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EXHIBIT 1.01
XXXXXXXX ALTERNATIVE ASSET TRUST
SELLING AGREEMENT
This Agreement made as of the 4th of January, 2001 by and among Xxxxxxxx
Alternative Asset Trust, a Delaware business trust (the "Trust"), Xxxxxxxx &
Company, Inc., (the "Managing Owner"), Xxxxxxxx Financial Services, Inc., a
Maryland corporation (the "Selling Agent"), and PaineWebber Incorporated (the
"Clearing Broker").
WITNESSETH:
WHEREAS, the Managing Owner has caused the Trust to be organized under a
declaration of trust and trust agreement dated as of May 1, 2000 (together, the
"Trust Agreement") to engage in trading, buying, selling or otherwise acquiring,
holding or disposing of futures contracts, forward contracts, foreign exchange
commitments, swaps, exchange for physicals, spot (cash) commodities, hybrid
instruments, securities and other items, options on and any rights pertaining to
the foregoing throughout the world with the objective of capital appreciation
through speculative trading and to file a registration statement on Form S-1
with the Securities and Exchange Commission (the "SEC") pursuant to the
Securities Act of 1933 (the "Securities Act") and the rules and regulations
adopted by the SEC thereunder, as amended to the date hereof (the "Rules"); the
term "Final Amendment" means the amendment to such registration statement which
has been submitted by the Trust to the SEC to permit such registration statement
to become effective; the date on which the registration statement becomes
effective being hereinafter referred to as the "Effective Date"; the term
"Registration Statement" means such registration statement in the form in which
it becomes effective; the term "Prospectus" means the prospectus included in the
Registration Statement, substantially in the form, heretofore submitted to, and
not reasonably objected to by, the Selling Agent, or the Managing Owner; and the
term "preliminary prospectus" means any preliminary prospectus (as described in
Rule 433 under the Securities Act) included at any time in the registration
statement prior to its becoming effective with the SEC.
WHEREAS, the Clearing Broker is to be the clearing broker for the Trust's
commodity futures transactions pursuant to the terms of the agreement between
the Clearing Broker and the Trust (the "Customer Agreement") described in the
Prospectus; and
WHEREAS, the Trust proposes to issue and sell to the public its Units of
Beneficial Interest ("Units"), which are designed to be sold to investors who
have "wrap fee" accounts with a Selling Agent; and
WHEREAS, the Selling Agent desires to assist in the sale of the Units upon
the terms and in reliance upon the representations, warranties and covenants set
forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Offering of Units
(a) Appointment
The Trust hereby appoints the Selling Agent as one of its agents on a
non-exclusive basis to offer and sell the Units. The Managing Owner will retain
additional selling agents ("Additional Selling Agents") who will attempt to sell
the Units on a best efforts basis at the price and in the manner described in
the Prospectus and in compliance with the terms and conditions set forth therein
and herein. Units are designed to be sold to investors who have "wrap fee"
accounts with an Additional Selling Agent.
During the period from the commencement of the offering of the Units to the
initial Closing Date (as defined in Section 3 hereof), the Trust will offer the
Units at a price of $1,000 per Unit. Such initial Offering Period shall
terminate on the initial Closing Date as determined pursuant to Section 3
hereof.
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During the offering period in respect of the Units (the "Continuing
Offering Period"), the Trust may continue to offer Units at the month-end Net
Asset Value per Unit as of the last business day of the month during which
subscriptions are received by the Managing Owner (each, a "Closing Date"). Such
Continuing Offering Period shall terminate at any time as determined by the
Managing Owner.
No selling commissions will be charged to the subscribers with respect to
the offer and sale of the Units.
The Trust hereby authorizes the Selling Agent to distribute the Prospectus
and any amendments or supplements thereto in accordance with the terms of this
Agreement.
(b) Compensation
In consideration of the Selling Agent administering the Units, the Managing
Owner shall pay the Selling Agent an ongoing fee for administrative, legal and
client reporting services of 0.35% per annum of the net assets of the Trust, as
defined in the Prospectus, by the Managing Owner. The Selling Agent may pass
along a portion of such fee to another selling agent which is appropriately
registered with or a member of, as applicable, the National Futures Association
(the "NFA"), the National Association of Securities Dealers, Inc. (the "NASD"),
the SEC, the securities or Blue Sky administrators of the several states and
various other jurisdictions and any other regulatory body.
Provided that a selling agent is registered with the CFTC as a futures
commission merchant or introducing broker and is a member in good standing of
the NFA in such capacity, the ongoing compensation described above will not be
limited. Such selling agent may pay a portion of such compensation to its
registered representatives who are registered associated persons with the CFTC
and have passed the National Commodity Futures Examination (Series 3) or the
Futures Managed Fund Examination (Series 31).
Selling agents and registered representatives who are not registered with
the CFTC as described above may receive the ongoing fee outlined above, on the
same basis as described above, provided that the total of such ongoing fee plus
the per unit organization and offering costs properly deemed to constitute costs
allocable to the selling agents, such as a selling brochure, seminar costs and
travel expenses, do not exceed 10% of such units' initial sale price.
(c) Undertaking of Selling Agent
The Selling Agent will use its best efforts to find eligible persons to
purchase Units on the terms stated herein and in the Prospectus and any
amendments or supplements thereto. In connection with the offer and sale of the
Units, the Selling Agent represents, warrants and agrees that it will comply
fully with all applicable laws and the rules of the NFA, the NASD, the SEC, the
securities or Blue Sky administrators of the several states and various other
jurisdictions and any other applicable regulatory body. It is understood that
the Selling Agent has no commitment with regard to the offer or sale of the
Units other than to use its best efforts as described above. The Selling Agent
will deliver all cash and checks received by it from subscribers to the escrow
of funds account as designated by the Managing Owner in Schedule A hereto (the
"Escrow Account"). The Managing Owner may amend Schedule A upon notice to the
Selling Agent. Such cash and checks shall be transmitted to the Escrow Account
by the Selling Agent no later than noon on the business day next succeeding the
receipt of such cash and checks by the Selling Agent. Such cash or checks will
be accompanied by one executed copy of the subscription agreement/power of
attorney for each subscription obtained, properly completed and executed and in
the form of Exhibit D to the Prospectus (a "Subscription Agreement"). All checks
received by the Selling Agent from subscribers shall be made payable to the
Escrow Account as designated on Schedule A hereto. The Selling Agent will
promptly deliver to the Managing Owner one photocopy of each such Subscription
Agreement. Promptly after receipt of a subscription and the funds therefor by
the escrow agent designated on Schedule A hereto and delivery of a copy of the
related Subscription Agreement to the Managing Owner, an interim receipt will be
mailed by the Managing Owner to each such subscriber for the amount deposited in
the Escrow Account on behalf of such subscriber.
