their financial stability and reputation and the value to the
Fund of all the services provided by them;
(3) to open, maintain and close bank accounts and draw checks or
other orders for the payment of monies; borrow from banks or other
financial institutions; to do any and all acts on behalf of the Fund and
exercise all rights of the Fund with respect to its interest in any
person, firm, corporation or other entity, including without limitation
the voting of Securities, participation in arrangements with creditors,
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the institution and settlement or compromise of suits and administrative
proceedings and other similar matters; to instruct custodians regarding
the settlement of transactions, the disbursement of payments to Limited
Partners with respect to repurchases of Units and the payment of Fund
expenses, including those relating to the registration of the Fund;
(4) to issue to any Limited Partner an instrument certifying that
such Limited Partner is the owner of Units;
(5) to assist the Directors in calling and conducting meetings of
the Directors;
(6) to engage such attorneys, accountants and other professional
advisers and consultants as the Manager may deem necessary or advisable
in connection with the affairs of the Fund or as may be directed by the
Directors;
(7) subject to any applicable Limited Partner approval requirements
under the 1940 Act, to engage the services of others to assist the
Manager in providing, or to provide under the Manager's control and
supervision, services described in this Section 3.04(b) to the Fund at
the expense of the Manager;
(8) to assist in the preparation and filing of any required tax or
information returns to be made by the Fund;
(9) as directed by the Directors, to commence, defend and conclude
any action, suit, investigation or other proceeding that pertains to the
Fund or any assets of the Fund;
(10) if directed by the Directors or as required under the 1940 Act,
to arrange for the purchase of any insurance covering the potential
liabilities of the Fund or relating to the performance of the Directors
or the Manager, or any of their principals, directors, officers, members,
employees and agents; and
(11) to execute, deliver and perform such contracts, agreements and
other undertakings, and to engage in such activities and transactions as
are necessary and appropriate for the conduct of the business of the
Fund;
(12) to organize one or more corporations formed to hold record
title, as nominee for the Fund, to Securities or funds of the Fund;
(13) to authorize any partner, director, officer, employee or other
agent of the Manager or agent or employee of the Fund to act for and on
behalf of the Fund in all matters incidental to the foregoing.
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SECTION 3.05 Reliance by Third Parties. Persons dealing with the
Fund are entitled to rely conclusively on a certificate of the Manager to the
effect that it is acting as the Manager and on the power and authority of the
Manager set forth herein.
SECTION 3.06 Other Activities of the General Partners. Each
General Partner shall devote that amount of its time to the affairs of the
Fund which in its judgment the conduct of the Fund's business reasonably
requires. No General Partner shall be obligated to do or perform any act or
thing in connection with the business of the Fund not expressly set forth
herein. Nothing contained in this Section 3.06 shall preclude the Manager,
any of its Affiliates or their respective partners, directors, officers,
employees or shareholders from engaging directly or indirectly in any other
business or other activity, including but not limited to exercising
investment advisory and management responsibility and buying, selling or
otherwise dealing with Securities for their own accounts, for the accounts of
family members and for the accounts of individual and institutional clients,
which activities may compete with those of the Fund. The Manager shall be
permitted to perform, among other things, investment advisory and management
services for individuals and entities other than the Fund and in that
connection may give advice and take action in the performance of its duties
to those individuals and entities which may differ from the timing and nature
of action taken with respect to the Fund. The Manager shall have no
obligation to purchase or sell for the Fund any Security or other investment
which the Manager or its Affiliates may purchase or sell, or recommend for
purchase or sale, for its or their own account, or for the account of any
client. Neither the Fund nor the Partners shall have any rights of first
refusal, coinvestment or other rights in respect of the investments of other
accounts or in any fees, profits or other income earned or otherwise derived
therefrom. No Director or Limited Partner shall, by reason of being a
Partner in the Fund, have any right to participate in any manner in any
profits or income earned or derived by or accruing to the Manager, any of its
Affiliates or their respective partners, members, directors, officers,
employees or shareholders from the conduct of any business other than the
business of the Fund or from any transaction in Securities effected by the
Manager, any of its Affiliates or their respective partners, members,
directors, officers, employees or shareholders for any account other than
that of the Fund.
SECTION 3.07 Custody of Assets of the Fund. The Manager shall not
have any authority to hold or have possession or custody of any funds,
Securities or other properties of the Fund. The physical possession of all
funds, Securities or other properties of the Fund shall at all times, be
held, controlled and administered by one or more custodians retained by the
Fund. The Manager shall have no responsibility with respect to the
collection of income, physical acquisition or the safekeeping of the funds,
Securities or other assets of the Fund, and all such duties of collection,
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physical acquisition or safekeeping shall be the sole obligation of such
custodians.
SECTION 3.08 Exculpation. (a) No General Partner shall be liable
to the Fund or any other Partner for (i) any act or omission by such General
Partner in connection with the conduct of the business of the Fund that is
determined by such General Partner in good faith to be in or not opposed to
the best interests of the Fund, unless that act or omission constitutes
willful misconduct, gross negligence, a violation of federal or state
securities laws or criminal wrongdoing by such General Partner, (ii) any
action or omission by any other Partner or (iii) any mistake, negligence,
dishonesty or bad faith of any broker or other agent of the Fund selected,
engaged or retained by such General Partner with reasonable care. To the
extent that, at law or in equity, a General Partner has duties (including
fiduciary duties) and liabilities relating thereto to the Fund or to another
Partner, such General Partner acting under this Agreement shall not be liable
to the Fund or to any such other Partner for its good faith reliance on the
provisions of this Agreement. The provisions of this Agreement, to the
extent that they expand or restrict the duties and liabilities of the General
Partners otherwise existing at law or in equity, are agreed by the Partners
to modify to that extent such other duties and liabilities of the General
Partners.
(b) No General Partner shall have any personal liability to the
Fund or any other Partner by reason of any change in United States federal,
state or local or foreign income tax laws, or in interpretations thereof, as
they apply to the Fund or the Limited Partners, whether the change occurs
through legislative, judicial or administrative action.
(c) Each General Partner may consult with legal counsel or
accountants selected by it and any act or omission by it on behalf of the
Fund or in furtherance of the business of the Fund in good faith in reliance
on and in accordance with the advice of such counsel or accountants shall be
full justification for the act or omission, and to the fullest extent
permitted by law such General Partner shall be fully protected in so acting
or omitting to act if the counsel or accountants were selected with
reasonable care.
SECTION 3.09 Indemnification. (a) To the fullest extent permitted
by law, the Fund shall indemnify and save harmless the General Partners,
their Affiliates and any of their respective members, partners, officers,
employees, directors and shareholders (the "Indemnitees") from and against
any and all claims, liabilities, damages, losses, costs and expenses,
including amounts paid in satisfaction of judgments, in compromises and
settlements, as fines and penalties and legal or other costs and expenses of
investigating or defending against any claim or alleged claim, of any nature
whatsoever, known or unknown, liquidated or unliquidated, that are incurred
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by any Indemnitee and arise out of or in connection with the business of the
Fund or the performance by the Indemnitee of any of such General Partner's
responsibilities hereunder, provided that an Indemnitee shall be entitled to
indemnification hereunder only if the Indemnitee acted in good faith and in a
manner the Indemnitee reasonably believed to be in or not opposed to the best
interests of the Fund and the Indemnitee's conduct did not constitute willful
misconduct, gross negligence, a violation of federal or state securities laws
or criminal wrongdoing. The termination of any proceeding by settlement,
judgment, order or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that an Indemnitee did not act in good
faith and in a manner that the Indemnitee reasonably believed to be in or not
opposed to the best interests of the Fund or that the Indemnitee's conduct
constituted willful misconduct, gross negligence, a violation of federal or
state securities laws or criminal wrongdoing. The satisfaction of any
indemnification and any saving harmless pursuant to this Section 3.09(a)
shall be from and limited to Fund assets, and no General Partner shall have
any personal liability on account thereof.
(b) Expenses incurred by an Indemnitee in defense or settlement of
any claim that may be subject to a right of indemnification hereunder may be
advanced by the Fund prior to the final disposition thereof upon receipt of
an undertaking by or on behalf of the Indemnitee to repay the amount advanced
to the extent that it shall be determined ultimately that the Indemnitee is
not entitled to be indemnified hereunder. The right of any Indemnitee to the
indemnification provided herein shall be cumulative of, and in addition to,
any and all rights to which the Indemnitee may otherwise be entitled by
contract or as a matter of law or equity and shall be extended to the
Indemnitee's successors, assigns and legal representatives. Nothing
contained in this Section 3.09 shall affect the power of the Fund to purchase
and maintain liability insurance on behalf of any General Partner or other
Person.
SECTION 3.10 Expenses. (a) The Manager shall pay directly the
Fund's overhead expenses, including equipment, utilities, salaries, its share
of rent, postage, delivery, news and quotation machines and computer
expenses, telephone and other administrative expenses and all expenses in
connection with reporting to the Partners concerning the Fund's investment
activities and performance (collectively, "Manager Expenses").
(b) The Fund shall pay directly all of its operational and
investment expenses, including the Management Fee, interest expenses,
brokerage commissions, custodial and depository fees and transactional
expenses, litigation expenses, taxes and investment banking fees and
expenses, as well as all legal and accounting fees, and litigation and tax
expenses and all expenses incurred in processing the sale and redemption of
Units. The Fund shall also pay all fees due to its Independent Directors;
fees payable to the Securities and Exchange Commission; state securities
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qualification fees; costs of preparing and printing offering memoranda for
regulatory purposes and for distribution to investors; charges of custodians
for the Fund; the costs of a fidelity bond and any liability insurance
obtained on behalf of the Fund or the Directors and the costs of meetings of
the Limited Partners.
ARTICLE IV
TERMINATION OF STATUS AS GENERAL
PARTNER, TRANSFERS AND REPURCHASES
SECTION 4.01 Termination of Status of the Manager. (a) The status
of the Manager shall terminate if the Manager (i) shall be dissolved or
otherwise shall terminate its existence; (ii) shall voluntarily withdraw as
Manager; (iii) shall be removed; (iv) shall fail to have its Investment
Advisory Agreement reapproved in accordance with the terms of the 1940 Act;
(v) shall designate a new Manager as permitted under Section 4.04 hereof and
such Designee is admitted as a substitute Manager pursuant to Section 2.08(a)
hereof; or (vi) shall otherwise cease to be a general partner of the Fund
under Section 17-402(4) or (5) of the Partnership Act.
(b) The Manager may not voluntarily withdraw as Manager until the
earliest of (i) one year from the date on which the Manager shall have given
the Directors written notice of its intention to effect such withdrawal (or
upon lesser notice if in the opinion of counsel to the Fund, such withdrawal
is not likely to cause the Fund to lose its partnership tax classification or
as otherwise permitted by Rule 2a19-2 of the 1940 Act); (ii) the date on
which the authority of the Manager to provide Management Services is
terminated (other than at the election of the Manager) pursuant to Section
3.04(a) hereof, unless within 30 days after such termination, the Directors
request the Manager not to withdraw, in which case 180 days after the date of
such termination; and (iii) the date on which one or more persons shall have
agreed to assume the obligations of the Manager hereunder with the approval
of the Directors and such other approvals as may be required by the 1940 Act.
SECTION 4.02 Termination of Status of a Director. The status of a
Director shall terminate if the Director (i) shall die; (ii) shall be
adjudicated incompetent; (iii) shall voluntarily withdraw as a Director (upon
not less than 60 days' prior written notice to the other Directors unless the
Board agrees to a shorter notice period); (iv) shall be removed; (v) shall be
certified by a physician to be mentally or physically unable to perform his
duties hereunder; (vi) shall be declared bankrupt by a court with appropriate
jurisdiction, file a petition commencing a voluntary case under any
bankruptcy law or make an assignment for the benefit of creditors; (vii)
shall have a receiver appointed to administer the property or affairs of such
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Partner; or (viii) shall otherwise cease to be a general partner of the Fund
under the Partnership Act.
SECTION 4.03 Removal of Directors. Any Director may be removed
either by (a) the vote or written consent of at least two-thirds (2/3) of the
Directors not subject to the removal vote or (b) the vote or written consent
of Limited Partners holding not less than two-thirds (2/3) of the total
number of votes eligible to be cast by all Partners.
SECTION 4.04 Changes in General Partners. Subject to the
provisions of the 1940 Act and other applicable law, the Manager may withdraw
as Manager of the Fund and designate an Affiliate of the Manager or any
successor to the business or assets of the Manager (the "Designee") to be
substituted as Manager. Subject to the provisions of Sections 2.08 and
3.04(a) and this Section 4.04, the Designee shall become and have all of the
rights, powers and duties of the Manager for all purposes of this Agreement,
provided that such Designee has agreed to be bound by all of the terms of
this Agreement and provided, further, that if the Transfer would constitute
an "assignment" within the meaning of the 1940 Act, an Investment Advisory
Agreement between the Fund and such person shall have been approved by (a)
the Directors (including a majority of the Independent Directors) by vote
cast in person at a meeting called for such purpose and (b) Limited Partners
holding a 1940 Act majority. By executing this Agreement, each other Partner
shall be deemed to have consented to any such Transfer that does not
constitute an "assignment" within the meaning of the 1940 Act permitted by the
preceding sentence. Directors may not Transfer their status as Directors.
SECTION 4.05 Transfer of Units. (a) Units owned by a Limited
Partner may be Transferred only (i) by operation of law pursuant to the
death, bankruptcy, insolvency or dissolution of such Limited Partner or (ii)
subject to applicable law, with the written consent of the Manager (which may
be withheld in its sole and absolute discretion). Any transferee which
acquires Units by operation of law as the result of the death, bankruptcy,
insolvency or dissolution of a Limited Partner or otherwise, shall be
entitled to the allocations and distributions allocable to the Units so
acquired and to Transfer such Units in accordance with the terms of this
Agreement, but shall not be entitled to the other rights of a Limited Partner
unless and until such transferee becomes a substituted Limited Partner. If a
Limited Partner transfers such Limited Partner's Units or a portion thereof
with the approval of the Manager, the Manager shall promptly take all
necessary actions so that each transferee or successor to whom such Units or
portion thereof are transferred is admitted to the Fund as a Limited Partner.
Each Limited Partner and transferee agrees to pay all expenses, including
attorneys' and accountants' fees, incurred by the Fund in connection with
such Transfer.
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(b) Each Limited Partner shall indemnify and hold harmless the Fund,
the Directors, the Manager, each other Limited Partner and any Affiliate of
the foregoing against all losses, claims, damages, liabilities, costs and
expenses (including legal or other expenses incurred in investigating or
defending against any such losses, claims, damages, liabilities, costs and
expenses or any judgments, fines and amounts paid in settlement), joint or
several, to which such persons may become subject by reason of or arising
from (i) any Transfer made by such Limited Partner in violation of this
Section 4.05 and (ii) any misrepresentation by such Limited Partner in
connection with any such Transfer.
SECTION 4.06 Repurchase of Units. (a) Each fiscal quarter the Fund
shall offer to repurchase at least 5% and up to 25% of its Units, as
determined by the Board of Directors, pursuant to the terms and conditions
set forth in Rule 23c-3 under the 1940 Act. The deadline for responding to
the Fund's repurchase offers (the "Repurchase Request Deadline") shall be
fourteen days prior to the last business day of each calendar quarter (or if
the day fourteen days prior to such day is not a business day, the previous
business day). The repurchase price will be the per unit net asset value on
the repurchase pricing date (the "Repurchase Pricing Date"), which shall be
the last business day of the calendar quarter, and payment for all units
repurchased pursuant to these offers will be made not later than 7 days after
the repurchase pricing date.
(b) The Fund shall have all rights with respect to repurchase
offers set forth in Section 23(c) of the 1940 Act.
ARTICLE V
CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS
AND ALLOCATIONS
SECTION 5.01 Capital Contributions. (a) The Limited Partners have
made capital contributions to the Fund consisting of cash in the amounts set
forth in the records of the Fund. Each initial capital contribution by a
Limited Partner is referred to herein as the Partner's "Initial Capital
Contribution." Additional capital contributions may be made by Partners by
purchasing additional Units only in accordance with the provisions of this
Section 5.01. Directors shall not be entitled to make voluntary
contributions of capital to the Partnership as General Partners, but may make
voluntary contributions to the capital of the Partnership as Limited Partners
(as may the Manager) if permitted by the Manager.
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(b) A Limited Partner may purchase additional Units on at least 10
days' prior written notice to the Manager on the first day of each calendar
quarter, provided that additional capital contributions shall be at least
$10,000, unless the Manager exercises its sole discretion to waive that
minimum. The Manager in its sole discretion may also sell additional Units
to Limited Partners at any time.
(c) Notwithstanding any other provision in this Agreement, in no
event shall any Limited Partner or former Limited Partner be obligated to
purchase any additional Units from the Fund or have any liability for the
repayment and discharge of the debts and obligations of the Fund (apart from
his Interest), except as may be required under the Partnership Act or other
applicable law and subject to the indemnity obligations of the Limited
Partners provided in Section 6.02(b). Except as expressly set forth herein,
no Partner shall be entitled to any return of capital, interest or
compensation by reason of its ownership of Units or by reason of serving as a
Partner.
SECTION 5.02 Capital Accounts and Tax Accounts. (a) The Fund shall
establish for each Limited Partner a tax capital account for income tax
accounting purposes ("Tax Account") and a capital account for partnership
accounting purposes ("Capital Account"). The initial balance of the Tax
Account and the Capital Account for each Limited Partner shall be the Limited
Partner's Initial Capital Contribution to the Fund. Thereafter, the Tax
Account and Capital Account shall be adjusted as provided in this Article.
(b) At the end of each fiscal year of the Fund, the initial balance
of the Tax Account of each Limited Partner shall from time to time be:
(i) Increased by (x) any cash contributed to the Fund capital
in addition to the Limited Partner's Initial Capital Contribution, (y)
the Limited Partner's allocable share of Fund taxable income and (z) the
Limited Partner's allocable share of Fund income exempt from federal
income taxation; and
(ii) Decreased by (x) the amount of cash and the adjusted basis
of other property distributed to the Limited Partner, (y) the Limited
Partner's allocable share of Fund taxable losses, including capital
losses, and (z) the Limited Partner's allocable share of Fund
expenditures which are not deductible by the Fund in computing its
taxable income and not properly chargeable to capital account.
(c) The initial balance of the Capital Account of each Limited
Partner shall from time to time be:
(i) Increased by (a) any cash contributed to the Fund capital
in addition to the Initial Capital Contribution made by the Limited
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Partner and (b) the positive adjustments to the Limited Partner's Capital
Account provided for in this Article; and
(ii) Decreased by (a) the amount of cash and the fair market
value of other property distributed to the Limited Partner and (b) the
negative adjustments to the Limited Partner's Capital Account provided
for in this Article.
SECTION 5.03 Capital Account Allocations.
(a) At the end of each Fiscal Period, the Capital Accounts of all
Limited Partners for the Fiscal Period, shall be credited to reflect the Net
Capital Appreciation or debited to reflect the Net Capital Depreciation of
the Fund during the Fiscal Period, pro rata in proportion to the Limited
Partners' Sharing Percentages at the beginning of the Fiscal Period.
(b) Notwithstanding anything to the contrary contained herein, no
allocation of Net Capital Depreciation shall be made pursuant to this Section
5.03 to the Capital Account of any Limited Partner to the extent that it
would cause or increase a deficit balance in the Limited Partner's Capital
Account as of the end of the fiscal year to which the allocation relates. In
this connection, a Limited Partner's Capital Account shall be reduced by the
amounts described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
(5) and (6). The amount of any Net Capital Depreciation that, but for this
Section 5.03(b), would otherwise be allocated to a Limited Partner shall be
allocated and charged to the Capital Account of the Manager.
(c) Notwithstanding anything to the contrary contained herein, any
Limited Partner who unexpectedly receives an allocation or distribution
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6)
that creates or increases a deficit balance in the Limited Partner's Capital
Account shall be allocated items of gross income and gain for Capital Account
purposes in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the deficit balance as quickly as
possible. Any amounts allocated pursuant to this Section 5.03(c) for any
Fiscal Period shall be excluded from Net Capital Appreciation or Net Capital
Depreciation for the Fiscal Period.
(d) Any allocations made pursuant to Sections 5.03(b) or 5.03(c)
shall be taken into account in computing subsequent allocations pursuant to
this Section 5.03, so that the net amount of any items allocated to each
Limited Partner shall, to the extent possible, be equal to the net amount
that would have been allocated to each Limited Partner if allocations
pursuant to Section 5.03(b) or 5.03(c) had not been made.
(e) To the extent, if any, that Manager Expenses and any items of
loss, expense or deduction resulting therefrom are deemed to constitute items
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of Fund loss, expense or deduction rather than items of loss, expense or
deduction of the Manager, the Manager Expenses and other items of loss,
expense or deduction shall be allocated 100% to the Manager.
(f) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted
and applied in a manner consistent with those Regulations. If the Manager
shall determine that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto, are computed in order to comply
with those Regulations, the Manager may make the modification, provided that
the modification is not likely to have an adverse effect on the interests of
any Limited Partner.
SECTION 5.04 Closing of the Books. To determine possible varying
interests of Limited Partners during a taxable year, the Fund shall use the
interim-closing of the books method, and all income, gains, losses and
deductions shall be allocated as realized or accrued by the Fund.
SECTION 5.05 Valuation of Assets. (a) Securities which are listed
on a national securities exchange shall be valued by the Manager at their
last sales prices on the date of determination on the principal securities
exchange on which the Securities shall have traded on that date, or if
trading in the Securities on the principal securities exchange on which the
Securities shall have traded on that date was reported on the consolidated
tape, their last sales prices on the consolidated tape (or, if the date of
determination is not a date upon which that principal securities exchange was
open for trading, on the last prior date on which that securities exchange
was open not more than 10 days prior to the date of determination). If no
sales of the Securities occurred on either of the foregoing dates, the
Securities shall be valued at the mean of the "bid" and "asked" prices for
the Securities on the principal securities exchange on which the Securities
are traded, on the date of determination, or, if "bid" and "asked" prices for
the Securities on the principal securities exchange on which the Securities
shall have traded on that date was reported on the consolidated tape, the
mean of "bid" and "asked" prices for the Securities on the consolidated tape
(or, if the date of determination is not a date upon which that securities
exchange was open for trading, on the last prior date on which it was open
not more than 10 days prior to the date of determination). Securities which
are not listed shall be valued at their representative "bid" quotations,
unless the Securities are included in the NASDAQ National Market System, in
which case they shall be valued based upon their closing "bid" prices as
reported on the NASDAQ National Market System reporting system (if these
prices are available). Securities for which no such market prices are
available shall be valued by or under the direction of the Board of
Directors.
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(b) All other assets of the Fund (except goodwill, which shall not
be taken into account) shall be valued by or under the direction of the Board
of Directors.
(c) If the Board of Directors determines that the valuation of any
Securities or other property pursuant to this Section 5.05 does not fairly
represent market value, the Securities or other property shall be valued
under the direction of the Board in a manner which it reasonably chooses and
shall set forth the basis of that valuation in writing in the Fund's records.
SECTION 5.06 Liabilities. Liabilities shall be determined in
accordance with generally accepted accounting principles, applied on a
consistent basis, provided that the Manager in its discretion may provide
reserves for estimated accrued expenses, liabilities and contingencies.
SECTION 5.07 Tax Account Allocations. (a) For each fiscal year,
items of income, gain, loss, deduction or credit (including items of income
or gain which are not subject to federal income taxation and items which are
not deductible for federal income tax purposes and not properly chargeable to
capital account) shall be allocated solely for income tax purposes among the
Limited Partners in a manner that reflects equitably amounts credited or
debited to each Limited Partner's Capital Account for the current and prior
fiscal years and shall be reflected in the Limited Partners' Tax Accounts.
These allocations shall be made pursuant to the general principles of
Sections 704(b) and 704(c) of the Code.
(b) If the Fund realizes capital gains or capital losses for
federal income tax purposes for any fiscal year during or as of the end of
which one or more Positive Basis Partners or Negative Basis Partners (as
hereinafter defined) withdraw from the Fund, the Manager shall (unless it
determines that allocations should be made in some other manner to satisfy
the requirements of the Code) allocate these capital gains or capital losses
as follows: (i) allocate the capital gains among the Positive Basis
Partners, pro rata in proportion to the respective Positive Basis (as
hereinafter defined) of each Positive Basis Partner, until either the full
amount of the capital gains shall have been allocated or the Positive Basis
of each Positive Basis Partner shall have been eliminated; (ii) allocate any
capital gains not allocated to Positive Basis Partners to the other Limited
Partners in a manner that reflects equitably the amounts credited to the
Limited Partners' Capital Accounts pursuant to Section 5.03; (iii) allocate
the capital losses among the Negative Basis Partners, pro rata in proportion
to the respective Negative Basis (as hereinafter defined) of each Negative
Basis Partner, until either the full amount of the capital losses shall have
been allocated or the Negative Basis of each Negative Basis Partner has been
eliminated; and (iv) allocate any capital losses not allocated to Negative
Basis Partners to the other Limited Partners in a manner that reflects
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equitably the amounts credited to the Limited Partners' Capital Accounts
pursuant to Section 5.03.
