EXHIBIT 10.2
WORLD MONITOR TRUST
BROKERAGE AGREEMENT
THIS BROKERAGE AGREEMENT, made as of the ______ day of
________, 1997, by and between WORLD MONITOR TRUST (the
"Trust"), a business trust organized under Chapter 38 of Title
12 of the Delaware Code (the "Delaware Act"), and PRUDENTIAL
SECURITIES INCORPORATED, a Delaware corporation (the
"Broker");
W I T N E S S E T H :
WHEREAS, Prudential Securities Futures Management Inc.
(the "Managing Owner"), a Delaware corporation, is acting as
the Managing Owner of the Trust; and
WHEREAS, the Trust has been organized to trade, buy,
sell, spread, or otherwise acquire, hold, or dispose of
commodity futures, forward and options contracts (collectively
"Commodity Interests"); and
WHEREAS, the Trust made a public offering of limited
liability beneficial interests (the "Interests") in Series A,
B and C (the "Series") of the Trust through the Broker, and in
connection therewith, the Trust filed with the United States
Securities and Exchange Commission (the "SEC"), pursuant to
the United States Securities Act of 1933, as amended (the
"Act"), registration statements on Form S-1, and as a part
thereof a prospectus, which registration statements, together
with all amendments thereto, shall be referred to herein as
the "Registration Statements" and which prospectus in final
form, included as part of the Registration Statements,
together with all amendments and supplements thereto, shall be
referred to herein as the "Prospectus"; and
WHEREAS, the assets of each Series of Interests in the
Trust will be managed by a different trading advisor and will
be separately valued; and
WHEREAS, the Trust desires to engage the Broker to
provide commodity brokerage and certain other types of
services for the Trust;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, it is agreed that:
1. Commodity Brokerage Services. The Trust hereby
authorizes the Broker, and the Broker hereby agrees, to act as
the Trust's commodity broker for all Commodity Interest
transactions effected for the benefit of each Series in
accordance with the authorized written or oral instructions of
each authorized commodity trading advisor (an "Advisor")
retained by the Trust for the various Series, in each instance
in accordance with the terms of the then current Advisory
Agreement by and among the Trust, the Managing Owner and each
such Advisor, and to act as the clearing broker for the
transactions effected for each Series. In this regard, the
Trust will each execute a copy of the Broker's Commodity
Customer's Agreement (and related documents), as appropriate,
substantially in the form attached hereto as Exhibit A (the
"Customer's Agreement"). This Brokerage Agreement and the
Customer's Agreement are hereinafter collectively referred to
as the "Brokerage Agreement".
The Broker agrees to establish a separate account for
each Series with sub-accounts, if requested by the Managing
Owner, for any Advisor's different trading approaches, and
maintain separate records for the trading activities of each
Series.
Notwithstanding any provisions of this Brokerage
Agreement to the contrary, the Broker shall assume financial
responsibility for any error committed by it in executing
orders for the purchase or sale of Commodity Interests for any
of the Trust's accounts. However, the Broker shall not be
responsible for errors committed by any Advisor and shall not
be responsible for any action of the Trust in following or
declining to follow any instruction, advice or recommendation
given by any Advisor.
2. Custodial Services. The Broker agrees to perform
certain custodial functions in connection with Series' assets
including, but not limited to, providing monthly accountings
of all dealings done and actions taken during the applicable
reporting period by the Broker with respect to the assets for
each Series, and providing each Series with an accounting of
all securities, commodities, funds, and other property held by
the Broker or its nominees for or on behalf of such Series.
3. Administrative Services. The Broker agrees to
perform certain administrative functions for each Series,
including, but not limited to, preparing and transmitting
daily confirmations of transactions and monthly statements of
account, calculating equity balances and margin requirements,
assisting the Managing Owner in providing continuing
informational services to the holders of Interests (the
"Limited Owners"), keeping the Limited Owners apprised of
developments affecting the Series, communicating valuations of
the Series, providing information with respect to procedures
for redemptions, exchanges, transfers, and distributions, if
any, interpreting monthly and annual reports, providing tax
information to the Limited Owners, explaining developments in
the commodity markets in the United States and abroad, and
providing information to the Managing Owner, when requested,
regarding the status of each Series accounts. The Broker
further agrees to perform such additional recordkeeping
services on behalf of the Series as the Managing Owner shall
reasonably request, and to furnish to the Trust as soon as
practicable all such other information in its possession which
the Managing Owner is required to furnish to the Limited
Owners of the Trust pursuant to the Declaration of Trust and
Trust Agreement of __________________ Trust, dated as of
_________________, 1997 (the "Trust Agreement") as from time
to time in effect, or any applicable law, rules or
regulations.