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(d) Finder's Fees
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 recommend 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.
2. Blue Sky Filings
The Trust agrees to prepare, execute, file and amend, as necessary, all
applications for registration of the Units, consents to service of process,
reports of sale of Units and similar Blue Sky qualification, registration and
exemption documents and to take such other actions which may be necessary or
advisable, in the opinion of the Managing Owner or its counsel, in order to
qualify the Units for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States of America as the Managing Owner may
reasonably request; provided, that in no event shall the Trust be obligated to
(i) take any action which would subject it to service of process in suits, other
than those arising out of the offering or sale of the Units, or taxes in any
jurisdiction where it is not now so subject or (ii) offer in any jurisdiction
that would require a change in any term in the Registration Statement, as the
same may be supplemented or amended.
The Managing Owner agrees to cause its counsel to prepare and deliver to
the Selling Agent a Blue Sky Survey which shall set forth, for the guidance of
the Selling Agent, in which United States jurisdictions the Units may be offered
and sold. It is understood and agreed that the Selling Agent may rely, in
connection with the offering and sale of Units in any jurisdiction, on advice
given by such counsel as to the legality of the offer or sale of the Units in
such jurisdiction, provided, however, that the Selling Agent shall be
responsible for compliance with all applicable laws, rules and regulations with
respect to the actions of its employees, acting as such, in connection with
sales of Units in any jurisdiction.
3. Closing Date
If at least $8,000,000 of Units shall have been so subscribed for, then on
the first business day ninety (90) days following the SEC effectiveness of the
Registration Statement (the "Effectiveness Date") or (i) at such earlier time
after subscriptions for at least $8,000,000 of Units shall have been received by
the Managing Owner or (ii) at such later date up to 270 days after the
Effectiveness Date to which the Managing Owner may extend the initial offering,
the Managing Owner shall notify the Selling Agent of the initial closing of the
Trust (the "initial Closing Date"), as well as of the aggregate number of Units
for which the Managing Owner has received acceptable subscriptions. Payment of
the purchase price for the Units shall be made at the office of Xxxxxxxx &
Company, Inc., 000 Xxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000,
at 10:00 A.M., Eastern time, on such day and time (not later than five (5)
business days after the end of the initial Offering Period) as shall be agreed
upon among the Selling Agent and the Managing Owner.
Subject to the Managing Owner's right to terminate the offering at any time
and subject to the conditions and requirements stated in the Prospectus and
herein, there shall be a closing on the last business day of each month during
the Continuing Offering Period (a "Closing Date"), with respect to subscriptions
received during each month of the Continuing Offering Period. Such closing shall
be held at the offices of the Managing Owner (or other location as selected by
the Managing Owner), and shall provide for (i) payment of the aggregate purchase
price for the Units to the Trust by release of funds from the Escrow Account,
and (ii) compliance with Section 8 hereof.
4. Reports for Selling Agent
The Trust agrees that so long as any of the Units are outstanding, it will,
at the Trust's expense, deliver to the Selling Agent upon request all financial
statements and other periodic and special reports distributed generally to the
Unitholders or required to be delivered to the Unitholders or filed with the
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SEC or the Commodity Futures Trading Commission (the "CFTC") under the Trust
Agreement or any federal statute, rule or regulation relating to securities,
commodities or commodity futures.
5. Agreements of the Trust and the Managing Owner
The Trust and the Managing Owner jointly and severally agree as follows:
(a) Promptly to file the Final Amendment and the Prospectus with the
SEC, but not to file any amendment or supplement to the Registration
Statement or Prospectus, except such as counsel for the Managing Owner
shall deem advisable in order to assure compliance with applicable laws.
(b) To advise the Selling Agent (i) when the Registration Statement
has become effective, (ii) of the issuance by the SEC, CFTC or any other
federal or state regulatory body of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act, the
CFTC registration or NFA membership of the Managing Owner as a commodity
pool operator or the registration of Units under the Blue Sky or securities
laws of any state or other jurisdiction or any order or decree enjoining
the offering or the use of the then current Prospectus or of the
institution, or notice of the intended institution, of any action or
proceeding for that purpose and (iii) the receipt by the Trust or any
representative or attorney of the Trust of any other material communication
from the SEC, CFTC, NFA or any Blue Sky or securities law administrator
relating to the Trust, the Registration Statement, any preliminary
prospectus or the Prospectus, as it may be amended or supplemented. The
Trust will make every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement under the
Securities Act or the registration of Units under the laws of the several
states and various other jurisdictions or enjoining the offering and, if
any such order is issued, to obtain as soon as possible the withdrawal
thereof; provided, that in no event shall the Trust be obligated to (i)
take any action which would subject it to service of process in suits,
other than those arising out of the offering or sale of the Units, or taxes
in any jurisdiction where it is not now so subject or (ii) change any term
in the Registration Statement, as the same may be amended or supplemented.
(c) To deliver to the Selling Agent, without charge, as many conformed
copies of the registration statement as originally filed and of the
Registration Statement and each amendment or supplement thereto (including
all exhibits filed with, or incorporated by reference in, any such
document) as the Selling Agent may reasonably request.
(d) During the Continuing Offering Period to deliver, without charge,
to the Selling Agent, at such office or offices within the United States of
America as the Selling Agent may reasonably designate, as many copies of
the Prospectus, as amended or supplemented, as the Selling Agent may
reasonably request.
