FORM OF UNITED STATES OIL FUND, LP AUTHORIZED PURCHASER AGREEMENT
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This United States Oil Fund, LP Authorized Purchaser Agreement (the “Agreement”), dated as of
March 8, 2006, is entered into by and between Victoria Bay Asset Management, LLC, a Delaware
limited liability company and General Partner of United States Oil Fund, LP (the “General
Partner”), on behalf of itself and as General Partner of United States Oil Fund, LP, and KV
Execution Services, LLC, a New York limited liability company (the “Initial Authorized Purchaser”
and an “Authorized Purchaser”).
SUMMARY
The General Partner serves in its capacity as General Partner of United States Oil Fund, LP
(the “Fund”) pursuant to the Limited Partnership Agreement dated as of the day the first Creation
Basket is sold and the proceeds are invested (substantially in the form attached hereto) between
the General Partner and the Limited Partners of the Fund (the “Partnership Agreement”). As
provided in the Partnership Agreement and described in the Fund’s prospectus (the “Prospectus”),
units of fractional undivided beneficial interest in and ownership of the limited partnership (the
“Units”) may be created or redeemed through the Marketing Agent by the Authorized Purchaser in
aggregations of one hundred thousand (100,000) Units (each aggregation, a “Creation Basket” or
“Redemption Basket,” respectively; collectively, “Baskets”). Creation Baskets are offered only
pursuant to the registration statement of the Fund on Form S-1, as amended (Registration No.:
333-124950), as declared effective by the Securities and Exchange Commission (the “SEC”) and as the
same may be amended from time to time thereafter (collectively, the “Registration Statement”).
Authorized Purchasers are the only persons that may place orders to create and redeem Creation
Baskets or Redemption Baskets.
Capitalized terms used but not defined in this Agreement shall have the meanings assigned to
such terms in the Prospectus. To the extent there is a conflict between any provision of this
Agreement and the provisions of the Prospectus, the provisions of the Prospectus shall control.
To give effect to the foregoing premises and in consideration of the mutual covenants and
agreements set forth below, the parties hereto agree as follows:
Section 1. Order Placement.
To place orders for the creation or redemption of one or more Baskets, Authorized Purchasers
must follow the procedures for creation and redemption referred to in Section 3 of this Agreement
and attached to this Agreement as Exhibit A; provided, however, that in the case of the Initial
Authorized Purchaser’s or any other Authorized Purchaser’s initial order to purchase one or more
Creation Baskets on the first day the Baskets are to be offered and sold, the procedures for
creation will be as attached to this Agreement as Exhibit A-1.
Section 2. Status and Obligations of Authorized Purchaser.
The Authorized Purchaser represents and warrants and covenants the following:
(a) The Authorized Purchaser is a participant of the Depository Trust Company (“DTC”) (as such
a participant, a “DTC Participant”). If the Authorized Purchaser ceases to be a DTC Participant,
the Authorized Purchaser shall give immediate notice to the General Partner of such event, and this
Agreement shall terminate immediately as of the date the Authorized Purchaser ceased to be a DTC
Participant.
(b) Unless Section 2(c) applies, the Authorized Purchaser either (i) is registered as a
broker-dealer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is a
member in good standing of the National Association of Securities Dealers, Inc. (the “NASD”), or
(ii) is exempt from being, or otherwise is not required to be, licensed as a broker-dealer or a
member of the NASD, and in either case is qualified to act as a broker or dealer in the states or
other jurisdictions where the nature of its business so requires. The Authorized Purchaser will
maintain any such registrations, qualifications and membership in good standing and in full force
and effect throughout the term of this Agreement. The Authorized Purchaser will comply with all
applicable federal law, the laws of the states or other jurisdictions concerned, and the rules and
regulations promulgated thereunder, including, but not limited to those applicable to securities
and commodities transactions, and with the Constitution, By-Laws and Conduct Rules of the NASD (if
it is a NASD member), and is solely responsible for determining the application of any such laws or
regulations in all cases at its own expense. The Authorized Purchaser will not directly or
indirectly offer, sell or deliver Baskets in or from any state or jurisdiction where they may not
lawfully be offered, sold and/or delivered.
(c) If the Authorized Purchaser is offering or selling Units in jurisdictions outside the
several states, territories and possessions of the United States and is not otherwise required to
be registered, qualified or a member of the NASD as set forth in Section 2(b) above, the Authorized
Purchaser will (i) observe the applicable laws of the jurisdiction in which such offer and/or sale
is made, (ii) comply with the full disclosure requirements of the Securities Act of 1933, as
amended (the “1933 Act”) and the Commodities Exchange Act (the “CEA”), and the rules and
regulations promulgated thereunder, and (iii) conduct its business in accordance with the spirit of
the NASD Conduct Rules.
(d) The Authorized Purchaser is in compliance with the money laundering and related provisions
of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the “PATRIOT Act”), and the regulations promulgated thereunder, if
the Authorized Purchaser is subject to the requirements of the PATRIOT ACT.
(e) The Authorized Purchaser has the capability to send and receive communications via an
authenticated telecommunication facility to and from the General Partner, ALPS Distributors, Inc.
(the “Marketing Agent”) and Xxxxx Brothers Xxxxxxxx & Co., who shall act as both administrator (the
“Administrator”) and custodian (the “Custodian”) for the Fund. The Authorized Purchaser shall
confirm such capability to the satisfaction of the General Partner and the Marketing Agent by the
end of the Business Day (as defined below) before placing its first order with the Marketing Agent
(whether such order is to create or to redeem Baskets). If required by the Marketing Agent, the
Administrator or the Custodian with respect to authorized
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telecommunications by telephonic facsimile, the Authorized Purchaser shall enter into a
separate agreement with the Marketing Agent, the Administrator or the Custodian, as the case may
be, indemnifying such party with respect to its communications by telephonic facsimile.
(f) Because new Baskets can be created and Units therein issued on an ongoing basis, at any
point during the life of the partnership, a “distribution,” as such term is used in the 1933 Act,
may be occurring with respect to resales of these Units. The Authorized Purchaser is cautioned
that some of its activities may result in its being deemed a participant in a distribution in a
manner which would render it a statutory underwriter and subject it to the prospectus-delivery and
liability provisions of the 1933 Act. The Authorized Purchaser should review the “What is the Plan
of Distribution?” portion of the Prospectus and consult with its own counsel in connection with
entering into this Agreement and placing an Order (as defined below). In addition to satisfying
the prospectus delivery and disclosure requirements of the 1933 Act, the Authorized Purchaser and
any other participant in the distribution of the Units purchased by the Authorized Purchaser also
has the obligation to comply with the disclosure delivery requirements under the CEA, including,
with respect to the CEA, the requirement that it provide an acknowledgement of receipt of the
Prospectus (the “CEA Acknowledgement”) as set forth in Section 11, to the Fund, directly or through
its agent, the Marketing Agent, prior to payment of the purchase price for any Creation Basket to
the Fund. To the extent the Authorized Purchaser has distributed a Preliminary Prospectus to
prospective investors, if there are material changes made to that document as compared to the final
Prospectus, the Authorized Purchaser shall give notice to any prospective investor who received the
Preliminary Prospectus of such material change prior to a sale.
Section 3. Orders.
(a) All orders to create or redeem Baskets shall be made in accordance with the terms of the
Prospectus, this Agreement and the creation and redemption procedures attached hereto as Exhibit A
(the “Procedures”), except in the case of the Initial Authorized Purchaser’s or any other
Authorized Purchaser’s initial order to purchase one or more Creation Baskets on the first day the
Baskets are to be offered and sold which will be governed by the procedures set fro in Exhibit A-1.
Each party will comply with such foregoing terms to the extent applicable to it. The General
Partner may issue additional or other procedures from time to time relating to the manner of
creating or redeeming Baskets and the Authorized Purchaser will comply with such procedures. The
Authorized Purchaser hereby consents to the use of recorded telephone lines.
(b) The Authorized Purchaser acknowledges and agrees it is acting solely as principal and not
on behalf of any party for which it is acting (whether such party is a customer or otherwise) that
each order to create a Basket (a “Purchase Order”) and each order to redeem a Basket (a “Redemption
Order”, and each Purchase Order and Redemption Order, an “Order”) may not be withdrawn by the
Authorized Purchaser. A form of Purchase/Redemption Order is attached hereto as Exhibit B.
(c) The General Partner acting by itself or through the Marketing Agent shall have the
absolute right, but shall have no obligation, to reject any Purchase Order or Creation Basket
Deposit (i) determined by the General Partner not to be in proper form; (ii) that the General
Partner has determined would have adverse tax consequences to the Fund; (iii) the acceptance or
receipt of which would, in the opinion of counsel to the General Partner, be unlawful; or (iv) if
circumstances
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outside the control of the General Partner, the Marketing Agent or the Custodian make it for
all practical purposes not feasible to process creations of Creation Baskets. None of the General
Partner, the Marketing Agent or the Custodian shall be liable to any person by reason of the
rejection of any Purchase Order or Creation Basket Deposit (as defined in Section 6).
(d) The General Partner acting by itself or through the Marketing Agent may, in its sole
discretion, reject any Redemption Order (i) determined by the General Partner not to be in proper
form or (ii) the fulfillment of which its counsel advises may be illegal under applicable laws and
regulations, and neither the General Partner nor the Marketing Agent shall have liability to any
person for rejecting a Redemption Order in such circumstances.
Section 4. Fees.
In connection with each Order by an Authorized Purchaser to create or redeem one or more
Baskets, the General Partner shall charge, and the Authorized Purchaser shall pay to the General
Partner, the Transaction Fee prescribed in the Prospectus applicable to such creation or
redemption. The initial Transaction Fee shall be one thousand dollars ($1,000). The Transaction
Fee may be adjusted from time to time as set forth in the Prospectus.
