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EXHIBIT 1.02
XXXXXXXX ALTERNATIVE ASSET TRUST
(A DELAWARE BUSINESS TRUST)
$50,000,000 OF UNITS OF BENEFICIAL INTEREST
(SUBSCRIPTION PRICE: $1,000 PER UNIT
DURING THE INITIAL OFFERING PERIOD;
NET ASSET VALUE PER UNIT DURING THE ONGOING OFFERING PERIOD)
ADDITIONAL SELLING AGENT AGREEMENT
January 4, 2001
PaineWebber Incorporated
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
Dear Sir/Madam:
Xxxxxxxx & Company, Inc., a Maryland corporation (the "Managing Owner"),
has caused the formation of a business trust pursuant to the Delaware Business
Trust Act (the "Delaware Act") under the name, XXXXXXXX ALTERNATIVE ASSET TRUST
(the "Trust"), for the purpose of engaging in trading, buying, selling or
otherwise acquiring, holding or disposing of futures contracts, forward
contracts, foreign exchange commitments, swaps, exchange for physicals, spot
(cash) commodities, hybrid instruments, securities and other items, options on
and any rights pertaining to the foregoing throughout the world with the
objective of capital appreciation through speculative trading. As described in
the Prospectus referred to below, the Trust will engage in this business under
the direction of the Managing Owner. The Trust proposes to make a public
offering of units of beneficial interest in the Trust (the "Units"). In
connection with the proposed public offering, the Trust has filed with the
United States Securities and Exchange Commission (the "SEC"), pursuant to the
United States Securities Act of 1933, as amended (the "1933 Act"), a
registration statement on Form S-1 to register the Units, and as part thereof a
prospectus (Registration No. 333-37548) (which registration statement, together
with all amendments thereto, shall be referred to herein as the "Registration
Statement" and which prospectus together with all amendments and supplements
thereto in the forms filed with the SEC pursuant to Rule 424 under the Act shall
be referred to herein as the "Prospectus"). The Units are designed to be sold to
investors who have "wrap fee" accounts with their selling agent. The Managing
Owner and the Trust have entered into a selling agreement dated as of January 4,
2001 among Xxxxxxxx Financial Services, Inc., the Managing Owner, the Trust and
others (the "Selling Agreement"), a copy of which will be furnished to you upon
request. Other selling agents, including those introduced by wholesalers
("Wholesalers") to the Trust and the Managing Owner (the "Additional Selling
Agents"), may be selected by the Managing Owner. You have been so selected by
the Managing Owner. We confirm our agreement with you as follows. Capitalized
terms used but otherwise not defined herein shall have the meanings ascribed to
them in the Selling Agreement unless the context indicates otherwise.
1. Appointment and Undertakings of the Additional Selling Agent
(a) Subject to the terms and conditions set forth in this Agreement, the
Selling Agreement and the Registration Statement, the Additional Selling Agent
is hereby appointed, and hereby accepts such appointment, as one of the Trust's
non-exclusive selling agents to offer and sell the Units on a best-efforts basis
without any commitment on the Additional Selling Agent's part to purchase any
Units. Units are designed to be sold to investors who have "wrap fee" account
with the Additional Selling Agent. It is understood and agreed that the Managing
Owner may retain other selling agents (including those introduced by
Wholesalers). The Additional Selling Agent agrees to comply with the terms and
conditions of this Agreement and any terms and conditions of the Selling
Agreement applicable to Additional Selling Agents.
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(b) The Additional Selling Agent agrees to use its reasonable efforts to
procure subscriptions for the Units as long as this Agreement and the Selling
Agreement remain in effect and to make the offering of Units at the offering
price and minimum amounts and on the other terms and conditions set forth in the
Prospectus and the Selling Agreement.
(c) The Additional Selling Agent shall offer and sell Units only to persons
and entities who satisfy the suitability and/or investment requirements set
forth in the Prospectus and the subscription agreements attached thereto and
who, to the Managing Owner's satisfaction, complete the subscription agreements
and related subscription documents used in connection with the offering of the
Units (the "Subscription Documents") and remit good funds for the full
subscription price. The Additional Selling Agent shall conduct a thorough review
of the suitability of each subscriber for Units that it solicits and of the
Subscription Documents. The Additional Selling Agent shall not execute any
transactions in Units in a discretionary account over which it has control
without prior written approval of the customer in whose name such discretionary
account is maintained.
