EXHIBIT 1.01
SELLING AGREEMENT
JWH GLOBAL PORTFOLIO TRUST
(A DELAWARE BUSINESS TRUST)
$50,000,000 OF UNITS OF BENEFICIAL INTEREST
Dated as of __________, 1996
[The Effective Date of
Reg. No. 33-_____]
JWH GLOBAL PORTFOLIO TRUST
SELLING AGREEMENT
TABLE OF CONTENTS
PAGE
----
Section 1. Representations and Warranties of the Managing Owner . . . . . . 2
Section 2. Representations and Warranties of the Selling Agent . . . . . . 6
Section 3. Representations and Warranties of JWH. . . . . . . . . . . . . . 7
Section 4. Offering and Sale of Units . . . . . . . . . . . . . . . . . . . 9
Section 5. Covenants of the Managing Owner. . . . . . . . . . . . . . . . . 14
Section 6. Covenants of JWH . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7. Payment of Expenses and Fees . . . . . . . . . . . . . . . . . . 16
Section 8. Conditions of Closing. . . . . . . . . . . . . . . . . . . . . . 17
Section 9. Indemnification and Exculpation. . . . . . . . . . . . . . . . . 27
Section 10. Status of Parties . . . . . . . . . . . . . . . . . . . . . . . 30
Section 11. Representations, Warranties and Agreements to Survive Delivery. 30
Section 12. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 13. Notices and Authority to Act. . . . . . . . . . . . . . . . . . 31
Section 14. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 15. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 16. Requirements of Law . . . . . . . . . . . . . . . . . . . . . . 31
-i-
JWH GLOBAL PORTFOLIO TRUST
(A DELAWARE BUSINESS TRUST)
$50,000,000 OF UNITS OF BENEFICIAL INTEREST
(SUBSCRIPTION PRICE: $100 PER UNIT
DURING THE INITIAL OFFERING PERIOD; NET
ASSET VALUE PER UNIT DURING THE ONGOING OFFERING PERIOD)
SELLING AGREEMENT
_______ __, 1996
CARGILL INVESTOR SERVICES, INC.
000 X. Xxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Your affiliate, CIS Investments, Inc., a Delaware corporation
(referred to herein in its individual corporate capacity and as managing
owner as "CISI" or the "Managing Owner"), and certain initial beneficial
owners have caused the formation of a business trust pursuant to Business
Trust Act (12 DEL.C. Section 3801 ET SEQ.) of the State of Delaware (the
"Trust Act") under the name JWH Global Portfolio Trust (the "Trust"), 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
Trust will enter into a Trading Advisory Agreement (the "Trading Advisory
Agreement") with Xxxx X. Xxxxx & Company, Inc., a California corporation
("JWH"), pursuant to which the Trust will engage in speculative trading in
the commodities markets under the direction of JWH pursuant to JWH's
Financial and Metals Portfolio and Original Program and, possibly in the
future, other programs selected by the Managing Owner with the agreement of
JWH (the "JWH Trading Programs"). You (the "Selling Agent" or "Futures
Broker") shall be the principal selling agent for the Trust. Other selling
agents (the "Additional Selling Agents") may be selected by the Selling Agent
(including those introduced by wholesalers ("Wholesalers")), with the consent
of the Managing Owner, in accordance with the terms of this Agreement, the
Additional Selling Agent Agreement attached as Exhibit A hereto and, in the
case of Wholesalers introducing Additional Selling Agents, the Wholesaling
Agreement attached as Exhibit B hereto. In addition, the Additional Selling
Agents may also, with the consent of the Selling Agent and Managing Owner,
distribute Units through the use of "introducing broker" correspondents
("Correspondents"), pursuant to the terms of the Correspondent Selling Agent
Agreement attached as Exhibit C hereto.
In addition, you have agreed to act as broker for the Trust (in
such capacity, the "Futures Broker") pursuant to a customer agreement (the
"Customer Agreement") between yourself
and the Trust and as principal with respect to certain "exchange of futures
for physical" transactions, and CIS Financial Services, Inc. ("CISFS") has
agreed to act as principal with respect to the Trust's forward and spot
currency trades and precious metals transactions pursuant to a Foreign
Exchange Account Agreement and Cash Bullion Account Agreement (collectively,
the "FX Agreement") between CISFS and the Trust.
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 MANAGING OWNER.
Each of the Managing Owner and the Trust severally as applicable to itself
(and in the case of CISI as applicable to the Trust) represents and warrants
to JWH and the Selling Agent, as follows:
(a) The Trust has provided to JWH and to the Selling Agent and
filed with the Securities and Exchange Commission (the "SEC") a
registration statement on Form S-1 (Registration No. 33-_____), as
initially filed with the SEC on __________, 1996 for the registration
of Units of Beneficial Interests (the "Units") in the Trust 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 National Futures Association ("NFA") in accordance with NFA
Compliance Rule 2-13. The Registration Statement, as amended by
Amendment No. 1 thereto, 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
Trust 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 Trust
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 Trust will not file any amendment to the
Registration Statement or any amendment or supplement to the
Prospectus which shall be reasonably objected to in writing by JWH or
by counsel to JWH, upon reasonable prior notice.
(b) The Trust 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
-2-
Selling Agent may withhold in its sole and absolute discretion.
The Trust will file all Promotional Material with the National
Association of Securities Dealers, Inc. (the "NASD"), and will not
use any such Promotional Material to which the NASD has not stated
in writing that it has no objections. The Trust will file all
Promotional Material in all state jurisdictions where such filing is
required, and will not use any such Promotional Material in any state
which has expressed any objection thereto (except pursuant to agreed-
upon modifications to the Promotional Material).
(c) The Certificate of Trust pursuant to which the Trust has
been formed (the "Certificate of Trust") and the Declaration and
Agreement of Trust of the Trust (the "Declaration and Agreement of
Trust") each provides for the subscription for and sale of the Units;
all action required to be taken by the Managing Owner and the Trust as
a condition to the sale of the Units to qualified subscribers therefor
has been, or prior to the Initial Closing Time and Subsequent Closing
Times, as defined in Section 4 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 beneficial interests in the Trust.
(d) The Trust is a business trust duly organized pursuant to the
Certificate of Trust, the Declaration and Agreement of Trust and the
Trust Act and validly existing under the laws of the State of Delaware
with full power and authority to engage in the trading of futures,
options on futures, and spot/forward contracts, as described in the
Prospectus; the Trust has filed (or will receive prior to the Initial
Closing Time, as defined in Section 4(c)) a certificate of assumed
name in the State of Illinois as provided by 805 I.L.C.S. 405/1.
(e) CISI is duly organized and validly existing and in good
standing as a corporation under the laws of the State of Delaware and
in good standing as a foreign corporation under the laws of the State
of Illinois, and in each other jurisdiction in which the nature or
conduct of its businesses requires such qualification and the failure
to so qualify would materially adversely affect the Trust's or the
Managing Owner's ability to perform its obligations hereunder.
(f) The Trust and the Managing Owner have proper power and
authority under applicable law to perform their respective obligations
under the Declaration and Agreement of Trust, the Escrow Agreement
relating to the offering of the Units (the "Escrow Agreement"), the
Customer Agreement, the FX Agreement, the Trading 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 Closing Time,
the Registration Statement and Prospectus did and will comply in all
material
-3-
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 not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. The Prospectus as of its date of issue and at the Initial
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, 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 JWH and furnished or approved
in writing by JWH.
(h) KPMG Peat Marwick, LLP, the accountants who certified the
financial statements filed with the SEC as part of the Registration
Statement, are, with respect to CISI and the Trust, independent public
accountants with respect to the Managing Owner and the Trust 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 Trust and of the Managing Owner 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 Managing Owner or the Trust, whether or
not arising in the ordinary course of business.
(k) The Managing Owner at the Initial Closing Time and each
Subsequent Closing Time will have a net worth sufficient in amount and
satisfactory in form, as set forth in the opinion of Sidley & Austin,
counsel for CISI, for classification of the Trust as a partnership for
Federal income tax purposes under current interpretations of the
Internal Revenue Code of 1954 and the Internal Revenue Code of 1986,
as amended (collectively, the "Code"), and the regulations thereunder.
(l) The Trading Advisory Agreement, the Declaration and
Agreement of Trust, the Escrow Agreement and this Agreement have each
been duly and validly authorized, executed and delivered by the
Managing Owner signatory thereto for itself and on behalf of the
Trust, and each constitutes a legal, valid and binding agreement of
the Trust and the Managing Owner signatory thereto enforceable in
accordance with its terms. The Customer Agreement and the FX
Agreement have each been duly and validly authorized, executed and
delivered by CISI on behalf of the Trust.
-4-
(m) The execution and delivery of the Declaration and Agreement
of Trust, the Escrow Agreement, the Customer Agreement, the FX
Agreement, the Trading 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 Managing Owner or the Trust, as the
case may be, is bound or any order, rule or regulation applicable to
the Managing Owner or the Trust of any court or any governmental body
or administrative agency having jurisdiction over the Managing Owner
or the Trust.
(n) There is not pending, or, to the Managing Owner's knowledge
threatened, any action, suit or proceeding before or by any court or
other governmental body to which the Managing Owner or the Trust is a
party, or to which any of the assets of the Managing Owner or the
Trust is subject, which is not referred to in the Prospectus and which
might reasonably be expected to result in any material adverse change
in the condition (financial or otherwise), business or prospects of
the Managing Owner or the Trust or is required to be disclosed in the
Prospectus pursuant to applicable CFTC regulations. The Managing
Owner has not received any notice of an investigation or warning
letter from NFA or the CFTC regarding non-compliance by the Managing
Owner with the Commodity Act or the regulations thereunder.
(o) The Managing Owner has all Federal and state governmental,
regulatory and commodity exchange approvals and licenses, and have
effected all filings and registrations with Federal and state
governmental agencies required to conduct its businesses and to act as
described in the Registration Statement and Prospectus or required to
perform its obligations as described under the Declaration and
Agreement of Trust and this Agreement (including, without limitation,
registration as a commodity pool operator under the Commodity Act and
membership in 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 Managing Owner identified in the Registration Statement are all
of the principals of the Managing Owner, as "principals" is defined by
the CFTC regulations. Such principals are duly listed as such on the
Managing Owner's commodity pool operator Form 7-R registration.
(p) The Trust 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.
(q) Neither the Managing Owner nor any of its principal or
affiliate has "operated," since January 1, 1991, any commodity pool,
within the meaning of the
-5-
CFTC's Part 4 Regulations, the performance of which is not included in
Appendix I to the Registration Statement and Prospectus.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE SELLING AGENT.
The Selling Agent represents and warrants (in its capacities as both Selling
Agent and Futures Broker) to the Trust, the Managing Owner and JWH, as
follows:
(a) The Selling Agent is a corporation duly organized and
validly existing and in good standing under the laws of the State of
Delaware and in good standing and qualified to do business in the
State of Illinois and 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 adversely affect the Futures
Broker's ability to perform its obligations hereunder or under the
Customer Agreement. The Selling Agent 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 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 (with respect to the information relating to
the Selling Agent furnished to the Managing Owner) 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 (as approved in pertinent part by the Selling
Agent) at its date of issue and as of the Initial 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.
(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 the Customer Agreement,
the Trading Advisory Agreement and this Agreement (including, without
limitation, membership of the Selling Agent as a dealer in NASD and
registration of the Selling Agent as a futures commission merchant
under the Commodity Act and membership of the Selling Agent as a
futures commission merchant in NFA), and the performance of such
obligations will not violate or result in a breach of any provision of
the Futures Broker's certificate of incorporation, by-laws or any
agreement, instrument, order, law or regulation binding upon the
Selling Agent.
-6-
(d) Each of the Customer Agreement and this Agreement has been
duly authorized, executed and delivered by the Selling Agent, and this
Agreement 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.
(f) In the ordinary course of its business, the Selling Agent is
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 the Customer Agreement and
this Agreement, the incurrence of the obligations set forth herein and
therein 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 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 Selling Agent.