(c) To the extent allocations of capital gains or losses pursuant
to Section 5.07(b) are insufficient to eliminate the Positive Basis of each
Positive Basis Partner or the Negative Basis of each Negative Basis Partner,
the Manager may, in its discretion, allocate amounts of ordinary income, loss
or deduction realized for federal income tax purposes relating to the fiscal
year in which the Positive Basis Partner or Negative Basis Partner withdraws
from the Fund pro rata to the Positive Basis Partners or Negative Basis
Partners, as the case may be, until the Positive Basis or Negative Basis of
each such Limited Partner has been eliminated.
(d) As used herein, (i) the term "Positive Basis" means, with
respect to any Limited Partner and as of any time of calculation, the amount
by which the Limited Partner's Capital Account as of that time exceeds the
Limited Partner's Tax Account as of that time; (ii) the term "Positive Basis
Partner" means any Limited Partner who withdraws from the Fund and who has
Positive Basis as of the effective date of the Limited Partner's withdrawal,
but the Limited Partner shall cease to be a Positive Basis Partner at the
time the Limited Partner shall have received allocations pursuant to Section
5.07(b) or (c) equal to the Limited Partner's Positive Basis as of the
effective date of the Limited Partner's withdrawal; (iii) the term "Negative
Basis" means, with respect to any Limited Partner and as of any time of
calculation, the amount by which the Limited Partner's Tax Account as of that
time exceeds the Limited Partner's Capital Account as of that time; and (iv)
the term "Negative Basis Partner" means any Limited Partner who withdraws
from the Fund and who has Negative Basis as of the effective date of the
Limited Partner's withdrawal, but the Limited Partner shall cease to be a
Negative Basis Partner at the time the Limited Partner shall have received
allocations pursuant to Section 5.07(b) or (c) equal to the Limited Partner's
Negative Basis as of the effective date of the Limited Partner's withdrawal.
SECTION 5.08 Determination by the Manager of Certain Matters. All
matters concerning the allocation of profits, gains and losses among the
Limited Partners, including taxes thereon, and accounting procedures not
expressly provided for by the terms of this Agreement shall be determined by
or under the direction of the Manager.
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ARTICLE VI
WITHDRAWALS AND DISTRIBUTIONS OF CAPITAL
SECTION 6.01 Withdrawals and Distributions in General. (a) No
Partner shall be entitled to receive distributions, withdraw any amount from
the Partner's Capital Account or withdraw from the Fund except as provided in
Sections 4.01, 4.04, 4.06, 6.02, 8.02 and 9.02.
(b) The Board of Directors may, in their sole discretion, authorize
the Fund to make distributions at any time to all of the Limited Partners on
a pro rata basis in accordance with their Sharing Percentages.
SECTION 6.02 Distributions of Net Investment Income and Net
Realized Capital Gains. (a) Subject to Section 4.06, a Limited Partner may,
at its election, made either in the Information Supplement attached to the
Limited Partner's Subscription Agreement or subsequently by notice to the
Manager, receive at the end of each fiscal year distributions of all or any
portion of the Limited Partner's share of the Fund's Net Investment Income
and Net Realized Capital Gains for that fiscal year. All amounts which are
not elected to be distributed will be automatically credited as additional
capital contributions to the Capital Account and Tax Account of the Limited
Partner otherwise entitled thereto as of the first day of the year following
the fiscal year to which the distribution relates, for which purpose all
specified capital contribution minimums shall be waived.
(b) Notwithstanding any provision of this Agreement to the
contrary, the Manager shall withhold and pay over to the Internal Revenue
Service, pursuant to Sections 1441, 1442, 1445 or 1446 of the Code, or any
successor provisions, at the times required by those Sections, the amounts
the Fund is required to withhold under those Sections, as from time to time
in effect, or any other applicable law. Each Partner shall furnish the
Manager with such information, forms and certifications as it may require and
as are necessary to comply with the regulations governing the obligations of
withholding tax agents. Each Partner hereby agrees to indemnify the Fund and
the Manager for his allocable share of any applicable withholding tax
(including any liability for penalties, additions to tax or interest) and
represents and warrants that the information and forms furnished by him shall
be true and accurate in all respects. For purposes of this Agreement, any
amount of withholding taxes withheld and paid over by the Manager with
respect to a foreign Partner's distributive share of the Fund's gross income
shall be treated as a cash distribution to the foreign Partner and shall be
charged against the Capital Account and Tax Account of the foreign Partner.
SECTION 6.03 Method of Distributions. Distributions made pursuant
to this Agreement shall be made in cash or Securities or both, as the Board
of Directors may determine.
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ARTICLE VII
ADMISSION OF NEW PARTNERS
New Limited Partners may, with the consent of the Manager and
without the approval of any Limited Partner, be admitted to the Fund on the
first day of each calendar quarter, provided that the new Limited Partners
make an Initial Capital Contribution of at least $100,000, unless the Manager
exercises its sole discretion to waive that minimum. In addition, the
Directors in their discretion may also admit new Directors at any time,
subject to the provisions of the 1940 Act. Each new General Partner shall be
required to execute an agreement pursuant to which he becomes bound by the
terms of this Agreement. Admission of a new Partner shall not be a cause for
dissolution of the Fund.
ARTICLE VIII
WITHDRAWAL, DEATH OR INCOMPETENCY OF PARTNERS
SECTION 8.01 Withdrawal, Death, Etc., of Partners. (a) The Manager
shall not have the right to withdraw from the Fund except as provided in
Section 4.04.
(b) The withdrawal, death, disability or incapacity of a Director
and the consequences thereof are set forth in Sections 2.08(b), 2.08(c) and
4.02.
(c) The withdrawal, death, disability, incapacity, incompetency,
termination, bankruptcy, insolvency or dissolution of a General or Limited
Partner will not dissolve the Fund. The legal representatives of a Limited
Partner will succeed as assignee to a Limited Partner's Units upon the death,
disability, incapacity, incompetency, termination, bankruptcy, insolvency or
dissolution of the Limited Partner but shall not be admitted as a substituted
Limited Partner without the consent of the Manager, which consent may be
given or withheld in its discretion. In the event of the death, disability,
incapacity, incompetency, termination, bankruptcy, insolvency or dissolution
of a Limited Partner, the interest of the Limited Partner will continue at
the risk of the Fund business until the date on which the Limited Partner's
Units are repurchased by the Fund or the earlier termination of the Fund. If
the Fund is continued after the date of withdrawal, the Limited Partner or
his legal representatives shall be paid the balance of its Capital Account as
soon as practicable after the end of the Fiscal Period.
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SECTION 8.02 Required Withdrawals of Partners. To the extent
permitted by law, the Board of Directors may terminate the interest of any
Limited Partner in the Fund at any time upon at least five days prior written
notice if the Board determines that it would be in the best interests of the
Fund to repurchase the Units of such Limited Partner for any reason,
including, but not limited to, if the Board determines that the continued
participation of the Limited Partner in the Fund might cause the Fund or any
Partner to violate any law or if any litigation is commenced or threatened
against the Fund or any Partner arising out of, or relating to, the
participation of the Limited Partner in the Fund, or if, after a tender of
shares by a Limited Partner on a Repurchase Request Deadline, the amount
remaining in such Limited Partner's Capital Account would aggregate less than
$100,000 (which may be computed on the basis of unaudited data).
SECTION 8.03 Effective Date of Withdrawal. The Capital Account of
a withdrawing Limited Partner shall be determined as of the effective date of
withdrawal. For purposes of this Section 8.03, the effective date of a
Limited Partner's withdrawal shall mean, as the case may be, the last day of
the Fiscal Period (i) in which the Limited Partner ceases to be a Partner
pursuant to Section 4.06 or (ii) which coincides with the date specified in
the written notice referred to in the first sentence of Section 8.02 if the
Limited Partner shall be required to withdraw from the Fund pursuant thereto.
SECTION 8.04 Limitations on Withdrawal of Capital Account. The
right of any withdrawn Partner or its legal representatives to have
distributed the Capital Account of the Partner is subject to the provision by
the Manager for all Fund liabilities in accordance with Section 17-607 of the
Partnership Act and other applicable law and for reserves for contingencies
and estimated accrued expenses. The unused portion of any reserve shall be
distributed after the Manager shall have determined that the need therefor
shall have ceased.
ARTICLE IX
DURATION AND TERMINATION OF THE FUND
SECTION 9.01 Duration. The Fund shall continue until it is
dissolved on the first to occur of (i) December 31, 2025, (iii) the Board's
determination at any time and for any reason to liquidate and dissolve the
Fund, (iv) the bankruptcy or insolvency of the Manager, (v) the election to
dissolve the partnership by the holders of a 1940 Act majority, or (vi)
termination, dissolution or withdrawal of the Manager as manager of the Fund
without the Board designating another investment adviser to be substituted as
the Manager.
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SECTION 9.02 Termination. Upon dissolution of the Fund, the Fund
shall be wound up and liquidated. The Manager or any other person or persons
who are winding-up the affairs of the Fund shall, within no more than 30 days
after completion of a final audit of the Fund's books and records, make
distributions out of Fund assets in the following manner and order:
(a) to the payment of the expenses of the winding-up, liquidation
and dissolution of the Fund;
(b) to pay all creditors of the Fund, other than Partners, either
by the payment thereof or the making of reasonable provision therefor;
(c) to establish reserves, in amounts established by the Manager or
such liquidator, to meet other liabilities of the Fund; and
(d) to pay, in accordance with the terms agreed among them and
otherwise on a pro rata basis, all creditors of the Fund that are
Partners, either by the payment thereof or the making of reasonable
provision therefor.
The remaining proceeds, if any, plus any remaining assets of the Fund, shall
be applied and distributed in accordance with the positive balances of the
Partners' Capital Accounts, as determined after taking into account all
adjustments to Capital Accounts for the Fund's taxable year during which the
liquidation occurs, by the end of such taxable year or, if later, within 90
days after the date of such liquidation. For purposes of the application of
this Section 9.02 and determining Capital Accounts on liquidation, all
unrealized gains, losses and accrued income and deductions of the Fund shall
be treated as realized and recognized immediately before the date of
distribution.
SECTION 9.03 Restoration Obligation.
No Partner shall have an obligation to restore a negative balance in
its Capital Account.
ARTICLE X
TAX RETURNS; REPORTS TO PARTNERS
SECTION 10.01 Independent Auditors. The books and records of the
Fund shall be audited by accountants selected by the Directors (including a
majority of the Independent Directors) in accordance with applicable law and,
if required by applicable law, ratified by the Limited Partners.
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SECTION 10.02 Filing of Tax Returns. The Manager shall prepare and
file, or cause the accountants of the Fund to prepare and file, a federal
information tax return in compliance with Section 6031 of the Code and any
other returns that are required thereby together with any required state and
local income tax and information returns for each tax year of the Fund.
SECTION 10.03 Tax Matters Partner. The Manager shall be designated
on the Fund's annual federal information tax return, and have full powers and
responsibilities, as the Tax Matters Partner of the Fund for purposes of
Section 6231(a)(7) of the Code. Each Person (for purposes of this Section
10.03, called a "Pass-Thru Partner") that holds or controls an interest as a
Limited Partner on behalf of, or for the benefit of, another Person or
Persons, or which Pass-Thru Partner is beneficially owned, directly or
indirectly, by another Person or Persons, shall, within 30 days following
receipt from the Tax Matters Partner of any notice, demand, request for
information or similar document, convey that notice or other document in
writing to all holders of beneficial interests in the Fund holding such
interest through the Pass-Thru Partner. If the Fund shall be the subject of
an income tax audit by any federal, state or local authority, to the extent
the Fund is treated as an entity for purposes of that audit, including
administrative settlement and judicial review, the Tax Matters Partner shall
be authorized to act for, and its decision shall be final and binding on, the
Fund and each Partner. All expenses incurred in connection with any audit,
investigation, settlement or review shall be borne by the Fund.
SECTION 10.04 Consistent Reporting. The Limited Partners shall not
take a position on their individual tax returns which may be inconsistent
with the reporting of tax items on the Fund's tax return.
SECTION 10.05 Reports to Current Partners. (a) Within 90 days
after the end of each fiscal year, the Fund shall prepare and mail to each
Partner:
(i) a statement showing the Net Capital Appreciation or Net Capital
Depreciation, as the case may be, for that year; and
(ii) the Partner's Capital Account as of the end of that fiscal year
and the manner of its calculation.
(b) Except as otherwise required by the 1940 Act, or as may
otherwise be permitted by rule, regulation or order, within 60 days after the
close of the fiscal year and of the second fiscal quarter, the Fund shall
furnish to each Partner an annual and a semi-annual report, respectively,
containing financial statements (which, in the case of each annual report,
shall be audited) and other information required by and otherwise conforming
to the requirements of the 1940 Act.
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SECTION 10.06 Reports to Partners and Former Partners.
Within 90 days after the end of each fiscal year, the Fund shall prepare and
mail, or cause its accountants to prepare and mail, to each Partner and, to
the extent necessary, to each former Partner (or its legal representatives),
a report setting forth in sufficient detail information which will enable the
Partner or former Partner (or its legal representatives) to prepare their
respective federal income tax returns in accordance with the laws, rules and
then prevailing.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Power of Attorney. Each Limited Partner acknowledges
and confirms that he has duly appointed the Manager as his true and lawful
attorney-in-fact for the limited purposes and on the terms and conditions
specified in the power of attorney in the form contained in the Subscription
Agreements.
SECTION 11.02 General. This Agreement shall be (a) binding on the
executors, administrators, estates, heirs and legal successors and
representatives of the Partners, (b) may be executed by the Manager as the
attorney-in-fact for each Limited Partner pursuant to the power of attorney
provided by each Limited Partner to the Manager in the form contained in the
Subscription Agreements and (c) may be executed in one or more counterparts,
all of which shall constitute one and the same instrument.
SECTION 11.03 Waiver of Partition. Except as may be otherwise
required by law in connection with the winding-up, liquidation and
dissolution of the Fund, each Partner hereby irrevocably waives any and all
rights that he may have to maintain an action for partition of any of the
Fund's property.
SECTION 11.04 Amendments to Partnership Agreement. (a) Except as
otherwise provided in this Section 11.04, this Agreement may be amended, in
whole or in part, with the approval of (i) the Board of Directors, (ii) the
Manager and (iii) the holders of more than 50% of the outstanding Units;
provided, however, that if approval is sought at a meeting of Limited
Partners pursuant to Section 3.03 this Agreement may be amended by the
affirmative vote of a 1940 Act majority voting in person or by proxy.
(b) Without the consent of the Limited Partners the Manager may
amend this Agreement to (i) reflect changes validly made in the membership of
the Fund and the capital contributions and withdrawals by any Partner, (ii)
reflect a change in the name of the Fund, (iii) reflect a change in the
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<PAGE>
manner in which Capital Accounts or any debits or credits thereto are
computed in accordance with Section 5.03(f), (iv) effect compliance with any
applicable law or regulation, and (v) make a change that is necessary or
desirable to correct any ambiguity, to correct or supplement any provision in
this Agreement that would be inconsistent with any other provision in this
Agreement and to make any other provision with respect to matters or
questions arising under this Agreement that will not be inconsistent with the
provisions of this Agreement, in each case so long as the change does not
adversely affect the Limited Partners.
(c) The consent of a Partner must be obtained for any amendment
which would (a) reduce its (i) Capital Account, (ii) rights to allocations
and distributions (other than by virtue of additional capital contributions
by other Partners) or (iii) rights of contribution or withdrawal or (b) amend
the provisions of this Section 11.04.
SECTION 11.05 Governing Law. Notwithstanding the place where this
Agreement may be executed by any of the parties, the parties expressly agree
that all the terms and provisions hereof shall be construed under the laws of
the State of Delaware and, without limitation thereof, that the Partnership
Act as now adopted or as may be hereafter amended shall govern the
partnership aspects of this Agreement.
SECTION 11.06 Adjustment of Basis of Fund Property. In the event
of a distribution of Fund property to a Partner or an assignment or other
transfer, including by reason of death, of all or part of the interest of a
Limited Partner in the Fund, at the request of a Partner the Manager, in its
sole discretion, may cause the Fund to elect, pursuant to Section 754 of the
Code, or the corresponding provision of subsequent law, to adjust the basis
of the Fund property as provided by Sections 734 and 743 of the Code.
SECTION 11.07 Notices. Each notice relating to this Agreement
shall be in writing and delivered in person or by registered or certified
mail. All notices to the Fund shall be addressed to its office and principal
place of business. All notices addressed to a Partner shall be addressed to
the Partner at the address set forth in the records of the Fund. Any Partner
may designate a new address by notice to that effect given to the Fund.
Unless otherwise specifically provided in this Agreement, a notice shall be
deemed to have been effectively given when mailed by registered or certified
mail to the proper address or delivered in person.
SECTION 11.08 Goodwill. No value shall be placed on the name or
goodwill of the Fund, which shall belong exclusively to the Manager.
SECTION 11.09 Headings. The titles of the Articles and the
headings of the Sections of this Agreement are for convenience of reference
-32-
<PAGE>
only and are not to be considered in construing the terms and provisions of
this Agreement.
SECTION 11.10 Pronouns. All pronouns shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the
person or persons, firm or corporation may require in the context thereof.
-33-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the day and year first written above.
BECK, MACK & OLIVER LLC,
as Manager
By: /s/ John C. Beck
------------------------------
John C. Beck
Member
JOHN C. BECK
/s/ John C. Beck
---------------------------------
Name: John C. Beck
Director
MARGARET ANN JOHNSON
/s/ Margaret Ann Johnson
---------------------------------
Name: Margaret Ann Johnson
Director
JOHN D. TWINAME
/s/ John D. Twiname
---------------------------------
Name: John D. Twiname
Director
-34-
<PAGE>
LIMITED PARTNERS:
By: Beck, Mack & Oliver LLC, as
attorney-in-fact for the
Persons whose names are set
forth in the records of the
Fund as Limited Partners
By: /s/ John C. Beck
--------------------------------
John C. Beck
Member
-35-
<PAGE>
SCHEDULE I
Directors
John C. Beck
Margaret Ann Johnson
John D. Twiname
Limited Partners
[A list of the names of the Limited Partners is maintained at the offices of
Beck, Mack & Oliver LLC.]
-36-
EXHIBIT B
FORM OF
SUBSCRIPTION DOCUMENTS
FOR
BMO PARTNERS FUND, L.P.
<PAGE>
DIRECTIONS FOR THE COMPLETION OF THE SUBSCRIPTION DOCUMENTS
Prospective investors must complete all of the Subscription
Documents contained in this package in the manner described below.
1. Subscription Agreement:
a. Fill in amount of the investment on page 1.
b. Date, print the name of the Investor and sign (and print
title, if applicable) on pages 5 and 6.
c. Complete the appropriate acknowledgment form and have the
form notarized.
2. Information Supplement:
a. Fill in name, address, telephone number, tax identification
or social security number and cash amount invested, as
indicated.
b. The Investor should indicate whether he is paying for his
investment by check or by wire transfer.
c. The Investor should indicate whether he wishes to receive
distributions of net investment income and capital gains in
cash. If the Investor elects to receive distributions of
net investment income or capital gains, he should also
indicate the percentage of the amounts available for
distribution he elects to receive.
d. Date, print the name of the Investor and sign (and print
title, if applicable) on page 2.
3. Investor Questionnaire:
a. In Part I, the Investor should indicate by checking box A or
B whether he is relying on the advice of a purchaser
representative in evaluating the merits and risks of an
investment in the Fund.
b. In Part II, the Investor should indicate whether he is an
accredited investor and, if so, indicate the categories
under which he qualifies as an accredited investor.
c. Entities should provide the information and respond to the
questions in Part III.
-2-
<PAGE>
d. Each Investor should respond to the questions in Part IV.
e. Date, print the name of the Investor and sign (and print
title, if applicable) on page 5.
4. Purchaser Representative Questionnaire: (ONLY for Investors who
checked Box B in Part I of the Investor Questionnaire and who are not
relying on the advice of a purchaser representative.)
a. A Purchaser Representative must complete all information,
execute and date.
5. Internal Revenue Service Form W-9:
a. Complete all information requested.
b. Sign, date and print name (and title, if applicable).
6. Evidence of Authorization:
Investors which are corporations must submit certified corporate
resolutions authorizing the subscription and identifying the
corporate officer empowered to sign the subscription documents.
Partnerships must submit a certified copy of the partnership
certificate (in the case of limited partnerships) or partnership
agreement identifying the general partners. Limited liability
companies must submit a copy of their operating agreement identifying
the manager or managing member, as applicable. Trusts must submit a
copy of the trust agreement. Employee benefit plans must submit a
certificate of an appropriate officer certifying that the
subscription has been authorized and identifying the individual
empowered to sign the subscription documents. (Entities may be
requested to furnish other or additional documentation evidencing the
authority to invest in the Fund.)
-3-
<PAGE>
SUBSCRIPTION AGREEMENT
<PAGE>
BMO PARTNERS FUND, L.P.
SUBSCRIPTION AGREEMENT
BMO Partners Fund, L.P.
c/o Beck, Mack & Oliver LLC
330 Madison Avenue, 31st Floor
New York, NY 10017
Gentlemen:
1. Subscription. The undersigned (the "Investor")
subscribes for and agrees to purchase $_______________ worth of units
("Units") of limited partnership interest in BMO Partners Fund, L.P. (the
"Fund"). The Investor acknowledges that this subscription (i) is
irrevocable, (ii) is conditioned upon acceptance by Beck, Mack & Oliver LLC
(the "Manager") on behalf of the Fund and (iii) will expire if not accepted
by the Manager on or prior to two months from the date hereof. The Investor
agrees to be bound by all the terms and provisions of the Second Amended and
Restated Limited Partnership Agreement of the Fund (the "Partnership
Agreement").
2. Payment. The Investor has enclosed herewith a check
payable to "BMO Partners Fund, L.P." or, on two business days' notice from
the Manager, will wire federal funds for the account of the Fund directly to
[insert wire instructions], in an amount equal to the amount referred to in
Paragraph 1 above. An investment made by check will be effective five
business days after the check is received and this subscription is accepted
by the Manager.
3. Investor's Representations and Warranties. The Investor
represents and warrants as follows:
(a) The Units to be acquired hereunder are being acquired
by the Investor for his own account, for one or more separate
accounts maintained by him or for the account of one or more pension
or trust funds of which he is a trustee, in each case for investment
purposes only and not with a view to resale or distribution.
(b) The Investor understands that the Units have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), or under the laws of any state or other jurisdiction, and that
the Fund does not contemplate registration of the Units under the
1933 Act or these laws. The Investor understands and agrees further
that, subject to limited withdrawal rights, the Units must be held
indefinitely unless they are subsequently registered under the 1933
-1-
<PAGE>
Act and these laws or an exemption from registration under the 1933
Act and these laws covering the sale of Units is available. Even if
such an exemption is available, the assignability and transferability
of the Units will be governed by the Partnership Agreement which
imposes substantial restrictions on transfer. The Investor
understands that legends stating that the Units have not been
registered under the 1933 Act and these laws and setting out or
referring to the restrictions on the transferability and resale of
the Units will be placed on all documents evidencing the Units. The
Investor has no need for immediate liquidity in his investment in
Units.
(c) The Investor has been furnished and has carefully read
the Private Placement Memorandum dated May 9, 2000 relating to the
Fund (the "Memorandum"), the Partnership Agreement and a written
disclosure statement (as described in Rule 204-3 under the Investment
Advisers Act of 1940, as amended (the "Advisers Act")) with respect
to the Manager. The Investor has such knowledge and experience in
financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Units, is able to bear the
risks of an investment in the Units and understands the risks of, and
other considerations relating to, a purchase of Units, including the
matters set forth under the caption "Principal Risks of Investing in
the Fund" in the Memorandum.
(d) To the full satisfaction of the Investor, the Investor
has been furnished any materials the Investor has requested relating
to the Fund, the offering of Units or any statement made in the
Memorandum, and the Investor has been afforded the opportunity to ask
questions of the Manager concerning the terms and conditions of the
offering and to obtain any additional information necessary to verify
the accuracy of any representations or information set forth in the
Memorandum.
(e) The Investor has been furnished no offering literature
other than the Memorandum, and the Investor has relied only on the
Memorandum in determining to invest in the Fund.
(f) If the Investor is not a natural person, (i) the
Investor has the power and authority to enter into this Subscription
Agreement, the Partnership Agreement and each other document required
to be executed and delivered by the Investor in connection with this
subscription for Units, and to perform its obligations hereunder and
thereunder and consummate the transactions contemplated hereby and
thereby and (ii) the person signing this Subscription Agreement on
behalf of the Investor has been duly authorized to execute and
deliver this Subscription Agreement, the Partnership Agreement and
-2-
<PAGE>
each other document required to be executed and delivered by the
Investor in connection with this subscription for Units. If the
Investor is an individual, the Investor has all requisite legal
capacity to acquire and hold the Units and to execute, deliver and
comply with the terms of each of the documents required to be
executed and delivered by the Investor in connection with this
subscription for Units. The execution and delivery by the Investor
of, and compliance by the Investor with, this Subscription Agreement,
the Partnership Agreement and each other document required to be
executed and delivered by the Investor in connection with this
subscription for Units does not represent a breach of or constitute a
default under, any instruments governing the Investor, any law,
regulation or order, or any agreement to which the Investor is a
party or by which the Investor is bound. This Subscription Agreement
has been duly executed by the Investor and constitutes, and the
Partnership Agreement, when the Investor is admitted as a Limited
Partner, will constitute, a valid and legally binding agreement of
the Investor, enforceable against it in accordance with its terms.