The Additional Selling Agent agrees not to recommend the purchase of Units
to any subscriber unless the Additional Selling Agent shall have reasonable
grounds to believe, on the basis of information obtained from the subscriber
concerning, among other things, the subscriber's investment objectives, other
investments, financial situation and needs, that the subscriber is or will be in
a financial position appropriate to enable the subscriber to realize to a
significant extent the benefits of the Trust, including the tax benefits (if
any) described in the Prospectus; the subscriber has a fair market net worth
sufficient to sustain the risks inherent in participating in the Trust,
including loss of investment and lack of liquidity; and the Units are otherwise
a suitable investment for the subscriber. In addition to submitting such
information to the Managing Owner, the Additional Selling Agent agrees to
maintain files of information disclosing the basis upon which the Additional
Selling Agent determined that the suitability requirements of Rule 2810(b)(2) of
the National Association of Securities Dealers, Inc. (the "NASD") were met as to
each subscriber (the basis for determining suitability may include the
Subscription Documents and other certificates submitted by subscribers). In
connection with making the foregoing representations and warranties, the
Additional Selling Agent further represents and warrants that it has received
copies of the Registration Statement, as amended to the date hereof, and the
Prospectus and has, among other things, examined the following sections in the
Prospectus and obtained such additional information from the Managing Owner
regarding the information set forth thereunder as the Additional Selling Agent
has deemed necessary or appropriate to determine whether the Prospectus
adequately and accurately discloses all material facts relating to an investment
in the Trust and provides an adequate basis to subscribers for evaluating an
investment in the Units:
"Summary"
"The Risks You Face"
"Investment Factors"
"Xxxxxxxx & Company, Inc."
"Conflicts of Interest"
"Charges to the Trust"
"Use of Proceeds"
"Distributions and Redemptions"
"Declaration of Trust & Trust Agreement"
"Federal Income Tax Aspects"
In connection with making the representations and warranties set forth in
this paragraph, the Additional Selling Agent has not relied on inquiries made by
or on behalf of any other parties.
The Additional Selling Agent agrees to inform all prospective purchasers of
Units of all pertinent facts relating to the liquidity and marketability of the
Units as set forth in the Prospectus.
The Additional Selling Agent shall offer and sell Units in compliance with
the requirements set forth in the Registration Statement (particularly the
"Subscription Requirements" attached as Exhibit B thereto), this Agreement and
the Blue Sky Survey delivered to the Additional Selling Agent pursuant to
Section 4(e) below. The Additional Selling Agent represents and warrants that it
shall comply fully at all
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times with all applicable federal and state securities and commodities laws
(including without limitation the 1933 Act, the Securities Exchange Act of 1934,
as amended (the "1934 Act"), the Commodity Exchange Act, as amended (the "CEA"),
and the securities and Blue Sky laws of the jurisdictions in which the
Additional Selling Agent solicits subscriptions, all applicable rules and
regulations under such laws, and all applicable requirements, rules, policy
statements and interpretations of the NASD, and the securities and commodities
exchanges and other governmental and self-regulatory authorities and
organizations having jurisdiction over it or the offering of Units). The
Additional Selling Agent shall under no circumstances engage in any activities
hereunder in any jurisdiction (i) in which the Managing Owner has not informed
the Additional Selling Agent that counsel's advice has been received that the
Units are qualified for sale or are exempt under the applicable securities or
Blue Sky laws thereof or (ii) in which the Additional Selling Agent may not
lawfully engage.
The Additional Selling Agent further agrees to comply with the requirement
under applicable federal and state securities laws to deliver to each offeree a
Prospectus and any amendments or supplements thereto (including summary
financial information, if available, after the Trust has commenced operations).
Neither the Additional Selling Agent nor any of its employees, agents or
representatives will use or distribute any marketing material or information
other than that prepared by the Trust and the Managing Owner. It is, however,
understood that the Additional Selling Agent may use documents that it prepares
solely for the purpose of communicating with its Registered Representatives
provided that the Additional Selling Agent provides to the Managing Owner a copy
of each such document prior to such use.
Other than as set forth in the Prospectus, the Managing Owner disclaims any
responsibility or obligation to notify any client of Additional Selling Agent
that (i) the Managing Owner operates another publicly-offered commodity pool,
which trades in the Financial, Metal & Energy Large Portfolio, with a higher
overall cost structure, and (ii) Additional Selling Agent, if offering both the
Trust and such other pool, may have a conflict of interest relating thereto.
