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EXHIBIT 1.01
FORM OF
AMENDED AND RESTATED
SELLING AGREEMENT
PROFUTURES LONG/SHORT GROWTH FUND, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
UNITS OF LIMITED PARTNERSHIP INTEREST
Dated as of ________, 1998
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PROFUTURES LONG/SHORT GROWTH FUND, L.P.
AMENDED AND RESTATED
SELLING AGREEMENT
TABLE OF CONTENTS
Page
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Section 1. Representations and Warranties of the General Partner ...................................... 2
Section 2. Representations and Warranties of the Selling Agent.......................................... 5
Section 3. Representations and Warranties of the Trading Advisor....................................... 7
Section 4. Representations and Warranties of the Broker................................................ 9
Section 5. Offering and Sale of Units.................................................................. 11
Section 6. Covenants of the General Partner............................................................ 15
Section 7. Covenants of the Trading Advisor............................................................ 17
Section 8. Covenants of the Broker..................................................................... 17
Section 9. Payment of Expenses and Fees................................................................ 17
Section 10. Conditions of Closing...................................................................... 18
Section 11. Indemnification and Exculpation............................................................. 27
Section 12. Status of Parties........................................................................... 30
Section 13. Representations, Warranties and Agreements to Survive Delivery.............................. 31
Section 14. Termination................................................................................. 31
Section 15. Notices and Authority to Act................................................................ 31
Section 16. Parties..................................................................................... 32
Section 17. Governing Law............................................................................... 32
Section 18. Requirements of Law......................................................................... 32
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PROFUTURES LONG/SHORT GROWTH FUND, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
$60,000,000 UNITS OF LIMITED PARTNERSHIP INTEREST
(SUBSCRIPTION PRICE: 101% OF NET ASSET VALUE PER UNIT)
FORM OF
AMENDED AND RESTATED
SELLING AGREEMENT
_______, 1998
PROFUTURES FINANCIAL GROUP, INC.
00000 Xxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Dear Sirs:
Your affiliate, ProFutures, Inc., a Texas corporation
(referred to herein in its individual corporate capacity and as general partner
as the "General Partner"), and an initial limited partner have caused the
formation of a limited partnership pursuant to the Revised Uniform Limited
Partnership Act of the State of Delaware ("DRULPA") under the name ProFutures
Long/Short Growth Fund, L.P. (the "Fund"), for the purpose of engaging in
speculative trading of futures and forward contracts and commodity options. As
described in the Prospectus referred to below, the Fund has entered into the
First Amendment and Restatement of Advisory Contract (the "Advisory Agreement")
with Hampton Investors, Inc., a New York corporation (the "Trading Advisor").
The Fund engages in speculative trading in the commodities markets under the
direction of the Trading Advisor pursuant to its Leverage 3 Trading Program (the
"Trading Strategy"). You shall serve as lead selling agent for the Fund (herein
referred to as the "Selling Agent") and you may select, with the consent of the
General Partner, other selling agents (the "Additional Selling Agents")
(including those introduced by wholesalers ("Wholesalers")) to act as selling
agents for the Fund in accordance with the terms of the Additional Selling Agent
Agreement attached hereto as Exhibit A. In addition, the Additional Selling
Agents may also, with the consent of the Selling Agent and the General Partner,
distribute Units through the use of "introducing broker" Correspondents
("Correspondents").
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ING (U.S.) Securities, Futures & Option, Inc. (the "Broker")
acts as broker for the Fund pursuant to a customer agreement (the "Customer
Agreement") between the Broker and the Fund.
Capitalized terms used herein, unless otherwise indicated,
shall have the meanings attributed to them in the Prospectus referred to below.
Section 1. Representations and Warranties of the General
Partner. The General Partner represents and warrants to the Trading Advisor, the
Broker and the Selling Agent, as follows:
(a) The Fund has provided to the Trading Advisor and to the
Selling Agent and filed with the Securities and Exchange Commission
(the "SEC") a registration statement on Form S-1 (Registration No.
333-63129), as initially filed with the SEC on Sept. 10, 1998 and
Amendment No. 1 thereto as filed on _______, 1998 for the registration
of Units of Limited Partnership Interests (the "Units") in the Fund
under the Securities Act of 1933, as amended (the "1933 Act"), has
filed two copies thereof with the Commodity Futures Trading Commission
(the "CFTC") under the Commodity Exchange Act (the "Commodity Act")
and one copy with the National Futures Association (the "NFA") in
accordance with NFA Compliance Rule 2-13. The Registration Statement
became effective with the SEC as of the date hereof. (The Registration
Statement, in the form in which it became effective, and the Prospectus
included therein as first filed pursuant to Rule 424(b) of the rules
and regulations of the SEC under the 1933 Act (the "SEC Regulations")
are hereinafter referred to as the "Registration Statement" and the
"Prospectus," respectively.) If the Fund files a subsequent
post-effective amendment to the Registration Statement, then the term
Registration Statement shall, from and after the declaration of the
effectiveness of such post-effective amendment, refer to the
Registration Statement as amended by such post-effective amendment
thereto, and the term Prospectus shall refer to the amended prospectus
then on file with the SEC as part of the Registration Statement, or if
a subsequent prospectus is filed by the Fund pursuant to Rule 424 of
the SEC Regulations, the term Prospectus shall refer to the prospectus
most recently filed pursuant to such Rule from and after the date on
which it shall have been first used. Except as required by law, the
Fund will not file any amendment to the Registration Statement or any
amendment or supplement to the Prospectus which shall be reason ably
objected to in writing by the Trading Advisor or by counsel to the
Trading Advisor, upon reasonable prior notice.
(b) The Fund will not utilize any promotional brochure or
other marketing materials (collectively, "Promotional Material"),
including "Tombstone Ads" or other communications qualifying under Rule
134 of the SEC Regulations, which are reasonably objected to by the
Selling Agent. No reference to the Selling Agent may be made in the
Registration Statement, Prospectus or in any Promotional Material which
has not been approved in writing by the Selling Agent, which approval
the Selling Agent may withhold in its sole and absolute discretion. The
Fund will file all Promotional Material with the National Association
of Securities Dealers, Inc. (the
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"NASD"), and will not use any such Promotional Material to which the
NASD has objected without first revising such Promotional Material to
address such objection(s). The Fund will file all Promotional Material
in all state jurisdictions where such filing is required, and will not
use any such Promotional Material in any state which has expressed any
objection thereto (except pursuant to agreed-upon modifications to the
Promotional Material).
(c) The Certificate of Limited Partnership (the "Certificate
of Limited Partnership") pursuant to which the Fund has been formed and
the Second Amended and Restated Limited Partnership Agreement of the
Fund (the "Limited Partnership Agreement") each provides for the
subscription for and sale of the Units; all action required to be taken
by the General Partner and the Fund as a condition to the sale of the
Units to qualified subscribers therefor has been, or prior to the
Initial Public Closing Time and Subsequent Public Closing Times, as
defined in Section 5 hereof, will have been taken; and, upon payment of
the consideration therefor specified in all accepted Subscription
Agreements and Powers of Attorney, the Units will constitute valid
limited partnership interests in the Fund.
(d) The Fund is a limited partnership duly organized pursuant
to the Certificate of Limited Partnership, the Limited Partnership
Agreement and the DRULPA and validly existing under the laws of the
State of Delaware with full power and authority to engage in the
trading of futures, forward and option contracts, as described in the
Prospectus, and the Fund has qualified to do business in the State of
Texas.
(e) The General Partner is duly organized and validly existing
and in good standing as a corporation under the laws of the State of
Texas and in good standing as a foreign corporation in any other
jurisdiction in which the nature or conduct of its business requires
such qualification and the failure to so qualify would materially
adversely affect the Fund or the General Partner's ability to perform
its obligations hereunder.
(f) The Fund and the General Partner have partnership or
corporate power and authority under applicable law to perform their
respective obligations under the Limited Partnership Agreement, the
Customer Agreement, the Investment Advisory Agreement, the Additional
Selling Agents Agreement, the Advisory Agreement and this Agreement, as
described in the Registration Statement and Prospectus.
(g) The Registration Statement and Prospectus contain all
statements and information required to be included therein by the
Commodity Act and the rules and regulations thereunder. When the
Registration Statement became effective under the 1933 Act and at all
times subsequent thereto up to and including the Initial Public Closing
Time, the Registration Statement and Prospectus will comply in all
material respects with the requirements of the 1933 Act, the Commodity
Act and the rules and regulations under such Acts. The Registration
Statement as of its effective date did
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not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not mislead ing. The Prospectus as of its date of
issue and at the Initial Public Closing Time did not and will not
contain an untrue statement of a material fact or omit to state a mate
rial fact necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.
This representation and warranty shall not, however, apply to any
statement or omission in the Registration Statement or Prospectus made
in reliance upon and in conformity with information relating to the
Trading Advisor, the Broker or any cash manager and furnished or
approved in writing by the Trading Advisor, the Broker or any cash
manager.
(h) Xxxxxx X. Xxxx, Xx. & Associates, L.L.C., the accountants
who certified the financial statements of the General Partner and the
Fund filed with the SEC as part of the Registration Statement, are
independent public accountants with respect to the General Partner and
the Fund as required by the 1933 Act and the SEC Regulations.
(i) The financial statements filed as part of the Registration
Statement and those included in the Prospectus present fairly the
financial position of the Fund and of the General Partner as of the
dates indicated; and said financial statements have been prepared in
conformity with generally accepted accounting principles (as described
therein), or, in the case of unaudited financial statements, in
substantial conformity with generally accepted accounting principles,
applied on a basis which is consistent in all material respects for
each balance sheet date presented.
(j) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any material adverse change in the condition, financial or
otherwise, business or prospects of the General Partner or the Fund,
whether or not arising in the ordinary course of business.
(k) The Advisory Agreement, the Limited Partnership Agreement,
the Additional Selling Agents Agreement and this Agreement have each
been duly and validly authorized, executed and delivered by the General
Partner for itself and on behalf of the Fund, and each constitutes a
legal, valid and binding agreement of the Fund and the General Partner
enforceable in accordance with its terms. The Investment Advisory
Agreement and the Customer Agreement have both been duly and validly
authorized, executed and delivered by the General Partner on behalf of
the Fund.
(l) The execution and delivery of the Limited Partnership
Agreement, the Customer Agreement, the Investment Advisory Agreement,
the Additional Selling Agents Agreement, the Advisory Agreement and
this Agreement, the incurrence of the obligations set forth in each of
such agreements and the consummation of the transactions contemplated
therein and in the Prospectus will not constitute a breach of, or
default under, any instrument by which either the General Partner or
the Fund, as the case may be, is bound or any order, rule or regulation
applicable to the General
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Partner or the Fund of any court or any governmental body or
administrative agency having jurisdiction over the General Partner or
the Fund.
(m) There is not pending, or, to the best of the General
Partner's knowledge threatened, any action, suit or proceeding before
or by any court or other governmental body to which the General Partner
or the Fund is a party, or to which any of the assets of the General
Partner or the Fund is subject, which is not referred to in the
Prospectus and which might reasonably be expected to result in any
material adverse change in the condition (financial or otherwise),
business or prospects of the General Partner or the Fund or is required
to be disclosed in the Prospectus pursuant to applicable CFTC
regulations. The General Partner has not received any notice of an
investigation or warning letter from the NFA or the CFTC regarding
non-compliance by the General Partner with the Commodity Act or the
regulations thereunder.
(n) The General Partner has all federal and state
governmental, regulatory and commodity exchange approvals and licenses,
and has effected all filings and registrations with federal and state
governmental agencies required to conduct its business and to act as
described in the Registration Statement and Prospectus or required to
perform its obligations as described under the Limited Partnership
Agreement and this Agreement (including, without limitation,
registration as a commodity pool operator under the Commodity Act and
membership in the NFA as a commodity pool operator), and the
performance of such obligations will not contravene or result in a
breach of any provision of its certificate of incorporation, by-laws or
any agreement, order, law or regulation binding upon it. The principals
of the General Partner identified in the Registration Statement are
all of the principals of the General Partner, as "principals" is
defined by the CFTC regulations. Such principals are duly registered as
such on the General Partner's commodity pool operator Form 7-R
registration.
(o) The Fund does not require any federal or state
governmental, regulatory or commodity exchange approvals or licenses,
or need to effect any filings or registrations with any federal or
state governmental agencies in order to conduct its businesses and to
act as contemplated by the Registration Statement and Prospectus and to
issue and sell the Units (other than filings relating solely to the
offering of the Units), and to trade in the commodity markets.
(p) None of the General Partner or any principal or affiliate
thereof has "operated," since January 1, 1991, any commodity pool,
within the meaning of the CFTC's Part 4 Regulations, the performance of
which is not included in the Prospectus.
