EXHIBIT 1.01(a)
FORM OF AMENDED AND RESTATED SELLING AGREEMENT
Dated as of _____________, 2000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
Two World ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter ▇▇▇▇▇▇ ▇.▇. ("Charter
▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter Millburn L.P. ("Charter Millburn"),
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter ▇▇▇▇▇▇ ▇.▇. ("Charter ▇▇▇▇▇▇"), each a
limited partnership organized pursuant to a certificate of limited partnership
filed on July 15, 1998 and a limited partnership agreement dated as of July 15,
1998 under the Delaware Revised Uniform Limited Partnership Act (the "DRULPA")
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter DWFCM ("Charter DWFCM"; collectively with
Charter ▇▇▇▇▇▇, Charter Millburn, and Charter ▇▇▇▇▇▇, the "Partnerships," and
each individually, a "Partnership") a limited Partnership organized pursuant to
a certificate of limited partnership filed October 22, 1993 and an amended and
restated limited partnership agreement dated as of _________ __, 2000 under
DRULPA (the certificates of limited partnership of Charter ▇▇▇▇▇▇, Charter
Millburn, Charter ▇▇▇▇▇▇, and Charter DWFCM are each hereinafter referred to as
a "Certificate of Limited Partnership," and the limited partnership agreements
of Charter ▇▇▇▇▇▇, Charter Millburn, Charter ▇▇▇▇▇▇, Charter DWFCM, are each
hereinafter referred to as a "Limited Partnership Agreement"), each propose,
subject to the terms and conditions set forth in this Agreement, to concurrently
offer, sell, and issue up to 9,000,000, 9,000,000, 9,000,000, and 1,750,000
units of limited partnership interest ("Units"), of Charter ▇▇▇▇▇▇, Charter
Millburn, Charter ▇▇▇▇▇▇, and Charter DWFCM, respectively.
Demeter Management Corporation, a Delaware corporation, is the
sole general partner of each Partnership (the "General Partner"). A single
registered commodity trading advisor (each, a "Trading Advisor") for each
Partnership is acting as the trading advisor with respect to the management of
each Partnership's trading activities pursuant to the respective management
agreements among the Trading Advisor for each Partnership, each Partnership, and
the General Partner (each, a "Management Agreement" and collectively, the
"Management Agreements").
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., a Delaware corporation ("DWR"),
acts as selling agent pursuant to this Agreement and acts as the non-clearing
commodity broker (in such capacity, the "Non-Clearing Broker") pursuant to the
respective customer agreements between the Non-Clearing Broker and each
Partnership, each dated as of November 6, 1998 (collectively, the "DWR Customer
Agreements"). ▇▇▇▇ Futures, Inc., a Delaware corporation ("CFI"), acts as the
clearing commodity broker for Charter ▇▇▇▇▇▇, Charter Millburn, and Charter
▇▇▇▇▇▇ pursuant to the respective customer agreements among the Clearing Broker,
the Non-Clearing Broker, and each Partnership, each dated as of November 6, 1998
(collectively, the "CFI Customer Agreements"). ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, a Delaware corporation ("MS & Co."), acts as the clearing
commodity broker for Charter DWFCM pursuant to the customer agreement among MS &
Co., the Non-Clearing Broker, and Charter DWFCM (the "MS & Co. Customer
Agreement" and, together with the CFI Customer Agreements, the "Clearing Broker
Customer Agreements"). MS & Co. and CFI are collectively referred to herein as
the "Clearing Brokers." The Non-Clearing Broker and the Clearing Brokers are
collectively referred to herein as the "Commodity Brokers." Subscriptions for
Units will be held by The Chase Manhattan Bank, as escrow agent (the "Escrow
Agent"), pursuant to an amended and restated escrow agreement among the
Partnerships, the Escrow Agent and DWR, dated as of _____________, 2000 (the
"Escrow Agreement").
This Agreement amends and restates the Selling Agreement dated
as of November 6, 1998, among Charter ▇▇▇▇▇▇, Charter Millburn, Charter ▇▇▇▇▇▇,
the General Partner and DWR.
1. Representations and Warranties of the General Partner and
the Partnerships. The General Partner represents and warrants to each of the
other parties hereto as to each Partnership and itself, and each Partnership,
severally and not jointly, represents and warrants to DWR as to itself with
respect to the agreements to which it is a party and with respect to the other
applicable documents, as follows:
(a) The Partnerships have provided to DWR, and filed with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act"), and the rules and regulations promulgated by the
SEC thereunder (the "SEC Regulations"):
(i) on July 29, 1998, registration statements on Form S-1, as
amended by Amendment No. 1 thereto filed on September 21,
1998, and as further amended by Amendment No. 2 thereto
filed on October 23, 1998 (SEC File Nos. 333-60115,
333-60103, and 333-60097), for the registration of 3,000,000
Units of Charter ▇▇▇▇▇▇, 3,000,000 Units of Charter
Millburn, and 3,000,000 Units of Charter ▇▇▇▇▇▇,
respectively, which was declared effective by the SEC on
November 6, 2000 (the "1998 Registration Statements");
(ii) on July 22, 1999, Post-Effective Amendment No. 1 to the 1998
Registration Statements, which were declared effective by
the SEC on August 13, 1999;
(iii) on November 23, 1999, registration statements on Form S-1,
as amended by Amendment No. 1 thereto, filed on March 17,
2000 (SEC File Nos. 333-91563, 333-91569, and 333-91567),
which were declared effected by the SEC on March 27, 2000
(the "2000 Registration Statements"); and
(iv) on July 17, 2000, (A) Post-Effective Amendment No. 1 to the
2000 Registration Statements, relating solely to the
continuing offering of unsold Units of Charter ▇▇▇▇▇▇,
Charter Millburn, and Charter ▇▇▇▇▇▇; and (B) a registration
statement on Form S-1 (SEC File No. 333-*) related to the
registration of 1,750,000 Units of Charter DWFCM, each of
which registration statements were declared effective by the
SEC on *, 2000.
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(b) Copies of the preliminary prospectus contained in each of
the Registration Statement referred to in Sections 1(a)(i) - (iv) and copies of
the final prospectus have also been filed with (i) the Commodity Futures Trading
Commission (the "CFTC") under the Commodity Exchange Act (the "CEAct") and the
rules and regulations promulgated thereunder by the CFTC (the "CFTC Rules"); and
(ii) the National Futures Association (the "NFA") in accordance with NFA
Compliance Rule 2-13. Copies of each of the Registration Statements referred to
in Sections 1(a)(i) - (iv) have also been filed with NASD Regulation, Inc. (the
"NASD") pursuant to its Conduct Rules.
(c) Each registration statement referred to in Sections
1(a)(i)-(iv) each and prospectus included therein are hereinafter called the
"Registration Statement" and the "Prospectus," respectively, except that if any
Partnership files a post-effective amendment to its registration statement, then
the term "Registration Statement" shall, from and after the filing of each such
amendment, refer to the applicable Registration Statement, as amended by such
amendment, and the term "Prospectus" shall refer to the amended prospectus then
on file with the SEC as part of the applicable Registration Statement; and if a
prospectus as first issued in compliance with the SEC Regulations shall differ
from the prospectus on file at the time the applicable Registration Statement or
any amendment thereto shall have become effective, the term "Prospectus" shall
refer to the prospectus most recently so issued from and after the date on which
it shall have been issued, including any amendment or supplement thereto. The
Partnerships will not file any amendment to their respective Registration
Statements or any amendment or supplement to the Prospectus unless DWR has
received reasonable prior notice of and a copy of such amendments or supplements
and has not reasonably objected thereto in writing.
(d) The Limited Partnership Agreements provide for the
subscription for and sale of the Units; all action required to be taken by the
General Partner and the Partnerships as a condition to the sale of the Units to
qualified subscribers therefor has been, or prior to each Closing (as defined in
Section 5(b) hereof) will have been, taken; and, upon payment of the
consideration therefor specified in each accepted Subscription and Exchange
Agreement and Power of Attorney, in the form included in the Prospectus (the
"Subscription Agreement"), the Units will constitute valid limited partnership
interests in the Partnership for which Units were subscribed.
(e) Each Partnership is a limited partnership duly organized
pursuant to a Certificate of Limited Partnership, a Limited Partnership
Agreement and the DRULPA, and is validly existing under the laws of the State of
Delaware with full power and authority to engage in the trading of futures,
forwards, and options and to engage in its other contemplated activities as
described in the Prospectus; each Partnership has received a certificate of
authority to do business in the State of New York as provided by Section 121-902
of the New York Revised Limited Partnership Act and is qualified to do business
in each jurisdiction in which the nature or conduct of its business requires
such qualification and where the failure to be so qualified could materially
adversely affect the Partnership's ability to perform its obligations hereunder
or under its Limited Partnership Agreement, its Management Agreement, its DWR
Customer Agreement, its Clearing Broker, Customer Agreement, or the Escrow
Agreement, as applicable.
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(f) The General Partner is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
and is qualified to do business and is in good standing as a foreign corporation
under the laws of the State of New York and in each other jurisdiction in which
the nature or conduct of its business requires such qualification and where the
failure to be so qualified could materially adversely affect the General
Partner's ability to perform its obligations hereunder or under the Limited
Partnership Agreements, the Management Agreements, or as described in the
Prospectus.
(g) Each of the Partnerships and the General Partner has full
partnership and corporate power and authority, as applicable, under applicable
law to conduct its business and perform its respective obligations, as
applicable, under the Limited Partnership Agreements, the Management Agreements,
the DWR Customer Agreements, the Clearing Broker Customer Agreements, the Escrow
Agreement, and this Agreement.
(h) The Registration Statements and the Prospectus contain all
statements and information required to be included therein by the CEAct and the
CFTC Rules. When each of the Registration Statements becomes effective under the
1933 Act and at all times subsequent thereto up to and including each Closing,
the Registration Statements and the Prospectus will comply in all material
respects with the requirements of the 1933 Act, the SEC Regulations, the CEAct,
the CFTC Rules, and the rules of the NASD and the NFA. As of their respective
effective dates, the Registration Statements will 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 as of each Closing, will not contain any
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. Any supplemental sales literature employed
in offering the Units ("Sales Literature"), when read in conjunction with the
Prospectus, as of its date of issue and as of each Closing, will not contain any
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. The Sales Literature will comply with the
1933 Act, the SEC Regulations, the CEAct, the CFTC Rules, and the rules of the
NASD and the NFA. This representation and warranty shall not, however, apply to
any statement or omission in the Registration Statements, Prospectus or Sales
Literature relating to DWR or any Trading Advisor or made in reliance upon and
in conformity with information furnished by DWR or any Trading Advisor.
(i) The accountants who certified the financial statements
filed with the SEC as part of the Registration Statements are, with respect to
the General Partner and the Partnerships, independent public accountants as
required by the 1933 Act and the SEC Regulations.
(j) The financial statements filed as part of the Registration
Statements and those included in the Prospectus present fairly the financial
position of each Partnership and of the General Partner as of the dates
indicated; and said financial statements have been prepared in conformity with
generally accepted accounting principles (as described therein).
