DEARBORN SELECT MASTER FUND, SPC COMMODITY TRADING ADVISORY AGREEMENT
EXHIBIT
10.1
DEARBORN
SELECT MASTER FUND, SPC
This
Commodity Trading Advisory Agreement (the “Agreement”) is made as of the 2nd day
of May, 2007, among Dearborn Select Master Fund, SPC, a segregated portfolio
company with limited liability incorporated under the laws of the Cayman
Islands, (the “Trading Company” which term shall include where the context
permits the Xxxxxx Segregated Portfolio – Class GP of the Trading
Company) acting for the account of the Xxxxxx Segregated Portfolio –
Class GP (the “Segregated Portfolio”) of the Trading Company, Dearborn
Capital Management, L.L.C., an Illinois limited liability company (the
“Manager”) and Xxxxxx Capital Management, Limited, a company organized under the
laws of England and Wales (the “Advisor”), on the following premises, terms and
conditions:
RECITALS
WHEREAS,
the Trading Company has been organized to trade and invest in commodity
interests, including futures contracts, forward contracts, options on futures
contracts, forward contracts and on commodities, spot contracts and swap
contracts (“Commodity Interests”); and
WHEREAS,
the Manager is, pursuant to the Investment Management Agreement between the
Trading Company and the Manager dated as of June 12, 2006, as it may be
amended from time to time (the “IMA”), authorized to utilize the services of one
or more commodity trading advisors in connection with the commodity trading
activities of the Trading Company; and
WHEREAS,
Grant Park Futures Fund, an Illinois limited partnership (“Grant Park”) which
currently offers units of limited partnership interest (“Units”) to the public
and has registered such Units for sale with the Securities and Exchange
Commission and certain of the states, and of which the Manager is the General
Partner, will allocate a portion of its assets in the Trading Company’s
Segregated Portfolio, where such assets will be traded and invested;
and
WHEREAS,
Advisor’s current business is advising and making trading decisions with respect
to the purchase and sale of Commodity Interests and other similar securities;
and
WHEREAS,
Advisor is registered as a commodity trading advisor with the Commodity Futures
Trading Commission (“CFTC”) and is a member of the National Futures Association
(“NFA”), and will maintain that registration and membership for the term of this
Agreement; and
WHEREAS,
the Segregated Portfolio, the Manager and Advisor wish to enter into this
Agreement in order to set forth the terms and conditions upon which Advisor
will
render and implement commodity trading advisory services on behalf of the
Trading Company the Segregated Portfolio on and after the date hereof until
this
Agreement is terminated;
NOW,
THEREFORE, the parties hereto agree as follows:
AGREEMENTS
1. Preparation
of Materials. Advisor will cooperate with the Trading
Company, the Xxxxxx Segregated Portfolio, the Manager and Grant Park in their
respective endeavors to prepare and update, or cause to be prepared and updated,
a registration statement on Form S-1, or such other form as may then be
available (the “Registration Statement”), and prospectus and disclosure document
included therein (the “Prospectus”), as such may be amended or supplemented from
time to time, promotional brochures or other marketing materials as well
as any
other materials reasonably requested or required by the Manager in connection
with the organization, operation, or marketing of the Trading Company and/or
Grant Park or the registration or renewal of registration of the Units for
offer
and sale to the public in all applicable jurisdictions (collectively, with
the
Registration Statement and Prospectus, the “Materials”). In this
regard, Advisor will furnish to the Manager such information as may be
reasonably requested for inclusion in such Materials. Moreover,
Advisor agrees to make all necessary disclosures regarding itself, its
principals, its trading performance, customer accounts and otherwise as are
required in the judgment of the Manager and/or the Trading Company to be
made in
such Materials.
2. Certain
Representations and Warranties of Advisor. Advisor
represents and warrants to the Trading Company and the Manager and agrees
as
follows:
(a) The
Disclosure Document of Advisor and any other information relating to Advisor,
its businesses, principals, and past performance record that has been requested
by the Manager, has been delivered to the Manager and is current, accurate
and
complete in all material respects and is in compliance with all applicable
laws,
rules and regulations, including Part 4 of the CFTC regulations promulgated
under the US Commodity Exchange Act, as amended (the “CE Act”), and Advisor will
provide the Manager with updated or amended copies of any such
materials.
(b) To
the
extent reasonably available to it, Advisor has supplied or will supply, and
has
made available or will make available, for review by the Manager or its agents
substantially all documents, statements, agreements, confirmations and
workpapers relating to all accounts managed by Advisor and any other persons
or
entities controlled by Advisor for the period covered in any Materials and
the
Manager shall keep such information confidential; provided, however, that
Advisor may, in its discretion, withhold from any such materials the name
of the
client for whom such account is maintained and any materials containing
proprietary information relating to Advisor’s trading
methodologies.
