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EXHIBIT 1.01
XXXXXXXX ASSET ALLOCATION TRUST
SELLING AGREEMENT
This Agreement made as of the ________ of
______________________, _______ by and among Xxxxxxxx Asset Allocation Trust, a
Delaware business trust (the "Trust"), Xxxxxxxx & Company, Inc., (the "Managing
Owner"), Xxxxxxxx Financial Services, Inc., a Maryland corporation (the "Selling
Agent"), and PaineWebber Incorporated (the "Clearing Broker").
W I T N E S S E T H:
WHEREAS, the Managing Owner has caused the Trust to be
organized under a declaration of trust and trust agreement dated as of May 1,
2000 (together, the "Trust Agreement") to engage in speculative trading of
commodity futures contracts, options thereon, and other commodity interests and
to file a registration statement on Form S-1 with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Act of 1933 (the "Securities
Act") and the rules and regulations adopted by the SEC thereunder, as amended to
the date hereof (the "Rules"); the term "Final Amendment" means the amendment to
such registration statement which has been submitted by the Trust to the SEC to
permit such registration statement to become effective; the date on which the
registration statement becomes effective being hereinafter referred to as the
"Effective Date"; the term "Registration Statement" means such registration
statement in the form in which it becomes effective; the term "Prospectus" means
the prospectus included in the Registration Statement, substantially in the
form, heretofore submitted to, and not reasonably objected to by, the Selling
Agent, or the Managing Owner; and the term "preliminary prospectus" means any
preliminary prospectus (as described in Rule 433 under the Securities Act)
included at any time in the registration statement prior to its becoming
effective with the SEC.
WHEREAS, the Clearing Broker is to be the clearing broker for
the Trust's commodity futures transactions pursuant to the terms of the
agreement between the Clearing Broker and the Trust (the "Customer Agreement")
described in the Prospectus; and
WHEREAS, the Trust proposes to issue and sell to the public
its Units of Beneficial Interest ("Units"), provided that Units may only be sold
to investors who have "wrap fee" accounts with a selling agent, as described
in the Prospectus; and
WHEREAS, the Selling Agent desires to assist in the sale of
the Units upon the terms and in reliance upon the representations, warranties
and covenants set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. OFFERING OF UNITS
(a) Appointment
The Trust hereby appoints the Selling Agent as one of its
agents on a non-exclusive basis to offer and sell the Units. The Managing Owner
will retain additional Selling Agents ("Additional Selling Agents") who will
attempt to sell the Units on a best efforts basis at the price and in the manner
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described in the Prospectus and in compliance with the terms and conditions set
forth therein and herein. Units may only be sold to investors who have "wrap
fee" accounts with an Additional Selling Agent.
During the period from the commencement of the offering of the
Units to the initial Closing Date (as defined in Section 3 hereof), the Trust
will offer the Units at a price of $1,000 per Unit. Such initial Offering Period
shall terminate on the initial Closing Date as determined pursuant to Section 3
hereof.
During the offering period in respect of the Units (the
"Continuing Offering Period"), the Trust may continue to offer Units at the
month-end Net Asset Value per Unit as of the last business day of the month
during which subscriptions are received by the Managing Owner (each, a "Closing
Date"). Such Continuing Offering Period shall terminate at any time as
determined by the Managing Owner.
No selling commissions will be charged to the subscribers with
respect to the offer and sale of the Units.
The Trust hereby authorizes the Selling Agent to distribute
the Prospectus and any amendments or supplements thereto in accordance with the
terms of this Agreement.
(b) Compensation
In consideration of the Selling Agent administering the Units,
the Managing Owner shall pay the Selling Agent an ongoing fee for
administrative, legal and client reporting services of 0.35% per annum of the
net assets of the Trust, as defined in the Prospectus, by the Managing Owner.
The Selling Agent may pass along a portion of such fee to another selling agent
which is appropriately registered with or a member of, as applicable, the
National Futures Association (the "NFA"), the National Association of Securities
Dealers, Inc. (the "NASD"), the SEC, the securities or Blue Sky administrators
of the several states and various other jurisdictions and any other regulatory
body.
(c) Undertaking of Selling Agent
The Selling Agent will use its best efforts to find eligible
persons to purchase Units on the terms stated herein and in the Prospectus and
any amendments or supplements thereto. In connection with the offer and sale of
the Units, the Selling Agent represents, warrants and agrees that it will comply
fully with all applicable laws and the rules of the NFA, the NASD, the SEC, the
securities or Blue Sky administrators of the several states and various other
jurisdictions and any other applicable regulatory body. It is understood that
the Selling Agent has no commitment with regard to the offer or sale of the
Units other than to use its best efforts as described above. The Selling Agent
will deliver all cash and checks received by it from subscribers to the escrow
of funds account (Xxxxxxxx Asset Allocation Trust, Escrow Account) (the "Escrow
Account") established by the Trust with the Mercantile-Safe Deposit & Trust
Company (the "Escrow Agent") pursuant to an Escrow Agreement, dated as of
_______, 2000 (the "Escrow Agreement"). Such cash and checks shall be
transmitted to the Escrow Agent by the Selling Agent no later than noon on the
business day next succeeding the receipt of such cash and checks by the Selling
Agent. Such cash or checks will be accompanied by one executed copy of the
subscription agreement/power of attorney for each subscription obtained,
properly completed and executed and in the form of Exhibit D to the Prospectus
(a "Subscription Agreement"). All checks received by the Selling Agent from
subscribers shall be made payable to "Xxxxxxxx Asset Allocation Trust, Escrow
Account." The Selling Agent will promptly deliver to the Managing Owner one
photocopy of each such Subscription Agreement. Promptly after receipt of a
subscription and the funds therefor by the Escrow Agent and delivery of a copy
of the related Subscription Agreement to the Managing Owner, an interim
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receipt will be mailed by the Managing Owner to each such subscriber for the
amount deposited in the Escrow Account on behalf of such subscriber.
(d) Finder's Fees
None of the Selling Agent, the Trust or the Managing Owner
shall, directly or indirectly, pay or award any finder's fees, commissions or
other compensation to any person engaged by a potential investor for investment
advice as an inducement to such advisor to recommend the purchase of Units;
provided, however, the normal sales commissions payable to a registered
broker-dealer or other properly licensed person for selling Units shall not be
prohibited hereby.
2. BLUE SKY FILINGS
The Trust agrees to prepare, execute, file and amend, as
necessary, all applications for registration of the Units, consents to service
of process, reports of sale of Units and similar Blue Sky qualification,
registration and exemption documents and to take such other actions which may be
necessary or advisable, in the opinion of the Managing Owner or its counsel, in
order to qualify the Units for offer and sale under the securities or Blue Sky
laws of such jurisdictions within the United States of America as the Managing
Owner may reasonably request; provided, that in no event shall the Trust be
obligated to (i) take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the Units, or
taxes in any jurisdiction where it is not now so subject or (ii) offer in any
jurisdiction that would require a change in any term in the Registration
Statement, as the same may be supplemented or amended.