(d) The additional services that the Additional Selling Agent will provide
on an ongoing basis to Unitholders will include but not be limited to: (i)
inquiring of the Managing Owner from time to time, at the request of
Unitholders, as to the Net Asset Value of a Unit, (ii) inquiring of the Managing
Owner from time to time at the request of the Unitholders, as to the commodities
markets and the activities of the Trust, (iii) assisting, at the request of the
Managing Owner, in the redemption of Units sold by the Additional Selling Agent,
(iv) responding to questions of Unitholders from time to time with respect to
monthly account statements, annual reports and financial statements furnished to
Unitholders, and (v) providing such other services to the owners of Units as the
Managing Owner may, from time to time, reasonably request.
All payments for subscriptions shall be made by transfer of funds to the
escrow account of the Trust as described in the Prospectus, as may be amended
from time to time upon notice of the Managing Owner, provided that any such
arrangements must comply in all relevant respects with Rules 10b-9 and 15c2-4
under the 1934 Act.
2. Compensation
(a) In consideration of the Additional Selling Agent administering the
Units, the Managing Owner shall pay the Additional Selling Agent an ongoing fee
for administrative, legal and client reporting services of 0.35% per annum of
the net assets of the Trust, as defined in the Prospectus attributable to
subscriptions from subscribers which are customers of the Additional Selling
Agent. The Additional Selling Agent may pass along a portion of such fee to
another selling agent which is appropriately registered with or a member of, as
applicable, the National Futures Association (the "NFA"), the NASD, the SEC, the
securities or Blue Sky administrators of the several states and various other
jurisdictions and any other regulatory body.
Provided that the Additional Selling Agent is registered with the CFTC as a
futures commission merchant or introducing broker and is a member in good
standing of the NFA in such capacity, the ongoing compensation described above
will not be limited. The Additional Selling Agent may pay a portion of such
compensation to its registered representatives who are registered associated
persons with
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the CFTC and have passed the National Commodity Futures Examination (Series 3)
or the Futures Managed Fund Examination (Series 31).
Selling agents and registered representatives who are not registered with
the CFTC as described above may receive the ongoing fee outlined above, on the
same basis as described above, provided that the total of such ongoing fee plus
the per Unit organization and offering costs properly deemed to constitute costs
allocable to the selling agents, such as a selling brochure, seminar costs and
travel expenses, do not exceed 10% of such Units' initial sale price.
The Additional Selling Agent shall not, directly or indirectly, pay or
award any finder's fees, commissions or other compensation to any person engaged
by a potential investor for investment advice as an inducement to such advisor
to advise the purchase of Units; provided, however, the normal sales commissions
payable to a registered broker-dealer or other properly licensed person for
selling Units shall not be prohibited hereby.
(b) Notwithstanding any other provision of this Agreement to the contrary,
the Managing Owner shall have sole discretion to accept or reject any
subscription for the Units in whole or in part.
(c) The Managing Owner agrees to make all payments to the Additional
Selling Agent pursuant to this Section 2 within 15 days following the end of a
monthly period in which compensation is earned.
3. Representations and Warranties
(a) The Managing Owner hereby represents and warrants as follows:
(i) The Trust is duly organized and validly existing as a business
trust under the laws of the State of Delaware, and has full power and
authority under the Trust Agreement to conduct its business as described in
the Registration Statement and Prospectus and to issue, sell and deliver
the Units. The Trust is not required to take any action to be qualified to
do business in the State of Maryland.
(ii) The Managing Owner is a corporation duly organized and validly
existing in good standing under the laws of the State of Maryland, has full
corporate power to perform its obligations and enter into the transactions
described in the Registration Statement and Prospectus, as the same may be
amended or supplemented. All the present principals of the Managing Owner
are identified as such in the Registration Statement and Prospectus.
(iii) The Units, when issued and sold pursuant to the terms hereof and
of the Registration Statement, Prospectus and Subscription Agreements, will
be validly issued, fully paid and not subject to further call or
assessment.