4. General Services. As part of its general services to
the Trust, the Broker will assist the Managing Owner in
managing the holdings of the various Series, other than
commodities assets, as the Managing Owner may reasonably
request. The Broker agrees to perform such other services on
behalf of the Trust and each Series from time to time as the
Managing Owner may reasonably request.
5. Agreement Nonexclusive. The Broker shall be free to
render services of the nature to be rendered to the Trust
hereunder to other persons or entities in addition to the
Trust, and the parties acknowledge that the Broker may render
such services to additional entities similar in nature to the
Trust, including other trusts organized with the Managing
Owner as their managing owner, as well as limited partnerships
of which the Managing Owner acts as general partner. It is
expressly understood and agreed that this Brokerage Agreement
is nonexclusive and that the Trust has no obligation to
execute any or all of its trades for Commodity Interests
through the Broker, and the parties acknowledge that any
Series may execute trades for Commodity Interests through such
other broker or brokers as the Managing Owner may direct from
time to time. The Trust's utilization of an additional
commodity broker shall neither terminate this Brokerage
Agreement nor modify in any regard the respective rights and
obligations of the Trust and the Broker hereunder.
6. Compensation of the Broker. The Broker's
compensation for its services hereunder shall be limited to
the commodity brokerage fees charged to each Series in
accordance herewith. The Broker shall charge each Series a
separate brokerage fee for all services provided by the Broker
for such Series at an annualized rate of 7.75% of each Series'
Net Asset Value. The brokerage fee shall be determined at the
close of business each Friday based on the Series' then Net
Asset Value but before the deduction of (i) any fees,
including the brokerage fee, the management fee and the
incentive fee, if any and (ii) redemptions for such week. The
sum of the amounts determined weekly shall be paid monthly.
In the event a Series commences trading activities subsequent
to the first business day of a week or terminates prior to the
last business day of a week, the brokerage fee shall be
prorated for any such week on the basis of the number of
trading days in the week the services were provided by the
Broker as compared to the total number of trading days in that
week. In addition, the Broker shall be obligated to pay all
fees and expenses related to the execution of the each Series'
Commodity Interest trading (including, without limitation,
floor brokerage, any costs associated with taking delivery of
Commodity Interests and National Futures Association ("NFA"),
exchange and clearing fees). There will be no material change
related to the aforementioned monthly brokerage fee except
upon 20 business days' notice to Limited Owners of each
Series, and no increase in such fee shall take effect except
at the beginning of a quarter. The brokerage fee shall be
paid by each Series within 20 days of the end of each month.
7. Investment Discretion. The Broker shall have no
authority or responsibility to direct the Commodity Interests
to be purchased or sold for the account of any Series.
8. Standard of Liability. Subject to Section 1 hereof,
the Broker and its stockholders, directors, officers,
employees, and its or their respective successors or assigns
shall not be liable to the Trust, the Limited Owners of the
Trust, or any of its or their respective successors or
assigns, except by reason of acts of, or omissions due to, bad
faith, misconduct, or negligence, or for not having acted in
good faith in the reasonable belief that such acts or
omissions were in the best interests of the Trust, or by
reason of any material breach of this Brokerage Agreement.
9. Limits on Claims. The Broker agrees that it will not
take any of the following action against the Trust: (i) seek
a decree or order by a court having jurisdiction in the
premises (A) for relief in respect of the Trust in an
involuntary case or proceeding under the Federal Bankruptcy
Code or any other federal or state bankruptcy, insolvency,
reorganization, rehabilitation, liquidation or similar law or
(B) adjudging the Trust a bankrupt or insolvent, or seeking
reorganization, rehabilitation, liquidation, arrangement,
adjustment or composition of or in respect of the Trust under
the Federal Bankruptcy Code or any other applicable federal or
state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of
the Trust or of any substantial part of any of its properties,
or ordering the winding up or liquidation of any of its
affairs, or (ii) seek a petition for relief, reorganization or
to take advantage of any law referred to in the preceding
clause or (iii) file an involuntary petition for bankruptcy
(collectively "Bankruptcy or Insolvency Action").
(b) In addition, the Broker agrees that for any
obligations due and owing to it by any Series, the Broker will
look solely and exclusively to the assets of such Series or
the Managing Owner, if it has liability in its capacity as
Managing Owner, to satisfy its claims and will not seek to
attach or otherwise assert a claim against the assets of any
other Series or the Trust as a whole, whether or not there is
a Bankruptcy or Insolvency Action taken. The parties agree
that this provision will survive the termination of this
Brokerage Agreement, whether terminated in a Bankruptcy or
Insolvency Action or otherwise.