Section 3. REPRESENTATIONS AND WARRANTIES OF JWH. JWH represents and
warrants to the Trust, the Selling Agent, and the Managing Owner as follows:
(a) JWH is a corporation duly organized and validly existing and
in good standing under the laws of the State of California 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 JWH's ability
to perform its obligations under this Agreement and the Trading
Advisory Agreement. JWH has full corporate power and authority to
perform its obligations under this Agreement, and the Trading Advisory
Agreement as described in the Registration Statement and Prospectus.
(b) All references to JWH 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
JWH, each of the principals of JWH, the JWH trading programs, and
JWH'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
-7-
relating to JWH furnished to the Managing Owner) 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 (as approved in pertinent part by JWH) at its date
of issue and as of the Initial 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 Managing Owner on or prior to the date hereof, the
actual performance of each discretionary account directed by JWH or
any principal or affiliate of JWH for the periods covered by the
Performance Summaries or Tables 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 of the CFTC). The
information, Performance Summaries and Monthly Rates of Return
relating to the performance of JWH comply in all material respects
with the disclosure requirements of the rules and regulations of the
CFTC under the Commodity Act. The performance records in the
Prospectus (as applicable to JWH) have been calculated in the manner
set forth in the notes thereto.
(c) The Trading Advisory Agreement and this Agreement have each
been duly and validly authorized, executed and delivered on behalf of
JWH and each constitutes a valid, binding and enforceable agreement of
JWH in accordance with its terms.
(d) JWH 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 Trading Advisory Agreement
(including, without limitation, registration of JWH as a commodity
trading advisor under the Commodity Act and membership of JWH as a
commodity trading advisor in NFA), and the performance of such
obligations will not violate or result in a breach of any provision of
JWH's Certificate of Incorporation, By-laws or any agreement,
instrument, order, law or regulation binding on JWH. The principals
of JWH are duly listed as such on JWH's commodity trading advisor
Form 7-R registration.
(e) Management by JWH of an account for the Trust in accordance
with the terms hereof and of the Trading 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 JWH nor any principal of JWH 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
-8-
offering of the Units, except as may be requested by the Managing Owner
pursuant to Section 6(c) of this Agreement.
(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 JWH,
whether or not arising in the ordinary course of business.
(h) The execution and delivery of this Agreement and the Trading
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 JWH
is bound or any order, rule or regulation applicable to JWH of any
court or any governmental body or administrative agency having
jurisdiction over JWH.
(i) Except as disclosed in the Registration Statement and
Prospectus, there is not pending, or to the best of JWH's knowledge
threatened, any action, suit or proceeding before or by any court or
other governmental body to which JWH is a party, or to which any of
the assets of JWH is subject, which might reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, business or prospects of JWH. JWH has not received any
notice of an investigation or warning letter from NFA or the CFTC
regarding non-compliance by JWH with the Commodity Act or the
regulations thereunder.
(j) JWH 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 Trust.
Section 4. OFFERING AND SALE OF UNITS.
(a) The Selling Agent is hereby appointed the principal selling
agent of the Trust (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
or exempt from the requirement of being so registered in each
jurisdiction in which such person markets Units) during the term
herein specified for the purpose of finding acceptable subscribers for
up to the number of Units set forth on page 1 hereof through a public
offering. The Initial Offering Period shall continue through
_________, 1997 or such other date not more than three months
thereafter as may be determined by the Managing Owner (the "Initial
Offering Period"; such date being hereafter referred to as the
"Initial Offering Termination Date"). Thereafter, Units may be sold
as of the close of business on the last day of each month, as
determined by the Managing Owner (the "Ongoing Offering Period"; such
subsequent sale dates
-9-
being hereinafter referred to as "Subsequent Closing Times"). The Initial
Offering Period and the Ongoing Offering Period shall be referred to
herein as the "Offering Period." Subject to the performance by the
Managing Owner 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 Managing Owner and JWH 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
Offering Period to find acceptable subscribers for the Units at a public
offering price of $100 per Unit during the Initial Offering Period, and at
Net Asset Value per Unit during the Ongoing Offering Period, each
subscriber being required to subscribe for at least $5,000 of Units,
$2000 of Units in the case of trustees or custodians of eligible employee
benefit plans and individual retirement accounts and $1,000 of Units
in the case of Unitholders subscribing for additional Units. 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 Offering Period. The
agency of the Selling Agent hereunder shall continue at least until
the close of business on ___________, 199_, as the Selling Agent and
the Managing Owner shall agree upon.
(b) In the event the offering is commenced and acceptable
subscriptions for at least the minimum number of Units specified on
the cover of the Prospectus (the "Minimum Units") shall not have been
received by the Initial Offering Termination Date, all funds received
from subscribers shall be returned in full, with any interest payable
thereon (irrespective of amount) and without deduction for any escrow
or other fee or expense; and thereupon the Selling Agent's duties as
agent and this Agreement shall terminate without further obligation
hereunder on the part of the Selling Agent, the Managing Owner, the
Trust or JWH.
(c) At the Initial Offering Termination Date, or at such earlier
time as subscriptions for all the Units shall have been received, or
at such earlier time the Managing Owner may determine to terminate the
offering, the Managing Owner shall notify the Selling Agent of the
aggregate number of Units for which the Managing Owner has received
acceptable subscriptions and, if at least the Minimum Units shall have
been so subscribed for, then payment of the purchase price for the
Units may, if the Managing Owner so elects, be made at the office of
CISI, Sears Tower, 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000, or at such other place as shall be agreed upon between
the Selling Agent and CISI, at 10:00 A.M., Chicago time, on the fifth
full business day after the day on which the Managing 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 Managing Owner (the "Initial Closing Time").
(d) No selling commissions will be paid from the proceeds of
sales of Units. The Selling Agent will compensate its own Registered
Representatives pursuant to the Selling Agent's standard compensation
procedures. The Selling Agent will pay
-10-
Additional Selling Agents selling commissions of up to 4% of the Net Asset
Value of each Unit sold by the Registered Representative of each such
Additional Selling Agent. In the case of an Additional Selling Agent
introduced by a Wholesaler, the Lead Selling Agent will pay such Wholesaler
a portion of the up to 4% per Unit selling commissions depending upon the
Wholesaler's arrangement with the Additional Selling Agent. Ongoing
compensation, of up to 1/3 of 1% (a 4% annual rate) of the month-start
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 Unit is redeemed) will also be paid to each such
Registered Representative who agrees to provide the additional
services described below, who is registered with the CFTC and who has
satisfied 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. In the case of an Additional Selling Agent
introduced by a Wholesaler who meets the eligibility requirements for
receipt of ongoing compensation, the Lead Selling Agent will pay a
portion of the up to 1/3 of 1% monthly ongoing compensation to the
Wholesaler depending upon the Wholesaler's arrangement with the
Additional Selling Agent. For purposes of determining when "trailing
commissions" 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 only be paid to any otherwise eligible Registered
Representatives, provided that the Additional Selling Agent with which
such Registered Representative is associated continues to be
registered with the CFTC as a futures commission merchant or
introducing broker and continues to be a member in good standing of
NFA in such capacity, and is contingent upon the provision by a
Registered Representative (duly registered and qualified as to
proficiency with the CFTC and NFA as described above) who sold
outstanding Units in his capacity as a registered representative of an
Additional Selling Agent of additional services in connection with
such Units, including: (i) inquiring of the Managing Owner from time
to time, at the request of an owner of such Units, as to the Net Asset
Value of a Unit; (ii) inquiring of the Managing Owner from time to
time, at the request of an owner of such Units, regarding the
commodities markets and the Trust; (iii) assisting, at the request of
the Managing Owner, in the redemption of Units sold by such Registered
Representative; and (iv) providing such other services to the owners
of such Units as the Managing Owner may, from time to time, reasonably
request.
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. Such ongoing compensation shall be paid
monthly.
-11-
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.
In the case of Units sold by Registered Representatives who are
not qualified to receive ongoing compensation as set forth above, the
Selling Agent will pay such Registered Representatives installment
selling commissions at the same rate as in the case of ongoing
compensation, but the sum of such installment selling commissions and
the initial selling commission payable to each such Registered
Representative is limited in amount, pursuant to applicable NASD
policy, to 9.5% of the initial subscription price of the Units sold by
such Registered Representatives.
In respect of Correspondents selected by an Additional Selling
Agent (with the consent of the Managing Owner 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.
Ongoing compensation which cannot be paid because an Additional
Selling Agent or a Correspondent (or a Registered Representative of
either) has not met the eligibility requirements shall be retained by
the Selling Agent.
Selling Commissions and ongoing compensation payable in respect
of Units sold to any investor eligible to be charged a Special
Brokerage Fee Rate as described in the Registration Statement and
Prospectus shall be reduced by the difference between the standard
rate Brokerage Fee and the applicable Special Brokerage Fee Rate.
(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
(formerly Appendix F of the NASD Rules of Fair Practice) 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
-12-
basis of information obtained from the subscriber concerning, among other
things, the subscriber's investment objectives, other investments,
financial situation and needs, that the subscriber is or will be in a
financial position appropriate to enable the subscriber to realize to a
significant extent the benefits of the Trust, including tax benefits
described in the Prospectus; the subscriber has a fair market net worth
sufficient to sustain the risks inherent in participating in the Trust,
including loss of investment and lack of liquidity; and the Units are
otherwise a suitable investment for the subscriber. 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 CISI, 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 following sections in the
Prospectus and obtained such additional information from CISI
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 Trust and provides an adequate basis
to subscribers for evaluating an investment in the Units:
"Summary"
"Risk Factors"
"Investment Factors"
"The Trust and Its Objectives"
"Xxxx X. Xxxxx & Company, Inc."
"The Managing Owner"
"Fiduciary Obligations of the Managing Owner"
"Use of Proceeds"
"Charges"
"Conflicts of Interest"
"Redemptions; Net Asset Value"
"The Trust and the Trustee"
"Federal Income Tax Aspects"
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.
-13-
(f) None of the Selling Agent, the Trust or the Managing Owner
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) As contemplated by Section 7 hereof, CISI will advance the
Trust's organization and initial offering costs.
(h) All payments for subscriptions shall be made by transfer of
funds to the escrow account of the Trust as described in the
Prospectus.
(i) CISI 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 (both before and after the Trust
commences operations). 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 and each Wholesaler, Additional
Selling Agent or Correspondent 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 5. COVENANTS OF THE MANAGING OWNER.
(a) The Managing Owner will notify the Selling Agent and JWH
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 Managing
Owner 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 Managing Owner will deliver to the Selling Agent, as
soon as available, two signed copies of each amendment to the
Registration Statement as originally filed and two sets of exhibits
thereto, and will also deliver to the Selling Agent such number of
conformed copies of the Registration Statement as originally
-14-
filed and of each amendment thereto (without exhibits) as the
Selling Agent shall reasonably require.
(c) The Managing Owner 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 Managing Owner and the Trust
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 Managing Owner or
the Trust shall occur as a result of which it is necessary, in the
reasonable opinion of the Managing Owner or 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 Managing Owner and the Trust
will forthwith prepare and furnish to the Selling Agent, at the
expense of the Managing Owner, a reasonable number of copies of
an amendment or amendments of, or a supplement or supplements to, the
Prospectus which will amend or supplement the Prospectus so 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 and JWH and their counsel.
(f) The Managing Owner 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 Managing Owner or the Trust be
obligated to (i) take any action which would subject it to service of
process in suits other than those arising out of the offering or sale
of the Units, or taxes, in any jurisdiction where any of them is not
now so subject, (ii) change any material term in the Registration
Statement, or (iii) expend a sum of money considered unreasonable by
CISI.
-15
Section 6. COVENANTS OF JWH.
(a) JWH agrees to cooperate, to the extent reasonably requested
by the Managing Owner, 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, JWH agrees to notify the Managing Owner
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 JWH and its principals required pursuant to
CFTC regulations. During such period, JWH shall promptly inform the
Managing Owner 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.
(c) JWH agrees to assist, and cause its principals or agents to
assist, at its own expense in "road show" presentations relating to
the initial and ongoing offering of the Units at the reasonable
request of the Selling Agent and at the expense of JWH, provided that
no such assistance shall result in any action which any such principal
or agent reasonably believes may require registration of JWH or any
such principal or agent as a broker-dealer or salesman.