(iv) The Escrow Agreement and this Agreement have each been duly and
validly authorized, executed and delivered by the Managing Owner on behalf
of the Trust and each is, assuming that it has been duly and validly
authorized, executed and delivered by the other parties thereto (other than
the Managing Owner), a valid and binding agreement of the Trust, except
insofar as bankruptcy, moratorium or other similar laws may be applicable
and except that the exculpation, indemnification and contribution
provisions of such agreements may be limited by applicable law and
enforcement of any specific terms or remedies may be unavailable.
(v) The Trust Agreement and this Agreement have each been duly and
validly authorized, executed and delivered on behalf of the Managing Owner
and each is, assuming that it has been duly and validly authorized,
executed and delivered by the other parties thereto (other than the Trust),
a valid and binding agreement of the Managing Owner except insofar as
bankruptcy, moratorium or other similar laws may be applicable, and except
that the exculpation, indemnification and contribution provisions of such
agreements may be limited by applicable law and enforcement of any specific
terms or remedies may be unavailable.
(vi) The Trust has, or is in the process of obtaining, all federal and
state governmental and regulatory approvals and licenses, and is
maintaining on a current basis all filings and registrations
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with federal and state governmental and regulatory agencies, required to
conduct its business to be conducted, all as described in the Registration
Statement and Prospectus.
(vii) The Managing Owner has all federal and state governmental and
regulatory, and to the best of its knowledge, commodity exchange licenses
and approvals, and is maintaining on a current basis all filings and
registrations with federal and state governmental and regulatory agencies,
required to act as described in the Registration Statement and Prospectus
(including, without limitation, registration as a commodity pool operator
under the Commodity Act and membership as a commodity pool operator in
NFA), and the performance of such actions will not violate or result in a
breach of any provision of its articles of incorporation, by-laws or any
agreement, instrument, order, law or regulation binding upon it.
(viii) On the Effective Date and the date on which the Prospectus is
first filed with the SEC pursuant to Rule 424(b), the Registration
Statement and the Prospectus (or when any post-effective amendment to the
Registration Statement becomes effective or any supplement to the
Prospectus is filed with the SEC, the Registration Statement, as amended,
and the Prospectus, as amended or supplemented) will comply fully in all
material respects with the requirements of the Securities Act and the Rules
and the Commodity Act and the published rules of the CFTC thereunder, and
will accurately describe the proposed operation of the Trust; and each of
the Registration Statement, as it may be amended, and the Prospectus, as it
may be amended or supplemented, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the
case of the Prospectus, as it may be amended or supplemented, in the light
of the circumstances under which such statements were made); except that
this representation and warranty does not apply to any statement or
omission in the Registration Statement, as it may be amended, or the
Prospectus, as it may be amended or supplemented, made in reliance upon
information furnished in writing to the Trust by the Additional Selling
Agent expressly for use therein.
(ix) All references to the Managing Owner and its principals in the
Registration Statement and the Prospectus are accurate and complete in all
material respects, set forth in all material respects the information
required to be disclosed to prospective investors under the Commodity Act
and the rules and regulations thereunder and, as to the Managing Owner and
its principals, the Registration Statement and Prospectus do not contain
any misleading or untrue statement of a material fact or omit to state a
material fact which is required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in
the light of the circumstances under which such statements were made).
(x) The balance sheet of the Managing Owner and the notes thereto
included in the Registration Statement present fairly the financial
position of the Managing Owner as of the date thereof, in conformity or (in
the case of any unaudited balance sheet) in substantial conformity with
generally accepted accounting principles. Since the date of the most recent
such balance sheet, there have been no changes in the financial condition
of the Managing Owner, other than changes which, in the aggregate, are not
materially adverse or which are disclosed in the Prospectus, and since such
date there have been no changes in the business of the Managing Owner which
are material in the context of the offering of the Units.
(xi) The Trust will file any promotional brochure or other marketing
materials (collectively, "Promotional Material") with the NASD, and will
not use any such Promotional Material to which the NASD has not stated in
writing that it has no objections. The Trust will file all Promotional
Material in all state jurisdictions where such filing is required, and will
not use any such Promotional Material in any state which has expressed any
objection thereto (except pursuant to agreed-upon modifications to the
Promotional Material).
(xii) The Trust and the Managing Owner have trust or corporate power
and authority under applicable law to perform their respective obligations
under the Trust Agreement and this Agreement, as described in the
Registration Statement and Prospectus.