Section 2. Representations and Warranties of the Selling
Agent. The Selling Agent represents and warrants to the Fund, the General
Partner, the Trading Advisor and the Broker as follows:
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(a) The Selling Agent is a corporation duly organized and
validly existing and in good standing under the laws of the State of
Texas and in good standing and qualified to do business in each
jurisdiction in which the nature or conduct of its business requires
such qualification and the failure to be duly qualified would
materially adversely affect the Selling Agent's ability to perform its
obligations hereunder. The Selling Agent has full corporate power and
authority to perform its obligations under this Agreement and as
described in the Registration Statement and Prospectus.
(b) All references to the Selling Agent and its principals in
the Registration Statement and Prospectus are accurate and complete in
all material respects, and set forth in all material respects the
information required to be disclosed therein under the Commodity Act
and the rules and regulations thereunder. As to the Selling Agent and
its principals, (i) the Registration Statement and Prospectus contain
all statements and information required to be included therein under
the Commodity Act and the rules and regulations thereunder, (ii) the
Registration Statement as of its effective date did not contain any
misleading or untrue statement of a material fact or omit to state a
material fact which is required to be stated therein or necessary to
make the statements therein not misleading and (iii) the Prospectus at
its date of issue and as of the Initial Public Closing Time did not and
will not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not
misleading, in light of the circumstances under which such statements
were made.
(c) The Selling Agent has all federal and state governmental,
regulatory and commodity exchange licenses and approvals, and has
effected all filings and registrations with federal and state
governmental and regulatory agencies required to conduct its business
and to act as described in the Registration Statement and Prospectus or
required to perform its obligations under this Agreement, and the
performance of such obligations will not violate or result in a breach
of any provision of the Selling Agent's certificate of incorporation,
by-laws or any agreement, instrument, order, law or regulation binding
upon the Selling Agent.
(d) This Agreement has been duly authorized, executed and
delivered by the Selling Agent and constitutes a valid, binding and
enforceable agreement of the Selling Agent in accordance with its
terms.
(e) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as may
otherwise be stated in or contemplated by the Registration Statement
and the Prospectus, there has not been any material adverse change in
the condition, financial or otherwise, business or prospects of the
Selling Agent, whether or not arising in the ordinary course of
business.
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(f) In the ordinary course of its business, the Selling Agent
may be engaged in civil litigation and subject to administrative
proceedings. Neither the Selling Agent nor any of its principals have
been the subject of any administrative, civil, or criminal actions
within the five years preceding the date hereof that would be material
to an investor's decision to purchase the Units which are not disclosed
in the Prospectus.
(g) The execution and delivery of this Agreement, the
incurrence of the obligations set forth herein and the consummation of
the transactions contemplated herein and in the Prospectus will not
constitute a breach of, or default under, any instrument by which the
Selling Agent is bound or any order, rule or regulation applicable to
the Selling Agent of any court or any governmental body or administra
tive agency having jurisdiction over the Selling Agent.
Section 3. Representations and Warranties of the Trading
Advisor. The Trading Advisor represents and warrants to the Fund, the Selling
Agent, the Broker and the General Partner as follows:
(a) The Trading Advisor is a corporation duly organized and
validly existing and in good standing under the laws of the State of
New York and in good standing as a foreign corporation in each other
jurisdiction in which the nature or conduct of its business requires
such qualification and the failure to be duly qualified would
materially affect the Trading Advisor's ability to perform its
obligations under this Agreement and the Advisory Agreement. The
Trading Advisor has full corporate power and authority to perform its
obligations under this Agreement and the Advisory Agreement as
described in the Registration Statement and Prospectus.
(b) All references to the Trading Advisor and its principals,
and its trading systems, methods and performance in the Registration
Statement and the Prospectus are accurate and complete in all material
respects. As to the Trading Advisor, each of the principals of the
Trading Advisor, the Trading Strategy and the Trading Advisor's trading
systems, strategies and performance, (i) the Registration Statement and
Prospectus contain all statements and information required to be
included therein under the Commodity Act and the rules and regulations
thereunder, (ii) the Registration Statement (with respect to the
information relating to the Trading Advisor) as of its effective date
did not contain any misleading or untrue statement of a material fact
or omit to state a material fact which is required to be stated therein
or necessary to make the statements therein not misleading and (iii)
the Prospectus (with respect to information relating to the Trading
Advisor) at its date of issue and as of the Initial Public Closing
Time, as supplemented, did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading, in light of the
circumstances under which such statements were made. Except as
otherwise disclosed in the Prospectus or identified in writing to the
General Partner on or prior to the date hereto, the actual performance
of each discretionary account directed by the Trading Advisor or any
principal or affiliate of the Trading Advisor for the periods covered
by the perform-
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ance summaries set forth in the Prospectus is disclosed in accordance
with the requirements of the Commodity Act and the rules and
regulations thereunder (or as otherwise permitted by the Staff of the
Division of Trading and Markets). The information, performance
summaries and monthly rates of return relating to the performance of
the Trading Advisor comply in all material respects with the disclosure
requirements of the rules and regulations of the CFTC under the
Commodity Act. The performance summaries in the Prospectus (as
applicable to the Trading Advisor) have been calculated in the manner
set forth in the notes thereto.
(c) The Advisory Agreement and this Agreement have each been
duly and validly authorized, executed and delivered on behalf of the
Trading Advisor and both constitute valid, binding and enforceable
agreements of the Trading Advisor in accordance with their terms.
(d) The Trading Advisor has all federal and state
governmental, regulatory and commodity exchange licenses and approvals
and has effected all filings and registrations with federal and state
governmental and regulatory agencies required to conduct its business
and to act as described in the Registration Statement and Prospectus or
required to perform its obligations under this Agreement and the
Advisory Agreement (including, without limitation, registration of the
Trading Advisor as a commodity trading advisor under the Commodity Act
and membership of the Trading Advisor as a commodity trading advisor in
the NFA), and the performance of such obligations will not violate or
result in a breach of any provision of the Trading Advisor's
Certificate of Incorporation, By-laws or any agreement, instrument,
order, law or regulation binding on the Trading Advisor. The principals
of the Trading Advisor are duly listed as such on the Trading Advisor's
commodity trading advisor Form 7-R registration.
(e) Management by the Trading Advisor of an account for the
Fund in accordance with the terms hereof and of the Advisory Agreement,
and as described in the Prospectus, will not require any registration
under, or violate any of the provisions of, the Investment Advisers Act
of 1940.
(f) Neither the Trading Advisor nor any principal of the
Trading Advisor will use or distribute any preliminary prospectus,
Prospectus, amended or supplemented Prospectus or selling literature
nor engage in any selling activities whatsoever in connection with the
offering of the Units.
(g) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as may
otherwise be stated in or contemplated by the Registration Statement
and the Prospectus, there has not been any material adverse change in
the condition, financial or otherwise, business or prospects of the
Trading Advisor, whether or not arising in the ordinary course of
business.
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(h) The execution and delivery of this Agreement and the
Advisory Agreement, the incurrence of the obligations herein and
therein set forth and the consummation of the transactions
contemplated herein and therein and in the Prospectus will not
constitute a breach of, or default under, any instrument by which the
Trading Advisor is bound or any order, rule or regulation applicable to
the Trading Advisor of any court or any governmental body or
administrative agency having jurisdiction over the Trading Advisor.
(i) There is not pending, or to the best of the Trading
Advisor's knowledge threatened, any action, suit or proceeding before
or by any court or other govern mental body to which the Trading
Advisor is a party, or to which any of the assets of the Trading
Advisor is subject, which might reasonably be expected to result in any
material adverse change in the condition, financial or otherwise,
business or prospects of the Trading Advisor. The Trading Advisor has
not received any notice of an investigation or warning letter from the
NFA or the CFTC regarding non-compliance by the Trading Advisor with
the Commodity Act or the regulations thereunder.
(j) The Trading Advisor has not received, and is not entitled
to receive, directly or indirectly, any commission, finder's fee,
similar fee or rebate from any person in connection with the
organization or operation of the Fund.
Section 4. Representations and Warranties of the Broker. The
Broker represents and warrants to the Fund, the General Partner, the Trading
Advisor and the Selling Agent, as follows:
(a) The Broker is a corporation duly organized and validly
existing and in good standing under the laws of the State of Illinois
and in good standing and qualified to do business in each jurisdiction
in which the nature or conduct of its business requires such
qualification and the failure to be duly qualified would materially
adversely affect the Broker's ability to perform its obligations
hereunder or under the Customer Agreement. The Broker has full
corporate power and authority to perform its obligations under the
Customer Agreement and this Agreement and as described in the
Registration Statement and Prospectus.
(b) All references to the Broker in the Registration Statement
and Prospectus are accurate and complete in all material respects, and
set forth in all material respects the information required to be
disclosed therein under the Commodity Act and the rules and regulations
thereunder. As to the Broker, (i) the Registration Statement and
Prospectus contain all statements and information required to be
included therein under the Commodity Act and the rules and regulations
thereunder, (ii) the Registration Statement as of its effective date
did not contain any misleading or untrue statement of a material fact
or omit to state a material fact which is required to be stated therein
or necessary to make the statements therein not misleading and (iii)
the Prospectus at its date of issue and as of the Initial Public
Closing Time did not and will not contain an untrue statement of a
material fact or omit to state a material fact
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necessary to make the statements therein not misleading, in light of
the circumstances under which such statements were made.
(c) The Broker has all federal and state governmental,
regulatory and commodity exchange licenses and approvals, and has
effected all filings and registrations with federal and state
governmental and regulatory agencies required to conduct its business
and to act as described in the Registration Statement and Prospectus or
required to perform its obligations under the Customer Agreement and
this Agreement (including, without limitation, registration of the
Broker as a futures commission merchant under the Commodity Act and
membership of the Broker as a futures commission merchant in the NFA),
and the performance of such obligations will not violate or result in a
breach of any provision of the Broker's certificate of incorporation,
by-laws or any agreement, instrument, order, law or regulation binding
upon the Broker.
(d) This Agreement and the Customer Agreement have been duly
authorized, executed and delivered by the Broker, and constitute valid,
binding and enforceable agreements of the Broker in accordance with
their terms.
(e) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as may
otherwise be stated in or contemplated by the Registration Statement
and the Prospectus, there has not been any material adverse change in
the condition, financial or otherwise, business or prospects of the
Broker, whether or not arising in the ordinary course of business.
(f) In the ordinary course of its business, the Broker is
engaged in civil litigation and subject to administrative proceedings.
Neither the Broker nor any of its principals have been the subject of
any administrative, civil, or criminal actions within the five years
preceding the date hereof that would be material to an investor's
decision to purchase the Units which are not disclosed in the
Prospectus.
(g) The execution and delivery of the Customer Agreement and
this Agreement, the incurrence of the obligations set forth herein and
therein and the con summation of the transactions contemplated herein
and therein and in the Prospectus will not constitute a breach of, or
default under, any instrument by which the Broker is bound or any
order, rule or regulation applicable to the Broker of any court or any
governmental body or administrative agency having jurisdiction over the
Broker.
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Section 5. Offering and Sale of Units.
(a) The Selling Agent is hereby appointed the principal
selling agent of the Fund (although as described herein it is
contemplated that certain Additional Selling Agents (including those
introduced to the Selling Agent by Wholesalers), Wholesalers and
Correspondents may also market Units provided each of such Additional
Selling Agents, Wholesalers and Correspondents is duly registered as a
broker-dealer in each jurisdiction in which such person markets Units)
during the term herein specified for the purpose of finding acceptable
subscribers for the Fund through a public offering. The Initial Public
Offering Period shall continue until the first full month after the
Registration Statement has been declared effective (the "Initial Public
Offering Period"; such date being hereafter referred to as the "Initial
Public Offering Termination Date"). Thereafter, Units may be sold as of
the beginning of each month, as determined by the General Partner (the
"Ongoing Public Offering Period"; such subsequent sale dates being
hereinafter referred to as "Subsequent Public Closing Times"). The
Initial Public Offering Period and the Ongoing Public Offering Period
shall be referred to herein as the "Public Offering Period." Subject to
the performance by the General Partner of all its obligations to be
performed hereunder, and to the completeness and accuracy in all
material respects of all the representations and warranties of the
General Partner, the Broker and the Trading Advisor contained herein,
the Selling Agent hereby accepts such agency and agrees on the terms
and conditions herein set forth to use its best efforts during the
Public Offering Period to find acceptable subscribers for the Units at
a public offering price of 101% of Net Asset Value (including the 1%
organizational charge referred to below), each subscriber being
required to make a minimum subscription of at least $10,000, except for
(i) trustees or custodians of eligible tax-exempt accounts and
individual retirement accounts and (ii) Limited Partners subscribing
for additional Units, where the minimum subscription is $5,000. It is
understood that the Selling Agent's agreement to use its best efforts
to find acceptable subscribers for the Units shall not prevent it from
acting as a selling agent or underwriter for the securities of other
issuers which may be offered or sold during the Public Offering Period.