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(k) Since the respective dates as of which information is
given in the Registration Statements and the Prospectus, except as may otherwise
be stated in or contemplated by the Registration Statements and the Prospectus,
there has not been any material adverse change in the condition, financial or
otherwise, business or prospects of the General Partner or any Partnership,
whether or not arising in any ordinary course of business.
(l) The General Partner will have a net worth at each Closing
sufficient in amount and satisfactory in form to meet the net worth requirements
set forth in each of the Limited Partnership Agreements.
(m) The Limited Partnership Agreements, the Management
Agreements and this Agreement have each been duly and validly authorized,
executed, and delivered by the General Partner on behalf of the Partnerships and
the General Partner, and each constitutes a valid and binding agreement of the
Partnerships and of the General Partner, enforceable in accordance with their
terms. The DWR Customer Agreements, the Clearing Customer Agreements and the
Escrow Agreement have each been duly and validly authorized, executed, and
delivered by the General Partner on behalf of the Partnerships, and each
constitutes a valid and binding agreement of the Partnerships, enforceable in
accordance with their terms.
(n) The execution and delivery of the Limited Partnership
Agreements, the Management Agreements, the DWR Customer Agreements, the Clearing
Customer Agreements, the Escrow 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 Registration Statements and the
Prospectus, will not violate, or constitute a breach of, or default under, the
certificate of incorporation or bylaws of the General Partner, the Certificates
of Limited Partnership or the Limited Partnership Agreements of the
Partnerships, or any other agreement or instrument by which either the General
Partner or the Partnerships, as the case may be, is bound or any law, order,
rule, or regulation applicable to the General Partner or the Partnerships of any
court, governmental body, administrative agency, panel, or self-regulatory
organization having jurisdiction over the General Partner or the Partnerships.
(o) Except as set forth in the Registration Statements or the
Prospectus, there has not been in the five years preceding the date of the
Prospectus and there is not pending or, to the best of the General Partner's
knowledge, threatened, any action, suit, or proceeding at law or in equity
before or by any court, governmental body, administrative agency, panel, or
self-regulatory organization to which the General Partner, any of the
"principals" of the General Partner, as defined in CFTC Rule 4.10(e) ("General
Partner Principals"), or any of the Partnerships is or was a party, or to which
any of the assets of the General Partner or any of the Partnerships is or was
subject; and neither the General Partner nor any General Partner Principal has
received any notice of an investigation by the SEC, CFTC, NASD, or NFA regarding
non-compliance by the General Partner, the General Partner Principals, or the
Partnerships with the 1933 Act, the SEC Regulations, the Securities Exchange Act
of 1934, as amended (the "1934 Act"), any other federal securities laws, rules
or regulations, the CEAct, the CFTC Rules, or the rules of the NASD or the NFA,
which action, suit, proceeding, or investigation resulted or might reasonably be
expected to result in any material adverse change in the condition, financial or
otherwise, business or prospects of the General Partner or any of the
Partnerships, or which could be material to an investor's decision to invest in
any of the Partnerships.
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(p) The General Partner and each "principal" of the General
Partner, as defined in CFTC Rule 3.1(a), have all federal, state, and foreign
governmental, regulatory, self-regulatory, and exchange approvals, licenses,
registrations, and memberships, and have effected all filings with federal,
state, and foreign governmental regulators, self-regulatory organizations, and
exchanges required to conduct their business and to act as described in the
Registration Statements and the Prospectus, or required to perform their
obligations under the Limited Partnership Agreements, the DWR Customer
Agreements, the Clearing Broker Customer Agreements, the Escrow Agreement, the
Management Agreements and this Agreement. The General Partner is registered as a
commodity pool operator under the CEAct and is a member of the NFA as a
commodity pool operator. The General Partner's principals identified in the
Prospectus are all of the General Partner Principals.
(q) To the extent required under CFTC Rules and applicable
CFTC staff no-action letters, the actual performance of all pools "operated"
within the meaning of the CEAct by the General Partner and of the General
Partner Principals is disclosed in the Prospectus.
2. Covenants of the Partnerships and the General Partner. Each
Partnership as to itself, severally and not jointly, and the General Partner as
to itself and each Partnership covenants and agrees as follows:
(a) The Partnerships will prepare and file with the SEC, CFTC,
NASD, and NFA, promptly upon DWR's request, any amendments to the applicable
Registration Statement, and any amendments and supplements to the Prospectus,
which may be necessary or advisable in connection with the offering and sale of
Units, and will use its best efforts to cause the same to become effective as
promptly as possible.
(b) As soon as any Partnership is advised or obtains knowledge
thereof, such Partnership will advise DWR of any requests made by the SEC, CFTC,
NASD, or NFA to amend the applicable Registration Statement, to amend or
supplement the Prospectus, or for additional information, or of the issuance by
the SEC of any stop order suspending the effectiveness of any Registration
Statement, of any order by the SEC, CFTC, NASD or NFA preventing or suspending
the use of the Prospectus, or of the institution of any proceedings for any such
purpose, and will use its best efforts to prevent the issuance of any such order
and, if any such order is issued, to obtain the lifting thereof as promptly as
possible.
(c) If, at any time after the effective date of any
Registration Statement and any amendment thereto, any event occurs involving any
of the Partnerships, the General Partner, or any General Partner Principal, or
of which any of the Partnerships, the General Partner, or any General Partner
Principal is aware, as a result of which any Registration Statement or the
Prospectus, as then amended and supplemented, would include any untrue statement
of a material fact or any omission to state a material fact required to be
stated therein or necessary to make the statements therein (and, with respect to
the Prospectus, in light of the circumstances under which they were made) not
misleading, or if it becomes necessary or desirable at any time to amend or
supplement any Registration Statement or the Prospectus to comply with the 1933
Act, the SEC Regulations, the CEAct, the CFTC Rules, or the rules of the NASD or
the NFA, the Partnerships will promptly notify DWR thereof and will prepare and
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file with the SEC, CFTC, NASD, and NFA an amendment or supplement that will
correct such statement or omission or that will effect such compliance.
(d) The Partnerships will furnish to DWR copies of the
Registration Statements, the Prospectus, and all amendments and supplements
thereto, in each case as soon as available and, in the case of the Prospectus,
in such quantities as DWR may reasonably request for delivery to it.
3. Representations and Warranties of the Non-Clearing Broker.
The Non-Clearing Broker represents and warrants to each of the other parties
hereto, as follows:
(a) The Non-Clearing Broker is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware,
and is qualified to do business and is in good standing as a foreign corporation
in the State of New York and in each other jurisdiction in which the nature or
conduct of its business requires such qualification and where the failure to be
so qualified could materially adversely affect the Non-Clearing Broker's ability
to perform its obligations hereunder or under the DWR Customer Agreements, or as
described in the Prospectus. The Non-Clearing Broker has full corporate power
and authority to perform its obligations under each of the DWR Customer
Agreements and this Agreement, and to conduct its business as described in the
Registration Statements and the Prospectus.
(b) As to the Non-Clearing Broker, (i) the Registration
Statements and the Prospectus are accurate and complete in all material respects
and contain all statements and information required to be included therein under
the 1933 Act, the SEC Regulations, the CEAct, the CFTC Rules, and the rules of
the NFA; (ii) as of their effective dates, the Registration Statements will not
contain any 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 its date of issue and as
of each Closing, will not contain any 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.
(c) The Non-Clearing Broker and each "principal" of the
Non-Clearing Broker, as defined in CFTC Rule 3.1(a), have all federal, state,
and foreign governmental, regulatory, self-regulatory, and exchange approvals,
licenses, registrations, and memberships, and have effected all filings with
federal, state, and foreign governmental regulators, self-regulatory
organizations, and exchanges required to conduct their business and to act as
described in the Registration Statements and the Prospectus, or required to
perform their obligations under each DWR Customer Agreement and this Agreement,
as applicable. The Non-Clearing Broker is registered as a futures commission
merchant under the CEAct and is a member of the NFA as a futures commission
merchant.
(d) The DWR Customer Agreements and this Agreement have been
duly and validly authorized, executed, and delivered by the Non-Clearing Broker,
and each constitutes a valid and binding agreement of the Non-Clearing Broker,
enforceable in accordance with its terms.
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(e) Since the respective dates as of which information is
given in the Registration Statements and the Prospectus, except as may otherwise
be stated in or contemplated by the Registration Statements and the Prospectus,
there has not been any material adverse change in the condition, financial or
otherwise, business or prospects of the Non-Clearing Broker, whether or not
arising in the ordinary course of business.
(f) Except as set forth in the Registration Statements or the
Prospectus, there has not been in the five years preceding the date of the
Prospectus and there is not pending or, to the best of the Non-Clearing Broker's
knowledge, threatened, any action, suit, or proceeding at law or in equity
before or by any court, governmental body, administrative agency, panel, or
self-regulatory organization to which the Non-Clearing Broker is or was a party,
or to which any of the assets of the Non-Clearing Broker is or was subject; and
the Non-Clearing Broker has not received any notice of an investigation by the
NFA or the CFTC regarding non-compliance by the Non-Clearing Broker with the
CEAct, the CFTC Rules, or the rules of the NFA, which action, suit, proceeding
or investigation resulted in or might reasonably be expected to result in any
material adverse change in the condition, financial or otherwise, business or
prospects of the Non-Clearing Broker or which would be material to an investor's
decision to invest in any of the Partnerships.
(g) The execution and delivery of each DWR Customer Agreement
and this Agreement, the incurrence of the obligations set forth herein and in
each DWR Customer Agreement, and the consummation of the transactions
contemplated therein and in the Registration Statements and in the Prospectus,
will not violate, or constitute a breach of, or default under, the certificate
of incorporation or bylaws of the Non-Clearing Broker or any other agreement or
instrument by which it is bound, or any law, order, rule, or regulation
applicable to the Non-Clearing Broker of any court, governmental body,
administrative agency, panel, or self-regulatory organization having
jurisdiction over the Non-Clearing Broker.
4. Covenants of the Non-Clearing Broker. The Non-Clearing
Broker covenants and agrees as follows:
(a) The Non-Clearing Broker agrees reasonably to cooperate by
providing information regarding itself in the preparation of any amendments or
supplements to the Registration Statements and the Prospectus.
(b) The Non-Clearing Broker agrees to notify the General
Partner immediately upon discovery of any untrue statement of a material fact in
the Registration Statements or the Prospectus relating to the Non-Clearing
Broker, or an omission to state a material fact relating to the Non-Clearing
Broker, required to be stated therein or necessary to make the statements
therein (and, with respect to the Prospectus, in light of the circumstances
under which they were made) not misleading, or of the occurrence of any event or
change in circumstances which would result in there being any material untrue or
misleading statement or a material omission in the Prospectus or the
Registration Statements regarding the Non-Clearing Broker, or which would result
in the Prospectus not including all material information relating to the
Non-Clearing Broker, required pursuant to the CEAct, the CFTC Rules, or the
rules of the NFA.
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5. Appointment of the Selling Agent.
(a) Subject to the terms and conditions set forth in this
Agreement, each Partnership hereby appoints DWR as its selling agent to offer
and sell Units on a best efforts basis, without any firm commitment on the part
of DWR to purchase any Units. DWR shall offer for sale up to 9,000,000 Units of
Charter ▇▇▇▇▇▇, 9,000,000 Units of Charter Millburn, 9,000,000 Units of Charter
▇▇▇▇▇▇, and 1,750,000 Units of Charter DWFCM and such additional Units as the
General Partner may, in its discretion, register and offer for sale from time to
time.
