EXHIBIT 10.5
FEE AGREEMENT
THIS FEE AGREEMENT ("Agreement") is made and entered into as of the 13th
day of March, 1998, by and between Corn Belt Management, Inc., an Iowa
corporation ("CBM"), and Quiet Systems, Ltd., a corporation organized under the
laws of the Cayman Islands (the "Company").
RECITALS:
A. The Company was organized on March 13, 1998, for the purpose of providing
trading advice and related services to various third parties regarding
trading in futures contracts and options.
B. CBM has expressed an interest in establishing one or more limited
partnerships or other entities (each, a "Pool," and collectively, the
"Pools") which would retain the Company to direct the trading of the funds
of the Pool or Pools in futures contracts and options under one or more of
the various trading programs that may be established by the Company from
time to time (each, a "Program," and collectively, the "Programs").
C. CBM has substantial experience in raising capital for trading in futures
contracts and options through Pools, and the Company has determined that it
is in the best interests of the Company for CBM to establish one or more
such Pools because of, among other things, the potentially material amount
of capital that such a Pool or Pools might generate for trading by the
Company under one or more of its Programs, thereby generating potentially
material fees for the Company, and the general exposure for and recognition
of the Company's services that might be derived through the marketing and
existence of such Pools. The Company has also determined that it is in the
best interests of the Company to encourage CBM to establish and market one
or more such Pools as soon as is reasonably practical because the existence
of such a Pool or Pools would, among other things, materially assist and
advance the start-up of the Company's business through the customer base
and fees that would be generated for the Company by and through such a Pool
or Pools.
D. The Company is therefore willing to grant any Pools which are at any time
established by CBM (or any Affiliate of CBM, as that term is defined below)
and which retain the Company to direct the trading of such Pools a
reduction in the fees that the Company will otherwise from time to time
impose upon other clients whose accounts are being traded under the
Company's respective Programs.
E. CBM desires to obtain such reduction in fees for its Pools, and the Company
desires to provide such reduction in fees, all upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the Recitals and the mutual agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and CBM agree as
follows:
1. The Company agrees that the monthly management fee and quarterly
incentive fee (or similar, analogous or related fees, however characterized)
that the Company will charge to any Pool which is at any time established by CBM
(or any Affiliate of CBM) and which retains the Company to direct the trading of
such Pool under any Program of the Company will in no event exceed,
respectively, (i) one percent (1%) of the Management Fee Calculation Base (as
that term is defined below); and (ii) ten percent (10%) of the Incentive Fee
Calculation Base (as that term is defined below), provided, however, that CBM
(or any Affiliate of CBM, as the case may be) (i) shall have registered the
offering of such pool within 30 days of the date on which the Company's
registration as a commodity trading advisor with the United States Commodity
Futures Trading Commission is first effective and (ii) shall have accepted an
aggregate of $500,000 U.S. in subscriptions to any one or more of such Pools
within six (6) months of such effective date.
CBM agrees to devote its best efforts to establishing and commencing the
marketing of one or more such Pools, but the Company acknowledges that CBM does
not guarantee or represent or warrant that it will have accepted an aggregate of
$500,000 U.S. in subscriptions in any one or more of such Pools on or before the
above referenced date. The Company also acknowledges that there is no limit on
the number of Pools that may be established by CBM (and any Affiliates of CBM),
but that CBM does not make any guaranties or any representations or warranties
with respect to the number of Pools that may be established by CBM (or any
Affiliate of CBM) from time to time nor with respect to the amount of funds or
other capital that may be generated or raised by any Pool or Pools from time to
time.
The term "Management Fee Calculation Base" means the most favorable
underlying basis or amount upon which the Company from time to time bases the
calculation of its management fee for any particular client under the particular
Program in question, whether that be the net assets of the client's account or
some other underlying basis or amount. The term "Incentive Fee Calculation Base"
means the most favorable underlying basis or amount upon which the Company from
time to time bases the calculation of its incentive fee for any particular
client under the particular Program in question, whether that be the new trading
profits of the client's account or some other underlying basis or amount.
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2. The term "Affiliate of CBM" for purposes of this Agreement shall mean
any person or entity which, directly or indirectly, controls CBM, is controlled
by CBM, or is under common control with CBM, including, without limitation, any
corporation or other form of entity of which a majority of its issued and
outstanding stock or other ownership interests are owned by CBM, any Affiliate
of CBM, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, and/or the spouse or any lineal descendants of ▇▇▇▇▇▇▇
▇. ▇▇▇▇.
CBM (or any Affiliate of CBM) shall be deemed to have "established" a Pool
or Pools for purposes of this Agreement if, without limitation, CBM (or the
Affiliate of CBM, as the case may be) (i) is serving as the general partner (or
one of the general partners) of the Pool, if the Pool is a limited partnership,
(ii) is serving as the manager (or one of the managers) of or in a similar
capacity for the Pool, if the Pool is a limited liability company, or (iii) is
otherwise responsible for the general operations of the Pool, regardless of the
form of entity of the Pool.