6. Amendment of the Registration Statement and Prospectus
The Trust agrees, at its expense, to amend the Registration Statement and
Prospectus or to supplement the Prospectus if, at any time after the Effective
Date and prior to each Closing Date, (i) such amendment or supplement is
necessary to comply with the Securities Act, the Commodity Exchange Act (the
"Commodity Act"), the securities or Blue Sky laws of any jurisdiction or the
rules or regulations promulgated under such Acts or laws, is necessary to comply
with any NFA deficiency notices or is necessary to correct any material untrue
statement in the Prospectus or Registration Statement or to eliminate any
material omission therein or any omission therein which renders any of the
statements therein materially misleading, or (ii) the Selling Agent or the
Clearing Broker advises the Trust that, in its opinion and that of its counsel,
such amendment or supplement is necessary to comply with such Acts or laws or
the rules or regulations promulgated thereunder, to comply with any such
deficiency notice or to correct any such material untrue statement or to
eliminate any such omission. The Managing Owner agrees to notify the Trust, the
Selling Agent and the Clearing Broker and each of the Selling Agent and the
Clearing Broker agrees to notify the Managing Owner and the Trust, immediately
(y) upon discovery of any untrue or misleading statements or omissions in the
Prospectus or Registration Statement
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concerning such party and (z) of the occurrence of any event or change in
circumstances which would result in there being any untrue or misleading
statement or omission in the Prospectus or Registration Statement, in each case
relating to the Managing Owner, the Selling Agent, the Clearing Broker,
respectively. The representations, warranties and indemnifications of all
parties hereto contained herein relating to the Registration Statement and
Prospectus shall attach to any such amendment or supplement.
7. Representations and Warranties
(a) The Managing Owner, represents and warrants to the Selling Agent and
the Clearing Broker that:
(i) The Trust is duly organized and validly existing as a business
trust under the laws of the State of Delaware, and has full power and
authority under the Trust Agreement to conduct its business as described in
the Registration Statement and Prospectus and to issue, sell and deliver
the Units. The Trust is not required to take any action to be qualified to
do business in the State of Maryland.
(ii) The Managing Owner is a corporation duly organized and validly
existing in good standing under the laws of the State of Maryland, has full
corporate power to perform its obligations and enter into the transactions
described in the Registration Statement and Prospectus, as the same may be
amended or supplemented. All the present principals of the Managing Owner
are identified as such in the Registration Statement and Prospectus.
(iii) The Units, when issued and sold pursuant to the terms hereof and
of the Registration Statement, Prospectus and Subscription Agreements, will
be validly issued, fully paid and not subject to further call or
assessment. Units are designed to be sold to investors who have "wrap fee"
accounts with a Selling Agent.
(iv) The Customer Agreement dated as of January 2, 2001, between the
Trust and the Clearing Broker (the "Customer Agreement") has been duly and
validly authorized, executed and delivered by the Managing Owner on behalf
of the Trust. The escrow agreement and this Agreement have each been duly
and validly authorized, executed and delivered by the Managing Owner on
behalf of the Trust and each is, assuming that it has been duly and validly
authorized, executed and delivered by the other parties thereto (other than
the Managing Owner), a valid and binding agreement of the Trust, except
insofar as bankruptcy, moratorium or other similar laws may be applicable
and except that the exculpation, indemnification and contribution
provisions of such agreements may be limited by applicable law and
enforcement of any specific terms or remedies may be unavailable.
(v) The Trust Agreement and this Agreement have each been duly and
validly authorized, executed and delivered on behalf of the Managing Owner
and each is, assuming that it has been duly and validly authorized,
executed and delivered by the other parties thereto (other than the Trust),
a valid and binding agreement of the Managing Owner except insofar as
bankruptcy, moratorium or other similar laws may be applicable, and except
that the exculpation, indemnification and contribution provisions of such
agreements may be limited by applicable law and enforcement of any specific
terms or remedies may be unavailable.
(vi) The Trust has, or is in the process of obtaining, all federal and
state governmental and regulatory approvals and licenses, and is
maintaining on a current basis all filings and registrations with federal
and state governmental and regulatory agencies, required to conduct its
business to be conducted, all as described in the Registration Statement
and Prospectus.
(vii) The Managing Owner has all federal and state governmental and
regulatory, and to the best of its knowledge, commodity exchange licenses
and approvals, and is maintaining on a current basis all filings and
registrations with federal and state governmental and regulatory agencies,
required to act as described in the Registration Statement and Prospectus
(including, without limitation, registration as a commodity pool operator
under the Commodity Act and membership as a commodity pool operator in
NFA), and the performance of such actions will not violate or result in a
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breach of any provision of its articles of incorporation, by-laws or any
agreement, instrument, order, law or regulation binding upon it.
(viii) On the Effective Date and the date on which the Prospectus is
first filed with the SEC pursuant to Rule 424(b), the Registration
Statement and the Prospectus (or when any post-effective amendment to the
Registration Statement becomes effective or any supplement to the
Prospectus is filed with the SEC, the Registration Statement, as amended,
and the Prospectus, as amended or supplemented) will comply fully in all
material respects with the requirements of the Securities Act and the Rules
and the Commodity Act and the published rules of the CFTC thereunder, and
will accurately describe the proposed operation of the Trust; and each of
the Registration Statement, as it may be amended, and the Prospectus, as it
may be amended or supplemented, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading (in the
case of the Prospectus, as it may be amended or supplemented, in the light
of the circumstances under which such statements were made); except that
this representation and warranty does not apply to any statement or
omission in the Registration Statement, as it may be amended, or the
Prospectus, as it may be amended or supplemented, made in reliance upon
information furnished in writing to the Trust by the Clearing Broker or the
Selling Agent, respectively, expressly for use therein.
(ix) All references to the Managing Owner and its principals in the
Registration Statement and the Prospectus are accurate and complete in all
material respects, set forth in all material respects the information
required to be disclosed to prospective investors under the Commodity Act
and the rules and regulations thereunder and, as to the Managing Owner and
its principals, the Registration Statement and Prospectus do not contain
any misleading or untrue statement of a material fact or omit to state a
material fact which is required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in
the light of the circumstances under which such statements were made).
(x) The balance sheet of the Managing Owner and the notes thereto
included in the Registration Statement present fairly the financial
position of the Managing Owner as of the date thereof, in conformity or (in
the case of any unaudited balance sheet) in substantial conformity with
generally accepted accounting principles. Since the date of the most recent
such balance sheet, there have been no changes in the financial condition
of the Managing Owner, other than changes which, in the aggregate, are not
materially adverse or which are disclosed in the Prospectus, and since such
date there have been no changes in the business of the Managing Owner which
are material in the context of the offering of the Units.
