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Exhibit 10 (b)
STOCK SUBSCRIPTION AGREEMENT
BETWEEN
MAXIMUS CAPITAL MANAGEMENT INC.
AND
XXXXXX XXXX
This is a Subscription Agreement between Maximus Capital Management, Inc.
(the "Managing Member") and Xxxxxx X. Xxxx (the "Subscriber") made as of this
18th day of March, 1997.
WHEREAS, the Managing Member is a corporation formed for the purpose of
acting as the sponsor, general partner and/or managing member of commodity
pools, including Maximus Fund I, L.L.C. (the "Fund"), which will engage in
speculative trading in commodity futures and options contracts and other
commodity interests.
WHEREAS, it is anticipated that the Fund will register with the Securities
and Exchange Commissions Membership Interests (the "Interests") having an
aggregate purchase price of $25,000,000 at $1,000 per Interest during the
Initial Offering Period and thereafter will offer such Interests to the public
at a Selling Price based on the current Net Asset Value;
WHEREAS, the Managing Member is obligated under the Fund's Operating
Agreement, for as long as it continues to serve as Managing Member of the Fund,
to contribute and maintain an investment in the Fund in an amount mandated
under the North American Securities Administrators Association ("NASAA")
Commodity Pool Guidelines (currently equal to the greater of 1% of the
aggregate capital contributions of all Members or $25,000) (the "Purchase
Requirement");
WHEREAS, the Managing Member, for as long as it continues to serve, as
Managing Member of the Fund, is obligated by the NASAA Guidelines and under the
Fund's Agreement to maintain a minimum net worth equal to not less than
mandated under the NASAA Guidelines (currently 5% of the aggregate initial
capital contributions to the Fund any other commodity pool for which it acts as
sponsor, general partner and/or Managing Member) (the "Net Worth
Requirement");
Therefore, Subscriber agrees with the Managing Member to purchase or
subscribe for the number of shares of common stock of the Managing Member as
provided for herein, and the Managing Member agrees to issue its shares of
common stock to Subscriber in the amounts as provided herein, upon receipt of
the full purchase price.
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1. At the initial and any subsequent closing date relating to the sale of
Interests -- provided that subscriptions for a minimum of 1,000 Interests have
been received and accepted during the Fund's Initial Offering Period --
Subscriber shall make cash contributions, if required, to the capital of the
Managing Member in amounts sufficient to meet the Purchase Requirement and the
Managing Member shall issue shares of its common stock at a price to the
Subscriber of the book value per share (as determined by an independent
certified public accountant selected and paid for by the Subscriber) on the
date such option is exercised, but in no event less than $.01 per share;
provided, however, that the Managing Member shall use its best efforts to use
its own capital first to meet the Interest Purchase Requirement. The
Subscriber will, in consideration of this financing arrangement, have a
security interest in any Interests purchased by the Managing Member through the
exercise of this paragraph. Moreover, in consideration for such funding
agreement, the Managing Member agrees to pay to the Subscriber profits (if any)
on such Subscriber shares.
Shares of the Managing Member acquired by the Subscriber pursuant to this
paragraph 1 may be repurchased by the Managing Member within 90 days and any
security interest therein held by the Subscriber shall be extinguished; if it
exercises such option to repurchase within a 90 day period, the Managing Member
will pay (i) the same price per share as the Subscriber did plus (ii) interest
at the then current Chemical Bank, N.A. prime rate plus two (2)%
2. At the initial and any subsequent closing date -- provided that
subscriptions for a minimum of 1,000 Interests have been received and accepted
during the Fund's Initial Offering Period -- Subscriber and the Managing Member
shall determine the aggregate amount of subscriptions to shares of the Managing
Member's common stock (at a price to Subscriber of book value per share as
determined by an independent certified public accountant selected and paid for
by the Fund on the date this option is exercised, but in no event less than
$.01 per share) required to enable the Managing Member to meet the Net Worth
Requirement. Based upon such determination (as confirmed in writing in the
form attached as Exhibit A), Subscriber will subscribe for the total
subscriptions required. All subscriptions shall be callable by the Managing
Member on demand; provided, however, that the Managing Member shall use its
best efforts to use its own capital first to meet the net worth test. Payment
for the subscriptions called shall be made in cash within 30 days after the
date of its call. Upon payment, the Managing Member shall issue to Subscriber
that number of shares for which full consideration has been paid. Moreover, in
consideration for such funding agreement, the Managing Member agrees to pay to
the Subscriber profits (if any) on such Subscriber shares.