Section 7. PAYMENT OF EXPENSES AND FEES. CISI will advance expenses
incident to the performance of the obligations of the Managing Owner and the
Trust 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 under the securities or "Blue Sky"
laws in the various jurisdictions, including filing fees and the fees and
disbursements of CISI's counsel incurred in connection therewith; (iv) the
services of counsel and accountants for CISI and the Trust, including certain
services of KPMG Peat Marwick, LLP 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 JWH and its personnel which shall be borne by JWH).
The Managing Owner and the Selling Agent are each aware of the
limitations imposed by Rule 2810 of the NASD on the aggregate compensation which
may be received by the Selling Agent in connection with the offering and sale of
the Units. The Selling Agent will in no event make any payments to its own
Registered Representatives or any Additional Agent as described above, which,
when added to the up to 4% selling commissions which the Selling Agent may pay
with
-16-
respect to the sales of Units, would exceed 10% of the gross proceeds of the
Units sold to the public. CISI shall not reimburse the Selling Agent for any
due diligence expenses in connection with the offering.
Section 8. 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 Closing Time and each Subsequent 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 NFA.
(b) At the Initial Closing Time, Sidley & Austin, counsel to
CISI and the Trust, 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 Trust pursuant to which the
Trust has been formed and the Declaration and Agreement of
Trust each provides for the subscription for and sale of the
Units; all action required to be taken by the Managing Owner
and the Trust 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 beneficial
interests in the Trust and each subscriber who purchases
Units will become a Unitholder, subject to the requirements
(x) that each such purchaser shall have duly completed,
executed and delivered to the Trust a Subscription Agreement
and Power of Attorney relating to the Units purchased by
such party, (y) that such purchaser meets all applicable
suitability standards as set forth in the Prospectus and
(z) that the representations and warranties of such
purchaser in the Subscription Agreement and Power of
Attorney are true and correct.
(ii) The Trust is a business trust duly organized
pursuant to the Certificate of Trust, the Declaration and
Agreement of Trust and the Trust Act and validly existing
under the laws of the State of Delaware with proper power
and authority to conduct the business in which it proposes
to engage as described in the Prospectus; the Trust has
filed a certificate of assumed name in the State of Illinois
pursuant to 805 I.L.C.S. 405/1 and need not effect any other
filings or qualifications under the laws of the United
States in order to preserve the
-17-
status of the Trust as a business trust or to enable the Trust to
perform its obligations under the Trading Advisory Agreement and this
Agreement and to conduct the business in which it proposes
to be engaged as described in the Prospectus.
(iii) CISI is duly organized and validly existing and
in good standing as a corporation under the laws of the
State of Delaware with corporate power and authority to act
as managing owner of the Trust, and is qualified to do
business and is in good standing as a foreign corporation in
the State of Illinois and in each other jurisdiction in
which the failure to so qualify might, in its opinion,
reasonably be expected to result in material adverse
consequences to the Trust. CISI has full corporate power
and authority to perform its obligations as described in the
Registration Statement and Prospectus.
(iv) Each of CISI (including the principals, as
defined in the Commodity Act, of CISI) and the Trust 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 CISI and
the Trust 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 Declaration and Agreement of Trust,
the Escrow Agreement, the FX Agreement, the Trading Advisory
Agreement, the Customer Agreement and this Agreement has
been duly and validly authorized, executed and delivered by
or on behalf of CISI or the Trust, as the case may be, and
assuming that such agreements are legal, valid and binding
on the other parties hereto and thereto, each of the
Declaration and Agreement of Trust, the Escrow Agreement,
the Trading Advisory Agreement, and this Agreement
constitutes a legal, valid and binding agreement of CISI or
the Trust (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
Declaration and Agreement of Trust, the Escrow Agreement,
the FX Agreement, and the Trading Advisory Agreement and the
incurrence of the obligations herein and therein set forth
and the consummation
-18-
of the transactions contemplated herein and therein and in the
Prospectus will not be in contravention of any of the provisions of
CISI's certificate of incorporation or by-laws, or the Declaration and
Agreement of Trust, and, to their knowledge, will not
constitute a breach of, or default under, any instrument by
which CISI or the Trust is bound or any order, rule or
regulation applicable to CISI or the Trust of any court or
any governmental body or administrative agency having
jurisdiction over CISI or the Trust.
(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 CISI (or any principal of CISI) or
the Trust 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 CISI or the Trust.
(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.
(ix) The terms and provisions of the Declaration and
Agreement of Trust, the Customer Agreement, the FX
Agreement, the Customer Agreement, the Trading Advisory
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 CISI, the Selling Agent or CISFS (a) at the time the
Registration Statement initially became effective and at the
time any post-effective amendment thereto
-19-
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 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
Appendix I (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 Appendix I, that such Appendix I complies
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 summary of Federal income tax consequences to
Unitholders set forth under the caption "Federal Income Tax
Consequences" in the Prospectus accurately describes the
material tax consequences set forth therein and that such
counsel further confirm their advice to CISI explicitly set
forth therein and in such Exhibit 8.01.
(xiii) To 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 CISI or the Trust 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 Trust, 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 matters of Delaware law, upon the opinion of Messrs. Xxxxxxxx,
Xxxxxx & Finger, Wilmington,
-20-
Delaware, and as to matters relating to CISI, the Selling Agent and
CISFS on internal counsel to Xxxxxxx, Xxxxxxxxxxxx.
(c) Xx. Xxxxx Xxxxxx, 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 Delaware and is qualified to do
business and in good standing as a foreign corporation in
the State of Illinois and in each other jurisdiction in
which such qualification is required and in which the
failure to so qualify might, in her opinion, reasonably be
expected to result in material adverse consequences to the
Trust. The Selling Agent has full corporate power and
authority to perform its obligations as described in the
Registration Statement and Prospectus.
(ii) Each of the Customer Agreement and this Agreement
has been duly authorized, executed and delivered by the
Selling Agent, and this Agreement 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).
(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 her knowledge, none of such approvals, licenses or
registrations has been rescinded or revoked.
(iv) The execution and delivery of the Customer
Agreement and this 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, to the best of her
knowledge, constitute a breach of, or default under, any
instrument known to her 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 Selling
Agent.
-21-
(v) To her 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 her attention that would lead
her 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 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
misleading.
(d) Xx. Xxxxx Xxxxxx, counsel to CISFS, shall deliver to all the
parties hereto, an opinion to the effect that:
(i) CISFS is duly organized and validly existing and
in good standing as a corporation under the laws of the
State of Delaware and is qualified to do business and in
good standing as a foreign corporation in the State of
Illinois and in each other jurisdiction in which such
qualification is required and in which the failure to so
qualify might, in her opinion, reasonably be expected to
result in material adverse consequences to the Trust. CISFS
has full corporate power and authority to perform its
obligations as described in the Registration Statement and
Prospectus.
(ii) Each of the FX Agreement and this Agreement has
been duly authorized, executed and delivered by CISFS, and
this Agreement constitutes a legal, valid and binding
agreement of CISFS 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
-22-
effect of general principles of equity (regardless of
whether enforceability is considered).
(iii) CISFS 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
CISFS to conduct its business as described in the
Registration Statement and Prospectus, and, to her
knowledge, none of such approvals, licenses or registrations
has been rescinded or revoked.
(iv) The execution and delivery of the FX Agreement
and this 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, to the best of her knowledge,
constitute a breach of, or default under, any instrument
known to her by which CISFS is bound or, any order, rule or
regulation applicable to CISFS, of any court or any
governmental body or administrative agency having
jurisdiction over CISFS.
(v) To her 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 CISFS (or any principal of CISFS) 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
CISFS.
(vi) Nothing has come to her attention that would lead
her 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 CISFS 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 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 CISFS or its principals, in light of the circumstances
under which they were made, not misleading.
(e) Xxxxx X. Xxxxx, counsel to JWH, shall deliver to all the
parties hereto an opinion as of the Initial Closing Time to the effect
that:
-23-
(i) JWH is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California 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
Trust, as described in the Registration Statement and
Prospectus, and its ability to discharge its obligations
under the Trading Advisory Agreement and this Agreement.
(ii) Each of the Trading Advisory Agreement and this
Agreement has been duly authorized, executed and delivered
by JWH and constitutes a valid, binding and enforceable
agreement of JWH 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) JWH (including the principals of JWH) 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 JWH to conduct
its business as described in the Registration Statement and
Prospectus (including, without limitation, performance of
this Agreement and the Trading 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 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
JWH, 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
JWH.
(v) The execution and delivery of this Agreement and
the Trading 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 contravention
of any of the provisions of the certificate of incorporation
or by-laws of JWH, or, to the best of such counsel's
knowledge,
-24-
constitute a breach of, or default under, any
instrument by which JWH is bound or any order, rule or
regulation applicable to JWH of any court or any
governmental body or administrative agency having
jurisdiction over JWH.
(vi) Based upon reliance on certain SEC No-Action
Letters, the performance by JWH of the transactions
contemplated by the Trading Advisory Agreement and described
in the Prospectus will not subject JWH or any principal of
JWH to the registration requirements, prohibitions or other
terms of the Investment Advisers Act of 1940, as amended.
(vii) 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 JWH 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 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 JWH or its principals, in light of the
circumstances under which they were made, not misleading;
provided, however, that no counsel for JWH 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 tables, that the performance records relating to JWH
set forth in the Prospectus comply as to form in all
material respects with CFTC rules except to the extent
departures therefrom have been permitted by CFTC staff.
(f) At the Initial Closing Time, the Managing Owner 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 Managing Owner 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 Closing Time; and (iii) the Managing Owner
has performed all covenants and agreements herein contained to be
performed on its part at or prior to the Initial Closing Time. Such
-25-
certificate may state that the Managing Owner has relied upon JWH to
provide certain information relating to JWH for use in the
Registration Statement.
(g) JWH shall deliver a report dated as of the Initial Closing
Time which shall present, for the period from the date after the last
day covered by the performance records in the Prospectus to the latest
practicable day before the Initial 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. JWH shall
also certify that such performance records have been calculated in
accordance with the notes to the applicable performance records in the
Prospectus.
(h) At the time the Registration Statement initially becomes
effective, KPMG Peat Marwick, LLP shall have delivered a letter,
substantially in the form previously agreed upon by the Selling Agent
and the Managing Owner.
(i) At the Initial Closing Time, KPMG Peat Marwick, LLP shall
deliver a letter in a form satisfactory to the Selling Agent and the
Managing Owner, substantially the same in scope and substance as the
letter described in paragraph (h) of this Section 8, dated as of the
Initial Closing Time.
(j) At the Initial Closing Time, JWH shall deliver a certificate
to the effect that (i) the representations and warranties of JWH
contained herein are true and correct with the same effect as though
expressly made at the Initial Closing Time, (ii) JWH has performed all
covenants and agreements herein contained to be performed on its part
at or prior to the Initial Closing Time and (iii) since the date of
the most recent financial information relating to JWH 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 JWH.
(k) At the Initial Closing Time, the Selling Agent shall deliver
a certificate to the effect that the representations and warranties of
the Selling Agent and Futures Broker 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 Closing Time.
(l) At the Initial Closing Time, CISFS shall deliver a
certificate to the effect that the representations and warranties of
CISFS 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 Closing Time.
(m) The Trust shall have received a capital contribution of the
Managing Owner in the amount required by the Declaration and Agreement
of Trust and as described in the Prospectus.
-26-
(n) The parties hereto shall have been furnished with such
additional information, opinions and documents, including supporting
documents relating to parties described in the Prospectus and
certificates signed by such parties with regard to information
relating to them and included in the Prospectus as they may reasonably
require for the purpose of enabling them to pass upon the sale of the
Units as herein contemplated and related proceedings, in order to
evidence the accuracy or completeness of any of the representations or
warranties or the fulfillment of any of the conditions herein
contained; and all actions taken by the parties hereto in connection
with the sale of the Units as herein contemplated shall be reasonably
satisfactory in form and substance to Sidley & Austin, Xx. Xxxxx and
Xx. Xxxxxx.