The Managing Owner agrees to cause its counsel to prepare and
deliver to the Selling Agent a Blue Sky Survey which shall set forth, for the
guidance of the Selling Agent, in which United States jurisdictions the Units
may be offered and sold. It is understood and agreed that the Selling Agent may
rely, in connection with the offering and sale of Units in any jurisdiction, on
advice given by such counsel as to the legality of the offer or sale of the
Units in such jurisdiction, provided, however, that the Selling Agent shall be
responsible for compliance with all applicable laws, rules and regulations with
respect to the actions of its employees, acting as such, in connection with
sales of Units in any jurisdiction.
3. CLOSING DATE
If at least $8,000,000 of Units shall have been so subscribed
for, then on the first business day ninety (90) days following the SEC
effectiveness of the Registration Statement (the "Effectiveness Date") or (i) at
such earlier time after subscriptions for at least $8,000,000 of Units shall
have been received by the Managing Owner or (ii) at such later date up to 180
days after the Effectiveness Date to which the Managing Owner may extend the
initial offering, the Managing Owner shall notify the Selling Agent of the
initial closing of the Trust (the "initial Closing Date"), as well as of the
aggregate number of Units for which the Managing Owner has received acceptable
subscriptions. Payment of the purchase price for the Units shall be made at the
office of Xxxxxxxx & Company, Inc., 000 Xxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000, at 10:00 A.M., Eastern time, on such day and time (not
later than five (5) business days after the end of the initial Offering Period)
as shall be agreed upon among the Selling Agent and the Managing Owner.
Subject to the Managing Owner's right to terminate the
offering at any time and subject to the conditions and requirements stated in
the Prospectus and herein, there shall be a closing on the last business day of
each month during the Continuing Offering Period (a "Closing Date"), with
respect to subscriptions received during each month of the Continuing Offering
Period. Such closing shall be held
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at the offices of the Managing Owner (or other location as selected by the
Managing Owner), and shall provide for (i) payment of the aggregate purchase
price for the Units to the Trust by release of funds from the Escrow Account,
and (ii) compliance with Section 8 hereof.
4. REPORTS FOR SELLING AGENT
The Trust agrees that so long as any of the Units are
outstanding, it will, at the Trust's expense, deliver to the Selling Agent upon
request all financial statements and other periodic and special reports
distributed generally to the Unitholders or required to be delivered to the
Unitholders or filed with the SEC or the Commodity Futures Trading Commission
(the "CFTC") under the Trust Agreement or any federal statute, rule or
regulation relating to securities, commodities or commodity futures.
5. AGREEMENTS OF THE TRUST AND THE MANAGING OWNER
The Trust and the Managing Owner jointly and severally agree
as follows:
(a) Promptly to file the Final Amendment and the Prospectus
with the SEC, but not to file any amendment or supplement to the Registration
Statement or Prospectus, except such as counsel for the Managing Owner shall
deem advisable in order to assure compliance with applicable laws.
(b) To advise the Selling Agent (i) when the Registration
Statement has become effective, (ii) of the issuance by the SEC, CFTC or any
other federal or state regulatory body of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act, the CFTC
registration or NFA membership of the Managing Owner as a commodity pool
operator or the registration of Units under the Blue Sky or securities laws of
any state or other jurisdiction or any order or decree enjoining the offering or
the use of the then current Prospectus or of the institution, or notice of the
intended institution, of any action or proceeding for that purpose and (iii) the
receipt by the Trust or any representative or attorney of the Trust of any other
material communication from the SEC, CFTC, NFA or any Blue Sky or securities law
administrator relating to the Trust, the Registration Statement, any preliminary
prospectus or the Prospectus, as it may be amended or supplemented. The Trust
will make every reasonable effort to prevent the issuance of any order
suspending the effectiveness of the Registration Statement under the Securities
Act or the registration of Units under the laws of the several states and
various other jurisdictions or enjoining the offering and, if any such order is
issued, to obtain as soon as possible the withdrawal thereof; provided, that in
no event shall the Trust be obligated to (i) take any action which would subject
it to service of process in suits, other than those arising out of the offering
or sale of the Units, or taxes in any jurisdiction where it is not now so
subject or (ii) change any term in the Registration Statement, as the same may
be amended or supplemented.
(c) To deliver to the Selling Agent, without charge, as many
conformed copies of the registration statement as originally filed and of the
Registration Statement and each amendment or supplement thereto (including all
exhibits filed with, or incorporated by reference in, any such document) as the
Selling Agent may reasonably request.
(d) During the Continuing Offering Period to deliver, without
charge, to the Selling Agent, at such office or offices within the United States
of America as the Selling Agent may reasonably designate, as many copies of the
Prospectus, as amended or supplemented, as the Selling Agent may reasonably
request.
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6. AMENDMENT OF THE REGISTRATION STATEMENT AND PROSPECTUS
The Trust agrees, at its expense, to amend the Registration
Statement and Prospectus or to supplement the Prospectus if, at any time after
the Effective Date and prior to each Closing Date, (i) such amendment or
supplement is necessary to comply with the Securities Act, the Commodity
Exchange Act (the "Commodity Act"), the securities or Blue Sky laws of any
jurisdiction or the rules or regulations promulgated under such Acts or laws, is
necessary to comply with any NFA deficiency notices or is necessary to correct
any material untrue statement in the Prospectus or Registration Statement or to
eliminate any material omission therein or any omission therein which renders
any of the statements therein materially misleading, or (ii) the Selling Agent
or the Clearing Broker advises the Trust that, in its opinion and that of its
counsel, such amendment or supplement is necessary to comply with such Acts or
laws or the rules or regulations promulgated thereunder, to comply with any such
deficiency notice or to correct any such material untrue statement or to
eliminate any such omission. The Managing Owner agrees to notify the Trust, the
Selling Agent and the Clearing Broker and each of the Selling Agent and the
Clearing Broker agrees to notify the Managing Owner and the Trust, immediately
(y) upon discovery of any untrue or misleading statements or omissions in the
Prospectus or Registration Statement concerning such party and (z) of the
occurrence of any event or change in circumstances which would result in there
being any untrue or misleading statement or omission in the Prospectus or
Registration Statement, in each case relating to the Managing Owner, the Selling
Agent, the Clearing Broker, respectively. The representations, warranties and
indemnifications of all parties hereto contained herein relating to the
Registration Statement and Prospectus shall attach to any such amendment or
supplement.
7. REPRESENTATIONS AND WARRANTIES
(a) The Managing Owner, represents and warrants to the
Selling Agent and the Clearing Broker that:
(i) The Trust is duly organized and validly existing as
a business trust under the laws of the State of Delaware, and has full power and
authority under the Trust Agreement to conduct its business as described in the
Registration Statement and Prospectus and to issue, sell and deliver the Units.
The Trust is not required to take any action to be qualified to do business in
the State of Maryland.