Section 5. Authorized Persons.
Concurrently with the execution of this Agreement and from time to time thereafter, the
Authorized Purchaser shall deliver to the General Partner and the Marketing Agent, notarized and
duly certified as appropriate by its secretary or other duly authorized official, a certificate in
the form of Exhibit C setting forth the names and signatures of all persons authorized to give
instructions relating to activity contemplated hereby or by any other notice, request or
instruction given on behalf of the Authorized Purchaser (each, an “Authorized Person”). The
General Partner or the Marketing Agent may accept and rely upon such certificate as conclusive
evidence of the facts set forth therein and shall consider such certificate to be in full force and
effect until the General Partner receives a superseding certificate bearing a subsequent date.
Upon the termination or revocation of authority of any Authorized Person by the Authorized
Purchaser, the Authorized Purchaser shall give immediate written notice of such fact to the General
Partner and the Marketing Agent, and such notice shall be effective upon receipt by the General
Partner.
Section 6. Creation Procedures.
On any Business Day, an Authorized Purchaser may place an order with the Marketing Agent to
create one or more Creation Baskets in accordance with this Section 6 and the Procedures. For
purposes of processing purchase and redemption orders, a “Business Day” means any day other than a
day when any of the American Stock Exchange, the New York Mercantile Exchange or the New York Stock
Exchange is closed for regular trading. Purchase orders must be placed by 12:00 PM New York time
or the close of regular trading on the American Stock Exchange, whichever is earlier, except in the
case of the Initial Authorized Purchaser’s or any other Authorized Purchaser’s initial order to
purchase one or more Creation Baskets on the first day the Baskets are to be offered and sold, when
such orders shall be placed by 9:00 AM New York Time on the day agreed to by the General Partner
and the Initial Authorized Purchaser. The day on which the Marketing Agent receives a valid
purchase order is the purchase order date. By placing a purchase order, an Authorized Purchaser
agrees to deposit Treasuries, cash, or a combination of Treasuries and cash with the Custodian of
the Fund. Prior to the delivery of Baskets for a purchase order, the
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Authorized Purchaser must also have wired to the Custodian the non-refundable transaction fee
due for the purchase order. “Treasuries” shall be any U.S. treasury security less than two years
to maturity with an aggregate market value, as determined in the sole discretion of the
Administrator using the valuation procedures set forth in Exhibit D, that together with any cash
amount, will equal the purchase price of the Creation Basket being purchased.
The total deposit required to create each Basket (“Creation Basket Deposit”) is an amount of
Treasuries and/or cash with a value that is in the same proportion to the total assets of the Fund
(net of estimated accrued but unpaid fees, expenses and other liabilities) on the date the order to
purchase is properly received as the number of Units to be created under the purchase order is in
proportion to the total number of Units outstanding on the date the order is received, except that
in the case of the Initial Authorized Purchaser’s or any other Authorized Purchaser’s initial order
to purchase one or more Creation Baskets on the first day the Baskets are to be offered and sold,
the Creation Basket Deposit will be in cash in an amount determined by multiplying the number of
Units in the Basket by the closing price of near month oil futures contracts for light, sweet crude
oil as listed on the NYMEX on the date the first Creation Basket is sold.
The General Partner determines, directly in its sole discretion, or in consultation with the
Administrator, the requirements for Treasuries and/or the amount of cash, including the maximum
permitted remaining maturity of a Treasury and the proportions of Treasury and cash, that may be
included in deposits to create Baskets. The Marketing Agent will publish such requirements at the
beginning of each Business Day. Unless otherwise determined by the General Partner, if Treasuries
and cash are to be deposited, the amount of cash deposit required will be the difference between
(i) the aggregate market value of the Treasuries required to be included in a Creation Basket
Deposit as of 4:00 PM New York time on the purchase order date and (ii) the total required deposit.
An Authorized Purchaser who places a purchase order is responsible for transferring to the
Fund’s account with the Custodian the required amount of Treasuries and/or cash by the end of the
third Business Day following the purchase order date, except in the case of the Initial Purchaser’s
or any other Authorized Purchaser’s initial order to purchase one or more Creation Baskets on the
first day the Baskets are to be offered and sold when the Creation Basket Deposit will be due by
12:00 PM New York time or the date the purchase order was accepted by the Marketing Agent. Upon
receipt of the deposit amount, the Administrator will direct DTC to credit the number of Baskets
ordered to the Authorized Purchaser’s DTC account on the third Business Day following the purchase
order date, except in the case of the Initial Authorized Purchaser’s initial order to purchase one
or more Creation Baskets, when the Administrator will direct DTC to credit the number of Baskets so
ordered upon confirmation by the Custodian that the Creation Basket Deposit has been received by
the Custodian. The expense and risk of delivery and ownership of Treasuries until such Treasuries
have been received by the Custodian on behalf of the Fund shall be borne solely by the Authorized
Purchaser.
Section 7. Redemption Procedures.
On any Business Day, an Authorized Purchaser may place an order with the Marketing Agent to
redeem one or more Redemption Baskets in accordance with this Section 7 and the Procedures.
Redemption orders must be placed by 12:00 PM New York time or the close of
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regular trading on the American Stock Exchange, whichever is earlier. A redemption order so
received is effective on the date it is received in satisfactory form by the Marketing Agent. The
day on which the Marketing Agent receives a valid redemption order is the redemption order date.
By placing a redemption order, an Authorized Purchaser agrees to deliver the Redemption Baskets to
be redeemed through DTC’s book-entry system to the Fund’s account with the Custodian not later than
11 a.m. on the third Business Day following the effective date of the redemption order. Prior to
the delivery of the redemption distribution for a redemption order, the Authorized Purchaser must
also have wired to the Fund’s account at the Custodian the non-refundable Transaction Fee due for
the redemption order.
The redemption distribution from the Fund consists of a transfer to the redeeming Authorized
Purchaser of an amount of Treasuries and/or cash with a value that is in the same proportion to the
total assets of the Fund (net of estimated accrued but unpaid fees, expenses and other liabilities)
on the date the order to redeem is properly received as the number of Units to be redeemed under
the redemption order is in proportion to the total number of Units outstanding on the date the
order is received. The General Partner, directly or in consultation with the Administrator, will
determine the requirements for Treasuries and/or the amount of cash, including the maximum
permitted remaining maturity of a Treasury, and the proportions of Treasuries and cash, that may be
included in distributions to redeem Baskets. The Marketing Agent will publish such requirements as
of 4:00 PM New York time on the redemption order date.
The redemption distribution due from the Fund is delivered to the Authorized Purchaser on the
third Business Day following the redemption order date if, by 9:00 AM New York time on such third
Business Day, the Fund’s DTC account has been credited with the Baskets to be redeemed. If the
Fund’s DTC account has not been credited with all of the Baskets to be redeemed by such time, the
redemption distribution is delivered to the extent of whole Baskets received. Any remainder of the
redemption distribution is delivered on the next Business Day to the extent of remaining whole
Baskets received if the Fund receives the fee applicable to the extension of the redemption
distribution date which the General Partner may, from time to time, determine and the remaining
Baskets to be redeemed are credited to the Fund’s DTC account by 9:00 AM New York time on such next
Business Day. Any further outstanding amount of the redemption order shall be cancelled. Pursuant
to instruction from the General Partner, the Custodian may also deliver the redemption distribution
notwithstanding that the Baskets to be redeemed are not credited to the Fund’s DTC account by 9:00
AM New York time on the third Business Day following the redemption order date if the Authorized
Purchaser has collateralized its obligation to deliver the Baskets through DTC’s book entry system
on such terms as the General Partner may from time to time determine.
The General Partner may, in its discretion, suspend the right of redemption, or postpone the
redemption settlement date, (1) for any period during which the American Stock Exchange or the New
York Mercantile Exchange is closed other than customary weekend or holiday closings, or trading on
the American Stock Exchange or the New York Mercantile Exchange is suspended or restricted, (2) for
any period during which an emergency exists as a result of which delivery, disposal or evaluation
of Treasuries or other assets of the Fund is not reasonably practicable, or (3) for such other
period as the General Partner determines to be necessary for the protection of the limited
partners. None of the General Partner, the Marketing Agent, the Administrator or the
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Custodian will be liable to any person or in any way for any loss or damages that may result
from any such suspension or postponement.
Section 8. Role of Authorized Purchaser.
(a) The Authorized Purchaser acknowledges that, for all purposes of this Agreement, the
Authorized Purchaser is and shall be deemed to be an independent contractor and has and shall have
no authority to act as agent for the Fund, the Marketing Agent, the Administrator the Custodian or
the General Partner in any matter or in any respect, except as set forth in Section 2(f).
(b) The Authorized Purchaser will make itself and its employees available, upon request,
during normal business hours to consult with the General Partner and the Marketing Agent concerning
the performance of the Authorized Purchaser’s responsibilities under this Agreement.
(c) The Authorized Purchaser will maintain records of all sales of Creation Baskets made by or
through it and will furnish copies of such records to the General Partner upon the reasonable
request of the General Partner.
Section 9. Indemnification.
