1
Exhibit 1.02
XXXXXXXX ASSET ALLOCATION TRUST
(A DELAWARE BUSINESS TRUST)
$50,000,000 OF UNITS OF BENEFICIAL INTEREST
(SUBSCRIPTION PRICE: $1,000 PER UNIT
DURING THE INITIAL OFFERING PERIOD;
NET ASSET VALUE PER UNIT DURING THE ONGOING OFFERING PERIOD)
ADDITIONAL SELLING AGENT AGREEMENT
___________ ___, 2000
[Additional Selling Agent]
Dear Sirs:
Xxxxxxxx & Company, Inc., a Maryland corporation (the
"Managing Owner"), has caused the formation of a business trust pursuant to the
Delaware Business Trust Act (the "Delaware Act") under the name, XXXXXXXX ASSET
ALLOCATION TRUST (the "Trust"), for the purpose of engaging in trading, buying,
selling or otherwise acquiring, holding or disposing of futures contracts,
forward contracts, foreign exchange commitments, swaps, exchange for physicals,
spot (cash) commodities, hybrid instruments, securities and other items, options
on and any rights pertaining to the foregoing throughout the world with the
objective of capital appreciation through speculative trading. As described in
the Prospectus referred to below, the Trust will engage in this business under
the direction of the Managing Owner. The Trust proposes to make a public
offering of units of beneficial interest in the Trust (the "Units"). In
connection with the proposed public offering, the Trust has filed with the
United States Securities and Exchange Commission (the "SEC"), pursuant to the
United States Securities Act of 1933, as amended (the "1933 Act"), a
registration statement on Form S-1 to register the Units, and as part thereof a
prospectus (Registration No. 333-_____) (which registration statement, together
with all amendments thereto, shall be referred to herein as the "Registration
Statement" and which prospectus together with all amendments and supplements
thereto in the forms filed with the SEC pursuant to Rule 424 under the Act shall
be referred to herein as the "Prospectus"). The Managing Owner and the Trust
have entered into a selling agreement dated as of _________ __, 2000 among
Xxxxxxxx Financial Services, Inc., the Managing Owner, the Trust and others (the
"Selling Agreement"), a copy of which has been furnished to you. Other selling
agents, including those introduced by wholesalers ("Wholesalers") to the Trust
and the Managing Owner (the "Additional Selling Agents" and together with the
Wholesalers, the "Selling Agents"), may be selected by the Managing Owner. You
have been so selected by the Managing Owner. We
2
confirm our agreement with you as follows. Capitalized terms used but otherwise
not defined herein shall have the meanings ascribed to them in the Selling
Agreement unless the context indicates otherwise.
1. Appointment and Undertakings of the Additional Selling Agent
(a) Subject to the terms and conditions set forth in this Agreement, the
Selling Agreement and the Registration Statement, the Additional Selling Agent
is hereby appointed, and hereby accepts such appointment, as one of the Trust's
non-exclusive selling agents to offer and sell the Units on a best-efforts basis
without any commitment on the Additional Selling Agent's part to purchase any
Units. Units may only be sold to investors who have "wrap fee" accounts with the
Additional Selling Agent. It is understood and agreed that the Managing Owner
may retain other selling agents (including those introduced by Wholesalers). The
Additional Selling Agent agrees to comply with the terms and conditions of this
Agreement and any terms and conditions of the Selling Agreement applicable to
Additional Selling Agents.
(b) The Additional Selling Agent agrees to use its reasonable efforts to
procure subscriptions for the Units as long as this Agreement and the Selling
Agreement remain in effect and to make the offering of Units at the offering
price and minimum amounts and on the other terms and conditions set forth in the
Prospectus and the Selling Agreement.
(c) The Additional Selling Agent shall offer and sell Units only to persons
and entities who satisfy the suitability and/or investment requirements set
forth in the Prospectus and the subscription agreements attached thereto and
who, to the Managing Owner's satisfaction, complete the subscription agreements
and related subscription documents used in connection with the offering of the
Units (the "Subscription Documents") and remit good funds for the full
subscription price. The Additional Selling Agent shall conduct a thorough review
of the suitability of each subscriber for Units that it solicits and of the
Subscription Documents. The Additional Selling Agent shall not forward to the
Managing Owner any Subscription Documents that are not in conformity with the
requirements specified in the Prospectus and in the Subscription Documents
appropriate for the particular subscriber, or that is illegible in any respect
or is not fully completed, dated, or signed, or that represents the subscription
of a person or entity not satisfying the suitability and/or investment
requirements applicable to such person or entity. The Additional Selling Agent
shall not execute any transactions in Units in a discretionary account over
which it has control without prior written approval of the customer in whose
name such discretionary account is maintained.