(ii) The Managing Owner is a corporation duly organized
and validly existing in good standing under the laws of the State of Maryland,
has full corporate power to perform its obligations and enter into the
transactions described in the Registration Statement and Prospectus, as the same
may be amended or supplemented. All the present principals of the Managing Owner
are identified as such in the Registration Statement and Prospectus.
(iii) The Units, when issued and sold pursuant to the
terms hereof and of the Registration Statement, Prospectus and Subscription
Agreements, will be validly issued, fully paid and not subject to further call
or assessment.
(iv) The Customer Agreement dated as of _____, 2000,
between the Trust and the Clearing Broker (the "Customer Agreement") has been
duly and validly authorized, executed and delivered by the Managing Owner on
behalf of the Trust. The Escrow Agreement and this Agreement have each been duly
and validly authorized, executed and delivered by the Managing Owner on behalf
of the Trust and each is, assuming that it has been duly and validly authorized,
executed and delivered by the other parties thereto (other than the Managing
Owner), a valid and binding agreement of the Trust, except insofar as
bankruptcy, moratorium or other similar laws may be applicable and except that
the
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exculpation, indemnification and contribution provisions of such agreements
may be limited by applicable law and enforcement of any specific terms or
remedies may be unavailable.
(v) The Trust Agreement and this Agreement have each been
duly and validly authorized, executed and delivered on behalf of the Managing
Owner and each is, assuming that it has been duly and validly authorized,
executed and delivered by the other parties thereto (other than the Trust), a
valid and binding agreement of the Managing Owner except insofar as bankruptcy,
moratorium or other similar laws may be applicable, and except that the
exculpation, indemnification and contribution provisions of such agreements may
be limited by applicable law and enforcement of any specific terms or remedies
may be unavailable.
(vi) The Trust has, or is in the process of obtaining,
all federal and state governmental and regulatory approvals and licenses, and is
maintaining on a current basis all filings and registrations with federal and
state governmental and regulatory agencies, required to conduct its business to
be conducted, all as described in the Registration Statement and Prospectus.
(vii) The Managing Owner has all federal and state
governmental and regulatory, and to the best of its knowledge, commodity
exchange licenses and approvals, and is maintaining on a current basis all
filings and registrations with federal and state governmental and regulatory
agencies, required to act as described in the Registration Statement and
Prospectus (including, without limitation, registration as a commodity pool
operator under the Commodity Act and membership as a commodity pool operator in
NFA), and the performance of such actions will not violate or result in a breach
of any provision of its articles of incorporation, by-laws or any agreement,
instrument, order, law or regulation binding upon it.
(viii) On the Effective Date and the date on which the
Prospectus is first filed with the SEC pursuant to Rule 424(b), the Registration
Statement and the Prospectus (or when any post-effective amendment to the
Registration Statement becomes effective or any supplement to the Prospectus is
filed with the SEC, the Registration Statement, as amended, and the Prospectus,
as amended or supplemented) will comply fully in all material respects with the
requirements of the Securities Act and the Rules and the Commodity Act and the
published rules of the CFTC thereunder, and will accurately describe the
proposed operation of the Trust; and each of the Registration Statement, as it
may be amended, and the Prospectus, as it may be amended or supplemented, will
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of the Prospectus, as it may be amended or
supplemented, in the light of the circumstances under which such statements were
made); except that this representation and warranty does not apply to any
statement or omission in the Registration Statement, as it may be amended, or
the Prospectus, as it may be amended or supplemented, made in reliance upon
information furnished in writing to the Trust by the Clearing Broker or the
Selling Agent, respectively, expressly for use therein.
(ix) All references to the Managing Owner and its
principals in the Registration Statement and the Prospectus are accurate and
complete in all material respects, set forth in all material respects the
information required to be disclosed to prospective investors under the
Commodity Act and the rules and regulations thereunder and, as to the Managing
Owner and its principals, the Registration Statement and Prospectus do not
contain any misleading or untrue statement of a material fact or omit to state a
material fact which is required to be stated therein or necessary to make the
statements therein not misleading (in the case of the Prospectus, in the light
of the circumstances under which such statements were made).
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(x) The balance sheet of the Managing Owner and the notes
thereto included in the Registration Statement present fairly the financial
position of the Managing Owner as of the date thereof, in conformity or (in the
case of any unaudited balance sheet) in substantial conformity with generally
accepted accounting principles. Since the date of the most recent such balance
sheet, there have been no changes in the financial condition of the Managing
Owner, other than changes which, in the aggregate, are not materially adverse or
which are disclosed in the Prospectus, and since such date there have been no
changes in the business of the Managing Owner which are material in the context
of the offering of the Units.
(xi) The certificate delivered pursuant to subsection (b)
of Section 8 hereof and all other certificates delivered by the Trust and the
Managing Owner pursuant to this Agreement were on the dates on which they were
delivered, or will be on the dates on which they are to be delivered, accurate
and complete in all material respects.
(xii) The Trust will file any promotional brochure or
other marketing materials (collectively, "Promotional Material") with the NASD,
and will not use any such Promotional Material to which the NASD has not stated
in writing that it has no objections. The Trust will file all Promotional
Material in all state jurisdictions where such filing is required, and will not
use any such Promotional Material in any state which has expressed any objection
thereto (except pursuant to agreed-upon modifications to the Promotional
Material).
(xiii) The Trust and the Managing Owner have trust or
corporate power and authority under applicable law to perform their respective
obligations under the Trust Agreement, the Customer Agreement and this
Agreement, as described in the Registration Statement and Prospectus.
(xiv) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has not been
any material adverse change in the condition, financial or otherwise, business
or prospects of the Managing Owner or the Trust, whether or not arising in the
ordinary course of business.
(xv) At the initial Closing Date, as set forth in
the opinion of Sidley & Austin, counsel for the Managing Owner, the Trust will
be classified as a partnership for Federal income tax purposes under the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder.
(xvi) There is not pending, or, to the best of the
Managing Owner's knowledge, threatened, any action, suit or proceeding before or
by any court or other governmental body to which the Managing Owner or the Trust
is a party, or to which any of the assets of the Managing Owner or the Trust is
subject, which is not referred to in the Prospectus and which might reasonably
be expected to result in any material adverse change in the condition (financial
or otherwise), business or prospects of the Managing Owner or the Trust or is
required to be disclosed in the Prospectus pursuant to applicable CFTC
regulations. The Managing Owner has not received any notice of an investigation
or warning letter from the NFA or the CFTC regarding non-compliance by the
Managing Owner with the Commodity Act or the regulations thereunder.
(b) The Clearing Broker represents and warrants to the Trust,
the Selling Agent and the Managing Owner:
(i) The Clearing Broker is a corporation duly organized
and validly existing in good standing under the laws of its state of
incorporation and in good standing and qualified to do business in each
jurisdiction in which the nature or conduct of its business requires such
qualifications
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and the failure to be duly qualified would materially adversely affect the
Clearing Broker's ability to perform its obligations hereunder or under the
Customer Agreement. The Clearing Broker has full power and authority to perform
its obligations as described in the Registration Statement and Prospectus.