(b) Units shall be offered for sale in the Partnerships'
continuing offering (the "Continuing Offering"), at monthly closings to be held
as of the last day of each month ("Monthly Closing"), at a price per Unit equal
to 100% of the "Net Asset Value per Unit" (as defined in each Limited
Partnership Agreement) as of the close of business on the date of such Monthly
Closing. The minimum subscription for most subscribers shall be $20,000, except
that, in the case of subscribers purchasing Units pursuant to a Non-Series
Exchange (as defined in the Prospectus), the $20,000 minimum investment will be
satisfied if the proceeds of the redemption of the units redeemed would have
equaled at least $20,000 as of the last day of the month immediately preceding
the Closing at which Units are purchased, irrespective of whether the actual
proceeds from such redemption are less than $20,000 when the units are redeemed.
A subscription may be for Units of one Partnership, or may be divided among two
or all three Partnerships, provided that the minimum subscription for any one
Partnership is: (a) in the case of a cash purchase, $5,000, or (b) in the case
of a Non-Series Exchange, the proceeds from the redemption of (i) five units
from commodity pools other than the Spectrum Series or (ii) 500 units from one,
or any combination, of the Spectrum Series. The minimum subscription per
Partnership for subscribers who already own Units in a Partnership and desire to
make an additional investment in such Partnership is: (a) in the case of a cash
purchase, $1,000, or (b) in the case of a Non-Series Exchange, the proceeds from
the redemption of (i) one Unit from commodity pools other than the Spectrum
Series, (ii) 100 units from one, or any combination of the Spectrum Series. The
number of Units received by a subscriber will be rounded to the third decimal
place.
(c) Notwithstanding any provision to the contrary herein, the
General Partner will have the sole discretion to accept or reject any
subscription for Units in whole or in part at any time prior to acceptance.
(d) No selling commissions will be charged with respect to the
sale of Units. The Partnerships understand, however, that DWR may compensate its
employees and certain "Additional Sellers," solely from DWR's own funds, in the
manner described in Sections 5(e)-(j).
(e) In the case of Units purchased for cash, qualified
employees of DWR have the option to receive from DWR (payable solely from its
own funds) a gross sales credit equal to four percent (4%) of the Net Asset
Value per Unit as of the applicable Closing for each Unit sold by them and
issued at such Closing, plus a gross sales credit of up to 71% of the brokerage
fees received by the Non-Clearing Broker from the Partnership each month that
are attributable to such outstanding Units, commencing with the fifteenth month
after the Closing at which a Unit is issued. Alternatively, qualified employees
of DWR may forego the initial gross sales credit of 4% of the Net Asset Value
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per Unit and immediately commence receiving a gross sales credit of up to 71% of
the brokerage fees received by the Non-Clearing Broker from the Partnership each
month that are attributable to such outstanding Units. Notwithstanding the
foregoing, employees of DWR that sell $500,000 or more of Units to any single
investor for cash will not have an option, and will only be entitled to receive
a gross sales credit of up to 71% of the brokerage fees received by the
Non-Clearing Broker from the Partnership each month that are attributable to
such outstanding Units, commencing with the first month after the Units are
issued.
(f) In the case of Units purchased pursuant to a Series
Exchange or Non-Series Exchange, qualified employees of DWR will not receive the
initial gross sales credit of 4%. However, DWR employees effecting a Series
Exchange or Non-Series Exchange will receive a gross sales credit of up to 71%
of the brokerage fees received by the Non-Clearing Broker from the Partnership
each month that are attributable to such outstanding Units, as follows: (i) in
the case of a Series Exchange where the DWR employee elected to receive the
initial gross sales credit of 4% in connection with the initial purchase of the
Units redeemed, such DWR employee will receive the monthly gross sales credit
commencing with the fifteenth month after the date the Units being redeemed were
purchased; and (ii) in the case of (A) a Series Exchange where the DWR employee
elected not to receive the initial gross sales credit of 4% in connection with
the initial purchase of the Units redeemed or (B) a Non-Series Exchange, such
DWR employee will receive the monthly gross sales credit commencing with the
first month after the Units are issued. In all cases, qualified DWR employees
will receive continuing compensation until the applicable Partnership terminates
or such Unit is redeemed (whichever comes first).
(g) In all cases, an employee of DWR will qualify for such
continuing compensation only if he is properly registered with the CFTC and is a
member of the NFA, as set forth in Section 5(h). Such continuing compensation is
to be paid in recognition of an employee's continuing services to Limited
Partners of the Partnerships, as set forth in Section 5(j). No person will
receive the continuing compensation described above who is not an employee of
DWR at the time of receipt of payment.
(h) Notwithstanding the foregoing, DWR will not pay any such
continuing compensation to any of its employees who is not legally qualified or
permitted to receive such continuing compensation. In that regard, each of DWR's
employees who receives any such continuing compensation must have become
registered as an "associated person" of DWR with the CFTC and with the NFA in
such capacity only after either having passed the National Commodity Futures
Examination (NASD Test Series #3), the Futures Managed Funds Examination (NASD
Test Series #31), or having been "grandfathered" as an associated person under
the CEAct and the Bylaws and rules of the NFA. Also, such compensation may be
paid by DWR to its employees only in respect of outstanding Units sold by such
persons and only so long as the additional services described in Section 5(i)
are provided by such persons to Limited Partners; provided, however, that DWR
may not pay any portion of such compensation to any individual no longer
employed by it, and provided, further, that such compensation may be paid to its
employees who, although not responsible for the sale of an outstanding Unit,
provide the services described below in place of the individual who was
responsible for such sale. All compensation described in Sections 5(e) and (f),
along with any other underwriting compensation, will not exceed 10% of the
proceeds received in connection with the issuance of the Units.
-10-
(i) DWR has appointed MS & Co. as its agent to make offers and
sales of Units. DWR, with the written approval of the General Partner, may also
appoint, as additional selling agents, one or more securities brokers or dealers
which are members in good standing of the NASD, or any foreign bank, dealer,
institution or person ineligible for membership in the NASD which agrees to make
no offers or sales of Units within the United States or its territories,
possessions or areas subject to its jurisdiction or to persons who are citizens
thereof or residents therein, as additional selling agents (MS & Co. and any
such selling agent, an "Additional Seller" and collectively, the "Additional
Sellers"), provided that each Additional Seller shall execute an Additional
Seller's Agreement substantially in the form attached hereto as Exhibit A. DWR
may compensate any Additional Seller by paying such Additional Seller, solely
from DWR's own funds, a commission, not to exceed four percent (4%) of the Net
Asset Value per Unit as of the date of the applicable Closing, for each Unit
sold by such Additional Seller and issued at such Closing. DWR may pay any
Additional Seller continuing compensation of up to 35% annually of the brokerage
fees received by the Non-Clearing Broker from the Partnerships each month that
are attributable to outstanding Units sold by such Additional Seller (except MS
& Co., which will be compensated at the same rate as DWR's employees), in
recognition of such Additional Seller's continuing services to limited partners
of the Partnerships, as set forth in Section 5(j); provided, however, that: (A)
no continuing compensation shall be paid to an Additional Seller unless it is
properly registered with the CFTC as a "futures commission merchant" or
"introducing broker," and is a member of the NFA in one of such capacities, and
(B) no Additional Seller which is registered as a futures commission merchant or
introducing broker may pay any portion of such continuing compensation to an
employee thereof unless such employee meets the same qualifications as DWR's
employees, as set forth in Section 5(h).
(j) The additional services that employees of DWR and
Additional Sellers will provide on an ongoing basis to limited partners at no
charge will include, but not be limited to: (i) inquiring of the General Partner
from time to time, at the request of limited partners, as to the Net Asset Value
of a Unit; (ii) inquiring of the General Partner from time to time, at the
request of limited partners, as to the futures, forwards and options markets and
the activities of the Partnerships; (iii) responding to questions of limited
partners from time to time with respect to monthly account statements, annual
reports, financial statements, and annual tax information furnished periodically
to limited partners; (iv) providing advice to limited partners from time to time
as to when and whether to make additional investments or to redeem or exchange
Units; (v) assisting limited partners from time to time in the redemption or
exchange of Units; and (vi) providing such other services as limited partners
from time to time may reasonably request.
(k) The Partnerships and DWR acknowledge that: (i) the
Partnerships shall have no liability to DWR, its employees, any Additional
Seller, or any employee of an Additional Seller with regard to any selling
compensation described above; and (ii) DWR will be paid any and all redemption
charges imposed on limited partners in accordance with Section 10(b) of each
Limited Partnership Agreement.
-11-
6. Undertakings of DWR.
(a) DWR agrees to use its best efforts to offer and sell Units
on the terms set forth in this Agreement, the Registration Statements, and the
Prospectus. It is understood that DWR has no commitment to offer and sell Units
or to purchase Units, other than to use its best efforts to offer and sell
Units.
(b) DWR will make the public offering of Units at the offering
price and on the other terms and conditions set forth in the Registration
Statements, the Prospectus, and this Agreement. DWR will offer and sell Units
only to persons who satisfy the suitability and/or minimum investment
requirements set forth in the Prospectus and the Subscription Agreement and who,
to the General Partner's satisfaction, complete a Subscription Agreement. DWR
will conduct a thorough review of the suitability of each subscriber for Units,
of each Subscription Agreement authorizing the General Partner and DWR to
transfer the full subscription price from the subscriber's customer account with
DWR to the escrow account established with the Escrow Agent pursuant to the
Escrow Agreement (the "Escrow Account"), and of each Subscription Agreement
requesting a Series Exchange or a Non-Series Exchange as described under
"Summary--Who May Subscribe" and "Exchange Right" in the Prospectus.
(c) All of DWR's branch offices will be required to forward
subscriptions to the General Partner's office in New York, New York no later
than noon of the first business day following their receipt of an acceptable
Subscription Agreement from a subscriber for Units. Subsequent to its review of
each Subscription Agreement, the General Partner will notify DWR, and DWR shall
notify each subscriber by the business day following its receipt of notice from
the General Partner, of the General Partner's acceptance of all, a portion, or
none of the subscriber's subscription.
(d) All funds from subscriptions received by DWR during the
Initial Offering and the Continuing Offering of the Partnerships and not
rejected by the General Partner will be promptly deposited by DWR in the Escrow
Account as described below. A subscriber whose Subscription Agreement is
received by DWR and whose subscription is not immediately rejected by the
General Partner must have the full subscription amount in his customer account
with DWR on the first business day following the date that his Subscription
Agreement is received by DWR, and DWR will transfer such subscription funds to
the Escrow Agent on that date. DWR will notify the General Partner of the
subscription amount deposited with the Escrow Agent on behalf of each subscriber
for Units and the name and residence address of each such subscriber.
Subscription funds held in the Escrow Account shall earn interest and
subscribers shall be credited with interest, as described under "Plan of
Distribution--Escrow Arrangements" in the Prospectus.
