EXHIBIT 1.01
SELLING AGREEMENT
Dated as of __________, 1997
Xxxx Xxxxxx Xxxxxxxx Inc.
Two World Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Xxxxxx Xxxxxxx Tangible Asset Fund L.P. (the "Partnership"), a limited
partnership organized pursuant to its certificate of limited partnership filed
on July 31, 1997 ("Certificate of Limited Partnership") and its limited
partnership agreement dated as of July 31, 1997 (the "Limited Partnership
Agreement") under the Delaware Revised Uniform Limited Partnership Act
("DRULPA"), proposes, subject to the terms and conditions set forth in this
Agreement, to offer, sell, and issue up to 5,000,000 Units of Limited
Partnership Interest of the Partnership (the "Units").
Demeter Management Corporation, a Delaware corporation, is the sole
general partner of the Partnership (the "General Partner"). Xxxxxx Xxxxxxx
Commodities Management, Inc., a Delaware corporation (the "Trading Advisor"),
acts as trading advisor with respect to the management of the Partnership's
trading activities pursuant to a management agreement among the Trading Advisor,
the Partnership and the General Partner dated as of ____________, 1997 (the
"Management Agreement").
Xxxx Xxxxxx Xxxxxxxx Inc., a Delaware corporation ("DWR"), will act as
selling agent pursuant to this Agreement. Subscriptions for Units will be held
by The Chase Manhattan Bank (in such capacity, the "Escrow Agent") pursuant to
an escrow agreement dated ____________, 1997 among the Partnership, The Chase
Manhattan Bank and DWR (the "Escrow Agreement").
Xxxxxx Xxxxxxx & Co. Incorporated, a Delaware corporation ("MS &
Co."), and Xxxxxx Xxxxxxx & Co. International Limited, a United Kingdom
corporation ("MSIL"), act as commodity brokers (together, the "Commodity
Brokers") pursuant to customer agreements between the Partnership and each of
the Commodity Brokers, each dated as of __________, 1997 (each, a "Customer
Agreement").
1. REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER AND THE
PARTNERSHIP. The General Partner and the Partnership represent and warrant to
each of the other parties hereto, as follows:
(a) The Partnership has provided to the Trading Advisor, DWR and
the Commodity Brokers, and filed with the Securities and Exchange Commission
(the "SEC") on August ___, 1997, a registration statement on Form S-1 (No.
333-____), including a preliminary prospectus (which has not been distributed to
the public), for the registration of
the Units under the Securities Act of 1933, as amended (the "1933 Act"), and the
rules and regulations promulgated thereunder (the "SEC Regulations"), and has
filed copies of such registration statement with (i) the Commodity Futures
Trading Commission (the "CFTC") under the Commodity Exchange Act (the "CEAct")
and the rules and regulations promulgated thereunder (the "CFTC Rules"), (ii)
the National Association of Securities Dealers, Inc. (the "NASD") pursuant to
its Conduct Rules; and (iii) the National Futures Association (the "NFA") in
accordance with NFA Compliance Rule 2-13. The registration statement and the
prospectus included therein are hereinafter called the "Registration Statement"
and the "Prospectus," respectively, except that (i) if the Partnership files a
post-effective amendment to the registration statement, then the term
"Registration Statement" shall, from and after the declaration of the
effectiveness of such post-effective amendment, refer to such post-effective
amendment, and the term "Prospectus" shall refer to the amended prospectus then
on file with the SEC as part of the Registration Statement, and (ii) if a
prospectus is filed pursuant to Rule 424 of the SEC Regulations, the term
"Prospectus" shall refer to the prospectus most recently filed pursuant to such
Rule from and after the date on which it shall have been first used, including
any amendment or supplement thereto, from and after the date on which it shall
have been first used. The Partnership will not file any amendment to the
Registration Statement or any amendment or supplement to the Prospectus unless
DWR, the Trading Advisor and the Commodity Brokers have received reasonable
prior notice of and a copy of such amendments or supplements and have not
reasonably objected thereto in writing.
(b) The Limited Partnership Agreement provides for the
subscription for and sale of the Units; all action required to be taken by the
General Partner and the Partnership as a condition to the sale of the Units to
qualified subscribers therefor has been, or prior to each Closing as defined in
Section 8(b) hereof will have been, taken; and, upon payment of the
consideration therefor specified in each accepted Subscription and Exchange
Agreement and Power of Attorney in the form attached to the Prospectus, the
Units will constitute valid limited partnership interests in the Partnership.
(c) The Partnership is a limited partnership duly organized
pursuant to the Certificate of Limited Partnership, the Limited Partnership
Agreement and the DRULPA, and is validly existing under the laws of the State of
Delaware with full power and authority to engage in its other contemplated
activities as described in the Prospectus; the Partnership has received a
certificate of authority to do business in the State of New York as provided by
Section 121-902 of the New York Revised Limited Partnership Act and is qualified
to do business in each jurisdiction in which the nature or conduct of its
business requires such qualification and where the failure to be so qualified
could materially adversely affect the Partnership's ability to perform its
obligations hereunder or under the Management Agreement, the Customer
Agreements, the Escrow Agreement, or the Limited Partnership Agreement, as
applicable.
(d) The General Partner is duly organized and validly existing
and in good standing as a corporation under the laws of the State of Delaware;
is in good standing and qualified to do business as a foreign corporation under
the laws of the State of New York; and is qualified to do business and is in
good standing as a foreign corporation in each
-2-
jurisdiction in which the nature or conduct of its business requires such
qualification and where the failure to be so qualified could materially
adversely affect the General Partner's ability to perform its obligations
hereunder or under the Management Agreement, the Limited Partnership Agreement,
or as described in the Prospectus.
(e) The Partnership and the General Partner have full
partnership or corporate power and authority under applicable law to conduct
their business and to perform their respective obligations, as applicable, under
the Limited Partnership Agreement, the Escrow Agreement, the Management
Agreement, the Customer Agreements, and this Agreement.
(f) The Registration Statement and Prospectus contain all
statements and information required to be included therein by the CEAct and the
CFTC Rules. When the Registration Statement becomes effective under the 1933
Act and at all times subsequent thereto up to and including each Closing, the
Registration Statement and Prospectus will comply in all material respects with
the requirements of the 1933 Act, the SEC Regulations, the CEAct, the CFTC
Rules, and the rules of the NASD and NFA. As of its effective date, the
Registration Statement did not contain any 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. The Prospectus, as of its date of
issue and at each Closing, did not and will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not misleading. Any supplemental sales literature employed in the
offering of Units ("Sales Literature"), when read in conjunction with the
Prospectus, did not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading. The Sales Literature complies and will comply with the CEAct, the
CFTC Rules, SEC Regulations, and the rules of the NFA and NASD. This
representation and warranty shall not, however, apply to any statement or
omission in the Registration Statement, Prospectus or Sales Literature made in
reliance upon and in conformity with information furnished by or relating to the
Trading Advisor, its trading methods or its trading performance, or any
information furnished by or relating to the Commodity Brokers.
(g) The accountants who certified the financial statements filed
with the SEC as part of the Registration Statement are, with respect to the
General Partner and the Partnership, independent public accountants as required
by the 1933 Act and the SEC Regulations.
(h) The financial statements filed as part of the Registration
Statement and those included in the Prospectus present fairly the financial
positions of the Partnership and of the General Partner as of the dates
indicated; and said financial statements have been prepared in conformity with
generally accepted accounting principles (as described therein).
-3-
(i) 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 General Partner or the Partnership, whether or not arising in
the ordinary course of business.
(j) The General Partner will have a net worth at each Closing
sufficient in amount and satisfactory in form to meet the net worth requirements
set forth in the Limited Partnership Agreement.
(k) The Limited Partnership Agreement, the Management Agreement
and this Agreement have each been duly and validly authorized, executed and
delivered by the General Partner on behalf of the Partnership and the General
Partner, and each constitutes a valid and binding agreement of the Partnership
and of the General Partner, enforceable in accordance with its terms. The
Escrow Agreement has been duly and validly authorized, executed and delivered by
the General Partner on behalf of the Partnership, and constitutes a valid and
binding agreement of the Partnership, enforceable in accordance with its terms.
As of the First Closing, the Customer Agreements will be duly and validly
authorized, executed and delivered by the General Partner on behalf of the
Partnership.
(l) The execution and delivery of the Limited Partnership
Agreement, the Escrow Agreement, the Customer Agreements, the Management
Agreement, and this Agreement, the incurrence of the obligations set forth in
each of such agreements, and the consummation of the transactions contemplated
therein and in the Registration Statement and Prospectus, will not violate, or
constitute a breach of, or default under, the General Partner's certificate of
incorporation or bylaws, the Certificate of Limited Partnership, the Limited
Partnership Agreement, any agreement or instrument by which either the General
Partner or the Partnership, as the case may be, is bound, or any law, order,
rule, or regulation applicable to the General Partner or the Partnership of any
court, governmental body, administrative agency, panel, or self-regulatory
organization having jurisdiction over the General Partner or the Partnership.
(m) Except as set forth in the Prospectus, there has not been in
the five years preceding the date of the Prospectus and there is not pending or,
to the best of the General Partner's knowledge, threatened, any action, suit, or
proceeding at law or in equity before or by any court, governmental body,
administrative agency, panel, or self-regulatory organization to which the
General Partner, any of the "principals" of the General Partner, as defined in
CFTC Rule 4.10(e) ("General Partner Principals"), or the Partnership is or was a
party, or to which any of the assets of the General Partner or the Partnership
is or was subject; and neither the General Partner nor any General Partner
Principal has received any notice of an investigation by the NFA, NASD, SEC, or
CFTC regarding non-compliance by any of the General Partner, the General Partner
Principals, or the Partnership with the 1933 Act, SEC Regulations, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), any other federal
securities laws, rules or regulations, the CEAct, the CFTC Rules, or the Rules
of the NASD or NFA, which action, suit, proceeding, or investigation resulted or
might reasonably be expected to result in any material adverse change in the
condition, financial or otherwise,
-4-
business or prospects of the General Partner or the Partnership, or which could
be material to an investor's decision to invest in the Partnership.
(n) The General Partner and each "principal" of the General
Partner, as defined in CFTC Rule 3.1(a), have all federal, state, and foreign
governmental, regulatory, self-regulatory, and exchange approvals, licenses, and
memberships, and have effected all filings and registrations with federal,
state, and foreign governmental regulators, self-regulatory organizations, and
exchanges required to conduct their business and to act as described in the
Registration Statement and Prospectus, or required to perform their obligations
under the Limited Partnership Agreement, the Customer Agreements, the Escrow
Agreement, the Management Agreement, and this Agreement, as applicable. The
General Partner is registered as a commodity pool operator under the CEAct and
is a member of the NFA as a commodity pool operator. The General Partner's
principals identified in the Prospectus are all of the General Partner
Principals.