(b) At the Initial Public Offering Closing Time the General
Partner shall notify the Selling Agent of the aggregate number of Units
for which the General Partner has received acceptable subscriptions and
payment of the purchase price for the Units may, if the General Partner
so elects, be made at the office of ProFutures, Inc., 00000 Xxx Xxxx
Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, or at such other place as shall
be agreed upon between the Selling Agent and the General Partner, at
10:00 A.M., Texas time, on the fifth full business day after the day on
which the General Partner notifies the Selling Agent of the number of
Units for which subscriptions have been accepted or such other day and
time as shall be agreed upon between the Selling Agent and the General
Partner (the "Initial Public Closing Time").
(c) An organizational charge of 1% of the Net Asset Value of
the Units subscribed for will be paid to the General Partner by each
subscriber. The General
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Partner has paid all actual costs of organizing the Fund and conducting
the public offering of the Units. To the extent that the aggregate 1%
organizational charge is less than the actual costs, the General
Partner will pay the costs. To the extent that the aggregate 1%
organizational charge collected exceeds the actual costs, the excess
amount will be paid to the Selling Agent. Such payment could be deemed
to be a selling commission. The Additional Selling Agents, if any,
shall be compensated as set forth in the Additional Selling Agents
Agreement attached hereto as Exhibit A.
(d) The Selling Agent will compensate its own Registered
Representatives pursuant to the Selling Agent's standard compensation
procedures. The Selling Agent will pay, from funds received from the
General Partner, Additional Selling Agents initial selling commissions
of up to 3% of the Net Asset Value of each Unit sold by the Registered
Representatives of each such Additional Selling Agent. In the case of
an Additional Selling Agent introduced by a Wholesaler, the Selling
Agent will pay such Wholesaler a portion of the up to 3% per Unit
selling commissions depending upon the Wholesaler's arrangements with
the Additional Selling Agent. Ongoing compensation, of up to 2% per
annum of the month-end Net Asset Value of the Units attributable to
Units sold by a Registered Representative of the Additional Selling
Agent which remain outstanding for more than twelve months (including
the month as of the end of which such Units are redeemed) will also be
paid to the Selling Agent, from funds received from the General
Partner, provided that such Additional Selling Agent is and remains
registered with the CFTC as a futures commission merchant or
introducing broker and is a member in good standing with NFA in such
capacity and agrees to provide the additional services described below.
For purposes of determining when ongoing compensation should begin to
accrue, Units sold during the Initial Offering Period shall not be
deemed to be outstanding until the Initial Closing Time.
The ongoing compensation described in the foregoing paragraph
shall be paid only in respect of Registered Representatives registered
with the CFTC as associated persons of the Additional Selling Agent who
have satisfied all applicable proficiency requirements (including those
imposed by the NASD as a condition of receiving such ongoing
compensation) by either passing the Series 3 National Commodity Futures
Exam or the Series 31 exam or being "grandfathered" from having to do
so who sold outstanding Units in their capacity as registered
representatives of an Additional Selling Agent and who agree to provide
additional services in connection with such Units, including but not
limited to: (i) inquiring of the General Partner from time to time, at
the request of a Limited Partner, as to the Net Asset Value of a Unit;
(ii) inquiring of the General Partner from time to time, at the request
of a Limited Partner, regarding the commodities markets and the Fund;
(iii) assisting, at the request of the General Partner, in the
redemption of Units sold by such Registered Representative; and (iv)
responding to questions of Limited Partners from time to time with
respect to monthly account statements, annual reports and financial
statements furnished to Limited Partners; and (v) providing such
services to the Limited Partners as the General Partner may, from time
to time, reasonably request.
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Ongoing compensation shall be credited and paid only in
respect of Units sold by Registered Representatives who are eligible to
receive such ongoing compensation as described above. No ongoing
compensation whatsoever shall be credited, paid or accrued on any Units
sold by Registered Representatives not then eligible to receive such
ongoing compensation. The Additional Selling Agent may receive such
ongoing compensation with respect to particular Units where substitute
Registered Representatives who are appropriately registered agree in
writing to perform the services described in this Section 5(d) above
with respect to such Units ("Substitute Registered Representatives").
Such ongoing compensation shall be paid monthly.
In the event that the payment of ongoing compensation is
restricted by the NASD, the Selling Agent's payments of such ongoing
compensation shall be limited to the maximum amount permissible
pursuant to such restrictions.
Additional Selling Agents will receive an installment selling
commission of up to 2% per annum of the month-end Net Asset Value of
Units remaining outstanding after the twelfth month following their
sale by such Additional Selling Agent if: (i) the Additional Selling
Agents are not registered with NFA as futures commissions merchants or
introducing brokers; (ii) the Registered Representatives engaged in the
sale of Units are not registered as associated persons of a futures
commissions merchant or introducing broker; or (iii) the Additional
Selling Agents or their registered representatives engaged in the sale
of Units do not agree to provide ongoing services to the purchasers of
Units. Installment selling commissions, if any, will be paid by the
Selling Agent from funds received from the General Partner. Installment
selling commissions are limited such that the sum of the initial
selling commission and the aggregate installment selling commissions
paid such Additional Selling Agents may not exceed 9% of the Net Asset
Value, at the time of sale, of Units sold by such Additional Selling
Agents.
In the case of an Additional Selling Agent introduced by a
Wholesaler, the Selling Agent will pay a portion of the up to 2% per
annum monthly ongoing compensation or installment selling commissions
to the Wholesaler depending upon the Wholesaler's arrangement with the
Additional Selling Agent; provided, however, that such wholesaler shall
not receive in excess of 9% of the initial Net Asset Value of the Units
sold by such Additional Selling Agent when aggregated with the selling
commissions and/or ongoing compensation payed to such Additional
Selling Agent.
In respect of Correspondents selected by an Additional Selling
Agent (with the consent of the General Partner and the Selling Agent),
the Selling Agent shall pay such Additional Selling Agent selling
commissions and ongoing compensation or installment sales commissions
as set forth above, a portion (as agreed between such Additional
Selling Agent and each such Correspondent) of which shall be passed on
by the Additional Selling Agent to such Correspondents.
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(e) The Selling Agent will use its best efforts to find
eligible persons to purchase the Units on the terms stated herein and
in the Registration Statement and Prospectus. It is understood that the
Selling Agent has no commitment with regard to the sale of the Units
other than to use its best efforts. In connection with the offer and
sale of the Units, the Selling Agent represents that it will comply
fully with all applicable laws, and the rules of the NASD, the SEC, the
CFTC, state securities administrators and any other regulatory body. In
particular, and not by way of limitation, the Selling Agent represents
and warrants that it is aware of Rule 2810 of the NASD and that it will
comply fully with all the terms thereof in connection with the offering
and sale of the Units. The Selling Agent shall not execute any sales of
Units from a discretionary account over which it has control without
prior written approval of the customer in whose name such discretionary
account is maintained.
The Selling Agent agrees not to recommend the purchase of
Units to any subscriber unless the Selling Agent shall have reasonable
grounds to believe, on the basis of information obtained from the
subscriber concerning, among other things, the subscriber's investment
objectives, other investments, financial situation and needs, that the
subscriber is or will be in a financial position appropriate to enable
the subscriber to realize to a significant extent the benefits of the
Fund, including tax benefits described in the Prospectus; the
subscriber has a fair market net worth sufficient to sustain the risks
inherent in participating in the Fund, including loss of investment and
lack of liquidity; and the Units are otherwise a suitable investment
for the subscriber. The Selling Agent agrees to maintain files of
information disclosing the basis upon which the Selling Agent
determined that the suitability requirements of Section (b)(2) of Rule
2810 of the NASD were met as to each subscriber (the basis for
determining suitability may include the Subscription Agreements and
Powers of Attorney and other certificates submitted by subscribers).
The Selling Agent represents and warrants that it has reasonable
grounds to believe, based on information in the Prospectus and
information to which the Selling Agent has had access due to its
affiliation with the General Partner, that all material facts relating
to an investment in the Units are adequately and accurately disclosed
in the Prospectus. In connection with making the foregoing
representations and warranties, the Selling Agent further represents
and warrants that it has, among other things, examined the Prospectus
and obtained such additional information from the General Partner and
the Trading Advisor regarding the information set forth thereunder as
the Selling Agent has deemed necessary or appropriate to determine
whether the Prospectus adequately and accurately discloses all material
facts relating to an investment in the Fund and provides an adequate
basis to subscribers for evaluating an investment in the Units. In
connection with making the representations and warranties set forth in
this paragraph, the Selling Agent has not relied on inquiries made by
or on behalf of any other parties.
The Selling Agent agrees to inform all prospective purchasers
of Units of all pertinent facts relating to the liquidity and
marketability of the Units as set forth in the Prospectus.
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(f) None of the Selling Agent, the Fund or the General Partner
shall, directly or indirectly, pay or award any finder's fees,
commissions or other compensation to any person engaged by a potential
investor for investment advice as an inducement to such advisor to
advise the purchase of Units; provided, however, the normal sales
commissions payable to a registered broker-dealer or other properly
licensed person for selling Units shall not be prohibited hereby.
(g) All payments for subscriptions shall be made by deposit of
check or transfer of funds to the custodial account of the Fund as
described in the Prospectus.
(h) The General Partner agrees to cause its counsel to prepare
and deliver to the Selling Agent a Blue Sky Survey which shall set
forth, for the guidance of the Selling Agent, in which United States
jurisdictions the Units may be offered and sold. It is understood and
agreed that the Selling Agent may rely, in connection with the offering
and sale of Units in any jurisdiction, on advice given by such counsel
as to the legality of the offer or sale of the Units in such
jurisdiction, provided, however, that the Selling Agent shall be
responsible for compliance with all applicable laws, rules and
regulations with respect to the actions of its employees, acting as
such, in connection with sales of Units in any jurisdiction.
Section 6. Covenants of the General Partner.
(a) The General Partner will notify the Selling Agent, the
Broker and the Trading Advisor immediately and confirm such
notification in writing (i) when any amendment to the Registration
Statement shall have become effective, (ii) of the receipt of any
comments from the SEC, CFTC or any other Federal or state regulatory
body with respect to the Registration Statement, (iii) of any request
by the SEC, CFTC or any other Federal or state regulatory body for any
amendment to the Registration Statement or any amendment or supplement
to the Prospectus or for additional information relating thereto and
(iv) of the issuance by the SEC, CFTC or any other Federal or state
regulatory body of any order suspending the effectiveness of the
Registration Statement under the 1933 Act, the CFTC registration or NFA
membership of the General Partner as a commodity pool operator, or the
registration of Units under the Blue Sky or securities laws of any
state or other jurisdiction or any order or decree enjoining the
offering or the use of the then current Prospectus or of the
institution, or notice of the intended institution, of any action or
proceeding for that purpose.
(b) The General Partner will deliver to the Selling Agent, as
soon as available, a conformed copy of each amendment to the
Registration Statement as originally filed including the Exhibits
thereto, and will also deliver to the Selling Agent such additional
number of conformed copies of the Registration Statement as originally
filed and of each amendment thereto (including Exhibits) as the Selling
Agent shall reasonably require.
-15-
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(c) The General Partner will deliver to the Selling Agent as
promptly as practicable from time to time during the period when the
Prospectus is required to be delivered under the 1933 Act, such number
of copies of the Prospectus (as amended or supplemented) as the Selling
Agent, Wholesalers, Additional Selling Agents and Correspondents may
reasonably request for the purposes contemplated by the 1933 Act or the
SEC Regulations.
(d) During the period when the Prospectus is required to be
delivered pursuant to the 1933 Act, the General Partner and the Fund
will use best efforts to comply with all requirements imposed upon them
by the 1933 Act and the Commodity Act, each as now and hereafter
amended, and by the SEC Regulations and rules and regulations of the
CFTC, as from time to time in force, so far as necessary to permit the
continuance of sales of, or dealings in, the Units during such period
in accordance with the provisions hereof and as set forth in the
Prospectus.