(e) DWR will offer and sell Units in compliance with the
requirements set forth in the Registration Statements, the Prospectus
(particularly under the captions "Summary--Who May Subscribe" and "--The
Offering of Units," "Plan of Distribution," "Subscription Procedure," and
"Purchases by Employee Benefit Plans--ERISA Considerations"), the Subscription
Agreement, and this Agreement. In connection with DWR's acting as selling agent,
DWR will comply fully at all times with all applicable federal, state, and
foreign securities and commodities laws (including, without limitation, the 1933
Act, the 1934 Act, the CEAct, and the securities ("Blue Sky") laws of the
jurisdictions in which DWR solicits subscriptions), and all requirements of the
-12-
NASD (particularly Conduct Rule 2810), the Board of Governors of the Federal
Reserve System, and the securities and commodities exchanges and other
governmental regulators and self-regulatory authorities and organizations having
jurisdiction over DWR. Specifically, (i) DWR will not permit the purchase of any
Units by a customer account over which DWR has discretionary authority without
the prior written approval by the customer owning such account; (ii) DWR
confirms that it has reasonable grounds to believe that all material facts are
adequately and accurately disclosed in the Prospectus, which provides a basis
for evaluating the Partnerships; (iii) DWR confirms that in determining the
adequacy of disclosed facts pursuant to clause (ii), it has obtained information
on material facts relating to: (A) items of compensation, (B) tax aspects, (C)
financial stability and experience of the General Partner, and (D) the
Partnerships' conflicts and risk factors; (iv) in recommending to a subscriber
the purchase or redemption of Units, a Series Exchange or a Non-Series Exchange,
DWR shall take such measures as are reasonably necessary to assure itself that
(A) its financial advisors have informed such subscriber of all pertinent facts
relating to the liquidity and marketability of the Units, and (B) its financial
advisors have reasonable grounds to believe, on the basis of information
obtained from such subscriber concerning his investment objectives, other
investments, financial situation and needs, and any other information known by
such financial advisors, that: (1) such subscriber is or will be in a financial
position appropriate to enable him to realize to a significant extent the
benefits described in the Prospectus, (2) such subscriber has a fair market net
worth sufficient to sustain the risks inherent in the purchase of Units,
including loss of investment and lack of liquidity, and (3) the purchase of
Units is otherwise suitable for such subscriber; and (v) DWR shall take such
measures as are reasonably necessary to assure itself that each subscriber has
received a Prospectus at least five business days prior to the applicable
Closing. The General Partner will maintain in its files, located c/o ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Inc., Two ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, each
subscriber's Subscription Agreement for not less than six years, and DWR will
maintain, at its respective branch offices, any other documents disclosing the
basis upon which the determination of suitability was reached for each such
subscriber.
(f) All subscriptions received and accepted by the General
Partner will, upon the satisfaction at each Closing of the conditions set forth
in Sections 9 and 10 hereof, be delivered to the respective Partnerships at each
Closing, and any interest earned on a subscriber's subscription funds while held
in escrow will be promptly returned to DWR in accordance with the Escrow
Agreement for prompt credit to the subscriber's customer account with DWR.
Interest earned on any subscriptions deposited into the Escrow Account and
thereafter rejected by the General Partner will be credited to the subscriber's
customer account with DWR.
(g) Any amounts credited to a subscriber's customer account
with DWR for a returned subscription and/or for interest earned will be
immediately available for investment or withdrawal from such account. In the
event a subscriber's customer account with DWR has been closed, any subscription
returned and/or interest earned will be paid by check.
7. Blue Sky Filings. The Partnerships will use their best
efforts to qualify Units for offer and sale under the Blue Sky laws of such
jurisdictions as DWR may reasonably request, to make applications, file
documents, and furnish information as may be reasonably required for that
purpose, and to comply with such laws so as to permit the continuance of sales
and dealings in such jurisdictions for as long as may be necessary to complete
-13-
the offer and sale of Units; provided, however, that neither the Partnerships
nor the General Partner will be required to qualify as or be subject to taxation
as a foreign partnership or corporation or to execute a general consent to
service of process in any jurisdiction. The Partnerships further agree that
their counsel will prepare and deliver to DWR Blue Sky surveys which will set
forth, for DWR's guidance, in what manner, at what time, in what amounts, and by
whom Units may be offered and sold in jurisdictions requested by DWR as provided
above.
8. Organizational and Offering Expenses. DWR shall pay all of
the costs incurred in connection with the organization of the Partnerships and
the Initial Offering. DWR will also pay all of the costs incurred in connection
with the offering of Units during the Continuing Offering (collectively, the
"Offering Expenses"), including all legal, accounting, and auditing fees and
expenses of outside firms and all costs, disbursements, filing fees, fees and
expenses of the Escrow Agent, printing and duplication costs, marketing costs
and expenses, and other related costs and expenses. Legal, accounting, and
auditing fees and expenses of outside firms shall include the legal, accounting,
and auditing expenses of DWR, the Partnerships and the General Partner relating
to the offering of Units. Marketing costs and expenses shall include, but not be
limited to, the printing and preparation of Sales Literature, the production of
audio and video tapes for use in sales presentations, and the staging of sales
seminars and the travel of DWR and General Partner personnel associated
therewith. DWR shall not be reimbursed for such expenses by the Partnerships.
Such expenses will not include the travel, legal, and other expenses of the
Trading Advisors, including such expenses incurred in connection with the
marketing of Units, which expenses shall be borne by the Trading Advisor (unless
DWR agrees to pay same from its own funds).
9. Closings.
(a) The Initial Closing, if any, for the acceptance of
subscriptions for Units in each Partnership is currently scheduled to be held on
October 31, 1998. Thereafter, Monthly Closings in the Continuing Offering shall
be held as of the last day of each month. Each Monthly Closing will be held at
such time, and at such location or locations as the General Partner and DWR may
mutually agree upon.
(b) Subject to its right to reject any subscription in its
sole discretion in whole or in part at any time prior to acceptance, the General
Partner, on behalf of each Partnership, will accept subscriptions for Units
properly made and cause proper entry to be made in the Unit register to be
maintained by the General Partner. No certificate evidencing Units shall be
issued to any subscriber; rather, DWR will deliver confirmations in its
customary form to subscribers whose subscriptions have been accepted by the
General Partner at each Closing.
(c) At each Closing, the delivery, receipt, and acceptance of
subscriptions for Units will be subject to the terms and conditions set forth in
this Agreement, including the following: (i) payment of the full subscription
price for Units and delivery of a properly completed Subscription Agreement by
each subscriber; and (ii) compliance with Section 10 hereof. Upon the
satisfaction of such terms and conditions, the aggregate subscription price for
Units (exclusive of any interest earned on such subscriptions while held in
escrow and payable to the subscribers in accordance with the Escrow Agreement)
will be paid and delivered to the applicable Partnership at each Closing.
-14-
10. Conditions of DWR's Obligations.
(a) DWR's obligations to proceed with the offering and sale of
Units and each Closing will be subject to: (i) the accuracy of the
representations and warranties by the Partnerships and the General Partner in
this Agreement as of the date hereof and as of the date of such Closing as if
such representations and warranties had been made on and as of the date thereof;
(ii) the performance by the Partnerships and the General Partner of their
respective covenants and agreements herein; and (iii) the additional conditions
precedent set forth below.
(b) At each Closing, the additional conditions precedent are
as follows:
(i) The Registration Statements will have become
effective. No stop order suspending the effectiveness of any of the
Registration Statements will have been issued and no proceedings for
that purpose will have been instituted or are pending or, to the
knowledge of the Partnerships or DWR, are contemplated or threatened by
the SEC. No order preventing or suspending the use of the Prospectus
will have been issued and no proceedings for that purpose will have
been instituted or are pending or, to the knowledge of the Partnerships
or DWR, are contemplated or threatened by the SEC, CFTC, NASD, or NFA.
Any requests of the SEC, CFTC, NASD, or NFA for additional information
(to be included in any of the Registration Statements or the Prospectus
or otherwise) will have been complied with to DWR's satisfaction.
(ii) Neither DWR nor any Trading Advisor will have
advised the Partnerships or the General Partner that, in its opinion,
any of the Registration Statements or the Prospectus contains any
untrue statement of a material fact or any omission to state a material
fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading.
(iii) At the request of DWR, the General Partner will
have furnished to DWR a certificate, dated the date of the Closing and
in form and substance satisfactory to DWR, to the effect that:
(A) The representations and warranties by
the Partnerships and the General Partner in this Agreement are
true, accurate, and complete on and as of the date of the
Closing as if made on the date of the Closing.
(B) No stop order suspending the
effectiveness of any of the Registration Statements has been
issued by the SEC and no proceedings for that purpose have
been instituted or are pending or, to the knowledge of the
General Partner, are contemplated or threatened under the 1933
Act. No order preventing or suspending the use of the
Prospectus has been issued by the SEC, CFTC, NASD, or NFA and
no proceedings for that purpose have been instituted or are
pending or, to the knowledge of the General Partner, are
contemplated or threatened under the 1933 Act or the CEAct.
-15-
(C) The Partnerships and the General Partner
have performed all of their obligations and satisfied all of
the conditions on their part to be performed or satisfied
under this Agreement, the Management Agreements, the Escrow
Agreement, the DWR Customer Agreements, and the CFI Customer
Agreements at or prior to the date of the Closing.
(D) The General Partner has made its capital
contribution to each Partnership and has met the net worth
standard required of it by each Limited Partnership Agreement.
(iv) Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the
General Partner and the Partnerships, shall deliver its opinion to the
parties hereto at such Closing, as requested by DWR, in form and
substance satisfactory to the parties hereto, to the effect that:
(A) Each Limited Partnership Agreement
provides for the subscription for and sale of the Units; all
action required to be taken by the General Partner and each
Partnership 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, the Units will
constitute valid limited partnership interests in the
applicable Partnership and each subscriber who purchases Units
will become a Limited Partner, subject to the requirements
that each such purchaser shall have duly completed, executed,
and delivered to the applicable Partnership a Subscription
Agreement relating to the Units purchased by such purchaser,
that such purchaser meets all applicable suitability
standards, and that the representations and warranties of such
purchaser in the Subscription Agreement are true and correct
and that such purchaser is included as a Limited Partner in
the applicable Partnership's records. Such counsel need not
independently verify compliance with such requirements.
(B) Each Partnership is a limited
partnership duly formed pursuant to its Certificate of Limited
Partnership, its Limited Partnership Agreement and the DRULPA
and is validly existing under the laws of the State of
Delaware with full partnership power and authority to conduct
the business in which it proposes to engage as described in
the applicable Registration Statement and the Prospectus and
to perform its obligations under its Limited Partnership
Agreement, its Management Agreement, its DWR Customer
Agreement, its Clearing Broker Customer Agreement, the Escrow
Agreement, and this Agreement; and each Partnership has
received a Certificate of Authority to do business in the
State of New York as contemplated under Article 8-A of the New
York Revised Limited Partnership Act and need not effect any
other filings or qualifications under the laws of any other
jurisdictions to conduct its business as described in the
applicable Registration Statement and the Prospectus.