(o) 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 8 shall,
at the option of any party hereto, apply at each Subsequent Closing
Time.
If any of the conditions specified in this Section 8 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 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 7.
Section 9. INDEMNIFICATION AND EXCULPATION.
(a) INDEMNIFICATION BY THE MANAGING OWNER. The Managing Owner
agrees to indemnify and hold harmless the Selling Agent, JWH, any
Wholesaler, Additional Selling Agent or Correspondent, and each
person, if any, who controls any of the foregoing within the meaning
of Section 15 of the 1933 Act, and the Trust agrees to indemnify and
hold harmless JWH and each person, if any, who controls JWH 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 misleading, unless (a) in the case
of JWH, such untrue statement or omission or alleged untrue
statement or omission was made in reliance upon
-27-
and in conformity with information relating to JWH and furnished or
approved in writing by JWH, (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
and furnished or approved by the Selling Agent or (c) in the
case of any Wholesaler, Additional Selling Agent or
Correspondent, such untrue statement or alleged untrue
statement was made in reliance upon and in conformity with
information (including any material omission from such
information), if any, relating to, such Wholesaler,
Additional Selling Agent or Correspondent and furnished or
approved by such party;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever to the extent of the aggregate
amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or
body commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission or any such
alleged untrue statement or omission (any settlement to be
subject to indemnity hereunder only if effected with the
written consent of the Managing Owner); and
(iii) against any and all expense whatsoever
(including the fees and disbursements of counsel and, in the
case of the Selling Agent, any indemnification of a
Wholesaler, Additional Selling Agent or Correspondent made
pursuant to a Wholesaling Agreement, Additional Selling
Agent Agreement or Correspondent Selling Agreement, as the
case may be) 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 Managing Owner or the Trust be liable under this
indemnity agreement with respect to any claim made against any
indemnified party unless the Managing Owner or the Trust 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
Managing Owner or the Trust shall not relieve the Managing Owner or
the Trust from any liability which they may have on account of this
indemnity agreement unless such failure to notify shall materially
prejudice the Managing Owner or the Trust. The Managing Owner and the
Trust shall be entitled to participate at their own expense in the
defense or, if they so elect within a reasonable time after receipt of
such notice, to assume the defense of that portion of any suit so
brought relating to the Managing Owner's or the Trust's
indemnification obligations hereunder, which defense shall be
-28-
conducted by counsel chosen by them and satisfactory to the
indemnified party or parties, defendant or defendants therein. In the
event that the Managing Owner or the Trust 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 Managing Owner be obligated to
indemnify the Selling Agent hereunder, and the Selling Agent agrees
not to attempt to obtain any indemnity from the Managing Owner
hereunder, to the extent that the Managing Owner and the Selling Agent
are advised by counsel reasonably satisfactory to the Managing Owner
and the Selling Agent that payment of such indemnity could adversely
affect the classification of the Trust as a partnership for Federal
income tax purposes.
The Managing Owner agrees to notify JWH 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 Managing Owner within the
meaning of Xxxxxxx 00 xx xxx 0000 Xxx.
(x) INDEMNIFICATION BY JWH. JWH agrees to indemnify and hold
harmless the Selling Agent, the Managing Owner, the Trust, and each
person, if any, who controls any of the foregoing within the meaning
of Section 15 of the 1933 Act (and, in the case of the Managing Owner
and the Trust, each person who signed the Registration Statement or is
a director of the Managing Owner), to the same extent as the indemnity
from the Managing Owner set forth in Section 9(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 JWH or any principal of JWH, 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
JWH for inclusion therein.
(c) INDEMNIFICATION BY THE SELLING AGENT. The Selling Agent
agrees to indemnify and hold harmless the Trust, the Managing Owner,
JWH and each person, if any, who controls the Trust, the Managing
Owner or JWH within the meaning of Section 15 of the 1933 Act (and in
the case of the Managing Owner and the Trust, each person who signed
the Registration Statement or is a director of the Managing Owner),
(i) to the same extent as the same extent as the indemnity from the
Managing Owner set forth in Section 9(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
-29-
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 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.
(d) If the indemnification provided for in this Section 9 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) 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 JWH, on the one hand, and, the Selling Agent, CISFS and the
Managing Owner, on the other, from the offering of the Units.
(e) LIMITATION ON CERTAIN INDEMNIFICATIONS AND EXCULPATIONS.
The exculpation provisions in the Trading Advisory Agreement shall not
relieve JWH from any liability it may have or incur to the Trust, the
Managing Owner or the Selling Agent under this Agreement (including,
without limitation, pursuant to the provisions of Section 9(b)
hereof). Nor shall JWH be entitled to be indemnified by the Managing
Owner, pursuant to the indemnification provisions contained in the
Trading Advisory Agreement, against any loss, liability, damage, cost
or expense it may incur under this Agreement. The Managing Owner
shall not be entitled to be indemnified by the Trust, pursuant to the
indemnification provisions contained in the Declaration and Agreement
of Trust against any loss, liability, damage, cost or expense it may
incur under this Agreement.
Section 10. STATUS OF PARTIES. In selling the Units for the Trust,
the Selling Agent is acting solely as an agent for the Trust and not as a
principal. The Selling Agent will use its best efforts to assist the Trust in
obtaining performance by each purchaser whose offer to purchase Units from the
Trust has been accepted on behalf of the Trust, but the Selling Agent shall not
have any liability to the Trust in the event that Subscription Agreements and
Powers of Attorney are improperly completed or any such purchase is not
consummated for any reason. Except as specifically provided herein, the Selling
Agent shall in no respect be deemed to be an agent of the Trust.
Section 11. 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 Managing Owner,
the Trust, the Futures Broker, CISFS, JWH or any person who controls any of the
foregoing and shall survive the Initial Closing Time.
-30-
Section 12. TERMINATION. The Managing Owner shall have the right to
terminate this Agreement at any time prior to the Initial Closing Time by giving
written notice of such termination to JWH, the Selling Agent, the Futures Broker
and CISFS.
Section 13. NOTICES AND AUTHORITY TO ACT. All communications
hereunder shall be in writing and, if sent to the Selling Agent, CISI, CISFS or
the Trust, shall be mailed, delivered or telegraphed and confirmed to it at
Portfolio Diversification Group, Sears Tower, 000 Xxxxx Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000, Attention: L. Xxxxxxx Xxxxxxxx; if sent to JWH,
shall be mailed, delivered or telegraphed and confirmed at Xxx Xxxxxxxxxxx
Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxx. Notices shall be
effective when actually received.
Section 14. PARTIES. This Agreement shall inure to the benefit of
and be binding upon the Selling Agent, the Trust, the Managing Owner, CISFS, JWH
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.
The parties acknowledge that the obligations of this Agreement are not
binding against the Unitholders individually but are binding only upon the
assets and property of the Trust and, in the event of any obligation or claim
arising hereunder against the Trust, no resort shall be had to the Unitholder's
personal property for the satisfaction of such obligation or claim.
Section 15. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES CREATED HEREBY SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF ILLINOIS WITHOUT REGARD TO THE PRINCIPLES OF CHOICE OF LAW THEREOF.
Section 16. 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 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.
-31-
If the foregoing is in accordance with each party's understanding of
its agreement, each party is requested to sign and return to CISI as Managing
Owner 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,
JWH GLOBAL PORTFOLIO TRUST
BY: CIS INVESTMENTS INC.,
Managing Owner
By:________________________________
Name:
Title:
CIS INVESTMENTS, INC.
By:________________________________
Name:
Title:
XXXX X. XXXXX & COMPANY, INC.
By:________________________________
Name:
Title:
CARGILL INVESTOR SERVICES, INC.
By:_______________________________
Name:
Title:
CIS FINANCIAL SERVICES, INC.
By:________________________________
Name:
Title:
-32-
EXHIBIT A
JWH GLOBAL PORTFOLIO TRUST
(A DELAWARE BUSINESS TRUST)
$50,000,000 OF UNITS OF BENEFICIAL INTEREST
(SUBSCRIPTION PRICE: $100 PER UNIT
DURING THE INITIAL OFFERING PERIOD; NET
ASSET VALUE PER UNIT DURING THE ONGOING OFFERING PERIOD)
ADDITIONAL SELLING AGENT AGREEMENT
_______ __, 1996
[Additional Selling Agent]
Dear Sirs:
CIS Investments, Inc., a Delaware corporation (the "Managing Owner"), has
caused the formation of a business trust pursuant to the Delaware Business Trust
Act (the "Delaware Act") under the name, JWH GLOBAL PORTFOLIO TRUST (the
"Trust"), 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 Trust will engage in speculative trading in the
commodities markets under the direction of Xxxx X. Xxxxx & Company, Inc.
("JWH"). The Trust proposes to make a public offering of units of beneficial
interest in the Trust (the "Units") through us, Cargill Investor Services, Inc.
(the "Lead Selling Agent"), on a best-efforts basis pursuant to the Selling
Agreement dated as of ______ __, 1996 among us, the Trust and others (the
"Selling Agreement"), a copy of which has been furnished to you. In connection
with the proposed public offering, the Trust has filed with the United States
Securities and Exchange Commission (the "SEC"), pursuant to the United States
Securities Act of 1933, as amended (the "1933 Act"), a registration statement on
Form S-1 to register the Units, and as part thereof a prospectus (Registration
No. 33-____) (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, the "Selling Agents"), may be selected by
us with the consent of the Managing Owner. We have so 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 Trust's
non-exclusive selling agents to offer and sell the Units on a best-efforts basis
without any commitment on the Additional Selling Agent's part to purchase any
Units. It is understood and agreed that the Lead Selling Agent, with the
consent of the Managing Owner, 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
Managing Owner 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.
(b) The Additional Selling Agent agrees to use its best efforts to procure
subscriptions for the Units as long as this Agreement and the Selling Agreement
remain in effect and to make the offering of Units at the offering price and
minimum amounts and on the other terms and conditions set forth in the
Prospectus and the Selling Agreement.
(c) The Additional Selling Agent shall offer and sell Units only to
persons and entities who satisfy the suitability and/or investment requirements
set forth in the Prospectus and the subscription agreements attached thereto and
who, to the Managing Owner's satisfaction, complete the subscription agreements
and related subscription documents used in connection with the offering of the
Units (the "Subscription Documents") and remit good funds for the full
subscription price. The Additional Selling Agent shall conduct a thorough
review of the suitability of each subscriber for Units that it solicits and of
the Subscription Documents. The Additional Selling Agent shall not forward to
the Managing Owner 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 is illegible in any respect
or is not fully completed, dated, or signed, or that represents 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.
The Additional Selling Agent agrees not to recommend the purchase of Units
to any subscriber unless the Additional Selling Agent shall have reasonable
grounds to believe, on the basis of information obtained from the subscriber
concerning, among other things, the subscriber's investment objectives, other
investments, financial situation and needs, that the subscriber is or will be in
a financial position appropriate to enable the subscriber to realize to a
significant extent the benefits of the Trust, including the tax benefits (if
any) described in the Prospectus; the subscriber has a fair market net worth
sufficient to sustain the risks inherent in participating in the Trust,
including loss of investment and lack of liquidity; and the Units are otherwise
a suitable investment for the subscriber. In addition to submitting such
information to the Managing Owner, the Additional Selling Agent agrees to
maintain files of information disclosing the basis upon which the Additional
Selling Agent determined that the suitability requirements of Section (b)(2) of
Rule 2810 of the National
2
Association of Securities Dealers, Inc. ("NASD") (formerly Section 3 of
Appendix F of the NASD's Rules of Fair Practice) were met as to each
subscriber (the basis for determining suitability may include the
Subscription Documents and other certificates submitted by subscribers). In
connection with making the foregoing representations and warranties, the
Additional Selling Agent further represents and warrants that it has received
copies of the Registration Statement, as amended to the date hereof, and the
Prospectus and has, among other things, examined the following sections in
the Prospectus and obtained such additional information from the Managing
Owner regarding the information set forth thereunder as the Additional
Selling Agent has deemed necessary appropriate to determine whether the
Prospectus adequately and accurately discloses all material facts relating to
an investment in the Trust and provides an adequate basis to subscribers for
evaluating an investment in the Units:
"Summary"
"Risk Factors"
"Investment Factors"
"The Trust and Its Objectives"
"Xxxx X. Xxxxx & Company, Inc."