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(xiii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition, financial or otherwise, business
or prospects of the Managing Owner or the Trust, whether or not arising in
the ordinary course of business.
(xiv) At the initial Closing Date, as set forth in the opinion of
Xxxxxx & Austin, counsel for the Managing Owner, the Trust will be
classified as a partnership for Federal income tax purposes under the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder.
(xv) There is not pending, or, to the best of the Managing Owner's
knowledge, threatened, any action, suit or proceeding before or by any
court or other governmental body to which the Managing Owner or the Trust
is a party, or to which any of the assets of the Managing Owner or the
Trust is subject, which is not referred to in the Prospectus and which
might reasonably be expected to result in any material adverse change in
the condition (financial or otherwise), business or prospects of the
Managing Owner or the Trust or is required to be disclosed in the
Prospectus pursuant to applicable CFTC regulations. The Managing Owner has
not received any notice of an investigation or warning letter from the NFA
or the CFTC regarding non-compliance by the Managing Owner with the
Commodity Act or the regulations thereunder.
(b) The Additional Selling Agent hereby represents and warrants as follows:
(i) The Additional Selling Agent is a corporation duly organized,
validly existing, and in good standing under the laws of the state of its
incorporation and has power and authority to enter into and carry out its
obligations under this Agreement.
(ii) The Additional Selling Agent has all governmental and regulatory
registrations, qualifications, approvals and licenses required to perform
its obligations under this Agreement (including, but not limited to,
registration as a broker-dealer with the SEC, membership in such capacity
in the NASD, registration as a futures commission merchant or introducing
broker under the CEA and membership with NFA, and registration or
qualification under the laws of each state in which Additional Selling
Agent will offer and sell Units); the performance by the Additional Selling
Agent of its obligations under this Agreement will not violate or result in
a breach of any provision of its certificate of incorporation or by-laws or
any agreement, order, law, or regulation binding upon it.
(iii) This Agreement has been duly and validly authorized, executed,
and delivered on behalf of the Additional Selling Agent and is a valid and
binding agreement of the Additional Selling Agent enforceable against the
Additional Selling Agent 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 except as enforceability of the indemnification provisions
contained in this Agreement may be limited by applicable law and the
enforcement of specific terms or remedies may be unavailable.
(iv) In the ordinary course of its business, the Additional Selling
Agent is engaged in civil litigation and subject to administrative
proceedings. Neither the Additional Selling Agent nor any of its principals
have been the subject of any administrative, civil, or criminal actions
within the five years preceding the date hereof that would be material for
an investor's decision to purchase the Units which are not disclosed to the
Trust or the Managing Owner.
(v) The information, if any, relating to the Additional Selling Agent
which the Additional Selling Agent has furnished to the Trust and the
Managing Owner for use in the Registration Statement is correct.
4. Covenants of the Trust and the Managing Owner
The Trust and the Managing Owner jointly and severally agree as follows:
(a) To advise the Additional Selling Agent (i) when the Registration
Statement has become effective, (ii) of the issuance by the SEC, CFTC or
any other federal or state regulatory body of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act, the
CFTC registration or NFA membership of the Managing Owner as a commodity
pool operator or the
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registration of Units under the Blue Sky or securities laws of any state or
other jurisdiction or any order or decree enjoining the offering or the use
of the then current Prospectus or of the institution, or notice of the
intended institution, of any action or proceeding for that purpose and
(iii) the receipt by the Trust or any representative or attorney of the
Trust of any other material communication from the SEC, CFTC, NFA or any
Blue Sky or securities law administrator relating to the Trust, the
Registration Statement, any preliminary prospectus or the Prospectus, as it
may be amended or supplemented. The Trust will make every reasonable effort
to prevent the issuance of any order suspending the effectiveness of the
Registration Statement under the Securities Act or the registration of
Units under the laws of the several states and various other jurisdictions
or enjoining the offering and, if any such order is issued, to obtain as
soon as possible the withdrawal thereof; provided, that in no event shall
the Trust be obligated to (i) take any action which would subject it to
service of process in suits, other than those arising out of the offering
or sale of the Units, or taxes in any jurisdiction where it is not now so
subject or (ii) change any term in the Registration Statement, as the same
may be amended or supplemented.
(b) To deliver to the Additional Selling Agent, without charge, as
many conformed copies of the registration statement as originally filed and
of the Registration Statement and each amendment or supplement thereto
(including all exhibits filed with, or incorporated by reference in, any
such document) as the Additional Selling Agent may reasonably request.