(ii) The Customer Agreement and this Agreement have each
been duly and validly authorized, executed and delivered by the Clearing Broker
and each is, assuming that it has been duly and validly authorized, executed and
delivered by the other parties thereto, a valid and binding agreement of the
Clearing Broker, except insofar as bankruptcy, moratorium or other similar laws
may be applicable and except that the exculpation, indemnification and
contribution provisions of such agreements may be limited by applicable law and
enforcement of any specific terms or remedies may be unavailable.
(iii) The Clearing Broker has all federal and state
governmental and regulatory and commodity exchange licenses and approvals, and
is maintaining on a current basis all filings and registrations with federal and
state governmental and regulatory agencies required, to perform its obligations
under the Customer Agreement and this Agreement and to act as described in the
Registration Statement and Prospectus (including, without limitation,
registration of the Clearing Broker as a futures commission merchant under the
Commodity Act and membership of the Clearing Broker as a futures commission
merchant in NFA), and the performance of the Clearing Broker's obligations under
the Customer Agreement and this Agreement and of such actions will not violate
or result in a breach of any provision of the Clearing Broker's articles of
incorporation, by-laws or any agreement, instrument, order, law or regulation
binding upon the Clearing Broker.
(iv) All references to the Clearing Broker in the
Registration Statement and Prospectus are accurate and complete in all material
respects, and set forth in all material respects the information required to be
disclosed therein under the Commodity Act and the rules and regulations
thereunder. As to the Clearing Broker, (i) the Registration Statement and
Prospectus contain all statements and information required to be included
therein under the Commodity Act and the rules and regulations thereunder, (ii)
the Registration Statement as of its Effective Date did not contain any
misleading or untrue statement of a material fact or omit to state a material
fact which is required to be stated therein or necessary to make the statements
therein not misleading and (iii) the Prospectus as of the initial Closing Date
did not and will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading,
in light of the circumstances under which such statements were made.
(v) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as may
otherwise be stated in or contemplated by the Registration Statement and the
Prospectus, there has not been any material adverse change in the condition,
financial or otherwise, business or prospects of the Clearing Broker, whether or
not arising in the ordinary course of business.
(vi) In the ordinary course of its business, the Clearing
Broker is engaged in civil litigation and subject to administrative proceedings.
Neither the Clearing Broker nor any of its principals have been the subject of
any administrative, civil, or criminal actions within the five years preceding
the date hereof that would be required to be disclosed in the Prospectus by CFTC
regulations and which are not disclosed in the Prospectus.
(c) The Selling Agent represents and warrants to the Trust,
the Managing Owner and the Clearing Broker:
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(i) The Selling Agent is a corporation duly organized and
validly existing and in good standing under the laws of the state of its
incorporation, is a member in good standing of the NASD and has full power and
authority to act as selling agent in the manner contemplated by this Agreement
and as described in the Registration Statement and the Prospectus. The Selling
Agent is in good standing and qualified to do business in each jurisdiction in
which the nature or conduct of its business requires such qualification and the
failure to be duly qualified would materially adversely affect the Selling
Agent's ability to perform its obligations hereunder.
(ii) The Selling Agent is in good standing and in
compliance with all applicable broker-dealer registration requirements in the
places where the Units will be sold by the Selling Agent.
(iii) Any use or distribution of the Registration
Statement, the Prospectus or any related preliminary prospectus by the Selling
Agent will comply with the terms and conditions set forth in the Prospectus and
with the Securities Act, the Securities Exchange Act of 1934, as amended, all
applicable securities and Blue Sky laws of the states in which the Selling Agent
intends to sell Units, the rules and regulations promulgated under all such Acts
and all such laws, and all applicable rules and regulations of the NASD and all
other self-regulatory organizations. In particular, and not by way of
limitation, the Selling Agent represents and warrants that it is aware of NASD
Rule 2810 and that it will comply fully with all the terms thereof in connection
with the offer and sale of the Units. The Selling Agent agrees not to recommend
either the purchase or redemption of Units to any subscriber unless the Selling
Agent shall have reasonable grounds to believe, on the basis of information
obtained from the subscriber concerning, among other things, the subscriber's
investment objectives, other investments, financial situation and needs, that
the subscriber is or will be in a financial position appropriate to enable the
subscriber to realize to a significant extent the benefits of the Trust,
including tax benefits described in the Registration Statement and the
Prospectus; the subscriber has a fair market net worth sufficient to sustain the
risks inherent in participating in the Trust, including loss of investment and
lack of liquidity; and the Units are otherwise a suitable investment for the
subscriber. The Selling Agent agrees to maintain files of information disclosing
the basis upon which the Selling Agent determined that the suitability
requirements of NASD Rule 2810 were met as to each subscriber (the basis for
determining suitability may include the Subscription Agreements and other
certificates submitted by subscribers). The Selling Agent represents and
warrants that it has reasonable grounds to believe, based on information in the
Registration Statement and Prospectus, that all material facts relating to an
investment in the Units are adequately and accurately disclosed in the
Registration Statement and Prospectus. In connection with making the foregoing
representations and warranties, the Selling Agent further represents and
warrants that it has, among other things, examined the Registration Statement
and Prospectus and obtained such additional information from the Managing Owner
regarding the information set forth thereunder as the Selling Agent has deemed
necessary or appropriate to determine whether the Registration Statement and
Prospectus adequately and accurately disclose all material facts relating to an
investment in the Trust and provide an adequate basis to subscribers for
evaluating an investment in the Units. In connection with making the
representations and warranties set forth in this paragraph, the Selling Agent
has not relied on inquiries made by or on behalf of any other parties.
The Selling Agent agrees to inform all prospective purchasers
of Units of all pertinent facts relating to the liquidity and marketability of
the Units as set forth in the Registration Statement and Prospectus.
(iv) The Selling Agent and its representatives have all
required federal and state governmental and regulatory approvals and licenses
and have effected all filings and registrations with federal and state
governmental and regulatory agencies required to conduct its business and to
perform their obligations under this Agreement and to act as described in the
Registration Statement and
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the Prospectus. The performance of the obligations of the Selling Agent under
this Agreement and its acting as described in the Registration Statement and the
Prospectus will not violate or result in a breach of any provisions of its
Articles of Incorporation or by-laws or any agreement, instrument, order, law or
regulation binding upon it.
(v) This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Selling Agent, and is, assuming that it
has been duly and validly authorized, executed and delivered by the other
parties hereto (other than the Selling Agent), a valid and binding agreement of
the Selling Agent and enforceable in accordance with its terms.