"The Managing Owner"
"Fiduciary Obligations of the Managing Owner"
"Use of Proceeds"
"Charges"
"Conflicts of Interest"
"Redemptions; Net Asset Value"
"The Trust and the Trustee"
"Federal Income Tax Aspects"
In connection with making the representations and warranties set forth in
this paragraph, the Additional Selling Agent has not relied on inquiries made by
or on behalf of any other parties.
The Additional Selling Agent agrees to inform all prospective purchasers of
Units of all pertinent facts relating to the liquidity and marketability of the
Units as set forth in the Prospectus.
The Additional Selling Agent shall offer and sell Units in compliance with
the requirements set forth in the Registration Statement (particularly the
"Subscription Requirements" attached as Exhibit B thereto), this Agreement and
the Blue Sky Survey delivered to the Lead Selling Agent by the Managing Owner'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
3
Managing Owner has not informed the Additional Selling Agent that counsel's
advice has been received that the Units are qualified for sale or are exempt
under the applicable securities or Blue Sky laws thereof or (ii) in which the
Additional Selling Agent may not lawfully engage.
The Additional Selling Agent further agrees to comply with the requirement
under applicable federal and state securities laws to deliver to each offeree a
Prospectus and any amendments or supplements thereto (including summary
financial information, if available, after the Trust has commenced operations).
Neither the Additional Selling Agent nor any of its employees, agents or
representatives will use or distribute any marketing material or information
other than that prepared by the Trust and the Managing Owner.
(d) The additional services that the Additional Selling Agent will provide
on an ongoing basis to Unitholders at no charge will include but not be limited
to: (i) inquiring of the Managing Owner from time to time, at the request of
Unitholders, as to the Net Asset Value of a Unit, (ii) inquiring of the Managing
Owner from time to time at the request of the Unitholders, as to the commodities
markets and the activities of the Fund, (iii) assisting, at the request of the
Managing Owner, in the redemption of Units sold by the Additional Selling Agent,
(iv) responding to question of Unitholders from time to time with respect to
monthly account statements, annual reports, financial statements, and annual tax
information furnished to Unitholders, and (v) providing such other services to
the owners of Units as the Managing Owner may, from time to time, reasonably
request.
All payments for subscriptions shall be made by transfer of funds to the
escrow account of the Trust as described in the Prospectus.
(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 a selling commission of __% of the subscription value
of the Unit(s) sold by the Additional Selling Agent. The selling commission
payable in respect of Units sold to any investor eligible to be charged a
Special Brokerage Fee Rate as described in the Prospectus shall be reduced by
the difference between the standard brokerage fee rate and the applicable
Special Brokerage Fee Rate (or, in the event that the Additional Selling Agent
shares the selling commission with a Wholesaler, the Additional Selling Agent's
proportionate share of such difference). Such commissions will be paid in
respect of each subscription as promptly as practicable after the initial
closing or each subsequent month-end closing.
(b) The Additional Selling Agent shall receive ongoing compensation,
payable monthly by the Lead Selling Agent, of __% (a __% annual rate) 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
4
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 (i) 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 after the end of the twelfth full month after the sale of such
Unit. Such ongoing compensation will be paid by the Lead Selling Agent from
brokerage fees paid to it in its capacity as the Trust's futures broker by the
Trust. Ongoing compensation payable in respect of Units sold to any investor
eligible to be charged a Special Brokerage Fee Rate as described in the
Prospectus shall be reduced by the difference between the standard brokerage fee
rate and the applicable Special Brokerage Fee Rate (or, in the event that the
Additional Selling Agent shares ongoing compensation with an eligible
Wholesaler, the Additional Selling Agent's proportionate share of such
difference). [ In the event the Additional Selling Agent's Wholesaler, if any,
is not eligible to receive ongoing compensation, the Additional Selling Agent
shall receive the amount that would have been due to the Wholesaler in the
absence of ineligibility.] For purposes of determining when ongoing
compensation should begin to accrue, Units sold during the Initial Offering
Period (as defined in the Prospectus) shall not be deemed to be sold until the
initial closing time and Units sold during the Ongoing Offering Period (as
defined in the Prospectus) 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 Managing Owner 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 Unitholders and only so long as the
additional services described in Section 1(d) above are provided by such person
to Unitholders.
In case of Units sold by Registered Representatives who are not qualified
to receive ongoing compensation as set forth above, the Lead Selling Agent will
pay each such Registered Representative installment selling commissions at the
same rate as in the case of ongoing compensation, but the sum of such
installment selling commissions and the initial selling commission paid to the
Additional Selling Agent and its Wholesaler, if any, is limited in amount,
pursuant to applicable NASD policy, to 9.5% of the initial subscription price of
the Units sold by such Registered Representative; provided, that no such
installment selling commissions shall be payable until the Managing Owner and
the Lead Selling Agent determine that the payment of such installment selling
commission is in compliance with Rule 2810 of the NASD (formerly Appendix F of
the NASD's Rules of Fair Practice) on aggregate compensation which may be
received by the Selling Agents.
In respect of Correspondents, if any, selected by the Additional Selling
Agent (with the consent of the Lead Selling Agent and the Managing Owner), the
Lead Selling Agent shall pay to the Additional Selling Agent selling commissions
and ongoing compensation or installment sales
5
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.
The Additional Selling Agent, although otherwise entitled to ongoing
compensation, will not be entitled to receipt thereof (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 provide the
ongoing services described above.
Ongoing compensation which cannot be paid because the Additional Selling
Agent or its Correspondent (or a Registered Representative of either) has not
met the eligibility requirements shall be retained by the Lead Selling Agent.
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 Managing Owner 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 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, in its capacity of futures broker for the Trust, has actually
received its brokerage fee from the Trust.
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 Delaware and has
power and authority to enter into and carry out its obligations under this
Agreement.
6
(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.
(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 _____________ 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
7
would be material for an investor's decision to purchase the Units which are
not disclosed to the Trust, the Managing Owner or the Lead Selling Agent.
(e) The information, if any, relating to the Additional Selling Agent
which the Additional Selling Agent has furnished to the Trust and the Managing
Owner for use in the Registration Statement is correct.
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 Managing Owner, in accordance with the provisions of
the Selling Agreement, 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 Managing
Owner, such action would be advisable. 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 8 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 Managing Owner 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 or proceeding for that purpose.
(b) The Lead Selling Agent will cause the Managing Owner 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 Managing Owner 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.
8
7. INDEMNIFICATION
(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 Managing
Owner agrees to indemnify the Lead Selling Agent pursuant to Section 9 of the
Selling Agreement. The Additional Selling Agent agrees that in no event shall
the Trust, the Managing Owner or JWH be liable for any loss, liability, claim,
damage or expense whatsoever suffered by the Additional Selling Agent in
connection with the offering of Units or this Agreement.
(b) The Additional Selling Agent shall indemnify, hold harmless, and
defend the Trust, the Managing Owner, the Lead Selling Agent, JWH 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 Trust, the Managing Owner and JWH are
expressly made third party beneficiaries of this Agreement.
8. RELATIONSHIP OF SELLING AGENTS, WHOLESALERS
AND THE LEAD SELLING AGENT
The obligations of each of the Additional Selling Agents, Wholesalers,
Correspondents and the Lead Selling Agent are several and not joint. Nothing
herein contained shall constitute the Additional Selling Agents, Wholesalers and
Correspondents, or any of them, and the Lead Selling Agent as an association,
partnership, unincorporated business or other separate entity, but the
Additional Selling Agent shall be liable for its proportionate share of any tax,
liability or expense based on any claim to the contrary. The Lead Selling Agent
shall be under no liability to the Additional Selling Agent except for lack of
good faith and for obligations expressly assumed by the Lead Selling Agent in
this Agreement.
9. 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 termination of this Agreement for any reason set forth in Sections
9(a)(i) or 9(a)(ii) shall not affect (i) the ongoing obligations of the Lead
Selling Agent to pay selling commissions, ongoing compensation or installment
selling commissions accrued prior to the termination hereof, (ii) the Additional
Selling Agent's obligations under the second sentence of Section 8 hereof or
(iii) the indemnification obligations under Section 7 hereof. In the event
9
this Agreement is terminated pursuant to Section 9(a)(iii), the Lead Selling
Agent may withhold accrued but unpaid selling commissions and ongoing
compensation or installment selling commissions due the Additional Selling
Agent until the Lead Selling Agent has been put in the same financial
position as it would have been in absent such breach or non-compliance.
10. 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 Trust 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 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.
11. 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:
Cargill Investor Services, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
if to the Additional Selling Agent:
________________________
________________________
________________________
10
(c) This Agreement shall be governed by, and construed in accordance with,
the law of the State of Illinois 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.
11
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,
CARGILL INVESTOR SERVICES, INC.
By:
-------------------------------
Its
--------------------------
CONFIRMED AND ACCEPTED
[Additional Selling Agent]
By:
------------------------------
Its
---------------------------
12
EXHIBIT B
JWH GLOBAL PORTFOLIO TRUST
(A DELAWARE BUSINESS TRUST)
$50,000,000 OF UNITS OF BENEFICIAL INTEREST
(SUBSCRIPTION PRICE: $100 PER UNIT
DURING THE INITIAL OFFERING PERIOD; NET
ASSET VALUE PER UNIT DURING THE ONGOING OFFERING PERIOD)
WHOLESALING AGREEMENT
_______ __, 1996
[Wholesaler]
Dear Sirs:
CIS Investments, Inc., a Delaware corporation (the "Managing Owner"), has
caused the formation of a business trust pursuant to the Delaware Business Trust
Act (the "Delaware Act") under the name, JWH GLOBAL PORTFOLIO TRUST (the
"Trust"), 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 Trust will engage in speculative trading in the
commodities markets under the direction of Xxxx X. Xxxxx & Company, Inc.
("JWH"). The Trust proposes to make a public offering of units of beneficial
interest in the Trust (the "Units") through us, Cargill Investor Services, Inc.
(the "Lead Selling Agent"), on a best-efforts basis pursuant to the Selling
Agreement dated as of ______ __, 1996 among us, the Trust and others (the
"Selling Agreement"), a copy of which has been furnished to you. In connection
with the proposed public offering, the Trust has filed with the United States
Securities and Exchange Commission (the "SEC"), pursuant to the United States
Securities Act of 1933, as amended (the "1933 Act"), a registration statement on
Form S-1 to register the Units, and as part thereof a prospectus (Registration
No. 33-____) (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, the "Selling Agents"), may be selected by
us with the consent of the Managing Owner. You have agreed to act as a
wholesaler. 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 WHOLESALER
(a) Subject to the terms and conditions set forth in this Agreement, the
Selling Agreement and the Registration Statement, the Wholesaler is hereby
appointed, and hereby accepts such appointment, as one of the Trust's non-
exclusive wholesalers to identify and introduce to the Lead Selling Agent one or
more Additional Selling Agents. It is understood and agreed that the Lead
Selling Agent, with the consent of the Managing Owner, may retain other
wholesalers and selling agents (including those introduced by the Wholesaler or
other Wholesalers) and that the Additional Selling Agent or any other Additional
Selling Agent, with the consent of the Lead Selling Agent and Managing Owner in
their sole discretion, may retain correspondent selling agents
("Correspondents"). The Wholesaler agrees to comply with the terms and
conditions of this Agreement and any terms and conditions of the Selling
Agreement applicable to Wholesalers.
(b) The Wholesaler agrees to use diligent efforts, so long as this
Agreement and the Selling Agreement remain in effect, to identify and introduce
to the Lead Selling Agent one or more Additional Selling Agents, each of which
shall agree 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 pursuant
to an Additional Selling Agent Agreement (the form of which is attached as
Exhibit A to the Selling Agreement) with the Lead Selling Agent.