The Additional Selling Agent agrees not to recommend the purchase of
Units to any subscriber unless the Additional 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 is or will be in a financial position appropriate to enable the
subscriber to realize to a significant extent the benefits of the Trust,
including the tax benefits (if any) described in the Prospectus; the subscriber
has a fair market net worth sufficient to sustain the risks inherent in
participating in the Trust, including loss of investment and lack of liquidity;
and the Units are otherwise a suitable investment for the subscriber. In
addition to submitting such information to the Managing Owner, the Additional
Selling Agent agrees to maintain files of information
2
3
disclosing the basis upon which the Additional Selling Agent determined that the
suitability requirements of Rule 2810(b)(2) of the National Association of
Securities Dealers, Inc. (the "NASD") were met as to each subscriber (the basis
for determining suitability may include the Subscription Documents and other
certificates submitted by subscribers). In connection with making the foregoing
representations and warranties, the Additional Selling Agent further represents
and warrants that it has received copies of the Registration Statement, as
amended to the date hereof, and the Prospectus and has, among other things,
examined the following sections in the Prospectus and obtained such additional
information from the Managing Owner regarding the information set forth
thereunder as the Additional Selling Agent has deemed necessary or appropriate
to determine whether the Prospectus adequately and accurately discloses all
material facts relating to an investment in the Trust and provides an adequate
basis to subscribers for evaluating an investment in the Units:
"Summary"
"The Risks You Face"
"Investment Factors"
"Xxxxxxxx & Company, Inc."
"Conflicts of Interest"
"Charges to the Trust"
"Use of Proceeds"
"Distributions and Redemptions"
"Declaration of Trust & Trust Agreement"
"Federal Income Tax Aspects"
In connection with making the representations and warranties set forth
in this paragraph, the Additional Selling Agent has not relied on inquiries made
by or on behalf of any other parties.
The Additional Selling Agent agrees to inform all prospective
purchasers of Units of all pertinent facts relating to the liquidity and
marketability of the Units as set forth in the Prospectus.
The Additional Selling Agent shall offer and sell Units in compliance
with the requirements set forth in the Registration Statement (particularly the
"Subscription Requirements" attached as Exhibit B thereto), this Agreement and
the Blue Sky Survey delivered to the Additional Selling Agent pursuant to
Section 4(e) below. The Additional Selling Agent represents and warrants that it
shall comply fully at all times with all applicable federal and state securities
and commodities laws (including without limitation the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the Commodity Exchange Act,
as amended (the "CEA"), and the securities and Blue Sky laws of the
jurisdictions in which the Additional Selling Agent solicits subscriptions, all
applicable rules and regulations under such laws, and all applicable
requirements, rules, policy statements and interpretations of the NASD, and the
securities and commodities exchanges and other governmental and self-regulatory
authorities and organizations having jurisdiction over it or the offering of
Units). The Additional Selling Agent shall under no circumstances engage in any
activities hereunder in any jurisdiction (i) in which the Managing Owner has not
informed the Additional Selling Agent that counsel's advice has been received
that the Units are qualified for sale or are exempt under the applicable
3
4
securities or Blue Sky laws thereof or (ii) in which the Additional
Selling Agent may not lawfully engage.
The Additional Selling Agent further agrees to comply with the
requirement under applicable federal and state securities laws to deliver to
each offeree a Prospectus and any amendments or supplements thereto (including
summary financial information, if available, after the Trust has commenced
operations). Neither the Additional Selling Agent nor any of its employees,
agents or representatives will use or distribute any marketing material or
information other than that prepared by the Trust and the Managing Owner. It is,
however, understood that the Additional Selling Agent may use documents that it
prepares solely for the purpose of communicating with its Registered
Representatives provided that the Additional Selling Agent provides to the
Managing Owner a copy of each such document prior to such use.