2. REPRESENTATIONS AND WARRANTIES OF MS & CO. MS & Co. represents
and warrants to each of the other parties hereto, as follows:
(a) MS & Co. is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is in good
standing and qualified to do business as a foreign corporation in the State of
New York and in each other jurisdiction in which the nature or conduct of its
business requires such qualification and where the failure to be so qualified
could materially adversely affect MS & Co.'s ability to perform its obligations
hereunder or under the Customer Agreement. MS & Co. has full corporate power
and authority to perform its obligations under the Customer Agreement and this
Agreement and to conduct its business as described in the Registration Statement
and Prospectus.
(b) As to MS & Co. and the "principals" of MS & Co., as defined
in CFTC Rule 4.10(e) (the "Commodity Broker Principals"), (i) the Registration
Statement and Prospectus are accurate and complete in all material respects and
contain all statements and information required to be included therein under the
1933 Act, the SEC Regulations, the CEAct, the CFTC Rules, and the rules of the
NFA; (ii) as of its effective date, the Registration Statement did not contain
any 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 each
Closing, did not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which such statements were made, not misleading.
(c) MS & Co. and each "principal" of MS & Co., as defined in
CFTC Rule 3.1(a), have all federal, state, and foreign governmental, regulatory,
self-regulatory, and exchange approvals, licenses and memberships, and have
effected all filings and registrations with federal, state, and foreign
governmental regulators, self-regulatory organizations, and exchanges required
to conduct their business and to act as described in the Registration Statement
and Prospectus, or required to perform their obligations under the
-5-
Customer Agreement and this Agreement, as applicable. MS & Co. is registered as
a futures commission merchant under the CEAct and is a member of the NFA as a
futures commission merchant.
(d) The Customer Agreement and this Agreement have each been
duly and validly authorized, executed and delivered by MS & Co., and each
constitutes a valid and binding agreement of MS & Co., enforceable in accordance
with its terms.
(e) 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 MS & Co., whether or not arising in the ordinary course of
business.
(f) Except as set forth in the Prospectus, there has not been in
the five years preceding the date of the Prospectus and there is not pending,
or, to the best of MS & Co.'s knowledge, threatened, any action, suit, or
proceeding at law or in equity before or by any court, governmental body,
administrative agency, panel, or self-regulatory organization to which MS & Co.
or any of its Commodity Broker Principals is or was a party, or to which any of
the assets of MS & Co. is or was subject; and neither MS & Co. nor any of its
Commodity Broker Principals has received any notice of an investigation by the
NFA or the CFTC regarding noncompliance by MS & Co. or any of its Commodity
Broker Principals with the CEAct, the CFTC Rules or the rules of the NFA, which
action, suit, proceeding or investigation resulted in or might reasonably be
expected to result in any material adverse change in the condition, financial or
otherwise, business or prospects of MS & Co. or which could be material to an
investor's decision to invest in the Partnership.
(g) The execution and delivery of the Customer Agreement and
this Agreement, the incurrence of the obligations set forth in each of such
agreements, and the consummation of the transactions contemplated therein and in
the Prospectus, will not violate, or constitute a breach of, or default under,
the certificate of incorporation or bylaws of MS & Co. or any agreement or
instrument by which it is bound, or any law, order, rule, or regulation
applicable to MS & Co. of any court, governmental body, administrative agency,
panel, or self-regulatory organization having jurisdiction over MS & Co.
3. REPRESENTATIONS AND WARRANTIES OF MSIL. MSIL represents and
warrants to each of the other parties hereto, as follows:
(a) MSIL is a corporation duly organized, validly existing and
in good standing under the laws of the United Kingdom, and is in good standing
and qualified to do business in each other jurisdiction in which the nature or
conduct of its business requires such qualification and where the failure to be
so qualified could materially adversely affect MSIL's ability to perform its
obligations hereunder or under the Customer Agreement. MSIL has full corporate
power and authority to perform its obligations under the Customer Agreement and
this Agreement and to conduct its business as described in the Registration
Statement and Prospectus.
-6-
(b) As to MSIL and any of its Commodity Broker Principals,
(i) the Registration Statement and Prospectus are accurate and complete in all
material respects and contain all statements and information required to be
included therein under the 1933 Act, the SEC Regulations, the CEAct, the CFTC
Rules, and the rules of the NFA; (ii) as of its effective date, the Registration
Statement did not contain any 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 each Closing, did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which such
statements were made, not misleading.
(c) MSIL and each "principal" of MSIL, as defined in CFTC Rule
3.1(a), have all governmental, regulatory, self-regulatory, and exchange
approvals, licenses and memberships, and have effected all filings and
registrations with governmental regulators, self-regulatory organizations, and
exchanges required to conduct their business and to act as described in the
Registration Statement and Prospectus, or required to perform their obligations
under the Customer Agreement and this Agreement, as applicable. MSIL is a
member firm of the United Kingdom Securities and Futures Authority (the "SFA").
(d) The Customer Agreement and this Agreement have each been
duly and validly authorized, executed and delivered by MSIL, and each
constitutes a valid and binding agreement of MSIL, enforceable in accordance
with its terms.
(e) 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 MSIL, whether or not arising in the ordinary course of business.
(f) Except as set forth in the Prospectus, there has not been in
the five years preceding the date of the Prospectus and there is not pending,
or, to the best of MSIL's knowledge, threatened, any action, suit, or proceeding
at law or in equity before or by any court, governmental body, administrative
agency, panel, or self-regulatory organization to which MSIL or any of its
Commodity Broker Principals is or was a party, or to which any of the assets of
MSIL is or was subject; and neither MSIL nor any of its Commodity Broker
Principals has received any notice of an investigation by the SFA regarding
noncompliance by MSIL or any of its Commodity Broker Principals with the United
Kingdom Financial Services Act, as amended, or the rules of the SFA, which
action, suit, proceeding or investigation resulted in or might reasonably be
expected to result in any material adverse change in the condition, financial or
otherwise, business or prospects of MSIL or which could be material to an
investor's decision to invest in the Partnership.
(g) The execution and delivery of the Customer Agreement and
this Agreement, the incurrence of the obligations set forth in each of such
agreements, and the consummation of the transactions contemplated therein and in
the Prospectus, will not violate, or constitute a breach of, or default under,
the memorandum of association or articles of
-7-
association of MSIL or any agreement or instrument by which it is bound, or any
law, order, rule, or regulation applicable to MSIL of any court, governmental
body, administrative agency, panel, or self-regulatory organization having
jurisdiction over MSIL.
4. REPRESENTATIONS AND WARRANTIES OF THE TRADING ADVISOR. The
Trading Advisor represents and warrants to each of the other parties hereto, as
follows:
(a) The Trading Advisor is a corporation duly organized, validly
existing and in good standing as a corporation under the laws of the State of
Delaware, and is in good standing and qualified to do business as a foreign
corporation in the State of New York and in each other jurisdiction in which the
nature or conduct of its business requires such qualification and where the
failure to so qualify could materially adversely affect the Trading Advisor's
ability to perform its duties hereunder or under the Management Agreement. The
Trading Advisor has full corporate power and authority to perform its
obligations under each of such agreements, and to conduct its business as
described in the Registration Statement and Prospectus. The only "principals"
(as defined in CFTC Rule 4.10) of the Trading Advisor are those set forth in the
Prospectus (the "Trading Advisor Principals").
(b) All references to the Trading Advisor and each Trading
Advisor Principal, including the Trading Advisor's trading program and systems,
in the Registration Statement and the Prospectus, and in the Sales Literature
which has been approved in writing by the Trading Advisor, are accurate and
complete in all material respects. With respect to the material relating to the
Trading Advisor and each Trading Advisor Principal, including the Trading
Advisor's and the Trading Advisor Principals' trading program and systems, as
applicable, (i) the Registration Statement and Prospectus contain all statements
and information required to be included therein under the 1933 Act, the SEC
Regulations, the CEAct, the CFTC Rules and the rules of the NFA; (ii) as of its
effective date, the Registration Statement 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 each
Closing, did not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which such statements were made, not misleading.
(c) The Management Agreement and this Agreement have each been
duly and validly authorized, executed and delivered by the Trading Advisor, and
each constitutes a valid and binding agreement of the Trading Advisor,
enforceable in accordance with its terms.
(d) The Trading Advisor and each "principal" of the Trading
Advisor, as defined in CFTC Rule 3.1(a), have all federal, state, and foreign
governmental, regulatory, self-regulatory, and exchange approvals, licenses and
memberships, and have effected all filings and registrations with federal,
state, and foreign regulators, self regulatory organizations and exchanges
required to conduct their business and to act as described in the Registration
Statement and Prospectus, or required to perform their obligations under this
-8-
Agreement and the Management Agreement, as applicable. The Trading Advisor is
registered as a commodity trading advisor under the CEAct and is a member of the
NFA as a commodity trading advisor.
(e) The execution and delivery of the Management Agreement and
this Agreement, the incurrence of the obligations set forth in each of such
agreements, and the consummation of the transactions contemplated therein and in
the Prospectus, will not violate, or constitute a breach of, or default under,
the certificate of incorporation or bylaws of the Trading Advisor or any
agreement or instrument by which it is bound, or any law, order, rule, or
regulation of any court, governmental body, administrative agency, panel, or
self-regulatory organization having jurisdiction over the Trading Advisor.
(f) The Trading Advisor is not required to be registered as an
investment adviser under the Investment Advisers Act of 1940, as amended, in
respect to its activities described in the Registration Statement and the
Prospectus and its obligations under the Management Agreement.
(g) 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 Trading Advisor or any Trading Advisor Principal whether or not
arising in the ordinary course of business.
(h) Except as set forth in the Prospectus, there has not been in
the five years preceding the date of the Prospectus and there is not pending,
or, to the best of the Trading Advisor's knowledge, threatened, any action,
suit, or proceeding at law or in equity before or by any court, governmental
body, administrative agency, panel, or self-regulatory organization to which the
Trading Advisor or any Trading Advisor Principal is or was a party, or to which
any of the assets of the Trading Advisor is or was subject; and neither the
Trading Advisor nor any Trading Advisor Principal has received any notice of an
investigation by the NFA or the CFTC regarding noncompliance by the Trading
Advisor or any of the Trading Advisor Principals with the CEAct, the CFTC Rules
or the rules of the NFA, which resulted in or might reasonably be expected to
result in any material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor or which could be material to an
investor's decision to invest in the Partnership.
(i) Neither the Trading Advisor nor any Trading Advisor
Principal has received, or is entitled to receive, directly or indirectly, any
commission, finder's fee, similar fee, or rebate from any person in connection
with the organization or operation of the Partnership, other than as described
in the Prospectus.
5. COVENANTS OF THE PARTNERSHIP AND THE GENERAL PARTNER. The
Partnership and the General Partner covenant and agree as follows:
(a) The Partnership will use its best efforts to cause any
post-effective amendments to the Registration Statement to become effective as
promptly as possible. The Partnership will prepare and file with the SEC, NASD,
CFTC, and NFA,
-9-
promptly upon DWR's request, any amendments to the Registration Statement and
any amendments and supplements to the Prospectus which may be necessary or
advisable in connection with the offering and sale of Units and will use its
best efforts to cause the same to become effective as promptly as possible.