(c) The Wholesaler covenants and agrees to wholesale Units through
registered or exempt broker-dealers which are member of the National Association
of Securities Dealers, Inc. ("NASD") and which have signed Additional Selling
Agent Agreements with the Lead Selling Agent. The Wholesaler's wholesaling
activities will consist primarily of providing sales literature and other
information, all of which shall have been prepared or approved by the Trust and
the Managing Owner, concerning the Trust to qualified broker-dealers and their
principals and Registered Representatives who will be participating in the
offering of Units and assisting such person in marketing Units and in providing
additional services on an ongoing basis to Unitholders. The Wholesaler may
participate in presentations to prospective investors, receive or handle any
part of the purchase price paid for Units or effect any transactions in Units.
(d) The Wholesaler shall offer and sell Units in compliance with the
requirements set forth in the Registration Statement (particularly the
"Subscription Requirements" attached as Exhibit B thereto), this Agreement and
the Blue Sky Survey delivered to the Lead Selling Agent by the Managing Owner's
counsel, a copy of which has been provided to the Wholesaler and each Additional
Selling Agent introduced by the Wholesaler. An Wholesaler shall represent and
warrant 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 Wholesaler 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 Wholesaler shall under no circumstances engage in any activities
hereunder in any jurisdiction (i) in which the Managing Owner has not informed
the Wholesaler that counsel's advice has been
2
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
Wholesaler may not lawfully engage.
(e) The Wholesaler further covenants and agrees to comply with any terms
and conditions of the Selling Agreement applicable to Additional Selling Agents
and the provisions of Sections 2(f)(i) to (iii) hereof applicable to Additional
Selling Agents.
(f) The Wholesaler has received copies of the Registration Statement, as
amended to the date hereof, and the Prospectus. The Wholesaler further
acknowledges, and agrees to assist each Additional Selling introduced by it
(references hereafter in this Agreement, except Sections 8 and 10, to
Additional Selling Agent(s) shall mean only those Additional Selling Agent(s)
introduced to the Lead Selling Agent by the Wholesaler) in compliance with, the
following:
(i) Units shall be offered at the offering price and minimum amounts
and on the other terms and conditions set forth in the Prospectus and the
Selling Agreement. The Additional Selling Agents shall offer and sell
Units only to persons and entities who satisfy the suitability and/or
investment requirements set forth in the Prospectus and the subscription
agreements attached thereto and who, to the Managing Owner's satisfaction,
complete the subscription agreements and related subscription documents
used in connection with the offering of the Units (the "Subscription
Documents") and remit good funds for the full subscription price. An
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 Managing
Owner 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 represents
the subscription of a person or entity not satisfying the suitability
and/or investment requirements applicable to such person or entity. No
Additional Selling Agent shall 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.
An Additional Selling Agent shall not recommend the purchase of Units
to any subscriber unless the Additional Selling Agent shall have reasonable
grounds to believe, on the basis of information obtained from the
subscriber concerning, among other things, the subscriber's investment
objectives, other investments, financial situation and needs, that the
subscriber is or will be in a financial position appropriate to enable the
subscriber to realize to a significant extent the benefits of the Trust,
including the tax benefits (if any) described in the Prospectus; the
subscriber has a fair market net worth sufficient to sustain the risks
inherent in participating in the Trust, including loss of investment and
lack of liquidity; and the Units are otherwise a suitable investment for
the subscriber. In addition to submitting such information to the Managing
Owner, the Additional Selling Agent shall agree 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 NASD (formerly Section 3 of Appendix F of the NASD's Rules of Fair
Practice) were met as to each subscriber (the basis for determining
suitability may include the Subscription Documents
3
and other certificates submitted by subscribers). In connection with
making the foregoing representations and warranties, the Additional
Selling Agent shall further represent and warrant that it has, among
other things, examined the following sections in the Prospectus and
obtained such additional information from the Managing Owner regarding
the information set forth thereunder as the Additional Selling Agent has
deemed necessary appropriate to determine whether the Prospectus
adequately and accurately discloses all material facts relating to an
investment in the Trust and provides an adequate basis to subscribers
for evaluating an investment in the Units:
"Summary"
"Risk Factors"
"Investment Factors"
"The Trust and Its Objectives"
"Xxxx X. Xxxxx & Company, Inc."
"The Managing Owner"
"Fiduciary Obligations of the Managing Owner"
"Use of Proceeds"
"Charges"
"Conflicts of Interest"
"Redemptions; Net Asset Value"
"The Trust and the Trustee"
"Federal Income Tax Aspects"
In connection with making the representations and warranties set forth
in this paragraph, the Additional Selling Agent shall not rely on inquiries
made by or on behalf of any other parties.
The Additional Selling Agents shall inform all prospective purchasers
of Units of all pertinent facts relating to the liquidity and marketability
of the Units as set forth in the Prospectus.
The Additional Selling Agent shall offer and sell Units in compliance
with the requirements set forth in the Registration Statement (particularly
the "Subscription Requirements" attached as Exhibit B thereto), this
Agreement and the Blue Sky Survey delivered to the Lead Selling Agent by
the Managing Owner's counsel, a copy of which has been provided to each
Additional Selling Agent. An Additional Selling Agent shall represent and
warrant 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)
4
in which the Managing Owner has not informed the Additional Selling
Agent that counsel's advice has been received that the Units are
qualified for sale or are exempt under the applicable securities or Blue
Sky laws thereof or (ii) in which the Additional Selling Agent may not
lawfully engage.
Each Additional Selling Agent shall further agree to comply with the
requirement under applicable federal and state securities laws to deliver
to each offeree a Prospectus and any amendments or supplements thereto
(including summary financial information, if available, after the Trust has
commenced operations). Neither the Additional Selling Agent nor any of its
employees, agents or representatives will use or distribute any marketing
material or information other than that prepared by the Trust and the
Managing Owner.
(ii) The additional services that an Additional Selling Agent will
provide on an ongoing basis to Unitholders at no charge will include but
not be limited to: (i) inquiring of the Managing Owner from time to time,
at the request of Unitholders, as to the Net Asset Value of a Unit, (ii)
inquiring of the Managing Owner from time to time at the request of the
Unitholders, as to the commodities markets and the activities of the Fund,
(iii) assisting, at the request of the Managing Owner, in the redemption of
Units sold by the Additional Selling Agent, (iv) responding to question of
Unitholders from time to time with respect to monthly account statements,
annual reports, financial statements, and annual tax information furnished
to Unitholders, and (v) providing such other services to the owners of
Units as the Managing Owner may, from time to time, reasonably request.
All payments for subscriptions shall be made by transfer of funds to
the escrow account of the Trust as described in the Prospectus.
(f) The Wholesaler (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 Wholesaler performing the obligations under
this Agreement, the Lead Selling Agent shall pay the Wholesaler a selling
commission of __% of the subscription value of the Unit(s) sold by each
Additional Selling Agent (it being understood that the Lead Selling Agent shall
pay each Additional Selling Agent's share of selling commission, ongoing
compensation or installment selling commissions directly to such Additional
Selling Agent in accordance with the applicable Additional Selling Agent
Agreement). The selling commission payable in respect of Units sold to any
investor eligible to be charged a Special Brokerage Fee Rate as described in the
Prospectus shall be reduced by the Wholesaler's proportionate share of the
difference between the standard brokerage fee rate and the applicable Special
Brokerage Fee Rate. Such commissions will be paid in respect of each
subscription as promptly as practicable after the initial closing or each
subsequent month-end closing.
5
(b) The Wholesaler shall receive ongoing compensation, payable monthly by
the Lead Selling Agent, of __% (a __% annual rate) of the month-end Net Asset
Value of the Units sold by a Registered Representative of an 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 continued
registration of the Wholesaler (or the firm with which the Wholesaler is
associated) and the Additional Selling Agent with the Commodity Futures Trading
Commission (the "CFTC") as futures commission merchants or introducing brokers
and continued membership with the National Futures Association ("NFA") in such
capacity and (i) the Wholesaler's and 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 after the end of the
twelfth full month after the sale of such Unit. Such ongoing compensation will
be paid by the Lead Selling Agent from brokerage fees paid to it in its capacity
as the Trust's futures broker by the Trust. Ongoing compensation payable in
respect of Units sold to any investor eligible to be charged a Special Brokerage
Fee Rate as described in the Prospectus shall be reduced by the wholesaler's
proportionate share of the difference between the standard brokerage fee rate
and the applicable Special Brokerage Fee Rate. For purposes of determining when
ongoing compensation should begin to accrue, Units sold during the Initial
Offering Period (as defined in the Prospectus) shall not be deemed to be sold
until the initial closing time and Units sold during the Ongoing Offering Period
(as defined in the Prospectus) 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 Managing Owner or subscriptions funds are deposited in escrow.
Furthermore, the Lead Selling Agent shall not compensate the Wholesaler
unless the Wholesaler is legally qualified and permitted to receive such
compensation. Also, such ongoing compensation may be paid by the Lead Selling
Agent to the Wholesaler only in respect of outstanding Units sold by an
Additional Selling Agent or any of its Registered Representatives to Unitholders
and only so long as the additional services described in Section 1(f)(ii) above
are provided by the Wholesaler and such person to Unitholders.
If the Wholesaler is not qualified to receive ongoing compensation as set
forth above, the Lead Selling Agent will pay the Wholesaler installment selling
commissions at the same rate as in the case of ongoing compensation, but the sum
of such installment selling commissions and the initial selling commission paid
to the Wholesaler and each Additional Selling Agent is limited in amount,
pursuant to applicable NASD policy, to 9.5% of the initial subscription price of
the Units sold by each Registered Representative of such Additional Selling
Agent; provided, that no such installment selling commissions shall be payable
until the Managing Owner and the Lead Selling Agent determine that the payment
of such installment selling commission is in compliance with Rule 2810 of the
NASD (formerly Appendix F of the NASD's Rules of Fair Practice) on aggregate
compensation which may be received by the Selling Agents. [In respect of Units
sold by its Registered Representatives who are eligible to receive ongoing
compensation, each Additional Selling Agent shall receive the amount of ongoing
compensation that is not paid to the Wholesaler because the Wholesaler is not
eligible to
6
receive ongoing compensation but that would have been due on such Units to
the Wholesaler in the absence of ineligibility.]
The Wholesaler, although otherwise entitled to ongoing compensation, will
not be entitled to receipt thereof (but may continue to receive installment
selling commissions) for any month during any portion of which the Registered
Representative of an Additional Selling Agent who is receiving such ongoing
compensation is at any time not properly registered with the CFTC or does not
provide the ongoing services described above.
Ongoing compensation which cannot be paid because an Additional Selling
Agent or its Correspondent (or a Registered Representative of either) has not
met the eligibility requirements shall be retained by the Lead Selling Agent.
The Wholesaler 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 Managing Owner 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 to the Wholesaler
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 Wholesaler only after the Lead Selling Agent, in its capacity of
futures broker for the Trust, has actually received its brokerage fee from the
Trust.
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 Delaware 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.
7
(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 WHOLESALER
The Wholesaler hereby represents and warrants as follows:
(a) The Wholesaler is a ____________ 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 Wholesaler 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 broker-dealer
with the SEC, membership in such capacity in the NASD, and registration and
qualification under the laws of each state in which the Wholesaler will offer
and sell Units); the performance by the Wholesaler 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 Wholesaler and is a valid and binding agreement of
the Wholesaler enforceable against the Wholesaler 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 Wholesaler nor any of its principals have been the subject
of any administrative, civil, or criminal actions within the five years
preceding the date hereof that would be material for an investor's decision to
purchase the Units which are not disclosed to the Trust, the Managing Owner or
the Lead Selling Agent.
(e) The information, if any, relating to the Wholesaler which it has
furnished to the Trust and the Managing Owner for use in the Registration
Statement is correct.