(d) The additional services that the Additional Selling Agent will
provide on an ongoing basis to Unitholders will include but not be limited to:
(i) inquiring of the Managing Owner from time to time, at the request of
Unitholders, as to the Net Asset Value of a Unit, (ii) inquiring of the Managing
Owner from time to time at the request of the Unitholders, as to the commodities
markets and the activities of the Trust, (iii) assisting, at the request of the
Managing Owner, in the redemption of Units sold by the Additional Selling Agent,
(iv) responding to questions of Unitholders from time to time with respect to
monthly account statements, annual reports and financial statements furnished to
Unitholders, and (v) providing such other services to the owners of Units as the
Managing Owner may, from time to time, reasonably request.
All payments for subscriptions shall be made by transfer of
funds to the escrow account of the Trust as described in the Prospectus,
provided that any such arrangements must comply in all relevant respects with
Rules 10b-9 and 15c2-4 under the 1934 Act.
2. Compensation
(a) In consideration of the Additional Selling Agent administering the
Units, the Managing Owner shall pay the Additional Selling Agent an ongoing fee
for administrative, legal and client reporting services of 0.35% per annum of
the net assets of the Trust, as defined in the Prospectus attributable to
subscriptions from subscribers which are customers of the Additional Selling
Agent. The Additional Selling Agent may pass along a portion of such fee to
another selling agent which is appropriately registered with or a member of, as
applicable, the National Futures Association (the "NFA"), the NASD, the SEC,
the securities or Blue Sky administrators of the several states and various
other jurisdictions and any other regulatory body.
The Additional Selling Agent shall not, 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 the purchase of Units; provided, however, the normal sales
commissions payable to a registered broker-dealer or other properly licensed
person for selling Units shall not be prohibited hereby.
(b) Notwithstanding any other provision of this Agreement to the contrary
the Managing Owner shall have sole discretion to accept or reject any
subscription for the Units in whole or in part.
4
5
(c) The Managing Owner agrees to make all payments to the Additional
Selling Agent pursuant to this Section 2 within 15 days following the end of a
monthly period in which compensation is earned.
3. Representations and Warranties
(a) The Managing Owner hereby represents and warrants as follows:
(i) The Trust is duly organized and validly existing as a business
trust under the laws of the State of Delaware, and has full power and authority
under the Trust Agreement to conduct its business as described in the
Registration Statement and Prospectus and to issue, sell and deliver the Units.
The Trust is not required to take any action to be qualified to do business in
the State of Maryland.
(ii) The Managing Owner is a corporation duly organized and validly
existing in good standing under the laws of the State of Maryland, has full
corporate power to perform its obligations and enter into the transactions
described in the Registration Statement and Prospectus, as the same may be
amended or supplemented. All the present principals of the Managing Owner are
identified as such in the Registration Statement and Prospectus.
(iii) The Units, when issued and sold pursuant to the terms hereof
and of the Registration Statement, Prospectus and Subscription Agreements, will
be validly issued, fully paid and not subject to further call or assessment.
(iv) The Escrow Agreement and this Agreement have each been duly and
validly authorized, executed and delivered by the Managing Owner on behalf of
the Trust and each is, assuming that it has been duly and validly authorized,
executed and delivered by the other parties thereto (other than the Managing
Owner), a valid and binding agreement of the Trust, except insofar as
bankruptcy, moratorium or other similar laws may be applicable and except that
the exculpation, indemnification and contribution provisions of such agreements
may be limited by applicable law and enforcement of any specific terms or
remedies may be unavailable.
(v) The Trust Agreement and this Agreement have each been duly and
validly authorized, executed and delivered on behalf of the Managing Owner and
each is, assuming that it has been duly and validly authorized, executed and
delivered by the other parties thereto (other than the Trust), a valid and
binding agreement of the Managing Owner except insofar as bankruptcy, moratorium
or other similar laws may be applicable, and except that the exculpation,
indemnification and contribution provisions of such agreements may be limited by
applicable law and enforcement of any specific terms or remedies may be
unavailable.
(vi) The Trust has, or is in the process of obtaining, all federal
and state governmental and regulatory approvals and licenses, and is maintaining
on a current basis all filings and registrations with federal and state
governmental and regulatory agencies, required to conduct its business to be
conducted, all as described in the Registration Statement and Prospectus.