(g) If the Investor has retained a purchaser representative
in connection with his determination to invest in the Fund, the
Investor acknowledges that he has been advised that:
(i) in connection with the Investor's determination of
whether to invest in the Fund, the purchaser representative will
receive compensation from the Manager equal to [specify].
4. Additional Representations, Warranties and Covenants for
Investors in Pennsylvania. The Investor agrees not to sell his Units within
12 months after the date of purchase unless the Units are registered under
the Securities Act or the Pennsylvania Securities Act of 1972 during this
twelve-month period.
5. Certain Employee Benefit Plans. (a) If the Investor
is, or is acting on behalf of, a trust established under an employee benefit
plan (a "Plan") as defined in and subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"): (i) it is aware of and has taken
into consideration its fiduciary duties, including the diversification
requirements of Section 404(a)(1)(c) of ERISA; (ii) it has concluded that its
proposed investment in the Fund is a prudent one; (iii) the fiduciary,
trustee or other person signing this Subscription Agreement on behalf of the
Investor is independent of the Manager; (iv) this subscription and the
investment contemplated hereby are in accordance with all requirements
applicable to the Plan under its governing instruments and under ERISA; and
(v) the Investor acknowledges and agrees that the Manager is not a
"fiduciary" (within the meaning of Section 3(21) of ERISA) with respect to
any assets of the Plan by reason of the Investor's investment in the Fund and
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<PAGE>
that the Investor has not relied and is not relying on the Manager to
provide, and it has not provided, any kind of investment advice with respect
to the Investor's purchase.
(b) If the Investor is purchasing the Units for an IRA or
Keogh Plan (even if not subject to Title I of ERISA), then the Investor
represents that no other person has exercised any discretionary authority or
control or provided any investment advice for a fee with respect to such
investment and that such investment is authorized by the appropriate
governing instrument and does not constitute a "prohibited transaction"
within the meaning of Section 4975 of the Code.
6. Tax Information. The Investor certifies under penalties
of perjury that (A) (i) the Investor's name, taxpayer identification or
social security number and address provided in the Investor Questionnaire is
correct and (ii) the Investor will complete and return with this Subscription
Agreement IRS Form W-9, Payer's Request for Taxpayer Identification Number
and Certification, and (B) (i) the Investor is not a non-resident alien
individual, foreign corporation, foreign partnership, foreign trust or
foreign estate (as defined in the Code) and (ii) the Investor will notify the
Fund within sixty (60) days of a change to foreign status. The Investor
agrees to execute properly and provide to the Fund in a timely manner any tax
documentation that may be reasonably required by the Manager in connection
with the Fund.
7. Further Advice and Assurances. All information which the
Investor has provided to the Fund, including the information in the Investor
Questionnaire, is correct and complete as of the date hereof, and the
Investor agrees to notify the Manager immediately if (x) any representation
or warranty contained in this Subscription Agreement, including the Investor
Questionnaire, becomes untrue prior to the admission of the Investor as a
Limited Partner or (y) any response to any question contained in Parts III or
IV of the Investor Questionnaire becomes untrue at any time. The Investor
agrees to provide such information and execute and deliver such documents as
the Fund may reasonably request to verify the accuracy of the Investor's
representations and warranties herein or to comply with any law or regulation
to which the Fund may be subject.
8. Power of Attorney. The Investor by executing this
Subscription Agreement appoints the Manager, with full power of substitution,
as his true and lawful representative and attorney-in-fact, in his name,
place and stead to make, execute, sign, acknowledge, swear to and file:
(a) all certificates and other instruments, including the
Partnership Agreement, and any amendments thereto or to the
Certificate of Limited Partnership of the Fund, which the Manager
deems appropriate to form, qualify or continue the Fund as a limited
-4-
<PAGE>
partnership (or a partnership in which the limited partners have
limited liability) in the State of Delaware and all other
jurisdictions in which the Fund conducts or plans to conduct business
(including without limitation any filing for the purpose of admitting
the Investor and others as partners and describing their initial or
any increased capital contributions);
(b) any instrument, certificate or other document which may
be deemed necessary or desirable to effect the winding-up and
termination of the Fund (including, but not limited to, a certificate
of cancellation);
(c) any business certificate, fictitious name certificate,
amendment thereto, or other instrument or document of any kind
necessary or desirable to accomplish the business, purpose and
objectives of the Fund, or required by any applicable federal, state
or local law; and
(d) the Partnership Agreement, any amendments to the
Partnership Agreement or any other agreement or instrument which the
Manager deems appropriate to (i) admit the Investor as a Limited
Partner of the Fund, (ii) effect the addition, substitution or
removal of any Limited Partner or General Partner pursuant to the
Partnership Agreement or (iii) effect another amendment or
modification to the Partnership Agreement adopted in accordance with
the terms of the Partnership Agreement.
This power of attorney is coupled with an interest, is irrevocable and shall
survive, and shall not be affected by, the subsequent death, disability,
incapacity, incompetency, termination, bankruptcy, insolvency or dissolution
of the Investor. This power of attorney shall survive the delivery of an
assignment or other attempted transfer by the Investor of the whole or any
part of his Interest, except that where an assignee or transferee of his
Interest has been approved as a substitute Partner, this power of attorney of
the assignor of the Interest shall survive the delivery of such assignment or
transfer for the sole purpose of enabling the Manager to execute, acknowledge
and file any instrument necessary to effect such substitution. This power of
attorney will terminate upon the complete withdrawal of an assigning Partner
from participation in the Fund.
-5-
<PAGE>
9. Miscellaneous. This Agreement may be executed in one or
more counterparts, all of which together shall constitute one instrument, and
shall be governed by and construed in accordance with the laws of the State
of New York.
IN WITNESS WHEREOF, the undersigned has executed this
Subscription Agreement on the date set forth below.
Date:
------------------
INDIVIDUAL INVESTOR:
--------------------------------
(Print Name)
--------------------------------
(Signature)
PARTNERSHIP, CORPORATION, TRUST,
CUSTODIAL ACCOUNT, OTHER INVESTOR:
--------------------------------
(Print Name of Entity)
By:
-----------------------------
(Signature)
--------------------------------
(Title)
-6-
<PAGE>
Accepted:
BMO PARTNERS FUND, L.P.
By: Beck, Mack & Oliver LLC
its Managing General Partner
By:
------------------------
Name:
Title:
-7-
<PAGE>
PLEASE COMPLETE THE APPROPRIATE ACKNOWLEDGMENT
FORM WHICH FOLLOWS THIS SIGNATURE PAGE.
<PAGE>
ACKNOWLEDGMENT FOR INDIVIDUAL SUBSCRIBERS
STATE OF )
) ss.:
COUNTY OF )
On this day of , 20__, before me, the
undersigned, a Notary Public of said State, duly commissioned and sworn,
personally appeared , known to me to
be the person (or persons) whose name is (or whose names are) subscribed to
on the within instrument, and acknowledged that he (or she or they) executed
the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year in this certificate first above written.
[SEAL]
-----------------------------------
Notary Public in and for said State
My commission expires on , 20___.
-1-
<PAGE>
ACKNOWLEDGMENT FOR PERSONS ACTING
IN A REPRESENTATIVE CAPACITY
(For Trusts, Partnerships, Corporations or Other Entities)
STATE OF )
) ss.:
COUNTY OF )
On this day of , 20___, before me personally
came to me known, who being by me duly sworn
did depose and say that such person is the of
described in and which executed the foregoing instrument, and being
duly authorized, signed such person's name thereon on behalf of such entity.
[SEAL]
-----------------------------------
Notary Public in and for said State
My commission expires on , 20___.
-1-
<PAGE>
INFORMATION SUPPLEMENT
TO
SUBSCRIPTION AGREEMENT
<PAGE>
INFORMATION SUPPLEMENT TO SUBSCRIPTION AGREEMENT
1. Print Full Name of Investor: Individual:
--------------------------------
First Middle Last
Partnership, Corporation,
Trust, Custodial Account,
Other :
--------------------------------
Name of Entity
2. Tax Identification or
Social Security Number: --------------------------------
3. Residence Address: --------------------------------
--------------------------------
--------------------------------
4. Business Address: --------------------------------
--------------------------------
--------------------------------
5. Home Telephone Number: ( )
--------------------------------
6. Business Telephone Number: ( )
--------------------------------
7. Cash Amount Invested: $
--------------------------------
8. Form of Payment (check one):
(a) / / By check. Cash amount invested will be
paid by check payable to BMO
Partners Fund, L.P.
(b) / / By wire. Cash amount invested will
be paid by wire transfer in federal
funds.
Funds should be wired to:
The Chase Manhattan Bank
ABA # 021-000-021
-1-
<PAGE>
Credit: A/C #189-0-07993
N/O Chase Custody Banking
Further Credit: A/C #JSD1870071
N/O BMO Partners Fund LP
Note: An investment made by check will be effective five business
days after the check is received and the Investor's
subscription is accepted by the Manager.
9. Net Investment Income and Capital Gains Distributions:
(a) / / Net Investment. Check this box if you choose Income
to have net investment income
distributed to you in cash. If
this box is not checked,
distributions of net investment
income will be automatically
reinvested in Units.
(b) / / Capital Gains. Check this box if you choose to
have capital gains distributions
paid to you in cash. If this box
is not checked, capital gains
distributions will be automatically
reinvested in Units.
(c) If you checked the box for either (a) or (b) above,
specify the percentage of the amounts available for distribution you wish to
receive:
Net Investment
Income: %
----------
Capital Gains: %
----------
Signatures:
INDIVIDUAL:
-----------------------
(Signature)
PARTNERSHIP, CORPORATION,
TRUST, CUSTODIAL ACCOUNT,
OTHER:
-2-
<PAGE>
------------------------
(Name of Entity)
By:
---------------------
(Signature)
---------------------
(Title)
-3-
<PAGE>
INVESTOR QUESTIONNAIRE
<PAGE>
BMO PARTNERS FUND, L.P.
INVESTOR QUESTIONNAIRE
BMO Partners Fund, L.P.
c/o Beck, Mack & Oliver LLC
330 Madison Avenue, 31st Floor
New York, New York 10017
Gentlemen:
This information is being furnished to enable you to
determine whether sales of limited partnership Units (the "Units") in BMO
Partners Fund, L.P. (the "Fund") may be made to the undersigned (the
"Investor"). The Investor agrees that he will notify you immediately of any
material change in any of the information set forth below occurring prior to
the closing of the purchase of the Units by him.
I. Investment Evaluation.
[Note: Each Investor must retain a purchaser representative
if the Investor does not have sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and
risks of an investment in the Fund.]
The Investor represents by initialing in box A or B below
that:
A / /
The Investor has such knowledge and experience in financial
and business matters that he is capable of evaluating the
merits and risks of an investment in the Fund and of making
an informed investment decision with respect to this
investment and will not require the services of a purchaser
representative.
B / /
The Investor has relied upon the advice of the following
purchaser representative in evaluating the merits and risks
of an investment in the Fund by the Investor:
-1-
<PAGE>
-------------------------
(Name)
[The Fund will make available, free of charge,
______________________ to serve as purchaser representative
for any Investor who is not otherwise relying on the advice
of a purchaser representative.] The above-named purchaser
representative has furnished a completed Purchaser
Representative Questionnaire to the Fund. The above-named
purchaser representative and the Investor together have such
knowledge and experience in financial and business matters
that they are capable of evaluating the merits and risks of
an investment in the Fund and of making an informed
investment decision with respect to this investment.
IF YOU HAVE CHECKED BOX B AND YOU ARE NOT RELYING ON THE SERVICES OF
______________________ AS YOUR PURCHASER REPRESENTATIVE, A COMPLETED
AND SIGNED PURCHASER REPRESENTATIVE QUESTIONNAIRE MUST ACCOMPANY
THIS INVESTOR QUESTIONNAIRE.
II. Accredited Investor Status.
Please check the box that applies.
/ / The Investor is an "accredited investor" within the
meaning of Rule 501 of Regulation D under the
Securities Act of 1933, as amended (the "Securities
Act").
[Note: See clauses (A) through (O) below for the
categories under which an Investor may qualify as an
"accredited investor".]
/ / The Investor is not an "accredited investor".
If the Investor is an "accredited investor", he has checked those
boxes below which are next to the categories under which he qualifies as an
accredited investor:
FOR INDIVIDUALS:
/ / (A) A natural person with individual net worth (or joint net
worth with spouse) in excess of $1 million. For purposes of
this item, "net worth" means the excess of total assets at
fair market value, including home, home furnishings and
-2-
<PAGE>
automobiles (and including property owned by a spouse), over
total liabilities.
/ / (B) A natural person with individual income (without including
any income of the Investor's spouse) in excess of $200,000
or joint income with spouse of $300,000 in each of the two
most recent years and who reasonably expects to reach the
same income level in the current year.
FOR ENTITIES:
/ / (C) A general partner of the Fund or a member of Beck, Mack &
Oliver LLC.
/ / (D) An entity, including a grantor trust, in which all of the
equity owners are accredited investors. (For this purpose,
a beneficiary of a trust is not an equity owner but the
grantor of a grantor trust may be an equity owner. Please
contact the Manager for further information.)
/ / (E) A bank, as defined in Section 3(a)(2) of the Securities Act
or any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act, whether
acting in its individual or fiduciary capacity.
/ / (F) An insurance company as defined in Section 2(a)(13) of the
Securities Act.
/ / (G) A broker-dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934.
/ / (H) An investment company registered under the Investment
Company Act of 1940.
/ / (I) A business development company as defined in Section
2(a)(48) of the Investment Company Act of 1940.
-3-
<PAGE>
/ / (J) A small business investment company licensed by the Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
/ / (K) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.
/ / (L) An organization described in Section 501(c)(3) of the
Internal Revenue Code or a corporation, Massachusetts or
similar business trust, or partnership, not formed for the
specific purpose of acquiring Units, with total assets in
excess of $5 million.
/ / (M) A trust with total assets in excess of $5 million not formed
for the specific purpose of acquiring Units, whose purchase
is directed by a person with such knowledge and experience
in financial and business matters as to be capable of
evaluating the merits and risks of an investment in the
Units.
/ / (N) An employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974 ("ERISA") if the
decision to invest in the Units is made by a plan fiduciary,
as defined in Section 3(21) of ERISA, which is either a
bank, savings and loan association, insurance company, or
registered investment adviser, or if the employee benefit
plan has total assets in excess of $5 million or, if a self-
directed plan, with investment decisions made solely by
persons that are accredited investors.
/ / (O) A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or
its political subdivisions, for the benefit of its
employees, if the plan has total assets in excess of $5
million.
III. Supplemental Data for Entities.
(a) If the Investor is not a natural person, furnish the following
supplemental data (natural persons may skip this Section of the
Investor Questionnaire):
-4-
<PAGE>
Legal form of entity (trust, corporation, partnership, limited
liability company, etc.):
-------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Jurisdiction of organization:
----------------------------------------
(b) If the Investor is treated as a partnership for U.S. federal income
tax purposes:
(i) What is the total number of partners or members in the
Investor?
------------
(ii) Is any partner or member in the Investor itself a
partnership for U.S. federal income tax purposes, an "S"
corporation or a grantor trust?
/ / Yes / / No
(c) If the Investor is a grantor trust:
(i) What is the total number of beneficiaries of the Investor?
---------------
(ii) Is any beneficiary of the Investor itself a partnership, an
"S" corporation or a grantor trust?
/ / Yes / / No
(d) If the Investor is an "S" corporation:
(i) What is the total number of equity holders in the Investor?
----------------
(ii) Is any equity holder in the Investor itself a partnership,
an "S" corporation or a grantor trust?
/ / Yes / / No
[If you checked the box marked "Yes" after any of (b)(ii), (c)(ii) or
(d)(ii), please contact the Fund at (212) 661-2640 for additional
information that will be required.]
IMPORTANT: You MUST notify the Fund at least ten days PRIOR TO
taking any action that would result in a change to any of the answers
to questions in this Section III.
-5-
<PAGE>
(f) If the Investor's tax year ends on a date other than December 31,
please indicate such date below:
-------------------------
IV. Related Parties.
(a) To the best of the Investor's knowledge, does the Investor control,
or is the Investor controlled by or under common control with, any
other investor in the Fund?
/ / Yes / / No
(b) Will any other person or persons have a beneficial interest in the
Units to be acquired hereunder (other than as a shareholder, partner,
policy owner or other beneficial owner of equity interests in the
Investor)?
/ / Yes / / No
If either question above was answered "Yes," please contact the Fund
for additional information that will be required.
The Investor agrees that he will, if requested by the Manager,
promptly provide any additional information and execute and deliver any other
documents that the Manager may reasonably request in order to substantiate
the foregoing information.
IN WITNESS WHEREOF, the undersigned has executed this Investor
Questionnaire this ___ day of ______, 20__ and declares that it is truthful
and correct.
Signatures:
INDIVIDUAL:
-------------------------
(Signature)
-6-
<PAGE>
PARTNERSHIP, CORPORATION, TRUST,
CUSTODIAL ACCOUNT, OTHER:
-------------------------
(Print Name of Entity)
By
----------------------
(Signature)
-------------------------
(Title)
-7-
<PAGE>
PURCHASER REPRESENTATIVE QUESTIONNAIRE
<PAGE>
BMO PARTNERS FUND, L.P.
PURCHASER REPRESENTATIVE QUESTIONNAIRE
BMO Partners Fund, L.P.
c/o Beck, Mack & Oliver LLC
330 Madison Avenue, 31st Floor
New York, New York 10017
Gentlemen:
The information contained in this Questionnaire is being
furnished in order for you to determine whether a sale of limited partnership
Units (the "Units") in BMO Partners Fund, L.P. (the "Fund") may be made to
the following Investor:
- -------------------------------------------------------------------
(Insert Name of Investor)
in light of the requirements of the Securities Act of 1933, as amended (the
"Act"). The undersigned understands that (a) you will rely upon the
information contained herein for purposes of this determination, (b) the
Units will not be registered under the Act in reliance upon the exemption
from registration afforded by Section 4(2) of the Act and (c) this
Questionnaire is not an offer to sell the Units or any other securities to
the undersigned Purchaser Representative.
I note that you have provided to the Investor a Private Placement
Memorandum dated May 9, 2000 in connection with the offering and sale of
the Units (the "Memorandum").
I represent that:
1. I have discussed the Memorandum with the Investor with a
view to determining whether an investment in the Fund by the
Investor is appropriate in light of the Investor's financial
circumstances, as these circumstances have been disclosed to
me by the Investor.
2. I am not an affiliate, partner or employee of the Fund or
its Manager (Beck, Mack & Oliver LLC) or of any of their
affiliates or counsel to any of them or a beneficial owner
of 10% or more of the equity Units in the Fund except as
follows:
-1-
<PAGE>
(State "No Exceptions" or set forth exceptions and give details.)
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
3. I have such knowledge and experience in financial and
business matters as to be capable of evaluating, alone, or
together with other purchaser representatives of the
Investor, or together with the Investor, the merits and
risks of an investment in the Fund. I offer as evidence of
this the following additional information (e.g., investment
experience, business experience, profession, education):
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
4. There is no material relationship between me or my
affiliates and the Fund or its affiliates which now exists
or is mutually understood to be contemplated or which has
existed at any time during the previous two years, and no
compensation has been received or will be received as a
result of any such relationship, except as follows:
(State "No Exceptions" or set forth exceptions and give details.)
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
If any exceptions exist and are described above, I confirm that these
exceptions were disclosed to the Investor in writing prior to the
date hereof by attaching a copy of the written disclosure.
I agree to notify you promptly of any change to the information
described in this Questionnaire which occurs prior to the completion
of the sale of the Units to the Investor.
-2-
<PAGE>
Date: ___________, 20___ Very truly yours,
------------------------------
Print or Type Name
------------------------------
Signature
------------------------------
Street Address
------------------------------
City, State and Zip Code
( )
------------------------------
Telephone
-3-
<PAGE>
INTERNAL REVENUE SERVICE FORM W-9
<PAGE>
[Form to be attached]
-5-
EXHIBIT C
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 1999
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
CONTENTS
--------
Page
Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . 1
Financial Statements and Notes
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 2
Condensed Schedule of Investments . . . . . . . . . . . . . . . . . 3-4
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Changes in Net Assets . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . 7-9
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the General Partner
BMO Partners Fund, L.P.
(A Delaware Limited Partnership)
We have audited the accompanying statement of assets and liabilities of BMO
Partners Fund, L.P. (A Delaware Limited Partnership), including the condensed
schedule of investments as of December 31, 1999, the related statement of
operations for the year then ended and the statement of changes in net assets
for each of the two years in the period then ended. These financial
statements and schedule are the responsibility of the general partner. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material missstatement. 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. 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and schedule referred to above
present fairly, in all material respects, the financial position of BMO
Partners Fund, L.P. as of December 31, 1999 and the results of its operations
for the year then ended and the changes in its net assets for each of the two
years in the period then ended, in conformity with generally accepted
accounting principles.
Reminick, Aarons & Company, LLP
New York, New York
February 15, 2000
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
Assets
Investments in securities, at market value (cost
$13,447,403) . . . . . . . . . . . . . . . . . . . $28,161,374
Cash equivalents . . . . . . . . . . . . . . . . . . 1,996,930
Receivables
Receivable from tender offer for securities . . . 1,195,200
Dividends . . . . . . . . . . . . . . . . . . . . 28,986
Interest . . . . . . . . . . . . . . . . . . . . 21,146
-----------
Total assets . . . . . . . . . . . . . . . . . 31,403,636
-----------
Liabilities
Accrued liabilities . . . . . . . . . . . . . . . . 20,000
-----------
Total liabilities . . . . . . . . . . . . . . 20,000
-----------
Net assets . . . . . . . . . . . . . . . . . . . . . . . $31,383,636
===========
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
CONDENSED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
Shares Value
-------- ---------
Securities by industry
Common stocks (86.38%) (a)
United States
Pharmaceuticals and hospital supplies
(6.85%) (b) . . . . . . . . . . . . . . $2,150,392
Entertainment and leisure (3.81%) . . . 1,194,600
Publishing and broadcasting (4.90%) . . 1,536,347
Services (2.11%) . . . . . . . . . . . . 662,580
Non-ferrous metals (.39%) . . . . . . . 122,850
Electrical equipment (8.23%) . . . . . .
General Electric Company (6.68%) . . 13,540 2,095,315
Other (1.55%) . . . . . . . . . . . . 485,156
Natural gas (1.88%) . . . . . . . . . . 589,856
Electronics (6.42%) (b) . . . . . . . . 2,013,849
Machinery (5.16%) (b) . . . . . . . . . 1,619,176
Building products (.13%) . . . . . . . . 39,516
Oil - domestic and crude (2.42%) . . . . 758,132
Miscellaneous industrials (8.40%) (b) . 2,635,932
Banks (2.39%) . . . . . . . . . . . . . 751,475
Credit and finance (6.58%) (b) . . . . . 2,064,625
Insurance (10.25%) . . . . . . . . . . .
American Int'l Group Inc. (6.70%) . . 19,460 2,104,113
Other (3.55%) . . . . . . . . . . . . 1,113,760
Railroads (2.35%) . . . . . . . . . . . 736,418
Telecommunications (12.32%) . . . . . .
AT&T Corp. Liberty Media Group
(8.76%) . . . . . . . . . . . . . . 48,370 2,748,021
Other (3.56%) . . . . . . . . . . . . 1,117,941
560,844
Freight and shipping (1.79%) . . . . . . ----------
Total common stocks (cost 27,100,898
$12,269,026) . . . . . . . . . . . . ----------
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1999
Market
Value
------
Securities by industry (continued)
Municipal bonds (.84%) (a)
United States
Puerto Rico 7.7% due 7/1/2020 (.84%) . . . . . . . 264,741
-----------
Total municipal bonds (cost $308,229) . . . . . 264,741
-----------
U.S. government obligation (2.54%) (a)
U.S. Treasury 4.750% note due 11/15/08 (2.54%) . . . 795,735
-----------
Total U.S. government obligation (cost $870,148) . 795,735
-----------
Total - 89.76% (cost $13,447,403) . . . . . . . . $28,161,374
===========
(a) Percent of net assets on the statement of assets and liabilities.
(b) No holdings in any one company in this category exceed 5% of net assets
on the statement of assets and liabilities.
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
Investment income
Dividends . . . . . . . . . . . . . . . . . . . . . . $262,984
Interest . . . . . . . . . . . . . . . . . . . . . . 146,753
--------
Total investment income . . . . . . . . . . . . . 409,737
--------
Expenses
Investment advisory fees . . . . . . . . . . . . . . 191,000
Banking and custodial fees . . . . . . . . . . . . . 22,350
Professional fees . . . . . . . . . . . . . . . . . . 36,970
Filing fees . . . . . . . . . . . . . . . . . . . . . 100
-------
Total expenses . . . . . . . . . . . . . . . . . . 250,420
--------
Investment income - net . . . . . . . . . . . . 159,317
--------
Realized and unrealized gain on investments
Net realized gain on investments . . . . . . . . . . 2,958,690
Change in unrealized appreciation of investments . . 1,598,249
---------
Net gain on investments . . . . . . . . . . . . . 4,556,939
---------
Net increase in net assets resulting from operations . . $4,716,256
==========
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
----------- -----------
Increase in net assets from operations
Investment income - net . . . . . . . . . . $ 159,317 $ 242,654
Net realized gain on investments . . . . . . 2,958,690 1,452,992
Change in unrealized appreciation
of investments . . . . . . . . . . . . . . 1,598,249 1,784,872
--------- ---------
Net increase in net assets
resulting from operations . . . . . . . . 4,716,256 3,480,518
Partners' capital contributions . . . . . . . . 1,052,868 1,512,768
Distributions to partners . . . . . . . . . . . (4,560,458) (1,503,290)
--------- ---------
Total increase . . . . . . . . . . . . . . . . 1,208,666 3,489,996
Net assets - beginning of year . . . . . . . . 30,174,970 26,684,974
---------- ----------
Net assets - end of year . . . . . . . . . . . $31,383,636 $30,174,970
=========== ===========
The accompanying notes are an integral part of these financial statements.