(vi) Any references to the Selling Agent in the
Registration Statement and Prospectus are accurate and complete in all material
respects, and set forth in all material respects the information required to be
disclosed therein under the Commodity Act and the rules and regulations
thereunder. As to the Selling Agent, (i) the Registration Statement and
Prospectus contain all statements and information required to be included
therein under the Commodity Act and the rules and regulations thereunder, (ii)
the Registration Statement as of its Effective Date did not contain any
misleading or untrue statement of a material fact or omit to state a material
fact which is required to be stated therein or necessary to make the statements
therein not misleading and (iii) the Prospectus at its date of issue and as of
the initial Closing Date did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein not misleading, in light of the circumstances under which such
statements were made.
(vii) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, except as may
otherwise be stated in or contemplated by the Registration Statement and the
Prospectus, there has not been any material adverse change in the condition,
financial or otherwise, business or prospects of the Selling Agent, whether or
not arising in the ordinary course of business.
(viii) In the ordinary course of its business, the
Selling Agent is engaged in civil litigation and subject to administrative
proceedings. Neither the Selling Agent nor any of its principals have been the
subject of any administrative, civil, or criminal actions within the five years
preceding the date hereof that would be required to be disclosed in the
prospectus by CFTC regulations and which are material to an investor's decision
to purchase the Units.
(ix) The execution and delivery of this Agreement, the
incurrence of the obligations set forth herein and the consummation of the
transactions contemplated herein and in the Prospectus will not constitute a
breach of, or default under, any instrument by which the Selling Agent is bound
or any order, rule or regulation applicable to the Selling Agent of any court or
any governmental body or administrative agency having jurisdiction over the
Selling Agent.
8. CLOSING REQUIREMENTS
The issue and sale of the Units and the release of the funds
from the Escrow Account to the Trust shall be subject to the accuracy on and as
of the Closing Date of, and compliance on each Closing Date with, the
representations and warranties of the Managing Owner, the Selling Agent and the
Clearing Broker herein and the performance by the Trust, the Managing Owner, the
Selling Agent and the Clearing Broker of their obligations hereunder and the
following conditions:
(a) The Trust, the Selling Agent and the Clearing Broker shal
have received a certificate of the Managing Owner executed by an officer of the
Managing Owner, which shall state that (i) no order suspending the effectiveness
of the Registration Statement, as it may be amended, or
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prohibiting the sale of the Units is in effect and no proceedings for such
purpose are pending before or, to the knowledge of such officers, threatened by
the SEC, (ii) no adverse comments or deficiency notices relating to the
Prospectus have been received from the CFTC or NFA which have not been responded
to the satisfaction of such agencies and (iii) the representations and
warranties of the Managing Owner contained herein are true and correct on and as
of the Closing Date, and the Managing Owner and the Trust, as the case may be,
have performed all covenants and agreements herein contained to be performed on
their respective parts at or prior to the date of the certificate.
(b) At the initial Closing Date, Sidley & Austin, counsel to
the Managing Owner, shall deliver to all the parties hereto its opinion, in form
and substance satisfactory to each of the parties hereto, to the effect that:
(i) Upon payment of the consideration therefor specified
in the accepted Subscription Agreements and Powers of Attorney, the Units will
constitute valid units of beneficial interest in the Trust and each subscriber
who purchases Units will become a Unitholder, subject to the requirement that
each such purchaser shall have duly completed, executed and delivered to the
Trust a Subscription Agreement and Power of Attorney relating to the Units
purchased by such party, that such purchaser meets all applicable suitability
standards as set forth in the Prospectus and that the representations and
warranties of such purchaser in the Subscription Agreement and Power of Attorney
are true and correct.
(ii) The Trust need not effect any other filings or
qualifications under the laws of the United States and the States of Illinois
and New York in order to preserve the status of the Trust as a business trust or
to enable the Trust to perform its obligations under this Agreement and to
conduct the business in which it proposes to be engaged as described in the
Prospectus.
(iii) The Managing Owner is qualified to do business and
is in good standing as a foreign corporation in each other jurisdiction in which
the failure to so qualify might, in their opinion, reasonably be expected to
result in material adverse consequences to the Trust.
(iv) Each of the Managing Owner (including the
principals, as defined in the Commodity Act, of the Managing Owner) and the
Trust has all Federal and Illinois and New York State governmental and
regulatory licenses and approvals and has received or made all filings and
registrations with Federal and Illinois and New York State governmental and
regulatory agencies necessary in order for each of the Managing Owner and the
Trust to conduct its business as described in the Registration Statement and
Prospectus, and, to the best of their knowledge, none of such approvals,
licenses or registrations have been rescinded or revoked.
(v) Each of the Trust Agreement, the Customer Agreement
and this Agreement, assuming that such agreements are legal, valid and binding
on the other parties hereto and thereto, constitutes a legal, valid and binding
agreement of the Managing Owner or the Trust (as the case may be) enforceable in
accordance with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability relating to or affecting the enforcement of creditors' rights and
by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(vi) The execution and delivery of this Agreement, the
Trust Agreement and the Customer Agreement and the incurrence of the obligations
herein and therein set forth and the consummation of the transactions
contemplated herein and therein and in the Prospectus, to their knowledge, will
not constitute a breach of, or default under, any instrument by which the
Managing Owner or the Trust is bound or any order, rule or regulation applicable
to the Managing Owner or the
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Trust of any court or any governmental body or administrative agency having
jurisdiction over the Managing Owner or the Trust.
(vii) To their knowledge, there are no actions, claims
or proceedings pending or threatened in any court or before or by any
governmental or administrative body, nor have there been any such suits, claims
or proceeding within the last five years, to which the Managing Owner (or any
principal of the Managing Owner) or the Trust is or was a party, or to which any
of their assets is or was subject, which are required to be, but are not
disclosed in, the Registration Statement or Prospectus or which might reasonably
be expected to materially adversely affect the condition (financial or
otherwise), business or prospects of the Managing Owner or the Trust.
(viii) No authorization, approval or consent of any
governmental authority or agency is necessary in connection with the
subscription for and sale of the Units, except such as may be required under the
Securities Act, the Commodity Act, NFA compliance rules or applicable securities
or "Blue Sky" laws.
(ix) The terms and provisions of the Trust Agreement, the
Customer Agreement and this Agreement conforms in all material respects to
descriptions thereof contained in the Prospectus.
(x) The Registration Statement is effective under the
Securities Act and, to the best of their knowledge, no proceedings for a stop
order are pending or threatened under Section 8(d) of the Securities Act.
(xi) At the time the Registration Statement initially
became effective and at the time any post-effective amendment thereto became
effective, the Registration Statement, and at the time the Prospectus and any
amendments or supplements thereto were first issued, the Prospectus, complied as
to form in all material respects with the requirements of the Securities Act,
the Rules and CFTC regulations. Nothing has come to their attention that would
lead them to believe that with respect to the Managing Owner and the Selling
Agent (a) at the time the Registration Statement initially became effective and
at the time any post-effective amendment thereto became effective, the
Registration Statement contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or (b) the Prospectus as first issued
or as subsequently issued or at the initial Closing Date contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that such counsel need
express no opinion (A) as to the financial statements, notes thereto and other
financial or statistical data set forth in the Registration Statement and
Prospectus or (B) as to any performance data set forth in the Registration
Statement, and Prospectus, including the performance summaries (and the notes
thereto) in the Registration Statement and Prospectus, except that such counsel
shall opine, without rendering any opinion as to the accuracy of the information
in the performance summaries, that such the performance summaries comply as to
form in all material respects with applicable CFTC rules.