(e) If any event relating to or affecting the General Partner
or the Fund shall occur as a result of which it is necessary, in the
reasonable opinion of the Selling Agent, to amend or supplement the
Prospectus in order to make the Prospectus not materially misleading in
light of the circumstances existing at the time it is delivered to a
subscriber, the General Partner and the Fund will forthwith prepare and
furnish to the Selling Agent, at the expense of the General Partner, a
reasonable number of copies of an amendment or amendments of, or a
supplement or supplements to, the Prospectus which will amend or
supplement the Prospectus so that as amended or supplemented it will
not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances existing at the time the Prospectus is
delivered to a subscriber, not misleading. No such amendment or
supplement shall be filed without the approval of the Selling Agent,
the Broker and the Trading Advisor.
(f) The General Partner will use best efforts to qualify the
Units for offer and sale under applicable securities or "Blue Sky" laws
and continue such qualification throughout the Offering Period,
provided that in no event shall the General Partner or the Fund be
obligated to (i) take any action which would subject it to service of
process in suits other than those arising out of the offering or sale
of the Units, or taxes, in any jurisdiction where either is not now so
subject, (ii) change any material term in the Registration Statement or
(iii) expend a sum of money considered unreasonable by the General
Partner.
-16-
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Section 7. Covenants of the Trading Advisor.
(a) The Trading Advisor agrees to cooperate, to the extent
reasonably requested by the General Partner, in the preparation of any
amendments or supplements relating to itself to the Registration
Statement and the Prospectus.
(b) During the period when the Prospectus is required to be
delivered under the 1933 Act, the Trading Advisor agrees to notify the
General Partner immediately upon discovery of any untrue or misleading
statement regarding it, its operations or any of its principals or of
the occurrence of any event or change in circumstances which would
result in there being any untrue or misleading statement or an omission
in the Prospectus or Registration Statement regarding it, its
operations or any of its principals or result in the Prospectus not
including all information relating to the Trading Advisor and its
principals required pursuant to CFTC regulations. During such period,
the Trading Advisor shall promptly inform the General Partner if it is
necessary to amend or supplement the Prospectus in order to make the
Prospectus not materially misleading in light of the circumstances
existing at the time the Prospectus is delivered to a subscriber.
Section 8. Covenants of the Broker.
(a) The Broker agrees to cooperate, to the extent reasonably
requested by the General Partner, in the preparation of any amendments
or supplements relating to itself to the Registration Statement and the
Prospectus.
(b) During the period when the Prospectus is required to be
delivered under the 1933 Act, the Broker agrees to notify the General
Partner immediately upon discovery of any untrue or misleading
statement regarding it, its operations or any of its principals or of
the occurrence of any event or change in circumstances which would
result in there being any untrue or misleading statement or an omission
in the Prospectus or Registration Statement regarding it, its
operations or any of its principals or result in the Prospectus not
including all information relating to the Broker and its principals
required pursuant to CFTC regulations. During such period, the Broker
shall promptly inform the General Partner if it is necessary to amend
or supplement the Prospectus in order to make the Prospectus not
materially misleading in light of the circumstances existing at the
time the Prospectus is delivered to a subscriber.
Section 9. Payment of Expenses and Fees. The General Partner
will pay all expenses incident to the performance of the obligations of the
General Partner and the Fund hereunder, including: (i) the printing and delivery
to the Selling Agent in quantities as hereinabove stated of copies of the
Registration Statement and all amendments thereto, of the Prospectus and any
supplements or amendments thereto, and of any supplemental sales materials;
(ii) the reproduction of this Agreement and the printing and filing of the
Registration Statement and the Prospectus (and, in certain cases, the exhibits
thereto) with the SEC, CFTC and NFA; (iii) the qualification of the Units
-17-
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under the securities or "Blue Sky" laws in the various jurisdictions, including
filing fees and the fees and disbursements of the General Partner's counsel
incurred in connection therewith; (iv) the services of counsel and accountants
for the General Partner and the Fund, including certain services of Xxxxxx X.
Xxxx, Xx. & Associates, L.L.C. in connection with their review of the
performance records in the Prospectus; (v) the printing or reproduction and
delivery to the Selling Agent of such number of copies as it may reasonably
request of the Blue Sky Survey; and (vi) "road show" presentations (not
including the expenses of the Trading Advisor and their personnel which shall be
borne by the Trading Advisor).
The General Partner and the Selling Agent are each aware of
the limitations imposed by Rule 2810 of the NASD on the aggregate selling
commissions which may be received by the Selling Agent in connection with the
offering and sale of the Units. The General Partner will in no event make any
payments deemed by the NASD to constitute underwriting compensation to the
Selling Agent nor shall the Selling Agent make any such payments to its own
Registered Representatives or any Additional Selling Agents as described above,
which would exceed 9.9% of the gross proceeds of the Units sold to the public.
The General Partner shall not reimburse the Selling Agent for any due diligence
expenses in connection with the offering.
Section 10. Conditions of Closing. The obligations of each of
the parties hereunder are subject to the accuracy of the representations and
warranties of the other parties hereto, to the performance by such other parties
of their respective obligations hereunder and to the following further
conditions:
(a) At the Initial Public Closing Time and each Subsequent
Public Closing Time no order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or
proceeding therefor initiated or threatened by the SEC and no objection
to the content thereof shall have been expressed or threatened by the
CFTC or the NFA.
(b) At the Initial Closing Time, Sidley & Austin, counsel to
the General Partner, shall deliver to all the parties hereto its
opinion, in form and substance satisfactory to each of the parties
hereto, to the effect that:
(i) The Certificate of Limited Partnership pursuant
to which the Fund has been formed and the Limited Partnership
Agreement each provides for the subscription for and sale of
the Units; all action required to be taken by the General
Partner and the Fund as a condition to the subscription for
and sale of the Units to qualified subscribers therefor has
been taken; and, upon payment of the consideration therefor
specified in the accepted Subscription Agreements and Powers
of Attorney, the Units will constitute valid limited
partnership interests in the Fund and each subscriber who pur
chases Units will become a Limited Partner, subject to the
requirement that each such purchaser shall have duly
completed, executed and delivered to the Fund a Subscription
Agreement and Power of
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Attorney relating to the Units purchased by such party, that
such purchaser meets all applicable suitability standards as
set forth in the Prospectus and that the representations and
warranties of such purchaser in the Subscription Agreement and
Power of Attorney are true and correct.
(ii) The Fund is a limited partnership duly organized
pursuant to the Certificate of Limited Partnership, the
Limited Partnership Agreement and DRULPA and validly existing
under the laws of the State of Delaware with partnership power
and authority to conduct the business in which it proposes to
engage as described in the Prospectus; the Fund has qualified
to do business in Texas and need not effect any other filings
or qualifications under the laws of the United States and the
States of Illinois, New York, Texas and California and the
District of Columbia in order to preserve the status of the
Fund as a limited partnership or to enable the Fund to perform
its obligations under the Advisory Agreement and this
Agreement and to conduct the business in which it proposes to
be engaged as described in the Prospectus.
(iii) The General Partner is duly organized and
validly existing and in good standing as a corporation under
the laws of the State of Texas with corporate power and
authority to act as general partner of the Fund, and is
qualified to do business and is in good standing as a foreign
corporation in each other jurisdiction in which the failure to
so qualify might, in their opinion, reasonably be expected to
result in material adverse consequences to the Fund. The
General Partner has full corporate power and authority to
perform its obligations as described in the Registration
Statement and Prospectus.
(iv) Each of the General Partner (including the
principals, as defined in the Commodity Act, of the General
Partner) and the Fund has all Federal and state governmental
and regulatory licenses and approvals and has received or made
all filings and registrations with Federal and state
governmental and regulatory agencies necessary in order for
each of the General Partner and the Fund to conduct its
business as described in the Registration Statement and
Prospectus, and, to the best of their knowledge, none of such
approvals, licenses or registrations have been rescinded or
revoked.
(v) Each of the Limited Partnership Agreement, the
Advisory Agreement, the Customer Agreement, the Investment
Advisory Agreement, the Additional Selling Agents Agreement
and this Agreement has been duly and validly authorized,
executed and delivered by or on behalf of the General Partner
or the Fund (as the case
-19-
22
may be) and assuming that such agreements are legal, valid and
binding on the other parties hereto and thereto, each of the
Limited Partnership Agreement, the Advisory Agreement, the
Customer Agreement, the Investment Advisory Agreement, the
Additional Selling Agents Agreement and this Agreement
constitutes a legal, valid and binding agreement of the
General Partner or the Fund (as the case may be) enforceable
in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general
applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered in
a proceeding in equity or at law).
(vi) The execution and delivery of this Agreement,
the Limited Partnership Agreement, the Customer Agreement, the
Investment Advisory Agreement, the Additional Selling Agents
Agreement and the Advisory Agreement and the incurrence of the
obligations herein and therein set forth and the consummation
of the transactions contemplated herein and therein and in the
Prospectus will not be in contravention of any of the
provisions of the General Partner's certificate of
incorporation or by-laws, of the Limited Partnership
Agreement, and, to their knowledge, will not constitute a
breach of, or default under, any instrument by which the
General Partner or the Fund is bound or any order, rule or
regulation applicable to the General Partner or the Fund of
any court or any governmental body or administrative agency
having jurisdiction over the General Partner or the Fund.
(vii) To their knowledge, there are no actions,
claims or proceedings pending or threatened in any court or
before or by any governmental or administrative body, nor have
there been any such suits, claims or proceeding within the
last five years, to which the General Partner (or any
principal of the General Partner) or the Fund is or was a
party, or to which any of their assets is or was subject,
which are required to be, but are not disclosed in, the
Registration Statement or Prospectus or which might reasonably
be expected to materially adversely affect the condition
(financial or otherwise), business or prospects of the
General Partner or the Fund.
(viii) No authorization, approval or consent of any
governmental authority or agency is necessary in connection
with the subscription for and sale of the Units, except such
as may be required under the 1933 Act, the Commodity Act, NFA
compliance rules or applicable securities or "Blue Sky" laws.
-20-
23
(ix) The terms and provisions of the Limited
Partnership Agreement, the Customer Agreement, the Advisory
Agreement, the Investment Advisory Agreement, the Additional
Selling Agents Agreement and this Agreement conforms in all
material respects to descriptions thereof contained in the
Prospectus.
(x) The Registration Statement is effective under the
1933 Act and, to the best of their knowledge, no proceedings
for a stop order are pending or threatened under Section 8(d)
of the 1933 Act.
(xi) At the time the Registration Statement initially
became effective and at the time any post-effective amendment
thereto became effective, the Registration Statement, and at
the time the Prospectus and any amendments or supplements
thereto were first issued, the Prospectus, complied as to form
in all material respects with the requirements of the 1933
Act, the SEC Regulations under the 1933 Act and CFTC
regulations. Nothing has come to their attention that would
lead them to believe that with respect to the General Partner
and the Selling Agent (a) at the time the Registration
Statement initially became effective and at the time any
post-effective amendment thereto became effective, the
Registration Statement contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading or (b) the Prospectus as first issued or as
subsequently issued or at the Initial Public Closing Time
contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that such
counsel need express no opinion (A) as to the financial
statements, notes thereto and other financial or statistical
data set forth in the Registration Statement and Prospectus or
(B) as to any performance data set forth in the Registration
Statement, and Prospectus, including the performance summaries
(and the notes thereto) in the Registration Statement and
Prospectus, except that such counsel shall opine, without
rendering any opinion as to the accuracy of the information in
the performance summaries, that such the performance summaries
comply as to form in all material respects with applicable
CFTC rules.
(xii) Such counsel confirm their opinion, a form of
which appears as Exhibit 8.01 to the Registration Statement,
that the sum xxxx of Federal income tax consequences to
Limited Partners set forth under the caption "Tax
Consequences" in the Prospectus accurately describes the
material tax consequences set forth therein
-21-
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and that such counsel further confirm their advice to the
General Partner explicitly set forth therein and in such
Exhibit 8.01.
(xiii) To the best of their knowledge, (a) there are
no contracts, indentures, mortgages, loan agreements, leases
or other documents of a character required to be described or
referred to in the Registration Statement or Prospectus or to
be filed as exhibits to the Registration Statement other than
those described or referred to therein or filed as exhibits
thereto, and with respect to the existing contracts,
indentures, mortgages, loan agreements, leases and other
documents so described, referred to or filed, the descriptions
thereof, references thereto or copies so filed are correct in
all material respects, and (b) no material default on the part
of the General Partner or the Fund exists in the due
performance or observance of any material obligation,
agreement, covenant or condition contained in any contract or
lease so described or filed.
(xiv) Assuming operation in accordance with the
Prospectus, the Fund, at Closing Time, is not an "investment
company" as that term is defined in the Investment Company Act
of 1940, as amended.
In rendering the opinions set forth above, Sidley & Austin may rely as
to certain matters relating to the General Partner on Fishman, Jones,
Xxxxx & Xxxx, P.C.