(a) Indemnification of Authorized Purchaser. The General Partner agrees to indemnify, defend
and hold harmless the Authorized Purchaser, its partners, stockholders, members, directors,
officers and employees and any Affiliate of the foregoing, and the successors and assigns of all of
the foregoing persons, from and against any loss, damage, expense, liability or claim (including
the reasonable cost of investigation) which the Authorized Purchaser or any such person may incur
under the 1933 Act, the Exchange Act, the CEA, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon:
(1) any untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended or supplement) or in
a Prospectus (the term Prospectus for the purpose of this Section 6 being deemed to
include the Prospectus and the Prospectus as amended or supplemented), or arises out of
or is based upon any omission or alleged omission to state a material fact required to
be stated in either such Registration Statement or such Prospectus or necessary to make
the statements made therein not misleading, except insofar as any such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in and in conformity with
information concerning the Authorized Purchaser furnished in writing by or on behalf of
the Authorized Purchaser to the General Partner expressly for use in such Registration
Statement;
(2) any untrue statement or alleged untrue statement of a material fact or breach by the
General Partner of any representation or warranty contained this Agreement;
(3) the failure by the General Partner to perform when and as required, any agreement or
covenant contained herein;
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(4) the Authorized Purchaser’s performance of its duties under this Agreement except in
the case of this clause (4), for any loss, damage, expense, liability or claim resulting
from the gross negligence or willful misconduct of the Authorized Purchaser.
In no case is the indemnity of the General Partner in favor of the Authorized Purchaser
and such other persons as are specified in this Section 9(a) to be deemed to protect the
Authorized Purchaser and such persons against any liability to the General Partner or
the Fund to which the Authorized Purchaser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this Agreement.
If any action, suit or proceeding (each, a “Proceeding”) is brought against the
Authorized Purchaser or any such person in respect of which indemnity may be sought
against the General Partner pursuant to the foregoing paragraph, the Authorized
Purchaser or such person shall promptly notify the General Partner in writing of the
institution of such Proceeding and the General Partner shall assume the defense of such
Proceeding, including the employment of counsel reasonably satisfactory to such
indemnified party and payment of all fees and expenses; provided, however, that the
omission to so notify the General Partner shall not relieve the General Partner from any
liability which it may have to the Authorized Purchaser or any such person except to the
extent that it has been materially prejudiced by such failure and has not otherwise
learned of such Proceeding. The Authorized Purchaser or such person shall have the right
to employ its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Authorized Purchaser or of such person unless the
employment of such counsel shall have been authorized in writing by the General Partner
in connection with the defense of such Proceeding or the General Partner shall not have,
within a reasonable period of time in light of the circumstances, employed counsel to
have charge of the defense of such Proceeding or such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them which are
different from, additional to or in conflict with those available to the General Partner
(in which case the General Partner shall not have the right to direct the defense of
such Proceeding on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the General Partner and paid as incurred (it
being understood, however, that the General Partner shall not be liable for the expenses
of more than one separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding).
The General Partner shall not be liable for any settlement of any Proceeding effected
without the General Partner’s written consent but if settled with the General Partner’s
written consent, the General Partner agrees to indemnify and hold harmless the
Authorized Purchaser and any such person from and against any loss or liability by
reason of such settlement. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
sentence of this paragraph, then the indemnifying party agrees that it shall be liable
for
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any settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 Business Days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall not have fully
reimbursed the indemnified party in accordance with such request prior to the date of
such settlement and (iii) such indemnified party shall have given the indemnifying party
at least 30 Business Days’ prior notice of its intention to settle. No indemnifying
party shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened Proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such
Proceeding and does not include an admission of fault, culpability or a failure to act,
by or on behalf of such indemnified party.
(b) The Authorized Purchaser agrees to indemnify, defend and hold harmless each of the Fund,
the General Partner and its partners, stockholders, members, directors, officers, employees and any
person who controls the General Partner within the meaning of Section 15 of the 1933 Act or Section
20 of the Exchange Act, and the successors and assigns of all of the foregoing persons, from and
against any loss, damage, expense, liability or claim (including the reasonable cost of
investigation) which the General Partner any such person may incur under the 1933 Act, the Exchange
Act, the CEA, the common law or otherwise, insofar as such loss, damage, expense, liability or
claim arises out of or is based upon any untrue statement or alleged untrue statement of a material
fact contained in and in conformity with information furnished in writing by or on behalf of the
Authorized Purchaser to the General Partner expressly for use in the Registration Statement (or in
the Registration Statement as amended or supplemented by any post-effective amendment thereof) or
in a Prospectus, or arises out of or is based upon any omission or alleged omission to state a
material fact in connection with such information required to be stated in such Registration
Statement or such Prospectus or necessary to make such information not misleading.
The Authorized Purchaser will also indemnify the General Partner as stated above insofar as
such loss, damage, expense, liability or claim arises out of or is based upon the Authorized
Purchaser’s performance of its duties under this Agreement, except in the case of any loss, damage,
expense, liability or claim resulting from the gross negligence or willful misconduct of the
General Partner. In no case is the indemnity of the Authorized Purchaser in favor of the General
Partner to be deemed to protect the General Partner and such persons against any liability to the
Authorized Purchaser to which the General Partner would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
If any Proceeding is brought against the General Partner or any person referred to in the
preceding paragraph in respect of which indemnity may be sought against the Authorized Purchaser
pursuant to the foregoing paragraph, the General Partner or such person shall promptly notify the
Authorized Purchaser in writing of the institution of such Proceeding and the Authorized Purchaser
shall assume the defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such indemnified party and payment of all fees and expenses; provided, however,
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that the omission to so notify the Authorized Purchaser shall not relieve the Authorized
Purchaser from any liability which it may have to the General Partner or any such person except to
the extent that it has been materially prejudiced by such failure and has not otherwise learned of
such Proceeding. The General Partner or such person shall have the right to employ their own
counsel in any such case, but the fees and expenses of such counsel shall be at the expense of the
General Partner or such person unless the employment of such counsel shall have been authorized in
writing by the Authorized Purchaser in connection with the defense of such Proceeding or the
Authorized Purchaser shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to defend such Proceeding or such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it or them which are
different from or additional to or in conflict with those available to the Authorized Purchaser (in
which case the Authorized Purchaser shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties, but the Authorized Purchaser may employ
counsel and participate in the defense thereof but the fees and expenses of such counsel shall be
at the expense of the Authorized Purchaser), in any of which events such fees and expenses shall be
borne by the Authorized Purchaser and paid as incurred (it being understood, however, that the
Authorized Purchaser shall not be liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of related Proceedings in the same
jurisdiction representing the indemnified parties who are parties to such Proceeding).
The Authorized Purchaser shall not be liable for any settlement of any such Proceeding
effected without the written consent of the Authorized Purchaser but if settled with the written
consent of the Authorized Purchaser, the Authorized Purchaser agrees to indemnify and hold harmless
the General Partner and any such person from and against any loss or liability by reason of such
settlement. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel
as contemplated by the second sentence of the preceding paragraph, then the indemnifying party
agrees that it shall be liable for any settlement of any Proceeding effected without its written
consent if (i) such settlement is entered into more than 60 Business Days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such settlement and
(iii) such indemnified party shall have given the indemnifying party at least 30 Business Days’
prior notice of its intention to settle. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or threatened Proceeding in
respect of which any indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the subject matter of such
Proceeding.
(c) The indemnity agreements contained in this Section 9 and the covenants, warranties and
representations of the General Partner contained in this Agreement shall remain in full force and
effect regardless of any investigation made by or on behalf of the Authorized Purchaser, its
partners, stockholders, members, directors, officers, employees and or any person (including each
partner, stockholder, member, director, officer or employee of such person) who controls the
Authorized Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the Exchange
Act, or by or on behalf of each of the General Partner, the Fund, their partners,
10
stockholders, members, directors, officers, employees or any person who controls the General
Partner or the Fund within the meaning of Section 15 of the 1933 Act or Section 20 of the Exchange
Act, and shall survive any termination of this Agreement or the initial issuance and delivery of
the Units. The General Partner and the Authorized Purchaser agree promptly to notify each other of
the commencement of any Proceeding against it and, in the case of the General Partner, against any
of the General Partner’s officers or directors in connection with the issuance and sale of the
Units, or in connection with the Registration Statement or the Prospectus.
Section 10.
(a) Limitation of Liability.
None of the General Partner, the Authorized Purchaser, the Marketing Agent, the Administrator,
or the Custodian, shall be liable to each other or to any other person, including any party
claiming by, through or on behalf of the Authorized Purchaser, for any losses, liabilities,
damages, costs or expenses arising out of any mistake or error in data or other information
provided to any of them by each other or any other person or out of any interruption or delay in
the electronic means of communications used by them.
(b) Tax Liability.
The Authorized Purchaser shall be responsible for the payment of any transfer tax, sales or
use tax, stamp tax, recording tax, value added tax and any other similar tax or government charge
applicable to the creation or redemption of any Basket made pursuant to this Agreement, regardless
of whether or not such tax or charge is imposed directly on the Authorized Purchaser. To the
extent the General Partner or the Fund is required by law to pay any such tax or charge, the
Authorized Purchaser agrees to promptly indemnify such party for any such payment, together with
any applicable penalties, additions to tax or interest thereon.
Section 11. Acknowledgment.
The Authorized Purchaser acknowledges receipt of a copy of the Prospectus and represents that it
has reviewed and understands such document.
Section 12. Effectiveness and Termination.
Upon the execution of this Agreement by the parties hereto, this Agreement shall become effective
in this form as of the date first set forth above, and may be terminated at any time by any party
upon thirty (30) days’ prior written notice to the other parties unless earlier terminated: (i) in
accordance with Section 2(a); (ii) upon notice to the Authorized Purchaser by the General Partner
in the event of a breach by the Authorized Purchaser of this Agreement or the procedures described
or incorporated herein; or (iii) at such time as the Fund is terminated.
Section 13. Marketing Materials; Representations Regarding Baskets; Identification in Registration
Statement.