5
6
(vii) The Managing Owner has all federal and state governmental and
regulatory, and to the best of its knowledge, commodity exchange licenses and
approvals, and is maintaining on a current basis all filings and registrations
with federal and state governmental and regulatory agencies, required to act as
described in the Registration Statement and Prospectus (including, without
limitation, registration as a commodity pool operator under the Commodity Act
and membership as a commodity pool operator in NFA), and the performance of such
actions will not violate or result in a breach of any provision of its articles
of incorporation, by-laws or any agreement, instrument, order, law or regulation
binding upon it.
(viii) On the Effective Date and the date on which the Prospectus is
first filed with the SEC pursuant to Rule 424(b), the Registration Statement and
the Prospectus (or when any post-effective amendment to the Registration
Statement becomes effective or any supplement to the Prospectus is filed with
the SEC, the Registration Statement, as amended, and the Prospectus, as amended
or supplemented) will comply fully in all material respects with the
requirements of the Securities Act and the Rules and the Commodity Act and the
published rules of the CFTC thereunder, and will accurately describe the
proposed operation of the Trust; and each of the Registration Statement, as it
may be amended, and the Prospectus, as it may be amended or supplemented, will
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of the Prospectus, as it may be amended or
supplemented, in the light of the circumstances under which such statements were
made); except that this representation and warranty does not apply to any
statement or omission in the Registration Statement, as it may be amended, or
the Prospectus, as it may be amended or supplemented, made in reliance upon
information furnished in writing to the Trust by the Additional Selling Agent
expressly for use therein.
6
7
(vii) The Managing Owner has all federal and state governmental and
regulatory, and to the best of its knowledge, commodity exchange licenses and
approvals, and is maintaining on a current basis all filings and registrations
with federal and state governmental and regulatory agencies, required to act as
described in the Registration Statement and Prospectus (including, without
limitation, registration as a commodity pool operator under the Commodity Act
and membership as a commodity pool operator in NFA), and the performance of such
actions will not violate or result in a breach of any provision of its articles
of incorporation, by-laws or any agreement, instrument, order, law or regulation
binding upon it.
(viii) On the Effective Date and the date on which the Prospectus is
first filed with the SEC pursuant to Rule 424(b), the Registration Statement and
the Prospectus (or when any post-effective amendment to the Registration
Statement becomes effective or any supplement to the Prospectus is filed with
the SEC, the Registration Statement, as amended, and the Prospectus, as amended
or supplemented) will comply fully in all material respects with the
requirements of the Securities Act and the Rules and the Commodity Act and the
published rules of the CFTC thereunder, and will accurately describe the
proposed operation of the Trust; and each of the Registration Statement, as it
may be amended, and the Prospectus, as it may be amended or supplemented, will
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of the Prospectus, as it may be amended or
supplemented, in the light of the circumstances under which such statements were
made); except that this representation and warranty does not apply to any
statement or omission in the Registration Statement, as it may be amended, or
the Prospectus, as it may be amended or supplemented, made in reliance upon
information furnished in writing to the Trust by the Additional Selling Agent
expressly for use therein.
(ix) All references to the Managing Owner and its principals in the
Registration Statement and the Prospectus are accurate and complete in all
material respects, set forth in all material respects the information required
to be disclosed to prospective investors under the Commodity Act and the rules
and regulations thereunder and, as to the Managing Owner and its principals, the
Registration Statement and Prospectus do not 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 therein not misleading
(in the case of the Prospectus, in the light of the circumstances under which
such statements were made).
(x) The balance sheet of the Managing Owner and the notes thereto
included in the Registration Statement present fairly the financial position of
the Managing Owner as of the date thereof, in conformity or (in the case of any
unaudited balance sheet) in substantial conformity with generally accepted
accounting principles. Since the date of the most recent such balance sheet,
there have been no changes in the financial condition of the Managing Owner,
other than changes which, in the aggregate, are not materially adverse or which
are disclosed in the Prospectus, and since such date there have been no changes
in the business of the Managing Owner which are material in the context of the
offering of the Units.
(xi) The Trust will file any promotional brochure or other marketing
materials (collectively, "Promotional Material") with the NASD, and will not use
any such Promotional Material to which the NASD has not stated in writing that
it has no objections. The Trust will
7
8
file all Promotional Material in all state jurisdictions where such filing is
required, and will not use any such Promotional Material in any state which has
expressed any objection thereto (except pursuant to agreed-upon modifications to
the Promotional Material).