(c) Counsel to the Selling Agent shall deliver to all the
parties hereto, an opinion to the effect that:
(i) The Selling Agent is duly organized and validly
existing and in good standing as a corporation under the laws
of the State of Texas and is qualified to do business and in
good standing as a foreign corporation in each jurisdiction in
which such qualification is required and in which the failure
to so qualify might, in such counsel's opinion, reasonably be
expected to result in material adverse consequences to the
Fund. The Selling Agent has full corporate power and authority
to perform its obligations as described in the Registration
Statement and Prospectus.
(ii) This Agreement has been duly authorized,
executed and delivered by the Selling Agent, and constitutes a
legal, valid and binding agreement of the Selling Agent
enforceable in accordance with its terms, except to the extent
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws of general
applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of
equity (regardless of whether enforceability is considered).
-22-
25
(iii) The Selling Agent has all Federal and state
governmental and regulatory licenses and approvals and has
received or made all filings and registrations with Federal
and state governmental and regulatory agencies necessary in
order for the Selling Agent to conduct its business as
described in the Registration Statement and Prospectus, and,
to such counsel's knowledge, none of such approvals, licenses
or registrations has been rescinded or revoked.
(iv) The execution and delivery of this Agreement,
the incurrence of the obligations herein set forth and the
consummation of the transactions contemplated herein and in
the Prospectus will not, to the best of such counsel's
knowledge, constitute a breach of, or default under, any
instrument known to such counsel by which the Selling Agent is
bound or, any order, rule or regulation applicable to the
Selling Agent, of any court or any governmental body or
administrative agency having jurisdiction over the Broker.
(v) To such counsel's knowledge, there are no
actions, claims or proceedings pending or threatened in any
court or before or by a governmental or administrative body,
nor have there been any suits, claims or proceedings within
the last five years, to which the Selling Agent (or any
principal of the Selling Agent) is or was a party or to which
any of its assets is or was subject, which are required to be
disclosed in the Registration Statement or Prospectus or which
might reasonably be expected to materially adversely affect
the business of the Selling Agent.
(vi) Nothing has come to such counsel's attention
that would lead such counsel to believe that (a) at the time
the Registration Statement initially became effective and at
the time any post- effective amendment thereto became
effective, insofar as the Selling Agent and its principals are
concerned, the Registration Statement contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or (b) the Prospectus as
first filed pursuant to Rule 424(b) or as subsequently filed
pursuant to Rule 424 or at the Initial Public Closing Time
contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the
statements therein relating to the Selling Agent or its
principals, in light of the circumstances under which they
were made, not mis leading.
(d) Counsel to the Trading Advisor shall deliver to the
General Partner, the Broker and the Selling Agent an opinion as of the
Initial Public Closing Time to the effect that:
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(i) The Trading Advisor is a corporation duly
organized, validly existing and in good standing under the
laws of the State of New York and is in good standing in each
jurisdiction in which the nature or conduct of its business
requires such qualification and in which the failure to so
qualify might reasonably be expected to materially adversely
affect the Fund, as described in the Registration Statement
and Prospectus, and its ability to discharge its obligations
under the Advisory Agreement and this Agreement.
(ii) Each of the Advisory Agreement and this
Agreement has been duly authorized, executed and delivered by
the Trading Advisor and constitutes a valid, binding and
enforceable agreement of the Trading Advisor in accordance
with its terms, subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in
effect affecting the enforceability generally of rights of
creditors and except as enforceability of the indemnification
provisions contained in such Agreements may be limited by
applicable law and the enforcement of specific terms or
remedies may be unavailable.
(iii) The Trading Advisor (including the principals
of the Trading Advisor) has all material Federal and state
governmental and regulatory licenses and approvals and has
received or made all filings and registrations with Federal
and state governmental and regulatory authorities necessary in
order for the Trading Advisor to conduct its business as
described in the Registration Statement and Prospectus
(including, without limitation, performance of this Agreement
and the Advisory Agreement) and, to the best of such counsel's
knowledge, none of such approvals, licenses or registrations
has been rescinded or revoked.
(iv) There is not pending or, to the best of such
counsel's knowledge, threatened any actions, suits or
proceedings before or by any court or other governmental or
administrative body, nor have there been any such suits,
claims or proceedings within the last five years to which the
Trading Advisor, or any of its principals, is or was a party,
or to which any of their assets is or was subject, which are
required to be, but are not disclosed in the Registration
Statement or Prospectus or which might reasonably be expected
to result in any material adverse change in the condition
(financial or otherwise), business or prospects of the Trading
Advisor.
(v) The execution and delivery of this Agreement and
the Advisory Agreement, the incurrence of the obligations
herein and therein set forth and the consummation of the
transactions contemplated herein, therein and in the
Prospectus will not be in contraven-
-24-
27
tion of any of the provisions of the certificate of
incorporation or by-laws of the Trading Advisor, or, to the
best of such counsel's knowledge, constitute a breach of, or
default under, any instrument by which the Trading Advisor is
bound or any order, rule or regulation applicable to the
Trading Advisor of any court or any governmental body or
administrative agency having jurisdiction over the Trading
Advisor.
(vi) Nothing has come to such counsel's attention
that would lead such counsel to believe that (a) at the time
the Registration Statement initially became effective and at
the time any post-effective amendment thereto became
effective, insofar as the Trading Advisor and its principals
are concerned, the Registration Statement contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or (b) the Prospectus as
first filed pursuant to Rule 424(b) or as subsequently filed
pursuant to Rule 424 or at the Initial Public Closing Time
contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the
statements therein relating to the Trading Advisor or its
principals, in light of the circumstances under which they
were made, not misleading; provided, however, that no counsel
for the Trading Advisor need express an opinion or belief (A)
as to the financial statements, notes thereto and other
financial or statistical data and notes or descriptions
thereto set forth in the Registration Statement and Prospectus
or (B) as to the performance data and notes or descriptions
thereto set forth in the Registration Statement, except that
such counsel shall opine, without rendering any opinion as to
the accuracy of the information in such performance summaries,
that the performance summaries relating to the Trading Advisor
set forth in the Prospectus comply as to form in all material
respects with CFTC rules.
(e) At the Initial Public Closing Time, the General Partner
shall deliver a certificate to the effect that: (i) no order suspending
the effectiveness of the Registration Statement has been issued and to
the best of its knowledge no proceedings therefor have been instituted
or threatened by the SEC, the CFTC or other regulatory body; (ii) the
representations and warranties of the General Partner contained herein
are true and correct with the same effect as though expressly made at
the Initial Closing Time and in respect of the Registration Statement
as in effect at the Initial Public Closing Time; and (iii) the General
Partner has performed all covenants and agreements herein contained to
be performed on its part at or prior to the Initial Public Closing
Time. Such certificate may state that the General Partner has relied
upon the Trading Advisor to provide certain information relating to the
Trading Advisor for use in the Registration Statement.
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28
(f) The Trading Advisor shall deliver a report dated as of the
Initial Public Closing Time which shall present, for the period from
the date after the last day covered by the performance summaries in the
Prospectus to the latest practicable day before the Initial Public
Closing Time, figures which shall be a continuation of such performance
records and which shall certify that such figures are accurate in all
material respects. The Trading Advisor shall also certify that such
performance summaries have been calculated in accordance with the notes
to the applicable performance summaries in the Prospectus.
(g) If requested by the General Partner, at the time the
Registration Statement initially becomes effective, Xxxxxx X. Xxxx, Xx.
& Associates, L.L.C. shall have delivered a letter, substantially in
the form previously agreed upon by the Selling Agent and the General
Partner.
(h) If requested by the General Partner, at the Initial Public
Closing Time, Xxxxxx X. Xxxx, Xx. & Associates, L.L.C. shall deliver a
letter in a form satisfactory to the Selling Agent and the General
Partner, substantially the same in scope and substance as the letter
described in paragraph (h) of this Section 10, dated as of Initial
Public Closing Time.
(i) At the Initial Public Closing Time, the Trading Advisor
shall make an investment in the Units in accordance with the Advisory
Agreement.
(j) At the Initial Public Closing Time, the Trading Advisor
shall deliver a certificate to the effect that (i) the representations
and warranties of contained herein are true and correct with the same
effect as though expressly made at the Initial Public Closing Time,
(ii) the Trading Advisor has performed all covenants and agreements
herein contained to be performed on its part at or prior to the Initial
Public Closing Time and (iii) since the date of the most recent
financial information relating to the Trading Advisor prior to the date
of this Agreement there has been no material adverse change, or
development involving a prospective material adverse change, in the
financial condition, business or business prospects of the Trading
Advisor.
(k) At the Initial Public Closing Time, the Broker shall
deliver a certificate to the effect that the representations and
warranties of the Broker contained herein are true and correct with the
same effect as though expressly made at the Initial Public Closing Time
and in respect of the Registration Statement as in effect at the
Initial Public Closing Time.
(l) At the Initial Public Closing Time, the Selling Agent
shall deliver a certificate to the effect that the representations and
warranties of the Selling Agent contained herein are true and correct
with the same effect as though expressly made at the Initial Public
Closing Time and in respect of the Registration Statement as in effect
at the Initial Public Closing Time.
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29
(m) The parties hereto shall have been furnished with such
additional information, opinions and documents, including supporting
documents relating to parties described in the Prospectus and
certificates signed by such parties with regard to information relating
to them and included in the Prospectus as they may reasonably require
for the purpose of enabling them to pass upon the sale of the Units as
herein contemplated and related proceedings, in order to evidence the
accuracy or completeness of any of the representations or warranties or
the fulfillment of any of the conditions herein contained; and all
actions taken by the parties hereto in connection with the sale of the
Units as herein contemplated shall be reasonably satisfactory in form
and substance to counsel to the Trading Advisor, counsel to the Broker,
counsel to the Selling Agent and Sidley & Austin.
If any of the conditions specified in this Section 10 shall
not have been fulfilled when and as required by this Agreement to be
fulfilled, this Agreement and all obligations hereunder may be canceled
by any party hereto by notifying the other parties hereto of such
cancellation in writing or by telegram at any time at or prior to the
Initial Public Closing Time, and any such cancellation or termination
shall be without liability of any party to any other party except as
otherwise provided in Section 9.
(n) The representations and warranties set forth herein shall
be restated as of each Subsequent Closing Time as if made as of the
date thereof. The conditions of closing set forth in this Section 10
shall, at the option of the General Partner, apply at each Subsequent
Closing Time.
Section 11. Indemnification and Exculpation.
(a) Indemnification by the General Partner. The General
Partner agrees to indemnify and hold harmless the Selling Agent, the
Broker, any Wholesaler, any Additional Selling Agent, any
Correspondent, and the Trading Advisor and each person, if any, who
controls the Selling Agent, the Broker or the Trading Advisor within
the meaning of Section 15 of the 1933 Act, as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever arising out of any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment
thereto) or any omission or alleged omission therefrom of a
material fact required to be stated therein or necessary in
order to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not mislead ing, unless (a) in the case of the
Trading Advisor, such untrue
-27-
30
statement or omission or alleged untrue statement or omission
was made in reliance upon and in conformity with information
relating to the Trading Advisor furnished or approved in
writing by the Trading Advisor, (b) in the case of the Selling
Agent, such untrue statement or omission or alleged untrue
statement or omission was made in reliance upon and in
conformity with information relating to the Selling Agent or
furnished or approved by the Selling Agent, (c) in the case of
the Broker, such untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in
conformity with information relating to the Broker furnished
or approved by the Broker or (d) in the case of any
Wholesaler, Additional Selling Agent or Correspondent, such
untrue statement or omission or alleged untrue statement or
omission was made in reliance upon and in conformity with
information relating to such Wholesaler, Additional Selling
Agent or Correspondent furnished or approved by such
Wholesaler, Additional Selling Agent or Correspondent;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever to the extent of the aggregate
amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body
commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission or any such alleged
untrue statement or omission (any settlement to be subject to
indemnity hereunder only if effected with the written consent
of the General Partner); and
(iii) against any and all expense whatsoever
(including the fees and disbursements of counsel) reasonably
incurred in investigating, preparing or defending against
litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under clauses
(i) or (ii) above.
In no case shall the General Partner be liable under this indemnity
agreement with respect to any claim made against any indemnified party
unless the General Partner shall be notified in writing of the nature
of the claim within a reasonable time after the assertion thereof, but
failure to so notify the General Partner shall not relieve the General
Partner from any liability which it may have otherwise than on account
of this indemnity agreement. The General Partner shall be entitled to
participate at its own expense in the defense or, if it so elects
within a reasonable time after receipt of such notice, to assume the
defense of that portion of any suit so brought relating to the General
Partner's indemnification obligations hereunder, which defense shall be
con ducted by counsel chosen by it and satisfactory to the indemnified
party or parties,
-28-
31
defendant or defendants therein. In the event that the General Partner
elects to assume the defense of any such suit and retain such counsel,
the indemnified party or parties, defendant or defendants in the suit,
shall, in the absence of conflicting claims, bear the fees and expenses
of any additional counsel thereafter retained by it or them.
