Exhibit 10.05
SELLING AGREEMENT
------------------
ML CHESAPEAKE L.P.
(A Delaware Limited Partnership)
Private Placement of Limited Partnership Interests
Dated as of September 22, 1995
ML CHESAPEAKE L.P.
SELLING AGREEMENT
TABLE OF CONTENTS
Page
Section 1. Representations and Warranties of the General Partner............................... 2
Section 2. Representations and Warranties of the Commodity Broker.............................. 4
Section 3. Representations and Warranties of the Trading Advisor............................... 6
Section 4. Offering and Sale of Interests...................................................... 8
Section 5. Covenants of the General Partner.................................................... 10
Section 6. Covenants of the Trading Advisor.................................................... 11
Section 7. Payment of Expenses and Fees........................................................ 12
Section 8. Conditions of Closing............................................................... 12
Section 9. Memorandum Terms and Descriptions Controlling....................................... 18
Section 10. Indemnification and Exculpation.................................................... 19
Section 11. Status of Parties.................................................................. 20
Section 12. Representations, Warranties and Agreements to Survive Delivery..................... 21
Section 13. Termination........................................................................ 21
Section 14. Notices and Authority to Act....................................................... 21
Section 15. Parties............................................................................ 21
Section 16. Governing Law...................................................................... 21
Section 17. Requirements of Law................................................................ 21
Section 18. Consent to Jurisdiction............................................................ 22
i
ML CHESAPEAKE L.P.
(A Delaware Limited Partnership)
Private Placement of Limited Partnership Interests
SELLING AGREEMENT
-----------------
September 22, 1995
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
North Tower
World Financial Center
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sirs:
Your affiliate, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Investment Partners Inc., a
Delaware corporation (referred to herein in its individual corporate capacity
and as general partner as the "General Partner"), and an initial limited partner
have caused the formation of a limited partnership pursuant to the Revised
Uniform Limited Partnership Act of the State of Delaware (the "Delaware Act")
under the name ML CHESAPEAKE L.P. (the "Partnership"), for the purposes of
engaging in speculative trading of commodity futures and forward contracts,
commodity options, and other commodity interests, implementing the techniques
and trading strategies of Chesapeake Capital Corporation, an Illinois
corporation (the "Trading Advisor"). The initial commodity broker for the
Partnership will be ▇▇▇▇▇▇▇ ▇▇▇▇▇ Futures Inc., a Delaware corporation (the
"Commodity Broker"). The exclusive selling agents for the Partnership will be
yourself and certain of your affiliates (herein sometimes collectively referred
to as the "Selling Agent").
The Partnership desires to increase the capital of the
Partnership as herein provided, by the sale of limited partnership interests in
the Partnership (the "Interests"), the purchasers of which will become limited
partners ("Limited Partners") in the Partnership.
The Commodity Broker has agreed to act as broker for the
Partnership pursuant to a customer agreement (the "Customer Agreement") between
the Commodity Broker and the Partnership.
The Trading Advisor has agreed to provide commodity-related
services to the Partnership pursuant to an advisory agreement (the "Advisory
Agreement") between the Trading Advisor, the General Partner and the
Partnership. The Trading Advisor has also agreed to provide various
commodity-related services to the Commodity Broker pursuant to a consulting
agreement (the "Consulting Agreement") between the Trading Advisor and the
Commodity Broker.
Capitalized terms used herein, unless otherwise indicated,
shall have the meanings attributed to them in the Memorandum referred to below.
Section 1. Representations and Warranties of the General
---------------------------------------------
Partner.
-------
The General Partner represents and warrants to the Commodity Broker,
the Trading Advisor and the Selling Agent as follows:
(a) The Partnership has provided to the Trading Advisor
and to the Selling Agent a Confidential Private Placement Memorandum
and Disclosure Document dated September 22, 1995 (including the
Appendices and Exhibits thereto and as amended and supplemented from
time to time, the "Memorandum") relating to the sale of the Interests
to "accredited investors" in a continuous offering exempt from
registration under the Securities Act of 1933, as amended, pursuant to
Section 4(2) thereof and Regulation D promulgated thereunder (together,
the "1933 Act"), has filed two copies thereof with the Commodity
Futures Trading Commission (the "CFTC") under the Commodity Exchange
Act (the "Commodity Act") and one copy with the National Futures
Association (the "NFA") in accordance with NFA Compliance Rule 2-13,
and has filed any such amendments thereto as may have been required by
the CFTC or any other regulatory agency, or as advised by counsel, to
the date hereof. Except as required by law, the Partnership will not
file any amendment or supplement to the Memorandum (and will not use
any such amendment or supplement) which shall be reasonably objected to
in writing by counsel to the Trading Advisor after reasonable prior
notice.
(b) The Certificate of Limited Partnership (the
"Certificate of Limited Partnership") pursuant to which the Partnership
has been formed and the Limited Partnership Agreement of the
Partnership (the "Limited Partnership Agreement") each provide for the
subscription for and sale of the Interests; all action required to be
taken by the General Partner and the Partnership as a condition to the
sale of the Interests to qualified subscribers therefor has been, or
prior to each Closing Time (as defined in Section 4 hereof) will have
been, taken; and, upon payment of the consideration therefor specified
in all accepted Subscription Agreements and Powers of Attorney, the
Interests will constitute valid limited partnership interests in the
Partnership.
(c) The Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware with full power and authority to engage in the
business to be conducted by it, as described in the Memorandum.
(d) The General Partner is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and 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 the
failure to so qualify would materially adversely affect the Partnership
or the General Partner's ability to perform its obligations hereunder.
(e) The Partnership and the General Partner have full
partnership or corporate power and authority under applicable law to
perform their respective obligations under
2
the Limited Partnership Agreement, the Customer Agreement, the Advisory
Agreement and this Agreement, as described in the Memorandum.
(f) The Memorandum contains all statements and
information required to be included therein by the Commodity Act, the
1933 Act and the rules and regulations under each. The Memorandum does
not contain, and will not as at any Closing Time contain, any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements contained therein, in the light of the
circumstances under which such statements were made, not misleading.
This representation and warranty shall not, however, apply to any
statement or omission in the Memorandum made in reliance upon and in
conformity with information relating to or furnished by the Trading
Advisor or the Selling Agent.
(g) Since the respective dates as of which information is
given in the Memorandum, except as may otherwise be stated in or
contemplated by the Memorandum, there has not been any material adverse
change in the condition (financial or otherwise), business or prospects
of the General Partner or the Partnership, whether or not arising in
the ordinary course of business.
(h) The General Partner at each Closing Time will have a
net worth sufficient in amount and satisfactory in form, as set forth
in the opinion of Sidley & Austin, counsel for the General Partner, for
classification of the Partnership as a partnership for Federal income
tax purposes under current interpretations of the Internal Revenue Code
of 1986, as amended (the "Code") and the regulations thereunder.