(c) During the Continuing Offering Period to deliver, without charge,
to the Additional Selling Agent, at such office or offices within the
United States of America as the Additional Selling Agent may reasonably
designate, as many copies of the Prospectus, as amended or supplemented, as
the Additional Selling Agent may reasonably request.
(d) If any event shall occur as a result of which it is necessary, in
the reasonable opinion of the Managing Owner, to amend or supplement the
Prospectus in order (i) to make the Prospectus not materially misleading in
the light of the circumstances existing at the time it is delivered to a
subscriber, or (ii) to conform with applicable CFTC or SEC Regulations, the
Managing Owner shall forthwith prepare and furnish to the Additional
Selling Agent, at the expense of the Managing Owner, a reasonable number of
copies of an amendment or amendments of, or a supplement or supplements to,
the Prospectus which will amend or supplement the Prospectus so as to
effect the necessary changes.
(e) To cause its counsel to prepare and deliver to the Additional
Selling Agent a Blue Sky Survey which shall set forth, for the guidance of
the Additional Selling Agent, in which United States jurisdictions the
Units may be offered and sold. It is understood and agreed that the
Additional Selling Agent may rely, in connection with the offering and sale
of Units in any jurisdiction, on advice given by such counsel as to the
legality of the offer or sale of the Units in such jurisdiction, provided,
however, that the Additional Selling Agent shall be responsible for
compliance with all applicable laws, rules and regulations with respect to
the actions of its employees, acting as such, in connection with sales of
Units in any jurisdiction.
5. Conditions of Closing.
The sale of the Units and the release of subscription funds for the escrow
account are subject to the accuracy of the representations and warranties of the
parties hereto, to the performance by such parties of their respective
obligations hereunder and to the following further conditions:
(a) At each Closing Date no order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or
proceeding therefor initiated or threatened by the SEC, and the CFTC shall
have filed the Prospectus as a Disclosure Document without a finding of
further deficiencies.
(b) At each Closing Date, the Managing Owner shall, at the request of
the Additional Selling Agent, deliver a certificate to the effect that: (i)
no order suspending the effectiveness of the Registration Statement has
been issued and no proceedings therefor have been instituted or to the best
of their knowledge upon due and diligent inquiry threatened by the SEC,
(ii) no adverse
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comments or deficiency notices relating to the prospectus have been
received from the CFTC or NFA which have not been responded to the
satisfaction of such agencies and (iii) the representations and warranties
of the Managing Owner contained herein are true and correct with the same
effect as though expressly made at such Closing Date and in respect of the
Registration Statement as in effect at such Closing Date; and (iii) the
Managing Owner has performed all covenants and agreements herein contained
which are required to be performed on their part at or prior to such
Closing Date.
(c) The parties hereto shall have been furnished with such additional
information, opinions and documents, including supporting documents
relating to parties described in the Prospectus and certificates signed by
such parties with regard to information relating to them and included in
the Prospectus as they may reasonably require for the purpose of enabling
them to pass upon the sale of the Units as herein contemplated and related
proceedings, in order to evidence the accuracy or completeness of any of
the representations or warranties or the fulfillment of any of the
conditions herein contained; and all actions taken by the parties hereto in
connection with the sale of the Units as herein contemplated shall be
reasonably satisfactory in form and substance to Sidley & Xxxxxx, counsel
for the Managing Owner and to the respective counsel for each of the
Additional Selling Agent.
If any of the conditions specified in this Section 5 shall not have been
fulfilled when and as required by this Agreement to be fulfilled prior to a
Closing Date, this Agreement and all obligations hereunder may be canceled by
any party hereto by notifying the other parties hereto of such cancellation in
writing or by telegram at any time at or prior to such Closing Date, and any
such cancellation or termination shall be without liability of any party to any
other party other than in respect of Units already sold and except as otherwise
provided in Section 5 of this Agreement.
6. Indemnification and Contribution
(a) The Managing Owner agrees to indemnify and hold harmless the Additional
Selling Agent, and each person, if any, who controls the Additional Selling
Agent within the meaning of Section 15 of the Securities Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
amendment thereto) or any omission or alleged omission therefrom of a
material fact required to be stated therein or necessary in order to make
the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, unless such untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity
with information relating to the Additional Selling Agent or furnished or
approved by the Additional Selling Agent;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency
or body commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission or any such alleged untrue statement or
omission (any settlement to be subject to indemnity hereunder only if
effected with the written consent of the Managing Owner); and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel) reasonably incurred in investigating, preparing
or defending against litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under clauses (i) or (ii) above.