(b) As soon as the Partnership is advised or obtains knowledge
thereof, it will advise DWR, the Trading Advisor, and the Commodity Brokers of
any requests made by the SEC, NASD, CFTC, or NFA to amend the Registration
Statement, to amend or supplement the Prospectus, or for additional information
or of the issuance by the SEC of any stop order suspending the effectiveness of
the Registration Statement, of any order by the SEC, NASD, CFTC, or NFA
preventing or suspending the use of the Prospectus, or of the institution of
any proceedings for any such purpose, and will use its best efforts to prevent
the issuance of any such order and, if any such order is issued, to obtain the
lifting thereof as promptly as possible.
(c) If, at any time after the effective date of the Registration
Statement and any amendment thereto, any event occurs involving the Partnership,
the General Partner, or any General Partner Principal, or of which the
Partnership, the General Partner, or any General Partner Principal is aware, as
a result of which the Registration Statement or Prospectus, as then amended and
supplemented, would include any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein (and, with respect to the Prospectus, in light of
the circumstances under which they were made) not misleading, or if it becomes
necessary or desirable at any time to amend or supplement the Registration
Statement or Prospectus to comply with the 1933 Act, SEC Regulations, the CEAct,
the CFTC Rules, or the rules of the NFA, the Partnership will promptly notify
DWR, the Trading Advisor, and the Commodity Brokers thereof and will prepare and
file with the SEC, NASD, CFTC, and NFA an amendment or supplement that will
correct such statement or omission.
(d) The Partnership will furnish to each party hereto copies of
the Registration Statement, the Prospectus, and all amendments and supplements
thereto, in each case as soon as available and, in the case of DWR, in such
quantities (in the case of the Prospectus) as DWR may reasonably request for
delivery to it.
6. COVENANTS OF THE TRADING ADVISOR. The Trading Advisor covenants
and agrees as follows:
(a) The Trading Advisor agrees reasonably to cooperate by
providing information regarding itself in the preparation of any amendments or
supplements to the Registration Statement and the Prospectus.
(b) The Trading Advisor agrees to notify the General Partner
immediately upon discovery of any untrue statement of a material fact in the
Registration Statement or the Prospectus relating to the Trading Advisor or the
Trading Advisor Principals or an omission to state a material fact relating to
the Trading Advisor or the Trading Advisor Principals required to be stated
therein or necessary to make the statements therein (and, with
-10-
respect to the Prospectus, in light of the circumstances under which they were
made) not misleading, or of the occurrence of any event or change in
circumstances which would result in there being any material untrue or
misleading statement or a material omission in the Prospectus or Registration
Statement regarding the Trading Advisor or the Trading Advisor Principals, or
which would result in the Prospectus not including all material information
relating to the Trading Advisor and the Trading Advisor Principals required
pursuant to the CEAct, the CFTC Rules, or the rules of the NFA.
(c) The Trading Advisor will not use or distribute any
preliminary prospectus, Prospectus, amended or supplemented Prospectus or Sales
Literature nor engage in any selling activities whatsoever in connection with
the offering of the Units, except that the Trading Advisor shall, at the General
Partner's request, assist in the marketing of the Partnership to prospective
investors, including, without limitation, participating in "road show"
presentations, sales seminars, and other similar events. The amount of time the
Trading Advisor must devote to assisting in such marketing efforts will be
reduced if the Trading Advisor reasonably believes that assisting in such
marketing efforts would be disruptive to its trading activities.
7. COVENANTS OF THE COMMODITY BROKERS. Each Commodity Broker
covenants and agrees as follows:
(a) The Commodity Broker agrees reasonably to cooperate by
providing information regarding itself in the preparation of any amendments or
supplements to the Registration Statement and the Prospectus.
(b) The Commodity Broker agrees to notify the General Partner
immediately upon discovery of any untrue statement of a material fact in the
Registration Statement or the Prospectus relating to the Commodity Broker or its
Commodity Broker Principals or an omission to state a material fact relating to
the Commodity Broker or its Commodity Broker Principals required to be stated
therein or necessary to make the statements therein (and, with respect to the
Prospectus, in light of the circumstances under which they were made) not
misleading, or of the occurrence of any event or change in circumstances which
would result in there being any material untrue or misleading statement or a
material omission in the Prospectus or Registration Statement regarding the
Commodity Broker or its Commodity Broker Principals, or which would result in
the Prospectus not including all material information relating to the Commodity
Broker and its Commodity Broker Principals required pursuant to the CEAct, the
CFTC Rules, or the rules of the NFA.
8. APPOINTMENT OF THE SELLING AGENT.
(a) Subject to the terms and conditions set forth in this
Agreement, the Partnership hereby appoints DWR as its selling agent to offer and
sell Units on a best efforts basis, without any firm commitment on the part of
DWR to purchase any Units. DWR shall offer for sale up to 5,000,000 Units, and
such additional Units as the General Partner may, in its discretion, register
and offer for sale from time to time.
-11-
(b) The "Offering Period" will be the period commencing on the
date of the Prospectus and ending on January 12, 1998, unless all of the
registered Units have previously been subscribed for or the General Partner has
sooner terminated the Offering Period, or the General Partner extends the
Offering Period as described below. During the Offering Period, DWR will offer
Units for sale at a "First Closing," which currently is scheduled to be held
November 3, 1997, at a price equal to $10.00 per Unit. However, the General
Partner may at its discretion hold such First Closing at any time during the
Offering Period. Units which remain unsold following the First Closing may be
offered, in the sole discretion of the General Partner, for sale at a "Second
Closing," currently scheduled to be held on December 1, 1997, at a price per
Unit equal to 100% of the Net Asset Value per Unit as of the last day of the
month immediately preceding the Second Closing. Units which remain unsold
following the Second Closing may be offered, in the sole discretion of the
General Partner, for sale at a "Third Closing," currently scheduled to be held
on January 2, 1998, at a price per Unit equal to 100% of the Net Asset Value per
Unit as of the last day of the month immediately preceding the Third Closing.
The General Partner may, in its discretion, extend the Offering Period to
provide for additional closings for the sale of Units, but in no event will the
Offering Period be extended beyond March 31, 1998 (the First, Second and Third,
or any such additional closing, is herein called a "Closing"). The minimum
subscription for most subscribers shall be $5,000, EXCEPT that the minimum
subscription is (a) $2,000 in the case of an XXX; or (b) for subscribers who
purchase Units pursuant to an Exchange (as defined in the Prospectus), the
lesser of (i) $5,000 ($2,000 in the case of IRAs), (ii) the proceeds from the
redemption of five units (two units in the case of IRAs) from commodity pools
other than the Spectrum Series, (iii) the proceeds from the redemption of 500
units (200 units in the case of IRAs) from one, or any combination, of the
Spectrum Series of commodity pools, or (iv) the proceeds from the redemption of
all of a subscriber's units of limited partnership interest in any other
commodity pool for which the General Partner serves as general partner and
commodity pool operator. A subscriber whose subscription is accepted at a
Closing and who desires to make an additional investment in the Partnership may
subscribe for Units at a subsequent Closing with a minimum investment of $1,000.
The number of Units received by a subscriber will be rounded to the third
decimal place.
Notwithstanding any provision to the contrary herein, the
General Partner will have the sole discretion to accept or reject any
subscription for Units in whole or in part at any time prior to acceptance. The
General Partner will determine to accept or reject a subscription generally
within 10 days of the receipt of a complete and executed Subscription and
Exchange Agreement and Power of Attorney.
(c) No selling commissions will be charged the Partnership or
any subscriber with respect to the sale of Units during the Offering Period.
The Partnership understands, however, that DWR may provide to its employees,
solely from its own funds, an amount equal to that described in the following
paragraph.
(d) Except as provided below, employees of DWR will receive
gross sales credit equal to three percent (3%) of the Net Asset Value per Unit
as of the date of the
-12-
applicable Closing for each Unit sold by them and issued at the Closing (such
compensation, together with any other underwriting compensation, will not exceed
the 10% of the proceeds received in connection with the issuance of the Units).
Commencing with the thirteenth month following the Closing at which a Unit is
issued, and continuing until the Partnership terminates or such Unit is
redeemed, employees of DWR who are qualified under Section 8(e) of this
Agreement also will receive up to 1/4 of 1% of the Net Asset Value (up to a 3%
annual rate) of a Unit as of the first day of each month. No person will
receive the continuing compensation described above who is not DWR's employee at
the time of receipt of payment.
DWR will not pay to an employee the 3% gross sales credit
described above with respect to Units purchased by a subscriber pursuant to an
Exchange (as defined in the Prospectus). Such employee will receive the
continuing payments with respect to Units that are comparable to the payments
that were received by such employee with respect to the units of the other
commodity pool involved in the Exchange.
(e) Notwithstanding the foregoing, DWR will not pay any such
continuing compensation to any of its employees who is not legally qualified or
permitted to receive such continuing compensation. In that regard, each of DWR's
employees who receives any such continuing compensation must have become
registered as an associated person with the CFTC and with the NFA in such
capacity only after either having passed the National Commodity Futures
Examination (NASD Test Series #3), the Futures Managed Funds Examination (NASD
Test Series #31), or having been "grandfathered" under the CEAct and the Bylaws
and rules of the NFA. Also, such compensation may be paid by DWR to its
employees only in respect of outstanding Units sold by such persons and only so
long as the additional services described in Section 8(g) of this Agreement are
provided by such persons to Limited Partners; PROVIDED, HOWEVER, that DWR may
not pay any portion of such compensation to any individual no longer employed by
it, and PROVIDED, FURTHER, that such compensation may be paid to its employees
who, although not responsible for the sale of an outstanding Unit, provide the
services described below in place of the individual who was responsible for such
sale.
(f) With the written approval of the General Partner, DWR may
appoint as its agent to make offers and sales of Units, one or more additional
selling agents (each, an "Additional Seller" and collectively, the "Additional
Sellers"), PROVIDED that each Additional Seller shall execute an Additional
Seller Agreement substantially in the form attached hereto as Exhibit A. DWR
may compensate any Additional Seller by paying such Additional Seller a
commission, not to exceed three percent (3%) of the Net Asset Value per Unit as
of the date of the applicable Closing, for each Unit sold by such Additional
Seller and issued at such Closing. In addition, commencing with the thirteenth
month after the Closing at which a Unit is issued and continuing until the
Partnership terminates or the Unit is redeemed, DWR may pay any Additional
Seller continuing compensation of up to 1/4 of 1% (up to 3% annually) of the Net
Asset Value as of the first day of each month of outstanding Units sold by such
Additional Seller, in recognition of such Additional Seller's continuing
services to Limited Partners of the Partnership, as set forth in Section 8(g) of
this Agreement; PROVIDED, HOWEVER, that: (A) no continuing compensation shall
be paid to an Additional Seller unless it
-13-
is properly registered with the CFTC as a "futures commission merchant" or
"introducing broker," and is a member of the NFA in one of such capacities, and
(B) no Additional Seller which is registered as a futures commission merchant or
introducing broker may pay any portion of such continuing compensation to an
employee thereof unless such employee meets the same qualifications as DWR's
employees, as set forth in Section 8(e) of this Agreement.