(xi) The certificate delivered pursuant to subsection (b) of Section 8
hereof and all other certificates delivered by the Trust and the Managing
Owner pursuant to this Agreement were on the dates on which they were
delivered, or will be on the dates on which they are to be delivered,
accurate and complete in all material respects.
(xii) The Trust will file any promotional brochure or other marketing
materials (collectively, "Promotional Material") with the NASD, and will
not use any such Promotional Material to which the NASD has not stated in
writing that it has no objections. The Trust will file all Promotional
Material in all state jurisdictions where such filing is required, and will
not use any such Promotional Material in any state which has expressed any
objection thereto (except pursuant to agreed-upon modifications to the
Promotional Material).
(xiii) The Trust and the Managing Owner have trust or corporate power
and authority under applicable law to perform their respective obligations
under the Trust Agreement, the Customer Agreement and this Agreement, as
described in the Registration Statement and Prospectus.
(xiv) 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
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otherwise, business or prospects of the Managing Owner or the Trust,
whether or not arising in the ordinary course of business.
(xv) At the initial Closing Date, as set forth in the opinion of
Sidley & Austin, counsel for the Managing Owner, the Trust will be
classified as a partnership for Federal income tax purposes under the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder.
(xvi) There is not pending, or, to the best of the Managing Owner's
knowledge, threatened, any action, suit or proceeding before or by any
court or other governmental body to which the Managing Owner or the Trust
is a party, or to which any of the assets of the Managing Owner or the
Trust is subject, which is not referred to in the Prospectus and which
might reasonably be expected to result in any material adverse change in
the condition (financial or otherwise), business or prospects of the
Managing Owner or the Trust or is required to be disclosed in the
Prospectus pursuant to applicable CFTC regulations. The Managing Owner has
not received any notice of an investigation or warning letter from the NFA
or the CFTC regarding non-compliance by the Managing Owner with the
Commodity Act or the regulations thereunder.
(b) The Clearing Broker represents and warrants to the Trust, the Selling
Agent and the Managing Owner:
(i) The Clearing Broker is a corporation duly organized and validly
existing in good standing under the laws of its state of incorporation and
in good standing and qualified to do business in each jurisdiction in which
the nature or conduct of its business requires such qualifications and the
failure to be duly qualified would materially adversely affect the Clearing
Broker's ability to perform its obligations hereunder or under the Customer
Agreement. The Clearing Broker has full power and authority to perform its
obligations as described in the Registration Statement and Prospectus.
(ii) The Customer Agreement and this Agreement have each been duly and
validly authorized, executed and delivered by the Clearing Broker and each
is, assuming that it has been duly and validly authorized, executed and
delivered by the other parties thereto, a valid and binding agreement of
the Clearing Broker, except insofar as bankruptcy, moratorium or other
similar laws may be applicable and except that the exculpation,
indemnification and contribution provisions of such agreements may be
limited by applicable law and enforcement of any specific terms or remedies
may be unavailable.
(iii) The Clearing Broker has all federal and state governmental and
regulatory and commodity exchange licenses and approvals, and is
maintaining on a current basis all filings and registrations with federal
and state governmental and regulatory agencies required, to perform its
obligations under the Customer Agreement and this Agreement and to act as
described in the Registration Statement and Prospectus (including, without
limitation, registration of the Clearing Broker as a futures commission
merchant under the Commodity Act and membership of the Clearing Broker as a
futures commission merchant in NFA), and the performance of the Clearing
Broker's obligations under the Customer Agreement and this Agreement and of
such actions will not violate or result in a breach of any provision of the
Clearing Broker's articles of incorporation, by-laws or any agreement,
instrument, order, law or regulation binding upon the Clearing Broker.
(iv) All references to the Clearing Broker in the Registration
Statement and Prospectus are accurate and complete in all material
respects, and set forth in all material respects the information required
to be disclosed therein under the Commodity Act and the rules and
regulations thereunder. As to the Clearing Broker, (i) the Registration
Statement and Prospectus contain all statements and information required to
be included therein under the Commodity Act and the rules and regulations
thereunder, (ii) the Registration Statement as of its Effective Date did
not contain any misleading or untrue statement of a material fact or omit
to state a material fact which is required to be stated therein or
necessary to make the statements therein not misleading and (iii) the
Prospectus as of the initial Closing Date did not and will not contain an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, in light of the
circumstances under which such statements were made.
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(v) 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 Clearing Broker, whether or not
arising in the ordinary course of business.
(vi) In the ordinary course of its business, the Clearing Broker is
engaged in civil litigation and subject to administrative proceedings.
Neither the Clearing Broker nor any of its principals have been the subject
of any administrative, civil, or criminal actions within the five years
preceding the date hereof that would be required to be disclosed in the
Prospectus by CFTC regulations and which are not disclosed in the
Prospectus.
(c) The Selling Agent represents and warrants to the Trust, the Managing
Owner and the Clearing Broker:
(i) The Selling Agent is a corporation duly organized and validly
existing and in good standing under the laws of the state of its
incorporation, is a member in good standing of the NASD and has full power
and authority to act as selling agent in the manner contemplated by this
Agreement and as described in the Registration Statement and the
Prospectus. The Selling Agent is in good standing and qualified to do
business in each jurisdiction in which the nature or conduct of its
business requires such qualification and the failure to be duly qualified
would materially adversely affect the Selling Agent's ability to perform
its obligations hereunder.
(ii) The Selling Agent is in good standing and in compliance with all
applicable broker-dealer registration requirements in the places where the
Units will be sold by the Selling Agent.