(xii) The Trust and the Managing Owner have trust or corporate power
and authority under applicable law to perform their respective obligations under
the Trust Agreement and this Agreement, as described in the Registration
Statement and Prospectus.
(xiii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any material
adverse change in the condition, financial or otherwise, business or prospects
of the Managing Owner or the Trust, whether or not arising in the ordinary
course of business.
(xiv) At the initial Closing Date, as set forth in the opinion of
Xxxxxx & Austin, counsel for the Managing Owner, the Trust will be classified as
a partnership for Federal income tax purposes under the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations thereunder.
(xv) There is not pending, or, to the best of the Managing Owner's
knowledge, threatened, any action, suit or proceeding before or by any court or
other governmental body to which the Managing Owner or the Trust is a party, or
to which any of the assets of the Managing Owner or the Trust is subject, which
is not referred to in the Prospectus and which might reasonably be expected to
result in any material adverse change in the condition (financial or otherwise),
business or prospects of the Managing Owner or the Trust or is required to be
disclosed in the Prospectus pursuant to applicable CFTC regulations. The
Managing Owner has not received any notice of an investigation or warning letter
from the NFA or the CFTC regarding non-compliance by the Managing Owner with the
Commodity Act or the regulations thereunder.
(b) The Additional Selling Agent hereby represents and warrants as
follows:
(i) The Additional Selling Agent is a ___________________________ duly
organized, validly existing, and in good standing under the laws of the state of
its incorporation and has power and authority to enter into and carry out its
obligations under this Agreement.
(ii) The Additional Selling Agent has all governmental and regulatory
registrations, qualifications, approvals and licenses required to perform its
obligations under this Agreement (including, but not limited to, registration as
a broker-dealer with the SEC, membership in such capacity in the NASD,
registration as a futures commission merchant or introducing broker under the
CEA and membership with NFA, and registration or qualification under the laws of
each state in which Additional Selling Agent will offer and sell Units); the
performance by the Additional Selling Agent of its obligations under this
Agreement will not violate or result in a breach of any provision of its
certificate of incorporation or by-laws or any agreement, order, law, or
regulation binding upon it.
(iii) This Agreement has been duly and validly authorized, executed,
and delivered on behalf of the Additional Selling Agent and is a valid and
binding agreement of the Additional Selling Agent enforceable against the
Additional Selling Agent in accordance with its
8
9
terms, subject only to bankruptcy, insolvency, reorganization, moratorium or
similar laws at the time in effect affecting the enforceability generally of
rights of creditors except as enforceability of the indemnification provisions
contained in this Agreement may be limited by applicable law and the enforcement
of specific terms or remedies may be unavailable.
(iv) Neither the Additional Selling Agent 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 for an
investor's decision to purchase the Units which are not disclosed to the Trust
or the Managing Owner.
(v) The information, if any, relating to the Additional Selling Agent
which the Additional Selling Agent has furnished to the Trust and the Managing
Owner for use in the Registration Statement is correct.
4. Covenants of the Trust and the Managing Owner
The Trust and the Managing Owner jointly and severally agree as
follows:
(a) To advise the Additional Selling Agent (i) when the Registration
Statement has become effective, (ii) of the issuance by the SEC, CFTC or any
other federal or state regulatory body of any stop order suspending the
effectiveness of the Registration Statement under the Securities Act, the CFTC
registration or NFA membership of the Managing Owner as a commodity pool
operator or the registration of Units 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 Prospectus or of the institution, or notice of the
intended institution, of any action or proceeding for that purpose and (iii) the
receipt by the Trust or any representative or attorney of the Trust of any other
material communication from the SEC, CFTC, NFA or any Blue Sky or securities law
administrator relating to the Trust, the Registration Statement, any preliminary
prospectus or the Prospectus, as it may be amended or supplemented. The Trust
will make every reasonable effort to prevent the issuance of any order
suspending the effectiveness of the Registration Statement under the Securities
Act or the registration of Units under the laws of the several states and
various other jurisdictions or enjoining the offering and, if any such order is
issued, to obtain as soon as possible the withdrawal thereof; provided, that in
no event shall the Trust be obligated to (i) take any action which would subject
it to service of process in suits, other than those arising out of the offering
or sale of the Units, or taxes in any jurisdiction where it is not now so
subject or (ii) change any term in the Registration Statement, as the same may
be amended or supplemented.
