UNITED STATES COMMODITY FUNDS LLC DIRECTOR DEFERRED COMPENSATION AGREEMENT
Exhibit
10.5
Execution
Copy
UNITED
STATES COMMODITY FUNDS LLC
This
DIRECTOR DEFERRED COMPENSATION AGREEMENT (“Agreement”)
is effective as of April 1, 2010, by and between United States Commodity Funds
LLC, a Delaware limited liability company (the “Company”),
each of the Funds (as defined below), and the undersigned director of the
Company (the “Director”).
Recitals
A. The
board of directors of the Company has determined that it is in the best
interests of the Company and each commodity fund for which the Company acts as
the general partner (each a “Fund”,
together, the “Funds”),
including United States Oil Fund, LP, United States 12 Month Oil Fund, LP,
United States Short Oil Fund, LP, United States Natural Gas Fund, LP, United
States 12 Month Natural Gas Fund, LP, United States Short Natural Gas Fund, LP,
United States Heating Oil Fund, LP, United States Gasoline Fund, LP and United
States ▇▇▇▇▇ Oil Fund, LP, to assure that the Company and the Funds will have
the continued dedication and objectivity of the Director.
B. The
board of directors believes that it is important to provide the Director with
deferred compensation to provide sufficient incentive to the Director to
continue his service to the Company and the Funds.
In
consideration of the mutual covenants herein contained, and in consideration of
the Director’s continuing service to the Company, the parties agree as
follows:
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1.
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Definition of
Terms. The following terms referred to in this Agreement shall have
the following meanings:
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A.
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Cause. “Cause”
shall mean the Director’s gross negligence, willful misconduct or failure
to satisfy his fiduciary duties as a
director.
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B.
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Deferred
Compensation. “Deferred
Compensation” shall mean compensation in an amount equal to two
times the Director’s annual compensation for services as a director
(including compensation for service on any committee of the board of
directors) as of the date hereof.
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C.
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Disinterested
Board. “Disinterested
Board” shall mean the board of directors of the Company excluding
those members of the board of directors, if any, who are parties to
agreements or arrangements identical to or substantially similar to this
Agreement.
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D.
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Resignation for Good
Reason. “Resignation
for Good Reason” shall mean the Director’s resignation because
(i) his compensation as a Director decreases below the amount of
compensation in effect on the date of this Agreement, (ii) his
expenses are not reimbursed at least to the same degree as they were
reimbursed during the period that he served as a director prior to the
date of this Agreement, (iii) there is any material adverse change in
his duties as a director of the Company from his current duties, or any
material increase in the amount of time (including travel time) necessary
to perform such duties from the amount of time currently spent by him,
(iv) the Company fails to maintain directors and officers errors and
omissions insurance coverage at least equivalent in amount and terms to
the current coverage, (v) the Company breaches this Agreement, or
(vi) circumstances are imposed on him by the Company that would, in
his reasonable judgment, make him unable to perform his duties as a
director of the Company in an appropriate
manner.
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E.
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Separation from
Service. “Separation
from Service” shall mean the Director’s separation from service as
a member of the Board within the meaning of Section 409A of the Internal
Revenue Code and the regulations
thereunder.
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2.
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Deferred
Compensation.
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A.
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Payment of Deferred
Compensation. The Deferred Compensation shall be paid in the manner
set forth in Section 2.B and 2. C below on the earliest to occur of
(i) ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇) the Director’s Separation from
Service, or (iii) the Director’s death. Notwithstanding the
foregoing, upon the Director’s Separation from Service prior to
April 1, 2012 due to (A) the Director’s voluntary resignation that is
other than a Resignation for Good Reason or (B) Cause, the Director shall
forfeit and shall not be entitled to receive payment of his Deferred
Compensation.
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B.
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Timing of Payment of
Deferred Compensation. The Deferred Compensation shall be paid to
the Director (or in the event of the Director’s death, (i) to his
beneficiary designated in accordance with procedures established by the
Company or (ii) if no such beneficiary is designated, to his estate)
by the Funds in a single lump sum within fourteen days after the date such
Deferred Compensation becomes due and payable to the Director pursuant to
Section 2.A.
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C.
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Payment by the
Funds. Payment of the Deferred Compensation shall be
apportioned among the Funds in a manner consistent with the payment of
fees and expenses of the directors.
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3.
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Segregated
Account. An amount equal to the Deferred Compensation
shall be deposited within fourteen days of the effective date of this
Agreement and maintained in a segregated account of the Funds
to be held by the Funds’ custodian, ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.,
Inc. (“BBH”),
on behalf of the Company and the Funds. However, the segregated
account and any other assets of the Company and the Funds shall not be
treated as set aside for or dedicated to the Director, and the Deferred
Compensation is not intended to be treated as funded for purposes of the
Internal Revenue Code or otherwise. The Director shall have no
interest in or claim on such segregated account or any other assets of the
Company or the Funds other than that of a general
creditor.