(iii) Any use or distribution of the Registration Statement, the
Prospectus or any related preliminary prospectus by the Selling Agent will
comply with the terms and conditions set forth in the Prospectus and with
the Securities Act, the Securities Exchange Act of 1934, as amended, all
applicable securities and Blue Sky laws of the states in which the Selling
Agent intends to sell Units, the rules and regulations promulgated under
all such Acts and all such laws, and all applicable rules and regulations
of the NASD and all other self-regulatory organizations. In particular, and
not by way of limitation, the Selling Agent represents and warrants that it
is aware of NASD Rule 2810 and that it will comply fully with all the terms
thereof in connection with the offer and sale of the Units. The Selling
Agent agrees not to recommend either the purchase or redemption of Units to
any subscriber unless the Selling Agent shall have reasonable grounds to
believe, on the basis of information obtained from the subscriber
concerning, among other things, the subscriber's investment objectives,
other investments, financial situation and needs, that the subscriber is or
will be in a financial position appropriate to enable the subscriber to
realize to a significant extent the benefits of the Trust, including tax
benefits described in the Registration Statement and 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 NASD Rule 2810 were met as to each subscriber
(the basis for determining suitability may include the Subscription
Agreements and other certificates submitted by subscribers). The Selling
Agent represents and warrants that it has reasonable grounds to believe,
based on information in the Registration Statement and Prospectus, that all
material facts relating to an investment in the Units are adequately and
accurately disclosed in the Registration Statement and 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 Registration Statement and Prospectus and obtained
such additional information from the Managing Owner regarding the
information set forth thereunder as the Selling Agent has deemed necessary
or appropriate to determine whether the Registration Statement and
Prospectus adequately and accurately disclose all material facts relating
to an investment in the Trust and provide an adequate basis to subscribers
for evaluating an investment in the Units. In connection with making
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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 Registration Statement and Prospectus. The
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.
(iv) The Selling Agent and its representatives have all required
federal and state governmental and regulatory approvals and licenses and
have effected all filings and registrations with federal and state
governmental and regulatory agencies required to conduct its business and
to perform their obligations under this Agreement and to act as described
in the Registration Statement and the Prospectus. The performance of the
obligations of the Selling Agent under this Agreement and its acting as
described in the Registration Statement and the Prospectus will not violate
or result in a breach of any provisions of its Articles of Incorporation or
by-laws or any agreement, instrument, order, law or regulation binding upon
it.
(v) This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Selling Agent, and is, assuming that it has been
duly and validly authorized, executed and delivered by the other parties
hereto (other than the Selling Agent), a valid and binding agreement of the
Selling Agent and enforceable in accordance with its terms.
(vi) Any references to the Selling Agent 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, (i) the Registration Statement and Prospectus
contain all statements and information required to be included therein
under the Commodity Act and the rules and regulations thereunder, (ii) the
Registration Statement as of its Effective Date did not contain any
misleading or untrue statement of a material fact or omit to state a
material fact which is required to be stated therein or necessary to make
the statements therein not misleading and (iii) the Prospectus at its date
of issue and as of the initial Closing Date did not and will not contain an
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein not misleading, in light of the
circumstances under which such statements were made.
(vii) 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.
(viii) 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 required to be disclosed in the
prospectus by CFTC regulations and which are material to an investor's
decision to purchase the Units.
(ix) The execution and delivery of this Agreement, the incurrence of
the obligations set forth herein and the consummation of the transactions
contemplated herein and in the Prospectus will not constitute a breach of,
or default under, any instrument by which the Selling Agent is bound or any
order, rule or regulation applicable to the Selling Agent of any court or
any governmental body or administrative agency having jurisdiction over the
Selling Agent.
8. Closing Requirements
The issue and sale of the Units and the release of the funds from the
Escrow Account to the Trust shall be subject to the accuracy on and as of the
Closing Date of, and compliance on each Closing Date
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with, the representations and warranties of the Managing Owner, the Selling
Agent and the Clearing Broker herein and the performance by the Trust, the
Managing Owner, the Selling Agent and the Clearing Broker of their obligations
hereunder and the following conditions:
(a) The Trust, the Selling Agent and the Clearing Broker shall have
received a certificate of the Managing Owner executed by an officer of the
Managing Owner, which shall state that (i) no order suspending the effectiveness
of the Registration Statement, as it may be amended, or prohibiting the sale of
the Units is in effect and no proceedings for such purpose are pending before
or, to the knowledge of such officers, threatened by the SEC, (ii) no adverse
comments or deficiency notices relating to the Prospectus have been received
from the CFTC or NFA which have not been responded to the satisfaction of such
agencies and (iii) the representations and warranties of the Managing Owner
contained herein are true and correct on and as of the Closing Date, and the
Managing Owner and the Trust, as the case may be, have performed all covenants
and agreements herein contained to be performed on their respective parts at or
prior to the date of the certificate.
(b) At the initial Closing Date, Sidley & Austin, counsel to the Managing
Owner, 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) Upon payment of the consideration therefor specified in the
accepted Subscription Agreements and Powers of Attorney, the Units will
constitute valid units of beneficial interest in the Trust and each
subscriber who purchases Units will become a Unitholder, subject to the
requirement 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, that such purchaser meets
all applicable suitability standards as set forth in the Prospectus and
that the representations and warranties of such purchaser in the
Subscription Agreement and Power of Attorney are true and correct.
(ii) The Trust need not effect any other filings or qualifications
under the laws of the United States and the States of Illinois and New York
in order to preserve the status of the Trust as a business trust or to
enable the Trust to perform its obligations under this Agreement and to
conduct the business in which it proposes to be engaged as described in the
Prospectus.
(iii) The Managing Owner is qualified to do business and is in good
standing as a foreign corporation in each other jurisdiction in which the
failure to so qualify might, in their opinion, reasonably be expected to
result in material adverse consequences to the Trust.
(iv) Each of the Managing Owner (including the principals, as defined
in the Commodity Act, of the Managing Owner) and the Trust has all Federal
and Illinois and New York State governmental and regulatory licenses and
approvals and has received or made all filings and registrations with
Federal and Illinois and New York State governmental and regulatory
agencies necessary in order for each of the Managing Owner 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 Trust Agreement, the Customer Agreement and this
Agreement, assuming that such agreements are legal, valid and binding on
the other parties hereto and thereto, constitutes a legal, valid and
binding agreement of the Managing Owner 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 Trust Agreement
and the Customer Agreement and the incurrence of the obligations herein and
therein set forth and the consummation of the transactions contemplated
herein and therein and in the Prospectus, to their knowledge, will not
constitute a breach of, or default under, any instrument by which the
Managing Owner or the Trust is
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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.
(vii) To their knowledge, there are no actions, claims or proceedings
pending or threatened in any court or before or by any governmental or
administrative body, nor have there been any such suits, claims or
proceeding within the last five years, to which the Managing Owner (or any
principal of the Managing Owner) 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 the Managing Owner 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 Securities
Act, the Commodity Act, NFA compliance rules or applicable securities or
"Blue Sky" laws.
(ix) The terms and provisions of the Trust Agreement, the Customer
Agreement and this Agreement conforms in all material respects to
descriptions thereof contained in the Prospectus.