(c) Advisor
is registered as a commodity trading advisor with the CFTC and is a member
of
the NFA. Advisor is also regulated by the United Kingdom Financial
Services Authority (the “FSA”).
(d) Advisor
is a company organized under the laws of England and Wales, with full power
and
authority to enter into this Agreement.
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(e) This
Agreement has been duly and validly authorized, executed and delivered by,
and
is a valid and binding contract of, Advisor enforceable in accordance with
its
terms.
(f) The
representations and warranties made in this Agreement by Advisor shall be
continuing during the term of this Agreement and if at any time any event
has
occurred which would make or tend to make any of the representations and
warranties in this Agreement not true, Advisor will promptly notify the Manager
and the Trading Company.
3. Certain
Representations and Warranties of the Trading Company. The
Trading Company represents and warrants to Advisor that:
(a) This
Agreement has been duly and validly authorized, executed and delivered by,
and
is a valid and binding contract of, the Trading Company enforceable in
accordance with its terms.
(b) The
Trading Company is duly formed and validly existing as a segregated portfolio
company with limited liability incorporated under the laws of the Cayman
Islands, with full power to carry out its obligations under this
Agreement.
(c) Shares
of
the Trading Company will be offered and sold in compliance with the requirements
set forth in the Memorandum of Association and Articles of Association of
the
Trading Company.
(d) The
representations and warranties made in this Agreement by the Trading Company
shall be continuing during the term of this Agreement and if at any time
any
event has occurred which would make or tend to make any of the foregoing
not
true, the Trading Company will promptly notify Advisor.
4. Certain
Representations and Warranties of the Manager.
(a) This
Agreement has been duly and validly authorized, executed and delivered by,
and
is a valid and binding contract of, the Manager enforceable in accordance
with
its terms.
(b) Grant
Park is duly formed and validly existing as an Illinois limited partnership,
with full partnership power to carry out its obligations under its Limited
Partnership Agreement, as such may be amended from time to time (the
“Partnership Agreement”).
(c) The
Materials will not contain any untrue statement of a material fact or omit
to
state any material fact required to be stated therein or necessary to make
the
statements therein, in light of the circumstances in which they are made,
not
misleading, or omit to state any material information required to be disclosed
therein under the CE Act, the Securities Act of 1933, and the rules promulgated
thereunder; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon
and in conformity with information furnished to the Manager or Grant Park
by or
on behalf of Advisor, as to it, including, without limitation, all references
to
Advisor and its affiliates, controlling persons, shareholders, partners,
directors, officers and employees, as well as to Advisor’s trading
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approach
and past performance history, which has been provided by Advisor for inclusion
in the Materials.
(d) Units
in
Grant Park will be offered and sold in compliance with the requirements set
forth in the Registration Statement and the Prospectus, the Partnership
Agreement and the Subscription Agreement and Power of Attorney. In
connection with the offer and sale of the Units of Grant Park, the Manager,
as
General Partner of Grant Park, will, and the Manager, as General Partner
of
Grant Park, will use its reasonable efforts to ensure that any third party
selling agents will, comply fully at all times with all federal, state and
foreign securities laws, rules and regulations applicable to the offer and
sale
of the Units to the public.
(e) The
Manager is duly formed and validly existing as an Illinois limited liability
company with full power and authority to carry out its obligations under
this
Agreement and is registered with the CFTC as a commodity pool operator and
is a
member of NFA.
(f) The
Manager has received, on behalf of Grant Park, the Segregated Portfolio and
the
Trading Company, the current commodity trading advisor disclosure document
of
Advisor (the “Disclosure Document”) and is familiar with the matters set forth
therein.
(g) The
representations and warranties made in this Agreement by the Manager shall
be
continuing during the term of this Agreement and if at any time any event
has
occurred which would make or tend to make any of the foregoing not true,
the
Manager will promptly notify Advisor.