(xii) Such counsel confirm their opinion, a form of
which appears as Exhibit 8.01 to the Registration Statement, that the summary of
Federal income tax consequences to Unitholders set forth under the caption
"Federal Income Tax Aspects" in the Prospectus accurately describes the material
tax consequences set forth therein and that such counsel further confirm their
advice to the Managing Owner explicitly set forth therein and in such Exhibit
8.01.
(xiii) To the best of their knowledge, (a) there are no
contracts, indentures, mortgages, loan agreements, leases or other documents of
a character required to be described or referred
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to in the Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement other than those described or referred to therein or
filed as exhibits thereto, and with respect to the existing contracts,
indentures, mortgages, loan agreements, leases and other documents so described,
referred to or filed, the descriptions thereof, references thereto or copies so
filed are correct in all material respects, and (b) no material default on the
part of the Managing Owner or the Trust exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract or lease so described or filed.
(xiv) Assuming operation in accordance with the
Prospectus, the Trust, at the Closing Date, is not an "investment company" as
that term is defined in the Investment Company Act of 1940, as amended.
(c) At the initial Closing Date, Xxxxxxxx, Xxxxxx & Finger,
Delaware counsel to the Trust, shall deliver to all the parties hereto its
opinion, in form and substance satisfactory to each of the parties hereto, to
the effect that:
(i) The Certificate of Trust pursuant to which the Trust
has been formed and the Trust Agreement each provides for the subscription for
and sale of the Units; all Delaware action required to be taken by the Managing
Owner and the Trust as a condition to the subscription for and sale of the Units
to qualified subscribers therefor has been taken; and, upon payment of the
consideration therefor specified in the accepted Subscription Agreements and
Powers of Attorney, the Units will constitute valid units of beneficial interest
in the Trust and each subscriber who purchases Units will become a Unitholder,
subject to the requirement that each such purchaser shall have duly completed,
executed and delivered to the Trust a Subscription Agreement and Power of
Attorney relating to the Units purchased by such party, that such purchaser
meets all applicable suitability standards as set forth in the Prospectus and
that the representations and warranties of such purchaser in the Subscription
Agreement and Power of Attorney are true and correct.
(ii) The Trust is a business trust duly organized
pursuant to the Certificate of Trust, the Trust Agreement and the Delaware
Business Trust Act and validly existing under the laws of the State of Delaware
with trust power and authority to conduct the business in which it proposes to
engage as described in the Prospectus; the Trust need not effect any other
filings or qualifications under the laws of the State of Delaware, in order to
preserve the status of the Trust as a business trust or to enable the Trust to
perform its obligations under this Agreement and to conduct the business in
which it proposes to be engaged as described in the Prospectus.
(iii) The Trust has any Delaware licenses and approvals
and has received or made all filings and registrations with Delaware
governmental and regulatory agencies necessary in order for the Trust to conduct
its business as described in the Registration Statement and Prospectus, and, to
the best of their knowledge, none of such approvals, licenses or registrations
have been rescinded or revoked.
(iv) Each of the Trust Agreement, the Customer
Agreement and this Agreement has been duly and validly authorized, executed and
delivered by or on behalf of the Trust and the Trust Agreement constitutes a
legal, valid and binding agreement of the Trust (as the case may be) enforceable
in accordance with its terms, except to the extent enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability relating to or affecting the enforcement of creditors' rights and
by the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
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(v) The execution and delivery of this Agreement, the
Trust Agreement and the Customer Agreement and the incurrence of the obligations
herein and therein set forth and the consummation of the transactions
contemplated herein and therein and in the Prospectus will not be in
contravention of any of the provisions of the Trust Agreement, and, to their
knowledge, will not constitute a breach of, or default under, any instrument by
which the Trust is bound or any order, rule or regulation applicable to the
Trust of any court or any governmental body or administrative agency having
jurisdiction over the Trust.
(d) At the initial Closing Date, Church & Xxxxx, Maryland
counsel to the Managing Owner, shall deliver to all the parties hereto its
opinion, in form and substance satisfactory to each of the parties hereto, to
the effect that:
(i) All action required to be taken by the Managing Owner
under the Maryland General Corporation Law as a condition to the subscription
for and sale of the Units to qualified subscribers therefor has been taken.
(ii) To our knowledge, the Trust is not required to make
any filings in order to qualify to do business in Maryland and need not effect
any other filings or qualifications under the corporate laws of the State of
Maryland in order to enable the Trust to perform its obligations under this
Agreement and to conduct the business in which it proposes to be engaged as
described in the Prospectus.
(iii) The Managing Owner is duly organized and validly
existing and in good standing as a corporation under the laws of the State of
Maryland with corporate power and authority to act as managing owner of the
Trust. The Managing Owner has full corporate power and authority to perform its
obligations as described in the Registration Statement and Prospectus.
(iv) The Managing Owner (including its principals), has
all licenses and approvals and has received or made all filings and
registrations with Maryland governmental and regulatory agencies necessary in
order for the Managing Owner to conduct its business as described in the
Registration Statement and Prospectus, and, to the best of their knowledge, none
of such approvals, licenses or registrations have been rescinded or revoked.
(v) Each of the Trust Agreement, the Customer Agreement
and this Agreement has been duly and validly authorized, executed and delivered
by or on behalf of the Managing Owner and, assuming that such agreements are
legal, valid and binding on the other parties hereto and thereto, each of the
Trust Agreement, the Customer Agreement and this Agreement constitutes a legal,
valid and binding agreement of the Managing Owner enforceable in accordance with
its terms, except to the extent enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the effect
of general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(vi) The execution and delivery of this Agreement, the
Trust Agreement and the Customer Agreement and the incurrence of the obligations
herein and therein set forth and the consummation of the transactions
contemplated herein and therein and in the Prospectus will not be in
contravention of any of the provisions of the Managing Owner's certificate of
incorporation or by-laws, and, to their knowledge, will not constitute a breach
of, or default under, any order, rule or regulation applicable to the Managing
Owner of any court or any governmental body or administrative agency of the
State of Maryland having jurisdiction over the Managing Owner.
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(vii) To their knowledge, there are no actions, claims
or proceedings pending or threatened in any court or before or by any
governmental or administrative body, nor have there been any such suits, claims
or proceeding within the last five years, to which the Managing Owner (or any
principal of the Managing Owner) is or was a party, or to which any of their
assets is or was subject, which are required to be, but are not disclosed in,
the Registration Statement or Prospectus or which might reasonably be expected
to materially adversely affect the condition (financial or otherwise), business
or prospects of the Managing Owner.
