1
HANSEATIC DISCRETIONARY POOL, L.L.C.
SELLING AGREEMENT
THIS AGREEMENT dated this ______ day of __________, 2001, by and
between Hanseatic Discretionary Pool, L.L.C, an Oklahoma Limited Liability
Company, the "Pool" and _____________, as selling agent ("Selling Agent" or
"Soliciting Dealer" any additional selling agents are collectively referred to
as "Sales Agents.")
WITNESSETH
WHEREAS, the Pool is organized under the laws of the State of Oklahoma
to engage in speculative trading of futures, options on futures, and other
commodity interests described in the Pool's final approved Prospectus/Disclosure
Document dated ___________________ (the "Disclosure Document" or "Prospectus");
and
WHEREAS, the Pool proposes to offer and sell up to $____________ of
units of membership interests (the "Units") as described in the Prospectus; and
WHEREAS, the Sales Agents desire to promote, solicit, and complete the
sale of the Units to customers identified by them upon the terms and in reliance
upon the representations, warranties and agreements set forth herein; and
WHEREAS, Pool Management Services, Inc., the Manager desires to
compensate the registered representatives of Selling Agent who are also
associated persons, qualified to receive commodity commissions, by the payment
of a percentage of the round turn or fixed commodity commissions based upon a
percentage of equity in lieu of round turn commissions (hereinafter such
payments are called "Trailing Commissions") as described in the Prospectus in
consideration of said registered representatives and associated persons
providing service to the Pool and the investors sold by the Sales Agents so long
as said investors remain Members in the Pool; and
NOW THEREFORE, the parties hereto, intending to be legally bound hereby
and in consideration of the mutual agreements, covenants, representations and
warranties contained herein, agree as follows:
I. Appointment of the Managing Dealer.
The Partnership hereby engages the Soliciting Dealer to serve on a
non-exclusive, best efforts basis, to solicit and obtain applications
and orders for the purchase of Units in the Pool to investors who meet
the suitability standards established in the Prospectus and by
applicable law upon the terms described in the Prospectus as required
by applicable law and pursuant to this Agreement. The Soliciting
Dealer, will be, at the time of appointment and continuously during the
time of performance hereunder, a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD"), and will
serve as independent contractor to the Pool for the purpose of
soliciting subscriptions for Units on a "best efforts" basis in
accordance with the terms and conditions set forth herein and in the
Prospectus.
A. No Market to be Maintained.
It is understood that the Soliciting Dealer shall have any
commitment or obligation to sell the Units or provide a market
for the Units, other than to use its best efforts to attempt to
sell such Units. The Pool may, but is not obligated, to engage
other NASD-member firms to sell Units on terms substantially the
same as the terms hereof; provided, however, in certain
instances, the terms of such engagements with respect to
compensation may provide for the payment of commissions and other
fees of less or more than the amounts provided to the Soliciting
Dealer.
B. Allocation of Units.
The allocation of Units among the any Soliciting Dealers shall,
subject to the terms and conditions herein set forth, be made by
the Pool, in its sole discretion. The Pool reserves the right to
notify each Sales Agent by telegram, fax or by other means of the
number of Units reserved for sale for each Sales Agent. Such
Units will be reserved for sale until the time specified in such
notification. Sales of any reserved Units after the time
specified in the notification or any requests for additional
Units will be subject to rejection by the Pool, in whole or in
part.
C. Duties of Sales Agents.
The Sales Agents agree to act, subject to a $50,000,000 maximum
upon total sales of Units by the Pool, by the Manager and all
Sales Agents or termination as provided in this Agreement or the
Prospectus, as the Sales Agents, to take the following actions:
1. Comply With Offering Procedures.
Each Soliciting Dealer agrees to take those steps deemed
necessary or desirable by legal counsel to the Pool to
comply with all laws and procedures applicable to the
offering of Units for sale in the jurisdictions selected by
the Pool and approved by the Manager. The Pool shall provide
a legal opinion from its counsel to advise the effective
date of the Prospectus and to otherwise support the
registration of the securities for sale together with a
legal memorandum to identify the states and other
jurisdictions, if any, in which the securities may be sold
(the "Blue Sky Survey"). Sales Agents shall offer the Units
for sale in those jurisdictions listed in said Blue Sky
Survey and will use only the sales and advertising
literature specifically supplied and authorized by the
Manager. Additional copies of the Prospectus will be
supplied to Sales Agents in reasonable quantities upon
request. The Pool will also provide Sales Agents with
reasonable quantities of supplemental literature, if any,
prepared by the Pool in connection with the offering of the
Units.