(a) The Authorized Purchaser represents, warrants and covenants that (i), without the written
consent of the General Partner, the Authorized Purchaser will not make, or permit any of its
representatives to make, any representations concerning the Baskets or the General Partner, the
Fund or any person indemnified by the Authorized Purchaser (the “AP Indemnified Person”) other than
representations contained (A) in the then-current Prospectus of the Fund, (B) in printed
information approved by the General Partner as information supplemental to such Prospectus or
11
(C) in any promotional materials or sales literature furnished to the Authorized Purchaser by the
General Partner, and (ii) the Authorized Purchaser will not furnish or cause to be furnished to any
person or display or publish any information or material relating to the Baskets, any AP
Indemnified Person or the Fund that is not consistent with the Fund’s then current Prospectus.
Copies of the then-current Prospectus of the Fund and any such printed supplemental information
will be supplied by the General Partner to the Authorized Purchaser in reasonable quantities upon
request.
(b) The Authorized Purchaser agrees to comply with the prospectus and disclosure delivery
requirements of the Federal securities and commodities laws. In connection therewith, the
Authorized Purchaser will provide each prospective purchaser with a copy of the Fund’s Prospectus
and, to the extent required under the CEA or regulations promulgated thereunder, obtain (or require
any participant in the distribution of Units in a Creation Basket the Authorized Purchaser has
purchased to obtain) the CEA Acknowledgment from any such purchaser prior to receipt of payment
from the purchaser. The Authorized Purchaser shall (or shall require any participant in
distribution of such Units in a Creation Basket the Authorized Purchaser has purchased) maintain
each such CEA Acknowledgement until the termination of this Agreement, and provide a copy to the
General Partner upon reasonable request.
(c) The Authorized Purchaser hereby agrees that for the term of this Agreement the General
Partner or its agent, the Marketing Agent, may deliver the then-current Prospectus, and any
supplements or amendments thereto or recirculation thereof, to the Authorized Purchaser in Portable
Document Format (“PDF”) via electronic mail or facsimile in lieu of delivering the Prospectus in
paper form. The Authorized Purchaser may revoke the foregoing agreement at any time by delivering
written notice to the General Partner and, whether or not such agreement is in effect, the
Authorized Purchaser may, at any time, request reasonable quantities of the Prospectus, and any
supplements or amendments thereto or recirculation thereof, in paper form from the General Partner
or its agent, the Marketing Agent. The Authorized Purchaser acknowledges that it has the
capability to access, view, save and print material provided to it in PDF and that it will incur no
appreciable extra costs by receiving the Prospectus in PDF instead of in paper form. The General
Partner will when requested by the Authorized Purchaser make available at no cost the software and
technical assistance necessary to allow the Authorized Purchaser to access, view and print the PDF
version of the Prospectus.
(d) For as long as this Agreement is effective, the Authorized Purchaser agrees to be
identified as an authorized purchaser of the Fund (i) in the section of the Prospectus included
within the Registration Statement entitled “Creation and Redemption of Units” and in any other
section as may be required by the SEC and (ii) on the Fund’s website. Upon the termination of this
Agreement, (i) during the period prior to when the General Partner qualifies and elects to file on
Form S-3, the General Partner will remove such identification from the Prospectus in the amendment
of the Registration Statement next occurring after the date of the termination of this Agreement
and, during the period after when the General Partner qualifies and elects to file on Form S-3, the
General Partner will promptly file a current report on Form 8-K indicating the withdrawal of the
Authorized Purchaser as an authorized purchaser of the Fund and (ii) the General Partner will
promptly update the Fund’s website to remove any identification of the Authorized Purchaser as an
authorized purchaser of the Fund.
12
Section 14. Certain Covenants of the General Partner.
The General Partner, on its own behalf and on behalf of the Fund, covenants and agrees:
(a) to advise the Authorized Purchaser promptly of the happening of any event during the term
of this Agreement which could require the making of any change in the Prospectus then being used so
that the Prospectus would not include an untrue statement of material fact or omit to state a
material fact necessary to make the statements therein, in the light of the circumstances under
which they are made, not misleading, and, during such time, to prepare and furnish, at the expense
of the Fund, to the Authorized Purchaser promptly such amendments or supplements to such Prospectus
as may be necessary to reflect any such change;
(b) to cause Xxxxxx LLP, accountants to the Fund, to deliver, at each time (i) the
Registration Statement or the Prospectus is amended or supplemented by the filing of a
post-effective amendment, (ii) a new Registration Statement is filed to register additional
Baskets in reliance on Rule 429, and (iii) there is financial information incorporated by reference
into the Registration Statement or the Prospectus, letters dated such dates and addressed to the
Authorized Purchaser, containing statements and information of the type ordinarily included in
accountants’ letters to underwriters with respect to the financial statements and other financial
information contained in or incorporated by reference into the Registration Statement and the
Prospectus;
(c) to deliver to the Authorized Purchaser, at each time (i) the Registration Statement or the
Prospectus is amended or supplemented by the filing of a post-effective amendment, (ii) a new
Registration Statement is filed to register additional Baskets in reliance on Rule 429, and (iii)
there is financial information incorporated by reference into the Registration Statement or the
Prospectus, a certification by a duly authorized officer of the General Partner in the form
attached hereto as Exhibit E. In addition, any certificate signed by any officer of the General
Partner and delivered to the Authorized Purchaser or counsel for the Authorized Purchaser pursuant
hereto shall be deemed to be a representation and warranty by the General Partner as to matters
covered thereby to the Authorized Purchaser;
(d) to furnish directly or through the Marketing Agent to the Authorized Purchaser, at each
time (i) the Registration Statement or the Prospectus is amended or supplemented by the filing of a
post-effective amendment, (ii) a new Registration Statement is filed to register additional Baskets
in reliance on Rule 429, and (iii) there is financial information incorporated by reference into
the Registration Statement or the Prospectus, such documents and certificates in the form as
reasonably requested; and
(e) to cause the Fund to file a post-effective amendment to the Registration Statement no less
frequently than once per calendar quarter on or about the same time that the Fund files a quarterly
or annual report pursuant to Section 13 or 15(d) of the Exchange Act (including the information
contained in such report), until such time as the Fund’s reports filed pursuant to Section 13 or
15(d) of the Exchange Act are incorporated by reference in the Registration Statement.
Section 15. Third Party Beneficiaries.
13
Each AP Indemnified Person, to the extent it is not a party to this Agreement, is a
third-party beneficiary of this Agreement (each, a “Third Party Beneficiary”) and may proceed
directly against the Authorized Purchaser (including by bringing proceedings against the Authorized
Purchaser in its own name) to enforce any obligation of the Authorized Purchaser under this
Agreement which directly or indirectly benefits such Third Party Beneficiary.
Section 16. Force Majeure.
No party to this Agreement shall incur any liability for any delay in performance, or for the
non-performance, of any of its obligations under this Agreement by reason of any cause beyond its
reasonable control. This includes any act of God or war or terrorism, any breakdown, malfunction or
failure of transmission in connection with or other unavailability of any wire, communication or
computer facilities, any transport, port, or airport disruption, industrial action, acts and
regulations and rules of any governmental or supra national bodies or authorities or regulatory or
self-regulatory organization or failure of any such body, authority or organization for any reason,
to perform its obligations.
Section 17. Miscellaneous.
(a) Entire Agreement. This Agreement (including any schedules and exhibits attached hereto
and thereto) contain all of the agreements among the parties hereto and thereto with respect to the
transactions contemplated hereby and thereby and supersede all prior agreements or understandings,
whether written or oral, among the parties with respect thereto.
(b) Amendment and Modification. This Agreement may be amended, modified or supplemented only
by a written instrument executed by all the parties.
(c) Successors and Assigns; Assignment. All the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement shall not be assigned by any party without the prior written
consent of the other parties and any assignment without such consent shall be null and void.
(d) Waiver of Compliance. Except as otherwise provided in this Agreement, any failure of any
of the parties to comply with any obligation, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument signed by the party
granting such waiver, but any such waiver, or the failure to insist upon strict compliance with any
obligation, covenant, agreement or condition herein, shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure or breach.
(e) Severability. The parties hereto desire that the provisions of this Agreement be enforced
to the fullest extent permissible under the Law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of this Agreement would
be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn
so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
14
jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
(f) Notices. All notices, waivers, or other communications pursuant to this Agreement shall
be in writing and shall be deemed to be sufficient if delivered personally, by facsimile (and, if
sent by facsimile, followed by delivery by nationally-recognized express courier), sent by
nationally-recognized express courier or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(1) | if to General Partner, to: | ||
Victoria Bay Asset Management, LLC x/x Xxxxxxxx X. Xxxxxx X.X. Xxx 0000 Xxxxxx, CA 94570 |
|||
(2) | if to the Authorized Purchaser, to: | ||
KV Execution Services LLC 0000 Xxxxx 00 Xxxxx 000 Xxxxxxxx Xxxxxxxxx, XX 00000 |
All such notices and other communications shall be deemed to have been delivered and received (i)
in the case of personal delivery or delivery by facsimile or e-mail, on the date of such delivery
if delivered during business hours on a Business Day or, if not delivered during business hours on
a Business Day, the first Business Day thereafter, (ii) in the case of delivery by
nationally-recognized express courier, on the first Business Day following dispatch, and (iii) in
the case of mailing, on the third Business Day following such mailing.