(g) The additional services that DWR's employees will provide on
an ongoing basis to Limited Partners at no charge will include, but not be
limited to: (i) inquiring of the General Partner from time to time, at the
request of Limited Partners, as to the Net Asset Value of a Unit; (ii) inquiring
of the General Partner from time to time, at the request of Limited Partners, as
to the futures markets and the activities of the Partnership; (iii) responding
to questions of Limited Partners from time to time with respect to monthly
account statements, annual reports, financial statements, and annual tax
information furnished periodically to Limited Partners; (iv) providing advice to
Limited Partners from time to time as to when and whether to redeem Units; (v)
assisting Limited Partners from time to time in the redemption of Units; and
(vi) providing such other services as Limited Partners from time to time may
reasonably request.
(h) The Partnership and DWR acknowledge that DWR will be paid
any and all redemption charges imposed on Limited Partners in accordance with
Section 10(b) of the Limited Partnership Agreement.
9. UNDERTAKINGS OF DWR.
(a) DWR agrees to use its best efforts to offer and sell Units
on the terms set forth in this Agreement, the Registration Statement, and the
Prospectus. It is understood that DWR has no commitment to offer and sell Units
or to purchase Units other than to use its best efforts to offer and sell Units.
(b) DWR will make the public offering of Units at the offering
price and on the other terms and conditions set forth in the Registration
Statement, the Prospectus, and this Agreement. DWR will offer and sell Units
only to persons who satisfy the suitability and/or minimum investment
requirements set forth in the Prospectus and the Subscription and Exchange
Agreement and Power of Attorney and who, to the General Partner's satisfaction,
complete a Subscription and Exchange Agreement and Power of Attorney. DWR will
conduct a thorough review of the suitability of each subscriber for Units, of
each Subscription and Exchange Agreement and Power of Attorney (i) authorizing
the General Partner and DWR to transfer the full subscription price from the
subscriber's customer account with DWR to the Xxxxxx Xxxxxxx Tangible Asset Fund
L.P. Escrow Account, and (ii) requesting the redemption of units of limited
partnership interest in another partnership of which the General Partner is the
general partner and commodity pool operator and authorizing the purchase of
Units with the proceeds of such redemption.
All of DWR's branch offices will be required to forward
subscriptions to DWR's New York, New York branch office no later than noon of
the first business day following their receipt of an acceptable Subscription and
Exchange Agreement
-14-
and Power of Attorney from a subscriber for Units. Subsequent to its review of
each Subscription and Exchange Agreement and Power of Attorney, the General
Partner will notify DWR, and DWR shall notify each subscriber by the business
day following its receipt of notice from the General Partner, of the General
Partner's acceptance of all, a portion, or none of the subscriber's
subscription.
All funds from subscriptions received by DWR during the
Offering Period and not rejected by the General Partner will be promptly
deposited by DWR in the Partnership's escrow account which will have been
established with the Escrow Agent as of the dates set forth below. The escrow
arrangements are described in the Prospectus and in the Escrow Agreement to
which DWR is a party along with the Escrow Agent and the Partnership. A
subscriber whose Subscription and Exchange Agreement and Power of Attorney is
received by DWR and not immediately rejected must have the full subscription
amount in his customer account with DWR on the first business day following the
date that his Subscription and Exchange Agreement and Power of Attorney is
received by DWR, and DWR will transfer such subscription funds to the Escrow
Agent on that date. DWR will notify the General Partner of the subscription
amount deposited with the Escrow Agent on behalf of each subscriber for Units
and the name and residence address of each such subscriber.
DWR will offer and sell Units in compliance with the
requirements set forth in the Registration Statement, the Prospectus
(particularly under the captions "Summary of the Prospectus -- Investment
Requirements," "Plan of Distribution," "Subscription Procedure," and "Purchases
by Employee Benefit Plans -- ERISA Considerations"), the Subscription and
Exchange Agreement and Power of Attorney, and this Agreement. In connection
with DWR's acting as selling agent, DWR will comply fully at all times with all
applicable federal, state, and foreign securities and commodities laws
(including, without limitation, the 1933 Act, the 1934 Act, the CEAct and the
securities ("Blue Sky") laws of the jurisdictions in which DWR solicits
subscriptions), and all requirements of the NASD (particularly Conduct Rule
2810), the Board of Governors of the Federal Reserve System, and the securities
and commodities exchanges and other governmental and self-regulatory authorities
and organizations having jurisdiction over DWR. Specifically, (i) DWR will not
permit the purchase of any Units by a customer account over which DWR has
discretionary authority without the prior written approval by the customer
owning such account; (ii) DWR confirms that it has reasonable grounds to believe
that all material facts are adequately and accurately disclosed in the
Prospectus, which provides a basis for evaluating an investment in the
Partnership; (iii) DWR confirms that in determining the adequacy of disclosed
facts pursuant to clause (ii), it has obtained information on material facts
relating to: (A) items of compensation, (B) tax aspects, (C) financial stability
and experience of the General Partner, and (D) the Partnership's conflicts and
risk factors; (iv) in recommending to a subscriber the purchase or sale of
Units, DWR shall take such measures as are reasonably necessary to assure itself
that its Account Executives have informed such subscriber of all pertinent facts
relating to the liquidity and marketability of the Units and that its account
executives ("Account Executives") have reasonable grounds to believe, on the
basis of information obtained from such subscriber concerning his investment
objectives, other investments, financial situation and needs, and any other
information known by such Account
-15-
Executive, that: (A) such subscriber is or will be in a financial position
appropriate to enable him to realize to a significant extent the benefits
described in the Prospectus, (B) such subscriber has a fair market net worth
sufficient to sustain the risks inherent in the purchase of Units, including
loss of investment and lack of liquidity, and (C) the purchase of Units is
otherwise suitable for such subscriber; (v) DWR shall take such measures as are
reasonably necessary to assure itself that each subscriber has received a
Prospectus at least five business days prior to the applicable Closing; and (vi)
the General Partner will maintain in its files, located c/o Xxxx Xxxxxx Xxxxxxxx
Inc., Xxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, each subscriber's
Subscription and Exchange Agreement and Power of Attorney for not less than six
years, and DWR will maintain, at its respective branch offices, any other
documents disclosing the basis upon which the determination of suitability was
reached for each such subscriber.
(c) If for any reason the General Partner determines not to hold
the First Closing, the offering of Units will terminate and each subscription
received during the Offering Period will be promptly returned to DWR for deposit
in the subscriber's customer account with DWR within five business days of the
termination of the Offering Period, together with any interest earned on such
subscriber's funds while held in escrow in accordance with the Escrow Agreement,
and DWR will promptly notify each subscriber that such subscription has been
returned to such subscriber's customer account with DWR and that such funds are
under such subscriber's control.
All subscriptions received and accepted by the General
Partner will, upon the satisfaction at each Closing of the conditions set forth
in Sections 12 and 13 hereof, be delivered to the Partnership at each Closing,
and any interest earned on a subscriber's subscription funds while held in
escrow will be promptly returned to DWR in accordance with the Escrow Agreement
for prompt deposit in the subscriber's customer account with DWR. Interest
earned on any subscriptions deposited into the Escrow Account and thereafter
rejected by the General Partner will be credited to the subscriber's customer
account with DWR.
10. BLUE SKY FILINGS. The Partnership will use its best efforts to
qualify Units for offer and sale under the Blue Sky laws of such jurisdictions
as DWR may reasonably request, to make applications, file documents, and furnish
information as may be reasonably required for that purpose, and to comply with
such laws so as to permit the continuance of sales and dealings in such
jurisdictions for as long as may be necessary to complete the offer and sale of
Units; PROVIDED, HOWEVER, that neither the Partnership nor the General Partner
will be required to qualify as or be subject to taxation as a foreign
partnership or corporation or to execute a general consent to service of process
in any jurisdiction. The Partnership further agrees that its counsel will
prepare and deliver to DWR Blue Sky surveys which will set forth, for DWR's
guidance, in what manner, at what time, in what amounts, and by whom Units may
be offered and sold in jurisdictions requested by DWR as provided above.
11. OFFERING EXPENSES. DWR shall pay all of the expenses of the
offering of Units (collectively, the "Offering Expenses"), including, but not
limited to, all legal
-16-
accounting, and auditing fees and expenses of outside firms and all costs,
disbursements, filing fees, printing and duplication costs, the Escrow Agent's
fees, marketing costs and expenses, and other related costs and expenses.
Legal, accounting, and auditing fees and expenses of outside firms shall include
the legal and accounting expenses relating to the offering of Units of DWR, the
Partnership and the General Partner. Marketing costs and expenses shall
include, but not be limited to, the printing and preparation of Sales
Literature, the production of any sales video, and the staging of sales seminars
and the travel of DWR and General Partner personnel associated therewith. DWR
shall not be reimbursed for such expenses by the Partnership. Such expenses
will not include the travel, legal and other expenses of the Trading Advisor,
including such expenses incurred in connection with the marketing of Units,
which expenses shall be borne by the Trading Advisor.
12. CLOSINGS.
(a) The First Closing, if any, for the acceptance of
subscriptions for Units received during the Offering Period is currently
scheduled to be held on November 3, 1997. The Second Closing, if any, for the
acceptance of subscriptions for Units is currently scheduled to be held on
December 1, 1997. The Third Closing, if any, for the acceptance of
subscriptions for Units is currently scheduled to be held on January 2, 1998.
Each Closing will be held at such time, and at such location or locations as the
General Partner and DWR may mutually agree upon.
(b) Subject to its right to reject any subscription in its sole
discretion in whole or in part at any time prior to acceptance, the General
Partner, on behalf of the Partnership, will accept subscriptions for Units
properly made and cause proper entry to be made in the Unit register to be
maintained by the General Partner. DWR will cause a receipt to be made on behalf
of subscribers for Units accepted by the General Partner at each Closing and
shall send such subscribers a confirmation of purchase in its customary form.
(c) At each Closing, the delivery, receipt, and acceptance of
subscriptions for Units will be subject to the terms and conditions set forth in
this Agreement, including the following: (i) payment of the full subscription
price for Units and delivery of a properly completed Subscription and Exchange
Agreement and Power of Attorney by each subscriber, and (ii) compliance with
Section 13 hereof. Upon the satisfaction of such terms and conditions, the
aggregate subscription price for Units (exclusive of any interest earned on such
subscriptions while held in escrow and payable to the subscribers in accordance
with the Escrow Agreement) will be paid and delivered to the Partnership at each
Closing.