-16-
(C) The General Partner is a corporation
duly organized, validly existing, and in good standing under
the laws of the State of Delaware and is qualified to do
business and is in good standing as a foreign corporation in
the State of New York and in each other jurisdiction in which
the nature or conduct of its business requires such
qualification and where the failure to be so qualified might
reasonably be expected to result in material adverse
consequences to any Partnership or might materially adversely
affect the General Partner's ability to perform its
obligations as described in the Registration Statements and
the Prospectus. The General Partner has full corporate power
and authority to conduct its business as described in the
Registration Statements and the Prospectus and to perform its
obligations under each Limited Partnership Agreement, each
Management Agreement, each DWR Customer Agreement, each
Clearing Broker Customer Agreement, the Escrow Agreement, and
this Agreement, as applicable.
(D) The General Partner and its
"principals," as defined in CFTC Rule 3.1(a), and each
Partnership have all federal and state governmental,
regulatory, self-regulatory and exchange approvals, licenses,
registrations, and memberships, and have effected all filings
with federal and state governmental regulators,
self-regulatory organizations and exchanges required to
conduct their business and to act as described in the
Registration Statements and the Prospectus, or required for
the General Partner and each Partnership to perform their
obligations under each Limited Partnership Agreement, each
Management Agreement, each DWR Customer Agreement, each
Clearing Broker Customer Agreement, the Escrow Agreement, and
this Agreement, except for such approvals, licenses,
registrations, memberships, and filings the absence of which
would not have a material adverse effect on their ability of
the Partnerships or the General Partner to act as described in
the Registration Statements and the Prospectus, or to perform
their obligations under such agreements, and, to the best of
such counsel's knowledge, after due investigation, none of
such approvals, licenses, registrations, memberships, or
filings has been rescinded, revoked, or suspended.
(E) Each Limited Partnership Agreement, each
Management Agreement, each DWR Customer Agreement, each
Clearing Broker Customer Agreement, the Escrow Agreement, and
this Agreement has been duly and validly authorized, executed,
and delivered by or on behalf of the General Partner and/or
each Partnership, as the case may be, and each Limited
Partnership Agreement constitutes a valid and binding
agreement of the General Partner, each Management Agreement
constitutes a valid and binding agreement of the General
Partner and the applicable Partnership, the Escrow Agreement
constitutes a valid and binding agreement of each Partnership
and DWR, and this Agreement constitutes a valid and binding
agreement of each Partnership, the General Partner and DWR,
and, in the case of each valid and binding agreement above,
the agreement is enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium,
or similar laws at the time in effect affecting the
enforceability generally of rights of creditors and by general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law), and except as enforceability of the indemnification,
exculpation, and contribution provisions may be limited by
applicable law or public policy.
-17-
(F) The execution and delivery of the
respective Limited Partnership Agreements, the respective
Management Agreements, the respective DWR Customer Agreements,
the respective Clearing Broker Customer Agreements, the Escrow
Agreement, and this Agreement, as applicable, the offer and
sale of the Units by each Partnership, 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 the General
Partner's certificate of incorporation or bylaws, any
Certificate of Limited Partnership, or any Limited Partnership
Agreement, or the certificate of incorporation or bylaws of
DWR, and, to the best of such counsel's knowledge, based upon
due inquiry of certain officers of the General Partner, will
not violate, or constitute a breach of, or default under, any
other agreement or instrument known to such counsel by which
the General Partner or any Partnership is bound, and will not
violate any order known to such counsel, or any law, rule, or
regulation applicable to the General Partner or any
Partnership of any court, governmental body, administrative
agency, panel, or self-regulatory organization having
jurisdiction over the General Partner or any Partnership.
(G) To the best of such counsel's knowledge,
based upon due inquiry of certain officers of the General
Partner, except as disclosed in the Prospectus, there are no
actions, suits, or proceedings at law or in equity pending or
threatened before or by any court, governmental body,
administrative agency, panel, or self-regulatory organization,
nor have there been any such actions, suits, or proceedings
within the five years preceding the date of the Prospectus to
which the General Partner or any Partnership is or was a
party, or to which any of the assets of the General Partner or
any of the Partnerships is or was subject, which would be
material to an investor's decision to invest in a Partnership,
or which resulted or might reasonably be expected to result in
a materially adverse change in the condition, financial or
otherwise, business or prospects of the General Partner or any
Partnership, whether or not arising in the ordinary course of
business.
(H) The information in the Prospectus under
the captions "Summary--Tax Considerations," "Risk
Factors--Taxation Risks," "Purchases by Employee Benefit
Plans--ERISA Considerations," "Material Federal Income Tax
Considerations," "State and Local Income Tax Aspects," and
"The Limited Partnership Agreements," to the extent that such
information constitutes matters of law or legal conclusions,
has been reviewed by such counsel and is correct.
(I) The Registration Statements are
effective under the 1933 Act and, to the best of such
counsel's knowledge, no proceedings for a stop order are
pending or threatened under Section 8(d) of the 1933 Act or
any Blue Sky laws.
-18-
(J) At the time the Registration Statements
became effective, the Registration Statements, and at the time
the Prospectus was issued and as of the Closing, the
Prospectus, complied as to form in all material respects with
the requirements of the 1933 Act, the SEC Regulations, the
CEAct, the CFTC Rules, and the rules of the NASD and NFA.
(K) Based upon reliance on certain SEC
"no-action" letters, as of the Closing, none of the
Partnerships needs register as an "investment company" under
the Investment Company Act of 1940, as amended.
(L) Nothing has come to such counsel's
attention that would lead them to believe that the
Registration Statements at the time they became effective
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
that the Prospectus at the time it was issued or at the
Closing contained an untrue statement of a material fact or
omitted to state a material fact necessary 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 or belief (a) as to the
information in the Registration Statements or the Prospectus
regarding the Trading Advisors, the Commodity Brokers, or
their respective principals, (b) as to the financial
statements, notes thereto and other financial or statistical
data set forth in the Registration Statements and the
Prospectus, or (c) as to the performance data and notes or
descriptions thereto set forth in the Registration Statements
and the Prospectus.
In rendering its opinion, such counsel may rely on
information obtained from public officials, officers of the General
Partner, and other sources believed by it to be responsible, and may
assume that signatures on all documents examined by it are genuine, and
that a Subscription Agreement in the form referred to in the
Prospectus, has been duly authorized, completed, dated, executed, and
delivered and funds representing the full subscription price for the
Units purchased have been delivered by each purchaser of Units in
accordance with the requirements set forth in the Prospectus.
(v) Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, counsel to the
Non-Clearing Broker, shall deliver an opinion to the parties hereto at
such Closing as requested by DWR, in form and substance satisfactory to
the parties hereto, to the effect that:
(A) The Non-Clearing Broker is a corporation
duly organized, validly existing, and in good standing under
the laws of the State of Delaware and is qualified to do
business and is in good standing as a foreign corporation in
the State of New York and in each other jurisdiction in which
the nature or conduct of its business requires such
qualification and where the failure to be so qualified might
reasonably be expected to result in material adverse
consequences to the Non-Clearing Broker or might materially
adversely affect the Non-Clearing Broker's ability to perform
its obligations as described in the Registration Statements
-19-
and the Prospectus. The Non-Clearing Broker has full corporate
power and authority to perform its obligations as described in
the Registration Statements and the Prospectus and to perform
its obligations under the DWR Customer Agreements, the
Clearing Broker Customer Agreements and this Agreement.
(B) The DWR Customer Agreements, the
Clearing Broker Customer Agreements and this Agreement have
been duly and validly authorized, executed, and delivered by
the Non-Clearing Broker, and the DWR Customer Agreements, the
Clearing Broker Customer Agreements and this Agreement
constitute valid and binding agreements of the Non-Clearing
Broker, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium,
or similar laws at the time in effect affecting the
enforceability generally of rights of creditors and by general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law), and except as enforceability of indemnification,
exculpation, and contribution provisions may be limited by
applicable law or public policy.
(C) The Non-Clearing Broker has all federal
and state governmental, regulatory, self-regulatory and
exchange approvals, licenses, registrations, and memberships,
and has effected all filings with federal and state
governmental regulators, self-regulatory organizations and
exchanges required to conduct its business and to act as
described in the Registration Statements and the Prospectus,
or required to perform its obligations under the DWR Customer
Agreements, the Clearing Broker Customer Agreements and this
Agreement, except for such approvals, licenses, registrations,
memberships, and filings the absence of which would not have a
material adverse effect on its ability to act as described in
the Registration Statements and the Prospectus, or to perform
its obligations under such agreements, and, to the best of
such counsel's knowledge, after due investigation, none of
such approvals, licenses, registrations, memberships, or
filings has been rescinded, revoked or suspended.
(D) The execution and delivery of the DWR
Customer Agreements, the Clearing Broker Customer Agreements
and this 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 the Non-Clearing
Broker's certificate of incorporation or bylaws, and to the
best of such counsel's knowledge, based upon due inquiry of
certain officers of the Non-Clearing Broker, will not violate,
or constitute a breach of, or default under, any other
agreement or instrument known to such counsel by which the
Non-Clearing Broker is bound, and will not violate any order
known to such counsel or any law, rule, or regulation
applicable to the Non-Clearing Broker of any court,
governmental body, administrative agency, panel, or
self-regulatory organization having jurisdiction over the
Non-Clearing Broker.
(E) To the best of such counsel's knowledge,
based upon due inquiry of certain officers of the Non-Clearing
Broker, except as disclosed in the Prospectus, there are no
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actions, suits, or proceedings at law or in equity pending or
threatened before or by any court, governmental body,
administrative agency, panel, or self-regulatory organization,
nor have there been any such actions, suits, or proceedings
within the five years preceding the date of the Prospectus,
against the Non-Clearing Broker is or was a party, or to which
any of its assets is or was subject, which would be material
to an investor's decision to invest in a Partnership, or which
resulted or might reasonably be expected to result in a
materially adverse change in the condition, financial or
otherwise, business or prospects of the Non-Clearing Broker,
whether or not arising in the ordinary course of business.
(F) Nothing has come to such counsel's
attention to lead such counsel to believe that, as to the
Non-Clearing Broker, (a) the Registration Statements at the
time they became effective 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 at the time it was
issued or at the Closing 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
Non-Clearing Broker, in light of the circumstances under which
they were made, not misleading.
In rendering its opinion, such counsel may rely on
information obtained from public officials, officers of the
Non-Clearing Broker, and other sources believed by it to be responsible
and may assume that signatures on all documents examined by it are
genuine.
(vi) Deloitte & Touche L.L.P., independent certified
public accountants for the Partnerships and the General Partner, will
have furnished to DWR a letter, at such Closing as requested by DWR,
dated the date of the Closing and in form and substance satisfactory to
DWR, to the effect that:
(A) Such accountant is an independent
certified public accountant within the meaning of the 1933
Act, the CEAct, and the SEC Regulations with respect to the
Partnerships and the General Partner.
(B) In such accountant's opinion, the
statements of financial condition of the Partnerships and the
General Partner and the notes thereto included in the
Prospectus and examined by it comply as to form in all
material respects with the applicable accounting requirements
of the 1933 Act, the CEAct, and the SEC Regulations.
(C) On the basis of limited procedures not
constituting an audit, including inquiries of officials of the
General Partner having responsibility for financial and
accounting matters pertaining to the Partnerships and such
other inquiries and procedures as may be specified in such
letter, nothing has come to such accountant's attention which
causes it to believe that, as of a specified date not more
than five business days prior to the date of the Closing,
there has been any decrease in the Net Assets of any
Partnership as compared to the Net Assets set forth in the
respective statements of financial condition of the
Partnerships included in the Prospectus, except as may be
disclosed in such letter.