The Company acknowledges and agrees that CBM (and any Affiliate of CBM)
shall at all times have the right to make any and all decisions regarding each
and every Pool, and to otherwise fully govern, control and otherwise direct any
and all aspects of each and every Pool, including, without limitation, regarding
and with respect to the organization, structure, offering, marketing, business
and operations of each and every Pool, all in CBM's (or the Affiliate of CBM's,
as the case may be) sole discretion. Without limiting the generality of the
foregoing, the Company acknowledges and agrees that CBM (and any Affiliate of
CBM) may market and promote each Pool in such manner and upon such terms and
conditions as CBM (or the Affiliate of CBM, as the case may be) may from time to
time determine, in its sole discretion, including, without limitation, with or
through any third party or parties (including any Affiliate of CBM) as CBM (or
the Affiliate of CBM, as the case may be) may from time to time determine.
3. The Company acknowledges and agrees that CBM (and any Affiliate of
CBM) may select the trading advisor or trading manager for any Pool or Pools in
its sole discretion, and that this Agreement does not obligate CBM (or any
Affiliate of CBM) to utilize the Company as the trading advisor or trading
manager for any Pool or Pools or otherwise on any exclusive basis. CBM (and any
Affiliate of CBM) shall also have the right, in its sole discretion, to utilize
any other trading advisor or trading manager or trading advisors or trading
managers in addition to the Company for any particular Pool at any time and from
time to time, and the Company agrees that in this circumstance CBM (or the
Affiliate of CBM, as the case may be) shall still be entitled to the reduction
in the Company's fees otherwise provided for in this Agreement. Without limiting
the generality of the foregoing, and in addition
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thereto to the extent necessary, the Company also acknowledges that CBM (and any
Affiliate of CBM) may discontinue the use of the Company as the trading advisor
or trading manager for any Pool at any time, in its sole discretion, and that
any such termination shall not in any way affect the fees being imposed upon any
other Pools then still utilizing the Company, CBM's (or any Affiliate of CBM's)
right to establish additional or other Pools utilizing the Company and obtaining
the reduction in the fees provided for in this Agreement for such additional or
other Pools, or otherwise effectuate a termination of this Agreement, in whole
or in part.
CBM also acknowledges and agrees, however, that the Company shall have the
right to terminate providing services to any Pool at any time in accordance with
the Company's then normal and ordinary course terms and provisions for clients
of the Program in question, except to the extent that such termination would be
based in any way upon the calculation of or the amount of fees payable by the
Pool to the Company. CBM also acknowledges that the Company is free to enter
into any agreements with any other commodity pool operators or third parties
upon such terms and conditions as the Company may determine, in its sole
discretion, including agreements providing for a reduction in the fees that will
be imposed by the Company with respect to the accounts of or accounts generated
by such other commodity pool operators or third parties.
4. This Agreement may be terminated by the Company only upon the
occurrence of a Termination Event (as that term is defined below), and only
effective ninety (90) days following the giving of written notice thereof by the
Company to CBM, which written notice must be given within fifteen (15) days of
the date of occurrence of the Termination Event in question in order to be
effective. If the Company does not provide CBM with written notice of the
termination of this Agreement within fifteen (15) days of the date of occurrence
of any Termination Event, the Company shall not have the right to terminate this
Agreement based upon the occurrence of said Termination Event, notwithstanding
the fact that said Termination Event is not cured or otherwise continues in
effect.
The term "Termination Event" shall mean (i) the termination or suspension
of CBM's registration as a commodity pool operator with the United States
Commodity Futures Trading Commission, unless such registration is renewed,
reinstated or otherwise obtained by CBM within sixty (60) days of such
termination or suspension; or (ii) the conviction of CBM, an Affiliate of CBM,
or any officer, director, employee or agent of CBM or any Affiliate of CBM for a
crime based upon illegal acts or omissions which are related to any Pool which
is then utilizing the Company as the Pool's trading manager or trading advisor,
unless such conviction is overturned or otherwise withdrawn within sixty (60)
days of the date of the initial conviction for the crime.
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Upon a proper and valid termination of this Agreement as provided above,
the Company may, in the Company's discretion, impose fees upon the Pools of CBM
and any Affiliate of CBM at what are the Company's then normal and ordinary
course rates under the particular Program in question.
5. This Agreement shall be governed by and construed in accordance with
the laws of the State of Iowa and of the United States, but without regard to
provisions thereof relating to conflicts of law.
6. No amendment, modification, supplement, termination or waiver of or to
any provision of this Agreement, nor consent to any departure therefrom, shall
be effective unless the same shall be in writing and signed by or on behalf of
the party to be charged with the enforcement thereof. Any amendment,
modification or supplement of or to any provision of this Agreement, any waiver
of any provision of this Agreement, and any consent to any departure from the
terms of any provision of this Agreement, shall be effective only in the
specific instance and for the specific purpose for which made or given.