2. Suitability Standards.
Solicitation and other activities by the Sales Agents shall
be undertaken only in accordance with this Agreement, the
Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the applicable rules and regulations of the
SEC, the Blue Sky Survey and Rule 2710 of the Conduct Rules
of the National Association of Securities Dealers, Inc. (the
"NASD" and any other Applicable NASD Rules or
Interpretation.) Each Sales Agent will procure information
and documentation from each subscriber solicited by their
registered representatives to demonstrate a reasonable basis
to believe that the sale of Units solicited by it were to a
subscriber who, on the basis of information obtained from
the subscriber concerning his investment objectives, other
investments, financial situation and requirements, and any
other information known by the Sales Agent, after due
inquiry, is or will be: (i) in a financial position
appropriate to realize to a significant extent the benefits
of the investment described in the Prospectus; and, (ii) the
subscriber has a fair market net worth sufficient to sustain
the risks inherent in the program, including loss of
investment and lack of liquidity which shall be either: (a)
a minimum annual gross income of $45,000 and a net worth
(exclusive of home, home furnishings and automobiles) of
$45,000; or (b) a net worth (determined with the foregoing
exclusions) of $150,000; or (c) such other higher gross
income and/or net worth requirements of the state where such
investor resides; and, (iii) the Units are otherwise a
suitable investment for the subscriber. Each Sales Agent
shall maintain records disclosing the basis upon which they
determined the suitability of any persons who purchased
Units for a period of six years.
3. Authorized Communication.
(a) Prospectus Review. Soliciting Dealer hereby affirms
that it has reviewed the draft Prospectus furnished to
it and has formed a reasonable basis to believe that
all material facts related to the Pool, the offering,
and the proposed operation of the Pool have been
adequately and accurately disclosed and that such facts
are sufficient for it to provide prospective investors
with a basis for evaluating the merits of an investment
in the Pool. In making the foregoing affirmation,
Soliciting Dealer, may make reference to descriptions
in the Prospectus, other than the descriptions in the
Summary, which are for convenience, only. Sales Agents
agree to maintain files to disclose and preserve the
basis upon which the determination of suitability for
investment in the Pool was reached as to each
subscriber solicited by it for a period of not less
than six years. The basis for determining suitability
may include the Subscription Agreement and Power of
Attorney and other certificates submitted by
subscribers upon which the Sales Agents and the Pool
may rely, absent actual knowledge of or a reason to
believe, any information contained in such documents is
inaccurate. Specifically, each Sales Agent has reviewed
and will cause its potential subscribers to review: (i)
the Risk Disclosure Statement; (ii) the items of
compensation relating to the Pool set forth under "Fees
and Expenses"; (iii) certain tax aspects of an
investment in the Fund set forth under "Summary of
Certain Federal Income Tax Aspects of Investing in the
Pool and Tax Considerations"; (iv) the financial
condition and experience of the Manager set forth under
"Business of the Pool"; and, (v) the risk factors
relating to an investment in the Units set forth under
"Risks you Face".
(b) Each Sales Agent agrees to: (i) deliver to each person
who subscribes for the Units, a Prospectus, as then
supplemented or amended, no less than five days prior
to the tender of his subscription agreement (the
"Subscription Agreement"); (ii) comply promptly with
the written request of any person for a copy of the
Prospectus during the period between the effective date
of the Prospectus and the later of the termination of
the distribution of the Units or the expiration of 90
days after the first date upon which the Units were
offered to the public; and, (iii) deliver in accordance
with applicable law or as prescribed by any state
securities administrator to any person a copy of any
document included within the Prospectus.
4. Subscriptions.
During the Offering Period, the Sales Agents shall cause the
subscriber to deliver all qualification documentation,
subscriptions for Units, and checks for payment for Units
shall be delivered by the Sales Agents to the Manager of the
Pool for review and acceptance.