5. Duties
of Advisor. Upon the allocation of assets of Grant Park to
the Segregated Portfolio, and of the Segregated Portfolio to Advisor, Advisor,
for that portion of the Segregated Portfolio’s assets allocated to Advisor,
shall have sole authority and responsibility for directing the investment
and
reinvestment in Commodity Interests pursuant to Advisor’s Diversified Trading
Program (the “Xxxxxx Program”) during the term of this Agreement and in
accordance with the trading policies and trading strategies set forth in
the
Prospectus which has been furnished to Advisor. If the Manager shall,
in its sole discretion, determine that any trading instructions issued by
Advisor violate those trading policies or strategies, then the Manager may
cause
any position placed in violation to be reversed. Advisor will
exercise its best efforts in determining the trades in Commodity
Interests. Changes in Commodity Interests traded shall not be deemed
material changes in trading policies. Advisor has advised the Trading
Company that its past performance and the past performance of its principals
as
provided to the Manager is the result of Advisor’s trading methods as modified
and refined from time to time. The Trading Company acknowledges that
the trading strategies of Advisor are confidential and
proprietary. If a change in Advisor’s trading strategies is deemed
material in the sole judgment of Advisor, then Advisor will not change its
trading strategies without at least 10 days’ prior written notice to the Manager
and the Trading Company. All commissions and expenses arising from
the trading of, or other transactions in the course of the administration
of,
the Segregated Portfolio’s account shall be charged to the Segregated
Portfolio’s account and shall be payable by Grant Park, pursuant to the terms of
its Partnership Agreement and the Prospectus. The Segregated Portfolio shall
deliver to Advisor, and renew when necessary, a Commodity Trading Authorization
appointing Advisor as the agent and attorney-in-fact of the Segregated Portfolio
for the purpose of trading Commodity Interests. All trades for the
account of the Segregated Portfolio directed
4
by
Advisor shall be made through such clearing broker or brokers as the Manager
directs (each, a “clearing broker”). Currently, Man Financial Inc.
and UBS Financial Services, Inc. are the only clearing brokers for the assets
of
Grant Park allocated to the Segregated Portfolio which are allocated to
Advisor. Notwithstanding the foregoing, Advisor may place orders for
Commodity Interest transactions for the Segregated Portfolio through executing
brokers or floor brokers selected by Advisor and may execute on behalf of
the
Segregated Portfolio “give-up” agreements with such executing brokers or floor
brokers where necessary; provided that Advisor will from time to time provide
the Manager with a list of the executing brokers or floor brokers Advisor
is
then using and the Manager may, within 5 days of receiving such list after
consultation with Advisor, object to the use of an executing broker or floor
broker and Advisor shall cease using such broker on behalf of the Segregated
Portfolio. Advisor will not enter into any soft dollar commission agreements
with any of the clearing brokers or any other brokers. Any
over-the-counter contracts in Commodity Interests transacted for the Segregated
Portfolio trading account will be affected through the clearing brokers or
its
affiliates, as agreed upon between Advisor and the Manager. Advisor
also from time to time may select other dealers through which any such contracts
will be traded, with the prior written consent of the Manager. In its
trading for the Segregated Portfolio’s account, the Advisor shall not engage in
“pyramiding” as such term is used in the Prospectus.
6. Independence
of Advisor. Advisor shall for all purposes herein be deemed
to be an independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Segregated
Portfolio and/or the Trading Company in any way or otherwise be deemed an
agent
of the Segregated Portfolio and/or the Trading Company. Advisor shall
not offer or sell or solicit any offers to purchase Units of Grant Park or
Units
in the Segregated Portfolio. However, when requested by the Manager
at such reasonable times and upon adequate notice as mutually agreed to,
Advisor
will assist in the general explanation and presentation of Advisor’s trading
strategies and methods solely to the employees of the Manager and, in Advisor’s
discretion, to Grant Park’s selling agents or to other agents of the Manager;
provided, however, that nothing in this section will require Advisor to disclose
confidential and proprietary information concerning its trading strategies
and
methods. The parties acknowledge that Advisor has, neither alone nor
in conjunction with the Manager, been an organizer or promoter of the Trading
Company, the Segregated Portfolio or Grant Park. Nothing herein
contained shall be deemed to require the Trading Company to take any action
contrary to its governing documents, or any applicable statute, regulation
or
exchange rule.
7. Compensation.
(a) In
consideration of and in compensation for all of the services to be rendered
by
Advisor to the Segregated Portfolio under this Agreement, beginning with
the
first calendar quarter-end following the date of this Agreement, Advisor
shall
receive compensation from the Manager or the Trading Company acting for the
account of the Segregated Portfolio, as applicable, (payable by Grant Park
or
the Manager as General Partner of Grant Park, as applicable and as disclosed
in
the Prospectus), as follows:
(1) The
Manager will pay to Advisor a “Consulting Fee” of 1% per year (computed and
accrued monthly on the basis of month-end “Allocated Net Assets,” as defined in
subsection (c) below, and paid quarterly) of such Advisor’s Allocated Net
Assets.