7. In the event any provision of this Agreement is held invalid, illegal
or unenforceable, in whole or in part, the remaining provisions of this
Agreement shall not be affected thereby and shall continue to be valid and
enforceable. In the event any provision of this Agreement is held to be invalid,
illegal or unenforceable as written, but valid, legal and enforceable if
modified, then such provision shall be deemed to be amended to such extent as
shall be necessary for such provision to be valid, legal and enforceable and it
shall be enforced to that extent. Without limiting the generality of the
foregoing, and in addition thereto to the extent necessary, any finding of
invalidity, illegality or unenforceability in any jurisdiction shall not
invalidate or render invalid, illegal or unenforceable such provision in any
other jurisdiction.
8. All notices, demands and other communications desired or required to
be given hereunder ("Notices") shall be in writing and shall be given by: (i)
hand delivery to the address for Notices; (ii) delivery by express courier
service to the address for Notices; or (iii) sending the same by United States
mail, airmail postage prepaid, certified mail, return receipt requested,
addressed to the address for Notices.
All Notices shall be deemed given and effective upon the earlier to occur
of: (i) the hand delivery of such Notice to the address for Notices; (ii) two
business days (a day not a Saturday, Sunday or holiday recognized in either the
United States and the Cayman Islands) after the deposit of such Notice with an
express courier service by the time deadline for next day delivery
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addressed to the address for Notices; or (iii) ten business days after
depositing the Notice in the United States mail as set forth above. All Notices
shall be addressed to the addresses set forth on the signature page hereof or to
such other persons or at such other place as any party thereto may by Notice
designate as a place for service of Notice.
9. Nothing contained in this Agreement and no action taken or omitted to
be taken by the parties pursuant hereto shall be deemed to constitute the
parties a partnership, an association, a joint venture or other entity, or to
constitute CBM or its affiliates an agent of the Company for any purpose.
10. This Agreement may not be assigned by CBM without the prior written
consent of the Company, which consent may not be unreasonably withheld by the
Company. Any change in the ownership of or the control of CBM (or any Affiliate
of CBM) shall not, however, be deemed to constitute an assignment of this
Agreement for purposes of this Section 10 or otherwise for this Agreement, and
changes in the ownership or control of CBM (or any Affiliate of CBM) may be made
without the consent of the Company. In the event of an assignment of this
Agreement by CBM, the term "CBM" for purposes of this Agreement shall mean the
assignee of CBM and the term "Affiliate of CBM" shall accordingly be interpreted
and based upon the assignee, and this Agreement shall otherwise be interpreted
accordingly.
11. This Agreement shall not be construed more strongly against any person
regardless of who is more responsible for its preparation.
12. This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, each of which shall be deemed
to be an original, but all of which together shall constitute one and the same
instrument.
13. Words and phrases herein shall be construed as in the singular or
plural number and as masculine, feminine or neuter gender, according to the
context.
14. The Company shall defend, indemnify and hold CBM (and the Pools and
Affiliates of CBM) harmless from any loss, liability, damage, cost or expense,
including court costs, arbitration costs and fees and reasonable attorneys'
fees, arising in connection with or resulting from any breach of warranty,
misrepresentation or nonfulfillment of any agreement on the part of the Company
under this Agreement. CBM shall defend, indemnify and hold the Company harmless
from any loss, liability, damage, cost or expense, including court costs,
arbitration costs and fees and reasonable attorneys' fees, arising in connection
with or resulting from any breach of warranty, misrepresentation or
nonfulfillment of any
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agreement on the part of CBM (or any Affiliate of CBM) under this Agreement.
15. The Recitals set forth in the forepart of this Agreement are true and
correct and are an integral part of this Agreement.
16. This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto (and to the benefit of the Pools and to the Affiliates of
CBM) and their respective heirs, successors, legal representatives and permitted
assigns. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto and the Pools and the Affiliates of
CBM (and their respective heirs, successors, legal representatives and permitted
assigns) any rights, remedies, liabilities or obligations under or by reason of
this Agreement. The Company acknowledges and agrees that this Agreement shall be
enforceable by CBM, and also by any Pool and by any Affiliate of CBM, either
independently or in connection with CBM or any Affiliate of CBM.
17. This Agreement constitutes the entire agreement between the parties
hereto pertaining to the subject matters hereof and supersedes all negotiations,
preliminary agreements and all prior or contemporaneous discussions and
understandings of the parties hereto in connection with the subject matters
hereof.
IN WITNESS WHEREOF, the Company and CBM have entered into this Agreement as
of the day and year first above written.
CORN BELT MANAGEMENT, INC. QUIET SYSTEMS, LTD.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/▇▇. ▇▇▇▇ ▇▇▇▇
------------------------- ---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President ▇▇. ▇▇▇▇ ▇▇▇▇
1s121 Cantigny Chairman of the Board
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ British American Centre,
Phase 3
▇▇. ▇▇▇'▇ Drive
▇▇▇▇▇▇ Town, Grand Cayman
Cayman Islands
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