(a) All checks shall be made payable to Hanseatic
Discretionary Pool, L.L.C. to be deposited within 24
hours after receipt by Sales Agents with the Pool as
described in the Prospectus for investment in the Pool
effective on the next admission date by the Manager
following the sale or, will be returned by the Manager
to the subscriber together with an explanation to the
subscriber, with a copy to the Soliciting Dealer, if
applicable, of the reason for the refusal by the
Manager to accept the subscription on behalf of the
Pool. The Sales Agents may not accept cash for the sale
of Units. Checks not made payable as described in the
Prospectus and above will be returned to the
subscriber.
D. Payments to Soliciting Dealer.
No Soliciting Dealer will be paid a sales commission by the
Pool. The Pool and its Manager may not, under any
circumstances, increase, modify, or otherwise adjust the sales
commission to be paid pursuant to the terms of this Agreement.
E. Payment of Trailing Commissions.
The Manager shall pay a portion of the fixed commodity
commission, after payment of expenses, as Trailing Commissions
to the Sales Agents, which are qualified to receive such
commissions on terms it shall negotiate with such Sales
Agents. The term expenses means, among others, the amounts
paid by the Manager for clearing charges and fees to the FCMs
and other Clearing Brokers, the Exchanges, and the NFA. The
method and the amount of such commissions or fees paid by the
Manager to the Sales Agents shall be determined solely by
negotiations between the Manager and the Sales Agents;
provided, however, no change shall be made to permit a
retroactive adjustment to Trailing Commissions previously
paid. Any such adjustment in rate of Trailing Commissions must
have equal application to all Sales Agents. Such fees and
charges paid by the Pool to the Manager are described in
detail in the Prospectus.
F. Continuing Service.
In consideration of the payment of Trailing Commissions
related to the trading of commodities by the Pool to the
employers of the associated persons who are Commodity Futures
Trading Commission registered or otherwise qualified to be
paid Trailing Commissions, such employers and associated
persons agree to provide services to the Pool, investors in
the Pool, and the Manager. Such services shall include, but
are not limited to, (i) preparation of projections of methods
to be used and costs to identify suitable investors to solicit
to buy Units; (ii) establish a promotion budget for delivery
of information regarding the Pool to the registered
representatives of the Sales Agents; (iii) inquiring of the
Manager, from time to time, at the request of an owner of
Units to determine the net asset value of a Unit, the
commodity markets traded, the advisors utilized, the Pool's
performance, and assisting, at the request of the General
Manager, in the transfer and Redemption of Units sold by the
Sales Agents; (iv) provide training and supervision of
personnel to provide service to investors in the Pool; (v)
maintain and distribute current copies of Prospectuses and
financial reports; (vi) provide assistance and review in
designing materials to send to Members and potential investors
and developing methods of making such materials accessible to
Members and potential investors; and, (vii) generally, take
those steps necessary and desirable to aid in the retention of
investment in the Pool.
II. Pool Support to the Sales Effort.
The Pool will provide sales literature, memorandum, telephone
consultations and any other reasonable services to support the
selling efforts of the Sales Agents. The Pool will provide
copies of all communications required to keep the investors
sold by the Sales Agents informed of the performance of the
Pool and required by law to be distributed to the purchasers
of Units sold by the Sales Agents, including, but not limited
to, the monthly and the annual audited financial statements
for the Pool.
III. Representations by All Parties
Each party hereto represents the following to the other
party to this Agreement. Legal Compliance.
The parties hereto will use their best efforts to comply fully
with all applicable laws and the rules of the National
Association of Securities Dealers, Inc. (the "NASD"), the
Securities and Exchange Commission (the "SEC"), and state
securities administrators of the several states and various
other jurisdictions applicable to each of them in regard to
their activities under this Agreement which in any way effects
the offer and sale of Units.
A. Authority to Act.
Each party to this agreement represents to the others
that it is duly organized and validly existing under
the laws of the state of its formation, is a member
in good standing of the self regulatory
organizations, if any, which regulate the sale of
Units, has all the registrations, licenses and
permits required to perform its duties hereunder, and
has the full power and authority to act in its
capacity in the manner contemplated by this Agreement
and as described in the Prospectus. This Agreement
has been duly and validly authorized, executed and
delivered on behalf of each party hereto and is a
valid and binding agreement, enforceable in
accordance with its terms. Each party has been
afforded the opportunity to be represented by legal
counsel of its choice.