(e) At the initial Closing Date, the Clearing Broker shall
deliver a certificate to the effect that the representations and warranties of
the Clearing Broker contained herein are true and correct with the same effect
as though expressly made at the initial Closing Date and in respect of the
Registration Statement as in effect at the initial Closing Date.
(f) At the initial Closing Date, the Selling Agent shall
deliver a certificate to the effect that the representations and warranties of
the Selling Agent contained herein are true and correct with the same effect as
though expressly made at the initial Closing Date and in respect of the
Registration Statement as in effect at the initial Closing Date.
(g) The parties hereto shall have been furnished with such
additional information, opinions and documents, including supporting documents
relating to parties described in the Prospectus and certificates signed by such
parties with regard to information relating to them and included in the
Prospectus as they may reasonably require for the purpose of enabling them to
pass upon the sale of the Units as herein contemplated and related proceedings,
in order to evidence the accuracy or completeness of any of the representations
or warranties or the fulfillment of any of the conditions herein contained; and
all actions taken by the parties hereto in connection with the sale of the Units
as herein contemplated shall be reasonably satisfactory in form and substance to
counsel to the Clearing Broker, counsel to the Selling Agent and counsel to the
Managing Owner.
If any of the conditions specified in this Section 8 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all obligations hereunder may be canceled by any party hereto by
notifying the other parties hereto of such cancellation in writing or by
telegram at any time at or prior to the initial Closing Date, and any such
cancellation or termination shall be without liability of any party to any other
party except as otherwise provided in Section 9.
(h) Certain or all of the conditions of closing set forth in
this Section 8 shall, at the option of the Managing Owner, apply at each
subsequent Closing Date.
9. INDEMNIFICATION
(a) The Managing Owner agrees to indemnify and hold harmless
the Selling Agent, the Clearing Broker and each person, if any, who controls the
Selling Agent and the Clearing Broker within the meaning of Section 15 of the
Securities Act, as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto) or any omission or alleged omission therefrom of a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, unless (a) in the case
of the Selling Agent, such untrue statement
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or omission or alleged untrue statement or omission was made in reliance upon
and in conformity with information relating to the Selling Agent or furnished or
approved by the Selling Agent or (b) in the case of the Clearing Broker, such
untrue statement or omission or alleged untrue statement or omission was made in
reliance upon and in conformity with information relating to the Clearing Broker
furnished or approved by the Clearing Broker;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever to the extent of the aggregate amount paid in settlement
of any litigation, or any investigation or proceeding by any governmental agency
or body commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission or any such alleged untrue statement or omission
(any settlement to be subject to indemnity hereunder only if effected with the
written consent of the Managing Owner); and
(iii) against any and all expense whatsoever (including
the fees and disbursements of counsel) reasonably incurred in investigating,
preparing or defending against litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged
untrue statement or omission, to the extent that any such expense is not paid
under clauses (i) or (ii) above.
The Managing Owner agrees to notify the Clearing Broker and
the Selling Agent within a reasonable time of the assertion of any claim in
connection with the sale of the Units against it or any of its officers or
directors or any person who controls the Managing Owner within the meaning of
Section 15 of the Securities Act.
(b) The Clearing Broker agrees to indemnify and hold harmless
the Selling Agent, the Managing Owner, the Trust and each person, if any, who
controls the Selling Agent, the Trust or the Managing Owner within the meaning
of Section 15 of the Securities Act (and, in the case of the Managing Owner and
the Trust, each person who signed the Registration Statement or is a director of
the Managing Owner), to the same extent as the indemnity from the Managing Owner
set forth in Section 9(a) hereof, but only insofar as the losses, claims,
damages, liabilities or expenses indemnified against arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
relating or with respect to Clearing Broker, which was made in any preliminary
prospectus, the Registration Statement or the Prospectus or any amendment or
supplement thereto and furnished by or approved by the Clearing Broker for
inclusion therein.
(c) The Selling Agent agrees to indemnify and hold harmless
the Clearing Broker, the Managing Owner, the Trust and each person, if any, who
controls the Clearing Broker, the Managing Owner or the Trust within the meaning
of Section 15 of the Securities Act (and in the case of the Managing Owner and
the Trust, each person who signed the Registration Statement or is a director of
the Managing Owner), (i) to the same extent as the indemnify from the Managing
Owner set forth in Section 9(a) hereof, but only insofar as the losses, claims,
damages, liabilities or expenses indemnified against arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
relating or with respect to the Selling Agent or any of its principals, or their
operations, which was made in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment or supplement thereto and furnished
by or approved by the Selling Agent for inclusion therein and (ii) against any
and all loss, liability, claim, damage and expense whatsoever resulting from a
demand, claim, lawsuit, action or proceeding relating to the actions or
capacities of the Selling Agent (including a breach of its obligations
hereunder).
(d) Each of the parties to this Agreement understands that the
obligations of each party subject to this Section 9 are separate and distinct.
Notwithstanding any other provision of this
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Section 9, (i) the Managing Owner shall have no obligation to indemnify the
Selling Agent for more than the amount of proceeds resulting from the sale of
Units by the Selling Agent during the period from the commencement of the
offering of the Units to the initial Closing Date and during the Continuing
Offering Period plus the Selling Agent's actual expenses incurred in connection
with any loss, claim, damage, charge or liability (including reasonable
attorneys' and accountants' fees incurred in defense thereof) and (ii) any
obligation of the Managing Owner to indemnify the Selling Agent shall be
adjusted to reflect the relative responsibility of the Selling Agent (if any)
for the circumstances giving rise to the losses, claims, damages, costs,
expenses, liabilities or actions for which indemnification is sought.
(e) Notwithstanding any other provision of this Section 9,
(i) the Selling Agent shall have no obligation to indemnify the Managing Owner
for more than the amount of proceeds resulting from the sale of Units by the
Selling Agent during the period from the commencement of the offering of the
Units to the initial Closing Date and during the Continuing Offering Period plus
the Managing Owner's actual expenses incurred in connection with any loss,
claim, damage, charge or liability (including reasonable attorneys' and
accountants' fees incurred in defense thereof) and (ii) any obligation of the
Selling Agent to indemnify the Managing Owner shall be adjusted to reflect the
relative responsibility of the Managing Owner (if any) for the circumstances
giving rise to the losses, claims, damages, costs, expenses, liabilities or
actions for which indemnification is sought.
(f) Notwithstanding any other provision of this Agreement,
indemnification of the Managing Owner or its controlling persons by the Trust
shall be permitted only to the extent permitted by the Trust Agreement, as
amended.