(c) This Brokerage Agreement has been made and executed
by and on behalf of the Trust and the Managing Owner and the
obligations of the Trust and/or the Managing Owner set forth
herein are not binding upon any of the Limited Owners
individually but are binding only upon the assets and property
identified above and no resort shall be had to the assets of
other Series issued by the Trust or the Limited Owners'
personal property for the satisfaction of any obligation or
claim hereunder.
10. Term and Termination. This Brokerage Agreement
shall commence on the date hereof and shall be automatically
renewed for additional one year periods unless sooner
terminated by either party hereto. This Brokerage Agreement
may be terminated by either party hereto at any time, upon
sixty (60) days' prior written notice to the other party.
This Brokerage Agreement shall terminate automatically if the
Broker's registration as a futures commission merchant ("FCM")
under the Commodity Exchange Act, as amended, ("CE Act") or
membership as an FCM with the National Futures Association
("NFA") is revoked, suspended, terminated or not renewed.
11. Subordination Agreement. The Broker agrees and
consents (the "Consent") to look solely to each Series for
which brokerage and clearing services are being performed (the
"Contracting Series") and assets (the "Contracting Series
Assets") of the Contracting Series and to the Managing Owner
and its assets for payment. The Contracting Series Assets
include only those funds and other assets that are paid, held
or distributed to the Trust on account of and for the benefit
of the Contracting Series, including, without limitation,
funds delivered to the Trust for the purchase of interests in
a Series. In furtherance of the Consent, the Broker agrees
that (i) any debts, liabilities, obligations, indebtedness,
expenses and claims of any nature and of all kinds and
descriptions (collectively, "Claims") incurred, contracted for
or otherwise existing arising from, related to or in
connection with the Trust and its assets and the Contracting
Series and the Contracting Series Assets, shall be subject to
the following limitations:
(a) Subordination of certain claims and rights. (i)
except as set forth below, the Claims, if any, of
the Broker (the "Subordinated Claims") shall be
expressly subordinate and junior in right of payment
to any and all other Claims against the Trust and
any Series thereof, and any of their respective
assets, which may arise as a matter of law or
pursuant to any contract; provided, however, that
the Broker's Claims (if any) against the Contracting
Series shall not be considered Subordinated Claims
with respect to enforcement against and distribution
and repayment from the Contracting Series, the
Contracting Series Assets and the Managing Owner and
its assets; and provided further that the Broker's
valid Claims, if any, against the Contracting Series
shall be pari passu and equal in right of repayment
and distribution with all other valid Claims against
the Contracting Series and (ii) the Broker will not
take, demand or receive from any Series or the Trust
or any of their respective assets (other than the
Contracting Series, the Contracting Series Assets
and the Managing Owner and its assets) any payment
for the Subordinated Claims;
(b) the Claims of the Broker with respect to the
Contracting Series shall only be asserted and
enforceable against the Contracting Series, the
Contracting Series Assets and the Managing Owner and
its assets; and such Claims shall not be asserted or
enforceable for any reason whatsoever against any
other Series, the Trust generally or any of their
respective assets;
(c) if the Claims of the Broker against the Contracting
Series or the Trust are secured in whole or in part,
the Broker hereby waives (under section 1111(b) of
the Bankruptcy Code (11 U.S.C. S 1111(b)) any right
to have any deficiency Claims (which deficiency
Claims may arise in the event such security is
inadequate to satisfy such Claims) treated as
unsecured Claims against the Trust or any Series
(other than the Contracting Series), as the case may
be;
(d) in furtherance of the foregoing, if and to the
extent that the Broker receives monies in connection
with the Subordinated Claims from a Series or the
Trust (or their respective assets), other than the
Contracting Series, the Contracting Series Assets
and the Managing Owner and its assets, the Broker
shall be deemed to hold such monies in trust and
shall promptly remit such monies to the Series or
the Trust that paid such amounts for distribution by
the Series or the Trust in accordance with the terms
hereof; and
(e) the foregoing Consent shall apply at all times
notwithstanding that the Claims are satisfied, and
notwithstanding that the agreements in respect of
such Claims are terminated, rescinded or canceled.
12. Complete Agreement. This Agreement and the
Customer's Agreement constitutes the entire agreement between
the parties with respect to the matters referred to herein and
therein (provided that if there are any inconsistencies
between the text of this Agreement and the Customer's
Agreement, this Agreement shall control), and no other
agreement, verbal or otherwise, shall be binding as between
the parties unless in writing and signed by the party against
whom enforcement is sought.