The Managing Owner agrees to notify the Additional Selling Agent within a
reasonable time of the assertion of any claim in connection with the sale of the
Units against it or any of its officers or directors or any person who controls
the Managing Owner within the meaning of Section 15 of the Securities Act.
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(b) The Additional Selling Agent agrees to indemnify and hold harmless the
Managing Owner and the Trust and each person, if any, who controls the Managing
Owner and the Trust within the meaning of Section 15 of the Securities Act (and
each person who signed the Registration Statement or is a director of the
Managing Owner), (i) to the same extent as the indemnify from the Managing Owner
set forth in Section 6(a) hereof, but only insofar as the losses, claims,
damages, liabilities or expenses indemnified against arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
relating or with respect to the Additional Selling Agent or any of its
principals, or their operations, which was made in the Registration Statement or
the Prospectus or any amendment or supplement thereto and furnished by or
approved by the Additional Selling Agent for inclusion therein and (ii) against
any and all loss, liability, claim, damage and expense whatsoever resulting from
a demand, claim, lawsuit, action or proceeding relating to the actions or
capacities of the Additional Selling Agent (including a breach of its
obligations hereunder).
(c) Each of the parties to this Agreement understands that the obligations
of each party subject to this Section 6 are separate and distinct.
Notwithstanding any other provision of this Section 6, (i) the Managing Owner
shall have no obligation to indemnify the Additional Selling Agent for more than
the amount of proceeds resulting from the sale of Units by the Additional
Selling Agent during the period from the commencement of the offering of the
Units to the initial Closing Date and during the Continuing Offering Period plus
the Additional Selling Agent's actual expenses incurred in connection with any
loss, claim, damage, charge or liability (including reasonable attorneys' and
accountants' fees incurred in defense thereof) and (ii) any obligation of the
Managing Owner to indemnify the Additional Selling Agent shall be adjusted to
reflect the relative responsibility of the Additional Selling Agent (if any) for
the circumstances giving rise to the losses, claims, damages, costs, expenses,
liabilities or actions for which indemnification is sought.
(d) Notwithstanding any other provision of this Section 6, (i) the
Additional Selling Agent shall have no obligation to indemnify the Managing
Owner for more than the amount of proceeds resulting from the sale of Units by
the Additional Selling Agent during the period from the commencement of the
offering of the Units to the initial Closing Date and during the Continuing
Offering Period plus the Managing Owner's actual expenses incurred in connection
with any loss, claim, damage, charge or liability (including reasonable
attorneys' and accountants' fees incurred in defense thereof) and (ii) any
obligation of the Additional Selling Agent to indemnify the Managing Owner shall
be adjusted to reflect the relative responsibility of the Managing Owner (if
any) for the circumstances giving rise to the losses, claims, damages, costs,
expenses, liabilities or actions for which indemnification is sought.
(e) Notwithstanding any other provision of this Agreement, indemnification
of the Managing Owner or its controlling persons by the Trust shall be permitted
only to the extent permitted by the Trust Agreement, as amended.