(i) Each of this Agreement, the Limited Partnership
Agreement and the Advisory Agreement has been duly and validly
authorized, executed and delivered by the General Partner on behalf of
the General Partner and the Partnership and constitutes a valid,
binding and enforceable agreement of the General Partner and the
Partnership in accordance with its terms. The Customer Agreement has
been duly and validly authorized, executed and delivered by the General
Partner on behalf of the Partnership.
(j) The execution and delivery of the Limited Partnership
Agreement, the Customer Agreement, the Advisory Agreement and this
Agreement, the incurrence of the obligations set forth in each of such
agreements and the consummation of the transactions contemplated
herein, therein and in the Memorandum will not constitute a breach of,
or default under, any instrument by which the General Partner or the
Partnership, as the case may be, is bound or any order, rule or
regulation applicable to the General Partner or the Partnership of any
court or any governmental body or administrative agency having
jurisdiction over the General Partner or the Partnership.
(k) There is not pending or, to the best of the General
Partner's knowledge, threatened any action, suit or proceeding before
or by any court or other governmental body to which the General Partner
or the Partnership is a party, or to which any of the assets of the
General Partner or the Partnership is subject, which is not referred to
in the Memorandum and which might reasonably be expected to result in
any material adverse change in the condition (financial or otherwise),
business or prospects of the General
3
Partner or the Partnership or is required to be disclosed in the
Memorandum pursuant to applicable CFTC regulations. The General Partner
has not received any notice of an investigation by the NFA or the CFTC
regarding non-compliance by the General Partner with the Commodity Act
or the regulations thereunder.
(l) The General Partner has all Federal and state
governmental, regulatory and exchange approvals and licenses, and has
effected all filings and registrations with Federal and state
governmental agencies required to conduct its business and to act as
described in the Memorandum or required to perform its obligations as
described under the Limited Partnership Agreement (including, without
limitation, registration as a commodity pool operator under the
Commodity Act and membership in the NFA as a commodity pool operator),
and the performance of such obligations will not contravene or result
in a breach of any provision of its certificate of incorporation,
by-laws or any agreement, instrument, order, law or regulation binding
upon it. The principals of the General Partner identified in the
Memorandum are all of the principals of the General Partner, as the
term "principals" is defined by the CFTC regulations. Such principals
are duly registered as such on the General Partner's commodity pool
operator Form 7-R registration.
(m) The Partnership does not require any Federal or state
governmental, regulatory or exchange approvals or licenses, nor need
the Partnership effect any filings or registrations with any Federal or
state governmental agencies in order to conduct its business and to act
as contemplated by the Memorandum and to issue and sell the Interests
(other than filings relating solely to the offering of the Interests).
(n) Neither the General Partner nor any principal or
affiliate thereof has previously "operated" any commodity pool within
the meaning of CFTC Regulations the performance of which is not
disclosed in the Memorandum.
Section 2. Representations and Warranties of the Commodity
-----------------------------------------------
Broker.
------
The Commodity Broker represents and warrants to the Partnership, the
General Partner, the Trading Advisor and the Selling Agent as follows:
(a) The Commodity Broker is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and in good standing as a foreign corporation in each other
jurisdiction in which the nature or conduct of its business requires
such qualification and the failure to so qualify would materially
adversely affect the Commodity Broker's ability to perform its
obligations hereunder or under the Customer Agreement or the Consulting
Agreement. The Commodity Broker has full corporate power and authority
to perform its obligations under the Customer Agreement, the Consulting
Agreement and this Agreement, as described in the Memorandum.
(b) All references to the Commodity Broker and its
principals in the Memorandum are accurate and complete in all material
respects, and set forth in all material respects the information
required to be disclosed therein under the Commodity Act and the rules
and regulations thereunder. As to the Commodity Broker and its
4
principals (i) the Memorandum contains all statements and information
required to be included therein under the Commodity Act and the rules
and regulations thereunder, (ii) the Memorandum does not contain, and
will not as of any Closing Time contain, any misleading or untrue
statement of a material fact or omit to state a material fact which is
required to be stated therein or necessary to make the statements
contained therein not misleading, in light of the circumstances under
which such statements were made.
(c) The Commodity Broker has all Federal and state
governmental, regulatory and exchange approvals and licenses, and has
effected all filings and registrations with Federal and state
governmental and regulatory agencies required to conduct its business
and to act as described in the Memorandum or required to perform its
obligations as described under the Customer Agreement, the Consulting
Agreement and this Agreement (including, without limitation,
registration of the Commodity Broker as a futures commission merchant
under the Commodity Act and membership of the Commodity Broker as a
futures commission merchant in the NFA), and the performance of such
obligations will not contravene or result in a breach of any provision
of the Commodity Broker's certificate of incorporation, by-laws or any
agreement, instrument, order, law or regulation binding upon the
Commodity Broker.
(d) Each of the Customer Agreement, the Consulting
Agreement and this Agreement has been duly and validly authorized,
executed and delivered by the Commodity Broker, and each of this
Agreement and the Consulting Agreement constitutes a valid, binding and
enforceable agreement of the Commodity Broker in accordance with its
terms.
(e) Since the respective dates as of which information is
given in the Memorandum, except as may otherwise be stated in or
contemplated by the Memorandum, there has not been any material adverse
change in the condition (financial or otherwise), business or prospects
of the Commodity Broker, whether or not arising in the ordinary course
of business.
(f) In the ordinary course of its business, the Commodity
Broker is engaged in civil litigation and subject to administrative
proceedings which, in the aggregate, are not expected to have a
material effect upon its condition, financial or otherwise. The
Commodity Broker makes it a policy to vigorously defend civil
litigation, reparation or arbitration proceedings brought against it
and in almost all such proceedings currently pending against it, the
Commodity Broker believes it has defenses which are factually and
legally sound. Neither the Commodity Broker nor any of its principals
have been the subject of any administrative, civil, or criminal actions
within the five years preceding the date hereof that would be material
to an investor's decision to purchase an Interest.
(g) The execution and delivery of the Customer Agreement,
the Consulting Agreement and this Agreement, the incurrence of the
obligations set forth herein and therein and the consummation of the
transactions contemplated herein and therein and in the Memorandum will
not constitute a breach of, or default under, any instrument by which
the Commodity Broker is bound or any order, rule or regulation
applicable to the
5
Commodity Broker of any court or any governmental body or
administrative agency having jurisdiction over the Commodity Broker.
Section 3. Representations and Warranties of the Trading
Advisor. The Trading Advisor represents and warrants to the Partnership, the
Selling Agent, the Commodity Broker and the General Partner as follows:
(a) The Trading Advisor is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation and in good standing as a foreign corporation in each
other jurisdiction in which the nature or conduct of its business
requires such qualification and the failure to so qualify would
materially adversely affect the Trading Advisor's ability to perform
its obligations hereunder or under the Advisory Agreement or the
Consulting Agreement. The Trading Advisor has full power and authority
to participate in the Partnership as described in the Memorandum.