B. No Breach of Agreements.
The entry of this Agreement will not cause a default
of any other agreement to which any party hereto is a
party. No party to this Agreement is in breach of any
agreement to which it is a party which will be
material to its performance under this Agreement nor
will any party during the term of this Agreement be
in contravention of or default under any order, law
or regulation binding upon it. The execution and
delivery of this Agreement, consummation of the
transactions herein contemplated and compliance with
the terms hereof will not constitute or result in a
default under or contravene any provision by any
party of the limited partnership agreement or any
other agreement, order, law or regulation related to
the Fund.
IV. Representations of the Pool.
The Pool represents and warrants to the Sales Agents that:
A. All Material Facts Disclosed.
The Prospectus contains all material statements and
information required to be included therein by the
Securities Act of 1933 and the Commodity Exchange
Act, and the securities laws of the various states
selected by the Pool in which offers for the sale of
Units will be made, as those laws may be amended,
from time to time, during this offering and the rules
and regulations promulgated thereunder; will conform
in all material respects with the requirements of
such laws and the rules and regulations thereunder;
and, will not include any 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 light of the
circumstances under which such statements were made,
not misleading; provided, however, that this
representation and warranty shall not apply, with
respect to the Sales Agents, to any statements or
omissions in the Prospectus, or any such amendment or
supplement, which supplies the information and which
is in writing and furnished by the Pool to the Sales
Agents prior to the sale in question.
B. The Units are Valid.
The Units, when issued and sold pursuant to the terms
hereof and of the Prospectus, will be validly issued,
fully paid and not subject to call or assessment, and
the Pool will apply the net proceeds received from
the issuance and sale of the Units in the manner set
forth in the Prospectus.
C. Other Agreements Valid.
The customer agreements with each clearing broker
(the "Brokerage Agreements") and the Power of
Attorney granted to the commodity trading advisor
has, to the best knowledge of the Manager after due
inquiry, been duly and validly authorized, executed
and delivered on behalf of the Pool and the other
party to the agreement, and each is a valid and
binding agreement of the Pool in accordance with its
terms, except to the extent that the exculpation and
indemnification provisions of such agreements may be
limited by applicable law or this Agreement.
D. Necessary Authority.
The Pool has all necessary governmental, regulatory
and commodity exchange approvals and licenses and has
effected all filings and registrations required to
conduct its business and perform its obligations as
described in the Prospectus. The Pool will use its
best efforts to be and remain qualified to offer and
sell the Units in those jurisdictions in which the
Units will be offered. The Pool is not and, upon
implementation or consummation of the transactions
contemplated by this Agreement and the Operating
Agreement, will not be an investment company within
the meaning of the Investment Company Act of 1940, as
amended.
V. Representations of the Manager.
The Manager represents and warrants to the Sales Agents that:
A. Government Authority.
The Manager has all governmental, regulatory and
other approvals and licenses and has effected all
filings and registrations including, without
limitation, registration as a commodity pool operator
under the Commodity Exchange Act, as amended, and
membership in NFA, as a corporation under the laws of
the State of New York, required to conduct its
business as described in the Prospectus or required
to perform its obligations as described therein or
under the limited partnership agreement, the power of
attorney to the CTA, this Agreement and the Brokerage
Agreements, and covenants that it will use its best
efforts to maintain such approvals, licenses,
filings, registrations, and memberships in full force
and effect.
B. Contracts and Information Complete.
The operating Agreement, the power of attorney, the
Brokerage Agreements and this Agreement have each
been duly authorized, executed and delivered by the
Manager, and each is intended to be a valid and
binding agreement of the Pool and the Manager in
accordance with its terms. All references and
information concerning the Manager in the Prospectus
supplied by it are accurate in all material respects
and, as to it, the Prospectus does not contain any
misleading or untrue statement of a material fact or
omit to state a material fact which is required to be
stated or which is necessary to prevent the
statements therein from being misleading.