In no event, however, shall the General Partner be obligated
to indemnify the Selling Agent hereunder, and the Selling Agent agrees
not to attempt to obtain any indemnity from the General Partner
hereunder, to the extent that the General Partner and the Selling Agent
are advised by counsel reasonably satisfactory to the General Partner
and the Selling Agent that payment of such indemnity could adversely
affect the classification of the Fund as a partnership for Federal
income tax purposes.
The General Partner agrees to notify the Trading Advisor, the
Broker and the Selling Agent within a reasonable time of the assertion
of any claim in connection with the sale of the Units against it or any
of its officers or directors or any person who controls the General
Partner within the meaning of Section 15 of the 1933 Act.
(b) Indemnification by the Trading Advisor. The Trading
Advisor agrees to indemnify and hold harmless the Selling Agent, the
Broker, the General Partner, the Fund and each person, if any, who
controls the Selling Agent, the Broker, the Fund or the General Partner
within the meaning of Section 15 of the 1933 Act (and, in the case of
the General Partner and the Fund, each person who signed the
Registration Statement or is a director of the General Partner), to the
same extent as the indemnity from the General Partner set forth in
Section 11(a) hereof, but only insofar as the losses, claims, damages,
liabilities or expenses indemnified against arise out of or are based
upon any untrue statement or omission or alleged untrue statement or
omission relating or with respect to the Trading Advisor or any
principal of the Trading Advisor, or their operations, trading systems,
methods or performance, which was made in any preliminary prospectus,
the Registration Statement or the Prospectus or any amendment or
supplement thereto and furnished by or approved by the Trading Advisor
for inclusion therein.
(c) Indemnification by the Broker. The Broker agrees to
indemnify and hold harmless the Selling Agent, the Trading Advisor, the
General Partner, the Fund and each person, if any, who controls the
Selling Agent, the Trading Advisor, the Fund or the General Partner
within the meaning of Section 15 of the 1933 Act (and, in the case of
the General Partner and the Fund, each person who signed the
Registration Statement or is a director of the General Partner), to the
same extent as the indemnity from the General Partner set forth in
Section 11(a) hereof, but only insofar as the losses, claims, damages,
liabilities or expenses indemnified against arise out of or are based
upon any untrue statement or omission or alleged untrue statement or
omission relating or with respect to Broker, which was made in any
preliminary prospectus, the Registration Statement or the Prospectus or
any amendment or supplement thereto and furnished by or approved by the
Broker for inclusion therein.
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32
(d) Indemnification by the Selling Agent. The Selling Agent
agrees to indemnify and hold harmless the Broker, the General Partner,
the Fund, the Trading Advisor and each person, if any, who controls the
Broker, the General Partner, the Fund or the Trading Advisor within the
meaning of Section 15 of the 1933 Act (and in the case of the General
Partner and the Fund, each person who signed the Registration Statement
or is a director of the General Partner), (i) to the same extent as the
indemnify from the General Partner set forth in Section 11(a) hereof,
but only insofar as the losses, claims, damages, liabilities or
expenses indemnified against arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission relating
or with respect to the Selling Agent or any of its principals, or their
operations, which was made in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement
thereto and furnished by or approved by the Selling Agent for inclusion
therein and (ii) against any and all loss, liability, claim, damage and
expense whatsoever resulting from a demand, claim, lawsuit, action or
proceeding relating to the actions or capacities of the Selling Agent
(including a breach of its obligations hereunder) and any Wholesaler,
Additional Selling Agent or Correspondent relating to the offering of
Units under this Agreement or any Wholesaling Agreement, Additional
Selling Agent Agreement or Correspondent Selling Agent Agreement as the
case may be.
(e) Contribution. If the indemnification provided for in this
Section 11 is not permitted under applicable law under subsection (a),
(b), (c) or (d) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Trading
Advisor, on the one hand, and, the Selling Agent, the Broker and the
General Partner, on the other, from the offering of the Units.
(f) Limitation on Certain Indemnifications and Exculpations.
The exculpation provisions in the Advisory Agreement shall not relieve
the Trading Advisor from any liability it may have or incur to the
Fund, the General Partner, the Selling Agent or the Broker under this
Agreement (including, without limitation, pursuant to the provisions of
Section 11(b) hereof). Nor shall the Trading Advisor be entitled to be
indemnified by the General Partner, pursuant to the indemnification
provisions contained in the Advisory Agreement, against any loss,
liability, damage, cost or expense it may incur under this Agreement.
The General Partner shall not be entitled to be indemnified by the
Fund, pursuant to the indemnification provisions contained in the
Limited Partner ship Agreement against any loss, liability, damage,
cost or expense it may incur under this Agreement.
Section 12. Status of Parties. In selling the Units for the
Fund, the Selling Agent is acting solely as an agent for the Fund and not as a
principal. The Selling Agent will use its best efforts to assist the Fund in
obtaining performance by each purchaser whose offer to purchase Units from the
Fund has been accepted on behalf of the Fund, but the Selling Agent shall not
have any
-30-
33
liability to the Fund in the event that Subscription Agreements and Powers of
Attorney are improperly completed or any such purchase is not consummated for
any reason.
Although the Trading Advisor and the Fund have entered into
the Advisory Agreement, all parties hereto acknowledge that none of such parties
has the power to act for another in any respect, except as set forth in the
Advisory Agreement, and that in no event shall the Fund be held responsible
hereunder for the acts and omissions of the Trading Advisor (or, conversely, the
Trading Advisor be held responsible for acts and omissions of the Fund) as a
consequence of the Advisory Agreement.
Section 13. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or contained in certificates of any party hereto submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by, or on behalf of, the Selling Agent, the General
Partner, the Fund, the Broker, the Trading Advisor or any person who controls
any of the foregoing and shall survive the Initial Public Closing Time.
Section 14. Termination. The General Partner shall have the
right to terminate this Agreement at any time prior to the Initial Public
Closing Time by giving written notice of such termination to the Trading
Advisor, the Selling Agent and the Broker.
Section 15. Notices and Authority to Act. All communications
hereunder shall be in writing and, if sent to the Selling Agent, the General
Partner, the Broker, the Trading Advisor or the Fund, shall be mailed, delivered
or telegraphed and confirmed as set forth below and shall be effective when
actually received.
If to the General Partner:
ProFutures Inc.
00000 Xxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Phone: (000) 000-0000
Telecopier: (000) 000-0000
If to the Fund:
ProFutures Long/Short Growth Fund, L.P.
c/o ProFutures, Inc.
00000 Xxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Phone: (000) 000-0000
Telecopier: (000) 000-0000
-31-
34
If to the Selling Agent:
ProFutures Financial Group, Inc.
00000 Xxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx
Phone: (000) 000-0000
Telecopier: (000) 000-0000
If to the Broker:
ING (U.S.) Securities, Futures &
Options, Inc.
000 X. Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Legal Counsel
Phone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Advisor:
Hampton Investors, Inc.
0000 Xxxxxx X
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx & Xxxx Xxxxxxx
Phone: (000) 000-0000
Telecopier: (000) 000-0000
Section 16. Parties. This Agreement shall inure to the benefit
of and be binding upon the Selling Agent, the Fund, the General Partner, the
Broker, the Trading Advisor and such parties' respective successors to the
extent provided herein. This Agreement and the conditions and provisions hereof
are intended to be and are for the sole and exclusive benefit of the parties
hereto and their respective successors, assigns and controlling persons and
parties indemnified hereunder, and for the benefit of no other person, firm or
corporation. No purchaser of a Unit shall be considered to be a successor or
assign solely on the basis of such purchase.
Section 17. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES CREATED HEREBY SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
Section 18. Requirements of Law. Whenever in this Agreement it
is stated that a party will take or refrain from taking a particular action,
such party may nevertheless refrain from taking or take such action if advised
by counsel that doing so is required by law or advisable to ensure
-32-
35
compliance with law, and shall not be subject to any liability hereunder for
doing so, although such action shall permit termination of the Agreement by the
other parties hereto.
If the foregoing is in accordance with each party's
understanding of its agreement, each party is requested to sign and return to
the General Partner a counterpart hereof, whereupon this instrument along with
all counterparts will become a binding agreement among them in accordance with
its terms.
Very truly yours,
PROFUTURES LONG/SHORT GROWTH FUND, L.P.
BY: PROFUTURES, INC., General Partner
By:
---------------------------------------
Name:
Title:
HAMPTON INVESTORS, INC., Trading Advisor
By:
---------------------------------------
Name:
Title:
ING. (U.S.) SECURITIES, FUTURES
& OPTIONS, INC., Broker
By:
---------------------------------------
Name:
Title:
-33-
36
PROFUTURES, INC., General Partner
By:
---------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
PROFUTURES FINANCIAL GROUP,
INC., Selling Agent
By:
---------------------------------------
Name:
Title:
-34-
37
EXHIBIT A
PROFUTURES LONG/SHORT GROWTH FUND, L.P.
(A DELAWARE LIMITED PARTNERSHIP)
$60,000,000 OF UNITS OF LIMITED PARTNERSHIP INTEREST
(SUBSCRIPTION PRICE: 101% OF NET ASSET VALUE PER UNIT)
FORM OF
ADDITIONAL SELLING AGENTS AGREEMENT
_________, 1998
Name of Selling Agent
Street Address
City, State, Zip Code
Dear Sirs:
ProFutures, Inc., a Texas corporation (the "General Partner"),
has caused the formation of a limited partnership pursuant to the Revised
Uniform Limited Partnership Act of the State of Delaware ("DRULPA") under the
name ProFutures Long/Short Growth Fund, L.P. (the "Fund"), for the purpose of
engaging in speculative trading of futures and forward contracts and com modity
options. As described in the Prospectus referred to below, the Fund has entered
into the First Amendment and Restatement of Advisory Contract (the "Advisory
Agreement") with Hampton Investors, Inc., a New York corporation (the "Trading
Advisor"). The Fund engages in speculative trading in the commodities markets
under the direction of the Trading Advisor pursuant to its Leverage 3 Trading
Program (the "Trading Strategy"). The Fund proposes to make a public offering of
units of limited partnership interest in the Fund (the "Units") through us,
ProFutures Financial Group, Inc. (the "Lead Selling Agent"), on a best-efforts
basis pursuant to the Selling Agreement dated as of _______, 1998 among us, the
Fund and others (the "Selling Agreement"), a copy of which has been furnished to
you. In connection with the proposed public offering, the Fund has filed with
the United States Securities and Exchange Commission (the "SEC"), pursuant to
the United States Securities Act of 1933, as amended (the "1933 Act"), a
registration statement on Form S-1 to register the Units, and as part thereof a
prospectus (Registration No. 333-63129) (which registration statement, together
with all amendments thereto, shall be referred to herein as the "Registration
Statement" and which prospectus together with all amendments and supplements
thereto in the forms filed with the SEC pursuant to Rule 424 under the Act shall
be referred to herein as the "Prospectus"). Other selling agents, including
those introduced by wholesalers ("Wholesalers") to us (the "Additional Selling
Agents" and together with the Lead Selling Agent and the Wholesalers, the
"Selling Agents"), may be selected by us with the consent of the General
Partner. We have so
38
selected you as an Additional Selling Agent. We confirm our agreement with you
as follows. Capitalized terms used but otherwise not defined herein shall have
the meanings ascribed to them in the Selling Agreement unless the context
indicates otherwise.
1. Appointment and Undertakings of the Additional Selling
Agent
(a) Subject to the terms and conditions set forth in this
Agreement, the Selling Agreement and the Registration Statement, the Additional
Selling Agent is hereby appointed, and hereby accepts such appointment, as one
of the Fund's non-exclusive selling agents to offer and sell the Units on a
best-efforts basis without any commitment on the Additional Selling Agent's part
to purchase any Units. It is understood and agreed that the Lead Selling Agent,
with the consent of the General Partner, may retain other selling agents
(including those introduced by Wholesalers) and that the Additional Selling
Agent or any other Additional Selling Agent, with the consent of the Lead
Selling Agent and General Partner in their sole discretion, may retain
correspondent selling agents ("Correspondents"). The Additional Selling Agent
agrees to comply with the terms and conditions of this Agreement and any terms
and conditions of the Selling Agreement applicable to Additional Selling Agents.