Page 6
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
------------------
BMO Partners Fund, L.P. ("Partnership") was organized under the laws
of the State of Delaware on March 8, 1991 as a limited partnership
for the purpose of investing in publicly traded equity and debt
securities. The Partnership maintains its general office in New York
City.
Security Valuation
------------------
Investments in securities traded on a national securities exchange
(or reported on the NASDAQ national market) are stated at the last
sales price on the day of valuation. Other securities traded in the
over-the-counter market and other securities for which no sale was
reported on that date are stated at the last quoted bid price.
Cash Equivalents
----------------
Cash equivalents consist of amounts held in money market accounts
whose fair value approximates their carrying amount. At December 31,
1999 and throughout the year, the Partnership maintained balances in
excess of insurable limits. The Partnership has not experienced any
losses in such accounts and believes it is not subject to any
significant credit risk with respect to cash equivalents.
Income Taxes
------------
As a limited partnership, the partners are required to include their
proportionate share of the Partnership's taxable income or loss on
their respective income tax returns. Accordingly, there is no
provision for federal, state or city income taxes in these financial
statements.
The Partnership is not subject to the New York City unincorporated
business tax since its sole activity is investing for its own
account.
Page 7
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires the general partner to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results
could differ from those estimates.
Other
-----
The Partnership follows industry practice and records security
transactions on the trade date. Dividend income is recognized on the
ex-dividend date, and interest income is recognized on an accrual
basis. Discounts and premiums on securities purchased are amortized
over the life of the respective securities. Realized gains and
losses from securities transactions are recorded on a first-in,
first-out basis.
NOTE 2 - INVESTMENT ADVISORY FEES
The general partner is a partnership which makes all investment
decisions and is compensated solely by receiving a quarterly
management fee as defined in the partnership agreement. Under the
terms of this agreement, the general partner is entitled to
investment advisory fees, calculated quarterly, based on an annual
rate of 1% of the first $5,000,000 in net assets, 0.75% on the second
$5,000,000 in net assets, and 0.50% on net assets over $10,000,000.
Investment advisory fees paid to the general partner were $191,000
for the year ended December 31, 1999.
NOTE 3 - CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Partnership to
concentrations of credit risk consist primarily of cash equivalents
and investments. The Partnership maintains cash and cash
Page 8
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
equivalents, short and long-term investments and other financial
instruments at a major financial institution.
NOTE 4 - ALLOCATION OF PARTNERS' CAPITAL
The net income of the Partnership is allocated among the partners in
proportion to their respective capital accounts as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
General Limited
Total Partner Partner
----------- ---------- -----------
Partners' capital - January 1, 1999 . . . . . . . $30,174,970 $305,813 $29,869,157
Partners' capital contributions . . . . . . . . . 1,052,868 -- 1,052,868
Distributions to partners . . . . . . . . . . . . (4,560,458) (344,310) (4,216,148)
Net increase in net assets resulting from 4,716,256 38,497 4,677,759
operations . . . . . . . . . . . . . . . . . . ------------ ---------- -----------
$31,383,636 $ -- $31,383,636
Partners' capital - December 31, 1999 . . . . . . ============ ========== ===========
</TABLE>
Page 9
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
CONTENTS
--------
Page
----
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . 1
Financial Statements and Notes
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 2
Condensed Schedule of Investments . . . . . . . . . . . . . . . . . . 3
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Changes in Net Assets . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 7
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the General Partner
BMO Partners Fund, L.P.
(A Delaware Limited Partnership)
We have audited the accompanying statement of assets and liabilities of BMO
Partners Fund, L.P. (A Delaware Limited Partnership), including the condensed
schedule of investments as of December 31, 1998, the related statement of
operations for the year then ended and the statement of changes in net assets
for each of the two years in the period then ended. These financial
statements and schedule are the responsibility of the general partner. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material missstatement. 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,
1998 by correspondence with the custodian. 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and schedule referred to above
present fairly, in all material respects, the financial position of BMO
Partners Fund, L.P. as of December 31, 1998 and the results of its operations
for the year then ended and the changes in its net assets for each of the two
years in the period then ended, in conformity with generally accepted
accounting principles.
Reminick, Aarons & Company, LLP
New York, New York
January 13, 1999
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
Assets
Investments in securities, at market value
cost $13,161,744) . . . . . . . . . . . . . . . $ 26,576,114
Cash equivalents . . . . . . . . . . . . . . . . . 3,549,326
Receivables
Dividends . . . . . . . . . . . . . . . . . . . . . 24,176
Interest . . . . . . . . . . . . . . . . . . . . . 48,354
------------
Total assets . . . . . . . . . . . . . . . 30,197,970
------------
Liabilities
Accrued liabilities . . . . . . . . . . . . . . . . 23,000
------------
Total liabilities . . . . . . . . . . . . . 23,000
------------
Net assets . . . . . . . . . . . . . . . . . . . . . . $ 30,174,970
============
The accompanying notes are an integral part of these financial statements.
Page 2
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
CONDENSED SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
Shares Value
-------- -------
Securities by industry
Common stocks (83.52%)(1)
United States
Pharmaceuticals and hospital supplies
(9.74%) . . . . . . . . . . . . . . . $2,949,800
Entertainment and leisure (7.74%) . . . 2,344,538
Publishing and broadcasting (3.41%) . . 1,031,434
Services (2.91%) . . . . . . . . . . . 879,710
Non-ferrous metals (.57%) . . . . . . . 172,069
Electrical equipment (7.62%) . . . . . 2,307,527
Electronics (5.08%) . . . . . . . . . . 1,536,526
Machinery (3.76%) . . . . . . . . . . . 1,138,004
Computers and office equipment (1.16%) . 351,731
Oil - domestic and crude (2.92%) . . . 883,961
Miscellaneous industrials (10.22%)
Tyco International Ltd. (5.08%) . 20,380 1,537,416
Other (5.14%) . . . . . . . . . . 1,554,959
Financial (3.25%) . . . . . . . . . . . 982,800
Banks (4.48%) . . . . . . . . . . . . . 1,355,807
Credit and finance (5.72%) . . . . . . 1,732,195
Insurance (8.30%)
American Int'l Group Inc. (5.45%). 17,088 1,651,128
Other (2.85%) . . . . . . . . . . 862,015
Railroads (4.76%) . . . . . . . . . . . 1,441,060
Investment (1.88%) . . . . . . . . . . 568,872
Total common stocks (cost ----------
$11,838,814) . . . . . . . . . . 25,281,552
----------
The accompanying notes are an integral part of these financial statements.
Page 3
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
CONDENSED SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1998
Shares Market Value
-------- ------------
Securities by industry (continued)
Municipal bonds (.98%)(1)
United States
Puerto Rico 7.7% due 7/1/2020 (.98%) . . 297,751
-----------
Total municipal bonds (cost $332,930) . 297,751
-----------
U.S. government obligation (3.29%)(1)
U.S. Treasury 5.875% note due 7/31/99
(3.29%) . . . . . . . . . . . . . . . . . . 996,811
-----------
Total U.S. government obligation (cost
$990,000) . . . . . . . . . . . . . 996,811
-----------
Total - 87.79% (cost $13,161,744)(1) . $26,576,114
===========
(1) Percent of net assets on the statement of assets and liabilities.
The accompanying notes are an integral part of these financial statements.
Page 4
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
Investment income
Dividends . . . . . . . . . . . . . . . . . . . . . . $ 217,540
Interest . . . . . . . . . . . . . . . . . . . . . . . 248,239
-----------
Total investment income . . . . . . . . . . . . . 465,779
-----------
Expenses
Investment advisory fees . . . . . . . . . . . . . . . 177,243
Banking and custodial fees . . . . . . . . . . . . . . 15,782
Professional fees . . . . . . . . . . . . . . . . . . 30,000
Filing fees . . . . . . . . . . . . . . . . . . . . . 100
----------
Total expenses . . . . . . . . . . . . . . . . . . . 223,125
----------
Investment income - net . . . . . . . . . . . . . . 242,654
----------
Realized and unrealized gain on investments
Net realized gain on investments . . . . . . . . . . . 1,452,992
Change in unrealized appreciation of
investments . . . . . . . . . . . . . . . . . . . . 1,784,872
----------
Net gain on investments . . . . . . . . . . . . . . 3,237,864
----------
Net increase in net assets resulting from operations . . $3,480,518
==========
The accompanying notes are an integral part of these financial statements.
Page 5
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
----------- ---------
Increase in net assets from operations
Investment income - net . . . . . . . . . . $242,654 $156,965
Net realized gain on investments . . . . . . 1,452,992 783,559
Change in unrealized appreciation of
investments . . . . . . . . . . . . . . . . 1,784,872 6,101,061
--------- ---------
Net increase in net assets resulting from
operations . . . . . . . . . . . . . . . 3,480,518 7,041,585
Partners' capital contributions . . . . . . . . 1,512,768 3,481,840
Distributions to partners . . . . . . . . . . . (1,503,290) (621,477)
----------- ----------
Total increase . . . . . . . . . . . . . . . . 3,489,996 9,901,948
Net assets - beginning of year . . . . . . . . 26,684,974 16,783,026
----------- ----------
Net assets - end of year . . . . . . . . . . . $30,174,970 $26,684,974
=========== ===========
The accompanying notes are an integral part of these financial statements.
Page 6
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
------------------
BMO Partners Fund, L.P. ("Partnership") was organized under the laws
of the State of Delaware on March 8, 1991 as a limited partnership
for the purpose of investing in publicly traded equity and debt
securities. The Partnership maintains its general office in New York
City.
Security Valuation
------------------
Investments in securities traded on a national securities exchange
(or reported on the NASDAQ national market) are stated at the last
sales price on the day of valuation. Other securities traded in the
over-the-counter market and other securities for which no sale was
reported on that date are stated at the last quoted bid price.
Cash Equivalents
----------------
Cash equivalents consist of amounts held in money market accounts
whose fair value approximates their carrying amount. At December 31,
1998 and throughout the year, the Partnership maintained balances in
excess of insurable limits. The Partnership has not experienced any
losses in such accounts and believes it is not subject to any
significant credit risk with respect to cash equivalents.
Income Taxes
------------
As a limited partnership, the partners are required to include their
proportionate share of the Partnership's taxable income or loss on
their respective income tax returns. Accordingly, there is no
provision for federal, state and city income taxes in these financial
statements.
The Partnership is not subject to New York City unincorporated
business tax since its sole activity is investing for its own
account.
Page 7
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires the general partner to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results
could differ from those estimates.
Other
-----
The Partnership follows industry practice and records security
transactions on the trade date. Dividend income is recognized on the
ex-dividend date, and interest income is recognized on an accrual
basis. Discounts and premiums on securities purchased are amortized
over the life of the respective securities. Realized gains and
losses from securities transactions are recorded on a first-in,
first-out basis.
NOTE 2 - INVESTMENT ADVISORY FEES
The general partner is a partnership which makes all investment
decisions and is compensated solely by receiving a quarterly
management fee as defined in the partnership agreement. Under the
terms of this agreement, the general partner is entitled to
investment advisory fees, calculated quarterly, based on an annual
rate of 1% of the first $5,000,000 in net assets, 0.75% on the second
$5,000,000 in net assets, and 0.50% on net assets over $10,000,000.
Investment advisory fees paid to the general partner were $177,243
for the year ended December 31, 1998.
Page 8
<PAGE>
BMO PARTNERS FUND, L.P.
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Partnership to
concentrations of credit risk consist primarily of cash equivalents
and investments. The Partnership maintains cash and cash
equivalents, short and long-term investments and other financial
instruments at a major bank.
NOTE 4 - ALLOCATION OF PARTNERS' CAPITAL
The net income of the Partnership is allocated among the partners in
proportion to their respective capital accounts as follows:
General Limited
Total Partner Partners
-------- --------- --------
Partners' capital - January 1,
1998 . . . . . . . . . . . . . $26,684,974 $266,496 $26,418,478
Partners' capital contributions . 1,512,767 2,316 1,510,451
Distributions to partners . . . . (1,503,290) -- (1,503,290)
Net increase in net assets
resulting from operations . . . 3,480,518 37,001 3,443,517
----------- -------- -----------
Partners' capital - December 31,
1998 . . . . . . . . . . . . . . $30,174,970 $305,813 $29,869,157
=========== ======== ===========
Page 9
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(1) Financial Statements -- Not Applicable
(2) (a) -- Limited Partnership Agreement*
(b) -- Not Applicable
(c) -- Not Applicable
(d) -- Not Applicable
(e) -- Automatic Dividend Reinvestment
Plan
(f) -- Not Applicable
(g) -- Investment Advisory Agreement
(h) (1) -- Not Applicable
(2) -- Not Applicable
(i) -- Not Applicable
(j) -- Form of Custody Account
Agreement
(k) -- Not Applicable
(l) -- Not Applicable
(m) -- Not Applicable
(n) -- Consent of Independent Auditors
(o) -- Not Applicable
(p) -- Not Applicable
(q) -- Not Applicable
(r) (1) -- Fund Code of Ethics
(2) -- Manager Code of Ethics
______________________
* Attached as Exhibit A to Private Placement Memorandum included as part
of this Form N-2.
Item 25. Marketing Arrangements
Not Applicable.
<PAGE>
Item 26. Other Expenses of Issuance and Distribution
Not Applicable.
Item 27. Persons Controlled by or Under Common Control with
Registrant
Not Applicable.
Item 28. Number of Holders of Securities
99
Item 29. Indemnification
Under the Partnership Agreement, the general partners
and officers of the partnership and Fund will be indemnified to the
fullest extent allowed and in the manner provided by Delaware law and
applicable provisions of the 1940 Act, as amended, including advancing of
expenses incurred in connection therewith. Indemnification shall not be
provided however to any officer or director against any liability to the
Registrant or its security-holders to which he or she would otherwise be
subject by reasons of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her
office.
Insofar as indemnification for liabilities under the
Securities Act of 1933 may be permitted to the directors and officers,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in such Act and is therefore unenforceable. If a claim for
indemnification against such liabilities under the Securities Act of 1933
(other than for expenses incurred in a successful defense) is asserted
against the Fund by the directors or officers in connection with the
units, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by
it is against public policy as expressed in such Act and will be governed
by the final adjudication of such issue.
Item 30. Business and Other Connections of Adviser
For information as to the business, profession, vocation
or employment of a substantial nature of each of the members and key
investment personnel of Beck, Mack & Oliver LLC, reference is made to
Beck, Mack & Oliver LLC's current Form ADV filed under the Investment
Advisers Act of 1940, SEC File Number 801-482, incorporated herein by
reference.
-2-
<PAGE>
Item 31. Location of Accounts and Records
The accounts and records of the Registrant are
maintained at the offices of Beck, Mack & Oliver LLC at 330 Madison
Avenue, 31st Floor, New York, New York 10017, of The Chase Manhattan Bank
at 55 Water Street, New York, New York 10041 and of Reminick Aarons & Co.
at 685 Third Avenue, New York, New York 10017.
Item 32. Management Services
Not applicable.
Item 33. Undertakings
(1) Not applicable.
(2) Not applicable.
(3) Not applicable.
(4) Not applicable.
(5) Not applicable.
(6) Not applicable.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company
Act of 1940, as amended, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of New York, State of New York on the ninth day
of May, 2000.
BMO PARTNERS FUND, L.P.
By: /s/ John C. Beck
------------------------------
Name: John C. Beck
Title: President
-4-
<PAGE>
SCHEDULE OF EXHIBITS TO FORM N-2
(1) Financial Statements -- Not Applicable
(2) (a) -- Limited Partnership Agreement*
(b) -- Not Applicable
(c) -- Not Applicable
(d) -- Not Applicable
(e) -- Automatic Dividend
Reinvestment Plan
(f) -- Not Applicable
(g) -- Investment Advisory Agreement
(h) (1) -- Not Applicable
(2) -- Not Applicable
(i) -- Not Applicable
(j) -- Form of Custody Account
Agreement
(k) -- Not Applicable
(l) -- Not Applicable
(m) -- Not Applicable
(n) -- Not Applicable
(o) -- Not Applicable
(p) -- Not Applicable
(q) -- Not Applicable
(r) (1) -- Fund Code of Ethics
(2) -- Manager Code of Ethics
______________________
* Attached as Exhibit A to Private Placement Memorandum included as part
of this Form N-2.
-5-
Exhibit (2)(e) to Form N-2
TERMS AND CONDITIONS OF DIVIDEND REINVESTMENT PLAN
1. Each limited partner will be deemed to have elected to be a participant
in the Dividend Reinvestment Plan (the "Plan"), unless the limited partner
specifically elects in writing (addressed to Beck, Mack & Oliver LLC at the
address below) to receive all income dividends and distributions of capital
gains in cash, paid by check, mailed directly to the record holder. Each
participant in the Plan is referred to herein as a "Participant."
2. Unless the Fund declares a dividend or distribution payable only in the
form of cash, all dividends and distributions will be applied in the manner
set forth below.
3. Dividends and distributions will be paid in newly issued Units, which
will be issued to Participants at net asset value per Unit on the dividend or
distribution payment date. Dividends and distributions will be credited to
each Participant's account.
4. The Beck, Mack & Oliver LLC (the "Manager") will confirm to Participants
each issuance of Units for their respective accounts as soon as practicable
but not later than 60 days after the date thereof.
5. Participants may terminate their participation in the Plan by notifying
the Manager in writing or by calling 1-212-661-2640. Such termination will
be effective immediately if notice is received by the Manager not less than
ten days prior to any dividend or distribution record date; otherwise such
termination will be effective on the first Business Day after the payment
date for such dividend or distribution with respect to any subsequent
dividend or distribution. The Plan may be amended or terminated by the Fund
as applied to any dividend or capital gains distribution paid subsequent to
written notice of the change or termination sent to Participants at least 30
days prior to the record date for the dividend or capital gains distribution.
Notwithstanding the preceding sentence, the Fund may amend or supplement the
Plan at any time or times when necessary or appropriate to comply with
applicable law or rules or policies of the Securities and Exchange Commission
or any other regulatory authority.
6. Any amendment or supplement shall be deemed to be accepted by each
Participant unless, prior to the effective date thereof, the Manager receives
written notice of the termination of the Participant's account under the
Plan.
7. All correspondence concerning the Plan should be directed to the Manager
at 330 Madison Avenue, 31st Floor, New York, New York.
Exhibit (2)(g) to Form N-2
INVESTMENT ADVISORY AGREEMENT
BMO PARTNERS FUND, L.P.
330 Madison Avenue, 31st Floor
New York, New York 10017
December 8, 1999
Beck, Mack & Oliver LLC
330 Madison Avenue, 31st Floor
New York, New York 10017
Dear Sirs:
This will confirm the agreement between the undersigned (the "Fund") and
you (the "Manager") as follows:
1. The Fund is a non-diversified, closed-end management investment
company which engages in the business of investing and reinvesting the assets
of the Fund in the manner and in accordance with the investment objectives
and limitations specified in the Fund's Second Amended and Restated Limited
Partnership Agreement (the "LP Agreement") and the Fund's currently effective
Registration Statement on Form N-2, as amended from time to time (the "Form
N-2"), filed by the Fund under the Investment Company Act of 1940, as amended
(the "1940 Act"). Copies of the documents referred to in the preceding
sentence have been furnished to the Manager. Any amendments to these
documents shall be furnished to the Manager promptly. Capitalized terms used
and not defined herein are used as defined in the LP Agreement.
2. The Fund employs the Manager and grants the Manager full
discretion and authority to (a) manage the assets and liabilities of the Fund
and (b) manage the day-to-day business of the Fund. The Manager shall have
all of the powers specified in the LP Agreement including, without
limitation, Section 3.04(b) thereof.
3. (a) The Manager shall pay directly the Fund's overhead
expenses, including equipment, utilities, salaries, its share of rent,
postage, delivery, news and quotation machines and computer expenses,
telephone and other administrative expenses and all expenses in connection
with reporting to the Partners concerning the Fund's investment activities
and performance.
<PAGE>
(b) The Fund shall pay directly all of its operational and
investment expenses, including the Management Fee, interest expenses,
brokerage commissions, custodial and depository fees and transactional
expenses, litigation expenses, taxes and investment banking fees and
expenses, as well as all legal and accounting fees, and litigation and tax
expenses and all expenses incurred in processing the sale and redemption of
Units. The Fund shall also pay all fees due to its Independent Directors;
fees payable to the Securities and Exchange Commission; state securities
qualification fees; costs of preparing and printing offering memoranda for
regulatory purposes and for distribution to investors; charges of custodians
for the Fund; the costs of a fidelity bond and any liability insurance
obtained on behalf of the Fund or the Directors and the costs of meetings of
the Limited Partners.
4. As manager of the Fund's assets, the Manager shall make
investments for the Fund's account in accordance with the investment
objectives, policies and limitations set forth in the LP Agreement, the Form
N-2, the 1940 Act and policy decisions adopted by the Fund's Board of
Directors from time to time and communicated in writing to the Manager. The
Manager shall advise the Fund's officers and Board of Directors, at such
times as the Fund's Board of Directors may specify, of investments made for
the Fund's account and shall, when requested by the Fund's officers or Board
of Directors, supply the reasons for making such investments.
5. In executing portfolio transactions on behalf of the Fund, the
Manager will use its best judgment to choose the dealer or broker it believes
most capable of providing the services necessary to obtain the most favorable
execution. The full range and quality of services available will be
considered in making these determinations. In those instances where it is
reasonably determined that more than one dealer or broker can offer the
services needed to obtain favorable execution, consideration may be given to
those dealers or brokers that supply research advice or other services. The
Manager is authorized to open, maintain and close accounts with brokers and
dealers, to make all decisions relating to the manner, method and timing of
securities and other investment transactions, to select and place orders with
brokers, dealers or other financial intermediaries for the execution,
clearance or settlement of any transactions on behalf of the Fund and to pay,
or authorize the payment and reimbursement of, brokerage commissions, which
may be in excess of the lowest rates available which are paid to brokers who
execute transactions for the account of the Fund and who supply or pay the
cost of research and brokerage services (which services may be used by the
Manager in servicing clients other than the Fund, and not all of which
services will necessarily benefit the Fund), provided that the Fund in using
these brokers obtains "best execution," taking into account the research and
execution capabilities of the brokers, their financial stability and
reputation and the value to the Fund of all the services provided by them.
-2-
<PAGE>
6. In consideration of the Manager's undertaking to render the
services described in this agreement, the Fund agrees that the Manager shall
not be liable for (a) any act or omission by the Manager in connection with
the conduct of the business of the Fund that is determined by the Manager in
good faith to be in or not opposed to the best interests of the Fund, unless
that act or omission constitutes willful misconduct, gross negligence, a
violation of federal or state securities laws or criminal wrongdoing by the
Manager, (ii) any action or omission by any other Partner or (iii) any
mistake, negligence, dishonesty or bad faith of any broker or other agent of
the Fund selected, engaged or retained by the Manager with reasonable care.
To the extent that, at law or in equity, the Manager has duties (including
fiduciary duties) and liabilities relating thereto to the Fund or to another
Partner, the Manager acting pursuant to this Agreement or the LP Agreement
shall not be liable for its good faith reliance on the provisions of this
Agreement or the LP Agreement. The provisions of this Agreement, to the
extent that they expand or restrict the duties and liabilities of the Manager
otherwise existing at law or in equity, are intended to modify to that extent
such other duties and liabilities of the Manager.
(b) The Manager may consult with legal counsel or accountants
selected by it and any act or omission by it on behalf of the Fund or in
furtherance of the business of the Fund in good faith in reliance on and in
accordance with the advice of such counsel or accountants shall be full
justification for the act or omission, and to the fullest extent permitted by
law the Manager shall be fully protected in so acting or omitting to act if
the counsel or accountants were selected with reasonable care.
7. In consideration of the Manager's services under this
Agreement, the Fund shall pay the Manager a fee (the "Management Fee"),
quarterly in advance, based on the Net Assets of the Fund at the beginning of
each quarter of the Fund's fiscal year. The Management Fee shall equal 1%
per annum of the first $5 million of the Fund's Net Assets, 3/4 of 1% per
annum of the next $5 million of the Fund's Net Assets and 1/2 of 1% per annum
of the Fund's Net Assets in excess of $10 million. If the date on which the
Fund liquidates is a date other than the last day of a quarter the Manager
shall refund to the Fund the amount of the most recent installment of the
Management Fee allocable to the portion of the quarter for which that
installment was paid which is subsequent to the liquidation date. For
purposes of this Agreement, the Management Fee shall be treated as an expense
of the Fund paid to the Manager other than in its capacity as a Partner,
pursuant to Section 707(a) of the Code.