(g) Any party which proposes to assert the right to be
indemnified under this Section 9 will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party under this Section 9,
notify each such indemnifying party of the commencement of such action, suit or
proceeding but the omission to notify an indemnifying party shall not relieve
such indemnifying party from any liability which it may have to any indemnified
party under this Section 9 except to the extent, and only to the extent, that
such omission was prejudicial to the indemnifying party. In no event shall any
such omission relieve an indemnifying party of any liability which it may have
to an indemnified party otherwise than under this Section 9. In case any such
action, suit or proceeding shall be brought against any indemnified party, and
such party shall notify the indemnifying party of the commencement thereof; the
indemnifying party shall be entitled to participate therein, and, if it shall
wish, individually or jointly with any other indemnifying party, to assume (or
have such other party assume) the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election (or the election of such other
party) so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, other than
reasonable costs of investigation requested by the indemnifying party (or such
other party), subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment by counsel by
such indemnified party has been authorized by the indemnifying party (or such
other indemnifying party as may have assumed the defense of the action in
question), (ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying party (or such other
party) and the indemnified party in the conduct of the defense of such action
(in which case the indemnifying party (or such other party) shall not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying party shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying party (subject to
possible reimbursement of the indemnifying party by such other party). An
indemnifying party shall not be liable for any settlement of any action or claim
effected
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without its consent. In the case of (ii) above, the indemnifying party (or the
indemnifying parties, if an indemnified party shall have a claim for
indemnification against more than one indemnifying party) shall not be liable
for the expenses of more than one separate counsel for each of the following
groups: (x) the Selling Agent and any person who controls the Selling Agent
within the meaning of Section 15 of the Securities Act; (y) the Trust and the
Managing Owner and any person who controls the Trust and Managing Owner within
the meaning of Section 15 of the Securities Act; and (z) the Clearing Broker and
any person who controls the Clearing Broker within the meaning of Section 15 of
the Securities Act.
(h) The exculpation provisions of the Trust Agreement shall
not relieve the Managing Owner or its principals from any liability they may
have or incur to the Trust under this Agreement.
10. FEES AND EXPENSES
Subject to reimbursement or partial reimbursement on an
installment basis by the Trust, as set forth in the Prospectus, the Managing
Owner will pay all costs and expenses relating to (i) the preparation, printing
and filing with the SEC, CFTC and NFA of the Registration Statement and (in
certain cases) exhibits thereto, each preliminary prospectus, the Prospectus and
all amendments and supplements to the Registration Statement and the Prospectus,
(ii) the registration or qualification of the Units for offer and sale under the
securities or Blue Sky laws of the various jurisdictions referred to in Section
2 hereof, including the fees and disbursements of legal counsel in connection
therewith and in connection with the preparation and printing of preliminary or
supplementary Blue Sky Surveys, (iii) the furnishing to the Selling Agents of
copies of each preliminary prospectus, the Prospectus, the Registration
Statement and all amendments or supplements thereto, and of such other documents
required to be furnished to the Selling Agents, including costs of shipping and
mailing, (iv) the filing requirements of the NASD in connection with its review
of the terms and arrangements of the proposed financing, (v) the fees and
disbursements of the Escrow Agent, (vi) all fees and disbursements of Xxxxxx X.
Xxxx, Xx. & Associates in connection with the financial statements and the
performance records contained in the Prospectus and the preparation and delivery
of any other documents to be prepared and delivered in connection with the
transactions contemplated hereby, (vii) the fees and disbursements of legal
counsel in connection with the organization of the Trust and the offering of the
Units, and (viii) all other organization and offering expenses relating to the
Trust, including any expenses incurred in any "roadshow" relating to the
offering of the Units and the Selling Agents' reasonable "due diligence"
expenses, within the guidelines established by NASD Rule 2810. Each other party
shall bear all of its expenses under this Agreement, including fees and
disbursements of its counsel.
11. SURVIVAL OF COVENANTS; CAPTIONS; SUCCESSORS AND ASSIGNS
The indemnification agreements contained in Section 9 hereof,
the obligation to settle accounts hereunder and the agreements, representations
and warranties herein shall survive (a) the issue and payment for the Units
hereunder, (b) any investigation made by any party hereto or by a controlling
person of any party hereto, as "controlling person" is defined in Section 15 of
the Securities Act and (c) the termination of the Agreement.
All captions used herein are for convenience of reference
only, are not a portion of this Agreement and are not to be used in construing
or interpreting any aspect of this Agreement.
This Agreement has been and is made solely for the benefit of
the Selling Agent, the Trust, the Managing Owner and the Clearing Broker and
their respective successors and assigns, and, to the extent expressed herein,
for the benefit of persons controlling any of the Selling Agent, the Trust, the
Managing Owner and the Clearing Broker and their respective successors and
assigns within the meaning
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of Section 15 of the Securities Act, and no other person, partnership,
association or corporation shall acquire or have any right under or by virtue of
this Agreement. The term "successors and assigns" shall not include any
purchaser of Units merely because of such purchase.
12. TERMINATION
Each party may terminate this Agreement at any time, in its
discretion, by giving prior written notice of such termination to the other
parties. Obligations incurred prior to termination shall survive termination.
13. NOTICES
Any notices under this Agreement shall be in writing
(including telegraphic communication) or by telephone, confirmed in writing, all
such writings to be sent by first class mail, postage prepaid, addressed to the
recipient party at the address previously furnished in writing by such party to
each of the other parties hereto. Copies of all notices shall be sent to Sidley
& Austin, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attn: Xxxxxxx
Xxxxxxxxxxxxx.
14. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original agreement, but all of which together
shall constitute one and the same instrument.
15. ENTIRE AGREEMENT
This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter contained herein.
16. GOVERNING LAW
This Agreement shall be deemed to be made under and construed
in accordance with the law of the State of New York, without regard to
principles of conflicts of laws.
17. REQUIREMENTS OF LAW
Whenever in this Agreement it is stated that a party will take
or refrain from taking a particular action, such party may nevertheless refrain
from taking or take such action if advised in a formal legal opinion of
nationally recognized counsel that doing so is required by law or advisable to
ensure compliance with law, and shall not be subject to any liability hereunder
for doing so, although such action shall permit termination of the Agreement by
the other parties hereto.
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IN WITNESS WHEREOF, this Agreement has been executed by the
parties hereto as of the day and year first above written.
XXXXXXXX ASSET ALLOCATION TRUST
By: XXXXXXXX & COMPANY, INC.
ITS MANAGING OWNER
By:
------------------------------------
XXXXXXXX & COMPANY, INC.
By:
------------------------------------
PAINEWEBBER INCORPORATED
By:
------------------------------------
XXXXXXXX FINANCIAL SERVICES, INC.
By:
------------------------------------
(Sign Name)
By: Xxxxxxx X. Xxxxx
------------------------------------
(Print Name)
Selling Agent's Legal Name and Address:
XXXXXXXX FINANCIAL SERVICES, INC.
----------------------------------------
000 Xxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
----------------------------------------
Xxxxxx, Xxxxxxxx 00000
----------------------------------------
ATTN.: Xxxxxxx X. Xxxxx
----------------------------------
TAX I.D. NO.: 00-0000000
--------------------------
PHONE: 0-000-000-0000
----------------------------------
FAX: 000-000-0000
-------------------------
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