(x) The Registration Statement is effective under the Securities Act
and, to the best of their knowledge, no proceedings for a stop order are
pending or threatened under Section 8(d) of the Securities 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 Securities Act,
the Rules and CFTC regulations. Nothing has come to their attention that
would lead them to believe that with respect to the Managing Owner and the
Selling Agent (a) at the time the Registration Statement initially became
effective and at the time any post-effective amendment thereto became
effective, the Registration Statement contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or (b)
the Prospectus as first issued or as subsequently issued or at the initial
Closing Date contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that such counsel need express no opinion (A) as to the
financial statements, notes thereto and other financial or statistical data
set forth in the Registration Statement and Prospectus or (B) as to any
performance data set forth in the Registration Statement, and Prospectus,
including the performance summaries (and the notes thereto) in the
Registration Statement and Prospectus, except that such counsel shall
opine, without rendering any opinion as to the accuracy of the information
in the performance summaries, that such the performance summaries comply as
to form in all material respects with applicable CFTC rules.
(xii) Such counsel confirm their opinion, a form of which appears as
Exhibit 8.01 to the Registration Statement, that the summary of Federal
income tax consequences to Unitholders set forth under the caption "Federal
Income Tax Aspects" in the Prospectus accurately describes the material tax
consequences set forth therein and that such counsel further confirm their
advice to the Managing Owner explicitly set forth therein and in such
Exhibit 8.01.
(xiii) To the best of their knowledge, (a) there are no contracts,
indentures, mortgages, loan agreements, leases or other documents of a
character required to be described or referred to in the Registration
Statement or Prospectus or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or filed as
exhibits thereto, and with respect to the existing contracts, indentures,
mortgages, loan agreements, leases and other documents so described,
referred to or filed, the descriptions thereof, references thereto or
copies so filed are correct in all material
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respects, and (b) no material default on the part of the Managing Owner 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 the Closing Date, is not an "investment company" as that term is defined
in the Investment Company Act of 1940, as amended.
(c) At the initial Closing Date, Xxxxxxxx, Xxxxxx & Finger, Delaware
counsel to the Managing Owner 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 Trust Agreement each provides for the subscription for and
sale of the Units; all Delaware 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 units of
beneficial interest in the Trust and each subscriber who purchases Units
will become a Unitholder, subject to the requirement 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, that such purchaser meets all applicable
suitability standards as set forth in the Prospectus and that the
representations and warranties of such purchaser in the Subscription
Agreement and Power of Attorney are true and correct.
(ii) The Trust is a business trust duly organized pursuant to the
Certificate of Trust, the Trust Agreement and the Delaware Business Trust
Act and validly existing under the laws of the State of Delaware with trust
power and authority to conduct the business in which it proposes to engage
as described in the Prospectus; the Trust need not effect any other filings
or qualifications under the laws of the State of Delaware, in order to
preserve the status of the Trust as a business trust or to enable the Trust
to perform its obligations under this Agreement and to conduct the business
in which it proposes to be engaged as described in the Prospectus.
(iii) The Trust has any Delaware licenses and approvals and has
received or made all filings and registrations with Delaware governmental
and regulatory agencies necessary in order for 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.
(iv) Each of the Trust Agreement, the Customer Agreement and this
Agreement has been duly and validly authorized, executed and delivered by
or on behalf of the Trust and the Trust Agreement constitutes a legal,
valid and binding agreement of 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).
(v) The execution and delivery of this Agreement, the Trust Agreement
and the Customer Agreement and the incurrence of the obligations herein and
therein set forth and the consummation of the transactions contemplated
herein and therein and in the Prospectus will not be in contravention of
any of the provisions of the Trust Agreement, and, to their knowledge, will
not constitute a breach of, or default under, any instrument by which the
Trust is bound or any order, rule or regulation applicable to the Trust of
any court or any governmental body or administrative agency having
jurisdiction over the Trust.
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(d) At the initial Closing Date, Church & Xxxxx, Maryland counsel to the
Managing Owner, 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) All action required to be taken by the Managing Owner under the
Maryland General Corporation Law as a condition to the subscription for and
sale of the Units to qualified subscribers therefor has been taken.
(ii) To their knowledge, the Trust is not required to make any filings
in order to qualify to do business in Maryland and need not effect any
other filings or qualifications under the corporate laws of the State of
Maryland in order to enable the Trust to perform its obligations under this
Agreement and to conduct the business in which it proposes to be engaged as
described in the Prospectus.
(iii) The Managing Owner is duly organized and validly existing and in
good standing as a corporation under the laws of the State of Maryland with
corporate power and authority to act as managing owner of the Trust, . The
Managing Owner has full corporate power and authority to perform its
obligations as described in the Registration Statement and Prospectus.
(iv) The Managing Owner (including its principals), has all licenses
and approvals and has received or made all filings and registrations with
Maryland governmental and regulatory agencies necessary in order for the
Managing Owner 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 Trust Agreement, the Customer Agreement and this
Agreement has been duly and validly authorized, executed and delivered by
or on behalf of the Managing Owner and, assuming that such agreements are
legal, valid and binding on the other parties hereto and thereto, each of
the Trust Agreement, the Customer Agreement and this Agreement con-stitutes
a legal, valid and binding agreement of the Managing Owner 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 Trust Agreement
and the Customer Agreement and the incurrence of the obligations herein and
therein set forth and the consummation of the transactions contemplated
herein and therein and in the Prospectus will not be in contravention of
any of the provisions of the Managing Owner's certificate of incorporation
or by-laws, and, to their knowledge, will not constitute a breach of, or
default under, any order, rule or regulation applicable to the Managing
Owner of any court or any governmental body or administrative agency of the
State of Maryland having jurisdiction over the Managing Owner.
(vii) To their knowledge, there are no actions, claims or proceedings
pending or threatened in any court or before or by any governmental or
administrative body, nor have there been any such suits, claims or
proceeding within the last five years, to which the Managing Owner (or any
principal of the Managing Owner) is or was a party, or to which any of
their assets is or was subject, which are required to be, but are not
disclosed in, the Registration Statement or Prospectus or which might
reasonably be expected to materially adversely affect the condition
(financial or otherwise), business or prospects of the Managing Owner.