C. Fees and Costs Attendant to Pool Offering.
The Manager will pay, or cause to be paid, all costs
and expenses associated with this offering of the
Pool's Units, including (i) the preparation, printing
and filing of the Prospectus and all amendments and
supplements thereto with the appropriate Federal and
state regulatory agencies and the self regulatory
agencies; (ii) the furnishing to the Sales Agents of
copies of the Prospectus and of other documents
required to be furnished, including costs of shipping
and mailing; (iii) fees and disbursements of legal
counsel, accountants, and other experts in connection
with the transactions contemplated by this Agreement;
and, (iv) any other organization, escrow, and
offering expenses of the Pool associated with this
Offering Period. Each other party to this Agreement
shall bear all of its own expenses under this
Agreement, including fees and disbursements of its
legal counsel, accountants and other experts.
VI. Representations of the Sales Agents.
The Sales Agents represent to the Pool and the Manager as
follows:
A. All Material Facts Disclosed.
Sales Agents have disclosed all material statements
and information related to the Sales Agents required
to be disclosed to the Pool and Manager by the
Securities Act of 1933 and the Commodity Exchange
Act, and any corresponding applicable state law, as
amended, from time to time, and the rules and
regulations promulgated thereunder; and, (i) all
information furnished to the Pool or the Manager
about the prospects and subscribers to the Pool by
the Sales Agents will be, to the best of Sales Agents
knowledge and belief, complete, true and correct;
and, (ii) all information furnished by the Sales
Agents to prospects and subscribers regarding the
Pool will also be true and correct and will be in
reliance upon and only the information furnished in
the Prospectus, amendments thereto or in writing
intended by the Manager to be delivered to
prospective investors.
B. Agreements Valid.
The Sales Agents have the authority to enter into
this Agreement and all other agreements required to
perform its obligations hereunder.
C. Necessary Authority.
The Sales Agents have all necessary governmental,
regulatory and other approvals and licenses and has
effected all filings and registrations required to
conduct its business and perform its obligations as
described in the Prospectus and this Agreement. The
Sales Agents will use their best efforts to be and
remain qualified to offer and sell the Units in those
jurisdictions in which the Pool and the Sales Agents
agree the Units will be offered. Specifically, each
Sales Agent represents that it is a broker or dealer
as defined in Section 3(a)(4) or 3(a)(5) of the
Securities Exchange Act of 1934 ("Exchange Act");
that it is registered with the Securities and
Exchange Commission pursuant to Section 15 of the
Exchange Act; that it is a member of the NASD; that
its customers' accounts are insured by the Securities
Investors Protection Corporation ("SIPC"); and that,
during the term of this Agreement, it will abide by
all of the rules and regulations of the NASD
including, without limitation, the NASD Conduct
Rules. Each Sales Agent agrees to notify the Manager
immediately in the event of (1) the termination of
its coverage by the SIPC; (2) its expulsion or
suspension from the NASD, or (3) its being found to
have violated any applicable Federal or state law,
rule or regulation arising out of its activities as a
broker-dealer or in connection with this Agreement,
or which may otherwise affect in any material way its
ability to act in accordance with the terms of this
Agreement. Any Sales Agent's expulsion from the NASD
will automatically terminate this Agreement
immediately without notice. Suspension of any Sales
Agent from the NASD for violation of any applicable
Federal or state law, rule or regulation will
terminate this Agreement effective immediately upon
written notice by the Manger of termination to Sales
Agent.
D. Use of Discretionary Authority.
Sales Agents will not make sales of Units from a
discretionary account over which it or any of its
registered representatives or the affiliates of any
of them have control without prior written approval
of the customer in whose name such discretionary
account is maintained.
E. ERISA Assets.
1. Sales Agents understand that the Department of Labor
views ERISA as prohibiting fiduciaries of discretionary
ERISA assets from receiving administrative service fees
or other compensation from funds in which the
fiduciary's discretionary ERISA assets are invested. To
date, the Department of Labor has not issued any
exemptive order or advisory opinion that would exempt
fiduciaries from this interpretation. Without specific
authorization from the Department of Labor, fiduciaries
should carefully avoid investing discretionary assets
in any fund pursuant to an arrangement where the
fiduciary is to be compensated by the fund for such
investment. Receipt of such compensation could violate
ERISA provisions against fiduciary self-dealing and
conflict of interest and could subject the fiduciary to
substantial penalties.