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4.
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Termination and
Amendment of this Agreement.
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A.
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Termination.
This Agreement shall terminate on the date that all obligations of the
parties hereunder have been
satisfied.
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B.
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Form of
Amendment. The form of any amendment of this Agreement shall be a
written instrument signed by the Director and by a duly authorized officer
or officers of the Company. Any such amendment shall have been
approved by the Disinterested
Board.
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5.
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Successors. Any
successor to the Company or any of the Funds (whether direct or indirect
and whether by purchase, merger, consolidation, liquidation or otherwise)
or to all or substantially all of the business and/or assets of the
Company or any of the Funds, as applicable, shall assume the obligations
under this Agreement. For all purposes under this Agreement,
the term “Company” or “Fund” shall include any successor to the business
and/or assets of the Company or any Fund, as applicable, which becomes
bound by the terms of this Agreement by operation of
law.
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6.
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Notice. Notices
and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally
delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Director, mailed
notices shall be addressed to him at the home address that was most
recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters,
and all notices shall be directed to the attention of its
Secretary.
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7.
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Miscellaneous
Provisions.
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A.
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Compliance with
Section 409A. This Agreement is intended to comply with
Section 409A of the Internal Revenue Code and the regulations thereunder
(“Section
409A”) and shall be interpreted and operated in accordance with
such intent. In the event that a Director is a “specified
employee” within the meaning of Section 409A, any amounts payable under
this Agreement that constitute deferred compensation within the meaning of
Section 409A and that become payable upon a Separation from Service shall
be delayed and paid upon the earlier of the first day of the
seventh month following such Separation from Service or the
Director’s death, if such delay is necessary to comply with Section
409A. Any adverse tax consequences incurred by the Director
under this Agreement, whether a result of Section 409A or otherwise, are
the sole responsibility of the affected
Director.
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B.
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Waiver. No
provision of this Agreement shall be modified, waived or discharged unless
the modification, waiver or discharge is agreed to in writing and signed
by the Director and by an authorized officer of the Company. No
waiver by either party of any breach of, or of compliance with, any
condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same
condition or provision at another
time.
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C.
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Whole
Agreement. No agreements, representations or understandings
(whether oral or written and whether express or implied) which are not
expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter
hereof.
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D.
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Choice of Law.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of
California.
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E.
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Severability.
The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other
provision hereof, which shall remain in full force and
effect.
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F.
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No Assignment of
Benefits. The rights of any person to payments or benefits under
this Agreement shall not be made subject to option or assignment, either
by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other
creditor’s process, and any action in violation of this subsection (E)
shall be void.
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G.
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Assignment by Company
and the Funds. The Company may assign its rights under this
Agreement to an affiliate, and an affiliate may assign its rights under
this Agreement to another affiliate of the Company or to the
Company. In the event of any such assignment, the term
“Company” when used in a section of this Agreement shall mean the Company
that the Director is actually associated with. No Fund may
assign this Agreement without the prior written consent of the
Director.
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H.
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Headings. The
headings of sections herein are included solely for convenience of
reference and shall not control the meaning or interpretation of any
provisions of this Agreement.
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I.
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Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together will constitute one and the
same instrument.
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IN
WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of
the Company by its duly authorized officer, as of the day and year first above
written.
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United
States Commodity Funds LLC
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By:
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Name:
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Title:
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United States Oil Fund,
LP, by its general partner United
States Commodity Funds LLC |
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By:
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Name:
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Title:
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United States 12 Month Oil
Fund, LP, by its general
partner United States Commodity Funds LLC |
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By:
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Name:
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Title:
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United States Short Oil Fund,
LP, by its general partner
United States Commodity Funds LLC |
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By:
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Name:
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Title:
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United States Natural Gas Fund,
LP, by its general
partner United States Commodity Funds LLC |
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By:
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Name:
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Title:
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United States 12 Month Natural
Gas Fund, LP, by its
general partner United States Commodity Funds LLC |
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By:
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Name:
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Title:
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United States Short Natural Gas
Fund, LP, by its
general partner United States Commodity Funds LLC |
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By:
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Name:
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Title:
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United States Heating Oil Fund,
LP, by its general
partner United States Commodity Funds LLC |
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By:
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Name:
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Title:
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United States Gasoline Fund,
LP, by its general
partner United States Commodity Funds LLC |
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By:
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Name:
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Title:
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United States ▇▇▇▇▇ Oil Fund,
LP, by its general
partner United States Commodity Funds LLC |
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By:
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Name:
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Title:
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Director
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Name:
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