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(2) The
Segregated Portfolio will pay to Advisor a quarterly “Incentive Fee” of 20% of
“New Trading Profits on the Allocated Net Assets of Advisor,” as defined in
subsection (d) below.
(b) Advisor
shall not receive any commissions, compensation, remunerations or payments
whatsoever from any clearing broker with whom the Segregated Portfolio and/or
the Trading Company (as the case may be) or Grant Park carries an account
for
any transactions executed in the Segregated Portfolio’s and/or the Trading
Company’s (as the case may be) account, nor shall Advisor at any time be an
“affiliate” of any clearing broker with whom the Segregated Portfolio and/or the
Trading Company (as the case may be) or Grant Park carries an account, as
such
term is used in the Partnership Agreement.
(c) “Allocated
Net Assets” means that portion of Grant Park’s Net Assets allocated to the
Segregated Portfolio that is allocated to Advisor by the Manager and subject
to
Advisor’s trading discretion (including any notional funds), together with any
appreciation or depreciation in such Allocated Net Assets. “Net
Assets” is defined as the total assets of Grant Park including all cash and cash
equivalents plus the market value of all open Commodity Interest positions
and
U.S. Treasury bills, but minus all accrued liabilities of Grant
Park. The market value of a Commodity Interest position shall be that
price quoted on the exchange on which each such contract is traded as of
the
close of each trading day, or if any such contract is not so traded, the
fair
market value of each contract, as determined by the Manager acting in its
capacity as General Partner of Grant Park.
(d) “New
Trading Profits on the Allocated Net Assets of Advisor” shall mean the sum of
(A) the net of any profits (excluding interest income) and losses realized
on all trades closed out during the period on such Allocated Net Assets,
plus (B) the net of any unrealized profits and losses on open
positions as of the end of such period (after deduction for accrued brokerage
commissions and all other transaction fees and costs) on such Allocated Net
Assets, minus (C) (i) the net of any unrealized profits or
losses on open positions as of the end of the preceding period (after deduction
for accrued brokerage commissions and all other transaction fees and costs)
on
such Allocated Net Assets, and (ii) cumulative net realized or unrealized
trading losses on such Allocated Net Assets (reduced by a proportionate share
of
realized and unrealized trading losses on such Allocated Net Assets attributable
to redeemed Units or reallocated amounts as of any redemption or reallocation
date), if any, carried forward from all preceding periods since the last
period
for which an Incentive Fee was payable to Advisor.
8. Right
to Advise Others. Advisor’s present business is advising
with respect to the purchase and sale of Commodity Interests. The
services provided by Advisor under this Agreement are not to be deemed
exclusive. Each of the Segregated Portfolio and the Manager
acknowledges that, subject to the terms of this Agreement, Advisor may render
advisory, consulting and management services to other
clients. Advisor shall be free to advise others and manage other
Commodity Interest trading accounts, including accounts owned by it or its
principals, during the term of this Agreement and to use the same information,
computer programs and trading strategy which it obtains, produces or utilizes
in
the performance of services for the Segregated Portfolio. In that
connection, however, Advisor represents and warrants
that: (i) in rendering consulting, advisory and management
services to other Commodity Interest trading accounts and entities, it will
use
its best efforts to achieve an
6
equitable
treatment of all accounts and will use a fair and reasonable system of order
entry for all accounts; and (ii) it will not deliberately use any trading
strategies for the Segregated Portfolio which it or its principals know are
inferior to those currently offered by Advisor and employed by Advisor for
other
accounts. Advisor agrees to be aware of the position limits imposed
on certain Commodity Interest contracts by the CFTC or applicable contract
market. Advisor will be entitled to use that portion of the
applicable position limits that bears the same relationship that the Segregated
Portfolio’s assets allocated to it bears to all of the Segregated Portfolio’s
assets. If, at any time during the term of this Agreement, Advisor is
required to aggregate the Segregated Portfolio’s Commodity Interest positions
with the positions of any other person for purposes of applying the CFTC
or
exchange imposed speculative position limits, Advisor will promptly notify
the
Manager if the Segregated Portfolio’s positions are included in an aggregate
amount which exceeds the applicable speculative position
limit. Advisor represents that, if speculative positions limits are
reached in any Commodity Interest contract, it will modify the trading
instructions to the Segregated Portfolio’s account and its other accounts in a
reasonable and good faith effort to achieve an equitable treatment of all
accounts. Advisor currently believes and represents that such
speculative limits will not materially affect its trading recommendations
or
strategy for the Segregated Portfolio given Advisor’s current accounts and all
proposed accounts for which each Advisor has a contract to act as a commodity
trading advisor.