5. AUTHORIZATION UNDER THE SELLING AGREEMENT
The Wholesaler agrees to be bound by any action taken by the Lead Selling
Agent or the Managing Owner, in accordance with the provisions of the Selling
Agreement, 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
8
supplements to the Prospectus, if, in the judgment of the Lead Selling Agent
or the Managing Owner, such action would be advisable. [The Lead Selling Agent
agrees that, at the Wholesaler's request, the Lead Selling Agent will require
any documents required to be delivered to or by the Lead Selling Agent pursuant
to Section 8 of the Selling Agreement to be addressed and delivered to the
Wholesaler.]
6. COVENANTS OF THE LEAD SELLING AGENT
(a) The Lead Selling Agent will notify the Wholesaler 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
Managing Owner 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 or proceeding for that purpose.
(b) The Lead Selling Agent will cause the Managing Owner to deliver
to the Wholesaler 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 Wholesaler may
reasonably request for the purposes contemplated by the 1933 Act or the SEC
Regulations.
(c) The Lead Selling Agent will cause the Managing Owner to furnish
to the Wholesaler 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.
7. INDEMNIFICATION
(a) The Lead Selling Agent shall indemnify, hold harmless, and defend the
Wholesaler and any person who controls the Wholesaler 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 Managing Owner agrees to
indemnify the Lead Selling Agent pursuant to Section 9 of the Selling Agreement.
The Wholesaler agrees that in no event shall the Trust, the Managing Owner or
JWH be liable for any loss, liability, claim, damage or expense whatsoever
suffered by the Wholesaler in connection with the offering of Units or this
Agreement.
(b) The Wholesaler shall indemnify, hold harmless, and defend the Trust,
the Managing Owner, the Lead Selling Agent, JWH 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 Wholesaler of its
representations, warranties, obligations and undertakings set forth in this
Agreement. The Trust, the Managing Owner and JWH are expressly made third party
beneficiaries of this Agreement.
9
8. RELATIONSHIP OF WHOLESALERS, SELLING AGENTS
AND THE LEAD SELLING AGENT
The obligations of each of the Wholesalers, Additional Selling Agents,
Correspondents and the Lead Selling Agent are several and not joint. Nothing
herein contained shall constitute the Wholesalers, Additional Selling Agents and
Correspondents, or any of them, and the Lead Selling Agent as an association,
partnership, unincorporated business or other separate entity, but the
Wholesaler shall be liable for its proportionate share of any tax, liability or
expense based on any claim to the contrary. The Lead Selling Agent shall be
under no liability to the Wholesaler except for lack of good faith and for
obligations expressly assumed by the Lead Selling Agent in this Agreement.
9. 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
Wholesaler, (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
Wholesaler of, or non-compliance by the Wholesaler with, any material term of
this Agreement.
(b) The termination of this Agreement for any reason set forth in Sections
9(a)(i) or 9(a)(ii) shall not affect (i) the ongoing obligations of the Lead
Selling Agent to pay selling commissions, ongoing compensation or installment
selling commissions accrued prior to the termination hereof, (ii) the
Wholesaler's obligations under the second sentence of Section 8 hereof or (iii)
the indemnification obligations under Section 7 hereof. In the event this
Agreement is terminated pursuant to Section 9(a)(iii), the Lead Selling Agent
may withhold accrued but unpaid selling commissions and ongoing compensation or
installment selling commissions due the Wholesaler until the Lead Selling Agent
has been put in the same financial position as it would have been in absent such
breach or non-compliance.
10. CONFIDENTIALITY
(a) The Lead Selling Agent hereby covenants and agrees that under no
circumstances will it solicit any of the Wholesaler'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 Wholesaler's client list as the Wholesaler may reasonably
request.
(b) The Wholesaler hereby covenants and agrees that under no circumstances
will it solicit any customer of the Lead Selling Agent, any other Wholesaler or
any Additional Selling Agent for the Trust whose name becomes known to the
Wholesaler in connection with the offering of the Units. The Wholesaler agrees
that it will take such steps to ensure the confidentiality of the Lead Selling
Agent's, any other Wholesaler's or any Additional Selling Agent's client list as
the owner of such list may reasonably request. The Wholesaler further covenants
and agrees not to solicit any selling agent which has been introduced to the
Lead Selling Agent by any other Wholesaler or any Additional Selling Agent.
10
11. 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:
Cargill Investor Services, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
if to the Wholesaler:
________________________
________________________
________________________
(c) This Agreement shall be governed by, and construed in accordance with,
the law of the State of Illinois 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.
11
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,
CARGILL INVESTOR SERVICES, INC.
By:
-------------------------------
Its
--------------------------
CONFIRMED AND ACCEPTED
[Wholesaler]
By:
------------------------------
Its
---------------------------
12
EXHIBIT C
JWH GLOBAL PORTFOLIO TRUST
(A DELAWARE BUSINESS TRUST)
$50,000,000 OF UNITS OF BENEFICIAL INTEREST
(SUBSCRIPTION PRICE: $100 PER UNIT
DURING THE INITIAL OFFERING PERIOD; NET
ASSET VALUE PER UNIT DURING THE ONGOING OFFERING PERIOD)
CORRESPONDENT SELLING AGENT AGREEMENT
_______ __, 1996
[Correspondent Selling Agent]
Dear Sirs:
CIS Investments, Inc., a Delaware corporation (the "Managing Owner"), has
caused the formation of a business trust pursuant to the Delaware Business Trust
Act (the "Delaware Act") under the name, JWH GLOBAL PORTFOLIO TRUST (the
"Trust"), for the purpose of engaging in trading commodity futures contracts and
other commodity interests. As described in the Prospectus referred to below,
the Trust will engage in speculative trading in the commodities markets under
the direction of Xxxx X. Xxxxx & Company, Inc. ("JWH"). The Trust proposes to
make a public offering of units of beneficial interest in the Trust (the
"Units") through Cargill Investor Services, Inc. (the "Lead Selling Agent") on a
best-efforts basis pursuant to the Selling Agreement dated as of _______ __,
1996 among the Lead Selling Agent, the Trust and others (the "Selling
Agreement"), a xxx of which has been furnished to you. In connection with the
proposed public offering, the Trust has filed with the United States Securities
and Exchange Commission (the "SEC"), pursuant to the United States Securities
Act of 1933, as amended (the "1933 Act"), a registration statement on Form S-1
to register the Units, and as part thereof a prospectus (Registration No. 33-
____) (which registration statement, together with all amendments thereto, shall
be referred to herein as the "Registration Statement" and which prospectus
together with all amendments and supplements thereto in the forms filed with the
SEC pursuant to Rule 424 under the Act shall be referred to herein as the
"Prospectus"). The Lead Selling Agent has, with the consent of the Managing
Owner, selected _______________ as an Additional Selling Agent. Other selling
agents (each a "Correspondent Selling Agent") may be selected by the Additional
Selling Agent, with the consent of the Managing Owner and the Lead Selling
Agent. You have been so selected by the Additional Selling Agent. We
understand that you are willing to use your best efforts to market the Units.
We confirm our agreement with your as follows. Capitalized
terms used but otherwise not defined herein shall have the meaning ascribed
to them in the Selling Agreement unless the context indicates otherwise.
1. APPOINTMENT AND UNDERTAKINGS OF THE CORRESPONDENT SELLING AGENT
(a) Subject to the terms and conditions set forth in this Agreement, the
Selling Agreement and the Registration Statement, the Correspondent Selling
Agent is hereby appointed, and hereby accepts such appointment, as one of the
Trust's non-exclusive selling agents to offer and sell the Units on a best-
efforts basis without any commitment on the Correspondent Selling Agent's part
to purchase any Units. It is understood and agreed that the Lead Selling Agent,
with the consent of the Managing Owner, may retain other selling agents and that
the Additional Selling Agent, with the consent of the Lead Selling Agent and
Managing Owner in their sole discretion, may retain other selling agents. The
Correspondent Selling Agent agrees to comply with the terms and conditions of
this Agreement and any terms and conditions of the Selling Agreement applicable
to selling agents.
(b) The Correspondent Selling Agent agrees to use its best efforts to
procure subscriptions for the Units as long as this Agreement and the Selling
Agreement remain in effect. The Correspondent Selling Agent agrees 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 Correspondent Selling Agent shall offer and sell Units only to
persons and entities who satisfy the suitability and/or investment requirements
set forth in the Prospectus and the subscription agreements attached thereto and
who, to the Managing Owner's satisfaction, complete the subscription agreements
and related subscription documents used in connection with the offering of the
Units (the "Subscription Documents") and remit good funds for the full
subscription price. The Correspondent Selling Agent shall conduct a thorough
review of the suitability of each subscriber for Units that it solicits and of
the Subscription Documents. The Correspondent Selling Agent shall not forward
to the Managing Owner 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 is illegible in any respect
or is not fully completed, dated, or signed, or that represents the subscription
of a person or entity not satisfying the suitability and/or investment
requirements applicable to such person or entity. The Correspondent Selling
Agent shall not execute any transactions in Units in a discretionary account
over which it has control without prior written approval of the customer in
whose name such discretionary account is maintained.
The Correspondent Selling Agent agrees not to recommend the purchase of
Units to any subscriber unless the Correspondent Selling Agent shall have
reasonable grounds to believe, on the basis of information obtained from the
subscriber concerning, among other things, the subscriber's investment
objectives, other investments, financial situation and needs, that the
subscriber is or will be in a financial position appropriate to enable the
subscriber to realize to a significant extent the benefits of the Trust,
including the tax benefits (if any) described in the
2
Prospectus; the subscriber has a fair market net worth sufficient to sustain
the risks inherent in participating in the Trust, including loss of
investment and lack of liquidity; and the Units are otherwise a suitable
investment for the subscriber. In addition to submitting such information to
the Managing Owner, the Correspondent Selling Agent agrees to maintain files
of information disclosing the basis upon which the Correspondent 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
Correspondent Selling Agent further represents and warrants that it has
received copies of the Registration Statement, as amended to the date hereof,
and the Prospectus and has, among other things, examined the following
sections in the Prospectus and obtained such additional information from the
Managing Owner regarding the information set forth thereunder as the
Correspondent Selling Agent has deemed necessary appropriate to determine
whether the Prospectus adequately and accurately discloses all material facts
relating to an investment in the Trust and provides an adequate basis to
subscribers for evaluating an investment in the Units:
"Summary"
"Risk Factors"
"Investment Factors"
"The Trust and Its Objectives"
"Xxxx X. Xxxxx & Company, Inc."
"The Managing Owner"
"Fiduciary Obligations of the Managing Owner"
"Use of Proceeds"
"Charges"
"Conflicts of Interest"
"Redemptions; Net Asset Value"
"The Trust and the Trustee"
"Federal Income Tax Aspects"
In connection with making the representations and warranties set forth in
this paragraph, the Correspondent Selling Agent has not relied on inquiries made
by or on behalf of any other parties.
The Correspondent 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 Correspondent Selling Agent shall offer and sell Units in compliance
with the requirements set forth in the Registration Statement and Prospectus
(particularly the "Subscription Requirements" attached as Exhibit B thereto),
this Agreement and the Blue Sky Survey delivered to the Lead Selling Agent by
the Managing Owner's counsel, a copy of which has been provided to the
Correspondent Selling Agent. The Correspondent 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
3
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 Correspondent 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 Correspondent Selling Agent shall under no circumstances engage
in any activities hereunder in any jurisdiction (i) in which the Managing
Owner has not informed the Correspondent 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
Correspondent Selling Agent may not lawfully engage.
The Correspondent Selling Agent further agrees to comply with the
requirement under applicable federal and state securities laws to deliver to
each offeree a Prospectus and any amendments or supplements thereto (including
summary financial information, if available, after the Trust has commenced
operations). Neither the Correspondent Selling Agent nor any of its employees,
agents or representatives will use or distribute any marketing material or
information other than that prepared by the Trust and the Managing Owner.