13. CONDITIONS OF DWR'S OBLIGATIONS.
(a) DWR's obligations to proceed with the offering and sale of
Units and each Closing will be subject to: (i) the accuracy of the
representations and warranties by the Partnership, the General Partner, the
Trading Advisor, and the Commodity Brokers in this Agreement as of the date
hereof and as of the date of such Closing as if such representations and
warranties had been made on and as of the date thereof; (ii) the performance by
the Partnership, the General Partner, the Trading Advisor, and the Commodity
Brokers of the
-17-
covenants and agreements herein; and (iii) to the additional conditions
precedent set forth below.
(b) At the First Closing, and at each subsequent closing with
respect to clauses (i), (ii), (iii), (iv), and (v) below (and update letters
from all legal counsel), the additional conditions precedent are as follows:
(i) The Registration Statement will have become effective. No
stop order suspending the effectiveness of the Registration Statement will
have been issued and no proceedings for that purpose will have been
instituted or are pending or, to the knowledge of the Partnership or DWR,
are contemplated or threatened by the SEC. No order preventing or
suspending the use of the Prospectus will have been issued and no
proceedings for that purpose will have been instituted or are pending or,
to the knowledge of the Partnership or DWR, are contemplated or threatened
by the SEC, NASD, CFTC, or NFA. Any requests of the SEC, NASD, CFTC, and
NFA for additional information (to be included in the Registration
Statement or Prospectus or otherwise) will have been complied with to DWR's
satisfaction.
(ii) Neither DWR, the Trading Advisor, MS & Co. nor MSIL will have
advised the Partnership or the General Partner that, in its opinion, the
Registration Statement or the Prospectus contains any untrue statement of a
material fact or any omission to state a material fact required to be
stated therein or necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which they were made)
not misleading.
(iii) The Trading Advisor, with respect to itself, will have
furnished to DWR, the General Partner and the Partnership a certificate,
dated the date of the Closing and in form and substance satisfactory to
such parties, to the effect that:
(A) The representations and warranties by the Trading Advisor in
this Agreement are true, accurate, and complete on and as of the date
of the Closing as if made on the date of the Closing.
(B) The Trading Advisor has performed all of its obligations and
satisfied all of the conditions on its part to be performed or
satisfied under the Management Agreement and this Agreement, as
applicable, at or prior to the date of the Closing.
(iv) Each Commodity Broker, with respect to itself, will have
furnished to each of the other parties hereto a certificate, dated the date
of the Closing and in form and substance satisfactory to such parties, to
the effect that:
-18-
(A) The representations and warranties by the Commodity Broker
in this Agreement are true, accurate, and complete on and as of the
date of the Closing as if made on the date of the Closing.
(B) The Commodity Broker has performed all of its obligations
and satisfied all of the conditions on its part to be performed or
satisfied under the Customer Agreement and this Agreement, as
applicable, at or prior to the date of the Closing.
(v) The General Partner will have furnished to each of the other
parties hereto a certificate, dated the date of the Closing and in form and
substance satisfactory to such parties, to the effect that:
(A) The representations and warranties by the Partnership and
the General Partner in this Agreement are true, accurate, and complete
on and as of the date of the Closing as if made on the date of the
Closing.
(B) No stop order suspending the effectiveness of the
Registration Statement has been issued by the SEC and no proceedings
for that purpose have been instituted or are pending or, to the
knowledge of the General Partner, are contemplated or threatened under
the 1933 Act. No order preventing or suspending the use of the
Prospectus has been issued by the SEC, NASD, CFTC, or NFA and no
proceedings for that purpose have been instituted or are pending or,
to the knowledge of the General Partner, are contemplated or
threatened under the 1933 Act or the CEAct.
(C) The Partnership and the General Partner have performed all
of their obligations and satisfied all of the conditions on their part
to be performed or satisfied under this Agreement, the Management
Agreement, the Escrow Agreement, and the Customer Agreements at or
prior to the date of the Closing.
(D) The General Partner has made the capital contribution to the
Partnership and has met the net worth standard, both as required of it
by the Limited Partnership Agreement.
(vi) Cadwalader, Xxxxxxxxxx & Xxxx, counsel to the General Partner and
the Partnership, shall deliver its opinion to each of the parties hereto at the
First Closing (with an update letter at each subsequent Closing), in form and
substance satisfactory to such parties, to the effect that:
-19-
(A) The Limited Partnership Agreement provides for the
subscription for and sale of the Units; all action required to be
taken by the General Partner and the Partnership 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 and Exchange
Agreements and Powers of Attorney, the Units will constitute valid
limited partnership interests in the Partnership and each subscriber
who purchases Units will become a Limited Partner, subject to the
requirement that such purchaser shall have duly completed, executed
and delivered to the Partnership a Subscription and Exchange Agreement
and Power of Attorney relating to the Units purchased by such
purchaser, that such purchaser meets all applicable suitability
standards, and that the representations and warranties of such
purchaser in the Subscription and Exchange Agreement and Power of
Attorney are true and correct and that such purchaser is included as a
Limited Partner in the Partnership's records.
(B) The Partnership is a limited partnership duly formed
pursuant to the Certificate of Limited Partnership, the Limited
Partnership Agreement and the DRULPA, and is validly existing under
the laws of the State of Delaware with full partnership power and
authority to conduct the business in which it proposes to engage as
described in the Registration Statement and Prospectus, and to perform
its obligations under the Management Agreement, the Escrow Agreement,
the Customer Agreements and this Agreement; the Partnership has
received a Certificate of Authority as contemplated under Section
121-902 of the New York Revised Limited Partnership Act and is
qualified to do business in New York and need not affect any other
filings or qualifications under the laws of any other jurisdictions to
conduct its business as described in the Registration Statement and
Prospectus.
(C) The General Partner is duly organized, validly existing and
in good standing as a corporation under the laws of the State of
Delaware with full corporate power and authority to act as general
partner of the Partnership, and is qualified to do business and is in
good standing as a foreign corporation in the State of New York and in
each other jurisdiction in which the nature or conduct of its business
requires such qualification and where the failure to so qualify might
reasonably be expected to result in material adverse consequences to
the Partnership or the General Partner's ability to perform its
obligations as described
-20-
in the Registration Statement and Prospectus. The General Partner has
full corporate power and authority to conduct its business as
described in the Registration Statement and Prospectus and to perform
its obligations under the Limited Partnership Agreement, the
Management Agreement, and this Agreement.
(D) The General Partner and each of its "principals," as defined
in CFTC Rule 3.1(a), and the Partnership have all federal and state
governmental, regulatory and self-regulatory licenses, registrations
and memberships required by law and have made all filings with federal
and state regulators and self-regulatory organizations necessary in
order for the General Partner and the Partnership to perform their
obligations under the Limited Partnership Agreement, the Escrow
Agreement, the Customer Agreements, the Management Agreement and this
Agreement, as applicable, and to conduct their business as described
in the Registration Statement and Prospectus, except for such
licenses, registrations, memberships, and filings, the absence of
which would not have a material adverse effect on their ability to act
as described in the Registration Statement and Prospectus, or to
perform their obligations under such agreements, and, to the best of
such counsel's knowledge, after due investigation, none of such
licenses, registrations, or memberships have been rescinded, revoked
or suspended.
(E) Each of the Limited Partnership Agreement, the Escrow
Agreement, the Customer Agreements, the Management Agreement and this
Agreement has been duly authorized, executed and delivered by or on
behalf of the General Partner and/or the Partnership, as the case may
be, and each of the Limited Partnership Agreement, the Management
Agreement, and this Agreement constitutes a valid and binding
agreement of the General Partner and the Partnership, and the Escrow
Agreement constitutes a valid and binding agreement of the
Partnership, and, in the case of each valid and binding agreement
above, the agreement is enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws at the time in effect affecting the enforceability
generally of rights of creditors and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law), and except as enforceability of any
indemnification, exculpation and contribution provisions contained in
such agreements may be limited by applicable law or public policy.
-21-
(F) The execution and delivery of this Agreement, the Limited
Partnership Agreement, the Customer Agreements, the Escrow Agreement,
and the Management Agreement, as applicable, and the offer and sale of
the Units by the Partnership 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 the General Partner's certificate of incorporation or
bylaws, the Certificate of Limited Partnership, or the Limited
Partnership Agreement and, to the best of such counsel's knowledge
based upon due inquiry of certain officers of the General Partner,
will not constitute a breach of, or default under, or a violation of
any agreement or instrument known to such counsel by which the General
Partner or the Partnership is bound, and will not violate any law,
order, rule, or regulation applicable to the General Partner or the
Partnership of any court, governmental body, administrative agency,
panel, or self-regulatory organization having jurisdiction over the
General Partner or the Partnership.
(G) To the best of such counsel's knowledge, based upon due
inquiry of certain officers of the General Partner, except as
disclosed in the Prospectus, there are no actions, suits, or
proceedings pending or threatened in any court or before or by any
governmental body, administrative agency, panel, or self-regulatory
organization, nor have there been any such actions, suits, or
proceedings within the five years preceding the date of the
Prospectus, to which the General Partner, any General Partner
Principal, or the Partnership is or was a party, or to which any of
their assets is or was subject, which would be material to an
investor's decision to invest in the Partnership or which might
reasonably be expected to materially adversely affect the condition,
financial or otherwise, or business of the General Partner, or the
Partnership, whether or not arising in the ordinary course of
business, or impair their ability to discharge their obligations as
described in the Prospectus.
(H) No authorization, approval, or consent of any governmental
authority or agency (with respect to the Partnership and General
Partner) is necessary in connection with the subscription for and sale
of the Units in the United States, except such as may be required
under the 1933 Act, the SEC Regulations, the CEAct, the CFTC Rules,
the NFA and NASD rules, and Blue Sky laws.
-22-
(I) The information in the Prospectus under the captions "Risk
Factors - Taxation and Regulatory Risks," "Purchases by Employee
Benefit Plans -- ERISA Considerations," "Material Federal Income Tax
Considerations," "State and Local Income Tax Aspects," and "The
Limited Partnership Agreement," to the extent that such information
constitutes matters of law or legal conclusions, has been reviewed by
such counsel and is correct.
(J) The Registration Statement is effective under the 1933 Act
and, to the best of such counsel's knowledge, no proceedings for a
stop order are pending or threatened under Section 8(d) of the 1933
Act or any Blue Sky laws.
(K) At the time the Registration Statement became effective, the
Registration Statement, and at the time the Prospectus was issued and
as of the Closing, the Prospectus, complied as to form in all material
respects with the requirements of the 1933 Act, the SEC Regulations,
the CEAct, the CFTC Rules, and the rules of the NFA and NASD. Nothing
has come to such counsel's attention that would lead them to believe
that the Registration Statement at the time it became effective
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 that the Prospectus at the time
it was issued or at the Closing contained an untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that Cadwalader,
Xxxxxxxxxx & Xxxx need express no opinion or belief (a) as to
information in the Registration Statement or the Prospectus regarding
the Trading Advisor, the Commodity Brokers, or their respective
principals, or (b) as to the financial statements, notes thereto and
other financial or statistical data set forth in the Registration
Statement and Prospectus.