9. Records
of the Trading Company. The Manager will instruct the
clearing brokers to furnish copies of all trade confirmations and monthly
trading reports to Advisor. Advisor will maintain a record of all
trading orders for the Segregated Portfolio’s account that have been filled and
will monitor the Segregated Portfolio’s open positions. Upon the
request of the Manager, Advisor shall permit the Manager or its agent to
inspect
such information as the Manager may reasonably request for the purpose of
confirming that the Segregated Portfolio has been treated equitably with
respect
to trading engaged in during the term of this Agreement by all accounts
controlled by Advisor or its principals. Advisor shall permit the
Manager to inspect the trading records of Advisor, its principals and their
other clients for the purpose of confirming that the Segregated Portfolio
is
being treated equitably by Advisor, including with respect to any modifications
of trading strategies resulting from speculative position limits and with
respect to the assignment of priorities of order entry to Advisor’s accounts,
and the Manager shall keep such information confidential; provided, however,
that Advisor may, in its discretion, withhold from any such inspection the
name
of the client for whom such account is maintained.
10. Term
and Termination; Automatic Renewal Provision.
(a) THE
INITIAL TERM OF THIS AGREEMENT SHALL COMMENCE ON THE DATE HEREOF AND SHALL
CONTINUE UNTIL THE ONE YEAR ANNIVERSARY OF THE DATE
HEREOF. THEREAFTER, THE TERM OF THIS AGREEMENT WILL AUTOMATICALLY BE
EXTENDED FOR ONE YEAR TERMS FROM YEAR TO YEAR, UNLESS TERMINATED BY ANY PARTY
PURSUANT TO THE TERMS OF SUBSECTION (b) BELOW. As used
in this Agreement, the term “term” shall mean the period commencing on the date
hereof through the effective date of the termination of this Agreement, unless
the context requires otherwise.
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(b) The
Manager and the Segregated Portfolio or Advisor may terminate this Agreement
at
any time upon no less than 60 days’ written notice to the
other. Notwithstanding the foregoing, this Agreement also may be
terminated on written notice at any time upon: (i) the Manager’s
withdrawal as Manager of the Trading Company, as provided in the IMA or as
General Partner of Grant Park, as provided in the Partnership Agreement;
(ii) the termination, bankruptcy, insolvency, liquidation, winding up or
other dissolution, whether voluntary or involuntary, of the Segregated
Portfolio, the Manager, Grant Park or the Trading Company; (iii) the death,
disability or loss of services of Xxxxx Xxxxxx Xxxxxxx or Xxxxxx Xxxx or
upon
Xx. Xxxxxxx and/or Xx. Xxxx no longer taking an active role in the
business of Advisor; (iv) the sale of or disposition of Advisor;
(v) the inability of Advisor to use its trading strategies for the
Segregated Portfolio’s benefit; (vi) the suspension, revocation or
withdrawal of Advisor’s registration as a commodity trading advisor or
withdrawal of the Manager registration as a commodity pool operator or the
suspension or termination of any parties’ NFA membership; (vii) a material
breach of this Agreement by Advisor or the Manager, the Segregated Portfolio
and/or the Trading Company; (viii) a violation by Advisor of the Segregated
or Grant Park’s trading policies; or (ix) the Manager’s objection after
consultation with Advisor to any executing broker used by Advisor. In
the event of the termination of this Agreement by Advisor, Advisor shall
be
entitled to and the Segregated Portfolio or the Manager, as the case may
be as
provided in Section 7 above, shall pay the quarterly Incentive Fee and
quarterly Consulting Fee, computed as if the effective date of termination
were
the last day of the then current calendar quarter.
11. Indemnity.
(a) In
any
threatened (in writing), pending or completed action, suit, or proceeding
to
which Advisor, its shareholders, officers, directors, employees or associated
persons (collectively, “its affiliates”) was or is a party or is threatened in
writing to be made a party by reason of the fact that Advisor is or was a
commodity trading advisor of the Segregated Portfolio or otherwise, the
Segregated Portfolio and the Manager jointly and severally shall indemnify
and
hold harmless, subject to subsection (b) below, Advisor and its affiliates
against any loss, liability, damage, cost, expenses (including reasonable
attorneys’ fees and accountants’ fees), judgments and amounts paid in settlement
actually and reasonably incurred by it or its affiliates in connection with
any
action, suit or proceeding if Advisor acted in good faith and in a manner
it
reasonably believed to be in or not opposed to the best interests of the
Segregated Portfolio, and provided that its conduct does not constitute gross
negligence, fraud or a material breach of its fiduciary
obligations. The termination of any action, suit or proceeding by
judgment, order or settlement shall not, of itself, create a presumption
that
Advisor did not act in good faith and in a manner which it reasonably believed
to be in or not opposed to the best interests of the Segregated
Portfolio.