(b) All references to the Trading Advisor and its
principals and trading systems, methods and performance in the
Memorandum are accurate and complete in all material respects. As to
the Trading Advisor, each of its principals, and their trading systems,
methods and performance, (i) the Memorandum contains all statements and
information required to be included therein under the Commodity Act and
the rules and regulations thereunder, and (ii) the Memorandum does not
contain, and will not as of any Closing Time contain, any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements contained therein, in the light of the
circumstances under which such statements were made, not misleading.
Except as otherwise disclosed in the Memorandum, the actual performance
of each discretionary account directed by the Trading Advisor or any
principal or affiliate of the Trading Advisor since January 1990 is
disclosed in the Memorandum on either a composite or a stand alone
basis, in accordance with the requirements of the Commodity Act and the
rules and regulations thereunder. The information regarding the actual
performance of such accounts set forth in the Memorandum is complete
and accurate in all material respects and complies with the disclosure
requirements of the rules and regulations of the CFTC promulgated
pursuant to the Commodity Act.
(c) The Trading Advisor has all Federal and state
governmental, regulatory and exchange approvals and licenses, and has
effected all filings and registrations with Federal and state
governmental and regulatory agencies required to conduct its business
and to act as described in the Memorandum or required to perform its
obligations as described under this Agreement, the Advisory Agreement
and the Consulting Agreement (including, without limitation,
registration of such Trading Advisor as a commodity trading advisor
under the Commodity Act and membership of such Trading Advisor as a
commodity trading advisor in the NFA), and the performance of such
obligations will not contravene or result in a breach of any provision
of the constituent documents of the Trading Advisor. The principals of
the Trading Advisor are duly disclosed as such on the Trading Advisor's
commodity trading advisor Form 7-R registration.
6
(d) Each of the Advisory Agreement, this Agreement and
the Consulting Agreement has been duly and validly authorized, executed
and delivered by or on behalf of the Trading Advisor and each
constitutes a valid, binding, and enforceable agreement of the Trading
Advisor in accordance with its terms.
(e) Participation by the Trading Advisor in accordance
with the terms hereof and as described in the Memorandum will not
violate any provisions of the Investment Advisers Act of 1940.
(f) Neither the Trading Advisor nor any principal of the
Trading Advisor will use or distribute the Memorandum or any selling
literature or engage in any selling activities whatsoever in connection
with the offering of the Interests, except as may be approved in
writing by the General Partner.
(g) Since the respective dates as of which information is
given in the Memorandum, except as may otherwise be stated in or
contemplated by the Memorandum, there has not been any material adverse
change in the condition (financial or otherwise), business or prospects
of the Trading Advisor, whether or not arising in the ordinary course
of business.
(h) There is not pending or, to the best of the Trading
Advisor's knowledge, threatened any action, suit or proceeding before
or by any court or other governmental body to which the Trading Advisor
is a party, or to which any of the assets of the Trading Advisor is
subject, which might reasonably be expected to result in any material
adverse change in the condition (financial or otherwise), business or
prospects of the Trading Advisor or is required to be disclosed in the
Memorandum pursuant to applicable CFTC regulations. The Trading Advisor
has not received any notice of an investigation by the NFA or the CFTC
regarding non-compliance by the Trading Advisor with the Commodity Act
or the regulations thereunder.
(i) The execution and delivery of this Agreement, the
Advisory Agreement and the Consulting Agreement, the incurrence of the
obligations herein and therein set forth and the consummation of the
transactions contemplated herein and therein and in the Memorandum will
not constitute a breach of, or default under, any instrument by which
the Trading Advisor is bound or any order, rule or regulation
applicable to the Trading Advisor of any court or any governmental body
or administrative agency having jurisdiction over the Trading Advisor.
(j) The Trading Advisor has not received, and is not
entitled to receive, directly or indirectly, any commission, finder's
fee, similar fee, or rebate from any person in connection with the
organization or operation of the Partnership other than as described in
the Memorandum.
(k) The actual performance capsules relating to the
Trading Advisor in the Memorandum have been calculated in conformity
with all applicable rules and advisories of the CFTC, including those
relating to the inclusion of "notional" equity.
7
Section 4. Offering and Sale of Interests.
------------------------------
(a) The Selling Agent is hereby appointed the exclusive
selling agent of the Partnership, except as may be otherwise approved
by the General Partner, during the term herein specified for the
purpose of finding acceptable subscribers who are "accredited
investors" (as defined in the ▇▇▇▇ ▇▇▇) through a private placement.
Subject to the performance by the General Partner and the Trading
Advisor of their respective obligations to be performed hereunder and
to the completeness and accuracy in all material respects of all the
representations and warranties of the General Partner, the Commodity
Broker and the Trading Advisor contained herein, the Selling Agent
hereby accepts such agency and agrees on the terms and conditions
herein set forth to use reasonable efforts during the term hereof to
find acceptable subscribers for the Interests, subscriptions being made
in multiples of $1,000 with the minimum subscription being $100,000 for
initial subscriptions and $25,000 for additional subscriptions, subject
to reduction to not less than $50,000 in the discretion of the General
Partner. It is understood that the Selling Agent's agreement to use
reasonable efforts to find acceptable subscribers for the Interests
shall not prevent it from acting as a selling agent or underwriter for
the securities of other issuers which may be offered or sold during the
term hereof. The agency of the Selling Agent hereunder shall continue
until the termination of this Agreement.
No selling commissions will be paid from the proceeds of sales
of Interests. The Selling Agent will be credited within the ▇▇▇▇▇▇▇
▇▇▇▇▇ organization with a selling commission equal to 5% of the
subscription price of each Interest, a portion of which will be paid to
employees of the Selling Agent who sell the Interests from funds made
available by the General Partner. In addition, the Selling Agent will
receive subsequent credits of 3% per annum of the average month-end Net
Asset Value of each outstanding Interest, payable as of the end of each
calendar quarter. Accruals will begin with the thirteenth full month
after such Interests are sold and will be made only in respect of
Interests which remain outstanding at the end of the relevant month
(including Interests redeemed as of such month-end). A portion of such
credits will also be paid to employees of the Selling Agent who sell
Interests from funds made available by the General Partner.
(b) In the event the offering is commenced and acceptable
subscriptions for at least $5,000,000 in subscriptions (the "Minimum
Amount") shall not have been received by October 31, 1995 (or such
other date on or before December 31, 1995 as to which the initial
offering period shall be extended by the General Partner, the "Initial
Offering Period Termination Date"), all funds received from subscribers
shall be returned in full, with any interest payable thereon
(irrespective of amount) and without deduction for any fees or
expenses; and thereupon the Selling Agent's duties as agent and this
Agreement shall terminate without further obligation hereunder on the
part of the Selling Agent, the General Partner, the Partnership, the
Commodity Broker or the Trading Advisor.