13. Assignment; Binding Effect. This Brokerage
Agreement may not be assigned by either party without the
express written consent of the other party. This Brokerage
Agreement shall be binding on and inure to the benefit of the
parties hereto and the respective successors and permitted
assigns of each of them, and no other person shall have any
right or obligation under this Brokerage Agreement. The terms
"successors" and "assigns" shall not include any purchasers,
as such, of Interests.
14. Amendment. This Brokerage Agreement may not be
amended except by the written consent of the parties.
15. Notices. All notices required or desired to be
delivered under this Brokerage Agreement shall be in writing
and shall be effective when delivered personally on the day
delivered, or when given by registered or certified 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 Trust:
WORLD MONITOR TRUST
Prudential Securities Futures Management Inc.
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
if to the Broker:
PRUDENTIAL SECURITIES INCORPORATED
One Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
16. Survival. The provisions of this Brokerage
Agreement. shall survive the termination of this Agreement
with respect to any matter arising while this Agreement was in
effect.
17. Severability. Whenever any statute shall be enacted
which shall affect in any manner or be inconsistent with any
of the provisions of this Brokerage Agreement, or whenever any
rule or regulation shall be prescribed or promulgated by any
government agency having jurisdiction which shall affect in
any manner or be inconsistent with any of the provisions of
this Brokerage Agreement, the provisions of this Brokerage
Agreement so affected shall be deemed modified or superseded,
as the case may be, by such statute, rule or regulation, and
all other provisions of this Brokerage Agreement and the
provisions so modified or superseded, shall in all respects
continue and be in full force and effect.
18. Headings. Headings of sections herein are for the
convenience of the parties only and are not intended to be a
part of, or to affect the meaning or interpretation of, this
Brokerage Agreement.
19. Definitions. All capitalized terms used herein and
not defined shall have the meaning ascribed to such terms in
the Trust Agreement and the Prospectus.
20. Governing Law. This Brokerage Agreement shall be
governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be
performed in that State, without giving effect to the
principles of conflicts of laws thereof.
21. Representations and Warranties of the Broker.
The Broker hereby represents and warrants to the Trust that:
a. On the date hereof the Broker is, and at all
times during the term of this Brokerage Agreement will
be, a duly formed and validly existing corporation in
good standing under the laws of the state of its
organization, and at all times during the term of this
Brokerage Agreement will be in good standing and
qualified to do business in each jurisdiction in which
the nature or conduct of its business requires such
qualifications and the failure to be so qualified
materially adversely would affect its ability to perform
its obligations under this Brokerage Agreement and to
operate as described in the Prospectus, and has full
capacity and authority to conduct its business and to
perform its obligations under this Brokerage Agreement,
and to act as described in the Registration Statements as
of its effective date and the Prospectus as of the
Closing Date.
b. This Brokerage Agreement has been duly and
validly authorized, executed and delivered on behalf of
the Broker, is a valid and binding agreement of the
Broker, and is enforceable in accordance with its terms.
The performance of the Broker's obligations under this
Brokerage Agreement, and the consummation of the
transactions set forth in this Brokerage Agreement, and
in the Registration Statements as of its effective date
and Prospectus as of the Closing Date are not contrary to
the provisions of the Broker's Certificate of
Incorporation or By-Laws, or to the best of its
knowledge, after due inquiry, any applicable law, rule or
regulation of any federal, state or other governmental
regulatory or self-regulatory agency or body and will not
result in any violation, breach or default under any term
or provision of any undertaking, contract, agreement or
order, to which the Broker is a party or by which the
Broker is bound.
c. The Broker has obtained all required
governmental and regulatory licenses, registrations and
approvals required by law as may be necessary to perform
their obligations under this Brokerage Agreement and to
act as described in the Registration Statements as of its
effective date and the Prospectus as of the Closing Date
(including, without limitation, the Broker's registration
as a futures commission merchant under the CE Act and
membership as a futures commission merchant with the NFA)
and will maintain and renew any required licenses,
registrations, approvals and memberships required during
the term of this Brokerage Agreement.
IN WITNESS WHEREOF, this Brokerage Agreement has been
executed for and on behalf of the undersigned as of the day
and year first above written.
WORLD MONITOR TRUST PRUDENTIAL SECURITIES
INCORPORATED
By: Prudential Securities
Futures Management Inc.,
its Managing Owner By:___________________________
By:
Xxxxxxx X. Xxxxxx, Esq.