(b) Any
indemnification under subsection (a) above, unless ordered by a court or
administrative forum, shall be made only as authorized in the specific case
and
only upon a determination by independent legal counsel in a written opinion
that
indemnification is proper in the circumstances because Advisor has not met
the
applicable standard of conduct set forth in subsection (a)
above.
(c) To
the
extent that Advisor or its affiliates has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsection (a)
8
above,
or
in defense of any claim, issue or matter therein, the provisions of
subsection (b) above shall not apply and the Segregated Portfolio and the
Manager jointly and severally shall indemnify it or its affiliates against
the
expenses, including attorneys’ and accountants’ fees, actually and reasonably
incurred by it or its affiliates in connection therewith.
(d) Expenses
incurred in defending a threatened or pending civil, administrative or criminal
action, suit or proceeding against Advisor or its affiliates may in the sole
discretion of the Manager, be paid by the Segregated Portfolio and the Manager
jointly and severally in advance of the final disposition of such action,
suit
or proceeding, if and to the extent that the person on whose behalf such
expenses are paid shall agree to reimburse the Segregated Portfolio and/or
the
Manager, as applicable, in the event indemnification is not permitted under
this
Section 11.
(e) Advisor
agrees to indemnify, defend and hold harmless the Segregated Portfolio, the
Manager and the Manager’s members, shareholders, officers, directors, employees
or associated persons (collectively, “its affiliates”) against all liabilities
incurred by them by reason of any act or omission of Advisor relating to
the
Segregated Portfolio (including costs and expenses of investigating and
defending any claims, demand or suit and reasonable attorneys’ and accountants’
fees) if there has been a final judicial or regulatory determination that
such
act or omission materially violated the terms of this Agreement or involved
gross negligence, fraud, recklessness or intentional misconduct on the part
of
Advisor.
(f) In
the
event that any claim, dispute or litigation arises between Advisor and any
party
other than the Segregated Portfolio or the Manager, which claim, dispute
or
litigation is unrelated to the Segregated Portfolio’s business, and if the
Segregated Portfolio or the Manager are made a party to such claim, dispute
or
litigation by such other party, Advisor shall defend any actions brought
in
connection therewith on behalf of the Segregated Portfolio and/or the Manager
each of whom agree to cooperate in such defense and Advisor shall indemnify
and
hold harmless the Segregated Portfolio and the Manager from and with respect
to
any amounts awarded to such other party. If any claim, dispute or
litigation arises between the Segregated Portfolio and/or the Manager and
any
party other than Advisor which claim, dispute or litigation is unrelated
to
Advisor’s business, and if Advisor is made a party to such claim, dispute or
litigation by such other party, the Segregated Portfolio and the Manager
jointly
and severally shall defend any actions brought in connection therewith on
behalf
of Advisor or its principals, each of whom agree to cooperate in such defense
and the Segregated Portfolio and the Manager jointly and severally shall
indemnify and hold harmless Advisor and its affiliates from and with respect
to
any amounts awarded to such other party. Notwithstanding any other
provision of this subsection (f), if, in any claim as to which indemnity is
or may be available, any indemnified party reasonably determines that its
interests are or may be, in whole or in part, adverse to the interests of
the
indemnifying party, the indemnified party may retain its own counsel in
connection with such claim and shall be indemnified by the indemnifying party
for any legal or any other expenses reasonably incurred in connection with
investigating or defending such claim.
(g) None
of
the foregoing provisions for indemnification shall be applicable with respect
to
default judgments, confessions of judgment or settlements entered into by
the
party claiming indemnification (“Indemnitee”) without the prior consent of the
party obligated to
9
indemnify
the other party (“Indemnitor”); provided, however, that should the Indemnitor
refuse to consent to a settlement approved by the Indemnitee, the Indemnitee
may
affect such settlement, pay such amount in settlement as it shall deem
reasonable and seek a judicial or regulatory determination with respect to
reimbursement by the Indemnitor of any loss, liability, damage, cost or expenses
(including reasonable attorneys’ and accountants’ fees) incurred by the
Indemnitee in connection with such settlement to the extent such loss,
liability, damage, cost or expense (including reasonable attorneys’ and
accountants’ fees) was caused by or resulted from a material violation of this
Agreement by the Indemnitor or violation of the standard of conduct set forth
herein. Notwithstanding the foregoing, the Indemnitor shall, at all
times, have the right to offer to settle any matters and if the Indemnitor
successfully negotiates a settlement and tenders payment therefore to the
Indemnitee, the Indemnitee must either use its best efforts to dispose of
the
matter in accordance with the terms and conditions of the proposed settlement
or
the Indemnitee may refuse to settle the matter and continue its defense in
which
latter event the maximum liability of the Indemnitor to the Indemnitee shall
be
the amount of said proposed settlement.