The Additional Selling Agent from time to time will provide
the Lead Selling Agent with a list of prospective Correspondents. Unless the
prospective Correspondent has a verifiable preexisting relationship with the
Lead Selling Agent (including previously having approached or been approached by
the Lead Selling Agent about being an Additional Selling Agent for the Fund) as
notified to the Additional Selling Agent in writing, such Correspondent shall
only be permitted to offer Units as a Correspondent of the Additional Selling
Agent pursuant to a Correspondent Selling Agreement in a form agreed to by the
Additional Selling Agent.
(b) The Additional Selling Agent agrees to use its reasonable
efforts to procure subscriptions for the Units as long as this Agreement and the
Selling Agreement remain in effect and to make the offering of Units at the
offering price and minimum amounts and on the other terms and conditions set
forth in the Prospectus and the Selling Agreement.
(c) The Additional Selling Agent shall offer and sell Units
only to persons and entities who satisfy the suitability and/or investment
requirements set forth in the Prospectus and the subscription agreements
attached thereto and who, to the General Partner's satisfaction, complete the
subscription agreements and related subscription documents used in connection
with the offering of the Units (the "Subscription Documents") and remit good
funds for the full subscription price. The Additional Selling Agent shall
conduct a thorough review of the suitability of each subscriber for Units that
it solicits and of the Subscription Documents. The Additional Selling Agent
shall not forward to the General Partner any Subscription Documents that are not
in conformity with the requirements specified in the Prospectus and in the
Subscription Documents appropriate for the particular subscriber, or that are
illegible in any respect or are not fully completed, dated, or signed, or that
represent the subscription of a person or entity not satisfying the suitability
and/or investment requirements applicable to such person or entity. The
Additional Selling Agent shall not execute any transactions in Units in a
discretionary account over which it has control without prior written approval
of the customer in whose name such discretionary account is maintained.
-2-
39
The Additional Selling Agent agrees not to recommend the
purchase of Units to any subscriber unless the Additional Selling Agent shall
have reasonable grounds to believe, on the basis of information obtained from
the subscriber concerning, among other things, the subscriber's investment
objectives, other investments, financial situation and needs, that the
subscriber is or will be in a financial position appropriate to enable the
subscriber to realize to a significant extent the benefits of the Fund,
including the tax benefits (if any) described in the Prospectus; the subscriber
has a fair market net worth sufficient to sustain the risks inherent in
participating in the Fund, including loss of investment and lack of liquidity;
and the Units are otherwise a suitable investment for the subscriber. In
addition to submitting such information to the General Partner, the Additional
Selling Agent agrees to maintain files of information disclosing the basis upon
which the Additional Selling Agent determined that the suitability requirements
of Section (b)(2) of Rule 2810 of the National Association of Securities
Dealers, Inc. ("NASD") were met as to each subscriber (the basis for determining
suitability may include the Subscription Documents and other certificates
submitted by subscribers). In connection with making the foregoing
representations and warranties, the Additional Selling Agent further represents
and warrants that it has received copies of the Registration Statement, as
amended to the date hereof, and the Prospectus and has, among other things,
examined the Prospectus and obtained such additional information from the
General Partner regarding the information set forth therein as the Additional
Selling Agent has deemed necessary or appropriate to determine whether the
Prospectus adequately and accurately discloses all material facts relating to an
investment in the Fund and provides an adequate basis to subscribers for
evaluating an investment in the Units. In connection with making the
representations and warranties set forth in this paragraph, the Additional
Selling Agent has not relied on inquiries made by or on behalf of any other
parties.
The Additional Selling Agent agrees to inform all prospective
purchasers of Units of all pertinent facts relating to the liquidity and
marketability of the Units as set forth in the Prospectus.
The Additional Selling Agent shall offer and sell Units in
compliance with the requirements set forth in the Registration Statement
(particularly the "Subscription Agreement and Power of Attorney" attached as
Exhibit B thereto), this Agreement and the Blue Sky Survey delivered to the Lead
Selling Agent by the General Partner's counsel, a copy of which has been
provided to the Additional Selling Agent. The Additional Selling Agent
represents and warrants that it shall comply fully at all times with all
applicable federal and state securities and commodities laws (including without
limitation the 1933 Act, the Securities Exchange Act of 1934, as amended (the
"1934 Act"), the Commodity Exchange Act, as amended (the "CEA"), and the
securities and Blue Sky laws of the jurisdictions in which the Additional
Selling Agent solicits subscriptions, all applicable rules and regulations under
such laws, and all applicable requirements, rules, policy statements and
interpretations of the NASD, and the securities and commodities exchanges and
other governmental and self-regulatory authorities and organizations having
jurisdiction over it or the offering of Units). The Additional Selling Agent
shall under no circumstances engage in any activities hereunder in any
jurisdiction (i) in which the General Partner has not informed the Additional
Selling Agent that counsel's advice has been received that the Units are
qualified for sale or are exempt under the applicable securities or Blue Sky
laws thereof or (ii) in which the Additional Selling Agent may not lawfully
engage.
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The Additional Selling Agent further agrees to comply with the
requirement under applicable federal and state securities laws to deliver to
each offeree a Prospectus and any amendments or supplements thereto. Neither the
Additional Selling Agent nor any of its employees, agents or representatives
will use or distribute any marketing material or information other than that
prepared by the Fund and the General Partner. It is, however, understood that
the Additional Selling Agent may use documents that it prepares solely for the
purpose of communicating with its Registered Representatives and Correspondents
provided that the Lead Selling Agent and the General Partner have provided the
written consent to the use of each such document.
(d) The additional services that the Additional Selling Agent
will provide on an ongoing basis to Limited Partners will include but not be
limited to: (i) inquiring of the General Partner from time to time, at the
request of Limited Partners, as to the Net Asset Value of a Unit, (ii) inquiring
of the General Partner from time to time at the request of the Limited Partners,
as to the commodities markets and the activities of the Fund, (iii) assisting,
at the request of the General Partner, in the redemption of Units sold by the
Additional Selling Agent, (iv) responding to questions of Limited Partners from
time to time with respect to monthly account statements, annual reports and
financial statements furnished to Limited Partners, and (v) providing such other
services to the owners of Units as the General Partner may, from time to time,
reasonably request.
All payments for subscriptions shall be made as described in
the Prospectus.
(e) The Additional Selling Agent (i) acknowledges that, other
than as set forth herein, it is not authorized to act as the agent of the Lead
Selling Agent in any connection or transaction and (ii) agrees not to so act or
to purport to so act.
2. Compensation
(a) In consideration for the Additional Selling Agent
performing the obligations under this Agreement, the Lead Selling Agent shall
pay the Additional Selling Agent an initial selling commission of __% of the
subscription value of the Unit(s) sold by the Additional Selling Agent. Such
commissions will be paid in respect of each subscription as promptly as
practicable after the relevant month-end closing.
(b) The Additional Selling Agent shall receive ongoing
compensation, payable monthly by the Lead Selling Agent, of __% per annum of the
month-end Net Asset Value of the Units sold by a Registered Representative of
the Additional Selling Agent which remain outstanding for more than twelve
months (including the month as of the end of which such Unit is redeemed)
assuming (i) the Additional Selling Agent's continued registration with the
Commodity Futures Trading Commission (the "CFTC") as a futures commission
merchant or introducing broker and continued membership with the National
Futures Association ("NFA") in such capacity and (ii) the Registered
Representative's compliance with the additional requirements described in
subsection 1(d), registration with the CFTC and compliance with all applicable
proficiency requirements (including those imposed by the NASD as a condition of
receiving "trailing commissions") by either passing the Series 3 National
Commodity Futures Exam or the Series 31 exam or being "grandfathered" from
having to do so. Such ongoing compensation shall begin to accrue with respect to
each Unit only
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after the end of the twelfth full month after the sale of such Unit. For
purposes of determining when ongoing compensation should begin to accrue, Units
shall not be deemed to be sold until the day Units are issued, and in either
case not the day when subscriptions are accepted by the General Partner or
subscriptions funds are deposited in escrow.
Furthermore, the Lead Selling Agent shall not compensate the
Additional Selling Agent, and the Additional Selling Agent shall not compensate
its employees or other persons, unless the recipient thereof is legally
qualified and permitted to receive such compensation. Also, such ongoing
compensation may be paid by the Lead Selling Agent to the Additional Selling
Agent and by the Additional Selling Agent to its employees or other persons,
only in respect of outstanding Units sold by such persons to Limited Partners
and only so long as the additional services described in Section 1(d) above are
provided by such person to Limited Partners. With respect to particular Units,
substitute Registered Representatives who are appropriately registered and who
agree to perform the services described in Section 1(d) above with respect to
such Units ("Substitute Registered Representatives") may also receive ongoing
compensation with respect to such Units.
Additional Selling Agents shall receive an installment selling
commission of up to __% per annum of the month-end Net Asset Value of Units
remaining outstanding after the twelfth month following their sale by such
Additional Selling Agent if: (i) the Additional Selling Agents are not
registered with the National Futures Association as futures commissions
merchants or introducing brokers; (ii) the Registered Representatives engaged in
the sale of Units are not registered as associated persons of futures
commissions merchants or introducing brokers; (iii) the Additional Selling
Agents do not agree to provide ongoing services to the purchasers of Units;
provided, that no such installment selling commissions shall be payable until
the General Partner and the Lead Selling Agent determine that the payment of
such installment selling commission is in compliance with Rule 2810 of the NASD
on aggregate compensation which may be received by Selling Agents. Installment
selling commissions, if any, will be paid by the Lead Selling Agent from funds
received from the General Partner. Installment selling commissions are limited
such that the sum of the initial selling commission and the aggregate
installment selling commissions paid such Additional Selling Agents may not
exceed 9% of the Net Asset Value, at the time of sale, of Units sold by such
Additional Selling Agents.
In respect of Correspondents, if any, selected by the
Additional Selling Agent (with the consent of the Lead Selling Agent and the
General Partner), the Lead Selling Agent shall pay to the Additional Selling
Agent selling commissions and ongoing compensation or installment sales
commissions as set forth above, a portion (as agreed between the Additional
Selling Agent and each such Correspondent) of which shall be passed on by the
Additional Selling Agent to such Correspondents.
The Additional Selling Agent agrees that it will promptly pass
on to its Registered Representatives and Correspondents the applicable portions
of the selling commissions received from the Lead Selling Agent to which such
Registered Representatives and Correspondents are entitled pursuant to,
respectively, the Additional Selling Agent's standard compensation procedures
and the Additional Selling Agent's agreement with each such Correspondent.
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The Additional Selling Agent, although otherwise entitled to
ongoing compensation, will not be entitled to receipt thereof with respect to
particular Units (but may continue to receive installment selling commissions)
for any month during any portion of which the Registered Representative who is
receiving such ongoing compensation is at any time not properly registered with
the CFTC or does not agree to provide the ongoing services described above.
However, the Lead Selling Agent agrees that Substitute Registered
Representatives may receive such ongoing compensation. The Lead Selling Agent
shall supply to the Additional Selling Agent at its reasonable request reports
concerning all currently outstanding Units sold by the Additional Selling Agent
or any Correspondent. The Additional Selling Agent shall, at the reasonable
request of the Lead Selling Agent, inform the Lead Selling Agent of currently
outstanding Units sold by the Additional Selling Agent or any Correspondent with
respect to which ongoing compensation may not be paid.
The Additional Selling Agent shall not, directly or
indirectly, pay or award any finder's fees, commissions or other compensation to
any person engaged by a potential investor for investment advice as an
inducement to such advisor to advise the purchase of Units; provided, however,
the normal sales commissions payable to a registered broker-dealer or other
properly licensed person for selling Units shall not be prohibited hereby.
(c) Notwithstanding any other provision of this Agreement to
the contrary, the General Partner shall have sole discretion to accept or reject
any subscription for the Units in whole or in part.
(d) The Lead Selling Agent agrees to make all payments from
funds received from the General Partner to the Additional Selling Agent pursuant
to this Section 2 within 15 days following the end of a monthly period in which
compensation is earned. Notwithstanding anything above to the contrary, the Lead
Selling Agent shall be liable to make ongoing compensation payments to the
Additional Selling Agent only after the Lead Selling Agent has actually received
its fee from the General Partner.
3. Representations and Warranties of the Lead Selling Agent
The Lead Selling Agent hereby represents and warrants as
follows:
(a) The Lead Selling Agent is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Texas and
has power and authority to enter into and carry out its obligations under this
Agreement.
(b) The Lead Selling Agent has all governmental and regulatory
registrations, qualifications, approvals and licenses required to perform its
obligations under this Agreement (including, but not limited to, registration as
a broker-dealer with the SEC, membership in such capacity in the NASD, and
registration or qualification under the laws of each state in which Lead Selling
Agent will offer and sell Units); the performance by the Lead Selling Agent of
its obligations under this Agreement will not violate or result in a breach of
any provision of its certificate of incorporation or by-laws or any agreement,
order, law, or regulation binding upon it.