(L) Based upon reliance on certain SEC No-Action letters, as of
the Closing, the Partnership need not register as an "investment
company" under the Investment Company Act of 1940, as amended.
In rendering its opinion, such counsel may rely on information
obtained from public officials, officers of the General Partner and other
sources believed by it to be responsible and may assume that signatures on all
documents examined by it are genuine, and
-23-
that a Subscription and Exchange Agreement and Power of Attorney, in the form
included in the Prospectus, has been duly authorized, completed, dated,
executed, and delivered, and good funds representing the full subscription price
for the Units purchased have been delivered by each purchaser of Units in
accordance with the requirements set forth in the Prospectus.
(vii) Counsel to MS & Co. shall deliver an opinion to each of the
parties hereto at the First Closing (with an update letter at each
subsequent Closing), in form and substance satisfactory to such parties, to
the effect that:
(A) MS & Co. is duly organized, validly existing and in good
standing as a corporation under the laws of the State of Delaware, and
is qualified to do business and in good standing as a foreign
corporation in the State of New York and in each other jurisdiction in
which the nature or conduct of its business requires such
qualification and where the failure to be so qualified would
materially adversely affect MS & Co.'s ability to perform its
obligations under the Customer Agreement and this Agreement. MS & Co.
has full corporate power and authority to conduct its business as
commodity broker as described in the Registration Statement and
Prospectus, and to perform its obligations under the Customer
Agreement and this Agreement.
(B) Each of the Customer Agreement and this Agreement has been
duly and validly authorized, executed, and delivered by MS & Co., and
constitutes a valid and binding agreement of MS & Co. enforceable in
accordance with its terms, subject only to bankruptcy, insolvency,
reorganization, moratorium, or similar laws at the time in effect
affecting the enforceability generally of rights of creditors and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and
except as enforceability of any indemnification, exculpation, and
contribution provisions contained in such agreements may be limited by
applicable law or public policy.
(C) MS & Co. has all federal and state governmental, regulatory,
and self-regulatory approvals, licenses, registrations, and
memberships required by law, and has effected all filings with federal
and state governmental regulators and self-regulatory organizations
required to conduct its business as commodity broker as described in
the Registration Statement and the Prospectus, and to perform its
obligations under the Customer Agreement and this Agreement, except
for such approvals, licenses, registrations, memberships, and filings,
the absence of which would not have a material adverse effect on its
ability to
-24-
act as described in the Registration Statement and Prospectus or to
perform its obligations under such agreements (except that counsel
need not opine as to exchange or clearinghouse membership) and, to the
best of such counsel's knowledge, after due investigation, none of
such approvals, licenses, registrations, or memberships, has been
rescinded, revoked, or suspended.
(D) The execution and delivery of this Agreement and the
Customer Agreement, the incurrence of the obligations herein and
therein set forth, and the consummation of the transactions
contemplated herein, therein, and in the Prospectus, will not be in
contravention of any of the provisions of the certificate of
incorporation or bylaws of MS & Co., and to the best of such counsel's
knowledge, based upon due inquiry of certain officers of MS & Co.,
will not constitute a breach of, or default under, or a violation of,
any agreement or instrument known to such counsel by which MS & Co. is
bound, and will not violate any law, order, rule, or regulation
applicable to MS & Co., of any court, governmental body,
administrative agency, panel, or self-regulatory organization having
jurisdiction over MS & Co.
(E) To the best of such counsel's knowledge, based upon due
inquiry of certain officers of MS & Co., except as disclosed in the
Prospectus, there are no actions, suits, or proceedings pending or
threatened in any court or before or by any governmental body,
administrative agency, panel, or self-regulatory organization, nor
have there been any such actions, suits, or proceedings within the
five years preceding the date of the Prospectus, to which MS & Co. or
any of its Commodity Broker Principals is or was a party, or to which
any of its assets is or was subject, which would be material to an
investor's decision to invest in the Partnership or which might
reasonably be expected to materially adversely affect the condition,
financial or otherwise, or the business of MS & Co., whether or not
arising in the ordinary course of business, or impair its ability to
discharge its obligations as described in the Prospectus.
(F) Nothing has come to such counsel's attention to lead such
counsel to believe that, solely as to MS & Co. and its Commodity
Broker Principals, (a) the Registration Statement at the time it
became effective 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 at the time it was issued or at the Closing contained an
untrue statement of a material fact or
-25-
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.
In rendering its opinion, such counsel may rely on information
obtained from public officials, officers of MS & Co., and other sources believed
by it to be responsible, and may assume that signatures on all documents
examined by it are genuine.
(viii) Counsel to MSIL shall deliver an opinion to each of the
parties hereto at the First Closing (with an update letter at each
subsequent Closing), in form and substance satisfactory to such parties, to
the effect that:
(A) MSIL is duly organized, validly existing and in good
standing as a corporation under the laws of the United Kingdom, and is
qualified to do business and in good standing in each other
jurisdiction in which the nature or conduct of its business requires
such qualification and where the failure to be so qualified would
materially adversely affect MSIL's ability to perform its obligations
under the Customer Agreement and this Agreement. MSIL has full
corporate power and authority to conduct its business as commodity
broker as described in the Registration Statement and Prospectus, and
to perform its obligations under the Customer Agreement and this
Agreement.
(B) Each of the Customer Agreement and this Agreement has been
duly and validly authorized, executed, and delivered by MSIL and
constitutes a valid and binding agreement of MSIL enforceable in
accordance with its terms, subject only to bankruptcy, insolvency,
reorganization, moratorium, or similar laws at the time in effect
affecting the enforceability generally of rights of creditors and by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and
except as enforceability of any indemnification, exculpation, and
contribution provisions contained in such agreements may be limited by
applicable law or public policy.
(C) MSIL has all governmental, regulatory, and self-regulatory
approvals, licenses, registrations, and memberships required by law,
and has effected all filings with governmental regulators and
self-regulatory organizations required to conduct its business as
commodity broker as described in the Registration Statement and the
Prospectus, and to perform its obligations under the Customer
Agreement and this Agreement, except for such approvals, licenses,
registrations, memberships, and filings,
-26-
the absence of which would not have a material adverse effect on its
ability to act as described in the Registration Statement and
Prospectus or to perform its obligations under such agreements (except
that counsel need not opine as to exchange or clearinghouse
membership) and, to the best of such counsel's knowledge, after due
investigation, none of such approvals, licenses, registrations, or
memberships, has been rescinded, revoked, or suspended.
(D) The execution and delivery of this Agreement and the
Customer Agreement, the incurrence of the obligations herein and
therein set forth, and the consummation of the transactions
contemplated herein, therein, and in the Prospectus, will not be in
contravention of any of the provisions of the memorandum of
association or articles of association of MSIL, and to the best of
such counsel's knowledge, based upon due inquiry of certain officers
of MSIL, will not constitute a breach of, or default under, or a
violation of, any agreement or instrument known to such counsel by
which MSIL is bound, and will not violate any law, order, rule, or
regulation applicable to MSIL, of any court, governmental body,
administrative agency, panel, or self-regulatory organization having
jurisdiction over MSIL.
(E) To the best of such counsel's knowledge, based upon due
inquiry of certain officers of MSIL, except as disclosed in the
Prospectus, there are no actions, suits, or proceedings pending or
threatened in any court or before or by any governmental body,
administrative agency, panel, or self-regulatory organization, nor
have there been any such actions, suits, or proceedings within the
five years preceding the date of the Prospectus, to which MSIL or any
of its Commodity Broker Principals is or was a party, or to which any
of its assets is or was subject, which would be material to an
investor's decision to invest in the Partnership or which might
reasonably be expected to materially adversely affect the condition,
financial or otherwise, or the business of MSIL, whether or not
arising in the ordinary course of business, or impair its ability to
discharge its obligations as described in the Prospectus.
(F) Nothing has come to such counsel's attention to lead such
counsel to believe that, solely as to MSIL and its Commodity Broker
Principals, (a) the Registration Statement at the time it became
effective 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
-27-
misleading, or (b) the Prospectus at the time it was issued or at the
Closing 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.
In rendering its opinion, such counsel may rely on information
obtained from public officials, officers of MSIL, and other sources believed by
it to be responsible, and may assume that signatures on all documents examined
by it are genuine.
(ix) Counsel to the Trading Advisor shall deliver an opinion to each
of the parties hereto at the First Closing (with an update letter at each
subsequent Closing), in form and substance satisfactory to such parties, to
the effect that:
(A) The Trading Advisor is duly organized, validly existing and
in good standing as a corporation under the laws of the State of
Delaware, and is qualified to do business and in good standing as a
foreign corporation in the State of New York and each other
jurisdiction in which the nature or conduct of its business requires
such qualification and where the failure to be so qualified would
materially adversely affect the Trading Advisor's ability to perform
its obligations under the Management Agreement and this Agreement.
The Trading Advisor has full corporate power and authority to conduct
its business as trading advisor as described in the Registration
Statement and Prospectus, and to perform its obligations under the
Management Agreement and this Agreement.
(B) The Trading Advisor and the Trading Advisor Principals have
all federal and state governmental, regulatory, and self-regulatory
approvals, licenses, registrations, and memberships required by law,
and have effected all filings with federal and state governmental
regulators and self-regulatory organizations required to conduct its
business as trading advisor as described in the Registration Statement
and the Prospectus, and to perform its obligations under this
Agreement and the Management Agreement, except for such approvals,
licenses, registrations, memberships, and filings the absence of which
would not have a material adverse effect on its ability to act as
described in the Registration Statement and Prospectus or to perform
its obligations under such agreements, and, to the best of such
counsel's knowledge, after due investigation, none of such approvals,
licenses, registrations, or memberships has been rescinded, revoked or
suspended.
-28-
(C) Each of the Management Agreement and this Agreement has been
duly and validly authorized, executed, and delivered by or the Trading
Advisor and constitutes a valid and binding agreement of the Trading
Advisor enforceable in accordance with its terms, subject only to
bankruptcy, insolvency, reorganization, moratorium, or similar laws at
the time in effect affecting the enforceability generally of rights of
creditors and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law), and except as enforceability of any indemnification,
exculpation, and contribution provisions contained in such agreements
may be limited by applicable law or public policy.
(D) To the best of such counsel's knowledge, based upon due
inquiry of certain officers of the Trading Advisor, except as
disclosed in the Prospectus, there are no actions, suits, or
proceedings pending or threatened in any court or before or by any
governmental body, administrative agency, panel, or self-regulatory
organization, nor have there been any such actions, suits, or
proceedings within the five years preceding the date of the
Prospectus, to which the Trading Advisor or any Trading Advisor
Principal is or was a party, or to which any of its assets is or was
subject, which would be material to an investor's decision to invest
in the Partnership or which might reasonably be expected to materially
adversely affect the condition, financial or otherwise, or the
business of the Trading Advisor, whether or not arising in the
ordinary course of business, or impair its ability to discharge its
obligations as described in the Prospectus.