8. This agreement shall continue in effect until two years from
the date hereof and thereafter for successive annual periods, provided that
such continuance is specifically approved at least annually (a) by the vote
of a majority of the Fund's outstanding voting securities (as defined in the
1940 Act) or by the Fund's Board of Directors and (b) by the vote, cast in
-3-
<PAGE>
person at a meeting called for the purpose, of a majority of the Fund's
directors who are not parties to this agreement or "interested persons" (as
defined in the 1940 Act) of any such party. This Agreement will terminate
(i) if revoked by the Directors or by vote of a 1940 Act majority of the
outstanding voting securities of the Fund, in either case with 60 days' prior
written notice to the Manager; (ii) at the election of the Manager with 60
days' (or one year's if such withdrawal is likely to cause the Fund to lose
its partnership tax classification) prior written notice to the Directors; or
(iii) upon the termination of the status of the Manager pursuant to Section
4.01(a) of the LP Agreement other than by reason of the withdrawal and
designation by the Manager of a Designee that does not involve an
"assignment" within the meaning of the 1940 Act (in which case the rights and
obligations of the Manager under this Agreement shall instead be vested in
such Designee). This Agreement shall automatically terminate upon the
occurrence of an "assignment" within the meaning of the 1940 Act.
9. Upon expiration or earlier termination of this agreement, the
Fund shall, if reference to "Beck, Mack & Oliver" or "BMO" is made in the
name of the Fund and if the Manager requests in writing, as promptly as
practicable change its corporate name and the name of the Fund so as to
eliminate all reference to "Beck, Mack & Oliver" or "BMO", thereafter the
Fund and the Fund shall cease transacting business in any corporate name
using the words "Beck, Mack & Oliver" or "BMO" or any other reference to the
Manager, "Beck, Mack & Oliver" or "BMO". The foregoing rights of the Manager
and obligations of the Fund shall not deprive the Manager, or any affiliate
thereof which has "Beck, Mack & Oliver" or "BMO" in its name, of, but shall
be in addition to, any other rights or remedies to which the Manager and any
such affiliate may be entitled in law or equity by reason of any breach of
this agreement by the Fund, and the failure or omission of the Manager to
request a change of the Fund's or the Fund's names or a cessation of the use
of the name of "Beck, Mack & Oliver" or "BMO" as described in this paragraph
9 shall not under any circumstances be deemed a waiver of the right require
such change or cessation at any time thereafter for the same or any
subsequent breach.
10. Except to the extent necessary to perform the Manager's
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Manager, or any affiliate of the Manager, or any
employee of the Manager, to engage in any other business or to devote time
and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind
to any other corporation, firm, individual or association.
11. This Agreement shall be governed by the laws of the State of
New York.
-4-
<PAGE>
If the foregoing correctly sets forth the agreement between the
Fund and the Manager, please so indicate by signing and returning to the Fund
the enclosed copy hereof.
Very truly yours,
BMO PARTNERS FUND, L.P.
By: /s/ John C. Beck
Name: John C. Beck
Title: President
ACCEPTED:
BECK, MACK & OLIVER LLC
By: /s/ Robert C. Beck
Name: Robert C. Beck
Title: Senior Member
-5-
Exhibit (2)(j) to Form N-2
CUSTODY SERVICES
CUSTODY ACCOUNT AGREEMENT
JSD 1870071
----------------------------------------------
ACCOUNT NUMBER
BMO Partners Fund LP
(investment company registered under
Investment Company Act of 1940)
----------------------------------------------
ACCOUNT NAME
April 2000
----------------------------------------------
DATE
/ / INDIVIDUAL
/ / JOINT (with Right of Survivorship; payable to any
of the undersigned or the survivor of them)
/ / CORPORATION
/x/ PARTNERSHIP
/ / FIDUCIARY
<PAGE>
Custody Account Agreement
The undersigned hereby requests and authorizes The Chase Manhattan Bank
(hereafter sometimes called "you") to establish a Custody Account (the
"Account") for the purpose of holding or disposing of any property
(hereinafter referred to as the "Property") received by The Chase
Manhattan Bank for the undersigned subject to the instructions set forth
herein.
1. Use Of Depositories
You may provide safekeeping of the Property according to your operational
procedures in effect from time to time and are not responsible for
retaining serial number identification of any securities held for the
Account. You may deposit all or any part of the Property with any
centralized securities depository system ("SDS") or subcustodian which
you may select. All stocks and other securities in registered form held
in the Account are to be registered in the name of your nominee or a
nominee of the relevant SDS or subcustodian. If this is an Individual or
Joint Account, you are authorized to execute instruments required for the
transfer of securities registered in the name of the undersigned into
good negotiable form.
2. Transactions
You are authorized:
(a) To receive property/investments in the Account against payment or
free against receipt as instructed by or on behalf of the
undersigned;
(b) To deliver property/investments from the Account against payment or
free against receipt as instructed by or on behalf of the
undersigned;
(c) To receive all interest, dividends and other income payable on
investments in the Account and to credit such interest, dividends
and other income as is designed herein;
(d) To credit all proceeds received from sales and redemptions and to
debit all costs and expenses of purchases as is designated herein;
(e) To present obligations (including coupons) for payment upon
maturity, when called for redemption and when income payments are
due;
(f) To exchange securities for other securities where the exchange is
purely ministerial;
(g) To purchase and sell investments for the Account on instructions of
the undersigned;
2
<PAGE>
(h) To convert any currency received with respect to investments in the
Account into another currency whenever it is practical or necessary
to do so through customary banking channels; and
(i) To enter into spot or forward transactions for the purchase and/or
sale of currencies for the Account in connection with or in
anticipation of the purchase or sale of securities.
3. Reservation Of Right
You reserve the right to refuse to accept any investment for the Account
which is in a form or condition which you, in your sole discretion,
determine is not compatible with the services to be performed under this
Agreement.
4. Proxies and Notices Of Redemptions, Tenders, Reorganizations &
Fractional Interests
You shall notify the undersigned upon receipt of notice by you of any
call for redemption, tender offer, subscription rights, merger,
consolidation, reorganization or recapitalization (i) appearing in the
financial publications to which you subscribe for the purpose of
monitoring the above and any official notifications from an SDS you
utilize, pertaining to securities in the Account which have been
registered in the name of your nominee or are being held by an SDS or
subcustodian on your behalf, and (ii) requiring you to act in response
thereto.
You are directed to forward to the undersigned, and/or any other
person designated by the undersigned, all proxies, annual reports and
other information which requires the undersigned's action, received by
you in connection with securities held in the Account, which have been
registered in the name of your nominee, or are being held by any SDS or
subcustodian on your behalf.
You are authorized to sell any fractional interest resulting from a
stock dividend or split. You are also authorised to sell any debt
instrument having a face value of less than $1,000 or considered to be
less than the minimum required for trading in the currency of the
instrument.
Should any securities of the type held by you for the undersigned be
called for a partial redemption by the issuer of such securities, you are
authorized in your sole discretion to allot the called portion to the
respective beneficial holders in any manner deemed to be fair and
equitable in your judgment.
All solicitation fees payable to you as agent in connection herewith
will be retained by you.
3
<PAGE>
5. Payment Orders
You are authorized to honor and execute funds transfer or withdrawal
instructions ("Payment Orders") given to you by any of the undersigned's
agents as identified in paragraph 14 of this Agreement, including Payment
Orders that may create an overdraft and those that are for the benefit of
any authorized representative, officer, agent or employee of the
undersigned, without inquiry into the circumstances; you have the right
to refuse Payment Order instructions if sufficient funds are not
available in the account. Except as otherwise modified hereby, the
parties intend that the transactions contemplated hereby are deemed funds
transfers subject to the Uniform Commercial Code.
Notwithstanding anything else to the contrary in this Agreement,
changes to assigned agents and/or telephone numbers utilized to
affirm/disaffirm Payment Orders must be provided to you by the
undersigned in writing and shall not be effective until acknowledged by
you. You may complete all Payment Orders based upon original standing
instructions until the changes become effective.
You may terminate the arrangement concerning Payment Orders as described
in this Agreement at any time without notice. The undersigned may
terminate the arrangement concerning Payment Orders as described in this
Agreement by providing you written notice of termination that shall
become effective upon your receipt of such notice. You may complete all
Payment Orders accepted on the day the termination becomes effective.
The undersigned agrees that all Payment Orders may be verified by
you pursuant to the following security procedures but agrees that you are
not obligated to verify Payment Orders and may execute them without use
of these verification processes:
(a) The undersigned agrees to send you written confirmation within one
day following the issuance of oral or electronically transmitted
Payment Order instructions. A failure to provide written
confirmation, or a discrepancy between the oral or electronically
transmitted order and the written confirmation, shall in no way
affect the validity or enforceability of any action taken by you in
reliance upon the oral or electronically transmitted Payment Order
instructions. You undertake no obligation to monitor the receipt of
written confirmations or detect discrepancies between the written
confirmation and the oral or electronically transmitted Payment
Order.
(b) If the undersigned gives verbal or electronically transmitted
Payment Order instructions, you may at your discretion telephone the
undersigned at one of the telephone numbers listed on page 13 or 14,
at another telephone number of the undersigned as shown in your
records or at such other telephone numbers as you may from time to
time agree upon.
4
<PAGE>
6. Bonds with Tender Put Options Attached
The undersigned understands that your role as custodian does not include
the duty to identify securities with tender put options attached or to
monitor the tender and action dates for these securities.
Notwithstanding anything contained herein to the contrary, the
undersigned shall have the sole responsibility for monitoring the
applicable dates on which securities with put option features must be
exercised. If the undersigned decides to exercise a tender put option,
the undersigned agrees to provide complete written instructions including
but not limited to security description, principal amount, name and
address of tender agent, intent notification date and details, tender
date and delivery date.
7. Investments and Funds Held Abroad
Investments in the Custody Account shall be held in such country or other
jurisdiction as shall be specified from time to time in instructions from
the undersigned which are acceptable to you, provided that such country
or other jurisdiction shall be one in which the principal trading market
for such investments is located or in which such investments are to be
acquired or presented for payment. Funds shall be credited to an account
in such amounts and in the country or other jurisdiction as shall be
specified from time to time in instructions from the undersigned which
are acceptable to you, provided that such country or other jurisdiction
shall be one in which such cash is the legal currency for the payment of
public or private debts.
The undersigned authorizes you to hold cash and investments for the
Custody Account in accounts which have been established by you with one
of your branches or with one or more subcustodians. "Subcustodian" means
a branch of another U.S. bank, a foreign bank acting as custodian or a
foreign securities depository in which you participate. You shall select
in your sole discretion the branch or subcustodian in the custody of
which any Investment may be maintained or with which any funds may be
deposited. Any entity so elected is authorized to hold such funds and
investments in its account with any foreign securities depository in
which it participates.
You shall not be liable for any loss resulting from the maintenance
of any investments in a foreign country, including, but not limited to,
losses resulting from nationalization, expropriation, currency
restrictions, acts of war or terrorism, insurrection, revolution, or acts
of God.
Unless specifically instructed otherwise by the undersigned, all
foreign currency collected in respect of such securities is, to the
extent possible, to be converted into United States dollars, and in
effecting such conversion you may use such methods or agencies as you may
deem appropriate, including your facilities, or those of your affiliates,
or foreign exchange traders at customary rates. All risks and expenses
incident to such collection and conversion shall be assumed by the
undersigned, and you shall have no responsibility for fluctuation in
exchange rates affecting any such conversion.
5
<PAGE>
8. Withholding Taxes
It is acknowledged that, if any of the undersigned is neither a citizen
nor a resident of the United States, income paid on some assets held by
you may be subject to U.S. withholding tax, and that you are required by
law to deduct applicable U.S. withholding taxes from such income. You
are also hereby advised that the proceeds of any sale of a security to
the issuer hereof in the context of a self-tender offer do not constitute
dividends and you are hereby requested not to withhold taxes payable to
the United States with respect to such proceeds. The undersigned
agree(s) to indemnify you for any assessed withholding taxes imposed on
you by the Internal Revenue Service with respect to any payments made in
connection with, rising out of, or in any way related to this Agreement,
as well as any interest related thereto.
You shall have no obligation to seek a refund of any taxes withheld
against any dividends or interest paid on any investment in the Account
unless the undersigned provides you with all documents that you may
reasonably require for that purpose.
9. Crediting and Debiting Procedure
With respect to any transaction involving any investment held in or to be
acquired for the Account you may, in your discretion, cause the Account
to be credited on the contractual settlement date with the proceeds of
any sale or exchange of any investment from the Account and to be debited
on the contractual settlement date for the cost of any investment
purchased or acquired for the Account. If a transaction with respect to
which a credit or debit has been made fails to settle, you may reverse
such credit or debit upon receipt of instructions from the undersigned.
Alternatively, while you assume no affirmative duty to act in the absence
of such instructions, you may reverse any such credit or debit if a
transaction fails to settle within a period of time after the contractual
settlement date which you in your sole discretion consider reasonable in
the light of market conditions. If any investments delivered pursuant
hereto are returned by the recipient thereof, you may cause any such
credits and debits to be reversed at any time. With respect to any
transactions as to which you do not determine so to credit or debit the
Account, the proceeds from the sale or exchange of investments will be
credited and the cost of such investments purchased or acquired will be
debited to the Account on the date such proceeds or investment are
received by you.
Notwithstanding the preceding paragraph, settlement and payment for
any investment received for, and delivery of any investment out of, the
Account may be effected in accordance with the customary or established
trading or processing practices and procedures for such investment in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering such investment to the purchaser thereof
or to a dealer therefor (or to an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment for
such investment from such purchaser or dealer (or agent therefor).
6
<PAGE>
With respect to all transactions for the Account, including, without
limitation, dividend and interest payments and sales and redemptions of
any investment, availability of funds credited to the Account will be
based on the type of funds used in the trade settlement or payment,
including, but not limited to, same-day availability for federal or same-
day funds and next-business-day availability for clearing house or next-
day funds.
10. Reimbursement
If you choose to credit the Account on the payable date for interest,
dividends or redemptions you may reverse such credit and if funds are not
available, the undersigned will return to you such amount or property in
the ordinary course of transactions for the account of the undersigned.
You shall have no duty to institute legal proceedings, file a claim or
proof of claim in any insolvency proceeding or take any action beyond
your ordinary collection procedures to collect such amounts or property.
11. Overdrafts
The amount by which any payment made by you on behalf of the undersigned
pursuant to this Agreement exceeds the available funds of any currency in
the Account shall be deemed a loan from you to the undersigned. Such
loan shall be payable on demand and, in your discretion, shall bear
interest at the rate customarily charged by you or your subcustodian on
similar loans. In no event shall you have any duty to make any payment
if such payment will exceed the funds available in the Account. You have
the right to refuse trades if sufficient funds are not available in the
Account.
12. Security and Set-off
As security for the performance of the undersigned's obligations under
this Agreement, the undersigned grants a security interest in and
pledges, transfers, and assigns to you all the undersigned's right, title
and interest in and to all cash, the Property, investments and other
assets held by you or by any of your subsidiaries, affiliates or
subcustodians (other than the shares of an investment company to which
you or your affiliate is an investment advisor) wherever located and
whether or not denominated in the same or different currencies. In the
event that a debited deposit is maintained in a currency other than the
currency of the undersigned's obligations to you, such debit shall be
made in an amount which, when converted to the currency of the
undersigned's obligation at your rate for purchasing such currency on the
date of such debit, shall yield the amount then due and payable to you
hereunder. In addition, and without limiting the foregoing, except as
precluded by law, the undersigned agrees that you may set-off any and all
of the undersigned's obligations to you against any and all deposits of
the undersigned, whether general or special, with you.
7
<PAGE>
13. Instructions of the Undersigned
You are authorized to accept and rely upon all instructions which you
believe in good faith are given by or on behalf of the undersigned under
the terms of this Agreement.
Instructions may be written, oral, by telephone, telex, facsimile
transmission, bank wire or other electronic communication acceptable to
you. You shall incur no liability to the undersigned or otherwise as a
result of any act or omission by you in accordance with instructions on
which you are authorized to rely pursuant to the provisions of this
section unless your reliance is the result of your gross negligence or
willful misconduct. You will incur no liability for the failure of any
written confirmation to conform to the telephone instructions which you
received or your failure to produce such confirmation at any subsequent
time. Unless otherwise expressly provided, all authorizations and
instructions shall continue in full force and effect until canceled or
superseded by subsequent authorizations or instructions received.
The undersigned agrees that if you require test arrangements,
authentication methods or other security devices to be used with respect
to instructions, the undersigned shall safeguard any testkeys,
identification codes or other security devices which you make available
and agrees that the undersigned shall be responsible for any loss,
liability or damage incurred by you or by the undersigned as a result of
your acting in accordance with instructions from any unauthorized person
using the proper security device. You may electronically record any
instructions given by telephone, and any other telephone discussions with
respect to the Account or transactions pursuant to this Agreement.
FOR JOINT ACCOUNTS:
You are directed to follow and rely upon any instructions received from
any one of the undersigned. For all purposes of this Agreement, an
instruction received from one of the undersigned shall constitute
instructions from all of the undersigned. Any one of the undersigned
acting alone may withdraw any property in the Account or pledge the same
for his or her individual indebtedness to you. If you should receive
conflicting instructions as to any matter, you are to notify all of the
undersigned and you are directed to take no action with respect to such
matter until you receive non-conflicting instructions from all of the
undersigned.
In addition:
(i) You may be required by service of legal process to remit funds held
in the Account to satisfy judgment entered against, or other debt
incurred by any of the undersigned;
(ii) You may honor withdrawal requests from any of the undersigned
after the death of any of the other undersigned;
(iii) You may treat the Account as the sole property of any of the
undersigned after the death of all of the other undersigned;
8
<PAGE>
(iv) Unless you receive written notice signed by any of the
undersigned not to pay or deliver any funds or securities in the
Account, you shall not be liable for continuing to honor
withdrawal requests from any of the undersigned; and
(v) After receipt of the notice referred to in (iv) you may require the
written authorization of any or all of the undersigned for any
further payments or deliveries.
FOR CORPORATE ACCOUNTS:
The undersigned has delivered to you a corporate resolution, ss authorized
in a certificate of the Secretary or Assistant Secretary, which
authorizes one or more officers, employees, or agents of the undersigned
to act on behalf of the undersigned under the terms of this Agreement.
FOR PARTNERSHIP ACCOUNTS:
The undersigned has delivered to you a partnership certificate, signed by
all of the general partners, authorizing one or more partners, employees,
or agents of the undersigned to act on behalf of the undersigned under
the terms of this Agreement.
FOR FIDUCIARY ACCOUNTS:
You are directed to follow only those instructions received from (check
only one) ________ Any, _________ Majority, or All of the undersigned.
14. Authority of Advisor/broker/agent
You are hereby authorized without further approval from the undersigned
to act upon the following instructions, this authorization to continue in
full force and effect until you receive written notice from the
undersigned of the revocation thereof:
(A) INSTRUCTIONS OF THE UNDERSIGNED'S ADVISOR
Beck, Mack & Oliver
-------------------------------------------------
-------------------------------------------------
(THE "ADVISOR")
(Please check Yes or No for each of the following five items.)
Yes No
- --- --
/x/ / / To sell, deliver or exchange any securities or other
property against receipt by you of such payment set
forth in such instructions and to purchase or receive
securities and make payment therefor as set forth in
such instructions.
9
<PAGE>
/x/ / / To make free deliveries of securities from the Account.
/x/ / / To issue checks drawn against the Account payable to the
Advisor for investment management bills submitted by the
Advisor.
/x/ / / To issue checks drawn against the account payable to tax
authorities, as directed by the Advisor.
/x/ / / To issue checks or remit funds by wire transfer drawn
against the Account, payable to any payee, as directed
by the Advisor.
(B) INSTRUCTIONS OF THE UNDERSIGNED'S BROKER
---------------------------------------------------------------
---------------------------------------------------------------
(the "Broker"), in the form of broker confirmations or I.D. confirmations
received through the Depository Trust Company Institutional Delivery
System, covering purchases and sales of securities made for the
undersigned's account by the Broker. All receipts and deliveries of
securities are to be effected against payment of the Broker's figures,
accepting those figures as correct. You will not be liable or responsible
in any way for determining whether any confirmation received by you from
the Broker represents a duplication by that Broker.
(C) INSTRUCTIONS OF THE UNDERSIGNED'S AGENT(S) TO GIVE PAYMENT ORDERS
1. Beck, Mack & Oliver LLC
-------------------------------------------------------
PRINT NAME
on file
-------------------------------------------------------
SIGNATURE
212-661-2640
--------------------------------------------------------
TELEPHONE NUMBER
2.
--------------------------------------------------------
PRINT NAME
--------------------------------------------------------
SIGNATURE
--------------------------------------------------------
TELEPHONE NUMBER
10
<PAGE>
3.
--------------------------------------------------------
PRINT NAME
--------------------------------------------------------
SIGNATURE
--------------------------------------------------------
TELEPHONE NUMBER
4.
--------------------------------------------------------
PRINT NAME
--------------------------------------------------------
SIGNATURE
--------------------------------------------------------
TELEPHONE NUMBER
Cross out any unused spaces above.
The above are hereby appointed by the undersigned as agent(s) to give
Payment Orders.
15. (A) Principal
The proceeds of sales and redemptions and other receipts of monies, other
than income, collected in accordance with the instructions of the
undersigned are to be credited to the principal division of the Account.
The cost and expenses of purchases are to be charged to the principal
division, except that accrued interest is to be charged to the income
division.
With respect to any balances remaining in the principal division,
you are instructed to:
(Please check one.)
/x/ Sweep principal balances daily to/from:
(Select one vehicle.)
_______ Chase Cash Investment Account (a Chase Manhattan Bank
interest-bearing money market account)
_______ Chase Vista Money Market Funds
Chase Vista Treasury Plus MMFD
---------------------------------------------------
(FUND NAME)
11
<PAGE>
/ / Retain in Account pending the undersigned's instructions.
(B) Income
With respect to all interest, dividend, and other income credited to the
Account, you are instructed to:
/x/ Sweep income balances daily to/from:
(Select one vehicle.)
_______ Chase Cash Investment Account (a Chase Manhattan Bank
interest-bearing money market account)
_______ Chase Vista Money Market Funds
Chase Vista Treasury Plus MMFD
---------------------------------------------------
(FUND NAME)
AND/OR
/ / Credit checking account (___ Monthly or ___ Quarterly) of ________
A/C#
-------------------------------------------------------------
12
<PAGE>
AND/OR
/ / Other (Please specify.)
Daily advices to BMO
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
OR
/ / Retain in Account pending the undersigned's instructions. By
selecting one of the Chase Vista Funds, the undersigned understands
and acknowledges that:
1. An investment in the Funds is not a bank deposit or an obligation
of, or guaranteed by, any bank, including The Chase Manhattan Bank
or its affiliated banks, and is not insured or guaranteed by any
federal agency including the FDIC. An investment in the Funds
involves certain risks including possible loss of principal.
2. The undersigned has been provided with and advised to read
carefully, the Funds prospectus which contains information on the
Funds fees and expenses.
3. You and your affiliates are compensated for various services
provided to the Funds including investment advisory and shareholder
services as more fully disclosed in the Funds prospectus.
16. Special Instructions
Certain records maintained by you pursuant to this Agreement may be
relied upon by the undersigned to satisfy a portion of the
undersigned requirements under the Investment Company Act of 1940
(as amended "The 1940 Act"). The undersigned or the undersigned's
authorized representatives, shall have access to such books and
records during your normal business hours. You shall preserve these
records for seven (7) years. Subject to restrictions under
applicable law, you shall also permit the undersigned's independent
public accountants reasonable access to such records as may be
required in connection with the examination of the undersigned's
books and records.
17. Optional Tax Service
/ / Tax Summary Letter. You are to prepare an annual summary statement
which details, for income tax purposes, gross income (by class),
expenses and capital transactions in the Account.
13
<PAGE>
/ / Individual Income Tax Return. You are to prepare federal, state and
local income tax returns.
/ / Fiduciary Income Tax Returns. You are to prepare a fiduciary return
and provide the beneficiary a summary statement which details net
figures to be reported by the beneficiary for income tax purposes.
In the event none of the above options are selected by the undersigned,
the undersigned will be deemed to have elected not to utilize this
service. The undersigned understands that a separate fee will be
charged, based on the amount of work involved, for the tax service
requested.
18. Shareholder Disclosure
The undersigned has indicated below whether you are authorized to release
the undersigned's name, address and share positions to requesting
companies whose stock is owned by the undersigned, which companies may be
required or choose to disclose such information to others.
Yes No
- --- ---
/ / / / You are authorized to release the name, address, and share
positions of the undersigned.
The Chase Manhattan Bank shall disclose such information unless expressly
forbidden by the undersigned.
19. Statement of Account
A statement of all transactions in the Account, with a list of the
securities held in the Account, including current market value, if
available to you, shall be rendered monthly. In the absence of the
filing in writing with you by the undersigned of exceptions or objections
to any such statement within sixty (60) days of issuance date, the
undersigned shall be deemed to have approved such statement, and you
shall be released, relieved and discharged with respect to all items set
forth therein. Market values are obtained from sources that you believe
to be reliable, however, you cannot guarantee their accuracy.
20. (A) Custodian Responsibility
You are authorized to take actions pursuant to this Agreement in
accordance with your customary processing practices for customers similar
to the undersigned and, in accordance with such practices, you may retain
agents, including subsidiaries or affiliates of yours, to perform certain
of such functions, notwithstanding that such retention may result in a
gain or profit to you or to any of your subsidiaries or affiliates. All
collection and receipt of funds or investments and all payment and
delivery of funds or investments under this Agreement shall be made by
you as the agent of the undersigned, for the account of, and at the risk
of, the undersigned.