(b) To deliver to the Additional Selling Agent, without charge, as many
conformed copies of the registration statement as originally filed and of the
Registration Statement and each amendment or supplement thereto (including all
exhibits filed with, or incorporated by reference in, any such document) as the
Selling Agent may reasonably request.
(c) During the Continuing Offering Period to deliver, without charge, to
the Additional Selling Agent, at such office or offices within the United States
of America as the Selling Agent may reasonably designate, as many copies of the
Prospectus, as amended or supplemented, as the Additional Selling Agent may
reasonably request.
9
10
(d) If any event shall occur as a result of which it is necessary, in the
reasonable opinion of the Managing Owner, to amend or supplement the Prospectus
in order (i) to make the Prospectus not materially misleading in the light of
the circumstances existing at the time it is delivered to a subscriber, or (ii)
to conform with applicable CFTC or SEC Regulations, the Managing Owner shall
forthwith prepare and furnish to the Additional Selling Agent, at the expense of
the Managing Owner, a reasonable number of copies of an amendment or amendments
of, or a supplement or supplements to, the Prospectus which will amend or
supplement the Prospectus so as to effect the necessary changes.
(e) To cause its counsel to prepare and deliver to the Additional Selling
Agent a Blue Sky Survey which shall set forth, for the guidance of the
Additional Selling Agent, in which United States jurisdictions the Units may be
offered and sold. It is understood and agreed that the Additional Selling Agent
may rely, in connection with the offering and sale of Units in any jurisdiction,
on advice given by such counsel as to the legality of the offer or sale of the
Units in such jurisdiction, provided, however, that the Additional 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 Units in any jurisdiction.
5. Conditions of Closing.
The sale of the Units and the release of subscription funds for the
escrow account are subject to the accuracy of the representations and
warranties of the parties hereto, to the performance by such parties of their
respective obligations hereunder and to the following further conditions:
(a) At each Closing Time no order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceeding
therefor initiated or threatened by the SEC, and the CFTC shall have filed the
Prospectus as a Disclosure Document without a finding of further deficiencies.
(b) At each Closing Time, the Managing Owner shall deliver a certificate
to the effect that: (i) no order suspending the effectiveness of the
Registration Statement has been issued and no proceedings therefor have been
instituted or to the best of their knowledge upon due and diligent inquiry
threatened by the SEC, the CFTC or other regulatory or self-regulatory body;
(ii) the representations and warranties of the Managing Owner contained herein
are true and correct with the same effect as though expressly made at such
Closing Time and in respect of the Registration Statement as in effect at such
Closing Time; and (iii) the Managing Owner has performed all covenants and
agreements herein contained which are required to be performed on their part at
or prior to such Closing Time.
(c) The parties hereto shall have been furnished with such additional
information, opinions and documents, including supporting documents relating to
parties described in the Prospectus and certificates signed by such parties with
regard to information relating to them and included in the Prospectus as they
may reasonably require for the purpose of enabling them to pass upon the sale of
the Units 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
10
11
in connection with the sale of the Units as herein contemplated shall be
reasonably satisfactory in form and substance to Sidley & Austin, counsel for
the Managing Owner and to the respective counsel for each of the Additional
Selling Agent.
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement to be fulfilled prior
to a Closing Time, this Agreement and all obligations hereunder may be canceled
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 such Closing Time, and any
such cancellation or termination shall be without liability of any party to any
other party other than in respect of Units already sold and except as otherwise
provided in Section 5 of this Agreement.
6. Indemnification and Contribution
(a) The Managing Owner agrees to indemnify and hold harmless the
Additional Selling Agent, and each person, if any, who controls the Additional
Selling Agent within the meaning of Section 15 of the Securities Act, as
follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any amendment 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 not
misleading or arising out of 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 therefrom of a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, unless such untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with information relating to the Additional Selling Agent or
furnished or approved by the Additional Selling Agent;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever 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 Managing Owner); and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel) reasonably incurred in investigating, preparing or
defending against litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid under
clauses (i) or (ii) above.