3. Upon issuance, all shares of the Managing Member's common stock shall
be fully paid, non-assessable and shall entitle the holder to all rights
applicable to such shares.
4. For purpose of meeting the Net Worth Requirement, all subscriptions for
common stock shall be carried at face amount without deduction or discount.
Any Interests owned by the Managing Member in the Fund or any other commodity
pool of which it is the sponsor, general partner and/or managing member shall
not be included in the computation of its net worth for compliance with the Net
Worth Requirement.
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5. The Net Worth Requirement shall be the Net Worth Requirement imposed by
the then current NASAA Guidelines. If the standard of the net worth
requirement is lowered and, in the opinion of counsel, the Managing Member can
lower its Net Worth Requirement without an adverse affect on the Fund or the
Managing Member, the lower Net Worth Requirement will thereafter apply.
6. So long as the Managing Member is the managing member of the Fund,
Xxxxxx Xxxx agrees not to cause the Managing Member to: (a) declare any
dividend; (b) redeem any shares of any class of capital stock; or (c)
intentionally take any other formal corporate action which would cause the
Managing Member's net worth to fall below a level required to satisfy the
Fund's Net Worth Requirements. Such undertaking shall include Xx. Xxxx'x best
efforts to conserve capital and avoid expenses of the Managing Member to the
extent feasible to minimize the need of the Managing Member to call the
subscription, especially as it relates to the Net Worth Requirement.
7. In the event that, at any time, the Managing Member is not required by
the Fund's Operating Agreement to maintain a net worth as great as the
aggregate face amount of the subscriptions provided for herein, the Managing
Member will immediately notify the Subscriber and, upon demand by Subscriber,
effect a reduction in its net worth (but not below that required by the
Operating Agreement) by cancellation of such excess subscriptions in
appropriate fashion.
8. This Agreement constitutes the entire understanding between the parties
hereto and with respect to the matters referred to herein and no change or
modification to this Agreement shall be effective unless the same shall be in
writing and signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties have duly executed this Agreement under
seal as of the date first above written.
XXXXXX XXXX ("Subscriber"), individually
/s/ Xxxxxx Xxxx
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MAXIMUS CAPITAL MANAGEMENT, INC.
Managing Member for Maximus Fund I, L.L.C.
By: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx, President
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EXHIBIT A
Xxxxxx Xxxx, President
Maximus Capital Management, Inc.
0000 X. Xxxxxxxxxx
Xxxxxx, XX 00000
Dear Xx. Xxxx:
This is to confirm to you the obligation of Xxxxxx Xxxx ("Subscriber")
pursuant to the March 18, 1997 Subscription Agreement between Maximus Capital
Management, Inc. and Xxxxxx Xxxx (the "Agreement"), to purchase certain shares
of Maximus Capital Management, Inc. outlined below. As of the initial (or ____
subsequent) closing this date for Maximus Fund I, L.L.C. (the "Fund"), the
aggregate initial capital contributions by the Members of the Fund were
$______________. Pursuant to the Agreement, accordingly, Subscriber hereby
subscribes to purchase ___________ shares of Maximus Capital Management, Inc.
(at $ ___________ per share), that number of its shares which will enable
Maximus Capital Management, Inc. to maintain its Net Worth Requirement as
defined in the Agreement. It is our understanding under the Agreement that
such subscription will be called only if absolutely required by Maximus Capital
Management, Inc. to meet its Net Worth Requirement (as defined) and only if, in
the exercise of its best efforts, it is otherwise unable to meet the Net Worth
Requirement except by call of the subscription. Therefore, no cash is needed
until all or a portion of this subscription is called by Maximus Capital
Management, Inc.
XXXXXX XXXX, individually
/s/ Xxxxxx Xxxx
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ACKNOWLEDGED:
MAXIMUS CAPITAL MANAGEMENT, INC.
Managing Member for Maximus Fund I, L.L.C.
By: /s/ Xxxxxx Xxxx
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Xxxxxx Xxxx, President