(e) At the initial Closing Date, the Clearing Broker shall deliver a
certificate to the effect that the representations and warranties of the
Clearing Broker contained herein are true and correct with the same effect as
though expressly made at the initial Closing Date and in respect of the
Registration Statement as in effect at the initial Closing Date.
(f) At the initial Closing Date, the Selling Agent shall deliver a
certificate to the effect that the representations and warranties of the Selling
Agent contained herein are true and correct with the same
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effect as though expressly made at the initial Closing Date and in respect of
the Registration Statement as in effect at the initial Closing Date.
(g) The parties hereto shall have been furnished with such additional
information, opinions and documents, including supporting documents relating to
parties described in the Prospectus and certificates signed by such parties with
regard to information relating to them and included in the Prospectus as they
may reasonably require for the purpose of enabling them to pass upon the sale of
the Units as herein contemplated and related proceedings, in order to evidence
the accuracy or completeness of any of the representations or warranties or the
fulfillment of any of the conditions herein contained; and all actions taken by
the parties hereto in connection with the sale of the Units as herein
contemplated shall be reasonably satisfactory in form and substance to counsel
to the Clearing Broker, counsel to the Selling Agent and counsel to the Managing
Owner.
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 Date, and any such cancellation or
termination shall be without liability of any party to any other party except as
otherwise provided in Section 9.
(h) Certain or all of the conditions of closing set forth in this Section 8
shall, at the option of the Managing Owner, apply at each subsequent Closing
Date.
9. Indemnification
(a) The Managing Owner agrees to indemnify and hold harmless the Selling
Agent, the Clearing Broker and each person, if any, who controls the Selling
Agent and the Clearing Broker within the meaning of Section 15 of the Securities
Act, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
amendment thereto) or any omission or alleged omission therefrom of a
material fact required to be stated therein or necessary in order to make
the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, unless (a) in the case of the Selling Agent, such
untrue statement or omission or alleged untrue statement or omission was
made in reliance upon and in conformity with information relating to the
Selling Agent or furnished or approved by the Selling Agent or (b) in the
case of the Clearing Broker, such untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity
with information relating to the Clearing Broker furnished or approved by
the Clearing Broker;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency
or body commenced or threatened, or of any claim whatsoever based upon any
such untrue statement or omission or any such alleged untrue statement or
omission (any settlement to be subject to indemnity hereunder only if
effected with the written consent of the Managing Owner); and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel) reasonably incurred in investigating, preparing
or defending against litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, to the extent that any such expense
is not paid under clauses (i) or (ii) above.
The Managing Owner agrees to notify the Clearing Broker and the Selling
Agent within a reasonable time of the assertion of any claim in connection with
the sale of the Units against it or any of its officers
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or directors or any person who controls the Managing Owner within the meaning of
Section 15 of the Securities Act.
(b) The Clearing Broker agrees to indemnify and hold harmless the Selling
Agent, the Managing Owner, the Trust and each person, if any, who controls the
Selling Agent, the Trust or the Managing Owner within the meaning of Section 15
of the Securities 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 Clearing Broker, which was made in any preliminary prospectus,
the Registration Statement or the Prospectus or any amendment or supplement
thereto and furnished by or approved by the Clearing Broker for inclusion
therein.
(c) The Selling Agent agrees to indemnify and hold harmless the Clearing
Broker, the Managing Owner, the Trust and each person, if any, who controls the
Clearing Broker, the Managing Owner or the Trust within the meaning of Section
15 of the Securities 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 indemnify 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 for inclusion therein and (ii) against any
and all loss, liability, claim, damage and expense whatsoever resulting from a
demand, claim, lawsuit, action or proceeding relating to the actions or
capacities of the Selling Agent (including a breach of its obligations
hereunder).
(d) Each of the parties to this Agreement understands that the obligations
of each party subject to this Section 9 are separate and distinct.
Notwithstanding any other provision of this Section 9, (i) the Managing Owner
shall have no obligation to indemnify the Selling Agent for more than the amount
of proceeds resulting from the sale of Units by the Selling Agent during the
period from the commencement of the offering of the Units to the initial Closing
Date and during the Continuing Offering Period plus the Selling Agent's actual
expenses incurred in connection with any loss, claim, damage, charge or
liability (including reasonable attorneys' and accountants' fees incurred in
defense thereof) and (ii) any obligation of the Managing Owner to indemnify the
Selling Agent shall be adjusted to reflect the relative responsibility of the
Selling Agent (if any) for the circumstances giving rise to the losses, claims,
damages, costs, expenses, liabilities or actions for which indemnification is
sought.
(e) Notwithstanding any other provision of this Section 9, (i) the Selling
Agent shall have no obligation to indemnify the Managing Owner for more than the
amount of proceeds resulting from the sale of Units by the Selling Agent during
the period from the commencement of the offering of the Units to the initial
Closing Date and during the Continuing Offering Period plus the Managing Owner's
actual expenses incurred in connection with any loss, claim, damage, charge or
liability (including reasonable attorneys' and accountants' fees incurred in
defense thereof) and (ii) any obligation of the Selling Agent to indemnify the
Managing Owner shall be adjusted to reflect the relative responsibility of the
Managing Owner (if any) for the circumstances giving rise to the losses, claims,
damages, costs, expenses, liabilities or actions for which indemnification is
sought.
(f) Notwithstanding any other provision of this Agreement, indemnification
of the Managing Owner or its controlling persons by the Trust shall be permitted
only to the extent permitted by the Trust Agreement, as amended.