(g) | Governing Law; Jurisdiction. | ||
(1) | All questions concerning the construction, interpretation and validity of this Agreement shall be governed by and construed and enforced in accordance with the domestic laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether in the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. In furtherance of the foregoing, the internal law of the State of New York will control the interpretation and construction of this Agreement, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily or necessarily apply. | ||
(2) | Each party irrevocably consents and agrees, for the benefit of the other parties, that any legal action, suit or proceeding against it with respect to its obligations, liabilities or any other matter arising out of or in connection with this Agreement or any related agreement may be brought in the courts of the State of New York and hereby |
15
irrevocably consents and submits to the non-exclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for itself and in respect of its properties, assets and revenues. Each party irrevocably waives any immunity to jurisdiction to which it may otherwise be entitled or become entitled (including sovereign immunity, immunity to pre-judgment attachment and execution) in any legal suit, action or proceeding against it arising out of or based on this Agreement or any related agreement or the transactions contemplated hereby or thereby which is instituted in any court of the State of New York. | |||
The provisions of this Section 17(g) shall survive any termination of this Agreement, in whole or in part. |
(h) No Partnership. Nothing in this Agreement is intended to, or will be construed to
constitute the General Partner or the Fund, on the one hand, and the Authorized Purchaser or any of
its Affiliates, on the other hand, as partners or joint venturers; it being intended that the
relationship between them will at all times be that of independent contractors.
(i) Interpretation. The article and section headings contained in this Agreement are solely
for the purpose of reference, are not part of the agreement of the parties and shall not in any way
affect the meaning or interpretation of this Agreement.
(j) No Strict Construction. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of strict construction
will be applied against any party.
(k) Counterparts; Facsimile Signatures. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which together shall constitute
one and the same instrument. Facsimile counterpart signatures to this Agreement shall be
acceptable and binding.
(l) Other Usages. The following usages shall apply in interpreting this Agreement: (i)
references to a governmental or quasigovernmental agency, authority or instrumentality shall also
refer to a regulatory body that succeeds to the functions of such agency, authority or
instrumentality; and (ii) “including” means “including, but not limited to.”
Section 18. Confidentiality.
(a) | The General Partner and the Authorized Purchaser shall during the Term and for one (1) year thereafter maintain in confidence, use only for the purposes provided for in this Agreement, and not disclose to any third party, without first obtaining the other party’s consent in writing, any and all Confidential Information (as defined below) such party receives from the other party; provided, however, that either party may disclose Confidential Information received from the other party to those of its Representatives as may be necessary for such party to carry out its obligations under this Agreement. |
16
“Confidential Information” shall mean all information or data of a party that is disclosed to or received by the other party, whether orally, visually or in writing, in any form, including, without limitation, information or data which relates to such party’s business or operations, research and development, marketing plans or activities, or actual or potential products. |
(b) | Notwithstanding the provisions of this Agreement to the contrary, a party shall have no liability to the other party for the disclosure or use of any Confidential Information of the other party if the Confidential Information: |
(i) | is known to such party at the time of disclosure other than as the result of a breach of this Section 18 by such party; | ||
(ii) | has been or becomes publicly known, other than as the result of a breach of this Section 18 by such party, or has been or is publicly disclosed by the other party; | ||
(iii) | is received by such party after the date of this Agreement from a third party (unless such third party breaches an obligation of confidentiality to the other party); or | ||
(iv) | is required to be disclosed by Law or similar compulsion or in connection with any legal proceeding, provided that such party shall promptly inform the other party in writing of such requirement and that such disclosure shall be limited to the extent so required and, except to the extent prohibited by Law, such party shall reasonably cooperate with the other party (at the expense of the other party) in seeking a protective order or other suitable confidentiality protections. |
(c) | The parties recognize and acknowledge that a breach or threatened breach by a party of the provisions of this Section 18 may cause irreparable and material loss and damage to the other party which cannot be adequately remedied at law and that, accordingly, in addition to, and not in lieu of, any damages or other remedy to which the non-breaching party may be entitled, the issuance of an injunction or other equitable remedy (without the requirement that a bond or other security be posted) is an appropriate remedy for the non-breaching party for any breach or threatened breach of the obligations set forth in this Section 18. | |
(d) | Each party agrees that it will use the same degree of care, but no less than a reasonable degree of care, in safeguarding the Confidential Information of the other party as it uses for its own Confidential Information of a similar nature. Each party shall promptly notify the other party in writing of any misuse, misappropriation or unauthorized disclosure of the Confidential Information of the other party which may come to such party’s attention. | |
(e) | Upon the termination of this Agreement, if requested in writing by the other party, each party shall, at such party’s option, promptly destroy or return to the other party all Confidential Information received from the other party, all copies and extracts of such |
17
Confidential Information and all documents or other media containing any such Confidential Information. |
18
IN WITNESS WHEREOF, the Authorized Purchaser and the General Partner have caused this Agreement to
be executed by their duly authorized representatives as of the date first set forth above.
VICTORIA BAY ASSET MANAGEMENT, LLC | ||||
By: |
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Name:
|
Xxxxxxxx X. Xxxxxx | |||
Title: |
||||
Address: |
||||
Telephone: |
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Facsimile: |
||||
KV EXECUTION SERVICES, LLC | ||||
By: |
||||
Name: |
||||
Title: |
||||
Address: |
||||
Telephone: |
||||
Facsimile: |
00
XXXXXXX X
XXXXXX XXXXXX OIL FUND, LP
CREATION AND REDEMPTION PROCEDURES
CREATION AND REDEMPTION PROCEDURES
Scope of Procedures and Overview
These procedures (the “Procedures”) describe the processes by which one or more Baskets of United
States Oil Fund, LP Units (the “Shares”) may be purchased by an Authorized Purchaser, or, once
Shares have been issued, redeemed by an Authorized Purchaser. Shares may be created or redeemed
only in blocks of 100,000 Shares (each such block, a “Basket”).
For purposes of these Procedures, a “Business Day” is defined as any day other than a day on which
the American Stock Exchange (“AMEX”), the New York Mercantile Exchange (“NYMEX”) or the New York
Stock Exchange (“NYSE”) is closed for regular trading.
Baskets are issued pursuant to the Prospectus, which will be delivered by the Marketing Agent to
each Authorized Purchaser prior to its execution of the Authorized Purchaser Agreement, and are
issued and redeemed in accordance with the Authorized Purchaser Agreement. Baskets may be issued
and redeemed on any Business Day by the Marketing Agent in exchange for cash and/or Treasuries,
which the Custodian receives from Authorized Purchasers or transfers to Authorized Purchasers, in
each case on behalf of the Fund.
Upon acceptance of the Authorized Purchaser Agreement, the Marketing Agent will assign a personal
identification number (a “PIN number”) to each Authorized Person authorized to act for the an
Authorized Purchaser. This will allow the Authorized Purchaser through its Authorized Person(s) to
place Purchase Order(s) or Redemption Order(s) for Baskets.
Important Notes:
• Any Order is subject to rejection by the General Partner or the Marketing Agent, as
agent of the General Partner, for the reasons set forth in the Authorized Purchaser Agreement.
• All Orders are subject to the provisions of the Partnership Agreement, the Prospectus
and the Authorized Purchaser Agreement relating to unclear or ambiguous instructions.
• The Authorized Purchaser, and each distributor offering and selling Units as part of
the distribution of such Units, shall comply with the prospectus delivery and disclosure
requirements of the 1933 Act as well as the analogous requirements under the CEA, including, the
requirement that prospective investors provide an acknowledgement of receipt of such disclosure
materials prior to the payment for any Units.
CREATION PROCESS
An order to purchase one or more Baskets placed by an Authorized Purchaser with the Marketing Agent
by 12:00 PM New York time or the close of regular trading on the AMEX, whichever is
earlier (the “Order Cut-Off Time”) on a Business Day (such day, “CREATION T”) results in the
transfer to the Authorized Purchaser’s account at The Depository Trust Company (“DTC”) of Baskets
the Authorized Purchaser has purchased, in most instances, by 9:00 AM New York time on CREATION
T+3:
CREATION PROCEDURES
1. By the Order Cut-Off Time (the earlier of the close of regular trading on the AMEX or 12:00 PM
New York time), an Authorized Person of the Authorized Purchaser calls the Marketing Agent at (000)
000-0000 to notify such agent that the Authorized Purchaser wishes to place a Purchase Order to
create an identified number of Baskets and to request that it be provided with an order number (an
“Order Number”). The Authorized Person provides a PIN number as identification. The Marketing
Agent provides the Authorized Purchaser with an Order Number for the Authorized Purchaser’s
Purchase Order Form. The Authorized Purchaser then completes and faxes to the Marketing Agent the
Purchase Order Form included as Exhibit B to the Authorized Purchaser Agreement. The Purchase
Order Form must include the Authorized Person’s signature, the number of Baskets being purchased,
and the Order Number.
2. If the Marketing Agent has not received the Purchase Order Form from the Authorized Purchaser
within 15 minutes after the Marketing Agent receives the phone call from the Authorized Purchaser
referenced in item (1) above, the Marketing Agent places a phone call to the Authorized Purchaser
to enquire about the status of the Order. If the Authorized Purchaser does not fax the Purchase
Order Form to the Marketing Agent within 15 minutes after the Marketing Agent’s phone call, the
Authorized Purchaser’s Order is cancelled. The Marketing Agent will then notify the Authorized
Purchaser that the Order has been cancelled via telephone call.
3. If the Marketing Agent has received the Authorized Purchaser’s Purchase Order Form on time in
accordance with the preceding timing rules, then by 1:00 PM New York time the Marketing Agent
returns to the Authorized Purchaser a copy of the Purchase Order Form submitted, marking it
“Affirmed.”
4. Based on the Purchase Orders placed with it on CREATION T, the Marketing Agent sends a facsimile
to the Transfer Agent indicating the total number of creation units and total amount of cash and/or
Treasuries for which the Marketing Agent will require an allocation into the custodial accounts of,
respectively, the Authorized Purchaser and the Fund on CREATION T+3. If the Marketing Agent
rejects a Purchase Order pursuant to the Authorized Purchaser Agreement after the foregoing
messages are given to the Custodian, the Marketing Agent will notify the Transfer Agent of such
rejection as soon as practicable but, in any event, by 1:30 PM EST the same day, identifying the
Authorized Purchaser whose Purchase Order was rejected and the amount of cash and/or Treasuries
contained in the rejected Purchase Order. The Transfer Agent will address any such rejection
notifications received after 1:30 pm EST only on a best efforts basis.