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(c) This Agreement has been duly and validly authorized,
executed, and delivered on behalf of the Lead Selling Agent and is a valid and
binding agreement of the Lead Selling Agent enforceable against the Lead Selling
Agent in accordance with its terms, subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect affecting the
enforceability generally of rights of creditors except as enforceability of the
indemnification provisions contained in this Agreement may be limited by
applicable law and the enforcement of specific terms or remedies may be
unavailable.
4. Representations and Warranties of the Additional Selling
Agent
The Additional Selling Agent hereby represents and warrants as
follows:
(a) The Additional Selling Agent is a corporation duly
organized, validly existing, and in good standing under the laws of the state of
its incorporation and has power and authority to enter into and carry out its
obligations under this Agreement.
(b) The Additional Selling Agent has all governmental and
regulatory registrations, qualifications, approvals and licenses required to
perform its obligations under this Agreement (including, but not limited to,
registration as a broker-dealer with the SEC, membership in such capacity in the
NASD, registration as a futures commission merchant or introducing broker under
the CEA and membership with NFA, and registration or qualification under the
laws of each state in which Additional Selling Agent will offer and sell Units);
the performance by the Additional Selling Agent of its obligations under this
Agreement will not violate or result in a breach of any provision of its
certificate of incorporation or by-laws or any agreement, order, law, or
regulation binding upon it.
(c) This Agreement has been duly and validly authorized,
executed, and delivered on behalf of the Additional Selling Agent and is a valid
and binding agreement of the Additional Selling Agent enforceable against the
Additional Selling Agent in accordance with its terms, subject only to
bankruptcy, insolvency, reorganization, moratorium or similar laws at the time
in effect affecting the enforceability generally of rights of creditors except
as enforceability of the indemnification provisions contained in this Agreement
may be limited by applicable law and the enforcement of specific terms or
remedies may be unavailable.
(d) Neither the Additional Selling Agent nor any of its
principals have been the subject of any administrative, civil, or criminal
actions within the five years preceding the date hereof that would be material
for an investor's decision to purchase the Units which have not been disclosed
to the Fund, the General Partner or the Lead Selling Agent in writing.
(e) The information, if any, relating to the Additional
Selling Agent which the Additional Selling Agent has furnished to the Fund and
the General Partner for use in the Registration Statement is correct.
(f) In respect of purchasers of Units that are not
individuals, the Additional Selling Agent shall have received, prior to sale of
Units to each such purchaser, evidence that the purchaser
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is authorized to invest in the Units and shall provide the Lead Selling Agent
with copies of such evidence upon reasonable request of the Lead Selling Agent.
5. Authorization Under the Selling Agreement
The Additional Selling Agent agrees to be bound by any action
taken by the Lead Selling Agent or the General Partner, in accordance with the
provisions of the Selling Agreement of which the Additional Selling Agent has
received notice, to terminate the Selling Agreement or the offering of the
Units, to consent to changes in the Selling Agreement or to approve of or object
to further amendments to the Registration Statement or amendments or supplements
to the Prospectus, if, in the judgment of the Lead Selling Agent or the General
Partner, such action would be advisable, provided that the Additional Selling
Agent shall not be bound by any such action that adversely affects the
Additional Selling Agent unless the Additional Selling Agent shall have
consented to such action. The Lead Selling Agent agrees that, at the Additional
Selling Agent's request, the Lead Selling Agent will require any documents
required to be delivered to or by the Lead Selling Agent pursuant to Section 10
of the Selling Agreement to be addressed and delivered to the Additional Selling
Agent.
6. Covenants of the Lead Selling Agent
(a) The Lead Selling Agent will notify the Additional Selling
Agent immediately (i) when any amendment to the Registration Statement shall
have become effective and (ii) of the issuance by the SEC, CFTC or any other
Federal or state regulatory body of any order suspending the effectiveness of
the Registration Statement under the 1933 Act, the CFTC registration or NFA
membership of the General Partner as a commodity pool operator, the CFTC
registration or NFA membership of the Lead Selling Agent as a futures commission
merchant, or the registration of Units under the Blue Sky or securities laws of
any state or other jurisdiction or any order or decree enjoining the offering or
the use of the then current Prospectus or of the institution, or notice of the
intended institution, of any action, investigation or proceeding for that
purpose.
(b) The Lead Selling Agent will cause the General Partner to
deliver to the Additional Selling Agent as promptly as practicable from time to
time during the period when the Prospectus is required to be delivered under the
1933 Act, such number of copies of the Prospectus (as amended or supplemented)
as the Additional Selling Agent may reasonably request for the purposes
contemplated by the 1933 Act or the SEC Regulations.
(c) The Lead Selling Agent will cause the General Partner to
furnish to the Additional Selling Agent a reasonable number of copies of any
amendment or amendments of, or supplement or supplements to, the Prospectus
which will amend or supplement the Prospectus.
(d) The Lead Selling Agent will cause the General Partner to
deliver to the Additional Selling Agent copies of all written communications to
any Limited Partner (other than tax information) whose Units were sold by the
Additional Selling Agent or its Correspondents.
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7. Indemnification and Contribution
(a) The Lead Selling Agent shall indemnify, hold harmless, and
defend the Additional Selling Agent and any person who controls the Additional
Selling Agent within the meaning of Section 15 of the 1933 Act, to the same
extent, and subject to the same conditions and procedural requirements, that the
General Partner agrees to indemnify the Lead Selling Agent pursuant to Section
11 of the Selling Agreement; provided that, in no case shall the Lead Selling
Agent be liable under this indemnity to the Additional Selling Agent if the
loss, liability, claim, damages or expense of the Additional Selling Agent
arises out of any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus (or any amendment
or supplement thereto) or any omission or alleged omission therefrom of a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading made in reliance upon and in conformity with
information relating to the Additional Selling Agent and furnished or approved
by the Additional Selling Agent. In addition, the Lead Selling Agent shall
indemnify, hold harmless and defend the Additional Selling Agent (and any
controlling person) for any loss, liability, claim, damage or expense incurred
by the Additional Selling Agent arising from any breach of this Agreement by the
Lead Selling Agent.
(b) Hampton Investors, Inc. (the "Trading Advisor") agrees to
indemnify and hold harmless the Additional Selling Agent, and each person, if
any, who controls the Additional Selling Agent within the meaning of Section 15
of the 1933 Act, to the same extent as the indemnity from the Trading Advisor
set forth in Section 11(b) of the Selling Agreement, but only insofar as the
losses, claims, damages, liabilities or expenses indemnified against, arise out
of or are based upon any untrue statement or omission or alleged untrue
statement or omission relating or with respect to the Trading Advisor or any
principal of the Trading Advisor, or their operations, trading systems, methods
or performance, which was made in any preliminary prospectus, the Registration
Statement or the Prospectus or any amendment or supplement thereto and furnished
by or approved by the Trading Advisor for inclusion therein.
(c) The Additional Selling Agent shall indemnify, hold
harmless, and defend the Fund, the General Partner, the Lead Selling Agent, the
Trading Advisor, the Broker and any person who controls any of the foregoing
within the meaning of Section 15 of the 1933 Act against any and all loss,
liability, claim, damage and expense whatsoever incurred by any such party
arising from any material breach by the Additional Selling Agent of its
representations, warranties, obligations and undertakings set forth in this
Agreement. The Fund, the General Partner, the Trading Advisor and the Broker are
expressly made third party beneficiaries of this Agreement.
(d) If the indemnification provided for in this Section 7
shall not be permitted under applicable law in respect of any loss, liability,
claim, damage or expense referred to herein, then the indemnitor shall, in lieu
of indemnifying the indemnified party contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability, claim, damage or
expense, (A) in such proportion as shall be appropriate to reflect the relative
benefits received by the Lead Selling Agent on the one hand and the Additional
Selling Agent on the other from the offering of the Units by the Additional
Selling Agent or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred
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46
to in clause (A) above but also the relative fault of the Lead Selling Agent on
the one hand the Additional Selling Agent on the other with respect to the
statements or omissions which resulted in such loss, liability, claim, damage or
expense, as well as any other relevant equitable considerations. Relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Lead Selling Agent on the one hand
or the Additional Selling Agent on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties agree that it would not be just
and equitable if contributions pursuant to this Section 7 were to be determined
by a pro rata allocation or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by the indemnified party as a result of the loss, liability,
claim, damage or expense referred to above in this Section 7, shall be deemed to
include, for purpose of this Section 7, any legal or other expenses reasonably
incurred by such otherwise indemnified party in connection with investigating or
defending any such action or claim.
8. Termination
(a) This Agreement shall terminate on the earlier of (i) such
date as the Lead Selling Agent may determine by giving 30 days' prior written
notice to the Additional Selling Agent, (ii) the termination of the Selling
Agreement or the offering of the Units or (iii) by the Lead Selling Agent,
without notice, upon breach by the Additional Selling Agent of, or
non-compliance by the Additional Selling Agent with, any material term of this
Agreement.
(b) The Additional Selling Agent shall have the right to
terminate its participation under this Agreement (i) at any time upon breach by
the Lead Selling Agent of or non-compliance with, any material term of this
Agreement; and (ii) at any time upon thirty business days' prior written notice
of such termination to the Lead Selling Agent and the Fund.
(c) The termination of this Agreement shall not affect (i) the
ongoing obligations of the Lead Selling Agent to pay selling commissions,
ongoing compensation or installment selling commissions with respect to Units
sold prior to the termination hereof, (ii) the Additional Selling Agent's
obligations under Section 1(d) hereof or (iii) the indemnification obligations
under Section 7 hereof.
9. Confidentiality
(a) The Lead Selling Agent hereby covenants and agrees that
under no circumstances will it solicit any of the Additional Selling Agent's
customers whose names become known to the Lead Selling Agent in connection with
the offering of the Units. The Lead Selling Agent agrees that it will take such
steps to ensure the confidentiality of the Additional Selling Agent's client
list as the Additional Selling Agent may reasonably request.
(b) The Additional Selling Agent hereby covenants and agrees
that under no circumstances will it solicit any customer of the Lead Selling
Agent or any other Additional Selling Agent for the Fund whose name becomes
known to the Additional Selling Agent in connection with the offering of the
Units. The Additional Selling Agent agrees that it will take such steps to
ensure the confidentiality of the Lead Selling Agent's or any other Additional
Selling Agent's client list as
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47
the owner of such list may reasonably request. The Additional Selling Agent
further covenants and agrees not to solicit any selling agent which has been
introduced to the Lead Selling Agent by any Wholesaler or any other Additional
Selling Agent.
10. Miscellaneous
(a) This Agreement shall be binding upon and inure to the
benefit of the respective successors and permitted assigns of the parties
hereto; provided, however, that a party hereto may not assign any rights,
obligations, or liabilities hereunder without the prior written consent of the
other parties.
(b) All notices required or desired to be delivered under this
Agreement shall be in writing and shall be effective when delivered personally
on the day delivered or, when given by registered mail, postage prepaid, return
receipt requested, on the day of receipt, addressed as follows (or to such other
address as the party entitled to notice shall hereafter designate in accordance
with the terms hereof):
if to the Lead Selling Agent:
ProFutures Financial Group, Inc.
00000 Xxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
if to the Additional Selling Agent:
---------------------
---------------------
---------------------
(c) This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York without regard to the
principles of choice of law thereof.
(d) All captions used in this Agreement are for convenience
only, are not a part hereof, and are not to be used in construing or
interpreting any aspect hereof.
(e) This Agreement may be executed in counterparts, each such
counterpart to be deemed an original, but which all together shall constitute
one and the same instrument.
(f) This Agreement may not be amended except by the express
written consent of the parties hereto. No waiver of any provision of this
Agreement may be implied from any course of dealing between or among any of the
parties hereto or from any failure by any party hereto to assert its rights
under this Agreement on any occasion or series of occasions.
(g) The provisions of this Agreement shall survive the
termination of this Agreement with respect to any matter arising while this
Agreement was in effect.
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48
If the foregoing is in accordance with your understanding of
our agreement, please sign and return a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
us in accordance with its terms.
Very truly yours,
PROFUTURES FINANCIAL GROUP, INC.
By:
------------------------------
Name:
-------------------------
Title:
------------------------
CONFIRMED AND ACCEPTED
[ADDITIONAL SELLING AGENT]
By:
------------------------------
Name:
-------------------------
Title:
------------------------
HAMPTON INVESTORS, INC.
(with respect to Section 7(b) hereof)
By:
------------------------------
Name:
-------------------------
Title:
------------------------
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