(g) Any party which proposes to assert the right to be indemnified under
this Section 9 will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against an indemnifying party under this Section 9, notify each
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such indemnifying party of the commencement of such action, suit or proceeding
but the omission to notify an indemnifying party shall not relieve such
indemnifying party from any liability which it may have to any indemnified party
under this Section 9 except to the extent, and only to the extent, that such
omission was prejudicial to the indemnifying party. In no event shall any such
omission relieve an indemnifying party of any liability which it may have to an
indemnified party otherwise than under this Section 9. In case any such action,
suit or proceeding shall be brought against any indemnified party, and such
party shall notify the indemnifying party of the commencement thereof; the
indemnifying party shall be entitled to participate therein, and, if it shall
wish, individually or jointly with any other indemnifying party, to assume (or
have such other party assume) the defense thereof, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election (or the election of such other
party) so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, other than
reasonable costs of investigation requested by the indemnifying party (or such
other party), subsequently incurred by such indemnified party in connection with
the defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party unless (i) the employment by counsel by
such indemnified party has been authorized by the indemnifying party (or such
other indemnifying party as may have assumed the defense of the action in
question), (ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying party (or such other
party) and the indemnified party in the conduct of the defense of such action
(in which case the indemnifying party (or such other party) shall not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying party shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying party (subject to
possible reimbursement of the indemnifying party by such other party). An
indemnifying party shall not be liable for any settlement of any action or claim
effected without its consent. In the case of (ii) above, the indemnifying party
(or the indemnifying parties, if an indemnified party shall have a claim for
indemnification against more than one indemnifying party) shall not be liable
for the expenses of more than one separate counsel for each of the following
groups: (x) the Selling Agent and any person who controls the Selling Agent
within the meaning of Section 15 of the Securities Act; (y) the Trust and the
Managing Owner and any person who controls the Trust and Managing Owner within
the meaning of Section 15 of the Securities Act; and (z) the Clearing Broker and
any person who controls the Clearing Broker within the meaning of Section 15 of
the Securities Act.
(h) The exculpation provisions of the Trust Agreement shall not relieve the
Managing Owner or its principals from any liability they may have or incur to
the Trust under this Agreement.
10. Fees and Expenses
Subject to reimbursement or partial reimbursement on an installment basis
by the Trust, as set forth in the Prospectus, the Managing Owner will pay all
costs and expenses relating to (i) the preparation, printing and filing with the
SEC, CFTC and NFA of the Registration Statement and (in certain cases) exhibits
thereto, each preliminary prospectus, the Prospectus and all amendments and
supplements to the Registration Statement and the Prospectus, (ii) the
registration or qualification of the Units for offer and sale under the
securities or Blue Sky laws of the various jurisdictions referred to in Section
2 hereof, including the fees and disbursements of legal counsel in connection
therewith and in connection with the preparation and printing of preliminary or
supplementary Blue Sky Surveys, (iii) the furnishing to the Selling Agents of
copies of each preliminary prospectus, the Prospectus, the Registration
Statement and all amendments or supplements thereto, and of such other documents
required to be furnished to the Selling Agents, including costs of shipping and
mailing, (iv) the filing requirements of the NASD in connection with its review
of the terms and arrangements of the proposed financing, (v) the fees and
disbursements of the escrow agent, (vi) all fees and disbursements of Xxxxxx X.
Xxxx, Xx. & Associates in connection with the financial statements and the
performance records contained in the Prospectus and the preparation and delivery
of any other documents to be prepared and delivered in connection with the
transactions contemplated hereby, (vii) the fees and disbursements of legal
counsel in connection with the organization
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of the Trust and the offering of the Units, and (viii) all other organization
and offering expenses relating to the Trust, including any expenses incurred in
any "roadshow" relating to the offering of the Units and the Selling Agents'
reasonable "due diligence" expenses, within the guidelines established by NASD
Rule 2810. Each other party shall bear all of its expenses under this Agreement,
including fees and disbursements of its counsel.
11. Survival of Covenants; Captions; Successors and Assigns
The indemnification agreements contained in Section 9 hereof, the
obligation to settle accounts hereunder and the agreements, representations and
warranties herein shall survive (a) the issue and payment for the Units
hereunder, (b) any investigation made by any party hereto or by a controlling
person of any party hereto, as "controlling person" is defined in Section 15 of
the Securities Act and (c) the termination of the Agreement.
All captions used herein are for convenience of reference only, are not a
portion of this Agreement and are not to be used in construing or interpreting
any aspect of this Agreement.
This Agreement has been and is made solely for the benefit of the Selling
Agent, the Trust, the Managing Owner and the Clearing Broker and their
respective successors and assigns, and, to the extent expressed herein, for the
benefit of persons controlling any of the Selling Agent, the Trust, the Managing
Owner and the Clearing Broker and their respective successors and assigns within
the meaning of Section 15 of the Securities Act, and no other person,
partnership, association or corporation shall acquire or have any right under or
by virtue of this Agreement. The term "successors and assigns" shall not include
any purchaser of Units merely because of such purchase.
12. Termination
Each party may terminate this Agreement at any time, in its discretion, by
giving prior written notice of such termination to the other parties.
Obligations incurred prior to termination shall survive termination.
13. Notices
Any notices under this Agreement shall be in writing (including telegraphic
communication) or by telephone, confirmed in writing, all such writings to be
sent by first class mail, postage prepaid, addressed to the recipient party at
the address previously furnished in writing by such party to each of the other
parties hereto. Copies of all notices shall be sent to Sidley & Austin, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attn: Xxxxxxx Xxxxxxxxxxxxx.
14. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.
15. Entire Agreement
This Agreement contains the entire understanding of the parties hereto with
respect to the subject matter contained herein.
16. Governing Law
This Agreement shall be deemed to be made under and construed in accordance
with the law of the State of New York, without regard to principles of conflicts
of laws.
17. 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 in a formal legal
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opinion of nationally recognized 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.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the day and year first above written.
XXXXXXXX ALTERNATIVE ASSET
TRUST
By: XXXXXXXX & COMPANY, INC.
ITS MANAGING OWNER
By: /s/ XXXXXXX X. XXXXX
------------------------------------
XXXXXXXX & COMPANY, INC.
By: /s/ XXXXXXX X. XXXXX
------------------------------------
PAINEWEBBER, INCORPORATED
By: /s/ XXXXXX X. XXXXX
------------------------------------
XXXXXXXX FINANCIAL SERVICES, INC.
--------------------------------------
By: /s/ XXXXXXX X. XXXXX
------------------------------------
(Sign Name)
By: XXXXXXX X. XXXXX
------------------------------------
(Print Name)
Selling Agent's Legal Name and Address
XXXXXXXX FINANCIAL SERVICES, INC.
000 Xxxx Xxxxxxxxxxxx Xxxxxx, Xxxxx
000
Xxxxxx, Xxxxxxxx 00000
ATTN.: XXXXXXX X. XXXXX
-------------------------------
TAX I.D. NO.: 00-0000000
-------------------------
PHONE: 0-000-000-0000
------------------------------
FAX: 000-000-0000
--------------------------------
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SCHEDULE A
The Managing Owner hereby designates Mercantile-Safe Deposit & Trust
Company as the Escrow Agent in respect of the Trust.
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