REDEMPTION PROCESS
An order to redeem one or more Baskets placed by an Authorized Purchaser with the Marketing Agent
by 12:00 PM New York time or the close of regular trading on the AMEX, whichever is
2
earlier, on a Business Day (such day, “REDEMPTION T”) results in the following taking place by
11:00 AM New York time on REDEMPTION T+3:
• Transfer to the account at DTC and the subsequent cancellation of the relevant number
of the Authorized Purchaser’s Baskets; and
• Transfer to the Authorized Purchaser by credit to the Authorized Purchaser’s account
of cash and Treasuries, if any, in the relevant amount(s) corresponding to the Baskets delivered
for redemption (the “Redemption Distribution”).
REDEMPTION PROCEDURES
REDEMPTION T (REDEMPTION ORDER TRADE DATE)
1. By the Order Cut-off Time, an Authorized Person of the Authorized Purchaser calls the Marketing
Agent at (000) 000-0000 to notify the Marketing Agent that the Authorized Purchaser wishes to place
a Redemption Order with the Marketing Agent to redeem an identified number of Baskets and to
request that the Marketing Agent provide an Order Number. The Authorized Person provides a PIN
number as identification to the Marketing Agent. The Marketing Agent provides the Authorized
Purchaser with an Order Number for the Authorized Purchaser’s Redemption Order Form. The
Authorized Purchaser then completes and faxes to the Marketing Agent the Redemption Order Form
included as Exhibit B to the Authorized Purchaser Agreement. The Redemption Order Form must
include the Authorized Person’s signature, the number of Baskets redeemed, and the Order Number
previously provided by the Marketing Agent.
2. If the Marketing Agent has not received the Redemption Order Form from the Authorized Purchaser
within 15 minutes after the Marketing Agent receives the phone call from the Authorized Purchaser
referenced in item (1) above, the Marketing Agent places a phone call to the Authorized Purchaser
to enquire about the status of the Order. If the Authorized Purchaser does not fax the Redemption
Order Form to the Marketing Agent within 15 minutes after the Marketing Agent’s phone call, the
Authorized Purchaser’s Order is cancelled. The Marketing Agent will then notify the Authorized
Purchaser that the Order has been cancelled via telephone call.
3. If the Marketing Agent has received the Authorized Purchaser’s Redemption Order Form on time in
accordance with the preceding timing rules, then by 1:00 PM New York. time the Marketing Agent
returns to the Authorized Purchaser a copy of the Redemption Order Form submitted, marking it
“Affirmed.” The Marketing Agent also indicates on the Redemption Order Form the amount of
Treasuries and/or cash, if any, to be delivered in the Redemption Distribution, and provides
details of the method of payment to be used for the Transaction Fee and the method of delivery of
the Treasuries and/or cash portion, if any, of the Redemption Distribution.
4. By the 1:00 PM New York time), the Marketing Agent sends a facsimile containing instructions to
the Transfer Agent to transfer on REDEMPTION T+3 from the custodial accounts of, respectively, the
Authorized Purchaser and the Fund (“deallocate”) the total number of creation units and the total
amount of cash and/or Treasuries required to settle the Redemption Orders received by the Marketing
Agent on REDEMPTION T. If the Marketing Agent rejects a
3
Redemption Order pursuant to the Authorized Purchaser Agreement after the foregoing message is
sent, the Marketing Agent will notify the Transfer Agent of such rejection as soon as practicable
but, in any event, by 1:30 pm EST the same day, identifying the Authorized Purchaser whose
Redemption Order was rejected and the amount of cash and/or Treasuries contained in the rejected
Redemption Order. The Transfer Agent will address any such rejection notifications received after
1:30 pm EST only on a best efforts basis.
REDEMPTION T+3
1. By 9:00 AM New York time, the Authorized Purchaser delivers free to the relevant account at DTC
the Baskets to be redeemed.
2. If the Custodian does not receive from a redeeming Authorized Purchaser all Shares comprising
the Baskets being redeemed by 9:00 AM New York time, (i) the Custodian will, only upon instruction
from the General Partner, settle the Redemption Order to the extent of whole Baskets received from
the Authorized Purchaser and (ii) the Marketing Agent will keep the redeeming Authorized
Purchaser’s Redemption Order open until 9:00 AM New York time on the following Business Day
(REDEMPTION T+4) as to the balance of the Redemption Order (such balance, the “Suspended Redemption
Order”). For each day (whether or not a Business Day) the Redemption Order is held open, the
Authorized Purchaser will be charged the greater of $300 or $30 times the number of Baskets
included in the Suspended Redemption Order, as determined in the sole discretion of the Fund.
REDEMPTION T+4
1. By 9:00 AM. New York time, the redeeming Authorized Purchaser must deliver free to the account
at DTC the Basket(s) comprising the Suspended Redemption Order. The Marketing Agent will settle
the Suspended Redemption Order to the extent of whole Baskets received. Any balance of the
Suspended Redemption Order will be cancelled.
2. The sequence of instructions and events related to the settlement of the Suspended Redemption
Order on REDEMPTION T+4 will be made in the manner provided for a Redemption Order under REDEMPTION
T+3.
* * * *
4
EXHIBIT A-1
UNITED STATES OIL FUND, LP
INITIAL CREATION PROCEDURES
INITIAL CREATION PROCEDURES
Scope of Procedures and Overview
These procedures (the “Initial Procedures”) describe the process by which one or more Baskets of
United States Oil Fund, LP Units (the “Shares”) may be purchased by the Initial Authorized
Purchaser. Shares may be created only in blocks of 100,000 Shares (each such block, a “Basket”).
For purposes of these Initial Procedures, a “Business Day” is defined as any day other than a day
on which the American Stock Exchange (“AMEX”), the New York Mercantile Exchange (“NYMEX”) or the
New York Stock Exchange (“NYSE”) is closed for regular trading.
Baskets are issued pursuant to the Prospectus, which will be delivered by the Marketing Agent to
the Initial Authorized Purchaser prior to its execution of the Authorized Purchaser Agreement, and
are issued in accordance with the Authorized Purchaser Agreement. Baskets may be issued on any
Business Day by the Marketing Agent in exchange for cash and/or Treasuries, which the Custodian
receives from the Initial Authorized Purchaser on behalf of the Fund.
Upon acceptance of the Authorized Purchaser Agreement, the Marketing Agent will assign a personal
identification number (a “PIN number”) to the Authorized Person authorized to act for the Initial
Authorized Purchaser. This will allow the Initial Authorized Purchaser through its Authorized
Person(s) to place the initial purchase order for Baskets.
Important Notes:
• Any Order is subject to rejection by the General Partner or the Marketing Agent, as
agent of the General Partner, for the reasons set forth in the Authorized Purchaser Agreement.
• All Orders are subject to the provisions of the Partnership Agreement, the Prospectus
and the Authorized Purchaser Agreement relating to unclear or ambiguous instructions.
• The Authorized Purchaser, and each distributor offering and selling Units as part of
the distribution of such Units, shall comply with the prospectus delivery and disclosure
requirements of the 1933 Act as well as the analogous requirements under the Commodity Exchange
Act, including, the requirement that prospective investors provide an acknowledgement of receipt of
such disclosure materials prior to the payment for any Units.
• The Initial Authorized Purchaser will purchase Creation Baskets at an initial offering
price per Unit equal to the closing price of near month oil futures contracts for light, sweet
crude oil as listed on the NYMEX on the last business day prior to the effective date of the
registration statement. The effective date will be the date the first Creation Basket is sold and
the proceeds are invested.
CREATION PROCESS
An order to purchase one or more of the initial Baskets placed by the Initial Authorized Purchaser
with the Marketing Agent by 9:00 AM New York time (the “Order Cut-Off Time”) on a Business Day
(such day, “CREATION T”) results in the transfer to the Initial Authorized Purchaser’s account at
The Depository Trust Company (“DTC”) of Baskets the Initial Authorized Purchaser has purchased by
12:00 PM New York time on CREATION T+0 if payment for such Baskets has been received by the
Custodian prior to that time:
CREATION PROCEDURES
1. By the Order Cut-Off Time (the earlier of the close of regular trading on the AMEX or 9:00 AM
New York time), an Authorized Person of the Initial Authorized Purchaser calls the Marketing Agent
at (000) 000-0000 to notify such agent that the Initial Authorized Purchaser wishes to place a
Purchase Order to create an identified number of Baskets and to request that it be provided with an
order number (an “Order Number”). The Authorized Person provides a PIN number as identification.
The Marketing Agent provides the Initial Authorized Purchaser with an Order Number for the Initial
Authorized Purchaser’s Purchase Order Form. The Initial Authorized Purchaser then completes and
faxes to the Marketing Agent the Purchase Order Form included as Exhibit B to the Authorized
Purchaser Agreement. The Purchase Order Form must include the Initial Authorized Person’s
signature, the number of Baskets being purchased, and the Order Number.
2. If the Marketing Agent has not received the Purchase Order Form from the Initial Authorized
Purchaser within 15 minutes after the Marketing Agent receives the phone call from the Initial
Authorized Purchaser referenced in item (1) above, the Marketing Agent places a phone call to the
Initial Authorized Purchaser to enquire about the status of the Order. If the Initial Authorized
Purchaser does not fax the Purchase Order Form to the Marketing Agent within 15 minutes after the
Marketing Agent’s phone call, the Initial Authorized Purchaser’s Order is cancelled. The Marketing
Agent will then notify the Initial Authorized Purchaser that the Order has been cancelled via
telephone call.