(h) The
foregoing provisions for indemnification shall survive the termination of
this
Agreement.
(i) Advisor
acknowledges as to it that the indemnities provided in this Agreement by
the
Manager and the Segregated Portfolio to Advisor shall be inapplicable in
the
event of any liability accruing to the extent, if any, caused by or based
upon
Advisor’s misrepresentations, omissions or breach of any warranty in this
Agreement.
(j) Nothing
in this Section 11 constitutes a waiver or limitation of any rights the
Segregated Portfolio may have under applicable U.S. state and Federal laws
that
impose liability under certain circumstances even on persons who act in
compliance with their fiduciary duties.
12. Reallocation
of Assets. The Manager in its sole and absolute discretion
may allocate assets away from or, with Advisor’s consent to, Advisor as of the
first day of any month on 10 days’ prior written notice. Any refusal
by Advisor to accept an allocation of additional assets must be communicated
by
Advisor to the Manager within 8 days prior to the proposed allocation date
after
having received the required notice of the proposed allocation from the Manager,
or on such shorter notice as is acceptable to the
Manager. Notwithstanding the foregoing, the Manager may reallocate
assets away from Advisor at any time, if the purpose of the reallocation
is to
meet a margin call from the Segregated Portfolio’s, but only to the extent that
such other commodity trading advisor, whose trading has resulted in the margin
call, has no Segregated Portfolio assets not committed to Commodity Interest
positions. The Manager shall immediately notify Advisor and all other
affected commodity trading advisors engaged by the Segregated Portfolio of
any
reallocation.
13. Complete
Agreement. This Agreement among Advisor, the Segregated
Portfolio and the Manager shall constitute all agreements between Advisor
and
the Segregated Portfolio, relating to the assets of Grant Park allocated
to
Advisor by the Segregated Portfolio, and shall supersede any prior agreements
among Advisor, the Segregated Portfolio, the Trading Company
10
and
the
Manager with respect thereto, and no other agreements with respect thereto,
verbal or otherwise, shall be binding upon the parties to this
Agreement.
14. Assignment
and Successors. This Agreement may not be assigned nor the
duties hereunder delegated by either party without the express written consent
of the other party. This Agreement is made solely for the benefit of,
and shall be binding upon, the parties and their respective successors and
assigns, and no other person shall have any right or obligation under
it.
15. Amendment. This
Agreement may not be amended except by a written instrument signed by the
parties.
16. Notices. All
notices required to be delivered under this Agreement shall be delivered
personally or by registered or certified mail, postage prepaid, return receipt
requested,
If
to the
Manager:
Dearborn
Capital Management, L.L.C.
000
Xxxx
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxx
Fax: (000)
000-0000
Attn: Xxxx
Tkatchew
If
to the
Trading Company or the Segregated Portfolio:
Dearborn
Select Master Fund, SPC
c/o
Close
Brothers (Cayman ) Limited
X.X.
Xxx
0000XX
Xxxxxxx
Xxxxx, 0xx Xxxxx
Xxxxx
Xxxxxx, Xxxxxx Xxxxxxx
Fax: (000)
000-0000
If
to the
Advisor:
Xxxxxx
Capital Management Limited
0-0
Xx.
Xxxx Xxxxx’x Xxxxx
Xxxxxx
X0
0XX Xxxxxxx
Fax: x00
(0)00-0000-0000
Attn: Xxxxxx
Xxxx
or
to any
other address designated by the party to receive the same by written notice
similarly given.
11
17. Notice
of Threatened, Pending or Completed Actions, Suits or
Proceedings.
(a) The
Manager will immediately give written notice to Advisor of (i) any
threatened (in writing), pending or completed action, suit or proceedings
(including without limitation any reparations proceedings or administrative
proceeding threatened or instituted under the CE Act) to which the Segregated
Portfolio was or is a party or is threatened (in writing) to be a party;
and
(ii) any judgments or amounts paid by the Segregated Portfolio in
settlement in connection with any such threatened, pending or completed action,
suit or proceeding.