14
<PAGE>
You will be responsible for only those duties stated in this
Agreement or expressly contained in instructions to perform the services
described herein given to you pursuant to the provisions of this
Agreement and, without limiting the foregoing, you shall have no duty or
responsibility:
(a) to supervise the investment of, or make recommendations with respect
to the purchase, retention or sale of, any investment relating to
the Account;
(b) with regard to any investment in the Account as to which a default
in the payment of principal or interest has occurred, to give notice
of default, make demand for payment or take any other action with
respect to such default;
(c) for any act or omission, or for the solvency or notice to the
undersigned of the solvency, of any affiliated or unaffiliated
subcustodian, securities depository broker or agent selected by you
(in the absence of negligence or willful misconduct by you in such
selection) or by the undersigned or any other person to effect any
transaction for the Account;
(d) to evaluate, or report to the undersigned regarding, the financial
condition of any party to which you deliver investments or payment
pursuant to this Agreement; or
(e) for any loss occasioned by delay in the actual receipt of notice by
you or any payment, redemption or other transaction in respect to
which you are authorized to take some action pursuant to this
Agreement.
(f) for fiduciary accounts, if the undersigned is a trust and you are
provided with a copy of its trust instrument, the undersigned
understands and agrees that your review of such document is solely
for the purpose of identifying the Trustees, and that you assume no
responsibility whatsoever for the proper administration of the
trust.
(B) Liability and Indemnification
You shall not be liable to any of the undersigned for any loss suffered
by the undersigned (including reasonable attorney's fees) in connection
with, arising out of, or in any way related to the transactions
contemplated under this Agreement, unless such loss is caused by your
negligence or willful misconduct. You may at your option insure yourself
against loss or liability from any cause but shall be under no obligation
to insure for the benefit of the undersigned. You shall have no
liability with respect to, and the undersigned hereby waives, releases
and agrees not to sue upon any claims for any special, speculative,
indirect or consequential losses or damages suffered by the undersigned
in connection with the transactions contemplated and the relationship
established by this Agreement, even if you are advised as to the
possibility thereof. You shall have no liability for any statement memo
15
<PAGE>
entries regarding assets not held or controlled by you. Without limiting
the generality of the foregoing, the undersigned agrees that you shall
not be responsible for the actions or omissions of any SDS utilized by
you. In the event of any litigation arising out of the undersigned's
authorization to honor and execute Payment Orders, the undersigned hereby
waives the right to impose any setoff or counterclaim of any nature or
description. All payments for which you may be liable in connection with
this Agreement shall be based upon the market value of the securities at
the date of discovery of the loss. The undersigned agrees to indemnify
and hold you harmless from loss or liability (including reasonable
attorney's fees) arising out of or in any way related to the terms of
this Agreement, unless caused by your negligence or willful misconduct.
21. Brokerage Transactions
You shall not be liable or accountable for any act or omission of brokers
or dealers in connection with this Agreement. In carrying out your
duties herein, including but not limited to your execution of any trades
the undersigned has directed, you may use such methods or agencies as you
determine in your sole discretion, including your facilities or the
facilities of an affiliate of yours. With respect to any direction to
receive securities in transactions not placed through you, you shall have
no duty or responsibility to advise the undersigned of non-receipt of, or
to take any steps to obtain delivery of securities from any brokers or
dealers, either against payment or free of payment. In connection with
the purchase or sale of securities on behalf of the undersigned, you may
combine the undersigned's order with the orders of other clients for
execution (including orders placed for your own account or placed for
persons connected with you). The undersigned acknowledges that combining
the undersigned's order with the orders of other clients may result in a
more favorable or less favorable price being obtained for the undersigned
than would have been achieved had the undersigned's order been executed
separately, and agrees that you shall not be liable to the undersigned
for any less favorable price obtained due to combining the undersigned's
order with other orders. All dealer concessions made to you will be
retained by you.
22. Fees and Expenses
You are authorized to charge the Account for all fees and expenses
incurred in connection with the Account and for custodian fees based on
the custodian fee schedule in effect from time to time. You will notify
the undersigned of any change in fees as may be required by applicable
law. Without limitation, the undersigned authorizes you to redeem any
shares of money market mutual funds in the Account necessary to cover any
such fees and expenses.
23. Notices
All communications which are to be furnished to the undersigned shall be
sent by mail to the address(es) listed on the signature lines hereto and
to the additional mailing address(es) following the signature lines, if
any, provided that in the event that you determine that an emergency
16
<PAGE>
exists, you may use such other means of communication as you deem
advisable.
24. (A) Governing Law
This Agreement shall be governed by the laws of the State of New York.
(B) Separability
Any provisions of this Agreement which may be determined by competent
authority to be prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
(C) Multiple Accounts
From time to time you may be instructed to open and maintain more than
one Custody Account for the undersigned. Unless the undersigned and you
otherwise agree, this Agreement will govern all such accounts.
25. Tax Certifications
Please check either item "A" if the undersigned is a United States
resident, entity or citizen, or item "B" if the undersigned is a
nonresident alien or foreign entity.
/ / (A) United States Residents/entities/citizens:
13-3609424
---------------------------------------------
TAXPAYER IDENTIFICATION NUMBER
Under penalties of perjury, the undersigned certifies as indicated
below that:
-- Undersigned is a citizen or resident of the United States,
AND
-- The number shown on this Agreement is the undersigned's correct
taxpayer identification number (or undersigned has applied for
and is waiting for a number to be issued),
AND
-- Undersigned is not subject to backup withholding because:
(a) undersigned is exempt from backup withholding,
17
<PAGE>
(b) undersigned has not been notified by the Internal Revenue
Service ("IRS") that undersigned is subject to backup with-
holding as a result of a failure to report all interest or
dividends, or
(c) the IRS has notified the undersigned that undersigned is no
longer subject to backup withholding.
/ / (B) Nonresident Aliens/foreign Entities:
Under penalties of perjury, the undersigned certifies as indicated
below that:
-- For INTEREST PAYMENTS, undersigned is not a U.S. citizen,
entity, or resident (or is filing for a foreign estate and
trust),
AND
-- For PURCHASES AND SALES OF SECURITIES, undersigned is an exempt
foreign person as described on Form W-8.
If any of the undersigned is a non-resident alien, with respect to the
Account, two duly completed and executed copies of the following
appropriate United States Internal Revenue Service forms have been
delivered to you: Form 1001, Form 4224 or Form W-8 (as applicable)
certifying the undersigned's status as a foreign person, and that, if
relevant, the undersigned is entitled to receive United States source
payments under or in connection with the Account without deduction of
withholding or at a reduced rate of withholding for United States federal
income taxes. The undersigned further agrees to provide updates of such
form(s) (or successor applicable forms), on or before the date that such
form(s) expire or become obsolete or after the occurrence of an event
requiring a change in the most recent form previously delivered by the
undersigned.
The undersigned further agrees to pay, indemnify, and hold you
harmless from and against any and all liabilities for taxes that you fail
to withhold or pay with respect to the Account, and to the extent that
any failure or delay by you to pay, withhold or report tax or income is a
result of the undersigned's failure to comply with the terms of this
Paragraph 25, any and all liabilities for penalties, interest or
additions to tax with respect to, or resulting from, any delay or failure
by you (i) to pay, withhold or report any federal, state or foreign taxes
imposed on, or in respect of, the Property held in the Account, or (ii)
to report interest, dividend or other income paid or credited to, or
transactions in, the Account. You will have no liability to apply the
appropriate reduced tax rate to the Account unless the undersigned
supplies you with the above-referenced Form 1001.
18
<PAGE>
26. Entire Agreement/modifications
This Agreement represents the entire agreement between you and the
undersigned and supersedes all prior agreements, representations, and
understandings that may currently exist. This Agreement may be amended
only by a written instrument executed by you and the undersigned.
27. Termination
Any party may terminate this Agreement at any time by written notice to
each other party. The undersigned's obligations and your rights
specified herein shall survive the termination of this Agreement.
(Refer to pages 13 through 14 for Signatures for Acceptance of this
Agreement.)
19
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of the date first above written.
The Internal Revenue Service does not require your consent to any
provision of this document other than the certifications
required to avoid backup withholding.
THE UNDERSIGNED agrees to notify you promptly in writing if different
telephone numbers are to be used.
FOR INDIVIDUAL ACCOUNTS AND FOR JOINT ACCOUNTS
JOINT ACCOUNTS (FIRST SIGNATURE): (SECOND SIGNATURE):
- ----------------------------------- -----------------------------
SIGNATURE SIGNATURE
- ----------------------------------- -----------------------------
NAME NAME
- ----------------------------------- -----------------------------
CITIZEN/RESIDENT OF CITIZEN/RESIDENT OF
- ----------------------------------- -----------------------------
PERMANENT ADDRESS (STREET/APT. NO.) PERMANENT ADDRESS (STREET/APT. NO.)
- ----------------------------------- -----------------------------
CITY, STATE, POSTAL CODE CITY, STATE, POSTAL CODE
- ----------------------------------- -----------------------------
TELEPHONE NUMBER(S) TELEPHONE NUMBER(S)
Mail indicated statements Mail indicated statements and
and advices (to one or more advices (to one or more
recipients), proxies and recipients) to above address.
1099 forms (to one recipient
each) to above address. / / Monthly Statement
/ / Principal Notices
/ / Monthly Statement
/ / Principal Notices
/ / Proxies
/ / 1099 Form
20
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FOR CORPORATION ACCOUNTS: FOR PARTNERSHIP ACCOUNTS:
BMO Partners Fund, LP
- ----------------------------- ---------------------------
CORPORATE NAME PARTNERSHIP NAME
BY:__________________________ BY: /s/ John C. Beck
TITLE ___________________________
GENERAL PARTNER
BY:__________________________ BY: /s/ Dan I. Abrams
TITLE ___________________________
GENERAL PARTNER
BY: _________________________
GENERAL PARTNER
330 Madison Avenue
- ------------------------- -----------------------------
ADDRESS ADDRESS
New York, NY 10017
_________________________ _____________________________
CITY, STATE, POSTAL CODE CITY, STATE, POSTAL CODE
212-661-2640
- ------------------------- ------------------------------
TELEPHONE NUMBER(S) TELEPHONE NUMBER(S)
Mail indicated statements Mail indicated statements and
and advices (to one or more advices (to one or more
recipients), proxies and recipients) proxies and 1099
1099 forms (to one recipient forms to (to one recipient
each) to above address. each) to above address.
Additional address(es) (if Additional address(es) (if
any) is (are) attached. any) is (are) attached.
/ / Monthly Statement /x/ Monthly Statement
/ / Principal Notices /x/ Principal Notices
/ / Proxies /x/ Proxies
/ / 1099 Form /x/ 1099 Form
21
<PAGE>
THE UNDERSIGNED agrees to notify you promptly in writing if
different telephone numbers are to be used.
FOR FIDUCIARY ACCOUNTS:
________________________________ _________________________________________
NAME OF ACCOUNT SIGNATURE OF ADDITIONAL FIDUCIARY, IF ANY
________________________________ _________________________________________
NAME OF ADDITIONAL FIDUCIARY, IF ANY
________________________________ _________________________________________
SIGNATURE OF PRINCIPAL FIDUCIARY PERMANENT ADDRESS (STREET/APT. NO.)
________________________________ _________________________________________
NAME OF PRINCIPAL FIDUCIARY CITY, STATE, POSTAL CODE
________________________________ _________________________________________
PERMANENT ADDRESS (STREET/APT NO.) TELEPHONE NUMBER(S)
________________________________ Mail indicated statements
CITY, STATE, POSTAL CODE and advices (to one or more
recipients) to above address
________________________________ / / Monthly Statement
TELEPHONE NUMBER(S) / / Principal Notices
22
<PAGE>
Mail indicated statements
and advices (to one or more ______________________________________
recipients), proxies and SIGNATURE OF ADDITIONAL FIDUCIARY, IF ANY
1099 forms (to one
recipient each) to above
address. ______________________________________
NAME OF ADDITIONAL FIDUCIARY, IF ANY
/ / Monthly Statement
/ / Principal Notices
/ / Proxies ______________________________________
/ / 1099 Form PERMANENT ADDRESS (STREET/APT. NO.)
______________________________________
CITY, STATE, POSTAL CODE
______________________________________
TELEPHONE NUMBER(S)
Mail indicated statements
and advices (to one or more
recipients) to above
address.
/ / Monthly Statement
/ / Principal Notices
23
<PAGE>
ACCEPTED AND AGREED TO BY THE CHASE MANHATTAN BANK
AUTHORIZED OFFICER
/s/ Carole E. Anderson 4/13/00
------------------------------------------------------
SIGNATURE
Carole E. Anderson
------------------------------------------------------
NAME/TITLE Assistant Secretary, Custody Services
24
Exhibit (2)(n) to Form N-2
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Partners of
BMO Partners Fund, L.P.
We consent to the reference to our firm under the caption "DESCRIPTION OF
UNITS -- Reports" in the Registration Statement on Form N-2 and to the
inclusion of our reports dated February 15, 2000 and January 13, 1999, with
respect to the financial statements of BMO Partners Fund, L.P. for the years
ended December 31, 1999 and 1998, respectively.
New York, New York REMINICK, AARONS & COMPANY, LLP
May 8, 2000
Exhibit (2)(r)(1) to Form N-2
BMO PARTNERS FUND, L.P.
Code of Ethics
I. Introduction.
The purpose of this Code of Ethics is to prevent Access Persons (as
defined below) of BMO Partners Fund, L.P. (the "Fund") from engaging in any
act, practice or course of business prohibited by paragraph (b) of Rule 17j-1
(the "Rule") under the Investment Company Act of 1940, as amended (the
"Act"). This Code of Ethics is required by paragraph (c) of the Rule.
A copy of the Rule is attached to this Code of Ethics as Appendix 1.
Access Persons of the Fund, in conducting their personal securities
transactions, owe a fiduciary duty to the shareholders of the Fund. The
fundamental standard to be followed in personal securities transactions is
that Access Persons may not take inappropriate advantage of their positions.
All personal securities transactions by Access Persons must be conducted in
such a manner as to avoid any actual or potential conflict of interest
between the Access Person's interest and the interests of the Fund, or any
abuse of an Access Person's position of trust and responsibility. Potential
conflicts arising from personal investment activities could include buying or
selling securities based on knowledge of the Fund's trading position or plans
(sometimes referred to as front-running), and acceptance of personal favors
that could influence trading judgments on behalf of the Fund. While this
Code of Ethics is designed to address identified conflicts and potential
conflicts, it cannot possibly be written broadly enough to cover all
potential situations and, in this regard, Access Persons are expected to
adhere not only to the letter, but also the spirit, of the policies contained
herein.
II. Definitions.
In order to understand how this Code of Ethics applies to
particular persons and transactions, familiarity with the key terms and
concepts used in this Code of Ethics is necessary. Those key terms and
concepts are:
1. "Access Person" means any director, officer or "advisory
person" of the Fund. A list of the Fund's Access Persons is attached as
Appendix 2 to this Code of Ethics and will be updated from time to time.
<PAGE>
2. "Advisory person" means (a) any employee of the Fund or of any
company in a control relationship to the Fund, who, in connection with his
regular functions or duties, makes, participates in, or obtains information
regarding the purchase or sale of a "covered security" by the Fund, or whose
functions relate to the making of any recommendations with respect to such
purchases or sales; and (b) any natural person in a control relationship to
the Fund who obtains information concerning recommendations made to the Fund
with regard to the purchase or sale of "covered securities".
3. "Beneficial ownership" has the meaning set forth in Rule 16a-
1(a)(2) of the Securities Exchange Act of 1934, as amended, a copy of which
is included as Appendix 3. The determination of direct or indirect
beneficial ownership shall apply to all securities which an Access Person has
or acquires.
4. "BMO" means Beck, Mack & Oliver LLC, the investment adviser
for the Fund.
5. "BMO Code" means the Code of Ethics adopted by BMO and
approved by the Board.
6. "Control" has the meaning set forth in Section 2(a)(9) of the
Act.
7. "Covered security" has the meaning set forth in
Section 2(a)(36) of the Act, except that it shall not include direct
obligations of the Government of the United States; bankers' acceptances,
bank certificates of deposit, commercial paper, and high-quality short-term
debt instruments, including repurchase agreements; or shares issued by
registered open-end investment companies. A high-quality short-term debt
instrument is one with a maturity at issuance of less than 366 days and that
is rated in one of the two highest rating categories by a nationally
recognized statistical rating organization.
8 "Independent director" means a director of the Fund who is not
an "interested person" of the Fund within the meaning of Section 2(a)(19) of
the Act.
9. "Investment Personnel" of the Fund or of BMO means (a) any
employee of the Fund or BMO (or of any company in a control relationship to
the Fund or BMO) who, in connection with his or her regular functions or
duties, makes or participates in making recommendations regarding the
purchase or sale of securities by the Fund and (b) any natural person who
controls the Fund or BMO and who obtains information concerning
recommendations made to the Fund regarding the purchase or sale of securities
by the Fund.
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<PAGE>
10. "IPO" means an offering of securities registered under the
Securities Act of 1933, the issuer or which, immediately before the
registration, was not subject to the reporting requirements of Sections 13 or
15(d) of the Securities Exchange Act.
11. "Limited Offering" means an offering exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2), 4(6) or Rule 504,
505 or 506.
12. "Purchase or sale of a security" includes, among other things,
the writing of an option to purchase or sell a security.
III. Restrictions Applicable to Directors, Officers and Employees of BMO.
1. All directors, officers and employees of BMO shall be subject
to the restrictions, limitations and reporting responsibilities set forth in
the BMO Code, as if fully set forth herein.
2. Persons subject to this Section III shall not be subject to
the restrictions, limitations and reporting responsibilities set forth in
Sections IV. and V. below.
IV. Prohibitions; Exemptions.
1. Prohibited Purchases and Sales.
A. No Access Person may purchase or sell, directly or indirectly,
any covered security in which that Access Person has, or by reason of the
transaction would acquire, any direct or indirect beneficial ownership and
which to the actual knowledge of that Access Person at the time of such
purchase or sale:
(1) is being considered for purchase or sale by the Fund; or
(2) is being purchased or sold by the Fund.
2. Exemptions From Certain Prohibitions.
A. The prohibited purchase and sale transactions described in
paragraph IV.1 above do not apply to the following personal securities
transactions:
(1) purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or control;
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<PAGE>
(2) purchases or sales which are non-volitional on the part of
either the Access Person or the Fund;
(3) purchases which are part of an automatic dividend reinvestment
plan (other than pursuant to a cash purchase plan option);
(4) purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
to the extent the rights were acquired from that issuer, and
sales of the rights so acquired;
(5) any purchase or sale, or series of related transactions,
involving 500 shares or less in the aggregate, if the issuer
has a market capitalization (outstanding shares multiplied by
the current price per share) greater than $1 billion;
(6) any purchase or sale which a person designated by the Board of
Directors (or if such purchase or sale is to be undertaken by
such person, another person so designated) approves on the
grounds that its potential harm to the Fund is remote.
3. Prohibited Recommendations.
An Access Person may not recommend the purchase or sale of any
covered security to or for the Fund without having disclosed his or her
interest, if any, in such security or the issuer thereof, including without
limitation:
A. any direct or indirect beneficial ownership of any covered
security of such issuer, including any covered security received in a private
securities transaction;
B. any contemplated purchase or sale by such person of a covered
security;
C. any position with such issuer or its affiliates; or
D. any present or proposed business relationship between such
issuer or its affiliates and such person or any party in which such person
has a significant interest.
4. Pre-approval of Investments in Initial
Public Offerings or Limited Offerings.
A. No Investment Personnel shall purchase any security
(including, but not limited to, any covered security) issued in an initial
public offering ("IPO") or a Limited Offering unless an officer of the Fund
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<PAGE>
approves the transaction in advance. The Secretary shall maintain a written
record of any decisions to permit these transactions, along with the reasons
supporting the decision.
V. Reporting.
1. Initial Holdings Reports.
No later than ten (10) days after a person becomes an Access
Person, he or she must report to the Fund the following information:
(i) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership when the person became an Access
Person;
(ii) the name of any broker, dealer or bank with whom the
Access person maintained an account in which any securities were
held for the direct or indirect benefit of the Access Person as of
the date the person became an Access Person; and
(iii) the date that the report is submitted by the Access
Person.
2. Quarterly Reporting.
A. Subject to the provisions of paragraph B below, every Access
Person shall either report to the Fund the information described in paragraph
C below with respect to transactions in any Covered Security in which the
Access Person has, or by reason of the transaction acquires, any direct or
indirect beneficial ownership in the security or, in the alternative, make
the representation in paragraph E below.
B. (1) An Access Person is not required to make a report with
respect to any transaction effected for any account over which the Access
Person does not have any direct or indirect influence or control; provided,
however, that if the Access Person is relying upon the provisions of this
paragraph B(1) to avoid making such a report, the Access Person shall, not
later than 10 days after the end of each calendar quarter, identify any such
account in writing and certify in writing that he or she had no direct or
indirect influence over any such account.
(2) An independent director of the Fund who would be required to
make a report pursuant to paragraph 1 or paragraph 2 above or paragraph 3
below solely by reason of being a director of the Fund is required to report
a transaction in a security only if the independent director, at the time of
the transaction, knew or, in the ordinary course of fulfilling the
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<PAGE>
independent director's official duties as a director of the Fund, should have
known that (a) the Fund has engaged in a transaction in the same security
within the last 15 days or is engaging or going to engage in a transaction in
the same security within the next 15 days, or (b) the Fund or BMO has within
the last 15 days considered a transaction in the same security or is
considering a transaction in the same security or within the next 15 days is
going to consider a transaction in the same security.
C. Every report shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which the report
relates was effected and shall contain the following information:
(i) the date of the transaction, the title, the interest rate
and maturity date (if applicable), the number of shares and the
principal amount of each Covered Security involved;
(ii) the nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
(iii) the price at which the transaction was effected;
(iv) the name of the broker, dealer or bank with or through
whom the transaction was effected;
(v) the date that the report is submitted by the Access
Person; and
(vi) a description of any factors potentially relevant to an
analysis of whether the Access Person may have a conflict of
interest with respect to the transaction, including the existence
of any substantial economic relationship between the transaction
and securities held or to be acquired by the Fund.
D. With respect to any account established by the Access Person
in which any securities were held during the quarter for the direct or
indirect benefit of the Access Person.
(i) the name of the broker, dealer or bank with whom the
Access Person established the account;
(ii) the date the account was established; and
(iii) the date that the report is submitted by the Access
Person.
E. If no transactions were conducted by an Access Person during a
calendar quarter that are subject to the reporting requirements described
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<PAGE>
above, such Access Person shall, not later than 10 days after the end of that
calendar quarter, provide a written representation to that effect to the
Fund.
3. Annual Reporting.
A. Subject to the provisions of paragraph 2(B) above, every
Access Person shall either report to the Fund the information described in
paragraph B below with respect to transactions in any Covered Security in
which the Access Person has, or by reason of the transaction acquires, any
direct or indirect beneficial ownership in the security.
B. Annually, within 30 days of the end of each calendar year, the
following information (which information must be current as of a date no more
than 30 days before the report is submitted):
(1) The title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or indirect
beneficial ownership;
(2) The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held for the
direct or indirect benefit of the Access Person; and
(3) The date that the report is submitted by the Access Person.
4. Annual Certification.
A. All Access Persons are required to certify annually that they
have read and understand this Code of Ethics and recognize that they are
subject to the provisions hereof and will comply with the policy and
procedures stated herein. Further, all Access Persons are required to
certify annually that they have complied with the requirements of this Code
of Ethics and that they have reported all personal securities transactions
required to be disclosed or reported pursuant to the requirements of such
policies. Independent Directors shall be deemed to comply with this
provision upon approval of the Code of Ethics by the Board of Directors. A
copy of the certification form to be used in complying with this paragraph A
is attached to this Code of Ethics as Appendix 4.
B. The Fund and BMO shall prepare an annual report to the Board
of Directors of the Fund to be presented at the first meeting of the Board
after the end of each calendar year and which shall:
(1) Summarize existing procedures concerning personal investing,
including preclearance policies and the monitoring of personal investment
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<PAGE>
activity after preclearance has been granted, and any changes in the
procedures during the past year;
(2) describe any issues arising under the Code of Ethics or
procedures since the last report to the Board including, but not limited to,
information about any material violations of the Code of Ethics or procedures
and the sanctions imposed during the past year;
(3) identify any recommended changes in existing restrictions or
procedures based upon experience under this Code of Ethics, evolving industry
practice or developments in applicable laws and regulations;
(4) contain such other information, observations and
recommendations as deemed relevant by the Fund and BMO; and
(5) certify that the Fund and BMO have adopted Codes of Ethics
with procedures reasonably necessary to prevent Access Persons from violating
the provisions of Rule 17j-1(b) or this Code.
5. Notification of Reporting Obligation and Review of Reports.
Each Access Person shall receive a copy of this Code of Ethics and
be notified of his reporting obligations. All reports shall be promptly
submitted upon completion to the Fund's Secretary for his review.
6. Miscellaneous.
A. Any report under this Code of Ethics may contain a statement
that the report shall not be construed as an admission by the person making
the report that the person has any direct or indirect beneficial ownership in
the securities to which the report relates.