3. If the Marketing Agent has received the Initial Authorized Purchaser’s Purchase Order Form on
time in accordance with the preceding timing rules, then by 10:00 AM New York time the Marketing
Agent returns to the Initial Authorized Purchaser a copy of the Purchase Order Form submitted,
marking it “Affirmed.”
4. Based on the Purchase Orders placed with it on CREATION T, the Marketing Agent sends a facsimile
to the Transfer Agent indicating the total number of creation units and total amount of cash and/or
Treasuries for which the Marketing Agent will require an allocation into the custodial accounts of,
respectively, the Initial Authorized Purchaser and the Fund on CREATION T+0 once the Custodian
confirms to the Transfer Agent that the payment for such Baskets in same day funds has been
received by it from the Initial Authorized Purchaser . If the Marketing Agent rejects a Purchase
Order pursuant to the Authorized Purchaser Agreement after the foregoing messages are given to the
Custodian, the Marketing Agent will notify the Transfer Agent of such rejection as
2
soon as practicable but, in any event, by 10:30 AM EST the same day, identifying the amount of cash
and/or Treasuries contained in the rejected Purchase Order. The Transfer Agent will address any
such rejection notifications received after 10:30 AM EST only on a best efforts basis.
0
XXXXXXX X
XXXXXX XXXXXX OIL FUND, LP
PURCHASE/ REDEMPTION ORDER FORM
CONTACT INFORMATION FOR ORDER EXECUTION: | ||||
Telephone order number: Facsimile number: |
Telex Number Business Number |
ALL ITEMS IN PART I MUST BE COMPLETED BY AN AUTHORIZED PURCHASER. THE DISTRIBUTOR AND/OR THE
TRUSTEE, IN THEIR DISCRETION, MAY REJECT ANY ORDER NOT SUBMITTED IN COMPLETE FORM.
1. TO BE COMPLETED BY AUTHORIZED PURCHASER :
Date:
|
Time: | |
Broker Name:
|
Firm Name: | |
NSCC Participant Number:
|
DTC Participant Number: | |
Telephone Number:
|
Telex Number: | |
Fax Number: |
||
Type of Order (Check One) |
Amount Created Units (100,000 Shares)
Amount Written Out
Amount Redeemed Units (100,000 Shares)
Amount Written Out:
Order #:
Authorized Person’s Signature
II. TO BE COMPLETED BY ALPS DISTRIBUTORS, INC.:
This certifies that the above order has been:
Accepted by the Marketing Agent (for purchase or redemption)
Declined — Reason:
Date
|
Time | Authorized Signature |
EXHIBIT C
FORM OF CERTIFIED AUTHORIZED PERSONS
OF AUTHORIZED PURCHASER
OF AUTHORIZED PURCHASER
The following are the names, titles and signatures of all persons (each an “Authorized Person”)
authorized to give instructions relating to any activity contemplated by the United States Oil
Fund, LP Authorized Purchaser Agreement or any other notice, request or instruction on behalf of
the Authorized Purchaser pursuant to the aforementioned agreement.
Authorized Purchaser:
Name: |
||||
Title: |
||||
Signature: |
||||
Name: |
||||
Title: |
||||
Signature: |
||||
Name: |
||||
Title: |
||||
Signature: |
||||
The undersigned, [name], [title] of [company], does hereby certify that the persons listed above
have been duly elected to the offices set forth beneath their names, that they presently hold such
offices, that they have been duly authorized to act as Authorized Persons pursuant to the United
States Oil Fund, LP Authorized Purchaser Agreement by and between KV Execution Services, LLC and
the General Partner of United States Oil Fund, LP, dated 2006, and that their signatures
set forth above are their own true and genuine signatures.
IN WITNESS WHEREOF, the undersigned has hereby set his/her hand and the seal of [company] on the
date set forth below.
Subscribed and sworn to before me
this ___ day of , 2006
this ___ day of , 2006
By:
|
||||
Name: |
||||
Signature: |
||||
Notary Public |
2
![(BROWN BROTHERS HARRIMAN LOGO)](https://www.sec.gov/Archives/edgar/data/1327068/000095013306001164/w09130a5x0913001.gif)
EXHIBIT D
BBH Pricing Policies
Futures, Forwards, Swaps, Options and Treasuries
Futures, Forwards, Swaps, Options and Treasuries
The pricing policies stated below are used for all BBH clients, including Mutual Fund Registered Investment Companies. These policies have been audited by
numerous accounting firms during annual fund audits.
Futures
Futures traded on exchanges are valued using the closing settlement prices quoted on the relevant exchange and obtained from pricing sources, typically Bloomberg or Reuters.
Futures traded on exchanges are valued using the closing settlement prices quoted on the relevant exchange and obtained from pricing sources, typically Bloomberg or Reuters.
Forward Currency Contracts
BBH obtains the WM Reuters London Close closing spot rates and the WM Reuters London Close forward point rates on a daily basis. The currency forward contract pricing model derives the differential in point rates to the expiration date of the forward and calculates its present value. The forward is valued at the net of the present value and the spot rate.
BBH obtains the WM Reuters London Close closing spot rates and the WM Reuters London Close forward point rates on a daily basis. The currency forward contract pricing model derives the differential in point rates to the expiration date of the forward and calculates its present value. The forward is valued at the net of the present value and the spot rate.
Swaps
Swaps and other similar derivative or contractual type instruments are valued at a price provided by a single broker or dealer, typically the counterparty. If no such price is available, the contract is valued at a price at which the counterparty to such contract would repurchase the instrument or terminate the contract.
Swaps and other similar derivative or contractual type instruments are valued at a price provided by a single broker or dealer, typically the counterparty. If no such price is available, the contract is valued at a price at which the counterparty to such contract would repurchase the instrument or terminate the contract.
Options
Option contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at the last sale price on the exchange or market that is the Primary Market. If a contract did not trade on the Primary Market, it shall be valued at the last sale price on another exchange or market where it did trade. If there is no such sale price, the value shall be the most recent bid quotation.
Option contracts on securities, currencies, indices, futures contracts, commodities and other instruments shall be valued at the last sale price on the exchange or market that is the Primary Market. If a contract did not trade on the Primary Market, it shall be valued at the last sale price on another exchange or market where it did trade. If there is no such sale price, the value shall be the most recent bid quotation.
Sale prices and bid quotations indicated above shall be supplied by a Pricing Service (Reuters,
Bloomberg, IDC, etc.). If a Pricing Service is not able to provide such sale prices or bid
quotations, the value shall be determined by taking the mean between the bid and the asked
quotations provided by a single broker or dealer, unless the broker or dealer can only provide a
bid quotation, in which case the value shall be such bid quotation.
Except as provided below, OTC currency options are valued by uploading the applicable implied
volatility rates from Reuters or Bloomberg. Other inputs are either uploaded (interest rates,
spots) or are specified when the ticker symbols are set up (expiration date, strike). OTC currency
options are then priced by using the Xxxxxx-Xxxxxxxxx modified Black-Scholes formula, which adjusts
for a constant yield versus a fixed dividend.
Except as provided below, OTC equity/index options are priced according to the contract
specifications (days to expiration, current spot index level, interest rates, dividends, strike
price) using the Black-Scholes
pricing model, modified for dividends. The volatility input assumption is interpolated from the
previous day’s price.
US Treasuries
BBH uses an evaluated bid supplied by IDC for treasury prices.