2. No Sales Agent will perform or provide any duties which
would cause it to be a fiduciary under Section 4975 of
the Internal Revenue Code, as amended. For purposes of
that Section, each Sales Agent understands that any
person who exercises any discretionary authority or
discretionary control with respect to any individual
retirement account or its assets, or who renders
investment advice for a fee, or has any authority or
responsibility to do so, or has any discretionary
authority or discretionary responsibility in the
administration of such an account, is a fiduciary.
VII. Indemnification and Limits.
The parties hereto agree to provide indemnification upon the
following terms and limits:
A. Indemnification from Pool to Sales Agents.
The Pool agrees to indemnify and hold harmless the
Sales Agents and each person, if any, who controls
the Sales Agents within the meaning of Section 15 of
the Securities Act, from and against any and all
losses, claims, damages, liabilities and expenses
including, but not limited to, any investigation,
legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted to which,
jointly or severally, they, or any of them, may
become subject as a result of any breach of fiduciary
duty owed by the Manager to the Pool or under the
Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the Commodity
Exchange Act, as amended, any other Federal or state
statutory or foreign law or regulation, at common law
or otherwise, insofar as such losses, claims,
damages, liabilities or expenses or actions with
respect thereto arise out of or are based upon any
untrue statement or alleged untrue statement of a
material fact contained in the Prospectus or any
amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading; except insofar
as any such untrue statement or omission or alleged
untrue statement or omission was made in the
Prospectus, or any amendment or supplement thereto,
in reliance upon and in conformity with information
furnished in writing to the Pool expressly for use
therein by the Sales Agent or any other independent
third party; provided, however, in no event shall the
Pool's agreement to indemnify contained herein inure
to the benefit of the Sales Agents or any person
controlling the Sales Agents on account of any
losses, claims, damages, liabilities, expenses or
actions arising from the sale of Units to any person
by the Sales Agents if such losses, claims, damages,
liabilities, expenses or actions arise out of or are
claimed to be based upon an untrue statement or
omission or alleged untrue statement or omission in a
Prospectus if a subsequent Prospectus or supplemental
Prospectus shall correct, prior to the delivery to
the Sales Agents by such person of his subscription,
the untrue statement or omission or the alleged
untrue statement or omission which is the basis of
the loss, claim, damage, liability, expense or action
for which indemnification is sought, or a copy of
such subsequent Prospectus was not sent or given to
such person simultaneously with or prior to the
receipt by the Sales Agents of such person's
subscription. In addition, this indemnification will
not apply to any claims asserted as a result of the
alleged misstatement of fact by any party other than
the Manager, or any other authorized representative
of the Pool or which was properly treated by (i) the
Prospectus, as amended, from time to time, or (ii)
written material furnished by the Manager on behalf
of the Pool for the purpose of delivery to prospects
or subscribers.
B. Indemnification from Sales Agents to Other Parties.
The Sales Agents agree to indemnify and hold harmless
the Manager, the Pool, and each person, if any, who
controls either of them within the meaning of Section
15 of the Securities Act, from and against any and
all losses, claims, damages, liabilities and expenses
including, but not limited to, any investigation,
legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted to which,
jointly or severally, they, or any of them, may
become subject under the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as
amended, the Commodity Exchange Act, as amended, any
other Federal or state statutory or foreign law or
regulation, at common law or otherwise, insofar as
the losses, claims, damages, liabilities or expenses
indemnified against arise out of or are based upon
any untrue statement or omission or alleged untrue
statement or omission which was made to a prospect or
subscriber to Units by the Sales Agents or either of
them or based upon such Sales Agents' violation of
any applicable Federal, State or other applicable
regulation or self-regulatory requirement in
connection with the offer or sale of units by such
Sales Agents; provided, however, that the obligation
of the Sales Agents to indemnify the Pool or the
Manager, or any person who controls them, hereunder
shall be limited to the total price of the Units sold
by the Sales Agent; and, provided, further, that the
final award or court order specifically find the
Sales Agent was guilty of such misrepresentation.
C. Sales Agents Responsible for Payment of Commissions.
Provided the Pool or Manager properly pays the sales
or Trailing Commissions to the Sales Agent which sold
the Units, such Sales Agent agrees to indemnify and
hold harmless the Pool and the Manager from all
claims, including attorney fees and costs, from any
person who asserts they are entitled to a portion of
the Trailing Commissions or are entitled to a portion
of the Sales Commissions paid to a Soliciting Dealer
Agreement.