VI. Confidentiality.
No Access Person shall reveal to any other person (except in the
normal course of his or her duties on behalf of the Fund) any information
regarding securities transactions by the Fund or consideration by the Fund or
BMO of any such securities transaction.
All information obtained from any Access Person hereunder shall be
kept in strict confidence, except that reports of securities transactions
hereunder will be made available to the Securities and Exchange Commission or
any other regulatory or self-regulatory organization to the extent required
by law or regulation.
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<PAGE>
VII. Sanctions.
Upon discovering a violation of this Code of Ethics, the Board of
Directors of the Fund may impose any sanctions it deems appropriate,
including a letter of censure, the suspension or termination of any director,
officer or employee of the Fund, or the recommendation to the employer of the
violator of the suspension or termination of the employment of the violator.
Dated: December 8, 1999
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<PAGE>
Appendix 1
----------
Rule 17j-1 Personal investment activities of investment company personnel.
- --------------------------------------------------------------------------
(a) Definitions. For purposes of this section:
(1) Access Person means:
(i) Any director, officer, general partner or Advisory Person of a Fund
or of a Fund's investment adviser.
(A) If an investment adviser is primarily engaged in a business or
businesses other than advising Funds or other advisory clients, the term Access
Person means any director, officer, general partner or Advisory Person of the
investment adviser who, with respect to any Fund, makes any recommendation,
participates in the determination of which recommendation will be made, or
whose principal function or duties relate to the determination of which
recommendation will be made, or who, in connection with his or her duties,
obtains any information concerning recommendations on Covered Securities
being made by the investment adviser to any Fund.
(B) An investment adviser is "primarily engaged in a business or businesses
other than advising Funds or other advisory clients" if, for each of its most
recent three fiscal years or for the period of time since its organization,
whichever is less, the investment adviser derived, on an unconsolidated
basis, more than 50 percent of its total sales and revenues and more than 50
percent of its income (or loss), before income taxes and extraordinary items,
from the other business or businesses.
(ii) Any director, officer or general partner of a principal underwriter
who, in the ordinary course of business, makes, participates in or obtains
information regarding, the purchase or sale of Covered Securities by the Fund
for which the principal underwriter acts, or whose functions or duties in the
ordinary course of business relate to the making of any recommendation to the
Fund regarding the purchase or sale of Covered Securities.
(2) Advisory Person of a Fund or of a Fund's investment adviser means:
(i) Any employee of the Fund or investment adviser (or of any company in
a control relationship to the Fund or investment adviser) who, in connection
with his or her regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of Covered Securities by a
Fund, or whose functions relate to the making of any recommendations with
respect to the purchases or sales; and
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(ii) Any natural person in a control relationship to the Fund or investment
adviser who obtains information concerning recommendations made to the Fund
with regard to the purchase or sale of Covered Securities by the Fund.
(3) Control has the same meaning as in section 2(a)(9) of the
Act [15 U.S.C. 80a-2(a)(9)].
(4) Covered Security means a security as defined in section 2(a)(36) of
the Act [15 U.S.C. 80a-2(a)(36)], except that it does not include:
(i) Direct obligations of the Government of the United States;
(ii) Bankers' acceptances, bank certificates of deposit, commercial paper
and high quality short-term debt instruments, including repurchase agreements;
and
(iii) Shares issued by open-end Funds.
(5) Fund means an investment company registered under the Investment
Company Act.
(6) An Initial Public Offering means an offering of securities registered
under the Securities Act of 1933 [15 U.S.C. 77a], the issuer of which,
immediately before the registration, was not subject to the reporting
requirements of sections 13 or 15(d) of the Securities Exchange Act of 1934
[15 U.S.C. 78m or 78o(d)].
(7) Investment Personnel of a Fund or of a Fund's investment adviser means:
(i) Any employee of the Fund or investment adviser (or of any company in
a control relationship to the Fund or investment adviser) who, in connection
with his or her regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by the Fund.
(ii) Any natural person who controls the Fund or investment adviser and who
obtains information concerning recommendations made to the Fund regarding the
purchase or sale of securities by the Fund.
(8) A Limited Offering means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to section 4(2) or section 4(6) [15
U.S.C. 77d(2) or 77d(6)] or pursuant to rule 504, rule 505, or rule 506 [17
CFR 230.504, 230.505, or 230.506] under the Securities Act of 1933.
(9) Purchase or sale of a Covered Security includes, among other things,
the writing of an option to purchase or sell a Covered Security.
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(10) Security Held or to be Acquired by a Fund means:
(i) Any Covered Security which, within the most recent 15 days:
(A) Is or has been held by the Fund; or
(B) Is being or has been considered by the Fund or its investment adviser
for purchase by the Fund; and
(ii) Any option to purchase or sell, and any security convertible into
or exchangeable for, a Covered Security described in paragraph (a)(10)(i) of
this section.
(b) Unlawful Actions. It is unlawful for any affiliated person of or
principal underwriter for a Fund, or any affiliated person of an investment
adviser of or principal underwriter for a Fund, in connection with the
purchase or sale, directly or indirectly, by the person of a Security Held or
to be Acquired by the Fund:
(1) To employ any device, scheme or artifice to defraud the Fund;
(2) To make any untrue statement of a material fact to the Fund or omit
to state a material fact necessary in order to make the statements made to the
Fund, in light of the circumstances under which they are made, not
misleading;
(3) To engage in any act, practice or course of business that operates or
would operate as a fraud or deceit on the Fund; or
(4) To engage in any manipulative practice with respect to the Fund.
(c) Code of Ethics.
(1) Adoption and Approval of Code of Ethics.
(i) Every Fund (other than a money market fund or a Fund that does not
invest in Covered Securities) and each investment adviser of and principal
underwriter for the Fund, must adopt a written code of ethics containing
provisions reasonably necessary to prevent its Access Persons from engaging
in any conduct prohibited by paragraph (b) of this section.
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(ii) The board of directors of a Fund, including a majority of directors
who are not interested persons, must approve the code of ethics of the Fund,
the code of ethics of each investment adviser and principal underwriter of the
Fund, and any material changes to these codes. The board must base its
approval of a code and any material changes to the code on a determination
that the code contains provisions reasonably necessary to prevent Access
Persons from engaging in any conduct prohibited by paragraph (b) of this
section. Before approving a code of a Fund, investment adviser or principal
underwriter or any amendment to the code, the board of directors must receive
a certification from the Fund, investment adviser or principal underwriter
that it has adopted procedures reasonably necessary to prevent Access Persons
from violating the investment adviser's or principal underwriter's code of
ethics. The Fund's board must approve the code of an investment adviser or
principal underwriter before initially retaining the services of the
investment adviser or principal underwriter. The Fund's board must approve a
material change to a code no later than six months after adoption of the
material change.
(iii) If a Fund is a unit investment trust, the Fund's principal
underwriter or depositor must approve the Fund's code of ethics, as required
by paragraph (c)(1)(ii) of this section. If the Fund has more than one principal
underwriter or depositor, the principal underwriters and depositors may
designate, in writing, which principal underwriter or depositor must conduct
the approval required by paragraph (c)(1)(ii) of this section, if they obtain
written consent from the designated principal underwriter or depositor.
(2) Administration of Code of Ethics.
(i) The Fund, investment adviser and principal underwriter must use
reasonable diligence and institute procedures reasonably necessary to prevent
violations of its code of ethics.
(ii) No less frequently than annually, every Fund (other than a unit
investment trust) and its investment advisers and principal underwriters must
furnish to the Fund's board of directors, and the board of directors must
consider, a written report that:
(A) Describes any issues arising under the code of ethics or procedures
since the last report to the board of directors, including, but not limited to,
information about material violations of the code or procedures and sanctions
imposed in response to the material violations; and
(B) Certifies that the Fund, investment adviser or principal underwriter,
as applicable, has adopted procedures reasonably necessary to prevent Access
Persons from violating the code.
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(3) Exception for Principal Underwriters. The requirements of paragraphs
(c)(1) and (c)(2) of this section do not apply to any principal underwriter
unless:
(i) The principal underwriter is an affiliated person of the Fund or of the
Fund's investment adviser; or
(ii) An officer, director or general partner of the principal underwriter
serves as an officer, director or general partner of the Fund or of the
Fund's investment adviser.
(d) Reporting Requirements of Access Persons.
(1) Reports Required. Unless excepted by paragraph (d)(2) of this section,
every Access Person of a Fund (other than a money market fund or a Fund that
does not invest in Covered Securities) and every Access Person of an
investment adviser of or principal underwriter for the Fund, must report to
that Fund, investment adviser or principal underwriter:
(i) Initial Holdings Reports. No later than 10 days after the person
becomes an Access Person, the following information:
(A) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership when the person became an Access Person;
(B) The name of any broker, dealer or bank with whom the Access Person
maintained an account in which any securities were held for the direct or
indirect benefit of the Access Person as of the date the person became an
Access Person; and
(C) The date that the report is submitted by the Access Person.
(ii) Quarterly Transaction Reports. No later than 10 days after the end
of a calendar quarter, the following information:
(A) With respect to any transaction during the quarter in a Covered
Security in which the Access Person had any direct or indirect beneficial
ownership:
(1) The date of the transaction, the title, the interest rate and maturity
date (if applicable), the number of shares and the principal amount of each
Covered Security involved;
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(2) The nature of the transaction (i.e., purchase, sale or any other type
of acquisition or disposition);
(3) The price of the Covered Security at which the transaction was
effected;
(4) The name of the broker, dealer or bank with or through which the
transaction was effected; and
(5) The date that the report is submitted by the Access Person.
(B) With respect to any account established by the Access Person in which
and securities were held during the quarter for the direct or indirect benefit
of the Access Person:
(1) The name of the broker, dealer or bank with whom the Access Person
established the account;
(2) The date the account was established; and
(3) The date that the report is submitted by the Access Person.
(iii) Annual Holdings Reports. Annually, the following information (which
information must be current as of a date no more than 30 days before the
report is submitted):
(A) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership;
(B) The name of any broker, dealer or bank with whom the Access Person
maintains an account in which any securities are held for the direct or
indirect benefit of the Access Person; and
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<PAGE>
(C) The date that the report is submitted by the Access Person.
(2) Exceptions from Reporting Requirements.
(i) A person need not make a report under paragraph (d)(1) of this section
with respect to transactions effected for, and Covered Securities held in,
any account over which the person has no direct or indirect influence or
control.
(ii) A director of a Fund who is not an "interested person" of the Fund
within the meaning of section 2(a)(19) of the Act [15 U.S.C. 80a-2(a)(19)],
and who would be required to make a report solely by reason of being a Fund
director, need not make:
(A) An initial holdings report under paragraph (d)(1)(i) of this section
and an annual holdings report under paragraph (d)(1)(iii) of this section; and
(B) A quarterly transaction report under paragraph (d)(1)(ii) of this
section, unless the director knew or, in the ordinary course of fulfilling
his or her official duties as a Fund director, should have known that during
the 15-day period immediately before or after the director's transaction in a
Covered Security, the Fund purchased or sold the Covered Security, or the
Fund or its investment adviser considered purchasing or selling the Covered
Security.
(iii) An Access Person to a Fund's principal underwriter need not make a
report to the principal underwriter under paragraph (d)(1) of this section
if:
(A) The principal underwriter is not an affiliated person of the Fund
(unless the Fund is a unit investment trust) or any investment adviser of the
Fund; and
(B) The principal underwriter has no officer, director or general partner
who serves as an officer, director or general partner of the Fund or of any
investment adviser of the Fund.
(iv) An Access Person to an investment adviser need not make a quarterly
transaction report to the investment adviser under paragraph (d)(1)(ii) of
this section if all the information in the report would duplicate information
required to be recorded under Sections 275.204-2(a)(12) or 275.204-2(a)(13)
of this chapter.
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(v) An Access Person need not make a quarterly transaction report under
paragraph (d)(1)(ii) of this section if the report would duplicate
information contained in broker trade confirmations or account statements
received by the Fund, investment adviser or principal underwriter with
respect to the Access Person in the time period required by paragraph
(d)(1)(ii), if all of the information required by that paragraph is contained
in the broker trade confirmations or account statements, or in the records of
the Fund, investment adviser or principal underwriter.
(3) Review of Reports. Each Fund, investment adviser and principal
underwriter to which reports are required to be made by paragraph (d)(1) of
this section must institute procedures by which appropriate management or
compliance personnel review these reports.
(4) Notification of Reporting Obligation. Each Fund, investment adviser and
principal underwriter to which reports are required to be made by paragraph
(d)(1) of this section must identify all Access Persons who are required to
make these reports and must inform those Access Persons of their reporting
obligation.
(5) Beneficial Ownership. For purposes of this section, beneficial
ownership is interpreted in the same manner as it would be under Section
240.16a-1(a)(2) of this chapter in determining whether a person is the
beneficial owner of a security for purposes of section 16 of the Securities
Exchange Act of 1934 [15 U.S.C. 78p] and the rules and regulations thereunder.
Any report required by paragraph (d) of this section may contain a statement
that the report will not be construed as an admission that the person making
the report has any direct or indirect beneficial ownership in the Covered
Security to which the report relates.
(e) Pre-approval of Investments in IPOs and Limited Offerings. Investment
Personnel of a Fund or its investment adviser must obtain approval from the
Fund or the Fund's investment adviser before directly or indirectly acquiring
beneficial ownership in any securities in an Initial Public Offering or in a
Limited Offering.
(f) Recordkeeping Requirements.
(1) Each Fund, investment adviser and principal underwriter that is
required to adopt a code of ethics or to which reports are required to be
made by Access Persons must, at its principal place of business, maintain
records in the manner and to the extent set out in this paragraph (f), and
must make these records available to the Commission or any representative of
the Commission at any time and from time to time for reasonable periodic,
special or other examination:
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(A) A copy of each code of ethics for the organization that is in effect,
or at any time within the past five years was in effect, must be maintained
in an easily accessible place;
(B) A record of any violation of the code of ethics, and of any action
taken as a result of the violation, must be maintained in an easily accessible
place for at least five years after the end of the fiscal year in which the
violation occurs;
(C) A copy of each report made by an Access Person as required by this
section, including any information provided in lieu of the reports under
paragraph (d)(2)(v) of this section, must be maintained for at least five
years after the end of the fiscal year in which the report is made or the
information is provided, the first two years in an easily accessible place;
(D) A record of all persons, currently or within the past five years, who
are or were required to make reports under paragraph (d) of this section, or who
are or were responsible for reviewing these reports, must be maintained in an
easily accessible place; and
(E) A copy of each report required by paragraph (c)(2)(ii) of this section
must be maintained for at least five years after the end of the fiscal year
in which it is made, the first two years in an easily accessible place.
(2) A Fund or investment adviser must maintain a record of any decision,
and the reasons supporting the decision, to approve the acquisition by
investment personnel of securities under paragraph (e), for at least five
years after the end of the fiscal year in which the approval is granted.
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<PAGE>
Appendix 2
----------
The following are "Access Persons" for purposes of the foregoing
Code of Ethics:
Name Title
---- -----
John C. Beck Director, President and Chief Executive Officer
John D. Twiname Director
Margaret Ann Johnson Director
Dan I. Abrams Treasurer and Secretary
Robert C. Beck Senior Member of the Adviser
M. Gerald Sedam II Member of the Adviser
Robert Johnson Campbell Member of the Adviser
Jonathan D. Gross Member of the Adviser
Walter K. Giles Associate of the Adviser
Anne Soltis Office Manager of the Adviser
Jane Mullen Employee of the Adviser
Michelle Makenny Employee of the Adviser
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<PAGE>
Appendix 3
----------
Rule 16a-1(a)(2) under the Securities Exchange Act of 1934:
- ----------------------------------------------------------
(2) Other than for purposes of determining whether a person is a beneficial
owner of more than ten percent of any class of equity securities registered
under Section 12 of the Act, the term beneficial owner shall mean any person
who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares a direct or indirect
pecuniary interest in the equity securities, subject to the following:
(i) The term pecuniary interest in any class of equity securities shall
mean the opportunity, directly or indirectly, to profit or share in any profit
derived from a transaction in the subject securities.
(ii) The term indirect pecuniary interest in any class of equity securities
shall include, but not be limited to:
(A) Securities held by members of a person's immediate family sharing
the same household; provided, however, that the presumption of such beneficial
ownership may be rebutted; see also @ 240.16a-1(a)(4);
(B) A general partner's proportionate interest in the portfolio securities
held by a general or limited partnership. The general partner's proportionate
interest, as evidenced by the partnership agreement in effect at the time of
the transaction and the partnership's most recent financial statements, shall
be the greater of:
(1) The general partner's share of the partnership's profits, including
profits attributed to any limited partnership interests held by the general
partner and any other interests in profits that arise from the purchase and
sale of the partnership's portfolio securities; or
(2) The general partner's share of the partnership capital account,
including the share attributable to any limited partnership interest held by
the general partner.
(C) A performance-related fee, other than an asset-based fee, received by
any broker, dealer, bank, insurance company, investment company, investment
adviser, investment manager, trustee or person or entity performing a similar
function; provided, however, that no pecuniary interest shall be present
where:
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<PAGE>
(1) The performance-related fee, regardless of when payable, is calculated
based upon net capital gains and/or net capital appreciation generated from
the portfolio or from the fiduciary's overall performance over a period of
one year or more; and
(2) Equity securities of the issuer do not account for more than ten
percent of the market value of the portfolio. A right to a nonperformance-
related fee alone shall not represent a pecuniary interest in the securities;
(D) A person's right to dividends that is separated or separable from the
underlying securities. Otherwise, a right to dividends alone shall not
represent a pecuniary interest in the securities;
(E) A person's interest in securities held by a trust, as specified in @
240.16a-8(b); and
(F) A person's right to acquire equity securities through the exercise or
conversion of any derivative security, whether or not presently exercisable.
(iii) A shareholder shall not be deemed to have a pecuniary interest in
the portfolio securities held by a corporation or similar entity in which the
person owns securities if the shareholder is not a controlling shareholder of
the entity and does not have or share investment control over the entity's
portfolio.
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<PAGE>
Appendix 4
----------
CERTIFICATION FORM
This is to certify that I have read and understand the Code
of Ethics of BMO Partners Fund, L.P., dated December 8, 1999, and that I
recognize that I am subject to the provisions thereof and will comply with
the policy and procedures stated therein.
This is to further certify that I have complied with the
requirements of such Code of Ethics and that I have reported all personal
securities transactions required to be disclosed or reported pursuant to the
requirements of such Code of Ethics.
Please sign your name here: ---------------------------
Please print your name here: ---------------------------
Please date here: ---------------------------
Please sign two copies of this Certification Form, return
one copy to Mr. Dan I. Abrams, Beck, Mack & Oliver LLC, 330 Madison Avenue,
31st Floor, New York, New York 10017, and retain the other copy, together
with a copy of the Code of Ethics, for your records.
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Exhibit (2)(r)(2) to Form N-2
Beck, Mack & Oliver LLC
Code of Ethics
for
Personal Transactions
I. Introduction.
All members and employees ("Access Persons") of Beck, Mack & Oliver LLC
("BMO"), in conducting their personal securities transactions, owe a
fiduciary duty to BMO Partners Fund, L.P. (the "Fund") for which BMO serves
as investment adviser. The fundamental standard to be followed in personal
securities transactions is that Access Persons may not take inappropriate
advantage of their positions. All personal securities transactions by Access
Persons must be conducted in such a manner as to avoid any actual or
potential conflict of interest between the Access Person's interest and the
interests of the Fund, or any abuse of an Access Person's position of trust
and responsibility. Potential conflicts arising from personal investment
activities could include buying or selling securities based on knowledge of
the Fund's trading position or plans (sometimes referred to as front-
running), and acceptance of personal favors that could influence trading
judgments on behalf of the Fund. In addition to the foregoing, this Code of
Ethics is intended to prevent Access Persons from engaging in any act,
practice or course of business prohibited by Rule 17j-1 under the Investment
Company Act of 1940 (the "Act"). Rule 17j-1 prohibits directors, officers
and advisory personnel of an investment adviser, in connection with the
purchase or sale by any such person of a covered security held or to be
acquired by the Fund, from engaging in manipulative practices or employing
any scheme to defraud the Fund, from making any untrue statements to the
investment company and from failing to disclose to the Fund material
information. A copy of Rule 17j-1 is attached to this Code of Ethics as
Appendix 1.
While this Code of Ethics is designed to address identified conflicts
and potential conflicts, it cannot possibly be written broadly enough to
cover all potential situations. In this regard, Access Persons are expected
to adhere not only to the letter, but also the spirit, of the policies
contained herein. For example, the restrictions contained herein on the
purchase or sale of a security would include the purchase or sale of an
equivalent security, such as the writing of an option to purchase or sell a
security.
The restrictions contained in this Code of Ethics apply to all
securities in which an Access Person has any direct or indirect "beneficial
ownership"<F1> and may encompass transactions in securities that are not
effected in employee accounts such as transactions effected for the account
of another individual or entity (such as a spouse or minor children) if the
Access Person may share in the profit from the transaction.
<PAGE>
In furtherance of the above principles, this Code of Ethics contains
certain restrictions on personal securities transactions by Access Persons,
certain restrictions on other activities of Access Persons when an actual or
potential conflict of interest between an Access Person and the Fund may
exist, and certain reporting requirements to enable BMO to ensure compliance
with this Code of Ethics. Any questions regarding the application or scope
of the restrictions and reporting requirements contained herein should be
directed to a member of BMO.
All of the restrictions and reporting requirements contained herein
apply generally to each Access Person. The restrictions and requirements
contained in this Code of Ethics are in addition to, not in lieu of, other
policies in place at BMO with respect to personal securities transactions
including, but not limited to, the Policy with Respect to Receipt and Use of
Material Inside (Nonpublic) Information.
FOR PURPOSES OF THIS CODE OF ETHICS:
1. "Covered Security" has the meaning set forth in Section 2(a)(36) of
the Act, except that it shall not include direct obligations of the
Government of the United States; bankers' acceptances, bank certificates of
deposit, commercial paper, and high-quality short-term debt instruments,
including repurchase agreements; or shares issued by registered open-end
investment companies. A high-quality short-term debt instrument is one with
a maturity at issuance of less than 366 days and that is rated in one of the
two highest rating categories by a nationally recognized statistical rating
organization.
2. "IPO" means an offering of securities registered under the
Securities Act of 1933, the issuer or which, immediately before the
registration, was not subject to the reporting requirements of Sections 13 or
15(d) of the Securities Exchange Act.
3. "Limited Offering" means an offering exempt from registration under
the Securities Act of 1933 pursuant to Section 4(2), 4(6) or Rule 504, 505 or
506.
4. "Portfolio Manager" includes only members or employees of BMO
having direct responsibility and authority to make investment decisions on
behalf of the Fund.
5. A security is "being considered for purchase or sale" when an order
for purchase or sale of the security has been placed on behalf of the Fund.
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<PAGE>
II. Prohibitions; Exemptions.
1. Prohibited Purchases and Sales.
A. Access Persons
(1) No Access Person may purchase or sell, directly or indirectly,
any Covered Security in which such person has, or by reason of the
transaction would acquire, any direct or indirect beneficial ownership
and which to the actual knowledge of that person at the time of such
purchase or sale:
(i) is being actively considered for purchase or sale for the
Fund; or
(ii) is in the process of being purchased or sold by the Fund.
(2) No Access Person may purchase and sell, or sell and purchase,
the same Covered Security within a thirty (30) calendar day period if
the Covered Security is of the type in which the Fund may invest.
B. Portfolio Managers
In addition to the above prohibitions applicable to Access Persons,
a Portfolio Manager may not purchase or sell, directly or indirectly,
any Covered Security in which he or she has or acquires any direct or
indirect beneficial ownership until the next trading day after the Fund
trades in that Covered Security.
2. Exemptions From Certain Prohibitions.
A. The prohibited purchase and sale transactions described in
paragraph II.1. above do not apply to the following personal securities
transactions:
(1) purchases or sales effected in any account over which the
Access Person has no direct or indirect influence or control;
(2) purchases or sales which are non-volitional on the part of
either the Access Person or the Fund;
(3) purchases which are part of an automatic dividend reinvestment
plan (other than pursuant to a cash purchase plan option);
(4) purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities,
-3-
<PAGE>
to the extent the rights were acquired from that issuer, and
sales of the rights so acquired;
(5) any purchase or sale, or series of related transactions,
involving 1,500 shares or less in the aggregate, if the issuer
has a market capitalization (outstanding shares multiplied by
the current price per share) greater than $3 billion;
(6) any purchase or sale which a member of BMO approves on the
grounds that the chance of a conflict of interest is remote
or, in extremely limited cases, where a personal hardship
would result and the equities strongly support an exemption.
BMO members may not approve their own transactions.
(B) Any personal securities transaction approved pursuant to
paragraph II.2.A.(6) shall be reported to the Chairman of the Audit
Committee of the Fund at the next Board meeting of the Fund.
3. Prohibited Recommendations.
All Access Persons are subject to the following restrictions on
making recommendations to the Fund:
A. No Access Person may recommend the purchase or sale of any
Covered Security to or for the Fund without first having disclosed his
or her interest, if any, in such Covered Security or the issuer thereof,
to a BMO member, including without limitation:
(1) any direct or indirect beneficial ownership of any Covered
Security of such issuer, including any security received in a
private securities transaction;
(2) any contemplated purchase or sale by such person of such
Covered Security;
(3) any position with such issuer or its affiliates; or
(4) any present or proposed business relationship between such
issuer or its affiliates and such person or any party in which
such person has a significant interest.