The Managing Owner agrees to notify the Additional Selling Agent
within a reasonable time of the assertion of any claim in connection with the
sale of the Units against it or
11
12
any of its officers or directors or any person who controls the Managing Owner
within the meaning of Section 15 of the Securities Act.
(b) The Additional Selling Agent agrees to indemnify and hold harmless the
Managing Owner and the Trust and each person, if any, who controls the Managing
Owner and the Trust within the meaning of Section 15 of the Securities Act (and
each person who signed the Registration Statement or is a director of the
Managing Owner), (i) to the same extent as the indemnify from the Managing Owner
set forth in Section 6(a) hereof, but only 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
relating or with respect to the Additional Selling Agent or any of its
principals, or their operations, which was made in any preliminary prospectus,
the Registration Statement or the Prospectus or any amendment or supplement
thereto and furnished by or approved by the Additional Selling Agent for
inclusion therein and (ii) against any and all loss, liability, claim, damage
and expense whatsoever resulting from a demand, claim, lawsuit, action or
proceeding relating to the actions or capacities of the Additional Selling Agent
(including a breach of its obligations hereunder).
(c) Each of the parties to this Agreement understands that the obligations
of each party subject to this Section 6 are separate and distinct.
Notwithstanding any other provision of this Section 6, (i) the Managing Owner
shall have no obligation to indemnify the Additional Selling Agent for more than
the amount of proceeds resulting from the sale of Units by the Additional
Selling Agent during the period from the commencement of the offering of the
Units to the initial Closing Date and during the Continuing Offering Period plus
the Additional Selling Agent's actual expenses incurred in connection with any
loss, claim, damage, charge or liability (including reasonable attorneys' and
accountants' fees incurred in defense thereof) and (ii) any obligation of the
Managing Owner to indemnify the Additional Selling Agent shall be adjusted to
reflect the relative responsibility of the Additional Selling Agent (if any) for
the circumstances giving rise to the losses, claims, damages, costs, expenses,
liabilities or actions for which indemnification is sought.
(d) Notwithstanding any other provision of this Section 6, (i) the
Additional Selling Agent shall have no obligation to indemnify the Managing
Owner for more than the amount of proceeds resulting from the sale of Units by
the Additional Selling Agent during the period from the commencement of the
offering of the Units to the initial Closing Date and during the Continuing
Offering Period plus the Managing Owner's actual expenses incurred in connection
with any loss, claim, damage, charge or liability (including reasonable
attorneys' and accountants' fees incurred in defense thereof) and (ii) any
obligation of the Additional Selling Agent to indemnify the Managing Owner shall
be adjusted to reflect the relative responsibility of the Managing Owner (if
any) for the circumstances giving rise to the losses, claims, damages, costs,
expenses, liabilities or actions for which indemnification is sought.
(e) Notwithstanding any other provision of this Agreement, indemnification
of the Managing Owner or its controlling persons by the Trust shall be permitted
only to the extent permitted by the Trust Agreement, as amended.
(f) Any party which proposes to assert the right to be indemnified under
this Section 6 will, promptly after receipt of notice of commencement of any
action, suit or proceeding
12
13
against such party in respect of which a claim is to be made against an
indemnifying party under this Section 6, notify each such indemnifying party of
the commencement of such action, suit or proceeding but the omission to notify
an indemnifying party shall not relieve such indemnifying party from any
liability which it may have to any indemnified party under this Section 6 except
to the extent, and only to the extent, that such omission was prejudicial to the
indemnifying party. In no event shall any such omission relieve an indemnifying
party of any liability which it may have to an indemnified party otherwise than
under this Section 6. In case any such action, suit or proceeding shall be
brought against any indemnified party, and such party shall notify the
indemnifying party of the commencement thereof; the indemnifying party shall be
entitled to participate therein, and, if it shall wish, individually or jointly
with any other indemnifying party, to assume (or have such other party assume)
the defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election (or the election of such other party) so 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 (or such other party), subsequently incurred
by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment by counsel by such indemnified party
has been authorized by the indemnifying party (or such other indemnifying party
as may have assumed the defense of the action in question), (ii) the indemnified
party shall have reasonably concluded that there may be a conflict of interest
between the indemnifying party (or such other party) and the indemnified party
in the conduct of the defense of such action (in which case the indemnifying
party (or such other 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 (subject to possible reimbursement of the indemnifying
party by such other 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 each of the following groups: (y) the Additional Selling
Agent and any person who controls the Additional Selling Agent within the
meaning of Section 15 of the Securities Act and (z) the Trust and the Managing
Owner and any person who controls the Trust and Managing Owner within the
meaning of Section 15 of the Securities Act.