(E) The execution and delivery of this Agreement and the
Management Agreement, the incurrence of the obligations herein and
therein set forth, and the consummation of the transactions
contemplated herein, therein, and in the Prospectus, will not be in
contravention of any of the provisions of the certificate of
incorporation or bylaws of the Trading Advisor, and, to the best of
such counsel's knowledge, based upon due inquiry of certain officers
of the Trading Advisor, will not constitute a breach of, or default
under, or a violation of, any agreement or instrument known to such
counsel by which the Trading Advisor is bound, and will not violate
any law, order, rule, or regulation applicable to the Trading Advisor
of any court, governmental body, administrative agency, panel, or
self-regulatory organization having jurisdiction over the Trading
Advisor.
-29-
(F) Based upon reliance of certain SEC No-Action letters, as of
the Closing the performance by the Trading Advisor of the transactions
contemplated by the Management Agreement and this Agreement and as
described in the Prospectus will not require the Trading Advisor to be
registered as an "investment adviser" as that term is defined in the
Investment Advisers Act of 1940, as amended.
(G) Nothing has come to such counsel's attention that would lead
them to believe that, solely as to the Trading Advisor and the Trading
Advisor Principals, (a) the Registration Statement at the time it
became effective 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 at the time it was issued or at the Closing 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 counsel need express no opinion or belief as
to the financial or statistical data set forth in the Registration
Statement and Prospectus, except that counsel shall opine, without
rendering any opinion as to the accuracy of the information in such
performance data, that the performance data of the Trading Advisor set
forth in the Prospectus comply as to form in all material respects
with the CEAct and CFTC Rules, except as disclosed in the Prospectus.
In giving the foregoing opinion, counsel may rely on information
obtained from public officials, officers of the Trading Advisor, and other
sources believed by it to be responsible, and may assume that signatures on all
documents examined by it are genuine.
(x) Deloitte & Touche LLP, independent certified public accountants
for the Partnership and the General Partner, will have furnished to DWR a
letter, dated the date of the First Closing and in form and substance
satisfactory to DWR, to the effect that:
(A) Such accountant is an independent certified public
accountant within the meaning of the 1933 Act, the CEAct, the SEC
Regulations, and the CFTC Rules with respect to the Partnership and
the General Partner.
(B) In such accountant's opinion, the statements of financial
condition of the Partnership and the General Partner and the notes
thereto included in the Prospectus and examined by it
-30-
comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act, the CEAct, the SEC
Regulations, and the CFTC Rules.
(C) On the basis of limited procedures not constituting an
audit, including inquiries of officials of the General Partner having
responsibility for financial and accounting matters pertaining to the
Partnership and such other inquiries and procedures as may be
specified in such letter, nothing has come to such accountant's
attention which causes it to believe that, as of a specified date not
more than five business days prior to the date of the Closing, there
has been any decrease in the Net Assets of the Partnership as compared
to Net Assets set forth in the statement of financial condition of the
Partnership included in the Prospectus, except as may be disclosed in
such letter.
(D) On the basis of limited procedures, not constituting an
audit, including a reading of the latest available financial
statements of the General Partner, inspection of the minute book of
the General Partner since the date of the latest audited financial
statements of the General Partner, inquiries of officials of the
General Partner having responsibility for financial and accounting
matters, and such other inquiries and procedures as may be specified
in such letter, nothing has come to such accountant's attention that
causes it to believe that, as of a specified date not more than five
business days prior to the date of the Closing, there has been any
decrease in the General Partner's net worth as compared to net worth
set forth in the statement of financial condition of the General
Partner included in the Prospectus, except as may be disclosed in such
letter.
(xi) All agreements contemplated herein or in the Registration
Statement or Prospectus shall have been duly executed and delivered.
14. INDEMNIFICATION.
(a) The Trading Advisor agrees to indemnify, defend, and hold
harmless DWR, the Partnership, the General Partner, MS & Co., MSIL, their
affiliates, and each of their officers, directors, principals, shareholders,
controlling persons and their respective successors and assigns, from and
against any loss, claim, damage, liability, cost, and expense, joint and
several, to which any indemnified party may become subject under the 1933 Act,
the 1934 Act, the CEAct, the Blue Sky law of any jurisdiction, or otherwise
(including any reasonable investigatory, legal, accounting and other fees and
expenses incurred in connection with, and any amounts paid in, any settlement,
provided that the Trading Advisor shall have approved such settlement, and in
connection with any administrative
-31-
proceedings), in respect of the offer or sale of Units, insofar as such loss,
claim, damage, liability, cost, or expense (or action in respect thereof) arises
out of, or is based upon: (i) a breach by the Trading Advisor of any
representation, warranty, or agreement in this Agreement or any certificate
delivered pursuant to this Agreement or the failure by the Trading Advisor to
perform any covenant made by the Trading Advisor herein; or (ii) a misleading or
untrue statement or alleged misleading or untrue statement of a material fact
made in the Registration Statement, the Prospectus, or any Sales Literature, or
an omission or alleged omission to state a material fact therein which is
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus and any Sales Literature, in light of the
circumstances under which they were made) not misleading, PROVIDED THAT such
statement or omission relates specifically to the Trading Advisor, or its
Trading Advisor Principals, or was made in reliance upon, and in conformity
with, written information or instructions furnished by the Trading Advisor, and,
in the case of Sales Literature only, was approved in writing by the Trading
Advisor. The Trading Advisor will also reimburse any indemnified party for any
legal, accounting, and other expenses incurred by such indemnified party in
connection with investigating or defending any loss, claim, damage, liability,
cost, and expense covered by the indemnities in this Section 14(a). This
indemnity shall not relate to any matter for which the Trading Advisor would be
indemnified under paragraph (e) of this Section 14.
(b) MS & Co. agrees to indemnify, defend, and hold harmless DWR,
the Partnership, the General Partner, the Trading Advisor, MSIL, their
affiliates, and each of their officers, directors, principals, shareholders,
controlling persons and their respective successors and assigns, from and
against any loss, claim, damage, liability, cost, and expense, joint and
several, to which any indemnified party may become subject under the 1933 Act,
the 1934 Act, the CEAct, the Blue Sky law of any jurisdiction, or otherwise
(including any reasonable investigatory, legal, accounting, and other fees and
expenses incurred in connection with, and any amounts paid in, any settlement,
provided that MS & Co. shall have approved such settlement, and in connection
with any administrative proceedings), in respect of the offer or sale of Units,
insofar as such loss, claim, damage, liability, cost, or expense (or action in
respect thereof) arises out of, or is based upon: (i) a breach by MS & Co. of
any representation, warranty, or agreement in this Agreement or any certificate
delivered pursuant to this Agreement or the failure by MS & Co. to perform any
covenant made by MS & Co. herein; or (ii) a misleading or untrue statement or
alleged misleading or untrue statement of a material fact made in the
Registration Statement or the Prospectus, or an omission or alleged omission to
state a material fact therein which is required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, PROVIDED
THAT such statement or omission relates specifically to MS & Co., or its
Commodity Broker Principals, or was made in reliance upon, and in conformity
with, written information or instructions furnished by MS & Co. MS & Co. will
also reimburse any indemnified party for any legal, accounting, and other
expenses incurred by such indemnified party in connection with investigating or
defending any loss, claim, damage, liability, cost, and expense covered by the
indemnities in this Section 14(b). This indemnity shall not relate to any
matter for which MS & Co. would be indemnified under paragraph (e) of this
Section 14.
-32-
(c) MSIL agrees to indemnify, defend, and hold harmless DWR, the
Partnership, the General Partner, the Trading Advisor, MS & Co., their
affiliates, and each of their officers, directors, principals, shareholders,
controlling persons and their respective successors and assigns, from and
against any loss, claim, damage, liability, cost, and expense, joint and
several, to which any indemnified party may become subject under the 1933 Act,
the 1934 Act, the CEAct, the Blue Sky law of any jurisdiction, or otherwise
(including any reasonable investigatory, legal, accounting, and other fees and
expenses incurred in connection with, and any amounts paid in, any settlement,
provided that MSIL shall have approved such settlement, and in connection with
any administrative proceedings), in respect of the offer or sale of Units,
insofar as such loss, claim, damage, liability, cost, or expense (or action in
respect thereof) arises out of, or is based upon: (i) a breach by MSIL of any
representation, warranty, or agreement in this Agreement or any certificate
delivered pursuant to this Agreement or the failure by MSIL to perform any
covenant made by MSIL herein; or (ii) a misleading or untrue statement or
alleged misleading or untrue statement of a material fact made in the
Registration Statement or the Prospectus, or an omission or alleged omission to
state a material fact therein which is required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not misleading, PROVIDED
THAT such statement or omission relates specifically to MSIL, or its Commodity
Broker Principals, or was made in reliance upon, and in conformity with, written
information or instructions furnished by MSIL. MSIL will also reimburse any
indemnified party for any legal, accounting, and other expenses incurred by such
indemnified party in connection with investigating or defending any loss, claim,
damage, liability, cost, and expense covered by the indemnities in this Section
14(c). This indemnity shall not relate to any matter for which MSIL would be
indemnified under paragraph (e) of this Section 14.
(d) The General Partner agrees to indemnify, defend and hold
harmless DWR, the Trading Advisor, MS & Co., MSIL, their affiliates, and each of
their officers, directors, principals, shareholders, controlling persons and
their respective successors and assigns, from and against any loss, claim,
damage, liability, cost, and expense, joint and several, to which any
indemnified party may become subject under the 1933 Act, the 1934 Act, the
CEAct, the Blue Sky law of any jurisdiction, or otherwise (including any
reasonable investigatory, legal, accounting, and other fees and expenses
incurred in connection with, and any amounts paid in any settlement, provided
that the General Partner shall have approved such settlement, and in connection
with any administrative proceedings), in respect of the offer or sale of Units,
insofar as such loss, claim, damage, liability, cost, or expense (or action in
respect thereof) arises out of, or is based upon: (i) a breach by the
Partnership or the General Partner of any representation, warranty, or agreement
in this Agreement or certificate delivered pursuant to this Agreement or the
failure by the Partnership or the General Partner to perform any covenant made
by them herein; or (ii) a misleading or untrue statement or alleged misleading
or untrue statement of a material fact made in the Registration Statement or the
Prospectus, or an omission or alleged omission to state a material fact therein
which is required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances under
which they were made) not misleading, PROVIDED THAT such misleading or untrue
statement or alleged misleading or untrue statement or
-33-
omission or alleged omission relates specifically to the General Partner or the
Partnership, or was made in reliance upon, and in conformity with, information
or instructions furnished by the General Partner or the Partnership. The
General Partner will also reimburse any indemnified party for any legal,
accounting, and other expenses incurred by such indemnified party in connection
with investigating or defending any loss, claim, damage, liability, cost, and
expense covered by the indemnities in this Section 14(d).