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(D) On the basis of limited procedures, not
constituting an audit, including a reading of the latest
available financial statements of the General Partner,
inspection of the minute book of the General Partner since the
date of the latest audited financial statements of the General
Partner, inquiries of officials of the General Partner having
responsibility for financial and accounting matters, and such
other inquiries and procedures as may be specified in such
letter, nothing has come to such accountant's attention that
causes it to believe that, as of a specified date not more
than five business days prior to the date of the Closing,
there has been any decrease in the General Partner's net worth
as compared to net worth set forth in the statement of
financial condition of the General Partner included in the
Prospectus, except as may be disclosed in such letter.
(vii) The Non-Clearing Broker shall deliver a
certificate to the parties hereto, in form and substance satisfactory
to such parties, at such Closing as requested by DWR, to the effect
that the representations and warranties of the Non-Clearing Broker
contained herein are true and correct with the same effect as though
expressly made at such Closing.
(viii) Each Trading Advisor shall deliver, at such
Closing as requested by DWR, such certificate as specified in each such
Trading Advisor's respective Management Agreement.
(ix) Counsel to each Trading Advisor shall deliver,
at such Closing as requested by DWR, such legal opinion as specified in
the respective Management Agreement of each Trading Advisor.
(x) All agreements contemplated herein or in the
Registration Statements or the Prospectus shall have been duly executed
and delivered.
11. Indemnification.
(a) Each Partnership agrees to indemnify, defend, and hold
harmless DWR, the General Partner, each Additional Seller and their respective
"affiliates" (as defined in Section 11(c)) from and against any loss, liability,
damage, cost, and expense (including attorneys' and accountants' fees and
expenses incurred in investigating or defending any demands, claims, or
lawsuits), actually and reasonably incurred arising from any act, omission,
activity, or conduct undertaken pursuant to this Agreement by or on behalf of
the Partnership, including, without limitation, any demands, claims, or lawsuits
initiated by a Limited Partner (or assignee thereof), provided that (1) DWR, the
General Partner, or the Additional Seller, as applicable, has determined, in
good faith, that the act, omission, activity, or conduct giving rise to the
claim for indemnification was in the best interests of the Partnership, and (2)
the act, omission, activity, or conduct that was the basis for such loss,
liability, damage, cost, or expense was not the result of misconduct or
negligence. The indemnity in this Section 11(a) is in addition to any liability
-22-
that the Partnership may otherwise have and will extend, upon the same terms and
conditions, to each person, if any, who controls an indemnified person within
the meaning of the 1933 Act. Notwithstanding anything to the contrary contained
in the foregoing, neither DWR, the General Partner, an Additional Seller, nor
their respective affiliates shall be indemnified by a Partnership for any
losses, liabilities, or expenses arising from or out of an alleged violation of
federal or state securities laws unless (1) there has been a successful
adjudication on the merits of each count involving alleged securities laws
violations as to the particular indemnitee, or (2) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction as
to the particular indemnitee, or (3) a court of competent jurisdiction approves
a settlement of the claims against the particular indemnitee and finds that
indemnification of the settlement and related costs should be made, provided,
with regard to such court approval, the indemnitee must apprise the court of the
position of the SEC, and the positions of the respective securities
administrators of Massachusetts, Missouri, Tennessee, and/or those other states
and jurisdictions in which the plaintiffs claim that they were offered or sold
Units, with respect to indemnification for securities laws violations before
seeking court approval for indemnification. Furthermore, in any action or
proceeding brought by a Limited Partner in the right of a Partnership to which
the General Partner, DWR, an Additional Seller, or any affiliate of any of the
foregoing is a party defendant, any such person shall be indemnified only to the
extent and subject to the conditions specified in DRULPA and this Section 11(a).
A Partnership shall make advances to the General Partner, DWR, an Additional
Seller, or their respective affiliates hereunder only if: (1) the demand, claim,
or lawsuit relates to the performance of duties or services by such persons to
the Partnership; (2) such demand, claim, or lawsuit is not initiated by a
Limited Partner; and (3) such advances are repaid, with interest at the legal
rate under Delaware law, if the person receiving such advance is ultimately
found not to be entitled to indemnification hereunder.
(b) DWR agrees to indemnify, hold harmless, and defend each
Partnership, the General Partner, their respective "affiliates" (as defined in
Section 11(c)), and their respective successors and assigns, from and against
any loss, claim, damage, liability, cost, and expense, joint or several
(including attorneys' and accountants' fees and expenses incurred in
investigating or defending any demands, claims, or lawsuits), to which any
indemnified party may become subject under the 1933 Act, the 1934 Act, the
CEAct, the Blue Sky law of any jurisdiction, or otherwise (including in
connection with the settlement of claims approved in advance by DWR and in
connection with any administrative proceedings), in respect of the offer or sale
of Units, insofar as such loss, claim, damage, liability, cost, or expense
arises out of, or is based upon: (i) a breach by DWR of any representation,
warranty, or agreement in this Agreement or any certificate delivered pursuant
to this Agreement, or the failure by DWR to perform any covenant made by DWR
herein; or (ii) a misleading or untrue statement of a material fact made in any
of the Registration Statements, the Prospectus or any Sales Literature, or an
omission to state a material fact therein which is required to be stated therein
or necessary to make the statements therein (in the case of the Prospectus and
any Sales Literature, in light of the circumstances under which they were made)
not misleading, provided such statement or omission relates specifically to DWR,
or was made in reliance upon, and in conformity with, written information or
instructions furnished by or on behalf of DWR or DWR's agents. The indemnity in
this Section 11(b) is in addition to any liability that DWR may otherwise have
and will extend, upon the same terms and conditions, to each person, if any, who
controls an indemnified person within the meaning of the 1933 Act.
-23-
(c) As used in this Section 11 the term "affiliate" of a
person shall mean: (i) any natural person, partnership, corporation,
association, or other legal entity directly or indirectly owning, controlling,
or holding with power to vote 10% or more of the outstanding voting securities
of such person; (ii) any partnership, corporation, association, or other legal
entity 10% or more of whose outstanding voting securities are directly or
indirectly owned, controlled, or held with power to vote by such person; (iii)
any natural person, partnership, corporation, association, or other legal entity
directly or indirectly controlling, controlled by, or under common control with,
such person; or (iv) any officer, director, or partner of such person.
Notwithstanding the foregoing, solely for purposes of determining eligibility
for indemnification under Section 11(a), the term "affiliate" shall include only
those persons performing services for the applicable Partnership.
(d) Promptly after receipt by an indemnified party under
Section 11(a) or (b) hereof of notice of the commencement of any action, claim,
or proceeding to which any of such subsections may apply, the indemnified party
will notify the indemnifying party in writing of the commencement thereof if a
claim in respect thereof is to be made against the indemnifying party under any
of such subsections; but the omission so to notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to the indemnified party otherwise than under any of such
subsections, except where such omission has materially prejudiced the
indemnifying party. In case any action, claim, or proceeding is brought against
an indemnified party and the indemnified party notifies the indemnifying party
of the commencement thereof as provided above, the indemnifying party will be
entitled to participate therein and, to the extent that the indemnifying party
desires, to assume the defense thereof with counsel selected by the indemnifying
party and not unreasonably disapproved by the indemnified party. After notice
from the indemnifying party to the indemnified party of the indemnifying party's
election so to assume the defense thereof as provided above, the indemnifying
party will not be liable to the indemnified party under any of such subsections
for any legal and other expenses subsequently incurred by the indemnified party
in connection with the defense thereof, other than reasonable costs of
investigation.
(e) Notwithstanding Section 11(d), if, in any action, claim,
or proceeding as to which indemnification is or may be available under Section
11(a) or (b) hereof, an indemnified party reasonably determines that its
interests are or may be adverse, in whole or in part, to the indemnifying
party's interests or that there may be legal defenses available to the
indemnified party which are different from, in addition to, or inconsistent
with, the defenses available to the indemnifying party, the indemnified party
may retain its own counsel in connection with such action, claim, or proceeding,
and will be indemnified by the indemnifying party for any legal and other
expenses reasonably incurred in connection with investigating or defending such
action, claim, or proceeding.
(f) In no event will the indemnifying party be liable for the
fees and expenses of more than one counsel for all indemnified parties in
connection with any one action, claim, or proceeding, or in connection with
separate but similar or related actions, claims, or proceedings, in the same
jurisdiction arising out of the same general allegations. The indemnifying party
will not be liable for any settlement of any action, claim, or proceeding
effected without the indemnifying party's express written consent, but if any
action, claim, or proceeding is settled with the indemnifying party's express
written consent or if there is a final judgment for the plaintiff in any such
action, claim, or proceeding, the indemnifying party will indemnify, defend, and
hold harmless an indemnified party as provided in Section 11(a) or (b) hereof,
as applicable.
(g) The exculpation provisions in each DWR Customer Agreement,
and each Limited Partnership Agreement shall not relieve any party thereto from
any liability it may have or incur to any party under this Agreement; nor shall
any party thereto be entitled to be indemnified by any party thereto pursuant to
-24-
the indemnification provisions contained in such agreements, against any loss,
liability, damage, cost, or expense it may incur under this Agreement.
12. Termination. Each of the parties shall have the right to
terminate this Agreement as to itself at any time prior to a Closing by giving
written notice of such termination to the other parties.
13. Survival. The respective indemnities, agreements,
obligations, representations, warranties, and other statements of the parties
hereto set forth in this Agreement or in any certificates delivered pursuant
hereto will remain in full force and effect (regardless of any investigation or
any statement as to the results thereof made by, or on behalf of, DWR, any
Partnership, the General Partner or any officer, director, controlling person,
or agent of any of the foregoing) and will survive the delivery of and payment
for Units and the termination or expiration of this Agreement, and each Closing.
14. Notices. All notices required or desired to be given under
this Agreement must be in writing and will be effective when given personally on
the date delivered or, when given by mail, on the date of receipt, addressed as
follows (or to such other address as the party entitled to notice hereafter
designates in accordance with the terms hereof):
if to the Partnerships or the General Partner:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter ▇▇▇▇▇▇ ▇.▇.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter Millburn L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter ▇▇▇▇▇▇ ▇.▇.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
if to DWFCM:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter DWFCM L.P.
c/o Demeter Management Corporation
Two World Trade Center, 62nd Floor
New York, New York 10048
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
if to DWR:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
15. Successors. This Agreement will be binding upon and inure
solely to the benefit of DWR, each Partnership and the General Partner (and to
the extent provided in Section 11 hereof, any Additional Sellers, the
"affiliates" of each Partnership, the General Partner, DWR, any Additional
Sellers, and the respective heirs, executors, administrators, successors, and
assigns of such persons), and no other person will acquire or have any rights
under or by virtue of this Agreement. No purchaser of Units will be deemed to be
a successor or assign to any party hereto merely by reason of such purchase.
16. Assignment; Amendment. This Agreement may not be assigned
by any party hereto without the prior express written consent of all other
parties. This Agreement may not be amended except by the express written consent
of all parties hereto.
