EXHIBIT 1.02
FORM OF ADDITIONAL SELLER AGREEMENT
Dated as of __________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Charter ▇▇▇▇▇▇ ▇.▇. ("Charter ▇▇▇▇▇▇"), ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Charter Millburn L.P. ("Charter Millburn"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Charter
▇▇▇▇▇▇ ▇.▇. ("Charter ▇▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Charter MSFCM L.P. ("Charter
MSFCM") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Charter ▇▇▇▇▇▇▇▇ ▇.▇. ("Charter ▇▇▇▇▇▇▇▇";
collectively with Charter ▇▇▇▇▇▇, Charter Millburn, Charter ▇▇▇▇▇▇ and Charter
MSFCM, 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.
-4-
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 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (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.
-5-
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 - Who May
Subscribe," "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,
-6-
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 Morgan ▇▇▇▇▇▇▇ ▇▇ Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, 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
-7-
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.
-10-
(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
-11-
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.
-12-
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.
-13-
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: __________________________
-14-
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 MSFCM 1,750,000
333-_____ __/__/00 Charter ▇▇▇▇▇▇ 2,000,000
333-_____ __/__/00 Charter MSFCM 3,000,000
333-_____ __/__/00 Charter ▇▇▇▇▇▇▇▇ 3,000,000
-15-