(c) At the Initial Offering Period Termination Date, or
at such earlier time as the General Partner may determine to terminate
the initial offering, the General Partner shall notify the Selling
Agent of the aggregate amount of acceptable subscriptions received by
the General Partner and, if at least the Minimum Amount shall have been
so
8
subscribed for, then payment of the purchase price for the Interests
shall be made at the office of the General Partner, ▇▇▇▇▇▇▇ ▇▇▇▇▇ World
Headquarters, Sixth Floor, South Tower, World Financial Center, New
York, New York 10080-6106, or at such other place as shall be agreed
upon between the Selling Agent and the General Partner, at 10:00 A.M.,
New York time, on the fifth full business day after the day on which
the General Partner so notifies the Selling Agent or such other day and
time as shall be agreed upon between the Selling Agent and the General
Partner (the "Initial Closing Time").
(d) Subject to the earlier termination of the offering by
the General Partner, after the Initial Closing Time, Interests (as well
as additional subscriptions for existing Limited Partners) will be
offered as of the close of business on the last business day of each
month ("Additional Closing Times"). The Initial Closing Time and the
Additional Closing Times are herein collectively referred to as the
"Closing Times." At 10:00 A.M. on each Additional Closing Time, payment
of the purchase price for the acceptable subscriptions received in
respect of such Additional Closing Time shall be made at the office of
the General Partner set forth above, or at such other place or time as
shall be agreed upon between the General Partner and the Selling Agent.
(e) The Selling Agent will use reasonable efforts to find
eligible persons to purchase the Interests on the terms stated herein
and in the Memorandum. It is understood that the Selling Agent has no
commitment with regard to the sale of the Interests other than to use
reasonable efforts. In connection with the offer and sale of the
Interests, the Selling Agent represents that it will comply fully with
all applicable laws, and the rules of the National Association of
Securities Dealers, Inc., the Securities and Exchange Commission, the
CFTC, state securities administrators and any other regulatory body.
The Selling Agent shall not execute any sale of an Interest from a
discretionary account over which it has control without prior written
approval of the customer in whose name such discretionary account is
maintained.
The Selling Agent agrees not to recommend the purchase of an
Interest to any subscriber unless the Selling Agent shall have
reasonable grounds to believe, on the basis of information obtained
from the subscriber concerning, among other things, the subscriber's
investment objectives, other investments, financial situation and
needs, that the subscriber (i) is an "accredited investor" within the
meaning of the 1933 Act, (ii) can afford to bear the risk of a total
loss of the subscriber's investment in the Partnership, (iii) has
sufficient financial knowledge and experience to be capable of
evaluating the risks and merits of an investment in the Partnership
(either alone or together with such subscriber's financial adviser(s),
other than a ▇▇▇▇▇▇▇ ▇▇▇▇▇ employee) and (iv) otherwise qualifies as an
acceptable subscriber on the basis set forth in the Memorandum. The
Selling Agent represents and warrants that it has reasonable grounds to
believe, based on information in the Memorandum and information to
which the Selling Agent has had access due to its affiliation with the
General Partner, that all material facts relating to an investment in
the Partnership are adequately and accurately disclosed in the
Memorandum. In connection with making the foregoing representations and
warranties, the Selling Agent further represents and warrants that it
has, among other things, examined the Memorandum and obtained such
additional information from the General Partner, the Commodity Broker
and the Trading Advisor regarding the information set
9
forth therein as the Selling Agent has deemed necessary or appropriate
to determine whether the Memorandum adequately and accurately discloses
all material facts relating to an investment in the Partnership and
provides an adequate basis to subscribers for evaluating an investment
in the Interests. In connection with making the representations and
warranties set forth in this paragraph, the Selling Agent has not
relied on inquiries made by or on behalf of any other parties.
The Selling Agent agrees to inform all prospective purchasers
of Interests of all pertinent facts relating to the liquidity and
marketability of the Interests as set forth in the Memorandum.
(f) None of the Selling Agent, the Partnership or the
General Partner shall, directly or indirectly, pay or award any
finder's fees, commissions or other compensation to any person engaged
by a potential investor for investment advice as an inducement to such
advisor to advise or recommend the purchase of an Interest; provided,
however, the normal sales commissions payable to a registered
broker-dealer or other properly licensed person for selling Interests
shall not be prohibited hereby.
(g) All payments for subscriptions shall be made by wire
transfers from subscribers' ▇▇▇▇▇▇▇ ▇▇▇▇▇ customer securities accounts,
as described in the Memorandum.
(h) The General Partner agrees to cause its counsel to
prepare and deliver to the Selling Agent a Blue Sky Survey which shall
set forth, for the guidance of the Selling Agent, the United States
jurisdictions in which the Interests may be offered and sold. It is
understood and agreed that the Selling Agent may rely, in connection
with the offering and sale of Interests in any jurisdiction, on advice
given by such counsel as to the legality of the offer or sale of the
Interests in such jurisdiction; provided, however, that the Selling
Agent shall be responsible for compliance with all applicable laws,
rules and regulations with respect to the actions of its employees,
acting as such, in connection with sales of Interests in any
jurisdiction.
Section 5. Covenants of the General Partner.
--------------------------------
(a) The General Partner will notify the Selling Agent,
the Commodity Broker and the Trading Advisor immediately and confirm
such notification in writing (i) of the receipt of any comments from
the CFTC or any other Federal or state regulatory body with respect to
the Memorandum, (ii) of any request by the CFTC or any other Federal or
state regulatory body for any amendment or supplement to the Memorandum
or for additional information relating thereto, (iii) any material
criminal, civil or administrative proceedings against or involving
either the General Partner, the Partnership or the Commodity Broker and
(iv) of the issuance by the CFTC or any other Federal or state
regulatory body of any order suspending the effectiveness of the CFTC
registration or NFA membership of the General Partner as a commodity
pool operator, or the exemption of the Interests under the Blue Sky or
securities laws of any state or other jurisdiction or any order or
decree enjoining the offering or the use of the then current Memorandum
or
10
of the institution, or notice of the intended institution, of any
action or proceeding for that purpose.
(b) It will deliver to the Selling Agent as promptly as
practicable from time to time such number of copies of the Memorandum
as the Selling Agent may reasonably request.
(c) It will amend or supplement the Memorandum from time
to time as is necessary, in its opinion, to comply with the 1933 Act,
the Commodity Act and the CFTC regulations thereunder and will furnish
to the Selling Agent and the Trading Advisor, at the expense of the
General Partner, a reasonable number of copies of such amendments or
supplements. No such amendment or supplement shall be filed without the
approval of the Selling Agent, the Commodity Broker and the Trading
Advisor.
(d) If any event relating to or affecting the General
Partner or the Partnership shall occur as a result of which it is
necessary, in the reasonable opinion of the Selling Agent or the
Trading Advisor, to amend or supplement the Memorandum in order to
comply with the 1933 Act, the Commodity Act and the CFTC regulations
thereunder or to make the Memorandum not materially misleading in the
light of the circumstances existing at the time it is delivered to a
subscriber, the General Partner and the Partnership will forthwith
prepare and furnish to the Selling Agent and the Trading Advisor, at
the expense of the General Partner, a reasonable number of copies of an
amendment or amendments of, or a supplement or supplements to, the
Memorandum which will amend or supplement the Memorandum so that as
amended or supplemented it will comply with the 1933 Act, the Commodity
Act and the CFTC regulations thereunder and not contain an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein, in the light of the
circumstances existing at the time the Memorandum is delivered to a
subscriber, not misleading. No such amendment or supplement shall be
filed without the approval of the Selling Agent, the Commodity Broker
and the Trading Advisor.