17. Governing Law; Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of laws. If any action or proceeding shall be
brought by a party to this Agreement to enforce any right or remedy under this
Agreement, each party hereto hereby consents and will submit to the jurisdiction
of the courts of the State of New York or any federal court sitting in the
County, City and State of New York. Any action or proceeding brought by any
party to this Agreement to enforce any right, assert any claim or obtain any
relief whatsoever in connection with this Agreement shall be brought by such
party exclusively in the courts of the State of New York or any federal court
sitting in the County, City and State of New York.
18. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
-26-
If the foregoing Agreement is satisfactory to you, please so
indicate by signing at the place provided below.
Accepted and Agreed: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CHARTER ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ INC. By: Demeter Management Corporation, General Partner
By: _____________________________ By:___________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CHARTER MILLBURN L.P.
By: Demeter Management Corporation, General Partner
By:___________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CHARTER ▇▇▇▇▇▇ ▇.▇.
By: Demeter Management Corporation, General Partner
By:___________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
DEMETER MANAGEMENT CORPORATION
By:___________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ CHARTER DWFCM L.P.
By: Demeter Management Corporation, General Partner
By:___________________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
-27-
EXHIBIT 1.02
FORM OF ADDITIONAL SELLER AGREEMENT
Dated as of __________
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter ▇▇▇▇▇▇ ▇.▇. ("Charter
▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter Millburn L.P. ("Charter Millburn"),
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter ▇▇▇▇▇▇ ▇.▇. ("Charter ▇▇▇▇▇▇"), and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Charter DWFCM L.P. ("Charter DWFCM"); collectively with
Charter ▇▇▇▇▇▇, Charter Millburn, and Charter ▇▇▇▇▇▇, the "Partnerships," and
each individually, a "Partnership"), each a limited partnership organized under
the Delaware Revised Uniform Limited Partnership Act, are each proposing
concurrently to offer and sell, and issue, units of limited partnership interest
(the "Units"), in accordance with the terms and conditions set forth in the
Amended and Restated Selling Agreement, dated as of *, (the "Selling
Agreement"), among you, the Partnerships, and Demeter Management Corporation, a
Delaware corporation which is the general partner of the Partnerships (the
"General Partner"), and in the effective registration statements on Form S-1
listed in Schedule A attached hereto, including the exhibits and any amendments
thereto, as filed by the Partnerships with the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act"). Such registration statements, in the form in which they have become
effective under the 1933 Act, are herein referred to each individually as a
"Registration Statement," and collectively as the "Registration Statements," and
the prospectus constituting a part of the Registration Statements under the 1933
Act in the form last filed with the SEC pursuant to Rule 424 under the 1933 Act,
together with any supplements thereto, is herein referred to as the
"Prospectus."
Pursuant to the Selling Agreement, you were appointed the
selling agent for the Units to use your best efforts to offer and sell Units
and, in that connection, you were authorized under the Selling Agreement to
appoint, with the written approval of the General Partner, as your agent to make
offers and sales of Units, certain securities brokers or dealers (each such
broker or dealer, an "Additional Seller"). All capitalized terms used herein
shall have the meanings ascribed to them in the Selling Agreement unless
otherwise defined herein or unless the context indicates otherwise.
On the basis of the terms, conditions, and agreements
contained in this Agreement, we agree with you as follows:
1. We agree to become an Additional Seller, to use our best
efforts to offer and sell the Units on the terms stated in this Agreement, the
Selling Agreement, the Registration Statements, and the Prospectus, and to
comply with the terms and conditions of this Agreement and the Selling Agreement
in making offers and sales of Units.
2. We, as an Additional Seller, represent and warrant to you,
as follows:
(a) We are a corporation, partnership, or other entity duly
organized, validly existing, and in good standing under the laws of the
jurisdiction indicated on the signature page hereof, and are qualified to do
business and are in good standing in each jurisdiction in which the nature or
conduct of our business requires such qualification and where the failure to be
so qualified could materially adversely affect our ability to perform our
obligations hereunder. We have full power and authority under applicable law to
conduct our business and perform our obligations under this Agreement.
-2-
(b) We have all U.S. federal and state, and non-U.S.
regulatory and self-regulatory approvals, licenses, registrations, and
memberships, and have effected all filings with U.S. federal and state, and
non-U.S. governmental regulators and self-regulatory organizations required to
conduct our business and required to perform our obligations under this
Agreement. Specifically, we are either: (i) a broker or dealer who is (A)
registered and in good standing as such with the SEC under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), (B) registered or licensed
and in good standing as such under the respective securities laws of the 50
states, the District of Columbia, and Puerto Rico where such registration or
licensing is required for us to consummate offers and sales of Units as
contemplated by this Agreement, and (C) a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"); or (ii) a
non-U.S. broker or dealer not eligible for membership in the NASD, in which case
we agree (A) to make no offers or sales of Units within the United States, its
territories or possessions, or areas subject to its jurisdiction, or to persons
who are citizens thereof or residents therein, (B) that in making offers and
sales of Units, we will comply with the "Free-Riding and Withholding
Interpretation" in IM-2110-1 to NASD Conduct Rule 2110, and NASD Conduct Rules
2730 and 2750, as if we were a member of the NASD, and NASD Conduct Rule 2420 as
it applies to a non-member non-U.S. broker or dealer, (C) that we will not offer
or sell any Units in any non-U.S. jurisdiction until we effect, at our cost and
expense, any and all registration or qualification filings with regard to the
Units, the Partnerships or the General Partner as may be required under the
securities or other laws of such jurisdiction (we will provide you, at our cost
and expense, an opinion of qualified counsel, satisfactory in form and substance
to you, confirming that any such filings have been properly effected, or that no
such filings were required, prior to the time any Subscription Agreement is
-3-
delivered by a resident of any non-U.S. jurisdiction), and (D) that because
limited partners in the Partnerships have a right of exchange (redemption of
Units and purchase of Units with the proceeds of the redemption) among the
Partnerships, we will maintain and update as necessary, at our cost and expense,
any required registration or qualification filings effected pursuant to the
immediately preceding clause (C) so long as any person resident in such non-U.S.
jurisdiction remains a Limited Partner.
(c) This Agreement has been duly and validly authorized,
executed, and delivered by us and constitutes our valid and binding agreement,
enforceable against us in accordance with its terms.
(d) The execution and delivery of this Agreement, the
incurrence of the obligations set forth herein, and the consummation of the
transactions contemplated herein will not violate, or constitute a breach of, or
default under, our certificate of incorporation or bylaws, partnership
certificate or agreement, or other organizational document, or any other
agreement or instrument by which we are bound or any order, law, rule, or
regulation applicable to us of any court, governmental body, administrative
agency, panel, or self-regulatory organization having jurisdiction over us.
3. It is understood and agreed that we shall not, without your
prior written approval, publish, circulate, distribute, or otherwise use any
advertisement or solicitation material relating to the Units, other than the
Prospectus and any other selling literature supplied by you to us expressly for
such purpose ("Selling Literature"). We understand and acknowledge that we are
not authorized by you, the General Partner, or any Partnership to make any
representations in connection with the offering of Units other than those
contained in the Prospectus. It is agreed that, upon our written request, you
shall provide us with copies of the Registration Statements.
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4. We will offer and sell Units only to persons who satisfy
the suitability and/or minimum investment requirements set forth in the
Prospectus and the Subscription Agreement (and as may be required by the law of
any non-U.S. jurisdiction in which we may offer Units) and who, to the General
Partner's satisfaction, complete a Subscription Agreement. We will conduct a
thorough review of the suitability of each subscriber for Units. We will forward
subscriptions to the General Partner's office at Two World Trade Center, 62nd
Floor, New York, New York 10048-0026 (or such other office as you may notify
us), no later than noon of the first business day following our receipt of an
acceptable Subscription Agreement from a subscriber for Units, by mail or
courier, so that the General Partner should receive such Subscription Agreement
at least five business days prior to the Initial Closing or the applicable
Monthly Closing, as the case may be. We will arrange for the opening of a
customer account with you for each such subscriber for the purpose of paying for
subscriptions, crediting of interest thereon, redemptions of Units, and receipt
of any distributions thereon. We understand that subsequent to its review of
each Subscription Agreement, the General Partner will notify us, and we shall
notify each subscriber by the business day following our receipt of notice from
the General Partner, of the General Partner's acceptance of all, a portion, or
none of the subscriber's subscription. We understand that the General Partner
may reject subscriptions, in whole or in part, for any reason, and we agree that
we shall not be entitled to commissions with respect to any rejected
subscriptions. All payments for subscriptions by subscribers shall be made as
provided under the heading "Subscription Procedure" in the Prospectus. You shall
be responsible for the deposit of subscription funds into the Escrow Account as
described under the heading "Plan of Distribution" in the Prospectus. You shall
be responsible for issuance and delivery of interim receipts to subscribers.
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5. We will offer and sell Units in compliance with the
requirements set forth in the Registration Statements, the Prospectus
(particularly under the captions "Summary of the Prospectus -- Investment
Requirements," "Plan of Distribution," "Subscription Procedure," and "Purchases
by Employee Benefit Plans -- ERISA Considerations"), the Subscription Agreement,
the Selling Agreement, and this Agreement. We will comply fully at all times
with all applicable U.S. federal and state, and non-U.S. securities and
commodities laws (including, without limitation, the 1933 Act, the 1934 Act, the
Commodity Exchange Act, as amended (the "CEAct"), and the securities laws of the
jurisdictions in which we solicit subscriptions), and all applicable
requirements of the NASD (including NASD Conduct Rule 2810, particularly
paragraphs (b)(2) and (3) thereof), the Board of Governors of the Federal
Reserve System, and all other securities and commodities exchanges, governmental
regulators and self-regulatory organizations that have jurisdiction over us or
over the offer and sale of Units by us.
6. Specifically, if we are a member of the NASD, (a) we will
not permit the purchase of any Units by a customer account over which we have
discretionary authority without the prior written approval by the customer
owning such account; (b) we confirm that we have reasonable grounds to believe
that all material facts are adequately and accurately disclosed in the
Prospectus, which provides a basis for evaluating the Partnerships; (c) we
confirm that in determining the adequacy of disclosed facts pursuant to clause
(b), we have obtained information on material facts relating to: (i) items of
compensation, (ii) tax aspects, (iii) financial stability and experience of the
General Partner, and (iv) the Partnerships' conflicts and risk factors; (d) we
will take such measures as are reasonably necessary to assure ourselves that (i)
our registered principals and representatives have informed each subscriber of
all pertinent facts relating to the liquidity and marketability of the Units,
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and (ii) in recommending the purchase or redemption of Units, or the exchange of
Units in one Partnership for Units in another Partnership, as described under
"Exchange Privilege" in the Prospectus (an "Exchange"), our registered
principals and representatives have reasonable grounds to believe, on the basis
of information obtained from each subscriber concerning his investment
objectives, other investments, financial situation and needs, and any other
information known by such registered principal or representative, that: (A) such
subscriber is or will be in a financial position appropriate to enable him to
realize to a significant extent the benefits described in the Prospectus, (B)
such subscriber has a fair market net worth sufficient to sustain the risks
inherent in the purchase of Units, including loss of investment and lack of
liquidity, and (C) the purchase of Units is otherwise suitable for such
subscriber; and (e) it is understood that the General Partner will maintain in
its files, located c/o ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., Two ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, each subscriber's Subscription Agreement for not less than
six years, and we will maintain, at our respective branch offices, any other
documents disclosing the basis upon which the determination of suitability was
reached for each such subscriber.