(e) The Partnership agrees to indemnify, defend, and hold
harmless the Trading Advisor, MS & Co., MSIL, DWR, the General Partner, each
Additional Seller (if any), and their respective affiliates (as defined in
Section 14(c) of the Limited Partnership Agreement), from and against any loss,
liability, damage, cost, or expense (including any reasonable investigatory,
legal, accounting, and other fees and expenses incurred in defense of any
demands, claims, or lawsuits), actually and reasonably incurred arising from
act, omission, activity or conduct undertaken pursuant to this Agreement by or
on behalf of the Partnership, including, without limitation, any demands,
claims, or lawsuits initiated by a Limited Partner (or assignee thereof),
PROVIDED that (1) the Trading Advisor, MS & Co., MSIL, DWR, the General Partner,
or the Additional Seller, as applicable, has determined, in good faith, that the
act, omission, conduct or activity giving rise to the claim for indemnification
was in the best interests of the Partnership, and (2) the act, omission,
activity, or conduct that was the basis for such loss, liability, damage, cost,
or expense was not the result of misconduct or negligence. The indemnity in
this Section 14(e) is in addition to any liability that the Partnership may
otherwise have and will extend, upon the same terms and conditions, to each
person, if any, who controls an indemnified person within the meaning of the
1933 Act.
(f) Notwithstanding anything to the contrary contained in the
foregoing, neither the Trading Advisor, MS & Co., MSIL, DWR, the General
Partner, an Additional Seller nor their respective affiliates shall be
indemnified by the Partnership for any losses, liabilities or expenses arising
from or out of an alleged violation of federal or state securities laws unless
(1) there has been a successful adjudication on the merits of each count
involving alleged securities laws violations as to the particular indemnitee, or
(2) such claims have been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the particular indemnitee, or (3) a court of
competent jurisdiction approves a settlement of the claims against the
particular indemnitee and finds that indemnification of the settlement and
related costs should be made, PROVIDED, with regard to such court approval, the
indemnitee must apprise the court of the position of the SEC and the positions
of the respective securities administrators of Massachusetts, Missouri,
Tennessee, and/or those other states and jurisdictions in which the plaintiffs
claim that they were offered or sold Units, with respect to indemnification for
securities laws violations before seeking court approval for indemnification.
Furthermore, in any action or proceeding brought by a Limited Partner in the
right of the Partnership to which the Trading Advisor, MS & Co., MSIL, DWR, the
General Partner, an Additional Seller or any affiliate of any of the foregoing
is a party defendant, any such person shall be indemnified only to the extent
and subject to the conditions specified in the DRULPA and this Section 14(f).
The Partnership shall make advances to the Trading Advisor, MS & Co., MSIL, DWR,
the General Partner, an
-34-
Additional Seller, or their respective affiliates hereunder only if: (1) the
demand, claim, or lawsuit relates to the performance of duties or services by
such persons to the Partnership; (2) such demand, claim, or lawsuit is not
initiated by a Limited Partner; and (3) such advances are repaid, with interest
at the legal rate under Delaware law, if the person receiving such advance is
ultimately found not to be entitled to indemnification hereunder.
(g) DWR agrees to indemnify, defend and hold harmless the
Partnership, the Trading Advisor, MS & Co., MSIL, the General Partner, their
affiliates, and each of their officers, directors, principals, shareholders,
controlling persons, and their respective successors and assigns, from and
against any loss, claim, damage, liability, cost, and expense, joint and
several, to which any indemnified person may become subject under the 1933 Act,
the 1934 Act, the CEAct, the Blue Sky law of any jurisdiction, or otherwise
(including any reasonable investigatory, legal, accounting, and other fees and
expenses incurred in connection with, and any amounts paid in, any settlement,
provided that DWR shall have approved such settlement, and in connection with
any administrative proceedings), in respect of the offer or sale of Units,
insofar as such loss, claim, damage, liability, cost, or expense (or action in
respect thereof) arises out of, or is based upon: (i) a breach by DWR of any
agreement in this Agreement or the failure by DWR to perform any undertaking
made by DWR herein; or (ii) a misleading or untrue statement or alleged
misleading or untrue statement of a material fact made in the Registration
Statement, the Prospectus, or any Sales Literature, or an omission or alleged
omission to state a material fact therein which is required to be stated therein
or necessary to make the statements therein (in the case of the Prospectus and
any Sales Literature, in light of the circumstances under which they were made)
not misleading, PROVIDED THAT such statement or omission relates specifically to
DWR, or was made in reliance upon, and in conformity with, written information
or instructions furnished by DWR. DWR will also reimburse any indemnified party
for any legal, accounting, and other expenses incurred by such indemnified party
in connection with investigating or defending any loss, claim, damage,
liability, cost, and expense covered by the indemnities in this Section 14(g).
The indemnity in this Section 14(g) is in addition to any liability that DWR may
otherwise have.
(h) Promptly after receipt by an indemnified party of notice of
the commencement of any action, claim, or proceeding to which any of the
foregoing subsections of this Section 14 may apply, the indemnified party will
notify the indemnifying party in writing of the commencement thereof if a claim
in respect thereof is to be made against the indemnifying party under any of
such subsections; but the failure to notify the indemnifying party will not
relieve the indemnifying party from any liability which the indemnifying party
may have to the indemnified party under any of such subsections, except where
such failure has materially prejudiced the indemnifying party. In case any
action, claim, or proceeding is brought against an indemnified party and the
indemnified party notifies the indemnifying party of the commencement thereof as
provided above, the indemnifying party will be entitled to participate therein
and, to the extent that the indemnifying party desires, to assume the defense
thereof with counsel selected by the indemnifying party and not disapproved by
the indemnified party, any such disapproval not to be unreasonable. After
notice from the indemnifying party to the indemnified party of the indemnifying
party's election so to assume
-35-
the defense thereof as provided above, the indemnifying party will not be liable
to the indemnified party hereunder for any legal and other expenses subsequently
incurred by the indemnified party in connection with the defense thereof, other
than reasonable costs of investigation.
Notwithstanding the preceding paragraph, if, in any action,
claim, or proceeding as to which indemnification is or may be available under
any of Sections 14(a) - (g) hereof, an indemnified party reasonably determines
that its interests are or may be adverse, in whole or in part, to the
indemnifying party's interests or that there may be legal defenses available to
the indemnified party which are inconsistent with the defenses available to the
indemnifying party, the indemnified party may retain its own counsel in
connection with such action, claim, or proceeding and will be indemnified by the
indemnifying party for any legal and other expenses reasonably incurred in
connection with investigating or defending such action, claim, or proceeding.
In no event, however, will the indemnifying party be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection with
any one action, claim, or proceeding, or in connection with separate but similar
or related actions, claims, or proceedings, in the same jurisdiction arising out
of the same general allegations. The indemnifying party will not be liable for
any settlement of any action, claim, or proceeding effected without the
indemnifying party's express written consent, but if any action, claim, or
proceeding is settled with the indemnifying party's express written consent or
if there is a final judgment for the plaintiff in any such action, claim, or
proceeding, the indemnifying party will indemnify, defend, and hold harmless an
indemnified party as provided in Sections 14(a) - (g) hereof, as applicable.
(i) The exculpation provisions in the Management Agreement, the
Customer Agreements, and the Limited Partnership Agreement shall not relieve any
party thereto from any liability it may have or incur to any party under this
Agreement; nor shall any party thereto be entitled to be indemnified by any
party thereto pursuant to the indemnification provisions contained in such
agreements, against any loss, liability, damage, cost or expense it may incur
under this Agreement.
14. TERMINATION. The General Partner shall have the right to
terminate this Agreement at any time prior to a Closing by giving written notice
of such termination to DWR, the Trading Advisor, and the Commodity Brokers.
15. SURVIVAL. The respective indemnities, agreements, obligations,
representations, warranties, and other statements of the parties hereto set
forth in this Agreement or in any certificates delivered pursuant hereto will
remain in full force and effect (regardless of any investigation or any
statement as to the results thereof made by, or on behalf of, DWR, the
Partnership, the General Partner, the Trading Advisor, the Commodity Brokers, or
any officer, director, controlling person, or agent of any of the foregoing),
and will survive the delivery of and payment for Units and the termination or
expiration of this Agreement, and each Closing.
-36-
16. NOTICES. All notices required or desired to be given under this
Agreement must be in writing and will be effective when given personally on the
date delivered or, when given by mail, on the date of receipt, addressed as
follows (or to such other address as the party entitled to notice hereafter
designates in accordance with the terms hereof):
if to the Partnership or the General Partner:
Xxxxxx Xxxxxxx Tangible Asset Fund L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: Xx. Xxxx X. Xxxxxx
President
if to the Trading Advisor:
Xxxxxx Xxxxxxx Commodities Management, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxxxxx
President
if to DWR:
Xxxx Xxxxxx Xxxxxxxx Inc.
Xxx Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxx X. Xxxxxx
Executive Vice President
if to MS & Co.:
Xxxxxx Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attn:________________________-
-37-
if to MSIL:
Xxxxxx Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX, Xxxxxxx
Attn:__________________________
17. SUCCESSORS. This Agreement will be binding upon and inure solely
to the benefit of DWR, the Trading Advisor, the Partnership, the Commodity
Brokers and the General Partner (and to the extent provided in Section 14
hereof, the officers, directors, controlling persons, and agents of the
Partnership, the Trading Advisor, the General Partner, the Commodity Brokers,
and DWR and the respective heirs, executors, administrators, successors, and
assigns of such persons), and no other person will acquire or have any rights
under or by virtue of this Agreement. No purchaser of Units will be deemed to be
a successor or assign to any party hereto merely by reason of such purchase.
18. ASSIGNMENT; AMENDMENT. This Agreement may not be assigned by any
party hereto without the prior express written consent of all other parties.
This Agreement may not be amended except by the express written consent of all
parties hereto.
19. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York, without regard to
principles of conflicts of laws. If any action or proceeding shall be brought
by a party to this Agreement to enforce any right or remedy under this
Agreement, each party hereto hereby consents and will submit to the jurisdiction
of the courts of the County, City and State of New York or any federal court
sitting in the County, City and State of New York. Any action or proceeding
brought by any party to this Agreement to enforce any right, assert any claim or
obtain any relief whatsoever in connection with this Agreement shall be brought
by such party exclusively in the courts of the County, City and State of New
York or any federal court sitting in the County, City and State of New York.
20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
-38-
If the foregoing Agreement is satisfactory to you, please so indicate by
signing at the place provided below.
XXXXXX XXXXXXX TANGIBLE ASSET
FUND L.P.
By: Demeter Management Corporation,
General Partner
By:___________________________-
Xxxx X. Xxxxxx
President
Accepted and Agreed: DEMETER MANAGEMENT CORPORATION
XXXX XXXXXX XXXXXXXX INC.
By:
Xxxx X. Xxxxxx
President
By:_____________________________
Xxxx X. Xxxxxx
Executive Vice President
XXXXXX XXXXXXX & CO. INCORPORATED
By:______________________________
XXXXXX XXXXXXX COMMODITIES
MANAGEMENT, INC.
By:______________________________
Xxxxx X. Xxxxxxxx
President
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
By:_______________________________
-39-