(e) It will use best efforts to exempt the offer and sale
of the Interests from registration under applicable securities or "Blue
Sky" laws and continue such exemption throughout the term hereof,
provided that in no event shall the General Partner or the Partnership
be obligated to (i) take any action which would subject it to service
of process for lawsuits, other than for any lawsuit arising out of the
offering or sale of the Interests, or taxes, in any jurisdiction where
either is not now so subject, (ii) change any material term in the
Memorandum, or (iii) expend a sum of money considered unreasonable by
the General Partner.
Section 6. Covenants of the Trading Advisor.
--------------------------------
(a) The Trading Advisor agrees to cooperate in the
preparation of the Memorandum and of any amendments or supplements
thereto.
(b) The Trading Advisor agrees to notify the General
Partner immediately upon discovery of any untrue or misleading
statement regarding it, its operations or any
11
of its principals, or of the occurrence of any event or change in
circumstances which would result in there being any untrue or
misleading statement or an omission regarding it (except with respect
to the Trading Advisor's trading performance), its operations or any of
its principals, in the Memorandum or result in the Memorandum not
including all information relating to the Trading Advisor and its
principals required pursuant to CFTC regulations. The Trading Advisor
shall promptly inform the General Partner if it is necessary to amend
or supplement the Memorandum in order to make the Memorandum not
materially misleading in the light of the circumstances existing at the
time the Memorandum is delivered to a subscriber.
Section 7. Payment of Expenses and Fees.
----------------------------
The General Partner will pay all expenses incident to the performance
of the obligations of the General Partner and the Partnership hereunder,
including: (i) the printing or reproduction and delivery to the Selling Agent in
quantities as hereinabove stated of copies of the Memorandum and all amendments
or supplements thereto and of any supplemental sales materials; (ii) the
reproduction of this Agreement and the printing or reproduction and filing of
the Memorandum with the CFTC and NFA; (iii) the exemption of the offer and sale
of the Interests under the securities or "Blue Sky" laws in the various
jurisdictions, including filing fees and the fees and disbursements of the
General Partner's counsel incurred in connection therewith; (iv) the services of
counsel for the General Partner and the Partnership; and (v) the printing or
reproduction and delivery to the Selling Agent of such number of copies as it
may reasonably request of the Blue Sky Survey. Other than as set forth above,
each party hereto shall bear its own expenses relating hereto and to the
offering of the Interests.
In the event that the sale of the Interests would otherwise
occur but is prevented from occurring due to any representation or warranty of
the Trading Advisor being materially untrue as a result of the willful act of
such Trading Advisor or any of its principals either as of the date hereof or as
of the Initial Closing Time, the Trading Advisor shall pay the expenses
described in clause (i) above.
Section 8. Conditions of Closing. The obligations of each of
---------------------
the parties hereunder at each Closing Time are subject to the accuracy of the
representations and warranties of the other parties hereto, to the performance
by such other parties of their respective obligations hereunder and to the
following further conditions:
(a) At the Initial Closing Time, no objection to the
content of the Memorandum shall have been expressed or threatened by
the CFTC or the NFA.
(b) At the Initial Closing Time, Sidley & Austin, counsel
to the General Partner and the Partnership, shall deliver its opinion,
in form and substance satisfactory to the parties hereto, to the effect
that:
(i) Each of the Certificate of Limited
Partnership pursuant to which the Partnership has been formed
and the Limited Partnership Agreement provides for the
subscription for and sale of the Interests; all action
required to be taken by the General Partner and the
Partnership as a condition to the subscription for and sale of
the Interests to qualified subscribers therefor has been
taken; and, upon
12
payment of the consideration therefor specified in the
accepted Subscription Agreements and Powers of Attorney, the
Interests will constitute valid limited partnership interests
in the Partnership and each subscriber who purchases an
Interest will become a Limited Partner, subject to the
requirement that each such purchaser shall have duly
completed, executed and delivered to the Partnership a
Subscription Agreement and Power of Attorney signature page
relating to the Interest purchased by such party, that such
purchaser meets all applicable suitability standards and that
the representations and warranties of such purchaser in the
Subscription Agreement and Power of Attorney are true and
correct.
(ii) The Partnership is a limited partnership
duly and validly organized pursuant to the Certificate of
Limited Partnership, the Limited Partnership Agreement and the
Delaware Act, and is validly existing under the laws of the
State of Delaware with full power and authority to conduct the
business in which it proposes to engage, as described in the
Memorandum.
(iii) The General Partner is duly organized,
validly existing and in good standing as a corporation 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 the failure to so qualify
might reasonably be expected to materially adversely affect
the Partnership or the General Partner's ability to perform
its obligations hereunder. The General Partner has full
corporate power and authority to perform its obligations as
described hereunder and in the Memorandum.
(iv) Each of the General Partner (including the
principals of the General Partner) and the Partnership has all
Federal and state governmental, regulatory and exchange
approvals and licenses, and has received or made all filings
and registrations with Federal and state governmental and
regulatory agencies required for each of the General Partner
and the Partnership to conduct its business and to act as
described in the Memorandum, and to the best of their
knowledge, none of such approvals, licenses or registrations
have been rescinded or revoked.
(v) Each of the Limited Partnership Agreement,
the Advisory Agreement, the Customer Agreement and this
Agreement has been duly and validly authorized, executed and
delivered by or on behalf of the General Partner or the
Partnership, as the case may be, and assuming that such
agreements are binding on the other parties hereto, each of
the Limited Partnership Agreement, the Advisory Agreement, and
this Agreement constitutes a valid, binding and enforceable
agreement of the General Partner and/or the Partnership (as
the case may be) 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 except as enforceability
of indemnification provisions may be limited by applicable law
and the enforcement of any specific terms or remedies may be
unavailable.
13
(vi) The execution and delivery of this
Agreement, the Limited Partnership Agreement, the Customer
Agreement and the Advisory Agreement, the incurrence of the
obligations herein and therein set forth and the consummation
of the transactions contemplated herein and therein and in the
Memorandum will not be in contravention of any of the
provisions of the General Partner's certificate of
incorporation or by-laws, or of the Limited Partnership
Agreement, and to the best of their knowledge, will not
constitute a breach of, or default under, any instrument by
which the General Partner or the Partnership, as the case may
be, is bound or any order, rule or regulation applicable to
the General Partner or the Partnership of any court or any
governmental body or administrative agency having jurisdiction
over the General Partner or the Partnership.