D. Limits upon Indemnification.
The obligation to provide the above described
indemnification's are conditioned upon and subject to
the following limitations:
1. Provide Notice.
As condition precedent to indemnification
under this Agreement, a party must, within
ten days after receipt of information to
inform it of the existence of a potential
claim or the commencement of any action,
suit or proceeding against it for which it
will make a claim for indemnification from
another party under this Agreement, provide
a complete description of the claim and give
notice to the indemnifying party of all
facts related to such claim including, but
not limited to, sending a copy of all papers
served. The failure to provide such timely
notice shall be a waiver of indemnification
under this Agreement but such omission shall
not be a waiver of any liability of any
person under common law or statute or any
other basis other than under the
indemnification provisions of this
Agreement. In case any such action, suit or
proceeding shall be brought against any
indemnified party and it shall have properly
notified the indemnifying party of such
claim, the indemnifying party shall be
entitled to participate in the defense of
such claim and, if it so elects,
individually or jointly with any other
indemnifying party similarly notified, to
assume the defense thereof with counsel
satisfactory to such indemnified party.
After notice from the indemnifying party to
such indemnified party of its election to
assume the defense thereof, the indemnifying
party shall not be liable to such
indemnified party for any legal or other
expenses, other than reasonable costs of
investigation requested by the indemnifying
party, subsequently incurred by such
indemnified party in connection with the
defense thereof and shall not be responsible
for the quality of the defense or the
outcome of the case.
2. Legal Counsel.
The indemnified party shall have the right
to employ its own counsel in any such action
in which the indemnifying party has so
assumed the defense, but the fees and
expenses of such counsel shall be at the
expense of such indemnified party unless (i)
the employment of counsel by such
indemnified party has been authorized by the
indemnifying party, (ii) the indemnified
party shall have reasonably concluded that
there may be a conflict of interest between
the indemnifying party and the indemnified
party in the conduct of the defense of such
action (in which case the indemnifying party
shall not have the right to direct the
defense of such action on behalf of the
indemnified party) or (iii) the indemnifying
party shall not in fact have employed
counsel to assume the defense of such
action, in each of which cases, the fees and
expenses of counsel shall be at the expense
of the indemnifying party. An indemnifying
party shall not be liable for any settlement
of any action or claim effected without its
consent. In the case of (ii) above, the
indemnifying party, or the indemnifying
parties, if an indemnified party shall have
a claim for indemnification against more
than one indemnifying party, shall not be
liable for the expenses of more than one
separate counsel for the Manager and the
Pool and any person who controls them within
the meaning of Section 15 of the Securities
Act.
3. Manager Liability Limitation.
Any exculpation provisions of the Operating
Agreement shall not relieve the Manager from
any liability it may have or incur to the
Pool under this Agreement, nor shall the
Manager be entitled to be indemnified by the
Pool, pursuant to any indemnification
provisions contained in the Operating
Agreement or the Brokerage Agreements,
against any loss, liability, damage, cost or
expense it may incur under this Agreement.
VIII Termination.
This Agreement may be terminated upon the following terms and
conditions:
A. Without Cause.
This Agreement may be terminated without cause by any
party upon fifteen (15) days notice to the other
parties.
B. With Cause.
Any party may terminate this Agreement at anytime for
cause if the Manager commits a breach of fiduciary
duty owed to the Pool, any domestic or international
event, act or occurrence has materially disrupted, or
in the opinion of the Manager will, in the immediate
future, materially disrupt the commodities markets;
or, any party to this Agreement breaches a material
term of this Agreement including, but not limited to,
fails to cure any law or rule violation attendant to
its right to perform under this Agreement or makes
any false statement or omission to any prospect or
subscriber of Units or required to be made under this
Agreement. C. Payments after Termination. The Manager
or the Pool, as the case may be, will continue to pay
Sales Commissions and Trailing Commissions provided
by this Agreement, after termination of this
Agreement, for any reason, for all Units sold by the
Sales Agents during the term of this Agreement;
provided, however, to receive trailing commissions,
the Sales Agents must continue to service the holders
of Units after such termination.
IX. General Provisions.
The following general terms are to apply to this Agreement.