B. In circumstances in which an Access Person is required to
disclose an interest in a Covered Security of an issuer acquired in a
private securities transaction to a BMO member, as described above,
BMO's decision to purchase or sell a security (or to recommend the
purchase or sale of a security) of the same issuer for the Fund shall be
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<PAGE>
subject to an independent review by a Portfolio Manager or Portfolio
Managers with no personal interest in the issuer.
III. Pre-Approval of Personal Securities Transactions.
1. To prevent conflicts of interest, Access Persons must do the
following prior to entering into any transaction involving the purchase
or sale of a Covered Security, other than transactions described in
Section II.2.A.(1)-(5) above:
a. Check to see whether the security is on the list of
contemplated or actual Fund transactions which is kept at the
trading desk;
b. Check to see whether the security is referred to in the
notes of the most recent research meeting; and
c. If the security appears on the list or in the notes
referred to above, the Access Person must obtain prior approval for
the proposed transaction from a BMO member. BMO members may not
approve their own transactions.
Approval is valid for a period of two business days from the date the
transaction has been approved.
2. No Access Person shall purchase any security (including, but
not limited to, any Covered Security) issued in an IPO or a Limited
Offering unless a BMO member approves the transaction in advance. In
determining whether or not to grant such approval, the approving BMO
member will consider whether the investment opportunity should be
reserved for the Fund and whether the opportunity is being offered by
virtue of the Access Person's position with the Fund or BMO.
3. Each BMO member shall maintain a log of approvals of
transactions by Access Persons.
4. A designated member of BMO will review periodically the
approved trades of each Access Person versus the Access Person's
securities transactions during the prior quarter.
IV. Prohibitions on Gifts and Services.
1. Access Persons may not accept gifts (other than meals) or
other things of more than $100 in value from any person or entity that
-5-
<PAGE>
is known by such Access Person to be doing business with or on behalf of
the Fund, without the approval of a BMO member.
2. Access Persons shall not serve on the boards of directors of
publicly held companies (other than the Fund), absent prior approval by
a BMO member. Such approval should be based on a determination that
board service would be consistent with the best interests of the
shareholders of the Fund.
V. Reporting; Exemptions.
1. Exemptions from Holdings Reports. An Access Person is not required
to make a report pursuant to paragraph 2, 3 or 4 below with respect to any
transaction effected for, or any Covered Securities held in, any account over
which the Access Person does not have any direct or indirect influence or
control; provided, however, that if the Access Person is relying upon the
provisions of this paragraph 1 to avoid making such a report, the Access
Person shall, not later than the date on which any report pursuant to
paragraph 2, 3 or 4 would otherwise be required, identify any such account in
writing and certify in writing that he or she had no direct or indirect
influence over any such account.
2. Initial Holdings Reports.
All Access Persons must report the following information to a BMO
member within ten (10) days of becoming an Access Person:
(1) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership when the person became an Access
Person;
(2) the name of any broker, dealer or bank with whom the
Access Person maintained an account in which any securities were
held for the direct or indirect benefit of the Access Person as of
the date the person became an Access Person; and
(3) the date that the report is submitted by the Access
Person.
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<PAGE>
3. Quarterly Reporting.
A. Subject to the provisions of paragraph C below, every Access
Person shall either report to BMO's office manager (the "Office
Manager") on a quarterly basis the information described in paragraph C
below with respect to transactions in any Covered Security in which the
Access Person has, or by reason of the transaction acquires, any direct
or indirect beneficial ownership in the security or, in the alternative,
make the representation in paragraph D below.
B. Every report shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which the report
relates was effected and shall contain the following information:
(1) With respect to any transaction during the quarter in a
Covered Security in which the Access Person had any direct or
indirect beneficial ownership, the report shall contain the
following information:
(i) the date of the transaction, the title, the interest
rate and maturity date (if applicable), the number of shares and the
principal amount of each Covered Security involved;
(ii) the nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
(iii) the price at which the transaction was
effected;
(iv) the name of the broker, dealer or bank with or
through whom the transaction was effected;
(v) the date that the report is submitted by the Access
Person; and
(vi) a description of any factors potentially relevant to
an analysis of whether the Access Person may have a conflict
of interest with respect to the transaction, including the
existence of any substantial economic relationship between the
transaction and securities held or to be acquired by the Fund.
(2) With respect to any account established by the Access Person
in which any securities were held during the quarter for the direct or
indirect benefit of the Access Person:
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<PAGE>
(i) the name of the broker, dealer or bank with whom the
Access Person established the account;
(ii) the date the account was established; and
(iii) the date that the report is submitted by the
Access Person.
C. If no transactions were conducted by an Access Person during a
calendar quarter that are subject to the reporting requirements
described above, such Access Person shall, not later than 10 days after
the end of that calendar quarter, provide a written representation to
that effect to the Office Manager.
D. Notwithstanding the foregoing, an Access Person need not
report to BMO information regarding transactions conducted through
securities accounts, provided that copies of the relevant confirmations
and periodic statements are furnished to BMO.
4. Annual Reporting.
Within 30 days of the end of each calendar year, every Access
Person shall report the following information to the Office Manager:
A. The title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or indirect
beneficial ownership;
B. The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held for the
direct or indirect benefit of the Access Person; and
C. The date that the report is submitted by the Access Person.
5. Annual Certification.
A. All Access Persons are required to certify annually that they
have read and understand this Code of Ethics and recognize that they are
subject to the provisions hereof and will comply with the policy and
procedures stated herein. Further, all Access Persons are required to
certify annually that they have complied with the requirements of this
Code of Ethics and that they have reported all personal securities
transactions required to be disclosed or reported pursuant to the
requirements of such policies. A copy of the certification form to be
used in complying with this paragraph A is attached to this Code of
Ethics as Appendix 3.
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<PAGE>
B. BMO shall prepare an annual report to the Board of Directors
of the Fund to be presented at the first meeting of the Board of the
Fund after the end of each calendar year and which shall:
(1) Summarize existing procedures concerning personal investing,
including preclearance policies and the monitoring of personal
investment activity after preclearance has been granted, and any changes
in the procedures during the past year;
(2) describe any issues arising under the Code of Ethics since
the last report to the Board including, but not limited to, information
about material violations of the Code of Ethics or procedures and the
sanctions imposed in response to such material violations during the
past year;
(3) identify any recommended changes in existing restrictions or
procedures based upon experience under this Code of Ethics, evolving
industry practice or developments in applicable laws and regulations;
(4) contain such other information, observations and
recommendations as deemed relevant by the BMO; and
(5) certify that BMO has adopted a Code of Ethics with procedures
reasonably necessary to prevent Access Persons from violating this Code.
6. Notification of Reporting Obligation and Review of Reports.
Each Access Person shall receive a copy of this Code of Ethics and
be notified of his reporting obligations. All reports made pursuant to
this Code of Ethics shall be reviewed by a BMO member who shall report
all potential violations to the Senior Member.
7. Miscellaneous.
Any report under this Code of Ethics may contain a statement that
the report shall not be construed as an admission by the person making
the report that the person has any direct or indirect beneficial
ownership in the securities to which the report relates.
VI. Confidentiality.
No Access Person shall reveal to any other person (except in the normal
course of his or her duties on behalf of BMO) any information regarding
securities transactions by Fund or consideration by the Fund or BMO of any
such securities transaction.
-9-
<PAGE>
All information obtained from any Access Person pursuant to this Code of
Ethics shall be kept in strict confidence, except that reports of securities
transactions hereunder will be made available to the Securities and Exchange
Commission or any other regulatory or self-regulatory organization to the
extent required by law or regulation.
VII. Sanctions.
Any trades made in violation of the provisions set forth under
paragraphs II.1.A. or II.1.B. must be unwound, or, if that is impractical,
any profits realized on trades made in violation of these prohibitions must
be disgorged to the Fund (or, alternatively, to a charitable organization)
under the direction of a BMO member, with the approval of BMO's Senior
Member.
Upon discovering a violation of this Code of Ethics, the members of BMO
may impose any sanctions it deems appropriate, including a letter of censure
or the suspension or termination of the employment of the violator.
Dated: April __, 2000
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<PAGE>
Appendix 1 to BMO Code of Ethics
Rule 17j-1 of the Investment Company Act of 1940:
Rule 17j-1 Personal investment activities of investment company personnel.
(a) Definitions. For purposes of this section:
(1) Access Person means:
(i) Any director, officer, general partner or Advisory Person of a Fund
or of a Fund's investment adviser.
(A) If an investment adviser is primarily engaged in a business or
businesses other than advising Funds or other advisory clients, the term Access
Person means any director, officer, general partner or Advisory Person of the
investment adviser who, with respect to any Fund, makes any recommendation,
participates in the determination of which recommendation will be made, or
whose principal function or duties relate to the determination of which
recommendation will be made, or who, in connection with his or her duties,
obtains any information concerning recommendations on Covered Securities
being made by the investment adviser to any Fund.
(B) An investment adviser is "primarily engaged in a business or
businesses other than advising Funds or other advisory clients" if, for each
of its most recent three fiscal years or for the period of time since its
organization, whichever is less, the investment adviser derived, on an
unconsolidated basis, more than 50 percent of its total sales and revenues and
more than 50 percent of its income (or loss), before income taxes and
extraordinary items, from the other business or businesses.
(ii) Any director, officer or general partner of a principal underwriter
who, in the ordinary course of business, makes, participates in or obtains
information regarding, the purchase or sale of Covered Securities by the Fund
for which the principal underwriter acts, or whose functions or duties in the
ordinary course of business relate to the making of any recommendation to the
Fund regarding the purchase or sale of Covered Securities.
(2) Advisory Person of a Fund or of a Fund's investment adviser means:
(i) Any employee of the Fund or investment adviser (or of any company in a
control relationship to the Fund or investment adviser) who, in connection
with his or her regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of Covered Securities by a
Fund, or whose functions relate to the making of any recommendations with
respect to the purchases or sales; and
(ii) Any natural person in a control relationship to the Fund or investment
adviser who obtains information concerning recommendations made to the Fund
with regard to the purchase or sale of Covered Securities by the Fund.
(3) Control has the same meaning as in section 2(a)(9) of the Act
[15 U.S.C. 80a-2(a)(9)].
(4) Covered Security means a security as defined in section 2(a)(36)
of the Act [15 U.S.C. 80a-2(a)(36)], except that it does not include:
(i) Direct obligations of the Government of the United States;
-1-
<PAGE>
(ii) Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including repurchase
agreements; and
(iii) Shares issued by open-end Funds.
(5) Fund means an investment company registered under the Investment
Company Act.
(6) An Initial Public Offering means an offering of securities
registered under the Securities Act of 1933 [15 U.S.C. 77a], the issuer of
which, immediately before the registration, was not subject to the reporting
requirements of sections 13 or 15(d) of the Securities Exchange Act of 1934
[15 U.S.C. 78m or 78o(d)].
(7) Investment Personnel of a Fund or of a Fund's investment adviser
means:
(i) Any employee of the Fund or investment adviser (or of any company
in a control relationship to the Fund or investment adviser) who, in connection
with his or her regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by the Fund.
(ii) Any natural person who controls the Fund or investment adviser and
who obtains information concerning recommendations made to the Fund regarding
the purchase or sale of securities by the Fund.
(8) A Limited Offering means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to section 4(2) or
section 4(6) [15 U.S.C. 77d(2) or 77d(6)] or pursuant to rule 504, rule 505, or
rule 506 [17 CFR 230.504, 230.505, or 230.506] under the Securities Act of
1933.
(9) Purchase or sale of a Covered Security includes, among other
things, the writing of an option to purchase or sell a Covered Security.
(10) Security Held or to be Acquired by a Fund means:
(i) Any Covered Security which, within the most recent 15 days:
(A) Is or has been held by the Fund; or
(B) Is being or has been considered by the Fund or its investment
adviser for purchase by the Fund; and
(ii) Any option to purchase or sell, and any security convertible into or
exchangeable for, a Covered Security described in paragraph (a)(10)(i) of
this section.
(b) Unlawful Actions. It is unlawful for any affiliated person of or
principal underwriter for a Fund, or any affiliated person of an investment
adviser of or principal underwriter for a Fund, in connection with the
purchase or sale, directly or indirectly, by the person of a Security Held or
to be Acquired by the Fund:
(1) To employ any device, scheme or artifice to defraud the Fund;
(2) To make any untrue statement of a material fact to the Fund or omit
to state a material fact necessary in order to make the statements made to the
Fund, in light of the circumstances under which they are made, not
misleading;
(3) To engage in any act, practice or course of business that operates
or would operate as a fraud or deceit on the Fund; or
(4) To engage in any manipulative practice with respect to the Fund.
(c) Code of Ethics.
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(1) Adoption and Approval of Code of Ethics.
(i) Every Fund (other than a money market fund or a Fund that does
not invest in Covered Securities) and each investment adviser of and principal
underwriter for the Fund, must adopt a written code of ethics containing
provisions reasonably necessary to prevent its Access Persons from engaging
in any conduct prohibited by paragraph (b) of this section.
(ii) The board of directors of a Fund, including a majority of
directors who are not interested persons, must approve the code of ethics of
the Fund, the code of ethics of each investment adviser and principal
underwriter of the Fund, and any material changes to these codes. The board
must base its approval of a code and any material changes to the code on a
determination that the code contains provisions reasonably necessary to
prevent Access Persons from engaging in any conduct prohibited by paragraph (b)
of this section. Before approving a code of a Fund, investment adviser or
principal underwriter or any amendment to the code, the board of directors must
receive a certification from the Fund, investment adviser or principal
underwriter that it has adopted procedures reasonably necessary to prevent
Access Persons from violating the investment adviser's or principal
underwriter's code of ethics. The Fund's board must approve the code of an
investment adviser or principal underwriter before initially retaining the
services of the investment adviser or principal underwriter. The Fund's board
must approve a material change to a code no later than six months after
adoption of the material change.
(iii) If a Fund is a unit investment trust, the Fund's principal
underwriter or depositor must approve the Fund's code of ethics, as required by
paragraph (c)(1)(ii) of this section. If the Fund has more than one principal
underwriter or depositor, the principal underwriters and depositors may
designate, in writing, which principal underwriter or depositor must conduct
the approval required by paragraph (c)(1)(ii) of this section, if they obtain
written consent from the designated principal underwriter or depositor.
(2) Administration of Code of Ethics.
(i) The Fund, investment adviser and principal underwriter must use
reasonable diligence and institute procedures reasonably necessary to prevent
violations of its code of ethics.
(ii) No less frequently than annually, every Fund (other than a unit
investment trust) and its investment advisers and principal underwriters must
furnish to the Fund's board of directors, and the board of directors must
consider, a written report that:
(A) Describes any issues arising under the code of ethics or
procedures since the last report to the board of directors, including, but not
limited to, information about material violations of the code or procedures
and sanctions imposed in response to the material violations; and
(B) Certifies that the Fund, investment adviser or principal
underwriter, as applicable, has adopted procedures reasonably necessary to
prevent Access Persons from violating the code.
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(3) Exception for Principal Underwriters. The requirements of
paragraphs (c)(1) and (c)(2) of this section do not apply to any principal
underwriter unless:
(i) The principal underwriter is an affiliated person of the Fund or
of the Fund's investment adviser; or
(ii) An officer, director or general partner of the principal
underwriter serves as an officer, director or general partner of the Fund or of
the Fund's investment adviser.
(d) Reporting Requirements of Access Persons.
(1) Reports Required. Unless excepted by paragraph (d)(2) of this
section, every Access Person of a Fund (other than a money market fund or a
Fund that does not invest in Covered Securities) and every Access Person of an
investment adviser of or principal underwriter for the Fund, must report to
that Fund, investment adviser or principal underwriter:
(i) Initial Holdings Reports. No later than 10 days after the person
becomes an Access Person, the following information:
(A) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership when the person became an Access Person;
(B) The name of any broker, dealer or bank with whom the Access Person
maintained an account in which any securities were held for the direct or
indirect benefit of the Access Person as of the date the person became an
Access Person; and
(C) The date that the report is submitted by the Access Person.
(ii) Quarterly Transaction Reports. No later than 10 days after the
end of a calendar quarter, the following information:
(A) With respect to any transaction during the quarter in a Covered
Security in which the Access Person had any direct or indirect beneficial
ownership:
(1) The date of the transaction, the title, the interest rate and
maturity date (if applicable), the number of shares and the principal amount of
each Covered Security involved;
(2) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(3) The price of the Covered Security at which the transaction was
effected;
(4) The name of the broker, dealer or bank with or through which the
transaction was effected; and
(5) The date that the report is submitted by the Access Person.
(B) With respect to any account established by the Access Person in
which any securities were held during the quarter for the direct or indirect
benefit of the Access Person:
(1) The name of the broker, dealer or bank with whom the Access Person
established the account;
(2) The date the account was established; and
(3) The date that the report is submitted by the Access Person.
(iii) Annual Holdings Reports. Annually, the following information
(which information must be current as of a date no more than 30 days before the
report is submitted):
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<PAGE>
(A) The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership;
(B) The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held for the direct or
indirect benefit of the Access Person; and
(C) The date that the report is submitted by the Access Person.
(2) Exceptions from Reporting Requirements.
(i) A person need not make a report under paragraph (d)(1) of this
section with respect to transactions effected for, and Covered Securities held
in, any account over which the person has no direct or indirect influence or
control.
(ii) A director of a Fund who is not an "interested person" of the
Fund within the meaning of section 2(a)(19) of the Act [15 U.S.C. 80a-2(a)(19)],
and who would be required to make a report solely by reason of being a Fund
director, need not make:
(A) An initial holdings report under paragraph (d)(1)(i) of this
section and an annual holdings report under paragraph (d)(1)(iii) of this
section; and
(B) A quarterly transaction report under paragraph (d)(1)(ii) of
this section, unless the director knew or, in the ordinary course of fulfilling
his or her official duties as a Fund director, should have known that during
the 15-day period immediately before or after the director's transaction in a
Covered Security, the Fund purchased or sold the Covered Security, or the
Fund or its investment adviser considered purchasing or selling the Covered
Security.
(iii) An Access Person to a Fund's principal underwriter need not make
a report to the principal underwriter under paragraph (d)(1) of this section
if:
(A) The principal underwriter is not an affiliated person of the
Fund (unless the Fund is a unit investment trust) or any investment adviser of
the Fund;
and
(B) The principal underwriter has no officer, director or general
partner who serves as an officer, director or general partner of the Fund or of
any investment adviser of the Fund.
(iv) An Access Person to an investment adviser need not make a
quarterly transaction report to the investment adviser under paragraph (d)(1)
(ii) of this section if all the information in the report would duplicate
information required to be recorded under Sections 275.204-2(a)(12) or 275.204
- -2(a)(13) of this chapter.
(v) An Access Person need not make a quarterly transaction report
under paragraph (d)(1)(ii) of this section if the report would duplicate
information contained in broker trade confirmations or account statements
received by the Fund, investment adviser or principal underwriter with
respect to the Access Person in the time period required by paragraph
(d)(1)(ii), if all of the information required by that paragraph is contained
in the broker trade confirmations or account statements, or in the records of
the Fund, investment adviser or principal underwriter.
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<PAGE>
(3) Review of Reports. Each Fund, investment adviser and principal
underwriter to which reports are required to be made by paragraph (d)(1) of
this section must institute procedures by which appropriate management or
compliance personnel review these reports.
(4) Notification of Reporting Obligation. Each Fund, investment
adviser and principal underwriter to which reports are required to be made by
paragraph (d)(1) of this section must identify all Access Persons who are
required to make these reports and must inform those Access Persons of their
reporting obligation.
(5) Beneficial Ownership. For purposes of this section, beneficial
ownership is interpreted in the same manner as it would be under Section
240.16a-1(a)(2) of this chapter in determining whether a person is
the beneficial owner of a security for purposes of section 16 of the
Securities Exchange Act of 1934 [15 U.S.C. 78p] and the rules and
regulations thereunder. Any report required by paragraph (d) of this section
may contain a statement that the report will not be construed as an admission
that the person making the report has any direct or indirect beneficial
ownership in the Covered Security to which the report relates.
(e) Pre-approval of Investments in IPOs and Limited Offerings.
Investment Personnel of a Fund or its investment adviser must obtain approval
from the Fund or the Fund's investment adviser before directly or indirectly
acquiring beneficial ownership in any securities in an Initial Public Offering
or in a Limited Offering.
(f) Recordkeeping Requirements.
(1) Each Fund, investment adviser and principal underwriter that is
required to adopt a code of ethics or to which reports are required to be made
by Access Persons must, at its principal place of business, maintain records in
the manner and to the extent set out in this paragraph (f), and must make
these records available to the Commission or any representative of the
Commission at any time and from time to time for reasonable periodic, special
or other examination:
(A) A copy of each code of ethics for the organization that is in
effect, or at any time within the past five years was in effect, must be
maintained in an easily accessible place;
(B) A record of any violation of the code of ethics, and of any
action taken as a result of the violation, must be maintained in an easily
accessible place for at least five years after the end of the fiscal year in
which the violation occurs;
(C) A copy of each report made by an Access Person as required by
this section, including any information provided in lieu of the reports under
paragraph (d)(2)(v) of this section, must be maintained for at least five
years after the end of the fiscal year in which the report is made or the
information is provided, the first two years in an easily accessible place;
(D) A record of all persons, currently or within the past five
years, who are or were required to make reports under paragraph (d) of this
section, or who are or were responsible for reviewing these reports, must be
maintained in an easily accessible place; and
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<PAGE>
(E) A copy of each report required by paragraph (c)(2)(ii) of this
section must be maintained for at least five years after the end of the fiscal
year in which it is made, the first two years in an easily accessible place.
(2) A Fund or investment adviser must maintain a record of any
decision, and the reasons supporting the decision, to approve the acquisition
by investment personnel of securities under paragraph (e), for at least five
years after the end of the fiscal year in which the approval is granted.
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Appendix 2 to BMO Code of Ethics
Rule 16a-1(a)(2) under the Securities Exchange Act of 1934:
(2) Other than for purposes of determining whether a person is a
beneficial owner of more than ten percent of any class of equity securities
registered under Section 12 of the Act, the term beneficial owner shall mean
any person who, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares a direct or indirect
pecuniary interest in the equity securities, subject to the following:
(i) The term pecuniary interest in any class of equity securities
shall mean the opportunity, directly or indirectly, to profit or share in any
profit derived from a transaction in the subject securities.
(ii) The term indirect pecuniary interest in any class of equity
securities shall include, but not be limited to:
(A) Securities held by members of a person's immediate family sharing
the same household; provided, however, that the presumption of such beneficial
ownership may be rebutted; see also @ 240.16a-1(a)(4);
(B) A general partner's proportionate interest in the portfolio
securities held by a general or limited partnership. The general partner's
proportionate interest, as evidenced by the partnership agreement in effect at
the time of the transaction and the partnership's most recent financial
statements, shall be the greater of:
(1) The general partner's share of the partnership's profits,
including profits attributed to any limited partnership interests held by the
general partner and any other interests in profits that arise from the purchase
and sale of the partnership's portfolio securities; or
(2) The general partner's share of the partnership capital account,
including the share attributable to any limited partnership interest held by
the general partner.
(C) A performance-related fee, other than an asset-based fee,
received by any broker, dealer, bank, insurance company, investment company,
investment adviser, investment manager, trustee or person or entity performing
a similar function; provided, however, that no pecuniary interest shall be
present where:
(1) The performance-related fee, regardless of when payable, is
calculated based upon net capital gains and/or net capital appreciation
generated from the portfolio or from the fiduciary's overall performance over
a period of one year or more; and
(2) Equity securities of the issuer do not account for more than ten
percent of the market value of the portfolio. A right to a nonperformance-
related fee alone shall not represent a pecuniary interest in the securities;
(D) A person's right to dividends that is separated or separable from
the underlying securities. Otherwise, a right to dividends alone shall not
represent a pecuniary interest in the securities;
(E) A person's interest in securities held by a trust, as specified in
@ 240.16a-8(b); and
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<PAGE>
(F) A person's right to acquire equity securities through the exercise
or conversion of any derivative security, whether or not presently exercisable.
(iii) A shareholder shall not be deemed to have a pecuniary interest in
the portfolio securities held by a corporation or similar entity in which the
person owns securities if the shareholder is not a controlling shareholder of
the entity and does not have or share investment control over the entity's
portfolio.
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Appendix 3 to BMO Code of Ethics
ANNUAL CERTIFICATION FORM
I, the undersigned, hereby certify that I have read and understand
the Code of Ethics of Beck, Mack & Oliver LLC dated May 9, 2000, and that
I recognize that I am subject to the provisions thereof and will comply with
the policy and procedures stated therein.
This is to further certify that I have complied with the
requirements of the Code of Ethics and that I have reported all personal
securities transactions, holdings and accounts required to be disclosed or
reported pursuant to the requirements of the Code of Ethics.
Name
Signature (please print) Date
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<PAGE>
____________________
[FN]
<F1> For this purpose, "beneficial owner" is any person who, directly or
indirectly, through any contract, arrangement, understanding,
relationship or otherwise has or shares a direct or indirect pecuniary
interest in the securities, as further described in Rule 16a-1(a)(2) of
the Securities Exchange Act of 1934, a copy of which is attached as
Appendix 2 to this Code of Ethics. "Pecuniary interest" generally is
the opportunity, directly or indirectly, to profit or share in any
profit derived from a transaction in securities.
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