(b) Advisor
will immediately give written notice to the Manager of (i) any threatened
(in writing), pending or completed action, suit or proceeding (including
without
limitation any reparations proceeding or administrative proceeding threatened
or
instituted under the CE Act) to which Advisor was or is a party or is threatened
in writing to be a party; and (ii) any judgments or amounts paid by Advisor
in settlement in connection with any such threatened, pending or completed
action, suit or proceeding.
(c) Written
notices required to be given pursuant to this Section 17 shall contain all
pertinent information concerning the threatened, pending or completed action,
suit or proceeding and, in the case of any pending or completed action suit
or
proceeding, shall include a copy of the complaint, petition or similar documents
asserting a claim.
(d) The
Manager and Advisor agree to use their best efforts to maintain the
confidentiality of notices received pursuant to this Section 17 and agree
not to disclose the contents of such notices to persons other than their
affiliates, or except as may be required, in their good faith judgment, by
any
applicable law or regulation.
18. Complaints. All
formal complaints relating to Advisor should, in the first instance, be made
in
writing to Xxxxxx Xxxx, Advisor’s Compliance Officer, at the address provided in
Section 16 of this Agreement as this address may be changed from time to
time. All such complaints relating to Advisor will be handled in
accordance with the applicable rules of the FSA.
19. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the Cayman Islands.
20. Notional
Funds Disclosure. The CFTC requires Advisor to make the
following disclosure to the Trading Company:
(a) You
should request your commodity trading advisor to advise you of the amount
of
cash or other assets (Actual Funds) which should be deposited to the advisor’s
trading program for your account to be considered “Fully
Funded.” This is the amount upon which the commodity trading advisor
will determine the number of contracts traded in your account and should
be an
amount sufficient to make it unlikely that any further cash deposits would
be
required from you over the course of your participation in the commodity
trading
advisor’s program;
12
(b) You
are
reminded that the account size you have agreed to in writing (the “nominal” or
“notional” account size) is not the maximum possible loss that your account may
experience; and
(c) You
should consult the account statements received from your futures commission
merchant in order to determine the actual activity in your account, including
profits, losses and current cash equity balance. To the extent that
the equity in your account is at any time less than the nominal account size,
you should be aware of the following:
(i) Although
your gains and losses, fees and commissions measured in dollars will be the
same, they will be greater when expressed as a percentage of account
equity.
(ii) You
may
receive more frequent and larger margin calls.
(iii) The
disclosures which accompany the performance table may be used to convert
the
rates of return (“RORs”) in the performance table to the corresponding RORs for
particular partial funding levels.
21. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original, but such counterparts shall, together, constitute
only
one instrument.
22. The
Advisor hereby acknowledges that (i) the Trading Company is a segregated
portfolio company established under the laws of the Cayman Islands and that
the
Segregated Portfolio is a segregated portfolio of the Trading Company and
(ii)
notwithstanding any other provision of this Agreement, liabilities of the
Trading Company incurred under this Agreement in respect of the Segregated
Portfolio shall only be satisfied out of, and the Advisor shall only be entitled
to recourse to, the assets of the Trading Company attributable to the Segregated
Portfolio and the Advisor shall not be entitled to have recourse to the assets
attributable to any other segregated portfolio of the Trading Company or
to the
general assets of the Trading Company. The Advisor and the Trading
Company may only set off or net any liability owed to, or by, the Advisor
by, or
to, the Trading Company in respect of the Segregated Portfolio and not any
other
segregated portfolio of the Trading Company or against the general assets
of the
Trading Company.
13
This
Agreement has been executed for and on behalf of the undersigned as of the
date
first set forth above.
NOTICE: THIS
AGREEMENT CONTAINS AN AUTOMATIC RENEWAL PROVISION IN SECTION 10
HEREIN.
|
DEARBORN
SELECT MASTER FUND, SPC acting for the account of XXXXXX SEGREGATED
PORTFOLIO – CLASS GP
|
|
By:
/s/ Xxxxx X.
Xxxxxxxx
|
|
Xxxxx
X. Xxxxxxxx,
its
Director
|
|
DEARBORN
CAPITAL MANAGEMENT, L.L.C.
|
|
By:
/s/ Xxxxx X.
Xxxxxxxx
|
|
Dearborn
Capital Management, Ltd.,
its
Managing Member
|
|
By:
/s/ Xxxxx X.
Xxxxxxxx
|
|
Xxxxx
X. Xxxxxxxx,
its
President
|
|
XXXXXX
CAPITAL MANAGEMENT LIMITED
|
|
By:
/s/ Xxxxxx
Xxxx
|
|
Xxxxxx
Xxxx
its
Director
|
14