(f) Any party which proposes to assert the right to be indemnified under
this Section 6 will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party under this Section 6, notify each such
indemnifying party of the commencement of such action, suit or proceeding but
the omission to notify an indemnifying party shall not relieve such indemnifying
party from any liability which it may have to any indemnified party under this
Section 6 except to the extent, and only to the extent, that such omission was
prejudicial to the indemnifying party. In no event shall any such omission
relieve an indemnifying party of any liability which it may have to an
indemnified party otherwise than under this Section 6. In case any such action,
suit or proceeding shall be brought against any indemnified party, and such
party shall notify the indemnifying party of the commencement thereof; the
indemnifying party shall be entitled to participate therein, and, if it shall
wish, individually or jointly with any other indemnifying party, to assume (or
have such other party assume) the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election (or the election of such other
party) so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, other than
reasonable costs of investigation requested by the indemnifying party (or such
other party), subsequently incurred by such indemnified
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party in connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
employment by counsel by such indemnified party has been authorized by the
indemnifying party (or such other indemnifying party as may have assumed the
defense of the action in question), (ii) the indemnified party shall have
reasonably concluded that there may be a conflict of interest between the
indemnifying party (or such other party) and the indemnified party in the
conduct of the defense of such action (in which case the indemnifying party (or
such other party) shall not have the right to direct the defense of such action
on behalf of the indemnified party) or (iii) the indemnifying party shall not in
fact have employed counsel to assume the defense of such action, in each of
which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party (subject to possible reimbursement of the indemnifying party
by such other party). An indemnifying party shall not be liable for any
settlement of any action or claim effected without its consent. In the case of
(ii) above, the indemnifying party (or the indemnifying parties, if an
indemnified party shall have a claim for indemnification against more than one
indemnifying party) shall not be liable for the expenses of more than one
separate counsel for each of the following groups: (y) the Additional Selling
Agent and any person who controls the Additional Selling Agent within the
meaning of Section 15 of the Securities Act and (z) the Trust and the Managing
Owner and any person who controls the Trust and Managing Owner within the
meaning of Section 15 of the Securities Act.
(g) The exculpation provisions of the Trust Agreement shall not relieve the
Managing Owner or its principals from any liability they may have or incur to
the Trust under this Agreement.
7. Termination
(a) Each party may terminate this Agreement at any time, in its discretion,
by giving prior written notice of such termination to the other parties.
Obligations incurred prior to termination shall survive termination.
(b) The termination of this Agreement shall not affect (i) the ongoing
obligations of the Managing Owner to pay the compensation described in Section
2(a) hereof accrued prior to the termination hereof, (ii) the Additional Selling
Agent's obligations under Section 1(d) hereof or (iii) the indemnification
obligations under Section 6 hereof.
8. Miscellaneous
(a) This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the parties hereto; provided,
however, that a party hereto may not assign any rights, obligations, or
liabilities hereunder without the prior written consent of the other parties.
(b) All notices required or desired to be delivered under this Agreement
shall be in writing and shall be effective when delivered personally on the day
delivered or, when given by registered mail, postage prepaid, return receipt
requested, on the day of receipt, addressed as follows (or to such other address
as the party entitled to notice shall hereafter designate in accordance with the
terms hereof):
if to the Managing Owner or the Trust:
Xxxxxxxx and Company, Inc.
000 Xxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attn: Compliance
Phone: 0-000-000-0000
Fax: 000-000-0000
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if to the Additional Selling Agent:
PaineWebber Incorporated
-------------------------
800 Harbor Boulevard
-------------------------
Weehawken, New Jersey 07087
-------------------------
Attn: Futures Department
--------------------
Phone: 000-000-0000
-------------------
Fax: 000-000-0000
---------------------
Tax I.D. No.: 00-0000000
------------
(c) This Agreement shall be governed by, and construed in accordance with,
the law of the State of New York without regard to the principles of choice of
law thereof.
(d) All captions used in this Agreement are for convenience only, are not a
part hereof, and are not to be used in construing or interpreting any aspect
hereof.
(e) This Agreement may be executed in counterparts, each such counterpart
to be deemed an original, but which all together shall constitute one and the
same instrument.
(f) This Agreement may not be amended except by the express written consent
of the parties hereto. No waiver of any provision of this Agreement may be
implied from any course of dealing between or among any of the parties hereto or
from any failure by any party hereto to assert its rights under this Agreement
on any occasion or series of occasions.
(g) The provisions of this Agreement shall survive the termination of this
Agreement with respect to any matter arising while this Agreement was in effect.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return a counterpart hereof, whereupon this instrument along
with all counterparts will become a binding agreement between us in accordance
with its terms.
Very truly yours,
XXXXXXXX & COMPANY, INC.
By: /s/ XXXXXXX X. XXXXX
------------------------------------
Its Chief Financial Officer
----------------------------------
XXXXXXXX ALTERNATIVE ASSET TRUST
By: XXXXXXXX & COMPANY, INC.,
the Managing Owner
By: /s/ XXXXXXX X. XXXXX
------------------------------------
Its Chief Financial Officer
----------------------------------
CONFIRMED AND ACCEPTED
PAINEWEBBER INCORPORATED
By: /s/ XXXXXX X. XXXXX
--------------------------------------------------------
Its Futures Director
-------------------------------------------------------
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