(vii) There is not pending or, to the best of
their knowledge, threatened any action, suit or proceeding
before or by any court or other governmental or administrative
body, nor have there been any such suits, claims or
proceedings within the last five years, to which the General
Partner (or any principal of the General Partner) or the
Partnership is or was a party, or to which any of their assets
is or was subject, which are required to be, but are not,
disclosed in the Memorandum or which 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 the Partnership.
(viii) No authorization, approval or consent of any
governmental or self-regulatory authority or agency is
necessary in connection with the subscription for and sale of
the Interests, except such as may be required under the
Commodity Act, NFA compliance rules or applicable securities
or "Blue Sky" laws.
(ix) The terms and provisions of the Limited
Partnership Agreement, the Advisory Agreement, the Customer
Agreement and this Agreement conform in all material respects
to descriptions thereof, if any, contained in the Memorandum.
(x) At the time the Memorandum and any
amendments or supplements thereto were first issued, the
Memorandum complied as to form in all material respects with
the requirements of the 1933 Act and CFTC regulations. Nothing
has come to their attention that would lead them to believe
that the Memorandum as first issued or as subsequently issued
(prior to the Initial Closing Time) or at the Initial Closing
Time contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make
the statements contained therein relating to the General
Partner, the Partnership or the Commodity Broker, in the light
of the circumstances under which they were made, not
misleading; provided, however, that such counsel need express
no opinion or belief as (A) as to the financial statements,
notes thereto and other financial or statistical data set
forth in the Memorandum or (B) as to the performance data set
forth in the Memorandum, except that counsel shall opine,
without rendering any opinion as to the accuracy of the
information therein, that
14
the capsule performance information set forth under
"Performance of Futures Funds Operated or Managed by ▇▇▇▇▇▇▇
▇▇▇▇▇ Investment Partners Inc." in the Memorandum complies as
to form in all material respects with CFTC Rule Section 4.25
(a)(3).
(xi) Such counsel confirm their opinion that the
summary of Federal income tax consequences to Limited Partners
set forth under the caption "Certain Tax Information" in the
Memorandum accurately describes the material tax consequences
set forth therein and that such counsel further confirm their
advice to the General Partner explicitly set forth therein.
(xii) Assuming operation in accordance with the
Memorandum, the Partnership at the Initial Closing Time is not
an "investment company" as that term is defined in the
Investment Company Act of 1940, as amended.
(c) At the Initial Closing Time, ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
counsel to the Commodity Broker, shall deliver an opinion to the effect
that:
(i) The Commodity Broker is a corporation duly
organized, validly existing and in good standing as a
corporation under the laws of the State of Delaware and is
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature or
conduct of its business requires such qualification and in
which the failure to so qualify might reasonably be expected
to materially adversely affect the Partnership. The Commodity
Broker has full corporate power and authority to perform its
obligations as described hereunder and in the Memorandum.
(ii) The Commodity Broker has all Federal and
state governmental and regulatory licenses and approvals and
has received or made all filings and registrations with
Federal and state governmental and regulatory agencies
necessary in order for the Commodity Broker to conduct its
business as described in the Memorandum, and, to the best of
his knowledge, none of such approvals, licenses or
registrations have been rescinded or revoked.
(iii) Each of the Customer Agreement, the
Consulting Agreement and this Agreement has been duly and
validly authorized, executed and delivered by the Commodity
Broker, and, assuming that such agreements are binding on the
other parties thereto, each of this Agreement and the
Consulting Agreement constitutes a valid, binding and
enforceable agreement of the Commodity Broker in accordance
with its terms, subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in
effect affecting the enforceability generally of rights of
creditors and that the enforcement of specific terms or
remedies may be unavailable.
(iv) The execution and delivery of the Customer
Agreement, the Consulting Agreement and this Agreement, the
incurrence of the obligations herein and therein set forth and
the consummation of the transactions
15
contemplated herein, therein and in the Memorandum will not be
in contravention of any of the provisions of the Commodity
Broker's certificate of incorporation or by-laws, or, to the
best of his knowledge, constitute a breach of, or default
under, any instrument known to him by which the Commodity
Broker is bound or any order, rule or regulation applicable to
the Commodity Broker, of any court or any governmental body or
administrative agency having jurisdiction over the Commodity
Broker.
(v) Nothing has come to his attention that would
lead him to believe that the Memorandum as first issued or as
subsequently issued (prior to the Initial Closing Time) or at
the Initial Closing Time contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements contained therein relating to the
Commodity Broker or its principals, in the light of the
circumstances under which they were made, not misleading.
(d) At the Initial Closing Time, Sidley & Austin, counsel
to the Trading Advisor, shall deliver an opinion to all other parties
hereto to the effect that:
(i) The Trading Advisor is a corporation duly
organized, validly existing and in good standing under the
laws of the state of its incorporation and is qualified to do
business and is in good standing in each jurisdiction in which
the nature or conduct of its business requires such
qualification and in which the failure to so qualify might
reasonably be expected to materially adversely affect the
Partnership, as described in the Memorandum. The Trading
Advisor has full power and authority to conduct the business
in which it engages and proposes to engage.
(ii) The Trading Advisor (including its
principals) has all Federal and state governmental and
regulatory licenses and approvals and has received or made all
filings and registrations with Federal and state governmental
and regulatory authorities necessary in order for the Trading
Advisor to conduct its business as described in the
Memorandum (including, without limitation, performance of this
Agreement, the Advisory Agreement and the Consulting
Agreement) and, to the best of such counsel's knowledge, none
of such approvals, licenses or registrations has been
rescinded or revoked.
(iii) Each of this Agreement, the Advisory
Agreement and the Consulting Agreement has been duly and
validly authorized, executed and delivered by the Trading
Advisor, and, assuming that such agreements are binding on the
other parties thereto, constitutes a valid, binding and
enforceable agreement of the Trading Advisor, in accordance
with its terms, subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in
effect affecting the enforceability generally of rights of
creditors and except as enforceability of the indemnification
provisions contained in any such agreement may be limited by
applicable law and the enforcement of specific terms or
remedies may be unavailable.
16
(iv) The execution and delivery of this
Agreement, the Advisory Agreement and the Consulting
Agreement, the incurrence of the obligations herein and
therein set forth and the consummation of the transactions
contemplated herein, therein and in the Memorandum will not be
in contravention of any of the provisions of the constituent
documents of the Trading Advisor, and to the best of such
counsel's knowledge, will not constitute a breach of, or
default under, any instrument by which the Trading Advisor is
bound or any order, rule or regulation applicable to the
Trading Advisor of any court or any governmental body or
administrative agency having jurisdiction over the Trading
Advisor.
(v) There is not pending or, to the best of such
counsel's knowledge, threatened any action, suit or proceeding
before or by any court or other governmental or administrative
body, nor have there been any such suits, claims or
proceedings within the last five years to which the Trading
Advisor, or any of its principals, is or was a party, or to
which any of their assets is or was subject, which are
required to be, but are not, disclosed in the Memorandum or
which might reasonably be expected to result in any material
adverse change in the condition (financial or otherwise),
business or prospects of such Trading Advisor.