7. Promptly after each Closing, you shall pay to us for each
Unit subscribed, accepted, and paid for through our efforts, a commission of
___% of the Net Asset Value of each such Unit as of the Closing as of which the
Unit is issued (the Net Asset Value per Unit at the Initial Closing is $10.00).
Your determination of the amount payable to us, if any, shall be conclusive. In
addition, if we are legally qualified or permitted to receive additional
compensation, as provided in Section 5(h) of the Selling Agreement, you agree to
pay to us, as additional compensation, an amount equal to _____% of the monthly
brokerage fees received by you from each Partnership and attributable to the
outstanding Units sold by us. Such additional compensation shall be in
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consideration of and is contingent upon our agreement (which we hereby undertake
to perform) to provide additional services in connection with Units sold by us,
including: (i) inquiring of the General Partner from time to time, at the
request of a Limited Partner, as to the Net Asset Value of a Unit; (ii)
inquiring of the General Partner, at the request of a Limited Partner, as to the
futures markets and the activities of the Partnerships; (iii) responding to
questions of Limited Partners from time to time with respect to monthly account
statements, annual reports, financial statements, and annual tax information
furnished periodically to Limited Partners; (iv) providing advice to Limited
Partners from time to time as to when and whether to make additional investments
or to redeem or Exchange Units; (v) assisting Limited Partners in the redemption
or Exchange of Units; and (vi) providing such other services as Limited Partners
from time to time may reasonably request. We understand and agree that no
portion of such additional compensation may be paid to our employees unless such
employees meet the qualifications set forth in Section 5(g) of the Selling
Agreement and have actually performed the above services for the Limited
Partners holding Units sold by us. Acceptance of compensation hereunder shall
constitute a representation by us that we have complied with all of the
provisions of this Paragraph 7 and this Agreement, and that we shall comply with
the provisions of this Paragraph 7 so long as we shall continue to receive any
additional compensation hereunder as specified in this Paragraph 7. We shall not
be entitled to a commission in any case in which it is determined by you or the
General Partner that the solicitation by us was made in violation of the
securities or commodities laws of any applicable jurisdiction. It is understood
that any compensation payable to us hereunder is payable solely from your funds,
and neither any Partnership, the General Partner, any subscriber, nor any
Limited Partner shall be liable or responsible therefor.
-8-
8. This Agreement shall terminate upon the termination of the
Initial Offering or the Continuing Offering pursuant to the Selling Agreement,
and may be terminated by either party upon ten (10) days' prior written notice
to the other. Upon termination of this Agreement, all authorizations, rights and
obligations hereunder shall cease, except (a) the indemnities set forth in
Paragraph 10 hereof, (b) the obligations to settle accounts hereunder, (c) our
obligations under Paragraph 2(b)(ii)(D) and Paragraph 9 hereof, and (d) your
agreement to provide additional compensation and our obligations in connection
therewith set forth in Paragraph 7 hereof.
9. We authorize you to deduct from any compensation that we
may receive under Paragraph 7 all transfer taxes, if any, paid by you for our
account with respect to sales of Units made through our efforts. We agree to pay
our proportionate share of any amount asserted against and discharged by you and
the other Additional Sellers, or any of them, based on the claim that you and
the Additional Sellers constitute an association, unincorporated business, or
other separate entity, including any expense incurred in defending against such
claim.
10. (a) We agree to indemnify, hold harmless, and defend you,
the General Partner, each Partnership, each Trading Advisor, and any other
Commodity Broker for a Partnership against any loss, claim, damage, liability,
cost, and expense, joint or several (including attorneys' and accountants' fees
and expenses reasonably incurred in investigating or defending any demands,
claims, or lawsuits), to which you or any indemnified party may become subject
under the 1933 Act, the 1934 Act, the CEAct, the securities law of any
jurisdiction, or otherwise (including in connection with the settlement of
claims approved in advance by us and in connection with any administrative
proceedings), in respect of the offer or sale of Units, insofar as such loss,
-9-
claim, damage, liability, cost, or expense arises out of, or is based upon a
breach by us of any representation, warranty, or agreement in this Agreement, or
the failure by us to perform any covenant made by us herein. The indemnity
agreement in this subparagraph (a) shall be in addition to any liability that we
may otherwise have and will extend, upon the same terms and conditions, to each
person, if any, who would be deemed a controlling person (within the meaning of
Section 15 of the ▇▇▇▇ ▇▇▇) of you, the General Partner, any Partnership, any
Trading Advisor, or any other Commodity Broker.
(b) Promptly after receipt by an indemnified party under
subparagraph (a) above of notice of the commencement of any action, claim, or
proceeding to which such subparagraph may apply, the indemnified party shall
notify the indemnifying party in writing of the commencement thereof if a claim
in respect thereof is to be made against the indemnifying party thereunder; but
the omission so to notify the indemnifying party shall not relieve the
indemnifying party from any liability which the indemnifying party may have to
the indemnified party otherwise than under such subparagraph, except to the
extent that such omission has materially prejudiced the indemnifying party. If
any action, claim, or proceeding is brought against an indemnified party and the
indemnified party notifies the indemnifying party of the commencement thereof as
provided above, the indemnifying party shall be entitled to participate therein
and, to the extent that the indemnifying party desires, to assume the defense
thereof with counsel selected by the indemnifying party and approved by the
indemnified party, such approval not to be unreasonably withheld. After notice
from the indemnifying party to the indemnified party of the indemnifying party's
election so to assume the defense thereof as provided above, the indemnifying
party shall not be liable to the indemnified party under subparagraph (a) for
any legal and other expenses subsequently incurred by the indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation.
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(c) Notwithstanding subparagraph (b), if, in any action,
claim, or proceeding as to which indemnification is or may be available under
subparagraph (a) above, an indemnified party reasonably determines that its
interests are or may be adverse, in whole or in part, to the indemnifying
party's interests or that there may be legal defenses available to the
indemnified party which are inconsistent with the defenses available to the
indemnifying party, the indemnified party may retain its own counsel in
connection with such action, claim, or proceeding, and shall be indemnified by
the indemnifying party for any legal and other expenses reasonably incurred in
connection with investigating or defending such action, claim, or proceeding.
(d) In no event will an indemnifying party under this
Agreement be liable for the fees and expenses of more than one counsel for any
one indemnified party in connection with any one action, claim, or proceeding or
in connection with separate but similar or related actions, claims, or
proceedings in the same jurisdiction arising out of the same general
allegations. The indemnifying party will not be liable for any settlement of any
action, claim, or proceeding effected without the indemnifying party's express
written consent, but if any action, claim, or proceeding is settled with the
indemnifying party's express written consent or if there is a final judgment for
the plaintiff in any such action, claim, or proceeding, the indemnifying party
shall indemnify, defend, and hold harmless an indemnified party as provided in
subparagraph (a) above.
11. We agree that under no circumstances shall we engage in
any activities hereunder in any jurisdiction unless (a) the Units have been
registered or qualified for sale under the securities laws thereof, and (b) we
may lawfully so engage in such activities therein.
12. We acknowledge receipt of copies of the Selling Agreement,
the Prospectus, and any Selling Literature provided to us pursuant to Paragraph
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3 hereof, and confirm that in executing this Agreement we have relied thereon
and upon no other representations whatsoever, either written or oral. We hereby
confirm (a) that we have examined the Selling Agreement, the Prospectus and any
such Selling Literature, and we are familiar with the terms of the Units and
other terms of the offering, (b) that the information, if any, relating to us
which has been furnished by us or on our behalf expressly for use in connection
with the Registration Statements, the Prospectus, and any Selling Literature
does not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus and any Selling Literature, in light of
the circumstances under which such statements were made) not misleading, (c)
that we are willing to accept the responsibilities of an Additional Seller under
the 1933 Act and the CEAct, and (d) that we are willing to proceed with the
offering of Units in the manner contemplated. Further, we understand that you
may approve of or object to any further amendments to the Registration
Statements, the filing of one or more additional registration statements and
amendments thereto, or amendments or supplements to the Prospectus and any
Selling Literature, without our consent or approval. With respect to the Selling
Agreement, we understand that you may in your discretion exercise any right of
cancellation or termination and consent to such other changes in the Selling
Agreement as you may approve without our consent or approval. You agree that you
will: (a) notify us of any such amendment to the Registration Statements, any
additional registration statement and any amendment thereto, and shall provide a
copy of same to us upon our written request; (b) notify us of any amendment or
supplement to the Prospectus or any Selling Literature, and cause a copy of same
to be furnished to us; and (c) notify us of any material change in the Selling
Agreement.
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13. We agree that you shall be under no liability (except for
your own lack of good faith and for obligations expressly assumed by you
hereunder) to us in respect of any matters connected herewith or action taken by
you pursuant hereto for, or in respect of, the form of or the statements
contained in the Registration Statements, any additional registration statement,
the Prospectus, any Selling Literature, or any amendment or supplement to any of
the foregoing documents; the qualification of the Units for sale under the laws
of any jurisdiction; or any matter in connection with any of the foregoing;
provided, however, that nothing in this Paragraph 13 shall be deemed to relieve
you from any liability imposed by the 1933 Act.
14. Nothing contained herein shall constitute us as partners
with you or with other Additional Sellers, and the obligations of ourselves and
of all other Additional Sellers are several and not joint.
15. Any notice from you to us at the address set forth below
shall be deemed to have been duly given if mailed, telexed, telegraphed,
telecopied, or telephoned and subsequently confirmed in writing to us.
16. This Agreement shall be construed in accordance with the
internal laws of the State of New York, without regard to principles of
conflicts of laws.
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Your acceptance of this Agreement and approval hereof shall be
indicated below, whereupon this Agreement shall constitute a binding agreement
between us.
Very truly yours,
Print or Type Name of Additional Seller
By: ____________________________________
(Signature of Authorized Signatory)
Name: _____________________________
Title:_____________________________
Address:
________________________________________
________________________________________
Attention:______________________________
Telephone No.:__________________________
Telex No.:______________________________
Telecopier No.:_________________________
Type of Organization (Corporation, Partnership
or Other Entity):_______________________
State or Other Jurisdiction Where
Organized:___________________________
Accepted as of ______________:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
By:___________________________
(Signature of Authorized Officer)
Name: ___________________________
Title: __________________________
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SCHEDULE A TO ADDITIONAL SELLER AGREEMENT
No. of Units
SEC File No. Effective Date Partnership Registered
------------ ---------------- ------------- --------------
333-60097 11/6/98 Charter ▇▇▇▇▇▇ 3,000,000
333-60015 11/6/98 Charter Millburn 3,000,000
333-60103 11/6/98 Charter ▇▇▇▇▇▇ 3,000,000
333-91563 3/26/00 Charter ▇▇▇▇▇▇ 6,000,000
333-91569 3/26/00 Charter Millburn 6,000,000
333-91567 3/26/00 Charter ▇▇▇▇▇▇ 6,000,000
333-_____ __/__/00 Charter DWFCM 1,750,000
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