0
XXXXXXX X
XXXXXX XXXXXX OIL FUND, LP
OFFICER’S CERTIFICATE
The undersigned, a duly authorized officer of Victoria Bay Asset Management, LLC, a Delaware
limited liability company (the “General Partner”), and pursuant to Section 13(d) of the United
States Oil Fund, LP Authorized Purchaser Agreement (the “Agreement”), dated as of ___,
2006, by and between the General Partner and KV Execution Services, LLC, (“the Authorized
Purchaser”), hereby certifies that:
1. Each of the following representations and warranties of the General Partner is true and correct
in all material respects as of the date hereof:
(a) the Prospectus does not contain 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, in light
of the circumstances under which they were made, not misleading; the Registration Statement
complies in all material respects with the requirements of the 1933 Act and the Prospectus complies
in all material respects with the requirements of the 1933 Act and any statutes, regulations,
contracts or other documents that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement have been so described or
filed; the conditions to the use of Form S-1 or S-3, if applicable, have been satisfied; the
Registration Statement does not contain 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 and the Prospectus does not contain 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, in
light of the circumstances under which they were made, not misleading; provided, however, that the
General Partner makes no warranty or representation with respect to any statement contained in the
Registration Statement or any Prospectus in reliance upon and in conformity with information
concerning the Authorized Purchaser and furnished in writing by or on behalf of the Authorized
Purchaser to the General Partner expressly for use in the Registration Statement or such
Prospectus; and neither the General Partner nor any person known to the General Partner acting on
behalf of the Fund has distributed nor will distribute any offering material other than the
Registration Statement or the Prospectus;
(b) the Fund has been duly formed and is validly existing as an investment fund under the laws
of the State of Delaware, as described in the Registration Statement and the Prospectus, and as
described in the Prospectus, the Marketing Agent is authorized to issue and deliver the Baskets to
the Authorized Purchaser;
(c) the General Partner has been duly organized and is validly existing as a limited liability
company in good standing under the laws of the State of Delaware, with full power and authority to
conduct its business as described in the Registration Statement and the Prospectus, and has all
requisite power and authority to execute and deliver this Agreement;
3
(d) the General Partner is duly qualified and is in good standing in each jurisdiction where
the conduct of its business requires such qualification; and the Fund is not required to so qualify
in any jurisdiction;
(e) the outstanding Units have been duly and validly issued and are fully paid and
non-assessable and free of statutory and contractual preemptive rights, rights of first refusal and
similar rights;
(f) the Units conform in all material respects to the description thereof contained in the
Registration Statement and the Prospectus and the holders of the Units will not be subject to
personal liability by reason of being such holders;
(g) this Agreement has been duly authorized, executed and delivered by the General Partner and
constitutes the valid and binding obligations of the General Partner, enforceable against the
General Partner in accordance with its terms;
(h) the General Partner is not in breach or violation of or in default under (nor has any
event occurred which with notice, lapse of time or both would result in any breach or violation of,
constitute a default under or give the holder of any indebtedness (or a person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of all or a part of
such indebtedness under) its constitutive documents, or any indenture, mortgage, deed of trust,
bank loan or credit agreement or other evidence of indebtedness, or any license, lease, contract or
other agreement or instrument to which the General Partner is a party or by which any of them or
any of their properties may be bound or affected, and the execution, delivery and performance of
this Agreement, the issuance and sale of Shares to the Authorized Purchaser hereunder and the
consummation of the transactions contemplated hereby does not conflict with, result in any breach
or violation of or constitute a default under (nor constitute any event which with notice, lapse of
time or both would result in any breach or violation of or constitute a default under),
respectively, the amended and restated limited liability company agreement of the General Partner,
or any indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or instrument to which the General
Partner is a party or by which, respectively, the General Partner or any of its properties may be
bound or affected, or any federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the General Partner or the Fund;
(i) no approval, authorization, consent or order of or filing with any federal, state, local
or foreign governmental or regulatory commission, board, body, authority or agency is required in
connection with the issuance and sale of Creation Baskets to the Authorized Purchaser hereunder or
the consummation by the General Partner or the Fund of the transactions contemplated hereunder
other than registration of the Units under the 1933 Act and the filing of the Prospectus with the
National Futures Association, which has been effected, and any necessary qualification under the
securities or blue sky laws of the various jurisdictions in which the Units are being offered or
under the rules and regulations of the American Stock Exchange;
(j) except as set forth in the Registration Statement and the Prospectus (i) no person has the
right, contractual or otherwise, to cause the Fund to issue or sell to it any Units or other equity
4
interests of the Fund, and (ii) no person has the right to act as an underwriter or as a
financial advisor to the Fund in connection with the offer and sale of the Units, in the case of
each of the foregoing clauses (i), and (ii), whether as a result of the filing or effectiveness of
the Registration Statement or the sale of the Units as contemplated thereby or otherwise; no person
has the right, contractual or otherwise, to cause the General Partner on behalf of the Fund or the
Fund to register under the 1933 Act any other equity interests of the Fund, or to include any such
shares or interests in the Registration Statement or the offering contemplated thereby, whether as
a result of the filing or effectiveness of the Registration Statement or the sale of the Units as
contemplated thereby or otherwise;
(k) each of the General Partner and the Fund has all necessary licenses, authorizations,
consents and approvals and has made all necessary filings required under any federal, state, local
or foreign law, regulation or rule, and has obtained all necessary authorizations, consents and
approvals from other persons, in order to conduct its respective business; the General Partner is
not in violation of, or in default under, or has not received notice of any proceedings relating to
revocation or modification of, any such license, authorization, consent or approval or any federal,
state, local or foreign law, regulation or rule or any decree, order or judgment applicable to the
General Partner;
(l) all legal or governmental proceedings, affiliate transactions, off-balance sheet
transactions, contracts, licenses, agreements, leases or documents of a character required to be
described in the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed as required;
(m) except as set forth in the Registration Statement and the Prospectus, there are no
actions, suits, claims, investigations or proceedings pending or threatened or contemplated to
which the General Partner or the Fund, or any of the General Partner’s directors or officers, is
or would be a party or of which any of their respective properties are or would be subject at law
or in equity, before or by any federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency;
(n) Xxxxxx LLP, whose report on the audited financial statements of the Fund is filed with the
SEC as part of the Registration Statement and the Prospectus, are independent public accountants as
required by the 1933 Act;
(o) the audited financial statement(s) included in the Prospectus, together with the related
notes and schedules, presents fairly the financial position of the Fund as of the date indicated
and has been prepared in compliance with the requirements of the 1933 Act and in conformity with
generally accepted accounting principles; there are no financial statements (historical or pro
forma) that are required to be included in the Registration Statement and the Prospectus that are
not included as required; and the Fund does not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not disclosed in the
Registration Statement and the Prospectus;
(p) subsequent to the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been (i) any material adverse change, (ii)
5
any transaction which is material to the General Partner or the Fund taken as a whole, (iii)
any obligation, direct or contingent (including any off-balance sheet obligations), incurred by the
General Partner or the Fund, which is material to the Fund, (iv) any change in the Units purchased
by the Authorized Purchaser or outstanding indebtedness of the General Partner or the Fund or (v)
any dividend or distribution of any kind declared, paid or made on such Units;
(q) the Fund is not and, after giving effect to the offering and sale of the Units, will not
be an “investment company” or an entity “controlled” by an “investment company,” as such terms are
defined in the Investment Company Act;
(r) except as set forth in the Registration Statement and the Prospectus, the General Partner
and the Fund own, or have obtained valid and enforceable licenses for, or other rights to use, the
inventions, patent applications, patents, trademarks (both registered and unregistered),
tradenames, copyrights, trade secrets and other proprietary information described in the
Registration Statement and the Prospectus as being owned or licensed by them or which are necessary
for the conduct of their respective businesses, (collectively, “Intellectual Property”);
(i) to the knowledge of the General Partner or the Fund, there are no third parties
who have or will be able to establish rights to any Intellectual Property, except for
the ownership rights of the owners of the Intellectual Property which is licensed to
the General Partner or the Fund;
(ii) to the knowledge of the General Partner or the Fund, there is no infringement by
third parties of any Intellectual Property;
(iii) there is no pending or, to the knowledge of the General Partner or the Fund,
threatened action, suit, proceeding or claim by others challenging the General
Partner or the Fund’s rights in or to any Intellectual Property, and the General
Partner and the Fund are unaware of any facts which could form a reasonable basis for
any such claim;
(iv) there is no pending or, to the knowledge of the General Partner or the Fund,
threatened action, suit, proceeding or claim by others challenging the validity or
scope of any Intellectual Property as to which the General Partner and the Fund have
no knowledge of any such pending or threatened claims, and the General Partner and
the Fund are unaware of any facts which could form a reasonable basis for any such
claim;
(v) there is no pending or, to the knowledge of the General Partner or the Fund,
threatened action, suit, proceeding or claim by others that the General Partner or
the Fund infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary rights of others, and the General Partner and the Fund
are unaware of any facts which could form a reasonable basis for any such claim; and
6
(vi) to the knowledge of the General Partner or the Fund, there is no patent or
patent application that contains claims that interfere with the issued or pending
claims of any of the Intellectual Property; and
(s) all tax returns required to be filed by the General Partner have been filed, and all taxes
and other assessments of a similar nature (whether imposed directly or through withholding)
including any interest, additions to tax or penalties applicable thereto due or claimed to be due
from such entities have been paid; and no tax returns or tax payments are due with respect to the
Fund as of the date of this Agreement;
(t) the General Partner has not sent or received any communication regarding termination of,
or intent not to renew, any of the contracts or agreements referred to or described in, or filed as
an exhibit to, the Registration Statement, and no such termination or non-renewal has been
threatened by the General Partner or any other party to any such contract or agreement;
(u) on behalf of the Fund, the General Partner has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-14 and 15d-14 under the Exchange Act,
giving effect to the rules and regulations, and SEC staff interpretations (whether or not public),
thereunder)); such disclosure controls and procedures are designed to ensure that material
information relating to the Fund, is made known to the General Partner, and such disclosure
controls and procedures are effective to perform the functions for which they were established; on
behalf of the Fund, the General Partner has been advised of: (i) any significant deficiencies in
the design or operation of internal controls which could adversely affect the Fund’s ability to
record, process, summarize, and report financial data; and (ii) any fraud, whether or not material,
that involves management or other employees who have a role in the Fund’s internal controls; any
material weaknesses in internal controls have been identified for the Fund’s auditors;
(w) any statistical and market-related data included in the Registration Statement and the
Prospectus are based on or derived from sources that the General Partner believes to be reliable
and accurate, and the General Partner has obtained the written consent to the use of such data from
such sources to the extent required; and
(x) neither the General Partner, nor any of the General Partner’s directors, members,
officers, affiliates or controlling persons has taken, directly or indirectly, any action designed,
or which has constituted or might reasonably be expected to cause or result in, under the Exchange
Act or otherwise, the stabilization or manipulation of the price of any security or asset of the
Fund to facilitate the sale or resale of the Units.
For purposes hereof, the term “Registration Statement” shall mean the Registration Statement
as amended or supplemented from time to time to the date hereof, the term “Preliminary Prospectus”
shall mean the preliminary prospectus dated April ___, 2006 relating to the Units and any other
prospectus dated prior to effectiveness of the Registration Statement relating to the Units, and
the term “Prospectus” shall mean the Prospectus as amended or supplemented from time to time to the
date hereof.
7
2. Each of the obligations of the General Partner to be performed by it on or before the date
hereof pursuant to the terms of the Agreement, and each of the provisions thereof to be complied
with by the General Partner on or before the date hereof, has been duly performed and complied with
in all material respects. Capitalized terms used, but not defined herein shall have the meanings
assigned to such terms in the Agreement.
IN WITNESS WHEREOF, I have hereunto, on behalf of the General Partner, subscribed my name this ___
day of ___, 2006.
By: | ||||||
Name: | ||||||
Title: |
I, ___, in my capacity as [title], hereby certify that ___ is the duly
elected [title] of the General Partner, and that the signature set forth immediately above is
[his/her] genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand as of the date first set forth above.
By: | ||||||
Name: | ||||||
Title: |
8