A. Reference to Prospectus. The Sales Agents acknowledge
receipt of a copy of the draft Prospectus referred to
above and, subject to the delivery by the Manager of
all revisions, Amendments and Addenda thereto and all
filings made to the Securities and Exchange
Commission, together with an opinion from counsel for
the Pool that they are complete and that the Units
are available for sale in the states identified in
the Blue Sky Survey (which shall not be an opinion of
counsel), the Sales Agents will distribute the
offering in accordance with the instructions of the
Pool. Terms with the first letter capitalized which
are not defined is this Agreement are defined in the
Prospectus.
B. Survival of Representations.
The representations contained in this Agreement made
by any party shall survive the issue, sale and
payment for the Units hereunder and the termination
of this Agreement as to all Units which remain in the
Pool. The fact a party may conduct a due diligence
review to determine the accuracy of one or all of the
representations made in this agreement shall not be
deemed a waiver or apply estoppel or otherwise
legally affect such representation should at some
later time any such representation be proved untrue.
C. Independent Contractors.
The parties hereto, subject to the procedures
established by the Pool to preserve the legality of
the offering and to assure that all persons solicited
will be pre-qualified as suitable to become members
in the Pool, shall be free to exercise their
independent judgment as to the performance of their
obligations under this agreement. The parties hereto
shall be free to devote whatever time they choose to
any other business. The Sales Agents are independent
from the Manager and the Pool; the relationship of
the Sales Agents with the Manager and the Pool are as
independent contractors. The parties agree that in
each transaction in the Units of the Pool and with
regard to any services rendered pursuant to this
Agreement: (a) each Sales Agent is acting as agent
for the subscriber; (b) each transaction is initiated
solely upon the order of the subscriber; (c) as
between each Sales Agent and its customer, the
customer will have full beneficial ownership of all
Units of the Pool; (d) each transaction shall be for
the account of the subscriber and not for the Sales
Agent's account; and (e) each transaction shall be
without recourse to Sales Agent provided that Sales
Agent acts in accordance with the terms of this
Agreement. No Sales Agent shall have any authority in
any transaction to act as agent for the Manager or as
agent for the Pool.
D. Successors and Assigns.
This Agreement has been and is made solely for the
benefit of the parties hereto to the extent expressed
herein, for the benefit of persons controlling any of
such parties hereto and the respective successors and
assigns of such controlling persons, and no other
person shall acquire or have any right under or by
virtue of this Agreement. There may be no assignment
of this Agreement.
E. Notices.
Any notices under this Agreement shall be given or
confirmed in writing and sent registered or certified
mail, postage prepaid, addressed as to such person at
the address in the caption of this Agreement or to
such other address as changed from time to time by
either party hereto by written notice to the other.
F. Entire Agreement
.
This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter
contained herein.
G. Arbitration.
Any controversy or disagreement between the parties
to this Agreement shall be determined by binding
arbitration in the City of Oklahoma City, State of
Oklahoma, by a single arbitrator knowledgeable in the
securities or commodities business in accordance with
the rules and regulations as promulgated by the
American Arbitration Association and judgment on any
award so made may be entered in any court having
jurisdiction. In the event a party is required to
retain legal counsel to enforce or defend its rights
under this Agreement, the loser of any such dispute
agrees to pay all costs including all reasonable
attorney fees and court costs, attendant to the
protection of its rights hereunder. Specifically, and
not by way of limitation to the foregoing, should
either party lose an arbitration claim and
subsequently file a court action, such losing party
shall pay the legal fees and costs of the party
defending the attempted avoidance of the arbitration
award.
H. Applicable Law and Severability.
This Agreement shall be governed by the laws of the
State of Oklahoma. If any of the provisions of this
Agreement are held unlawful, void or unenforceable,
such event shall not affect the enforceability of the
remaining provisions.
I.. Captions.
All captions used herein are for convenience only,
are not a portion of this Agreement and are not to be
used in construing or interpreting any aspect of this
Agreement.
J. Counterparts.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed an
original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Pool, the Manager, and the Sales Agent have
executed this Agreement on the day and year first above written.
HANSEATIC DISCRETIONARY POOL, L L.C. _________________________
By: POOL MANAGEMENT SERVICES, INC. ,Its Manager SALES AGENT
By: _________________________________ By: ____________________
Xxxxxx Xxxxx, President
Its: ____________________