(d) The additional services that the Correspondent Selling Agent will
provide on an ongoing basis to Unitholders at no charge will include but not be
limited to: (i) inquiring of the Managing Owner from time to time, at the
request of Unitholders, as to the Net Asset Value of a Unit, (ii) inquiring of
the Managing Owner from time to time at the request of the Unitholders, as to
the commodities markets and the activities of the Fund, (iii) assisting, at the
request of the Managing Owner, in the redemption of Units sold by the
Correspondent Selling Agent, (iv) responding to question of Unitholders from
time to time with respect to monthly account statements, annual reports,
financial statements, and annual tax information furnished to Unitholders, and
(v) providing such other services to the owners of Units as the Managing Owner
may, from time to time, reasonably request.
All payments for subscriptions shall be made by transfer of funds to the
escrow account of the Trust as described in the Prospectus.
(e) The Correspondent 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 or the Additional Selling Agent in any connection or transaction and (ii)
agrees not to so act or to purport to so act.
2. COMPENSATION
(a) The Lead Selling Agent agrees to pay to the Additional Selling Agent a
selling commission of up to 4% of the subscription value of the Unit(s) sold by
the Correspondent Selling Agent. Such commissions will be paid in respect of
each subscription as promptly as practicable after the initial closing or each
subsequent month-end closing. The Additional Selling Agent agrees that it will
pass on promptly to the Correspondent Selling Agent __% of the 4% initial
selling commission received by the Additional Selling Agent from the Lead
Selling Agent. The selling commission payable in respect of Units sold to any
investor eligible to be charged a Special
4
Brokerage Fee Rate as described in the Registration Statement and Prospectus
shall be reduced by the difference between the standard brokerage fee rate
and the applicable Special Brokerage Fee Rate and the Additional Selling
Agent's and Correspondent Selling Agent's respective shares of the selling
commission on such Units accordingly shall be reduced proportionately.
(b) The Additional Selling Agent shall receive ongoing compensation,
payable monthly by the Lead Selling Agent, of up to 1/3 of 1% (a 4% annual rate)
of the month-end Net Asset Value of the Units sold by a Registered
Representative of the Correspondent 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 and Correspondent 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 (i) 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. The Additional Selling Agent agrees
that it will pass on promptly to the Correspondent Selling Agent __% of the
initial 1/3 of 4% ongoing compensation received by the Additional Selling Agent
from the Lead Selling Agent. Such ongoing compensation shall begin to accrue
with respect to each Unit only after the end of the twelfth full month after the
sale of such Unit. Such ongoing compensation will be paid by the Lead Selling
Agent from brokerage fees paid to it in its capacity as the Trust's futures
broker by the Trust. Ongoing compensation payable in respect of Units sold to
any investor eligible to be charged a Special Brokerage Fee Rate as described in
the Registration Statement and Prospectus shall be reduced by the difference
between the standard brokerage fee rate and the applicable Special Brokerage Fee
Rate and the Additional Selling Agent's and Correspondent Selling Agent's
respective shares of ongoing compensation on such Units accordingly shall be
reduced proportionately. [In the event the Additional Selling Agent is not
eligible to receive ongoing compensation, the Correspondent Selling Agent shall
receive the amount that would have been due to the Additional Selling Agent in
the absence of ineligibility and the Additional Selling Agent agrees to promptly
pass on such amount to the Correspondent Selling Agent.] For purposes of
determining when ongoing compensation should begin to accrue, Units sold during
the Initial Offering Period (as defined in the Registration Statement and
Prospectus) shall not be deemed to be sold until the initial closing time and
Units sold during the Ongoing Offering Period (as defined in the Registration
Statement and Prospectus) 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
Managing Owner or subscriptions funds are deposited in escrow.
Furthermore, the Additional Selling Agent shall not compensate the
Correspondent Selling Agent, and the Correspondent 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 Additional Selling Agent to the
Correspondent Selling Agent and by the Correspondent Selling Agent to its
employees or other persons, only in
5
respect of outstanding Units sold by such persons to Unitholders and only so
long as the additional services described in Section 1(d) above are provided
by such person to Unitholders.
In case of Units sold by Registered Representatives who are not qualified
to receive ongoing compensation as set forth above, the Additional Selling Agent
will pay each such Registered Representative installment selling commissions at
the same rate as in the case of ongoing compensation, but the sum of such
installment selling commissions and the initial selling commission paid to the
Additional Selling Agent and the Correspondent is limited in amount, pursuant to
applicable NASD policy, to 9.5% of the initial subscription price of the Units
sold by such Registered Representative; provided, that no such installment
selling commissions shall be payable until the Managing Owner and the Lead
Selling Agent determine that the payment of such installment selling commission
is in compliance with Rule 2810 of the NASD (formerly Appendix F of NASD's Rules
of Fair Practice) on aggregate compensation which may be received by the selling
agents.
The Correspondent Selling Agent agrees that it will promptly pass on to its
Registered Representatives the applicable portions of the selling commission and
ongoing compensation or installment selling commissions received from the
Additional Selling Agent to which such Registered Representatives are entitled
pursuant to the Correspondent Selling Agent's standard compensation procedures.
The Correspondent Selling Agent, although otherwise entitled to ongoing
compensation, will not be entitled to receipt thereof (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 provide the
ongoing services described above.
Ongoing compensation which cannot be paid because the Correspondent Selling
Agent or its Registered Representative has not met the eligibility requirements
shall be retained by the Lead Selling Agent.
The Correspondent 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 Managing Owner shall have sole discretion to accept or reject any
subscription for the Units in whole or in part.
(d) The Additional Selling Agent agrees to make all payments to the
Correspondent Selling Agent pursuant to this Section 2 within __ days
following the receipt of payment of selling
6
commission, ongoing compensation and installment selling commissions from the
Lead Selling Agent.
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 Delaware 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.
(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 ______________ duly organized,
validly existing, and in good standing under the laws of its state of
organization 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, 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.
7
(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.
5. REPRESENTATIONS AND WARRANTIES OF THE CORRESPONDENT SELLING AGENT The
Correspondent Selling Agent hereby represents and warrants as follows:
(a) The Correspondent Selling Agent is a __________ duly organized,
validly existing, and in good standing under the laws of the state of its
organization and has power and authority to enter into and carry out its
obligations under this Agreement.
(b) The Correspondent 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 Correspondent Selling Agent will offer and sell Units); the
performance by the Correspondent 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 Correspondent Selling Agent and is a valid and
binding agreement of the Correspondent Selling Agent enforceable against the
Correspondent 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 Correspondent Selling Agent nor any of its principals have
been the subject of any administrative, civil, or criminal actions within the
five years preceding the date hereof that would be material for an investor's
decision to purchase the Units which are not disclosed to the Trust, the
Managing Owner, the Lead Selling Agent and the Additional Selling Agent.
(e) The information, if any, relating to the Correspondent Selling Agent
which the Correspondent Selling Agent has furnished to the Trust and the
Managing Owner for use in the Registration Statement is correct.
8
6. AUTHORIZATION UNDER THE SELLING AGREEMENT
The Correspondent Selling Agent agrees to be bound by any action taken by
the Lead Selling Agent or the Managing Owner, in accordance with the provisions
of the Selling Agreement, 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 Managing Owner, such action would be advisable. [The Lead Selling Agent
agrees that, at the Correspondent 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 8 of the Selling Agreement to be addressed and
delivered to the Correspondent Selling Agent.]
7 COVENANTS OF THE ADDITIONAL SELLING AGENT
(a) The Additional Selling Agent will notify the Correspondent
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 Managing Owner 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 or proceeding for that purpose.
(b) The Additional Selling Agent will deliver to the Correspondent
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 Correspondent
Selling Agent may reasonably request for the purposes contemplated by the 1933
Act or the SEC Regulations.
(c) The Additional Selling Agent will furnish to the Correspondent
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.
8. INDEMNIFICATION
(a) The Lead Selling Agent shall indemnify, hold harmless, and defend the
Correspondent Selling Agent and any person who controls the Correspondent
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
Managing Owner agrees to indemnify the Lead Selling Agent pursuant to Section 9
of the Selling Agreement. The Correspondent Selling Agent agrees that in no
event shall the Trust, the Managing Owner or JWH be liable for any loss,
liability, claim, damage or expense whatsoever suffered by the Correspondent
Selling Agent in connection with the offering of Units or this Agreement.
9
(b) The Additional Selling Agent shall indemnify, hold harmless, and
defend the Correspondent Selling Agent and any person who controls the
Correspondent Selling Agent 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.
(c) The Correspondent Selling Agent shall indemnify, hold harmless, and
defend the Trust, the Managing Owner, the Lead Selling Agent, JWH, the
Additional Selling Agent 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 Correspondent Selling Agent of its representations,
warranties, obligations and undertakings set forth in this Agreement. The
Trust, the Managing Owner and JWH are expressly made third party beneficiaries
of this Agreement.
9. RELATIONSHIP OF SELLING AGENTS, WHOLESALERS
AND THE LEAD SELLING AGENT
The obligations of each of the Additional Selling Agents, Wholesalers,
Correspondents and the Lead Selling Agent are several and not joint. Nothing
herein contained shall constitute the Additional Selling Agents, Wholesalers and
Correspondents, or any of them, and the Lead Selling Agent as an association,
partnership, unincorporated business or other separate entity, but the
Additional Selling Agent shall be liable for its proportionate share of any tax,
liability or expense based on any claim to the contrary. The Lead Selling Agent
shall be under no liability to the Correspondent Selling Agent except for lack
of good faith and for obligations expressly assumed by the Lead Selling Agent in
this Agreement.
10. 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
other parties, (ii) such date as the Additional Selling Agent may determine by
giving 30 days' prior written notice to the other parties, (iii) the termination
of the Selling Agreement or the offering of the Units or (iv) by the Lead
Selling Agent, without notice, upon breach by the Correspondent Selling Agent
of, or non-compliance by the Correspondent Selling Agent with, any material term
of this Agreement.
(b) The termination of this Agreement for any reason set forth in Sections
10(a)(i), 10(a)(ii) or 10(a)(iii) shall not affect (i) the ongoing obligations
of the Lead Selling Agent to pay selling commissions, ongoing compensation or
installment selling commissions accrued prior to the termination hereof, (ii)
the Additional Selling Agent's obligations under the second sentence of Section
9 hereof or (iii) the indemnification obligations under Section 7 hereof. In
the event this Agreement is terminated pursuant to Section 10(a)(iv), the Lead
Selling Agent may withhold accrued but unpaid selling commissions and ongoing
compensation or installment selling commissions due the Correspondent Selling
Agent until the Lead Selling Agent has been put in the same financial position
as it would have been in absent such breach or non-compliance.
10
11. CONFIDENTIALITY
(a) The Lead Selling Agent hereby covenants and agrees that under no
circumstances will it solicit any of the Correspondent 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 Correspondent Selling Agent's client
list as the Correspondent Selling Agent may reasonably request.
(b) The Additional Selling Agent hereby covenants and agrees that under no
circumstances will it solicit any of the Correspondent Selling Agent's customers
whose names become 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 Correspondent Selling Agent's
client list as the Correspondent Selling Agent may reasonably request.
(b) The Correspondent Selling Agent hereby covenants and agrees that under
no circumstances will it solicit any customer of the Lead Selling Agent or any
other selling agent for the Trust whose name becomes known to the Correspondent
Selling Agent in connection with the offering of the Units. The Correspondent
Selling Agent agrees that it will take such steps to ensure the confidentiality
of the Lead Selling Agent's or any other selling agent's client list as the
owner of such list may reasonably request. The Correspondent 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 selling
agent.
12. 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:
Cargill Investor Services, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
11
if to the Additional Selling Agent:
________________________
________________________
________________________
if to the Correspondent Selling Agent:
________________________
________________________
________________________
(c) This Agreement shall be governed by, and construed in accordance with,
the law of the State of Illinois 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.
12
If the foregoing is in accordance with your understanding of our agreement,
please sign and return a counterpart hereof to the Lead Selling Agent, whereupon
this instrument along with all counterparts will become a binding agreement
among them in accordance with its terms.
Very truly yours,
CARGILL INVESTOR SERVICES, INC.
By:
--------------------------------
Its
---------------------------
[Additional Selling Agent]
By:
--------------------------------
Its
---------------------------
CONFIRMED AND ACCEPTED
[Correspondent Selling Agent]
By:
------------------------------
Its
---------------------------
13