(vi) Nothing has come to such counsel's attention
that would lead such counsel to believe that the Memorandum as
first issued or as subsequently issued (prior to the Initial
Closing Time) or at the Initial Closing Time 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 Trading Advisor or any of its
principals, in the light of the circumstances under which they
were made, not misleading; provided, however, that counsel
need express no opinion or belief (A) as to the financial
statements, notes thereto and other financial or statistical
data set forth in the Memorandum or (B) as to the performance
data set forth in the Memorandum, except that such counsel
shall opine, without rendering any opinion as to the accuracy
of the information in such performance capsules, that the
performance capsules relating to the Trading Advisor and its
principals set forth in the Memorandum comply as to form in
all material respects with CFTC Rule Section 4.25(a)(3) and
discussions, if any, held with the Division of Trading and
Markets of the CFTC.
(e) At the Initial Closing Time, the General Partner
shall deliver a certificate to the effect that: (i) the representations
and warranties of the General Partner contained herein are true and
correct with the same effect as though expressly made at the Initial
Closing Time; and (ii) the General Partner has performed all covenants
and agreements herein contained to be performed on its part at or prior
to the Initial Closing Time. Such certificate may state that the
General Partner has relied upon the Trading Advisor to provide certain
information supplied by the Trading Advisor for use in the Memorandum.
(f) At the Initial Closing Time, the Trading Advisor
shall deliver a report dated as of the Initial Closing Time which shall
present for the period from the date after the last day covered by the
performance capsules in the Memorandum to the latest practicable day
before the Initial Closing Time figures which constitute a continuation
of
17
such capsules and which shall certify that such figures are accurate in
all material respects.
(g) At the Initial Closing Time, the Trading Advisor
shall deliver a certificate to the effect that (i) the representations
and warranties of the Trading Advisor contained herein are true and
correct with the same effect as though expressly made at the Initial
Closing Time and (ii) the Trading Advisor has performed all covenants
and agreements herein contained to be performed on its part at or prior
to the Initial Closing Time.
(h) At the Initial Closing Time, the Commodity Broker
shall deliver a certificate to the effect that the representations and
warranties of the Commodity Broker contained herein are true and
correct with the same effect as though expressly made at the Initial
Closing Time.
(i) The Partnership shall have received a capital
contribution of the General Partner in the amount required by the
Limited Partnership Agreement and as described in the Memorandum.
(j) Executed copies of the Limited Partnership Agreement,
the Customer Agreement, the Consulting Agreement, the Advisory
Agreement and this Agreement shall be delivered to all parties.
(k) The parties hereto shall have been furnished with
such additional information, opinions and documents, including
supporting documents relating to parties described in the Memorandum
and certificates signed by such parties with regard to information
relating to them and included in the Memorandum as they may reasonably
require for the purpose of enabling them to pass upon the sale of the
Interests as herein contemplated and related proceedings, in order to
evidence the accuracy or completeness of any of the representations or
warranties or the fulfillment of any of the conditions herein
contained; and all actions taken by the parties hereto in connection
with the sale of the Interests as herein contemplated shall be
reasonably satisfactory in form and substance to Messrs. Sidley &
Austin and ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
If any of the conditions specified in this Section 8 shall not
have been fulfilled when and as required by this Agreement to be
fulfilled, this Agreement and all obligations hereunder may be
cancelled by any party hereto by notifying the other parties hereto of
such cancellation in writing or by telegram at any time at or prior to
the Initial Closing Time, and any such cancellation or termination
shall be without liability of any party to any other party except as
otherwise provided in Section 7.
At each sale of Interests at any Additional Closing Time, the
parties hereto shall be deemed to have restated and reaffirmed the
representations made herein by each such party as of such Additional
Closing Time.
Section 9. Memorandum Terms and Descriptions Controlling.
All parties hereto expressly agree that the descriptions, if
any, of this Agreement, the Consulting Agreement, the Customer Agreement and the
Advisory Agreement contained in
18
the Memorandum, as amended and supplemented and as identified by the General
Partner and approved by each such other party hereto, shall control against the
terms contained herein and in such agreements and contracts referred to above.
Section 10. Indemnification and Exculpation.
(a) Indemnification by the General Partner. The General
Partner agrees to indemnify and hold harmless the Selling Agent, the
Partnership, the Commodity Broker and the Trading Advisor and each
person, if any, who controls any of the foregoing within the meaning of
Section 15 of the 1933 Act, as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever (including fees and
disbursements of counsel) arising out of any untrue statement
or alleged untrue statement of a material fact contained in
the Memorandum (or any amendment or supplement thereto) or any
omission or alleged omission therefrom of a material fact
required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the
Trading Advisor and its controlling persons shall not be
entitled to be indemnified if such untrue statement or
omission or alleged untrue statement or omission was made in
reliance upon and in conformity with information relating to
the Trading Advisor or any of its principals furnished or
approved by the Trading Advisor or any of its principals; and
provided further that the Selling Agent and its controlling
persons shall not be entitled to be indemnified if such untrue
statement or omission or alleged untrue statement or omission
was made in reliance upon and in conformity with information
relating to the Selling Agent furnished or approved by the
Selling Agent; and
(ii) against any and all loss, liability, claim,
damage and expense whatsoever (including the fees and
disbursements of counsel) to the extent of the aggregate
amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body
commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission or any such alleged
untrue statement or omission (any settlement to be subject to
indemnity hereunder only if effected with the written consent
of the General Partner and only, in the case of the Trading
Advisor, to the extent of its net worth (as provided above)).
In no case shall the General Partner be liable under this indemnity
agreement with respect to any claim made against any indemnified party
unless the General Partner shall be notified in writing of the nature
of the claim within a reasonable time after the assertion thereof, but
failure so to notify the General Partner shall not relieve the General
Partner from any liability which it may have otherwise than on account
of this indemnity agreement. The General Partner shall be entitled to
participate at its own expense in the defense or, if it so elects
within a reasonable time after receipt of such notice, to assume the
defense of the pertinent portion of any suit so brought for which an
indemnified party has claimed that indemnification may be due from the
General Partner, which defense
19
shall be conducted by counsel chosen by it and satisfactory to the
indemnified party or parties, defendant or defendants therein. In the
event that the General Partner elects to assume the defense of any such
suit and retain such counsel, the indemnified party or parties,
defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel thereafter retained by it or them.
In no event, however, shall the General Partner be obligated
to indemnify the Selling Agent or the Commodity Broker hereunder, and
each of the Selling Agent and the Commodity Broker agrees not to
attempt to obtain any indemnity from the General Partner hereunder, to
the extent that the General Partner and the Selling Agent or the
Commodity Broker are advised by counsel reasonably satisfactory to the
General Partner and the Selling Agent or the Commodity Broker that
payment of such indemnity could adversely affect the classification of
the Partnership as a partnership for Federal income tax purposes.