(g) The exculpation provisions of the Trust Agreement shall not relieve
the Managing Owner or its principals from any liability they may have or incur
to the Trust under this Agreement.
7. Termination
(a) This Agreement shall terminate on the earlier of (i) such date as the
Managing Owner may determine by giving 30 days' prior written notice to the
Additional Selling Agent, (ii) the termination of the offering of the Units or
(iii) by the Managing Owner, without notice, upon breach by the Additional
Selling Agent of, or non-compliance by the Additional Selling Agent with, any
material term of this Agreement.
13
14
(b) The Additional Selling Agent shall have the right to terminate its
participation under this Agreement (i) at any time upon breach by the Managing
Owner or the Trust of or non-compliance with, any material term of this
Agreement; and (ii) at any time upon thirty business days' prior written notice
of such termination to the Managing Owner and the Trust.
(c) The termination of this Agreement for any reason set forth in Sections
7(a)(i), 7(a)(ii) or 7(b) shall not affect (i) the ongoing obligations of the
Managing Owner to pay the compensation described in Section 2(a) hereof accrued
prior to the termination hereof, (ii) the Additional Selling Agent's obligations
under Section 1(d) hereof or (iii) the indemnification obligations under Section
6 hereof. In the event this Agreement is terminated pursuant to Section
7(a)(iii), the Managing Owner may withhold accrued but unpaid compensation due
the Additional Selling Agent until the Managing Owner has been put in the same
financial position as it would have been in absent such breach or
non-compliance.
8. Miscellaneous
(a) This Agreement shall be binding upon and inure to the benefit of the
respective successors and permitted assigns of the parties hereto; provided,
however, that a party hereto may not assign any rights, obligations, or
liabilities hereunder without the prior written consent of the other parties.
(b) All notices required or desired to be delivered under this Agreement
shall be in writing and shall be effective when delivered personally on the day
delivered or, when given by registered mail, postage prepaid, return receipt
requested, on the day of receipt, addressed as follows (or to such other address
as the party entitled to notice shall hereafter designate in accordance with the
terms hereof):
if to the Managing Owner or the Trust:
Xxxxxxxx and Company, Inc.
-------------------------------------------
210 West Pennsylvania Avenue, Suite 770
-------------------------------------------
Towson, Maryland 21204
-------------------------------------------
Attn: Xxxxxx Xxxxxxx
-----------------------------------
Phone: 0-000-000-0000
-----------------------------------
Fax: 000-000-0000
-----------------------------------
if to the Additional Selling Agent:
-------------------------------------------
-------------------------------------------
-------------------------------------------
Attn:
-------------------------------------
Phone:
-------------------------------------
Fax:
-------------------------------------
Tax I.D. No.:
-----------------------------
14
15
(c) This Agreement shall be governed by, and construed in accordance with,
the law of the State of New York without regard to the principles of choice of
law thereof.
(d) All captions used in this Agreement are for convenience only, are not
a part hereof, and are not to be used in construing or interpreting any aspect
hereof.
(e) This Agreement may be executed in counterparts, each such counterpart
to be deemed an original, but which all together shall constitute one and the
same instrument.
(f) This Agreement may not be amended except by the express written
consent of the parties hereto. No waiver of any provision of this Agreement may
be implied from any course of dealing between or among any of the parties hereto
or from any failure by any party hereto to assert its rights under this
Agreement on any occasion or series of occasions.
(g) The provisions of this Agreement shall survive the termination of this
Agreement with respect to any matter arising while this Agreement was in effect.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
us in accordance with its terms.
Very truly yours,
XXXXXXXX & COMPANY, INC.
By:
-----------------------------------
Its
------------------------------
XXXXXXXX ASSET ALLOCATION TRUST
By: XXXXXXXX & COMPANY, INC., the
Managing Owner
By:
-----------------------------------
Its
------------------------------
CONFIRMED AND ACCEPTED
[Additional Selling Agent]
By:
-----------------------------------
Its
-----------------------------
15