The General Partner agrees to notify the Trading Advisor, the
Selling Agent and the Commodity Broker within a reasonable time of the
assertion of any claim in connection with the sale of the Interests
against it or any of its officers or directors or any person who
controls the General Partner within the meaning of Section 15 of the
1933 Act.
(b) Indemnification by the Trading Advisor. The Trading
Advisor agrees to indemnify and hold harmless the Selling Agent, the
Commodity Broker, the General Partner and the Partnership and each
person, if any, who controls the Selling Agent, the Commodity Broker,
the Partnership or the General Partner within the meaning of Section 15
of the 1933 Act (and, in the case of the General Partner, each director
of the General Partner), to the same extent as the indemnity from the
General Partner set forth in Section 10(a) hereof, but only insofar as
the losses, claims, damages, liabilities or expenses indemnified
against arise out of or are based upon any materially untrue statement
or omission or alleged materially untrue statement or omission relating
or with respect to the Trading Advisor, or any of its principals, or
their operations, trading systems, methods or performance, which was
made in the Memorandum or any amendment or supplement thereto and
furnished by such Trading Advisor and approved for inclusion therein.
(c) Limitation on Certain Indemnifications and
Exculpations. The exculpation and indemnification provisions in the
Limited Partnership Agreement, the Consulting Agreement and the
Advisory Agreement shall neither relieve nor indemnify the Trading
Advisor from or against any liability it may have or incur to the
Partnership, the General Partner, the Selling Agent or the Commodity
Broker under this Agreement (including, without limitation, pursuant to
the provisions of Section 10(b) hereof). The exculpation and
indemnification provisions contained in the Limited Partnership
Agreement shall neither relieve nor indemnify the General Partner
against any loss, liability, damage, cost or expense it may incur under
this Agreement.
Section 11. Status of Parties. In selling the Interests for
the Partnership, the Selling Agent is acting solely as agent for the Partnership
and not as principal. The Selling Agent will use its best efforts to assist the
Partnership in obtaining performance by each purchaser
20
whose offer to purchase Interests from the Partnership has been accepted on
behalf of the Partnership, but the Selling Agent shall not have any liability to
the Partnership in the event that Subscription Agreements and Powers of Attorney
signature pages are improperly completed or any such purchase is not consummated
for any reason. The Selling Agent shall in no respect be deemed to be an agent
of the Partnership.
Section 12. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or contained in certificates of any party hereto submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by, or on behalf of, the Selling Agent, the General
Partner, the Partnership, the Commodity Broker, the Trading Advisor, or any
person who controls any of the foregoing, and shall survive each Closing Time in
the form restated and reaffirmed as of such Closing Time.
Section 13. Termination. The General Partner shall have the
right to terminate this Agreement at any time prior to the Initial Closing Time
by giving written notice of such termination to the Trading Advisor, the Selling
Agent and the Commodity Broker. In addition, this Agreement may be terminated by
either the General Partner or the Selling Agent on any anniversary of the
Initial Closing Time by such party giving ten days notice to the other parties
hereto to such effect. No such termination shall relieve the General Partner
from its obligations under Section 4(a) hereof unless the termination is based
on the Selling Agent's breach of its obligations under this Agreement.
Section 14. Notices and Authority to Act. All communications
hereunder shall be in writing and sent to the addresses listed on Schedule A
hereto, as the same may be changed by written notice to all parties. Notices
shall be effective when actually received.
Section 15. Parties. This Agreement shall inure to the benefit
of and be binding upon the Selling Agent, the Partnership, the General Partner,
the Commodity Broker, the Trading Advisor and such parties' respective
successors to the extent provided herein. This Agreement and the conditions and
provisions hereof are intended to be and are for the sole and exclusive benefit
of the parties hereto and their respective successors, assigns and controlling
persons and parties indemnified hereunder, and for the benefit of no other
person, firm or corporation. No purchaser of an Interest shall be considered to
be a successor or assign solely on the basis of such purchase.
Section 16. Governing Law. This Agreement and the rights and
obligations of the parties created hereby shall be governed by the laws of the
State of New York, without regard to principles of conflicts of law.
Section 17. Requirements of Law. Whenever in this Agreement it
is stated that a party will take or refrain from taking a particular action,
such party may nevertheless refrain from taking or take such action if advised
by counsel that doing so is required by law or advisable to ensure compliance
with law, and shall not be subject to any liability hereunder for doing so,
although such action shall permit termination of the Agreement by the other
parties hereto.
21
Section 18. Consent to Jurisdiction. The parties hereto agree
that any action or proceeding arising directly, indirectly, or otherwise in
connection with, out of, related to, or from this Agreement, any breach hereof,
or any transaction covered hereby, shall be resolved, whether by arbitration or
otherwise, within the County, City, and State of New York. Accordingly, the
parties consent and submit to the jurisdiction of the federal and state courts
and any applicable arbitral body located within the County, City, and State of
New York. The parties further agree that any such action or proceeding brought
by either party to enforce any right, assert any claim, or obtain any relief
whatsoever in connection with this Agreement shall be bought by such party
exclusively in the federal or state courts, or if appropriate before any
applicable arbitral body, located within the County, City, and State of New
York.
If the foregoing is in accordance with each party's
understanding of their agreement, each party is requested to sign and return to
the General Partner a counterpart hereof, whereupon this instrument along with
all counterparts will become a binding agreement among them in accordance with
its terms.
Very truly yours,
ML CHESAPEAKE L.P.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ INVESTMENT PARTNERS
INC., General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President & Director, Administration
CHESAPEAKE CAPITAL CORPORATION
By: _____________________________________________
Name:
Title
▇▇▇▇▇▇▇ ▇▇▇▇▇ FUTURES INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Co-Chairman
▇▇▇▇▇▇▇ ▇▇▇▇▇ INVESTMENT PARTNERS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President & Director, Administration
22
Confirmed and accepted as of
the date first above written:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: Director
23
this instrument along with all counterparts will become a binding agreement
among them in accordance with its terms.
Very truly yours,
ML CHESAPEAKE L.P.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ INVESTMENT PARTNERS
INC., General Partner
By:_____________________________________________
Name:
Title
CHESAPEAKE CAPITAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇ FUTURES INC.
By:_____________________________________________
Name:
Title
ML FUTURES INVESTMENT PARTNERS INC.
By:_____________________________________________
Name:
Title
Confirmed and accepted as of
the date first above written:
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇
& ▇▇▇▇▇ INCORPORATED
By:______________________________
Name:
Title
24
SCHEDULE A
ADDRESSES OF PARTIES
ML Chesapeake Fund L.P.
c/o Merrill ▇▇▇▇▇ Investment
Partners Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
6th Floor, South Tower
World Financial Center
New York, New York 10080-6106
▇▇▇▇▇▇▇ ▇▇▇▇▇ Investment
Partners Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
6th Floor, South Tower
World Financial Center
New York, New York 10080-6106
▇▇▇▇▇▇▇ ▇▇▇▇▇ Futures Inc.
Two ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Chesapeake Capital Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